EXHIBIT 10(ii)
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BY AND AMONG
K-V PHARMACEUTICAL COMPANY,
CYTYC PRENATAL PRODUCTS, CORP.
AND
HOLOGIC, INC.
DATED AS OF JANUARY 16, 2008
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS............................................................................................1
Section 1.1 Defined Terms..........................................................................1
Section 1.2 Construction of Certain Terms and Phrases.............................................12
ARTICLE II. PURCHASE AND SALE OF ASSETS..........................................................................13
Section 2.1 Grant of Exclusive License............................................................13
Section 2.2 Purchase, Sale and Transfer of Assets.................................................13
Section 2.3 Excluded Assets.......................................................................14
Section 2.4 Retention of Copies...................................................................14
Section 2.5 Assignability and Consents............................................................14
ARTICLE III. ASSUMPTION OF LIABILITIES...........................................................................15
Section 3.1 Assumption of Liabilities.............................................................15
ARTICLE IV. PURCHASE PRICE, PAYMENT, REIMBURSEMENT OF EXPENSES AND TRANSFER......................................17
Section 4.1 Initial Payment of Purchase Price.....................................................17
Section 4.2 Additional Payments, Reimbursement of Expenses and Transfer of Assets.................17
Section 4.3 Allocation of Purchase Price..........................................................18
Section 4.4 Sales, Use and Other Taxes............................................................19
Section 4.5 Tax Withholding.......................................................................19
Section 4.6 Risk of Loss..........................................................................19
Section 4.7 Subsidiaries..........................................................................19
ARTICLE V. CLOSING AND TRANSFER DATE.............................................................................19
Section 5.1 Time and Place of Closing.............................................................19
Section 5.2 Deliveries at Closing.................................................................20
Section 5.3 Time and Place of Transfer Date.......................................................20
Section 5.4 Transfer Date Deliveries..............................................................20
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................21
Section 6.1 Organization, Etc.....................................................................22
Section 6.2 Authority of the Seller...............................................................22
Section 6.3 Consents and Approvals................................................................22
Section 6.4 Non-Contravention.....................................................................23
Section 6.5 Contracts.............................................................................23
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Section 6.6 Intellectual Property Rights..........................................................23
Section 6.7 Litigation............................................................................26
Section 6.8 Permits; Compliance with Law..........................................................26
Section 6.9 Gestiva Inventory.....................................................................27
Section 6.10 Suppliers.............................................................................28
Section 6.11 Absence of Certain Changes or Events..................................................28
Section 6.12 Title to Assets; Sufficiency of Assets................................................29
Section 6.13 Disclosure............................................................................29
Section 6.14 Taxes.................................................................................30
Section 6.15 Competing Business....................................................................31
Section 6.16 Unlawful Payments.....................................................................31
Section 6.17 Brokers...............................................................................31
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR......................................................31
Section 7.1 Corporate Organization................................................................32
Section 7.2 Authority of the Acquiror.............................................................32
Section 7.3 Non-Contravention.....................................................................32
Section 7.4 Litigation............................................................................32
Section 7.5 Brokers...............................................................................33
ARTICLE VIII. COVENANTS OF THE PARTIES...........................................................................33
Section 8.1 Operation of the Gestiva Business.....................................................33
Section 8.2 Reasonable Efforts....................................................................35
Section 8.3 Access; Confidentiality...............................................................37
Section 8.4 Public Announcements; Confidentiality.................................................39
Section 8.5 Regulatory Matters....................................................................39
Section 8.6 Covenant Not to Compete...............................................................41
Section 8.7 Further Assurances....................................................................43
Section 8.8 No Solicitation.......................................................................43
Section 8.9 Insurance.............................................................................43
Section 8.10 Tax Matters...........................................................................44
Section 8.11 Employee Matters......................................................................46
ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES FOR THE CLOSING.........................................46
Section 9.1 Seller's Conditions to Closing........................................................46
Section 9.2 Acquiror's Obligations to Closing.....................................................46
ARTICLE X. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES FOR THE TRANSFER DATE....................................47
Section 10.1 Seller's Obligations for the Transfer Date............................................47
Section 10.2 Acquiror's Obligations for the Transfer Date..........................................48
ARTICLE XI. INDEMNIFICATION......................................................................................49
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Section 11.1 Survival of Representations, Warranties, Covenants, Etc...............................49
Section 11.2 Indemnification.......................................................................49
Section 11.3 Limitations...........................................................................53
Section 11.4 Conflict with other Provisions........................................................54
ARTICLE XII. TERMINATION.........................................................................................54
Section 12.1 Methods of Termination................................................................54
Section 12.2 Procedure upon Termination............................................................55
Section 12.3 Termination Fee.......................................................................56
ARTICLE XIII. MISCELLANEOUS......................................................................................56
Section 13.1 Notices...............................................................................56
Section 13.2 Entire Agreement......................................................................57
Section 13.3 Waiver................................................................................57
Section 13.4 Amendment.............................................................................58
Section 13.5 Third Party Beneficiaries.............................................................58
Section 13.6 Assignment; Binding Effect............................................................58
Section 13.7 Headings..............................................................................58
Section 13.8 Severability..........................................................................58
Section 13.9 Governing Law.........................................................................58
Section 13.10 Expenses..............................................................................59
Section 13.11 Counterparts..........................................................................59
Section 13.12 Remedies..............................................................................59
Exhibit A-Form of Assumption and Assignment Agreement
Exhibit B-Form of Bill of Sale
Exhibit C-Form of Trademark Assignment Agreement
Exhibit D-Form of FDA Transfer Letters
Exhibit E-Form of License Agreement
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT") is made and
entered into as of January 16, 2008, by and among K-V Pharmaceutical Company,
a Delaware corporation (the "ACQUIROR"), Cytyc Prenatal Products Corp., a
Delaware corporation (the "SELLER") and solely for purposes of Section 8.6 and
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ARTICLE XI, Hologic, Inc., a Delaware corporation ("PARENT").
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RECITALS
WHEREAS, Seller is engaged in researching, manufacturing,
developing, marketing, and selling Gestiva;
WHEREAS, on the Closing Date (as defined herein), Seller
will, by the terms of this Agreement, conditionally sell the Purchased Assets
(as defined herein) to Acquiror and grant to Acquiror an exclusive license to
use the Gestiva Intellectual Property (as defined herein) during the period
between the Closing Date and the Transfer Date (as defined herein).
WHEREAS, on the Transfer Date, Seller will, by the terms of
this Agreement, transfer to Acquiror all of the Purchased Assets; and
WHEREAS, Acquiror has agreed to assume the Assumed
Liabilities on the Transfer Date on the terms and subject to the conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the
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following defined terms shall have the meanings specified below:
"ACCOUNTANTS" has the meaning set forth in Section 8.10(h).
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"AAA" has the meaning set forth in Section 11.2(f)(ii).
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"ACQUIROR" has the meaning set forth in the preamble to this
Agreement.
"ACQUIROR MATERIAL ADVERSE EFFECT" means any Effect that,
individually or in the aggregate, has had or would be reasonably expected to
have a material adverse effect on (i) the Acquiror's ability to consummate the
transactions contemplated hereby in accordance with the terms and conditions
hereof or (ii) on the business, assets (including intangible assets), results
of
operations, liabilities (contingent or otherwise) or conditions (financial or
otherwise) of the Acquiror.
"ACTION OR PROCEEDING" means any action, suit, claim,
proceeding, arbitration, dispute, Order, inquiry, hearing, assessment with
respect to fines or penalties or litigation (whether civil, criminal,
administrative or investigative) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental or Regulatory Authority.
"ADDITIONAL PURCHASE PRICE AMOUNT" has the meaning set forth
in Section 4.2(b).
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"AFFILIATE" means, with respect to any Person, any other
Person which Controls, is Controlled by or is under common Control with such
Person.
"AGREEMENT" has the meaning set forth in the preamble
hereto.
"API" means the 17 alpha-hydroxyprogesterone caproate active
pharmaceutical ingredient.
"APPLICABLE PERIOD" has the meaning set forth in Section
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8.6(a).
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment
and Assumption Agreement substantially in the form attached hereto as Exhibit A.
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"ASSUMED CONTRACTS" means the Gestiva Contracts set forth on
Schedule 1.1(a) and any Contracts entered into by Seller or its Affiliates
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from the date hereof to the Transfer Date in accordance with Section 8.1(b)(iv)
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to the extent relating solely to Gestiva or the Purchased Assets.
"ASSUMED LIABILITIES" has the meaning set forth in Section
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3.1(a).
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"BILL OF SALE" means the Bill of Sale conveying the
Purchased Assets from the Seller to the Acquiror as of the Transfer Date,
substantially in the form attached hereto as Exhibit B.
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"BUSINESS DAY" means a day other than Saturday, Sunday or
any day on which commercial banks located in New York are authorized or
obligated by Law to close.
"CHARTER DOCUMENTS" has the meaning set forth in Section 6.1.
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"CLOSING" has the meaning set forth in Section 5.1.
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"CLOSING DATE" has the meaning set forth in Section 5.1.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPETING PRODUCT" has the meaning set forth in Section
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8.6(a).
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"COMPLETE RESPONSE" has the meaning set forth in Section
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4.2(a).
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"CONFIDENTIALITY AGREEMENT" means the Confidentiality
Agreement, dated as October 30, 2007, by and between Parent and Acquiror.
"CONTRACTS" means any and all written or legally binding
oral commitments, contracts, purchase orders, sales orders, leases, subleases,
licenses, easements, commitments, arrangements, undertakings, evidence of
indebtedness, security or pledge agreements or other agreements.
"CONTROL" means:
(a) ownership (directly or indirectly) of at least fifty
percent (50%) of the shares or stock entitled to vote for the election of
directors in the case of a company or corporation; or
(b) the ability otherwise to direct and control (whether
directly or indirectly through one or more intermediaries) the actions of a
Person.
"DAMAGES" has the meaning set forth in Section 11.2(a).
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"DEFAULT" means (i) a breach, default or violation, (ii) the
occurrence of an event that with or without the passage of time or the giving
of notice, or both, would constitute a breach, default or violation or cause
an Encumbrance to arise or (iii) with respect to any Contract, the occurrence
of an event that with or without the passage of time or the giving of Notice,
or both, would constitute a change of control or give rise to a right of
termination, modification, renegotiation, acceleration, cancellation, or a
right to receive Damages or a payment of penalties.
"DESIGNATED ACQUIROR SUBSIDIARY" shall have the meaning set
forth in Section 4.7.
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"EFFECT" means any state of facts, change, development,
event, occurrence, effect or condition.
"ENCUMBRANCE" means any claim, mortgage, pledge, assessment,
security interest, option, deed of trust, lease, lien, levy, license,
restriction on transferability, defect in title, charge or other encumbrance
of any kind, whether voluntarily incurred or arising by operation of Law or
any conditional sale or title retention agreement or other agreement to give
any of the foregoing in the future.
"ENVIRONMENTAL LAWS" means any federal, state, local or
non-U.S. Law and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, judgment,
stipulation, injunction, permit, authorization, policy, opinion, or agency
requirement, in each case having the force and effect of Law, relating to the
pollution, protection, investigation or restoration of the environment or
health and safety as affected by the environment or natural resources,
including those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Materials or noise, odor, wetlands, pollution or contamination.
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"ERISA AFFILIATE" means any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with,
under "common control" with, or a member of an "affiliated service group"
with, Seller, as defined in Section 414(b), (c), (m) or (o) of the Code, or
under "common control" with Seller, within the meaning of Section 4001(b)(1)
of ERISA.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.3.
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"EXCLUDED LIABILITIES" has the meaning set forth in Section
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3.1(b).
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"EXCLUDED TAX LIABILITY" has the meaning set forth in
Section 3.1(b)(iii).
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"FDA" means the United States Food and Drug Administration
or any successor thereto.
"FDA ACT" means the U.S. Food, Drug and Cosmetic Act of
1938, as it may be superseded or amended from time to time.
"FDA TRANSFER LETTERS" has the meaning set forth in Section
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8.2(e).
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"GESTIVA" means the pharmaceutical product containing the
API described in NDA #21-945.
"GESTIVA BOOKS AND RECORDS" means all books, records, files,
documents, data, information and correspondence related to the Gestiva
Business which are owned by the Parent, the Seller or their Subsidiaries,
including, without limitation, all records with respect to supply sources; all
pre-clinical, clinical and process data and reports relating to research or
development of products or of any materials used in the research, development,
use, testing, manufacture, marketing or sale of products, including all raw
data relating to clinical trials of products, all case report forms relating
thereto and all statistical programs developed (or modified in a manner
material to the use or function thereof) to analyze clinical data; all market
research data, market intelligence reports and statistical programs (if any)
used for marketing and sales research; promotional, advertising and marketing
materials, sales forecasting models, medical education materials, sales
training materials, web site content and advertising and display materials;
all records, including vendor and supplier lists, manufacturing records,
sampling records, standard operating procedures and batch records, related to
the manufacturing process; all data contained in laboratory notebooks relating
to products or relating to their biological, physiological, mechanical or
formula properties; all adverse experience reports and files related thereto
(including source documentation) and all periodic adverse experience reports
and all data contained in electronic data bases relating to periodic adverse
experience reports; all analytical and quality control data; all written
correspondence with the FDA; and written records relating to the regulatory
filings with the FDA or its foreign counterparts, including, but not limited
to, the Gestiva FDA Submission. Notwithstanding the foregoing, the Gestiva
Books and Records shall exclude any books, records, files, documents, data,
information and correspondence relating to human resources or employees of the
Parent, the Seller and their Subsidiaries and in the case of any books,
records, files, documents, data, information and correspondence also relating
to the other businesses or assets of the Parent, the Seller and their
Subsidiaries, the Seller shall have the right to exclude or redact the same
with respect to such other businesses and assets.
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"GESTIVA BUSINESS" means the research, development,
regulatory approval, manufacture, distribution, marketing, sale and promotion
of Gestiva, and to the extent applicable, Gestiva Product Improvements in each
case as conducted by the Parent, the Seller and their Subsidiaries.
"GESTIVA CONTRACTS" means all (i) Contracts pursuant to
which Seller or its Affiliates purchases any materials from any third party
for use in connection with the development, testing or manufacture of Gestiva,
all of which Contracts in effect on the date hereof are set forth on Schedule
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1.1(a), (ii) Contracts relating to any pre-clinical or clinical trial
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involving Gestiva, all of which Contracts in effect on the date hereof are set
forth on Schedule 1.1(a), (iii) Contracts constituting material transfer
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agreements involving the transfer of Gestiva, all of which Contracts in effect
on the date hereof are set forth on Schedule 1.1(a), (iv) Contracts relating
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to the marketing of Gestiva or educational matters relating to Gestiva, all of
which Contracts in effect on the date hereof are set forth on Schedule 1.1(a),
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(v) Contracts relating to the supply or manufacture of Gestiva or Gestiva
Product Improvements, all of which Contracts in effect on the date hereof are
set forth on Schedule 1.1(a), (vi) Contracts constituting confidentiality
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agreements involving Gestiva or Gestiva Intellectual Property, including
non-compete or non-solicitation agreements with employees, independent
contractors or agents of Seller with third parties, (vii) Contracts involving
any royalty, licensing, partnering or similar arrangement involving Gestiva or
Gestiva Intellectual Property, all of which Contracts in effect on the date
hereof are set forth on Schedule 1.1(a), (viii) Contracts pursuant to which
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any services are provided to Seller or its Affiliates with respect to Gestiva,
including consultation agreements, all of which Contracts in effect on the
date hereof are set forth on Schedule 1.1(a), and (ix) Contracts pursuant to
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which any third party collaborates with Seller or its Affiliates in the
performance of research or development of Gestiva, all of which Contracts in
effect on the date hereof are set forth on Schedule 1.1(a).
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"GESTIVA COPYRIGHTS" means all copyrightable works and
copyrights, and any registrations, applications, and renewals in connection
therewith worldwide, if any, including moral rights, website content, and
other rights of authorship and exploitation in each case as set forth on
Schedule 1.1(b) of the Seller Disclosure Schedule.
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"GESTIVA FDA SUBMISSIONS" means, collectively, the Gestiva
Pre-IND and Gestiva NDA.
"GESTIVA GOVERNMENTAL PERMITS" means all authorizations,
licenses, permits, certificates, approvals, exemptions, consents,
confirmations, orders, registrations, product registrations, concessions,
franchises, waivers and clearances of a Governmental or Regulatory Authority
(including all authorizations under the FDA Act, the Public Health Services
Act, the Controlled Substances Act and the regulations of the FDA and the
United States Drug Enforcement Agency promulgated thereunder) necessary for
the Seller to carry on the Gestiva Business as it is being conducted as of the
date hereof.
"GESTIVA INTELLECTUAL PROPERTY" means (i) the Gestiva
Copyrights, (ii) the Gestiva Patent Rights, (iii) the Gestiva Know-How, (iv)
the Gestiva Trademarks, (v) the rights to exclude others from appropriating
any of the foregoing, including the rights to sue for and remedies against
past, present and future infringements of any or all of the foregoing and
rights of priority
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and protection of interests therein and (vi) any other proprietary,
intellectual property and other rights relating to any or all of the foregoing
anywhere in the world.
"GESTIVA PRE-IND" means the Pre-IND #68,108, as filed as of
the date hereof of this Agreement, and all documents, data, analyses, files
related thereto, in each case as may be updated in accordance with this
Agreement.
"GESTIVA INVENTORY" means all inventories of Gestiva in
existence as of the Transfer Date, together with all bulk active
pharmaceutical ingredient, all other raw materials, components, parts, work in
process and packaging materials owned by the Parent, the Seller or any of
their Subsidiaries as of the Transfer Date for use in the operation of the
Gestiva Business. For clarity, Gestiva Inventory shall exclude raw materials,
components, parts, work in process and packaging materials not specific to
Gestiva.
"GESTIVA KNOW-HOW" means any and all Gestiva Manufacturing
Know-How and other Know-How that is currently owned or used under license by
the Parent, the Seller or any of their Subsidiaries related to Gestiva or the
Gestiva Product Improvements as of the Transfer Date. For the sake of clarity,
none of the foregoing information shall be included in Gestiva Know-How to the
extent that such information is covered by any claim of any Gestiva Patent
Rights.
"GESTIVA MANUFACTURING KNOW-HOW" means any Know-How or other
information relating to the manufacture of Gestiva or Gestiva Product
Improvements owned or used under license by the Parent, the Seller or their
Subsidiaries, including without limitation the identity, amounts and assurance
quality of ingredients, the manufacturing processes and controls,
specifications, technology, inventions, assays, quality control and testing
procedures, Know-How and trade secrets used, held for use, or intended to be
used in or necessary to manufacture, formulate, test and package Gestiva for
use, sale, marketing and distribution as of the Transfer Date. For sake of
clarity, none of the foregoing information shall be included in the Gestiva
Manufacturing Know-How to the extent that such information is covered by any
claim of any Gestiva Patent Rights.
"GESTIVA NDA" means NDA # 21-945 as filed as of the date of
this Agreement, and all documents, data, analyses, and files related thereto,
in each case as may be updated in accordance with this Agreement.
"GESTIVA NDA APPROVAL" means approval of the Gestiva NDA by
the FDA allowing for the initiation of marketing and sale of Gestiva in the
United States for the prevention of preterm delivery in woman with a history
of a prior preterm delivery or any other similar treatment.
"GESTIVA NDA APPROVAL DATE" means the date upon which the
FDA issues to the Seller written notice of the Gestiva NDA Approval.
"GESTIVA PATENT RIGHTS" means those Patent Rights owned or
used under license by the Parent, the Seller or their Subsidiaries listed on
Schedule 1.1(c), together with all registrations, applications and renewals
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thereof, and any other Patent Rights that are owned or used under license by
the Parent, the Seller or any of their Subsidiaries and that would be
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infringed by the manufacture, sale, offer to sell or importation of Gestiva or
any Gestiva Product Improvement.
"GESTIVA PRODUCT IMPROVEMENT" means (to the extent
applicable) any: (i) line extension of Gestiva, (ii) new indication of
Gestiva, (iii) composition of matter or article of manufacture consisting
essentially of 17 alpha-hydroxyprogesterone caproate, (iv) pharmaceutical
combination containing 17 alpha-hydroxyprogesterone caproate and another
active ingredient, (v) new formulations comprising of 17
alpha-hydroxyprogesterone caproate and/or (vi) compositions of matter or
articles of manufacture constituting any of the foregoing or components
thereof.
"GESTIVA PRODUCT REGISTRATIONS" means (i) the exemptions,
approvals or registrations which have been received by the Parent, the Seller
or any of their Subsidiaries as of the date of this Agreement, or which are
received by the Parent, the Seller or any of their Subsidiaries after the date
of this Agreement but before the Transfer Date, for the manufacturing,
testing, investigation, sale, use, distribution and/or marketing of Gestiva or
a Gestiva Product Improvement (including any NDAs or INDs) and (ii) all
dossiers, reports, data and other written materials filed as part of or
referenced in any applications for such approvals or registrations, or
maintained by the Parent, the Seller or any of their Subsidiaries and relating
to such approvals or registrations.
"GESTIVA TRADEMARKS" means all trademarks, trade names,
product names, trade dress, service marks, logos and slogans set forth on
Schedule 1.1(d), in each case, whether registered or unregistered, including
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all common law rights, registrations and applications for registrations for
any of the foregoing, and all internet domain names, and all registrations,
applications and renewals thereof and the goodwill associated therewith.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, department, ministry,
official or other instrumentality of the United States or other country, or
any supra-national organization, or any foreign or domestic, state, county,
city or other political subdivision.
"HAZARDOUS MATERIALS" means (i) any petroleum, petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any Environmental
Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, together with any rules or regulations promulgated
thereunder.
"IND" means (i) an Investigational New Drug Application, as
defined in the FDA Act and the regulations promulgated thereunder, which is
required to be filed with the FDA before beginning clinical testing of a
product in human subjects, or any successor application or procedure, (ii) all
supplements and amendments that may be filed with respect to the foregoing and
(iii) all international equivalents of the foregoing.
"INDEMNIFICATION CLAIM NOTICE" has the meaning set forth in
Section 11.2(c).
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"INDEMNIFIED PARTY" has the meaning set forth in Section
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11.2(c).
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"INDEMNITEES" has the meaning set forth in Section 11.2(c).
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"INITIAL GESTIVA INVENTORY" means the release and shipment
of no fewer than 15,000 5-milliliter vials of finished Gestiva suitable for
commercial sale by the Acquiror.
"INITIAL PURCHASE PRICE AMOUNT" has the meaning set forth in
Section 4.1.
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"JOINT INTEGRATION COMMITTEE" means a committee of
representatives comprised of two (2) members selected by the Acquiror from its
senior executives and two (2) members selected by the Seller from its senior
executives; each having responsibility at the respective party for the
development of Gestiva. Each party will give the other written notification
concerning its executives nominated to serve on the Joint Integration
Committee. Either party may replace either of its members on the Joint
Integration Committee with an equivalent senior executive by providing written
notice of the change to the other party.
"KNOW-HOW" means any proprietary or nonproprietary
information directly related to the manufacture, preparation, development
(both research and clinical), or commercialization of a product, including,
without limitation, product specifications, processes, product designs, plans,
trade secrets (including, without limitation, user information, customer and
supplier lists, and related information, business and marketing plans, any
other financial, marketing and business data), ideas, concepts, inventions,
formulae, chemical, pharmacological, toxicological, pharmaceutical, physical,
analytical, stability, safety, quality assurance, quality control and clinical
information, technical information, research information, and all other
confidential or proprietary technical and business information, whether or not
embodied in any documentation or other tangible materials, but in no event
shall the definition of "Know-How" include information properly in the public
domain.
"KNOWLEDGE" with respect to (i) the Seller means the actual
knowledge of Robb Hesley, Catherine Williams, Mary Eckstein, Lynn Jones, Tom
Umbel, Howard Doran, Tony Kingsley and Mark Casey (whose positions and
operational responsibilities are listed on Schedule 1.1(e) hereto), following
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reasonable inquiry and (ii) the Acquiror means the knowledge of the officers,
directors or senior managers, following reasonable inquiry.
"LAW" means any federal, state, local or foreign law,
statute, code or ordinance, or any rule or regulation promulgated by any
Governmental or Regulatory Authority.
"LIABILITY" means any direct or indirect liability,
obligation, claim, deficiency, guarantee or commitment of any kind or nature
(whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, or due or to become due),
including any liability for Taxes.
"LIABILITY CAP" means $750,000 until the Seller receives
payment of the NDA Milestone Payment pursuant to Section 4.2(a), if ever, and
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thereafter shall be $950,000, until the Seller receives payment of the
Additional Purchase Price Amount pursuant to Section 4.2(b), if ever, and
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thereafter shall be $8,200,000.
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"LIABILITY THRESHOLD" has the meaning set forth in Section
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11.3(a).
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"LICENSE AGREEMENT" has the meaning set forth in Section
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2.1.
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"NDA" means (i) a New Drug Application for any product, as
appropriate, requesting permission to place a drug on the market in accordance
with 21 C.F.R. Part 314, and all supplements or amendments filed pursuant to
the requirements of the FDA, including all documents, data and other
information concerning a product which are reasonably necessary for FDA
approval to market a product in the United States and (ii) all international
equivalents of the foregoing.
"NDA MILESTONE PAYMENT" has the meaning set forth in Section
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4.2(a).
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"NON-ASSIGNABLE ASSET" has the meaning set forth in Section
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2.5(a).
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"NO-SHOP PERIOD" has the meaning set forth in Section 8.8.
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NOTICE" with respect to a party means notice actually
received by an officer, director or senior manager of the Seller, in the case
of the Seller, or of the Acquiror, in the case of the Acquiror, in each case
with responsibility in the relevant area, or delivered in accordance with the
terms of the document, Law or Order pursuant to which such notice was given.
"OBJECTION NOTICE" has the meaning set forth in Section
-------
11.2(f)(i).
- ----------
"ORDER" means any writ, judgment, decree, injunction or
similar order, including consent orders, of any Governmental or Regulatory
Authority (in each such case whether preliminary or final).
"ORDINARY COURSE OF BUSINESS" means an action or activity
that is consistent in nature, scope and magnitude with the past practices of
the Seller and its Affiliates with respect to the Gestiva Business.
"PARENT" has the meaning set forth in the preamble to this
Agreement.
"PATENT RIGHTS" means any invention disclosure, patent
application (including any provisionals, divisionals, continuations,
continuations-in-part (to the extent claiming subject matter invented on or
before the Transfer Date) and substitutions thereof), patents issuing from or
granted upon such invention disclosure or patent application (including
patents of addition (to the extent claiming subject matter invented on or
before the Transfer Date) and substitutions thereof), reissues, extensions,
reexaminations, renewal applications, supplemental patent certificates or any
confirmation patent or registration patent) and all foreign counterparts of
any of the foregoing.
"PERMITTED ENCUMBRANCES" means with respect to the Seller:
(i) statutory liens of landlords, liens of carriers, warehousepersons,
mechanics and material persons or similar liens incurred or arising in the
ordinary course of business, none of which materially detracts from the value
or materially impairs the use of the asset or property subject thereto, or
materially impairs the operations of the Parent, the Seller or any of their
Subsidiaries, (ii) liens incurred or deposits
9
made in connection with workers' compensation, unemployment insurance and
other similar types of social security programs or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return of money bonds and similar
obligations, in each case in the ordinary course of business, consistent with
past practice, (iii) encumbrances which do not interfere with the ordinary
conduct of business of the Seller and do not materially detract from the value
of the underlying asset, (iv) liens for Taxes, assessments and governmental
charges not yet due and payable and (v) non-exclusive end-user licenses
entered in the ordinary course of business.
"PERSON" means any natural person, corporation, general
partnership, limited partnership, limited liability company, proprietorship,
joint venture, other business organization, trust, entity, union, association
or Governmental or Regulatory Authority.
"PERSONNEL" has the meaning set forth in Section 6.6(l).
--------------
"POST-TRANSFER TAX PERIOD" means any Tax Period beginning
after the Transfer Date and the portion of any Straddle Period beginning after
the Transfer Date.
"PRE-TRANSFER TAX PERIOD" means any Tax Period ending on or
before the Transfer Date and the portion of any Straddle Period ending on the
Transfer Date.
"PURCHASE PRICE" has the meaning set forth in Section 4.2(b).
--------------
"PURCHASED ASSETS" has the meaning set forth in Section 2.2.
-----------
"REGISTERED GESTIVA INTELLECTUAL PROPERTY" means all Gestiva
Intellectual Property that has been registered, filed, certified or otherwise
perfected or recorded with or by any Governmental or Regulatory Authority,
including all Gestiva Patent Rights.
"REIMBURSABLE EXPENSES" means any (i) all out-of-pocket
expenses incurred by the Parent, the Seller or their Subsidiaries, between
January 1, 2008 and the Transfer Date, in conducting the Gestiva Business in
the Ordinary Course of Business, including in seeking to obtain and obtaining
the Gestiva NDA Approval as required pursuant to Section 8.5 hereof, in
-----------
accordance with the budget set forth on Schedule 1.1(f) or as approved by the
---------------
Joint Integration Committee or otherwise incurred in accordance with Section
-------
8.1(b)(i), other than any expenses, including salary and benefits, related to
- ---------
the continued employment of any employee of the Parent, the Seller or their
Subsidiaries, (ii) all out-of-pocket expenses incurred by the Parent, the
Seller or their Subsidiaries, between January 1, 2008 and the Transfer Date,
under the Assumed Contracts pursuant to the terms in effect on the date hereof
or otherwise entered into or amended as permitted by Section 8.1(b)(iv), (iii)
all out-of-pocket expenses incurred by the Parent, the Seller or their
Subsidiaries in the Ordinary Course of Business in respect of the Gestiva
Governmental Permits that are Purchased Assets to the extent relating to the
operation or conduct of the Gestiva Business during the period beginning on
January 1, 2008 and ending on the Transfer Date, and (iv) the expenses set
forth on Schedule 1.1(g), in each of the cases of clauses (i)-(iv) without
---------------
duplication of expenses.
"RELATED AGREEMENTS" means the (i) Trademark Assignment
Agreement, Bill of Sale, Assignment and Assumption Agreement and duly executed
and attested assignments of
10
transfer, or such other instruments of conveyance as may be required by Law,
sufficient to permit the proper recordation of transfer of title ownership in
all Registered Gestiva Intellectual Property owned by the Seller from the
Parent, the Seller or their Subsidiaries to Acquiror in accordance with this
Agreement, (ii) the Transition Services Agreement and (iii) the License
Agreement.
"RESTRICTED TERRITORY" shall mean world-wide.
"RETAINED DOCUMENTS" shall have the meaning set forth in
Section 2.4.
- -----------
"SELLER" has the meaning set forth in the preamble to this
Agreement.
"SELLER DISCLOSURE SCHEDULE" has the meaning set forth in
the preamble to ARTICLE VI.
----------
"SELLER GOVERNMENTAL CONSENTS" has the meaning set forth in
Section 6.3(a).
- --------------
"SELLER MATERIAL ADVERSE EFFECT" means any Effect that,
individually or in the aggregate, (i) has had or would reasonably be expected
to have a material adverse effect on the Purchased Assets taken as a whole or
(ii) could reasonably be expected to materially impair or delay the ability of
the Seller to perform its obligation hereunder; provided, however, that none
of the following shall be deemed in themselves, either alone or in
combinations, to constitute, and none of the following shall be taken into
account in determining whether there has been, or will be, a Seller Material
Adverse Effect: (A) any Effect relating to general economic conditions in the
United States or foreign economies in any locations where the Seller and its
Affiliates have material operations relating to the Gestiva Business except to
the extent such Effect disproportionately affects the Seller and its
Affiliates, (B) any Effect attributable to conditions that generally affect
the industries in which the Seller and its Affiliates participate relating to
the Gestiva Business except to the extent such Effect disproportionately
affects the Seller and its Affiliates, taken as a whole and (C) any Effect
that results from actions taken by the Seller as required by this Agreement or
at the written direction of the Acquiror.
"SELLER THIRD PARTY CONSENTS" has the meaning set forth in
Section 6.3(b).
- --------------
"STRADDLE PERIOD" means any Tax period beginning on or
before the date hereof and ending after the Transfer Date.
"SUBSIDIARY" of a Person means any entity Controlled by that
Person.
"SURVIVAL PERIOD" shall have the meaning set forth in
Section 11.1.
- ------------
"TAXES" means all of the following in connection with the
operations of the Gestiva Business or the transactions contemplated hereby:
(i) any net income, alternative or add-on minimum, gross income, gross
receipts, sales, use, value added, ad valorem, transfer, franchise, profits,
license, excise, severance, stamp, occupation, payroll, employment,
withholding, social security, unemployment, disability, registration, premium,
property, environmental, windfall profits, capital stock, customs duty, or
other tax, governmental fee or other like assessment imposed by any
governmental, regulatory or administrative entity or
11
agency responsible for the imposition of any such tax (domestic or foreign)
including any interest, penalty or addition thereon, whether disputed or not,
(ii) any Liability for the payment of any amounts of the type described in (i)
as a result of being a member of any affiliated, consolidated, combined,
unitary or other group for any Tax Period and (iii) any Liability for the
payment of any amounts of the type described in (i) or (ii) as a result of any
express or implied obligation to indemnify any other Person.
"TAX PERIOD" means any period prescribed by any Governmental
or Regulatory Authority for which a Tax Return is required to be filed or a
Tax is required to be paid or measured.
"TAX RETURN" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"TERMINATION DATE" has the meaning set forth in Section
-------
12.1(b).
- -------
"THIRD PARTY CLAIM" has the meaning set forth in Section
-------
11.2(d).
- -------
"TRADEMARK ASSIGNMENT AGREEMENT" means the Trademark
Assignment Agreement to be dated as of the Transfer Date by and between the
Acquiror and Seller, substantially in the form attached hereto as Exhibit C.
---------
"TRANSFER DATE" shall have the meaning set forth in Section
-------
5.3.
- ---
"TRANSFER TAXES" has the meaning set forth in Section 4.4.
-----------
"TRANSITION SERVICES AGREEMENT" means the Transition
Services Agreement, by and between the Acquiror and the Seller, in a form to
be mutually agreed upon by the Acquiror and the Seller.
"TREASURY REGULATIONS" means the Treasury regulations
promulgated under the Code.
Section 1.2 Construction of Certain Terms and Phrases.
-----------------------------------------
Unless the context of this Agreement otherwise requires: (i) words of any
gender include each other gender, (ii) words using the singular or plural
number also include the plural or singular number, respectively, (iii) the
terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement, (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement, (v) the term "or" has, except
where otherwise indicated, the inclusive meaning represented by the phrase
"and/or" and (vi) the term "including" means "including without limitation."
Whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless Business Days are specified.
12
ARTICLE II.
PURCHASE AND SALE OF ASSETS
Section 2.1 Grant of Exclusive License. Subject to the terms
--------------------------
and conditions set forth in this Agreement, Seller grants to Acquiror an
exclusive paid-up, royalty-free, worldwide license to use Gestiva Intellectual
Property during the period beginning on the Closing Date and ending on the
earlier to occur of (i) the date this Agreement is terminated pursuant to
Section 12.1 and (ii) the Transfer Date, pursuant to the terms and conditions
- ------------
of the License Agreement attached hereto as Exhibit E (the "License
--------- -------
Agreement"). Notwithstanding the foregoing, the Seller shall retain all rights
- ---------
to use the Gestiva Intellectual Property to the extent necessary to enable the
Seller to perform its obligations under this Agreement.
Section 2.2 Purchase, Sale and Transfer of Assets. Upon the
-------------------------------------
terms and subject to the conditions set forth in this Agreement, on the
Closing Date, Seller shall, or cause its Affiliates to, conditionally sell,
convey and assign to the Acquiror, and the Acquiror shall conditionally
purchase and acquire from Seller and its Affiliates, all of Seller's and its
Affiliates' right, title and interest in and to all of the following assets,
free and clear of all Encumbrances (collectively, the "PURCHASED ASSETS"),
provided, however, that notwithstanding the foregoing, the conditions to the
conditional sale, conveyance and assignment of the Purchased Assets shall only
be satisfied and the Purchased Assets shall only be transferred and delivered
by the Seller or its Affiliates to the Acquiror upon the Transfer Date (as
defined herein):
(a) the Assumed Contracts;
(b) all Gestiva Books and Records;
(c) all Gestiva Inventory, excluding such Gestiva
Inventory Acquiror elects to exclude as designated by Acquiror in writing
prior to the Closing Date;
(d) all Gestiva Intellectual Property;
(e) all Gestiva Product Registrations, excluding
the Gestiva FDA Submissions;
(f) all Gestiva Product Improvements;
(g) all Gestiva Governmental Permits, to the extent
legally transferable, excluding the Gestiva FDA Submissions;
(h) the Gestiva FDA Submissions (unless earlier
transferred pursuant to Section 8.5);
-----------
(i) any other assets owned by the Seller or its
Affiliates related to the research (including all pre-clinical and clinical
studies), development, manufacture, formulation, use, distribution, marketing,
sale and promotion of Gestiva and/or Gestiva Product Improvements, including
but not limited to, any equipment and tangible property related thereto;
13
(j) all customer and supplier relationships,
goodwill and other intangible assets associated with the Gestiva Business;
(k) all claims, causes of action or rights to
collect, including for past, present or future infringement, misappropriation
or violation of Gestiva Intellectual Property rights;
(l) all rights related to or arising out of or
under any express or implied warranties from suppliers relating to the Gestiva
Business; and
(m) all rights, claims and credits (including all
guarantees, warranties, indemnities and similar rights and all refunds,
credits and claims for refunds or credits relating to Taxes incurred during
the Post-Transfer Tax Period), in favor of Seller or any of its Affiliates or
any of their respective employees to the extent relating to any Purchased
Asset or any Assumed Liability.
Section 2.3 Excluded Assets. Notwithstanding anything to the
---------------
contrary contained in this Agreement, from and after each of the Closing Date
and the Transfer Date, the Seller and its Affiliates shall retain all of their
respective rights, title and interest in their assets and properties other
than the Purchased Assets (the "EXCLUDED ASSETS").
Section 2.4 Retention of Copies. From and after the Transfer
-------------------
Date, the Seller may retain, at its expense, one archival copy of all
documents or materials conveyed hereunder which do not contain or otherwise
consist of, in whole or in part, the Assumed Contracts or the Gestiva Books
and Records (the "RETAINED DOCUMENTS"); provided that access to such Retained
Documents shall be restricted to the Seller's legal counsel and such employees
of the Seller who have a "need to know" such information for conducting the
operations of Seller and its Affiliates following the Transfer Date; provided,
further, that no such operations shall include, directly or indirectly, the
Gestiva Business or otherwise conflict with or result in a breach of Section
8.6 hereof. In addition, from and after the Transfer Date, the Seller may
retain, at its expense, one archival copy of all Assumed Contracts and the
Gestiva Books and Records, in each case, which the Seller in good faith
determines it is reasonably likely to need access to in connection with
performing its rights and obligations under this Agreement. Access to such
Assumed Contracts and Gestiva Books and Records shall be restricted to the
Seller's legal counsel and such employees of the Seller who have a "need to
know" such information in connection therewith and from and after the Transfer
Date and shall be kept strictly confidential by Seller and its Affiliates and
not used for any other purpose. Upon final performance of its rights and
obligations hereunder, Seller shall destroy or deliver any such copies of such
Assumed Contracts and Gestiva Books and Records to Acquiror.
Section 2.5 Assignability and Consents.
--------------------------
(a) Notwithstanding anything to the contrary contained in this
Agreement, if the sale, conveyance, assignment, transfer or delivery or
attempted sale, conveyance, assignment, transfer or delivery to the Acquiror
of any Purchased Asset is (i) prohibited by any applicable Law or (ii) would
require any authorizations, approvals, consents or waivers from a Person other
than Seller or any Affiliate of Seller and such authorizations, approvals,
consents or waivers shall not have
14
been obtained prior to the Transfer Date (each, a "NON-ASSIGNABLE ASSET"), in
either case, the transactions contemplated on the Transfer Date shall proceed
(subject to the parties rights under ARTICLE X), but the Transfer Date shall
---------
not constitute the sale, conveyance, assignment, transfer or delivery of such
Non-Assignable Asset, and this Agreement shall not constitute a sale,
conveyance, assignment, transfer or delivery of such Non-Assignable Asset
unless and until such authorization, approval, consent or waiver is obtained.
After the Transfer Date, the Seller shall continue to use commercially
reasonable efforts to obtain any Seller Third Party Consent, and the Seller
shall cooperate with the Acquiror in any such commercially reasonable
arrangement, including performance by the Seller as agent if commercially
reasonable to the Seller, and, in such case, the Acquiror shall be liable to
the Seller in a fashion equivalent to what the Acquiror's Liabilities would be
under the Non-Assignable Asset if it were assigned. The Seller shall promptly
pay over to the Acquiror the net amount (after expenses and taxes) of all
payments received by it in respect of all Non-Assignable Assets.
(b) Once authorization, approval or waiver of or consent for the
sale, conveyance, assignment, transfer or delivery of any such Non-Assignable
Asset not sold, conveyed, assigned, transferred or delivered at the Closing is
obtained, the Seller shall convey, assign, transfer and deliver such
Non-Assignable Asset to the Acquiror at no additional cost to the Acquiror.
Notwithstanding anything to the contrary contained in this Agreement, the
Acquiror shall not assume any Liabilities with respect to a Non-Assignable
Asset until it has been assigned to the Acquiror.
ARTICLE III.
ASSUMPTION OF LIABILITIES
Section 3.1 Assumption of Liabilities.
-------------------------
(a) Upon the terms and subject to the conditions set forth in
this Agreement, as of the Transfer Date, the Acquiror agrees to assume,
satisfy, perform, pay and discharge each of the following Liabilities (the
"ASSUMED LIABILITIES"):
(i) all Liabilities of the Parent, the Seller or any of
their Subsidiaries under the Assumed Contracts (in the case of an Assumed
Contract requiring third party consent to assignment, where such consent has
been obtained), but only to the extent such Liabilities arise from and after
the Transfer Date; and
(ii) all Liabilities with respect to the Gestiva
Governmental Permits that are Purchased Assets to the extent relating to the
operation or conduct of the Gestiva Business by or on behalf of the Acquiror
from and after the Transfer Date, excluding the Gestiva NDA (subject to
Section 8.5).
- ------------
(b) Notwithstanding anything contained in this Agreement to the
contrary, from and after the Closing Date and the Transfer Date, the Seller
shall retain all of the following Liabilities ("EXCLUDED LIABILITIES"):
15
(i) any Liability incurred by the Seller in accordance
with Section 8.5 in obtaining the Gestiva NDA Approval (subject to the
-----------
reimbursement right set forth in Section 4.2(c));
--------------
(ii) all accounts payable and other similar Liabilities of
the Seller and its Subsidiaries;
(iii) any Liability for (A) Taxes of Seller, (B) all other
Taxes relating to the Gestiva Business or the Purchased Assets attributable to
any Pre-Transfer Tax Period and (C) Taxes of any other Person for which Seller
is liable pursuant to any Agreement, by Law or otherwise ("EXCLUDED TAX
LIABILITY");
(iv) all Liabilities of the Parent, the Seller and their
Subsidiaries arising out of any product liability, intellectual property
infringement, breach of warranty or similar claim for injury to person or
property or any other claim related to the Purchased Assets or Gestiva arising
prior to the Transfer Date (including all proceedings relating to any such
Liabilities);
(v) all Liabilities of the Parent, the Seller and their
Subsidiaries arising out of government seizures, field corrections,
withdrawals or recalls of Gestiva manufactured, transferred or sold prior to
the Transfer Date, which are claimed prior to, on or after the Transfer Date;
(vi) all Liabilities of the Parent, the Seller and their
Subsidiaries with respect to any litigation or other claims related to Gestiva
or the Purchased Assets to the extent arising from any event, circumstance or
condition occurring or alleged to have occurred prior to the Transfer Date;
(vii) any Liability of the Seller related to any product or
service of the Seller or any of its Affiliates, other than Gestiva (subject to
Section 3.1(a));
- --------------
(viii) any Liability or obligation of the Parent, the Seller
or any of their Subsidiaries (A) arising out of any actual or alleged breach
by the Parent, the Seller or any of their Subsidiaries of, or nonperformance
by the Parent, the Seller or any of their Subsidiaries under, any Assumed
Contract prior to the Transfer Date or (B) accruing under any Assumed Contract
prior to the Transfer Date, including any accrued patent and other
intellectual property license fees and liabilities;
(ix) any Liability of the Seller to the extent arising out
of (A) any suit, action or proceeding pending or, to the Knowledge of the
Seller, threatened as of the Transfer Date, with respect to claims which arise
from facts, events or circumstances occurring prior to the Transfer Date, or
(B) any actual or alleged violation by the Seller or any of its Affiliates of
any Law applicable to the Seller or any of its Affiliates;
(x) any Liability of the Parent, the Seller or their
Subsidiaries that relates to any Excluded Asset;
(xi) any Liability of the Parent, the Seller or any of
their Subsidiaries or ERISA Affiliates under or relating to (A) any employee
benefit plan, or relating to wages,
16
bonuses, payroll, vacation, sick leave, workers' compensation, unemployment
benefits, pension benefits, employee stock option or profit-sharing plans,
health care plans or benefits, phantom stock, deferred compensation or other
similar plan or arrangement, or any other employee plans or benefits of any
kind, in each case, which the Parent, the Seller or any of their Subsidiaries
or ERISA Affiliates has entered into, maintains or administers or has
maintained or administered, to which the Parent, the Seller or any of their
Subsidiaries or ERISA Affiliates contributes or has contributed or is or has
been required to contribute, or under or with respect to which the Parent, the
Seller or any of their ERISA Affiliates has or may have any Liability and (B)
any actual or alleged violation by the Parent, the Seller or any of their
Affiliates of any equal employment or employment discrimination laws;
(xii) any Liability under Environmental Laws arising out of
or relating to the operation or conduct of the business of the Parent, the
Seller or their Subsidiaries or the use or ownership of the Purchased Assets,
in each case, before the Transfer Date;
(xiii) any Liability of the Seller to any of its Affiliates;
and
(xiv) any other Liability of Seller or any of its
Subsidiaries or Affiliates that is not specifically listed as an Assumed
Liability under Section 3.1(a) (including any Liability to the extent
--------------
resulting from the ownership, use, operation or maintenance of the Purchased
Assets by or on behalf of Seller prior to the Transfer Date, or the operation
or conduct of the business of the Parent, the Seller or their Subsidiaries, by
or on behalf of the Seller prior to the Transfer Date).
ARTICLE IV.
PURCHASE PRICE, PAYMENT, REIMBURSEMENT OF EXPENSES AND TRANSFER
Section 4.1 Initial Payment of Purchase Price. As
---------------------------------
consideration for the agreements of the parties hereunder, at the Closing, the
Acquiror shall pay to Seller an aggregate amount equal to the sum of
$7,500,000 (the "INITIAL PURCHASE PRICE AMOUNT").
The Initial Purchase Price Amount shall be payable in cash by wire transfer of
immediately available funds to an account designated by Seller to Acquiror in
writing at least two (2) Business Days prior to Closing.
Section 4.2 Additional Payments, Reimbursement of Expenses
----------------------------------------------
and Transfer of Assets.
----------------------
(a) Upon the earlier to occur of (i) the Seller's receipt of
written communication from the FDA acknowledging the FDA's receipt of a
"Complete Response" from Seller relating to the FDA's October 20, 2006
Approvable Letter and that such response contains all necessary elements
required by the FDA to proceed with their review of such "Complete Response"
(the "COMPLETE RESPONSE"), or (ii) receipt of the Gestiva NDA Approval,
Acquiror shall pay to Seller, within five (5) Business Days thereafter,
$2,000,000 in cash (the "NDA MILESTONE PAYMENT").
17
(b) Subject to the terms and conditions of this Agreement
(including the conditions to the Transfer Date set forth in Article X), on the
---------
Transfer Date, the Acquiror shall pay to the Seller the sum of $72,500,000 in
accordance with Section 5.4(b) (such amount being the "ADDITIONAL PURCHASE
--------------
PRICE AMOUNT" and together with the Initial Purchase Price Amount, the
"PURCHASE PRICE"), the NDA Milestone Payment (if not yet paid pursuant to
Section 4.2(a)) and any Reimbursable Expenses not yet reimbursed to the Seller
- --------------
pursuant to the terms of this Agreement in accordance with Section 5.4(b). For
--------------
avoidance of doubt, the Transfer Date shall not occur and the Additional
Purchase Price Amount shall not be payable by the Acquiror prior to the
occurrence of each of the following conditions (which are in addition to the
conditions set forth in Article X): (i) the Gestiva NDA Approval Date, (ii)
---------
the transfer by the Seller to the Acquiror of the Gestiva FDA Submissions and
all rights associated therewith pursuant to Section 8.5, (iii) the transfer of
-----------
the Gestiva Books and Records to the offices of Brown Rudnick Berlack Israels
LLP, at One Financial Center, Boston Massachusetts 02111, at least five (5)
days prior to the Transfer Date, provided however, such transfer shall not
limit the rights of Acquiror set forth in Section 8.3(a) and (iv) the receipt
--------------
by the Acquiror of the Initial Gestiva Inventory.
(c) The Acquiror shall reimburse the Seller for any Reimbursable
Expenses as may be submitted by the Seller on a monthly basis, such
reimbursement to be made within ten (10) Business Days of the Acquiror's
receipt of evidence documenting the Seller's incurrence of such Reimbursable
Expenses, which documentation shall include an itemization of such expenses in
reasonable detail and specificity.
(d) All payments paid to the Seller pursuant to this Section 4.2,
-----------
shall be by wire transfer of immediately available funds to an account
designated by the Seller at least two (2) Business Days prior to the date on
which such payment is required to be paid.
Section 4.3 Allocation of Purchase Price. The Purchase Price
----------------------------
shall be allocated among the Purchased Assets in accordance with Section 1060
of the Code and the Treasury Regulations promulgated thereunder, and the
Acquiror and the Seller agree to (a) be bound by the allocation, (b) act in
accordance with the allocation in the preparation of financial statements and
filing of all Tax Returns (including, without limitation, filing Internal
Revenue Service Form 8594 with their United States federal income Tax Return
for the taxable year that includes the Transfer Date) and in the course of any
Tax audit, Tax review or Tax litigation relating thereto, and (c) take no
position and cause their Affiliates to take no position inconsistent with the
allocation for income Tax purposes, including United States federal and state
income Tax and foreign income Tax, unless otherwise required pursuant to a
"determination" within the meaning of Section 1313(a) of the Code. The
Acquiror shall after consultation with the Seller initially determine and send
written Notice to the Seller of the allocation of the Purchase Price within
thirty (30) days after the Transfer Date. The Seller will be deemed to have
accepted such allocation unless it provides written Notice of disagreement to
the Acquiror within twenty (20) Business Days after the receipt of the
Acquiror's Notice of allocation. If the Seller provides such Notice of
disagreement to the Acquiror, then the parties shall proceed in good faith to
determine the allocation in dispute. If, within ten (10) days after the
Acquiror receives the Seller's Notice of disagreement, the parties have not
reached agreement, then the Accountants shall be engaged to determine the
final allocation in dispute. Not later than thirty (30) days prior to the
filing of their respective Internal Revenue Service Forms 8594 relating to
this transaction, each party shall deliver to the other party a copy of its
Internal Revenue Service Form 8594.
18
Section 4.4 Sales, Use and Other Taxes. All transfer,
--------------------------
documentary, sales, use, valued-added, gross receipts, stamp, registration or
other similar transfer taxes incurred in connection with the transfer and sale
of the Purchased Assets as contemplated by the terms of this Agreement,
including all recording or filing fees, notarial fees and other similar costs
of Closing or similar costs arising on the Transfer Date, that may be imposed,
payable, collectible or incurred ("TRANSFER TAXES") shall be timely paid by
the Seller. The Seller will, at its own expense, file all necessary Tax
Returns and other documentation with respect to any such Transfer Taxes and
shall file such Tax Returns within the time prescribed by applicable law, and
the Acquiror will join in the execution of any such Tax Returns and other
documentation. The Seller shall provide the Acquiror with evidence
satisfactory to Acquiror that such transfer Taxes have been timely paid by the
Seller.
Section 4.5 Tax Withholding. Acquiror shall be entitled to
---------------
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to Seller such amounts as Acquiror is required to deduct and
withhold under the Code, any Tax Law or any other Law with respect to the
making of such payment. To the extent that amounts are so withheld by
Acquiror, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Seller in respect of whom such deduction
and withholding was made by Acquiror.
Section 4.6 Risk of Loss. Until the Transfer Date, the
------------
Seller shall bear the risk of any loss or damage to the Purchased Assets from
fire, casualty or any other occurrence. Following the Transfer Date, Acquiror
shall bear the risk of any loss or damage to the Purchased Assets from fire,
casualty or any other occurrence.
Section 4.7 Subsidiaries. Acquiror shall, upon ten (10)
------------
Business Days prior written notice to Seller, have the right to designate one
or more of its wholly-owned direct or indirect Subsidiaries (each, a
"DESIGNATED ACQUIROR SUBSIDIARY") to purchase all or any of the Purchased
Assets or assume all or any of the Assumed Liabilities so long as Acquiror
shall remain liable for all of its liabilities and obligations hereunder and
under the Related Agreements; provided, however, that Acquiror shall not be
permitted to make such a designation if such designation would, or would
reasonably be expected to, (i) result in any material costs, or any material
liabilities, to the Seller or its Subsidiaries, (ii) materially delay or
prevent the consummation of the transactions contemplated hereby, (iii)
materially adversely affect the obtaining of consents and approvals in
connection with the transactions contemplated hereby (or require that material
consents and approvals be resolicited) or (iv) otherwise cause the conditions
to the Transfer Date set forth in ARTICLE X hereof to not be satisfied.
---------
ARTICLE V.
CLOSING AND TRANSFER DATE
Section 5.1 Time and Place of Closing. Unless this Agreement
-------------------------
is earlier terminated pursuant to ARTICLE XII, the closing (the "CLOSING") of
-----------
the transactions contemplated by this Agreement to be consummated on the
Closing shall take place as promptly as practicable, but in no event later
than five (5) Business Days following satisfaction or waiver
19
of the conditions set forth in ARTICLE IX, at 9:00 a.m., Pacific Standard
----------
time, at the offices of Latham & Watkins LLP, 650 Town Center Drive 20th
Floor, Costa Mesa, California 92626, unless another time or place shall be
agreed to by the parties (the "CLOSING DATE").
Section 5.2 Deliveries at Closing.
---------------------
(a) Closing Deliveries by the Seller. At the Closing, the Seller
--------------------------------
shall deliver or cause to be delivered to the Acquiror:
(i) all forms, certificates and other documents referred
to in Section 8.10(d);
---------------
(ii) an original of the License Agreement, executed by the
Seller; and
(iii) the certificates and other matters described in
ARTICLE IX.
- ----------
(b) Closing Deliveries by the Acquiror. At the Closing, the
----------------------------------
Acquiror will deliver or cause to be delivered to the Seller:
(i) the Initial Purchase Price Amount in immediately
available funds by wire transfer to an account or accounts that shall have
been designated by the Seller not less than two (2) Business Days prior to the
Closing Date; and
(ii) the certificates and other matters described in
ARTICLE IX.
- ----------
Section 5.3 Time and Place of Transfer Date. Unless this
-------------------------------
Agreement is earlier terminated pursuant to ARTICLE XII, the transfer and sale
-----------
of the Purchased Assets and Assumed Liabilities shall take place as promptly
as practicable, but in no event later than five (5) Business Days following
the satisfaction or waiver of the conditions set forth in Articles X, at 9:00
----------
a.m., Pacific Standard time, at the offices of Latham & Watkins LLP, 650 Town
Center Drive 20th Floor, Costa Mesa, California 92626, unless another time or
place shall be agreed to by the parties (the "TRANSFER DATE").
Section 5.4 Transfer Date Deliveries
------------------------
(a) Transfer Date Deliveries by the Seller. On the Transfer
--------------------------------------
Date, the Seller shall deliver to the Acquiror:
(i) an unredacted, fully executed copy of each of the
Assumed Contracts;
(ii) written evidence (including duly executed UCC-3 forms,
as applicable) that all Encumbrances related to the Purchased Assets, if any,
have been released;
(iii) written evidence of the receipt of all Seller
Governmental Consents set forth on Section 6.3(a) of the Seller Disclosure
--------------
Schedule and Seller Third Party Consents set forth on Section 6.3(b) of the
--------------
Seller Disclosure Schedule;
(iv) an original of each Related Agreement (excluding the
License Agreement and, if previously executed pursuant to Section 8.5(b), the
--------------
Transition Services Agreement)
20
executed by the Seller and copies of all documents required to be delivered by
the Seller pursuant thereto;
(v) written evidence (including duly executed UCC-3 forms,
as applicable) that all Encumbrances related to the Purchased Assets, if any,
have been released;
(vi) the Gestiva Books and Records;
(vii) the FDA Transfer Letters, unless previously delivered
pursuant to Section 8.5(b);
--------------
(viii) the certificates and other matters described in
ARTICLE X; and
- ---------
(ix) such other instruments or documents, in form and
substance reasonably acceptable to the Seller and the Acquiror, as may be
necessary to effect the Acquiror's assumption of the Assumed Liabilities and
the Assumed Contracts.
(b) Transfer Date Deliveries by the Acquiror. On the Transfer
----------------------------------------
Date, the Acquiror shall deliver to the Seller
(i) an original of each of the Related Agreements
(excluding the License Agreement and, if previously executed pursuant to
Section 8.5(b), the Transition Services Agreement) executed by the Acquiror,
- --------------
and copies of all documents required to be delivered by the Acquiror pursuant
thereto;
(ii) the certificates and other matters described in
ARTICLE X;
- ---------
(iii) such other instruments or documents, in form and
substance reasonably acceptable to the Seller and the Acquiror, as may be
necessary to effect the Acquiror's assumption of the Assumed Liabilities and
the Assumed Contracts; and
(iv) the Additional Purchase Price Amount, the NDA
Milestone Payment (if not yet paid pursuant to Section 4.2(a)) and any
--------------
Reimbursable Expenses owed to the Seller pursuant to the terms of this
Agreement in immediately available funds by wire transfer to an account or
accounts that shall have been designated by the Seller to the Acquiror not
less than two (2) Business Days prior to the Transfer Date.
(c) Further Deliveries of the Seller. At or promptly following
--------------------------------
the Transfer Date, but in no event later than ten (10) days thereafter, the
Seller shall deliver or cause to be delivered to Acquiror any other Purchased
Asset which was not delivered to Acquiror on the Transfer Date.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
21
Subject to the such exceptions as are disclosed in the
disclosure schedule supplied by the Seller to the Acquiror dated as of the
date hereof (the "SELLER DISCLOSURE SCHEDULE"), which Seller Disclosure
Schedule identifies the Section (or, if applicable, subsection) to which such
exception relates (provided, however, that such disclosure shall also apply to
particular matters represented or warranted in other Sections and subsections
to the extent that it is readily apparent from the text of such disclosure),
the Seller represents and warrants to the Acquiror as follows:
Section 6.1 Organization, Etc. The Seller is duly
------------------
incorporated, validly existing and in good standing under the laws of Delaware
and has all requisite power and authority to own its assets, including the
Purchased Assets. The Seller is duly authorized to conduct its business and is
in good standing in each jurisdiction where such qualification is required to
own the Purchased Assets or conduct its business as it is now being conducted,
except where the failure to be so qualified or in good standing would not be
reasonably expected to have a Seller Material Adverse Effect. The certificate
of incorporation, bylaws or other similar governing instruments and
organizational documents (the "CHARTER DOCUMENTS") of the Seller that have
been delivered to the Acquiror on or prior to the date hereof are effective
under applicable Laws and are current, correct and complete.
Section 6.2 Authority of the Seller. The Seller has all
-----------------------
necessary corporate power and authority and has taken all corporate actions
necessary to enter into this Agreement, to execute and deliver the Related
Agreements to which it is or will be a party and carry out the transactions
contemplated hereby and by the Related Agreements to which it is or will be a
party. The board of directors of the Seller has taken all action required by
Law and the Charter Documents of the Seller to duly authorize (i) the
execution and delivery of this Agreement and the Related Agreements to which
it is or will be a party and (ii) the consummation of the transactions
contemplated hereby and by the Related Agreements to which it is or will be a
party. No other corporate proceedings on the part of the Seller are necessary
to authorize this Agreement and Related Agreements and the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by the Seller and, when executed and delivered by the
Acquiror, will constitute a legal, valid and binding obligation of the Seller,
enforceable against it in accordance with its terms. When executed and
delivered by the Seller, each Related Agreement will constitute a legal, valid
and binding obligation of the Seller enforceable against it in accordance with
its terms. Notwithstanding the matters set forth in this Section 6.2, the
-----------
enforceability of this Agreement and the Related Agreements may be limited by
principles of public policy, the rules of law governing specific performance,
injunctive relief or other equitable remedies, and by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
Section 6.3 Consents and Approvals.
----------------------
(a) Schedule 6.3(a) of the Seller Disclosure Schedule sets forth
---------------
a complete and accurate list (the "SELLER GOVERNMENTAL CONSENTS") of all
consents, waivers, approvals, Orders, permits or authorizations of, or
registrations, notifications, declarations, payments or filings with, any
Governmental or Regulatory Authority that are required by or with respect to
the Seller in connection with the execution and delivery of this Agreement and
the Related Agreements by the Seller or the performance of its obligations
thereunder.
22
(b) Schedule 6.3(b) of the Seller Disclosure Schedule sets forth
---------------
a complete and accurate list (the "SELLER THIRD PARTY CONSENTS") of all
material consents, waivers, approvals, or authorizations of, or notices to,
any third party (other than a Governmental or Regulatory Authority) that are
required by or with respect to the Seller in connection with the execution and
delivery of this Agreement and the Related Agreements by the Seller or the
performance of its obligations hereunder and thereunder.
Section 6.4 Non-Contravention. The execution and delivery by
-----------------
the Seller of this Agreement and the Related Agreements does not, and the
performance by Seller of its obligations under this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Charter Documents of the Seller;
(b) assuming the receipt of all consents, waivers, approvals,
Orders, permits or authorizations of Governmental and Regulatory Authorities,
and the termination or expiration of any waiting periods thereunder (set forth
in Schedule 6.4(b) of the Seller Disclosure Schedule) required to be obtained
---------------
by the Seller and the making of all registrations, notifications, declarations
or filings with Governmental and Regulatory Authorities, and the termination
or expiration of any waiting periods thereunder (set forth in Schedule 6.4(b)
---------------
of the Seller Disclosure Schedule) required to be made by or with respect to
the Seller, conflict with or result in a violation or breach of any term or
provision of any Law applicable to the Seller, the Gestiva Business or the
Purchased Assets; or
(c) conflict with or result in (i) a Default under, (ii) the
loss of any benefit under or (iii) the creation of any Encumbrance on any of
the Purchased Assets (including any Assumed Contract).
Section 6.5 Contracts. The Assumed Contracts are valid,
---------
binding and in full force and effect. Except as set forth on Schedule 6.5(a)
---------------
of the Seller Disclosure Schedule, the Seller and, to the Knowledge of the
Seller, any other party thereunder, has performed all obligations required to
be performed by such party under the Assumed Contracts and is not (with or
without the lapse of time or the giving of notice, or both) in material breach
or default under any Assumed Contract and, to the Knowledge of the Seller, no
other party to any Assumed Contract is (with or without the lapse of time or
the giving of notice, or both) in material breach or default thereunder. The
Seller has not received any notice of the intention of any party to terminate
any Assumed Contract. Complete and correct copies of all written Assumed
Contracts and amendments thereto have been made available to Acquiror, and
summaries of any oral Assumed Contracts have been provided to the Acquiror. No
Contracts other than the Assumed Contracts and the rights of Seller under the
Related Agreements are used, held for use, or intended to be use in or
necessary to the conduct of the Gestiva Business.
Section 6.6 Intellectual Property Rights.
----------------------------
(a) The Gestiva Intellectual Property set forth in Schedule 6.6(a)
---------------
of the Seller Disclosure Schedule constitutes all of the Gestiva Copyrights,
Gestiva Patent Rights and Gestiva
23
Trademarks. As of the Closing Date and Transfer Date, the Seller has or its
Subsidiaries have a valid and enforceable right to use or will be the sole and
exclusive owners of all of the Gestiva Intellectual Property set forth on
Schedule 6.6(a) of the Seller Disclosure Schedule.
- ---------------
(b) To the Knowledge of the Seller, the operation of the Gestiva
Business, as has been and is now being conducted, does not presently infringe
or constitute a misappropriation of any registered or unregistered patents,
trademarks, copyrights, trade secrets or other proprietary rights of any
Person and neither the Parent, the Seller, nor any of their Subsidiaries
thereof, has received any written notice from any Person, or has Knowledge of,
any actual or threatened claim or assertion to the contrary or of any facts or
alleged facts which are likely to serve as the basis for any such claim or
assertion.
(c) With respect to all Gestiva Intellectual Property that
consists of Registered Gestiva Intellectual Property or is subject to an
application for copyright registration, mask work registration, or trademark
or service mark registration, Schedule 6.6(c) sets forth a list of all
---------------
jurisdictions in which such Registered Gestiva Intellectual Property is issued
or registered, and all patent, registration and/or application numbers. Any
registration, maintenance and renewal fees due in connection with the Gestiva
Intellectual Property set forth in Schedule 6.6(c) have been paid in a timely
---------------
manner and all necessary documents and certificates in connection with such
Gestiva Intellectual Property have, for the purposes of maintaining such
Gestiva Intellectual Property, been filed in a timely manner with the relevant
Governmental or Regulatory Authorities.
(d) To the Knowledge of the Seller, the Gestiva Intellectual
Property set forth on Schedule 6.6(a) of the Seller Disclosure Schedule is
---------------
free and clear of all Encumbrances other than Permitted Encumbrances and no
Person other than the Parent, the Seller or their Subsidiaries, including any
current or former employee or consultant of the Parent, the Seller or their
Subsidiaries, has any proprietary, commercial or other interest in any of the
Gestiva Intellectual Property. There are no existing agreements, options,
commitments, or rights with, of or to any Person to acquire or obtain any
rights to, any of the Gestiva Intellectual Property set forth on Schedule 6.6(a)
---------------
of the Seller Disclosure Schedule.
(e) To the Knowledge of the Seller, the Seller or its Affiliates
have the unrestricted right to assign, transfer and/or grant to the Acquiror
all rights in the Gestiva Intellectual Property that are being assigned,
transferred and/or granted to the Acquiror under this Agreement and the
Related Agreements, in each case free of any rights or claims of any Person
and without payment of any royalties, license fees or other amounts to any
Person. To the Knowledge of the Seller, the consummation of this Agreement and
the other transactions contemplated hereby does not and will not infringe or
misappropriate any Gestiva Intellectual Property or any intellectual property
of any other Person.
(f) To the Knowledge of the Seller, there is no unauthorized
use, violation, misappropriation or infringement of any of the Gestiva
Intellectual Property by any Person.
(g) There are no Actions or Proceedings (including any
inventorship challenges) pending or, to the Knowledge of the Seller,
threatened, with respect to any of the Gestiva Intellectual Property nor have
any such Actions or Proceedings been brought during the past
24
three (3) years.
(h) Solely as it relates to Gestiva or a Gestiva Product
Improvement, the Seller has not entered into any Contract (i) granting any
Person the right to bring infringement actions with respect to, or otherwise
to enforce rights with respect to, any of the Gestiva Intellectual Property,
or (ii) expressly agreeing to indemnify any Person against any charge of
infringement of any of the Gestiva Intellectual Property.
(i) The Seller has not entered into any Contract granting any
Person the right to control the prosecution of any of the Gestiva Patent
Rights.
(j) None of the Gestiva Trademarks are or have been the subject
of any opposition, cancellation, abandonment or similar proceeding, and
neither the Parent, the Seller, nor any of their Subsidiaries, has received
any written notice from any Person, or has Knowledge, of any actual or
threatened claim or assertion to the contrary, or of any facts or alleged
facts which are likely to serve as a basis for any such claim or assertion.
(k) Except for the License Agreement or as set forth on Schedule
--------
6.6(k) of the Seller Disclosure Schedule, the Seller has not granted any
- ------
licenses under or to any of the Gestiva Intellectual Property or entered into
any distribution or marketing arrangements with respect to any Gestiva
Intellectual Property or Gestiva. The Seller has not granted any licenses
under or to any of the Gestiva Intellectual Property or entered into any
distribution or marketing arrangements with respect to any Gestiva
Intellectual Property or Gestiva.
(l) All Gestiva Know-How that would otherwise constitute a trade
secret has been the subject of reasonable measures to maintain its secrecy.
All former and current employees, independent contractors, members of
management and key personnel of the Parent, the Seller or their Subsidiaries
with access to such trade secrets or similar confidential information,
including all former and current employees, agents, consultants and
independent contractors who have contributed to or participated in the
conception and development of material Gestiva Intellectual Property
(collectively, "PERSONNEL"), have executed and delivered to Seller a
proprietary information agreement restricting such person's right to disclose
or use for unauthorized purposes such trade secrets or information. All such
former and current Personnel (i) who are or were employees of Seller have
executed a written "work-for-hire" agreement with Seller that, in accordance
with all applicable Laws, has accorded the Seller full, effective, exclusive
and original ownership of all Gestiva Intellectual Property rights therein and
thereby arising and (ii) who were or are not employees of Seller have executed
appropriate instruments of assignment in favor of Seller as assignee that have
conveyed to Seller full, effective and exclusive ownership of all Gestiva
Intellectual Property rights therein and thereby arising. No former or current
Personnel have any claim against Seller in connection with such person's
involvement in the conception and development of any Gestiva Intellectual
Property except for such claims that, individually or in the aggregate, do not
have, have not had and could not reasonably be expected to have a Seller
Material Adverse Effect, and no such claim has been asserted or is threatened
in writing, or to Seller's Knowledge, orally.
(m) No licensing fees, royalties, profit participations, or
other payments are due or payable by the Parent, the Seller or any of their
Subsidiaries in connection with Gestiva
25
Intellectual Property, other than maintenance fees.
Section 6.7 Litigation. Schedule 6.7 of the Seller
---------- ------------
Disclosure Schedule sets forth a list as of the date hereof of each pending
or, to the Knowledge of the Seller, threatened suit, claim, action, proceeding
or investigation, arising out of the conduct of the Gestiva Business or
against or affecting any Purchased Assets or Assumed Liability. Except as set
forth in Schedule 6.7 of the Seller Disclosure Schedule, none of the suits,
------------
claims, actions, proceedings or investigations listed in Schedule 6.7 of the
------------
Seller Disclosure Schedule as to which there is at least a reasonable
possibility of adverse determination would have, if so determined,
individually or in the aggregate, a Seller Material Adverse Effect. Except as
set forth in Schedule 6.7 of the Seller Disclosure Schedule, neither the
------------
Seller nor any of its Affiliates are a party or subject to or in Default under
any Order applicable to the conduct of the Gestiva Business, any Purchased
Assets or any Assumed Liability, and there are no outstanding Orders of any
Governmental or Regulatory Authority that apply to the Purchased Assets that
restricts the manufacture, use or sale of Gestiva, the ownership, disposition
or use of the Purchased Assets by the Seller or the conduct of the Gestiva
Business by the Seller, in each case, in any material respect.
Section 6.8 Permits; Compliance with Law.
----------------------------
(a) Schedule 6.8 of the Seller Disclosure Schedule sets forth a
------------
true and complete list of all Gestiva Governmental Permits. The Seller is in
possession of all Gestiva Governmental Permits and all Gestiva Governmental
Permits are valid and in full force and effect.
(b) The Gestiva Business has been and is currently conducted by
the Seller and its Subsidiaries in material compliance with all Gestiva
Governmental Permits and applicable Law by which the Gestiva Business, Gestiva
or any Purchased Asset is bound.
(c) No Governmental or Regulatory Authority has notified the
Seller or any of its Subsidiaries in writing that the Gestiva Business or the
Purchased Assets were or are in material violation of any Law or Required
Permit or the subject of any investigation in any jurisdiction where the
Gestiva Business is conducted.
(d) No Governmental or Regulatory Authority has notified the
Parent, the Seller or any of their Subsidiaries of any facts or circumstances
which would lead to any suspension, loss of or material modification to any
Required Permit or refusal by a Governmental or Regulatory Authority to renew
or accept for filing any Required Permit on terms less advantageous,
individually or in the aggregate, to the Parent, the Seller and their
Subsidiaries than the terms of those Gestiva Governmental Permits currently in
force.
(e) (i) All applications, submissions, information, claims,
reports and statistics, and other data derived therefrom, utilized as the
basis for or submitted in connection with any and all requests for a Required
Permit of the FDA or other Governmental or Regulatory Authority relating to
the Purchased Assets, when submitted to the FDA or other Governmental or
Regulatory Authority were true, complete and correct in all material respects
as of the date of submission and any legally necessary or required updates,
changes, corrections or modifications to such applications, submissions,
information, claims, reports or statistics have been submitted to FDA and
other Governmental or Regulatory Authority.
26
(ii) To the Knowledge of the Seller or its Affiliates, all
pre-clinical and clinical trials conducted by the Parent, the Seller or any of
their Subsidiaries with regard to Gestiva or the Purchased Assets have been
conducted in material compliance with experimental protocols, procedures and
controls pursuant to accepted professional scientific standards and all
applicable Laws promulgated by the FDA relating thereto, including without
limitation the FDA Act and its applicable implementing regulations at 21
C.F.R. Parts 50, 54, 56 and 312, as amended.
(iii) There are no investigations, audits, actions or other
proceedings of a Governmental or Regulatory Authority pending with respect to
a violation by the Parent, the Seller or any of their Subsidiaries of the FDA
Act or other applicable Law that would reasonably be expected to result in
administrative, civil or criminal liability, and, to the Knowledge of the
Seller, there are no facts or circumstances existing that would reasonably be
expected to serve as a basis for such an investigation, audit, action or other
proceeding, in each case with respect to Gestiva, the Purchased Assets, the
Assumed Liabilities or the Gestiva Business.
(iv) No Governmental or Regulatory Authority has commenced
or threatened in writing to initiate any action to withdraw the Gestiva
Product Registrations or request the recall of Gestiva, or commenced or
threatened to initiate any action to enjoin production of Gestiva at any
facility, nor have the Parent, the Seller or any of their Subsidiaries
received any notice to such effect and, there are no grounds for such action.
(v) To the Knowledge of the Seller, none of the officers of
the Seller, have been disqualified or debarred by the FDA for any purpose, or
have been charged with or convicted under United States federal Law for
conduct relating to the development or approval or otherwise relating to the
regulation of any drug product under the Generic Drug Enforcement Act of 1992,
the FDA Act or any other similar Law or have made an untrue statement of a
material fact to any Governmental or Regulatory Authority with respect to
Gestiva (whether in any submission to such Governmental or Regulatory
Authority or otherwise), or failed to disclose a material fact required to be
disclosed to any Governmental or Regulatory Authority with respect to Gestiva.
Neither the Seller nor any of its Subsidiaries are the subject of any pending
or threatened investigation in respect of the Seller of any of its
Subsidiaries or its products, by the FDA pursuant to its "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities" Final Policy
set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments
thereto.
(f) None of Parent, Seller or any of their Subsidiaries are,
directly or indirectly, engaged in the research, review or development, at any
stage, of any product which contains the API, including any and all dosage
forms, modifications, prototypes, formulas, or strengths of the API. In
addition, none of Parent, Seller nor any of their Subsidiaries is, directly or
indirectly, engaged in the research, review or development of any product
which is intended to treat the Gestiva indication.
Section 6.9 Gestiva Inventory. All of the Gestiva Inventory
-----------------
(i) will be as of the Transfer Date, free of any material defect or deficiency
and (ii) was produced or manufactured in accordance with the specifications
for Gestiva as set forth in the applicable Gestiva Product Registrations and
in compliance with applicable Law. The Seller at Closing, and upon delivery
27
of the Gestiva Inventory on the Transfer Date, as applicable, will have good
and marketable title to the Gestiva Inventory free and clear of any
Encumbrances. As of immediately prior to the Transfer Date, none of the
Gestiva Inventory has been sold commercially and all prior human uses thereof
have been subject to appropriate exemptions.
Section 6.10 Suppliers. All of the suppliers to the Gestiva
----------
Business since January 1, 2006 and all Contracts with any such supplier
currently in effect are set forth on Schedule 6.10 and Schedule 1.1(a). None
------------- ---------------
of such suppliers has given the Parent, the Seller or any of their
Subsidiaries notice terminating, canceling or threatening to terminate or
cancel any Contract or relationship with the Parent, the Seller or any of
their Subsidiaries relating to the Gestiva Business. To the Knowledge of the
Seller, such suppliers are manufacturing and otherwise operating in compliance
with applicable FDA requirements with respect to the products and materials
supplied to Seller.
Section 6.11 Absence of Certain Changes or Events.
------------------------------------
(a) Except as set forth on Schedule 6.11(a) of the Seller
----------------
Disclosure Schedule, since December 31, 2006, there has not been a Seller
Material Adverse Effect.
(b) Except as set forth in Schedule 6.11(b) of the Seller
----------------
Disclosure Schedule, since April 2, 2007 to the date of this Agreement, and to
the Knowledge of the Seller during the period between December 31, 2006 and
April 1, 2007, the Seller has conducted and did conduct the Gestiva Business
in the Ordinary Course of Business, and the Seller has not, with respect to
the Gestiva Business or any of the Purchased Assets:
(i) subjected any of the Purchased Assets to any
Encumbrances other than Permitted Encumbrances (subject to Section 6.12(a));
---------------
(ii) sold, transferred, leased, subleased, licensed,
sublicensed or otherwise disposed of, to any third party, any Purchased Assets
or assets used in or necessary for the conduct of the Gestiva Business;
(iii) entered into any Assumed Contract or accelerated,
cancelled, modified or terminated any Assumed Contract except in connection
with any renewal thereof in the Ordinary Course of Business;
(iv) surrendered, revoked or otherwise terminated any
Gestiva Governmental Permits, except in connection with any renewal or
reissuance thereof;
(v) incurred Assumed Liabilities, other than in the
Ordinary Course of Business;
(vi) waived, released or assigned any rights, which rights,
but for such waiver, release or assignment, would have been classified as
Purchased Assets, other than in the Ordinary Course of Business;
28
(vii) experienced any damage, destruction or casualty loss
(whether or not covered by insurance) with respect to any Purchased Asset
other than as a result of ordinary wear and tear, where applicable;
(viii) delayed or postponed the payment of any Assumed
Liability; or
(ix) with respect to the Purchased Assets or the Gestiva
Business, made any election or change to any election in respect to Taxes,
adopted or changed any accounting method in respect to Taxes, entered into any
Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or
settled or compromised on any claim, notice, audit report or assessment in
respect of Taxes, consented to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes, changed any
annual Tax accounting period, filed any amended Tax Return, or surrendered any
right to claim a Tax refund; or
(x) agreed, whether in writing or otherwise, to do any of
the foregoing, except as expressly contemplated by this Agreement.
Section 6.12 Title to Assets; Sufficiency of Assets.
--------------------------------------
(a) Except as set forth on Schedule 6.12(a) of the Seller
----------------
Disclosure Schedule, as of the Closing Date, the Seller has and, at the
Transfer Date the Seller will deliver to Acquiror, good and valid title to or,
in the case of licensed assets, a valid and binding license to the Purchased
Assets free and clear of all Encumbrances (except that as of the Closing Date
the Purchased Assets may have been subject to any Permitted Encumbrances).
Except as set forth on Schedule 6.12(a) of the Seller Disclosure Schedule, no
----------------
Subsidiary or other Affiliate of the Seller owns, beneficially or of record,
or has any rights, title or interest in, to or under any Purchased Asset, and
there are no employees of any Subsidiary of the Seller employed in the Gestiva
Business or who perform tasks that are necessary for the operation of the
Gestiva Business.
(b) The Purchased Assets (together with the rights of the
Acquiror and its Affiliates under the Related Agreements) constitute all of
the assets, Contracts, Gestiva Governmental Permits , rights and services
required for the continued operation of the Gestiva Business by the Acquiror
as conducted by the Seller during the past twelve (12) months.
(c) Each item of equipment which is a Purchased Asset is in good
operating condition for the purposes for which it is currently being used,
subject to ordinary wear and tear and is free from any material defect.
(d) During the twelve (12) calendar month period prior to the
date hereof, the Seller has not experienced any out-of-stock or back-order
situation with respect to the Gestiva Business.
Section 6.13 Disclosure. The Seller has made available and
----------
disclosed to Acquiror all material information in the possession of the Seller
concerning the safety, efficacy, side effects or toxicity of Gestiva (in
animals or humans), derived from any pre-clinical or clinical use, studies,
investigations or tests of Gestiva (in animals or humans) conducted by
29
Seller in all indications for Gestiva that has been submitted to the FDA or
studied by the Seller, whether or not determined to be attributed to Gestiva.
Section 6.14 Taxes. As of the date hereof and as of the
-----
Transfer Date:
(a) To the extent that such action relates to the Purchased
Assets or the Gestiva Business, (i) the Seller has, and its Affiliates have,
duly and timely filed (or caused to be filed) with the appropriate taxing
authorities all Tax Returns required to be filed through the date hereof, and
(ii) all such Tax Returns filed are complete and accurate in all material
respects. All Taxes owed by the Seller in respect of the Gestiva Business
(whether or not shown on any Tax Return) have been paid. Neither the Seller
nor any of its Affiliates are currently the beneficiary of any extension of
time within which to file any Tax Return with respect to the Purchased Assets
or the Gestiva Business.
(b) There are no liens for Taxes (other than for current Taxes
not yet due and payable) on any of the Purchased Assets.
(c) No deficiencies for Taxes have been claimed, proposed or
assessed by any taxing or other Governmental Authority against the Seller or
its Subsidiaries with respect to the Purchased Assets or the Gestiva Business,
and there are no pending or, to the Knowledge of the Seller, threatened
audits, investigations, disputes or claims or other actions for or relating to
any Liability for Taxes with respect to the Purchased Assets or the Gestiva
Business, and there are no matters under discussion with any Governmental or
Regulatory Authorities, or known to the Parent, the Seller or their
Subsidiaries, with respect to Taxes that are likely to result in an additional
Liability for Taxes with respect to the Purchased Assets or the Gestiva
Business. The Seller has delivered or made available to Acquiror complete and
accurate copies of all examination reports and statements of deficiencies
assessed against or agreed to by the Parent, the Seller or their Subsidiaries
since December 31, 2003 with respect to the Purchased Assets or the Gestiva
Business. With respect to the Purchased Assets or the Gestiva Business,
neither the Parent, the Seller nor any of their Subsidiaries have waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(d) There are no Tax-sharing agreements or similar arrangements
(including indemnity arrangements) with respect to or involving the Purchased
Assets or the Gestiva Business, and after the Transfer Date, the Purchased
Assets and the Gestiva Business shall not be bound by any such Tax-sharing
agreements or similar arrangements or have any Liability thereunder for
amounts due in respect of periods prior to the Transfer Date.
(e) The Parent, the Seller and their Subsidiaries have withheld
and paid, and will withhold and pay prior to the Transfer Date, all Taxes
concerning the Gestiva Business required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(f) Neither the Parent, the Seller nor any of their Subsidiaries
(i) has consented at any time under former Section 341(f)(1) of the Code to
have the provisions of former Section 341(f)(2) of the Code apply to any
disposition of the Purchased Assets; (ii) has acquired or owns Purchased
Assets that directly or indirectly secure any debt, the interest on which is
tax exempt
30
under Section 103(a) of the Code; or (iii) has made any of the foregoing
elections or is required to apply any of the foregoing rules under any
comparable foreign, state or local Tax Law.
(g) The Seller is not a "foreign person" as defined in Section
1445(f)(3) of the Code. The transactions contemplated herein are not subject
to the tax withholding provisions of Section 3406 of the Code or of Subchapter
A of Chapter 3 of the Code or of any other provision of law.
(h) None of the Purchased Assets is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(i) None of the Purchased Assets is property that is required to
be treated as being owned by any other Person pursuant to the so-called safe
harbor lease provisions of former Section 168(f)(8) of the Code or any
comparable provision of state law.
Section 6.15 Competing Business. None of the Parent, the
------------------
Seller, nor any of their Subsidiaries, are (i) with the exception of Gestiva,
developing or considering engaging in the development of a pharmaceutical
product for the prevention of preterm birth or (ii) in discussion with a
potential acquisition target or a potential acquirer of the Parent, the Seller
or any of their Subsidiaries that is, to the knowledge of the Seller,
developing or considering engaging in the development of a pharmaceutical
product for the prevention of preterm birth.
Section 6.16 Unlawful Payments. None of the Parent, the
-----------------
Seller, nor any of their Subsidiaries, or to the Knowledge of the Seller, any
officer, director, employee, agent, Affiliate, representative of the Parent,
the Seller or any of their Subsidiaries has made, directly or indirectly, any
bribe or kickback, illegal political contribution, payment from corporate
funds which was incorrectly recorded on the books and records of the Parent,
the Seller or any of their Subsidiaries, unlawful payment from corporate funds
to governmental or municipal officials in their individual capacities for the
purpose of affecting their action or the actions of the jurisdiction which
they represent to obtain favorable treatment in securing business or licenses
or to obtain special concessions of any kind whatsoever, or illegal payment
from corporate funds to obtain or retain any business.
Section 6.17 Brokers. The Acquiror has no, and will have no,
-------
obligation to pay any brokers (including real estate brokers), finders,
investment bankers, financial advisors or similar fees in connection with this
Agreement or the transactions contemplated hereby by reason of any action
taken by or on behalf of the Parent, the Seller or any of their Subsidiaries.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
Subject to the such exceptions as are disclosed in the
disclosure schedule supplied by the Acquiror to the Seller dated as of the
date hereof (the "ACQUIROR DISCLOSURE SCHEDULE"), which Acquiror Disclosure
Schedule identifies the Section (or, if applicable, subsection) to which such
exception relates (provided, however, that such disclosure shall also apply to
particular matters represented or warranted in other Sections and subsections
to the extent that it is readily apparent from the text of such disclosure),
the Acquiror represents and warrants to the Seller as follows:
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Section 7.1 Corporate Organization. The Acquiror is duly
----------------------
incorporated, validly existing and, where applicable, in good standing under
the laws of Delaware and has all requisite power and authority to own its
assets and carry on its business as currently conducted by it. The Acquiror is
duly authorized to conduct its business and is in good standing in each
jurisdiction where such qualification is required, except where the failure to
be so qualified or in good standing would not be reasonably expected to have
an Acquiror Material Adverse Effect. The Charter Documents of the Acquiror are
effective under the applicable Laws and are current, correct and complete.
Section 7.2 Authority of the Acquiror. The Acquiror has all
-------------------------
necessary power and authority and has taken all corporate actions necessary to
enter into this Agreement and to carry out the transactions contemplated
hereby. The board of directors of the Acquiror has taken all action required
by Law and its Charter Documents to authorize the execution and delivery by
the Acquiror of this Agreement and the Related Agreements to which the
Acquiror is or will be a party and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by the Acquiror and, when executed and delivered by the
Seller, will constitute a legal, valid and binding obligation of the Acquiror
enforceable against it in accordance with its terms. When executed and
delivered by the Acquiror, each Related Agreement to which the Acquiror is or
will be a party will constitute a legal, valid and binding obligation of the
Acquiror enforceable against it in accordance with its terms. Notwithstanding
the matters set forth in this Section 7.2, the enforceability of this
-----------
Agreement and the Related Agreements may be limited by principles of public
policy and the rules of law governing specific performance, injunctive relief,
other equitable remedies, or bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally.
Section 7.3 Non-Contravention. The execution and delivery by
-----------------
the Acquiror of this Agreement and each of the Related Agreements does not,
and the performance by it of its obligations under this Agreement and each of
the Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Charter Documents of the Acquiror;
(b) assuming the receipt of all consents, waivers, approvals,
Orders or authorizations of Governmental and Regulatory Authorities required
to be obtained by the Acquiror and the making of all registrations,
declarations or filings with Governmental and Regulatory Authorities required
to be made by the Acquiror, conflict with or result in a violation or breach
of any term or provision of any Law applicable to the Acquiror; or
(c) conflict with or result in a Default under any Contract to
which the Acquiror is a party or by which the Acquiror or any of its assets is
bound.
Section 7.4 Litigation. There are no Actions or Proceedings
----------
pending, or to the Knowledge of the Acquiror, threatened, against Acquiror in
connection with (i) this Agreement or any Related Agreement or (ii) the
transactions contemplated by this Agreement. The Acquiror is not subject to
any Order that could reasonably be expected to result in an Acquiror Material
Adverse Effect.
32
Section 7.5 Brokers. The Seller has no, and will have no,
-------
obligation to pay any brokers, finders, investment bankers, financial advisors
or similar fees in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf of the
Acquiror or any of its Affiliates.
ARTICLE VIII.
COVENANTS OF THE PARTIES
Section 8.1 Operation of the Gestiva Business.
---------------------------------
(a) Between the date of this Agreement and the Transfer Date,
except as expressly permitted by this Agreement, or as otherwise directed in
writing by the Acquiror, the Seller shall conduct the Gestiva Business only in
the Ordinary Course of Business in substantially the same manner as previously
conducted (including with respect to research and development efforts,
manufacturing and capital expenditures) (it being acknowledged that after the
Closing Date the Acquiror will be solely responsible for, and the Seller will
reasonably cooperate with the Acquiror in, conducting all marketing and
promotional activities with respect to the Gestiva Business prior to the
Transfer Date; provided, that neither the Seller nor Parent, nor any of their
respective Subsidiaries, shall be obligated to provide the Acquiror access to
any employee for such purposes other than Robb Hesley), and use its
commercially reasonable efforts to keep intact the Purchased Assets, and
preserve the relationships of the Seller with customers, suppliers, licensors,
licensees, distributors, regulatory authorities and other Persons, in each
case, who are material to the Gestiva Business. Without limiting the
generality of the foregoing, from the date of this Agreement to the Transfer
Date, the Seller shall:
(i) use its commercially reasonable efforts to keep
available the services of the current employees and consultants in the Gestiva
Business;
(ii) confer with the Acquiror, where reasonably practicable,
prior to implementing material operational decisions relating to the Gestiva
Business;
(iii) keep in full force and effect, without amendment
(except in connection with any renewal thereof in the Ordinary Course of
Business), all material rights relating to the Purchased Assets and the
Gestiva Business;
(iv) comply in all material respects with all requirements
of Law and contractual obligations, in each case applicable to the Purchased
Assets and operation of the Gestiva Business;
(v) maintain all Gestiva Books and Records;
(vi) maintain the Purchased Assets in good operating order
and condition, reasonable wear and tear excepted;
33
(vii) not waive, release or assign any rights, which rights,
but for such waiver, release or assignment, would have been classified as
Purchased Assets;
(viii) not fail to maintain its existing insurance coverage
to the extent relating to the Gestiva Business in all material respects in
effect as of the date hereof; and
(ix) upon any damage, destruction or loss of any material
Purchased Asset, apply any and all insurance proceeds received with respect
thereto to the prompt repair, replacement and restoration thereof to the
condition of such Purchased Asset before such event or, if required, to such
other (better) condition as may be required by applicable Law.
(b) Without limiting the generality of the lead-in paragraph of
Section 8.1(a), and except as set forth in Schedule 8.1(b) of the Seller
- -------------- ---------------
Disclosure Schedule or as otherwise expressly permitted by the terms of this
Agreement, from the date of this Agreement to the Transfer Date, without the
prior written consent of the Acquiror (which shall not be unreasonably
withheld), the Seller shall not:
(i) Without the prior approval of the Joint Integration
Committee, (A) incur or obligate itself to incur any liability in excess of
$25,000 unless such liability is set forth on the budget set forth as Schedule
--------
1.1(g) hereto, which budget may be amended from time to time upon the mutual
- ------
written consent of the parties hereto or (B) make any non-monetary decision
that could reasonably be expected to result in a significant economic adverse
impact on the Gestiva Business following the Closing Date;
(ii) subject any Purchased Assets to any Encumbrances other
than a Permitted Encumbrance;
(iii) sell, transfer, lease, sublease, license or otherwise
dispose of or grant any option or rights in, to or under any Purchased Assets;
(iv) enter into any Contract that would have been required
to be set forth on Schedule 1.1(a) of the Seller Disclosure Schedule if such
---------------
Contract had existed as of the date hereof, or terminate, extend or amend any
Assumed Contract set forth in Schedule 1.1(a) of the Seller Disclosure
---------------
Schedule;
(v) abandon or terminate any clinical trials relating to
Gestiva (other than for safety concerns or in accordance with the terms of
existing agreements with respect to such clinical trials) or terminate,
withhold or delay the Seller's support of clinical trials sponsored by
clinical investigators with respect to Gestiva;
(vi) commence, sponsor or commit to participate in any
clinical trials or investigator sponsored trials with respect to Gestiva or
provide any clinical grants with respect to Gestiva;
(vii) abandon any patents or patent filings or any
litigation seeking to enforce the Seller's interest in any Gestiva
Intellectual Property used, or contemplated to be used, in the conduct of the
Gestiva Business;
34
(viii) take any action that would, or that could reasonably
be expected to, result in any of the conditions to the purchase and sale of
the Purchased Assets set forth in ARTICLE X not being satisfied;
---------
(ix) to the extent that doing so would relate to the
Purchased Assets or the Gestiva Business, make any election or change to any
election in respect to Taxes, adopt or change any accounting method in respect
to Taxes, enter into any Tax allocation agreement, Tax sharing agreement, Tax
indemnity agreement or closing agreement, settle or compromise on any claim,
notice, audit report or assessment in respect of Taxes, consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes, change any annual Tax accounting period, file
any amended Tax Return, or surrender any right to claim a Tax refund; or
(x) agree, whether in writing or otherwise, to do any of
the foregoing set forth in clauses (i) through (ix) above.
Section 8.2 Reasonable Efforts.
------------------
(a) Subject to Section 8.2(b), and following the date hereof,
--------------
each of the parties hereto shall use its commercially reasonable efforts to
take, or cause to be taken, all action, or to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement and the Related
Agreements and to cause the conditions to the obligations of the other party
hereto to consummate the transactions contemplated hereby to be satisfied at
the Closing and as of the Transfer Date as provided herein, including
obtaining all consents and approvals of all Persons and Governmental or
Regulatory Authorities and removing any injunctions or other Encumbrances on
the Purchased Assets, impairments or delays the obtaining or removal of which
are necessary, proper or advisable to the consummation of the transactions
contemplated by this Agreement and the Related Agreements. The parties hereto
shall cooperate with each other in connection with the taking of all actions
referenced in the preceding sentence, including providing (i) such reasonable
assistance as the other party may request in connection with its preparation
of any required filings or submissions and (ii) copies of all such filings and
submissions to the non-filing party and its advisors prior to filing or
submission and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. The Seller and the Acquiror shall
have the right to review in advance, and, to the extent practicable, each
shall consult the other on, all the information relating to the Seller or the
Acquiror, as the case may be, that appears in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the transactions contemplated by this Agreement (including any
filing contemplated by this Section 8.2(a)). The Seller and the Acquiror may,
--------------
as each deems reasonably advisable and necessary, designate any competitively
sensitive information provided to the other under this section as "outside
counsel only." Such information shall be given only to outside counsel of the
recipient. In addition, the Seller and the Acquiror may redact any information
from such documents shared with the other party or its counsel that is not
pertinent to the subject matter of the filing or submission or pertaining to
the transactions contemplated by this Agreement.
(b) The Acquiror and the Seller shall each: (i) promptly take
all actions necessary to
35
make the filing required of such party or any of its Affiliates under the HSR
Act within five (5) Business Days after the date hereof, (ii) comply at the
earliest practicable date with any request for additional information or
documentary material received by such party or any of its Affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (iii) cooperate with the other party in
connection with any filing under the HSR Act and in connection with resolving
any investigation or other inquiry concerning the transactions contemplated
under this Agreement commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state attorneys general.
Each of the Seller, on one hand, and the Acquiror, on the other hand, shall be
responsible for its own legal fees for preparing its portion of the HSR Act
filings. For the avoidance of doubt, the Acquiror and the Seller shall share
equally any required filing fees under the HSR Act.
(c) In furtherance and not in limitation of the other covenants
of the parties contained herein, each party shall use commercially reasonable
efforts to resolve such objections, if any, as may be asserted with respect to
the consummation of the transactions contemplated hereby under any antitrust
Law. If any administrative, judicial or legislative Action or Proceeding is
instituted (or threatened to be instituted) challenging the sale and purchase
of any of the Purchased Assets or any other transaction as violative of any
antitrust Law, each party shall cooperate and use commercially reasonable
efforts to contest and resist any such Action or Proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other Order that is in effect and that restricts, prevents or prohibits
consummation at the Closing of the sale and purchase of the Purchased Assets
or any other transaction contemplated under this Agreement; provided, however,
that nothing in this Agreement shall require the Acquiror or its Subsidiaries
to commit to any divestitures, licenses or hold separate or similar
arrangements with respect to its assets, the Purchased Assets or the Assumed
Liabilities or otherwise agree to any limitation on conduct of business
arrangements (including the Gestiva Business), whether as a condition to
obtaining any approval from a Governmental and Regulatory Authority or any
other Person for any other reason.
(d) Each party shall promptly inform the other parties of any
material communication received by such party from the Federal Trade
Commission or the Antitrust Division of the Department of Justice regarding
any of the transactions contemplated under this Agreement. Each party shall
advise the other party promptly of any understandings, undertakings or
agreements that such party proposes to make or enter into with the Federal
Trade Commission or the Antitrust Division of the Department of Justice in
connection with the transactions contemplated under this Agreement.
(e) The Seller shall, (i) to the extent practicable include the
Acquiror in any substantive discussions with the FDA regarding any Gestiva
Product Registration, (ii) if reasonably requested by the Acquiror, upon
reasonable notice, attend meetings or conference calls involving the Acquiror
or one of its Subsidiaries and the FDA related to any of the foregoing and
(iii) cooperate with Acquiror by submitting the FDA transfer letters,
substantially in the form of Exhibit D hereto (the "FDA TRANSFER LETTERS") to
---------
the FDA on the Transfer Date or sooner pursuant to the provision set forth in
Section 8.5(b), in order to have the FDA transfer all Gestiva Product
- --------------
Registrations to one of Acquiror's Subsidiaries or to Acquiror at such time as
requested by the Acquiror. Notwithstanding the foregoing, without the prior
written approval of
36
the Seller, which shall not be unreasonably withheld, the Acquiror shall not
directly initiate correspondence with or meet with the FDA regarding Gestiva,
the Gestiva Product Registration or any matter relating to the Gestiva
Business.
(f) Notwithstanding anything in this Agreement to the contrary,
the Acquiror shall not be required to expend money, commence any litigation or
offer or grant any accommodation (financial or otherwise) to any third party
in connection with obtaining any consent, substitution, approval or amendment
required to be obtained by the Seller in order to assign or transfer any
Purchased Asset to the Acquiror. In the event any such consent, substitution,
approval or amendment is not obtained prior to the Transfer Date, the Seller
shall continue to use commercially reasonable best efforts to obtain such
consent, waiver or approval after the Transfer Date.
Section 8.3 Access; Confidentiality.
-----------------------
(a) From the date hereof until the Transfer Date, the Seller
shall permit the Acquiror and its representatives to have reasonable access,
during regular business hours and upon reasonable advance notice, to all the
personnel, properties, Contracts relating to Gestiva, the Purchased Assets or
the Assumed Liabilities, Tax Returns, the Gestiva Books and Records, the
Assumed Liabilities or the Gestiva Business, and the Seller shall furnish
promptly to the Acquiror such information in the Seller's possession
concerning the Purchased Assets, the Assumed Liabilities or the Gestiva
Business as the Acquiror may reasonably request; provided, however, that any
such access shall be conducted in a manner as not to unreasonably interfere
with the operation of the Gestiva Business. The Seller shall instruct its
respective employees, counsel and financial advisors to provide reasonable
cooperation to the Acquiror in its investigation of the Gestiva Business.
(b) From and after the Closing, the Seller shall implement
procedures to keep confidential, and cause its officers, directors, employees,
representatives, agents and advisors to keep confidential, all information
relating to the Purchased Assets, Assumed Liabilities and Gestiva Business,
except as required by Law and except for information which was in the public
domain or was publicly known prior to the Closing or which becomes generally
available to the public after the Closing Date other than as a result of a
disclosure by the Seller or its officers, directors, employees,
representatives, agents and advisors. The Seller shall not disseminate any
such information other than to those employees of the Seller who have a
business need to access such information (i) in connection with the
preparation of the Seller's accounting records, (ii) in connection with the
preparation of any Tax Returns or with any Tax audits or (iii) in connection
with any suit, claim, action, proceeding or investigation relating to the
Purchased Assets, the Assumed Liabilities or the Gestiva Business. The Seller
shall not use or cause or permit its officers, directors, employees,
representatives and advisors to use any such information after the Closing for
any purpose whatsoever, other than in implementation of this Agreement.
Effective upon Closing, upon written request of the Acquiror, from time to
time, the Seller shall (at the Acquiror's sole cost and expense) use
reasonable efforts to enforce the Seller's rights with respect to the use and
maintenance of confidential information relating to the Gestiva Business under
all confidentiality agreements between the Seller and any other third party.
The Seller shall not waive or release its rights under such confidentiality
agreements with respect to the use and maintenance of such confidential
information with respect to the Gestiva Business.
37
(c) Between the date hereof and the Transfer Date, information
disclosed to the Acquiror pursuant to this Agreement (including in the Seller
Disclosure Schedule) shall be held as Confidential Information (as defined in
the Confidentiality Agreement) and shall be subject to the Confidentiality
Agreement.
(d) Following the Transfer Date, for so long as such information
is retained by the Seller (which shall be for a period of at least five (5)
years), the Seller shall permit the Acquiror and its authorized
representatives to have reasonable access and duplicating rights during normal
business hours, upon reasonable prior notice, to the Seller and its books,
records and personnel solely to the extent relating to the Purchased Assets,
the Assumed Liabilities or the Gestiva Business, to the extent such access may
reasonably be required: (i) in connection with the preparation of the
Acquiror's accounting records or with any audits thereof, (ii) in connection
with any suit, claim, action, proceeding or investigation relating to the
Purchased Assets, the Assumed Liabilities or the Gestiva Business or (iii) in
connection with any required regulatory filing relating to the Purchased
Assets, the Assumed Liabilities or the Gestiva Business; provided that the
Acquiror shall reimburse the Seller promptly for all reasonable and necessary
out-of-pocket costs and expenses incurred by the Seller in connection with any
such request. Notwithstanding the foregoing, the Seller need not disclose to
the Acquiror any information: (i) relating to pricing or other matters that
are highly sensitive if (I) providing such portions of documents or
information, in the good faith opinion of the Seller's counsel, would
reasonably be expected to result in a violation of antitrust laws and (II) the
Seller designates such information as "outside counsel and retained experts
only" and discloses such information to Acquiror's outside counsel and
retained experts; or (ii) which the Seller is prohibited from disclosing by
applicable Law. If any material is withheld by the Seller pursuant to the
immediately preceding sentence, the Seller shall inform the Acquiror as to the
general nature of what is being withheld. The Seller may redact such portions
of such books and records that do not relate to the Purchased Assets, the
Assumed Liabilities or the Gestiva Business.
(e) Following the Transfer Date, for so long as such information
is retained by Acquiror (which shall be for a period of at least five (5)
years), the Acquiror shall permit the Seller and its authorized
representatives to have reasonable access and duplicating rights during normal
business hours, upon reasonable prior notice, to the Acquiror and the Gestiva
Books and Records and the employees of the Acquiror or its Subsidiaries, to
the extent that such access may reasonably be required: (i) in connection with
the preparation of the Seller's accounting records or with any audits thereof,
(ii) in connection with any suit, claim, action, proceeding or investigation
with an adverse third party relating to the Purchased Assets, the Assumed
Liabilities or the Gestiva Business or (iii) in connection with any required
regulatory filing relating to the Purchased Assets the Assumed Liabilities or
the Gestiva Business; provided that the Seller shall reimburse the Acquiror
promptly for all reasonable and necessary out-of-pocket costs and expenses
incurred by the Acquiror in connection with any such request. Notwithstanding
the foregoing, the Acquiror need not disclose to the Seller any information:
(A) relating to pricing or other matters that are highly sensitive if (I)
providing such portions of documents or information, in the opinion of the
Acquiror's counsel, might reasonably result in a violation of antitrust laws
and (II) the Acquiror designates such information as "outside counsel and
retained experts only" and discloses such information to the Seller's outside
counsel and retained experts or (B) which the Acquiror is prohibited from
disclosing by applicable Law. If any material is withheld by the Acquiror
pursuant to the immediately preceding sentence, the
38
Acquiror shall inform the Seller as to the general nature of what is being
withheld. The Acquiror may redact such portions of such Gestiva Books and
Records that do not relate to the Purchased Assets, the Assumed Liabilities or
the Gestiva Business.
Section 8.4 Public Announcements; Confidentiality. Except as
-------------------------------------
otherwise required by applicable Law or applicable stock exchange
requirements, prior to the Transfer Date, neither the Acquiror nor the Seller
shall, and each of them shall cause their respective Affiliates,
representatives and agents not to, issue or cause the publication of any press
release or public announcement with respect to the transactions contemplated
by this Agreement without the express prior written approval of the other
party, which approval shall not be unreasonably withheld or delayed; provided,
that after the Seller or the Acquiror has issued a press release announcing
the execution of this Agreement (the "INITIAL PRESS RELEASE") each of the
Seller and the Acquiror may make any public statement in response to questions
by the press, analysts, investors or those attending industry conferences or
financial analyst calls, or issue press releases, so long as any such public
statement or press release is not inconsistent with prior public disclosures,
press releases or public statements approved by the other party pursuant to
this Section 8.4 and which do not reveal non-public information about the
-----------
other party. The parties acknowledge that the Acquiror intends to disclose
certain financial projections regarding Gestiva with its Initial Press
Release.
Section 8.5 Regulatory Matters.
------------------
(a) Until the Gestiva NDA Approval Date, the Seller shall
control the prosecution of the Gestiva NDA before the FDA as described in this
Section 8.5. Unless and until the Acquiror notifies the Seller otherwise in
- -----------
accordance with Section 8.5(b), the Seller shall use its commercially
--------------
reasonable efforts, at its expense, subject to the reimbursement provisions of
Section 4.2(c), to obtain Gestiva NDA Approval as soon as practicable. In
- --------------
connection therewith, the Seller shall continue to be the party of record with
respect to the Gestiva NDA and, following the Closing, shall keep the Acquiror
fully informed with respect to the prosecution of the Gestiva NDA and (i)
promptly provide to the Acquiror or its designee any material written
correspondence from the FDA with respect thereto and (ii) no later than two
(2) Business Days prior to the submission thereof provide to the Acquiror or
its designee any proposed written correspondence to the FDA with respect
thereto, including copies of any and all underlying data to accompany any such
correspondence. Following the Closing, the Seller shall consider in good faith
any comments of the Acquiror or its designee with respect to such
correspondence and including any reasonable comments proposed by the Acquiror
provided, however, that the Seller shall have the right to determine the final
form of any such correspondence, provided such determination is made in good
faith. Following the Closing, the Seller shall also notify the Acquiror of any
pre-scheduled meetings during which the Seller reasonably expects to discuss
matters material to the Gestiva NDA (including any pre-scheduled telephonic
discussions during which the Seller reasonably expects to discuss matters
material to the Gestiva NDA) with the FDA, and the Acquiror or its designee
shall have the right to participate in such meetings and any internal
pre-meetings with respect thereto. Following the Closing until the Gestiva NDA
Approval Date, the Seller shall use any and all Purchased Assets solely and to
the extent necessary for carrying out the Seller's right hereunder to
prosecute the Gestiva NDA and obtain the Gestiva NDA Approval. Without
limiting any other obligation of the Acquiror under this Agreement, the
Acquiror shall cooperate with the Seller in the Seller's efforts to obtain
Gestiva
39
NDA Approval, including providing to the Seller all relevant data, information
and material reasonably requested by the Seller which the Seller shall not
disclose to any third Person or use except solely and to the extent necessary
for prosecuting the Gestiva NDA and obtaining the Gestiva NDA Approval.
(b) Prior to Gestiva NDA Approval, upon the mutual consent of
the Seller and the Acquiror following discussion between the parties, the
Seller shall promptly assign to the Acquiror the Gestiva NDA and all related
files, which assignment shall be effected by the Seller submitting the FDA
Transfer Letters to the FDA. The Seller shall cooperate with Acquiror in
obtaining the assignment and shall take all actions reasonably requested by
Acquiror necessary, proper or advisable to effectuate the assignment.
Thereafter, the Acquiror shall (i) be the party of record with respect to the
Gestiva NDA and (ii) use commercially reasonable efforts, at its expense, to
obtain Gestiva NDA Approval as soon as practicable. In connection therewith,
the Acquiror shall keep the Seller reasonably informed with respect to the
prosecution of the Gestiva NDA and consider in good faith the Seller's
comments with respect thereto and include any reasonable comments proposed by
the Seller. Without limiting any other obligation of the Seller under this
Agreement, the Seller shall cooperate with the Acquiror in the Acquiror's
efforts to obtain the Gestiva NDA Approval, including providing to the
Acquiror all relevant data, information and material reasonably requested by
the Acquiror which the Acquiror shall not disclose to any third Person or use
except solely and to the extent necessary for prosecuting the Gestiva NDA and
obtaining the Gestiva NDA Approval. The Seller agrees and acknowledges that,
following the Closing, the Acquiror shall have the right to use any and all
materials of Seller, whether or not such materials are Purchased Assets,
solely and to the extent necessary for carrying out the Acquiror's right
hereunder to prosecute the Gestiva NDA and obtain the Gestiva NDA Approval if
the Seller and Acquiror consent to the assignment of the Gestiva FDA
Submissions as provided in this Section 8.5(b). In the event that the parties
--------------
transfer the Gestiva NDA to the Acquiror pursuant to this Section 8.5(b), the
--------------
parties shall concurrently execute and deliver the Transition Services
Agreement.
(c) Unless previously assigned to the Acquiror pursuant to
Section 8.5(b), on the Transfer Date, the Seller shall transfer and assign to
- --------------
the Acquiror (A) the Gestiva FDA Submissions (including all associated rights)
together with (B) all files related thereto. Thereafter, the Acquiror shall
have all rights and responsibilities with respect to such Gestiva FDA
Submissions. The foregoing transfer and assignment shall be effected by the
Seller submitting the FDA Transfer Letters to the FDA.
(d) From and after the transfer by the Seller to the Acquiror of
each Gestiva Product Registration held by the Seller or any of its
Subsidiaries pursuant to the terms hereof, except as required by applicable
Law, the Acquiror 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 such
Gestiva Product Registration, including preparing and filing all reports
(including adverse drug experience reports) and responding to and answering
all questions and complaints requested by the appropriate Governmental or
Regulatory Authority, (ii) taking all actions and conducting all communication
with third parties in respect of Gestiva manufactured, tested, used or
distributed pursuant to such Gestiva Product Registration (whether
manufactured, tested, used or distributed before or after transfer of such
Gestiva Product Registration), including responding to all complaints in
respect thereof,
40
including complaints related to tampering or contamination, and (iii)
investigating all complaints and adverse drug experiences in respect of
Gestiva manufactured, tested, used or distributed pursuant to such Gestiva
Product Registration (whether manufactured, tested, used or distributed before
or after transfer of such Gestiva Product Registration, as set forth in
Section 8.5(e) below). It is understood and agreed that Seller shall be
responsible for all foregoing obligations listed in this Section 8.5(d) prior
to the transfer of the Gestiva Product Registrations and shall use
commercially reasonable efforts to timely and appropriately fulfill such
obligations.
(e) From and after the transfer of the Gestiva FDA Submissions,
the Acquiror shall be responsible for the investigation, analysis and
reporting to the FDA of any adverse experience report or complaint in
connection with the Product received by either the Acquiror or the Seller from
any source (including any patient, health care professional or other customer
of the Gestiva Business), regardless of whether the Product involved in any
such adverse experience report or complaint was manufactured, tested, used or
distributed by the Seller or Acquiror. The Seller shall use its commercially
reasonable efforts to report to the Acquiror any adverse experience report or
complaint received by the Seller relating to the Product after the Closing
within four (4) business days and in no event later than four (4) Business
Days, after receipt of such adverse experience report or complaint by the
Seller. The Seller shall reasonably cooperate with the Acquiror in connection
with the investigation and analysis of all adverse experience reports or
complaints that relate to the period before the date of the assignment of the
Gestiva FDA Submissions. It is understood and agreed that the Seller shall be
responsible for all foregoing obligations listed in this Section 8.5(e) prior
--------------
to the transfer of the Gestiva FDA Submissions and shall use commercially
reasonable efforts to timely and appropriately fulfill such obligations.
Section 8.6 Covenant Not to Compete.
-----------------------
(a) The Parent and Seller understand that Acquiror shall be
entitled to protect and preserve the going concern value of the Gestiva
Business following the Closing to the extent permitted by Law and that the
Acquiror would not have entered into this Agreement absent the provisions of
this Section 8.6 and, therefore, for the period from the date hereof until
-----------
seven (7) years following the Closing Date with respect to a 17-P Competing
Product and ten (10) years following the Closing Date with respect to a
Preterm Delivery Competing Product (the "APPLICABLE PERIOD"), neither the
Parent nor Seller, nor any of their Subsidiaries, nor their respective
successors or assigns, nor, any of its or their respective Affiliates (which
term, for purposes of this Section 8.6, shall not be deemed to include
-----------
stockholders of Parent in such capacity), shall directly or indirectly,
engage, license or assist another to engage in the research, marketing,
manufacturing, distribution or sale of any Competing Product anywhere in the
Restricted Territory. As used herein, a "17-P COMPETING PRODUCT" means any
product that contains 17 alpha-hydroxyprogesterone caproate or any other form
of progesterone; a "PRETERM DELIVERY COMPETING PRODUCT" means any product that
contains 17 alpha-hydroxyprogesterone caproate, or any other form of
progesterone, and that is marketed, promoted, or sold for the prevention of
preterm delivery and a "COMPETING PRODUCT" means any 17-P Competing Product
and any Preterm Delivery Competing Product.
(b) If a court determines that the foregoing restrictions are
too broad or otherwise unreasonable under applicable Law, including with
respect to time or space, the court is hereby requested and authorized by the
parties to revise the foregoing restriction to include the
41
maximum restrictions allowable under applicable Law. Each of the parties
acknowledges, however, that this Section 8.6 has been negotiated by the
-----------
parties and that the Restricted Territory and the Applicable Period are
reasonable in light of the circumstances pertaining to the parties.
(c) Notwithstanding any other provision of this Agreement, it is
understood and agreed that the remedy of indemnity payments pursuant to
ARTICLE XI and other remedies at law would be inadequate in the case of any
- ----------
breach of the covenants contained in Section 8.6, and, accordingly, the
-----------
Acquiror shall be entitled to equitable relief, including the remedy of
specific performance, with respect to any breach or attempted breach of such
covenants.
(d) Notwithstanding the foregoing, if the Parent or the Seller
or any of their Subsidiaries signs a definitive agreement with respect to a
merger or acquisition pursuant to which the Parent or the Seller or any of
their Subsidiaries would acquire rights (other than residual financial rights)
in a Competing Product at any time during the Applicable Period relating to
such Competing Product, then the Parent or the Seller or their Affiliates or
Subsidiaries, as applicable, shall have six (6) months from the closing of
such definitive agreement to divest itself of such rights in the Competing
Product and, during such six (6) month period, the manufacture, developing,
marketing, distributing, and/or sale of such Competing Product shall not be in
violation of this Section 8.6. In the case of divestiture under the preceding
-----------
sentence, such divestiture can occur by either (x) an outright sale of all
rights in the Competing Product to a third party or (y) an out-license to an
unaffiliated third party of the right to make, have made, use, sell, offer for
sale and import such Competing Product; provided, however, that the Parent and
the Seller and their Subsidiaries may only retain residual financial rights to
such Competing Product and must not exercise or have the ability to exercise
any role or influence in any manner over the performance of any clinical
trials with respect to such Competing Product, or the sale, offering for sale
or other promotion of such Competing Product. The Parent or Seller shall
provide Acquiror with reasonable advance notice of any such sale contemplated
by this Section 8.6(d) and an opportunity to bid on the divested asset.
(e) If solely due to the fault of the Acquiror, the parties have
not given effect to the Transfer Date within five (5) Business Days following
the satisfaction or waiver of the conditions set forth in Article X, and the
---------
Seller has demonstrated to the reasonable satisfaction of the Acquiror that it
is fully prepared to consummate the transactions and matters to be consummated
on the Transfer Date, including (i) transferring to the Acquiror the Gestiva
FDA Submissions and all rights associated therewith pursuant to Section 8.5,
-----------
(ii) executing and delivering the Related Agreements and other documents and
materials to be delivered on the Transfer Date, and (iii) delivering to the
Acquiror the Initial Gestiva Inventory, the provisions of this Section 8.6
-----------
shall cease to apply until such time as the Acquiror has made the deliveries
required by Section 5.4(b), including the Additional Purchase Price Amount.
--------------
(f) For the avoidance of doubt, if any Person acquires Control
of the Parent, whether by stock purchase, merger, consolidation or other
business combination, the provision of this Section 8.6 shall not apply to
-----------
such acquiror or its Affiliates if such Competing Product is researched,
marketed, manufactured, distributed or sold without, directly or indirectly,
the assistance of, the resources of, the employees of, or assets of Parent,
the Seller and their Subsidiaries in existence immediately prior to such
acquisition; provided, however, notwithstanding this Section 8.6(f), the
restrictions set forth in this Section 8.6 shall continue to
-----------
42
apply to the Parent, the Seller and their Subsidiaries following such
transaction.
Section 8.7 Further Assurances.
------------------
(a) On and after the Transfer Date, the Seller shall from time
to time, at the reasonable request of the Acquiror, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such further
conveyances, notices and assumptions and such other instruments, and take such
other actions as the Acquiror may reasonably request, in order to more
effectively consummate the transactions contemplated hereby and to transfer
fully to the Acquiror good and marketable title to the Purchased Assets and
all of the titles, rights, interests, remedies, powers and privileges intended
to be conveyed under this Agreement and the Related Agreements (including
assistance in the collection or reduction to possession of any of the
Purchased Assets).
(b) On and after the Transfer Date, the Acquiror shall from time
to time, at the reasonable request of the Seller, take such actions as the
Seller may reasonably request, in order to more effectively consummate the
transactions contemplated hereby, including the Acquiror's assumption of the
Assumed Liabilities and to conduct the Gestiva Business as contemplated by
this Agreement and the Related Agreements.
Section 8.8 No Solicitation. From the date of this Agreement
---------------
until the earlier to occur of (i) the Transfer Date or (ii) the termination of
this Agreement in accordance with ARTICLE XII (the "NO-SHOP PERIOD"), the
-----------
Seller shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any of its directors, officers or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly, (I) solicit, initiate or encourage any Other Bid (as defined
below), (II) enter into any agreement with respect to any Other Bid or (III)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Other Bid. In the event that the Seller
(or any of its Subsidiaries) receives any Other Bid, the Seller shall promptly
advise the Acquiror of such proposal. As used in this Section 8.8, "OTHER BID"
means any proposal for a sale, spin-off or other disposition or similar
transaction involving the Gestiva Business or any of the Purchased Assets,
other than the transactions contemplated by this Agreement. For the avoidance
of doubt, "OTHER BID" shall not mean any proposal relating to any merger,
consolidation, business combination or similar transaction involving twenty
five percent (25%) or more of the total outstanding voting equity securities
of the Parent.
Section 8.9 Insurance. In the event that prior to the
---------
Transfer Date any Purchased Asset suffers any damage, destruction or other
loss as a result of a casualty event, the Seller shall, after the Transfer
Date, (i) promptly pay to the Acquiror all insurance proceeds received by the
Seller with respect to such damage, destruction or other loss, less any
proceeds applied to the physical restoration of such asset, and (ii) assign to
the Acquiror all rights of the Seller against third parties (other than
against its insurance carriers) with respect to any causes of action, whether
or not litigation has commenced as of the Transfer Date, in connection with
such damage, destruction or other loss; provided, however, that the proceeds
of such insurance shall be subject to (and recovery thereon shall be reduced
by the amount of) any applicable
43
deductibles and co-payment provisions or any payment or reimbursement
obligations of the Seller in respect thereof.
Section 8.10 Tax Matters.
-----------
(a) Books & Records; Cooperation. The Acquiror, on one hand, and
----------------------------
the Seller, on the other hand, agree to furnish or cause to be furnished to
the other, upon request, as promptly as practicable, such information and
assistance relating to the Purchased Assets or the Gestiva Business,
including, without limitation, access to books and records, as is reasonably
necessary for the filing of all Tax Returns by the Acquiror or the Seller, the
making of any election relating to Taxes, the preparation for any audit by any
taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Taxes. The Seller shall retain all books and
records with respect to Taxes pertaining to the Purchased Assets or the
Gestiva Business, for a period of at least six (6) years following the
Transfer Date. At the end of such period, the Seller shall provide the
Acquiror with at least ten (10) days prior written notice before transferring,
destroying or discarding any such books and records, during which period the
Acquiror can elect to take possession, at its own expense, of such books and
records. The Acquiror, on one hand, and the Seller, on the other hand, shall
cooperate fully with the other in the conduct of any audit, litigation or
other proceeding relating to Taxes involving the Purchased Assets or the
Gestiva Business. The Acquiror, on one hand, and the Seller, on the other
hand, further agree, upon request, to use their commercially reasonable
efforts prior to the Transfer Date, and for a period of three (3) years
following the Transfer Date, to obtain any certificate or other document from
any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby). Any
information obtained pursuant to this Section 8.10(a) shall be kept strictly
---------------
confidential, except as may be otherwise necessary in connection with the
filing of Tax Returns, claims for a Tax refund or in conducting any audit,
examination or other proceeding in respect of Taxes.
(b) Allocation of Taxes. Except as otherwise provided in Section
------------------- -------
4.4 hereof relating to Transfer Taxes, the Seller shall be responsible for and
- ---
shall promptly pay when due all Taxes levied with respect to the Purchased
Assets or the Gestiva Business attributable to the Pre-Transfer Tax Period.
All Taxes levied with respect to the Purchased Assets or the Gestiva Business
for the Straddle Period shall be apportioned between the Pre-Transfer Tax
Period and the Post-Transfer Tax Period, as follows:
(i) in the case of any Taxes other than Taxes based upon
or related to income or receipts, the portion allocable to the Pre-Transfer Tax
Period shall be deemed to be the amount of such Tax for the entire Straddle
Period multiplied by a fraction the numerator of which is the number of days
in the Tax period ending on the Transfer Date and the denominator of which is
the number of days in the entire Straddle Period, and
(ii) in the case of any Tax based upon or related to income
or receipts, the portion allocable to the Pre-Transfer Tax Period shall be
deemed equal to the amount which would be payable if the relevant Straddle
Period ended on the Transfer Date.
44
Upon receipt of any bill for such Taxes relating to the Purchased Assets or
the Gestiva Business, the Acquiror, on one hand, and the Seller, on the other
hand, shall present a statement to the other setting forth the amount of
reimbursement to which each is entitled under this Section 8.10 together with
------------
such supporting evidence as is reasonably necessary to calculate the proration
amount. The proration amount shall be paid by the party owing it to the other
within ten (10) days after delivery of such statement. In the event that the
Acquiror or the Seller shall make any payment for which it is entitled to
reimbursement under this Section 8.10, the applicable party shall make such
------------
reimbursement promptly but in no event later than ten (10) days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement.
(c) Notices. The Seller shall promptly notify the Acquiror in
-------
writing upon its receipt of notice of any pending or threatened federal,
state, local or foreign Tax audits or assessments relating to the income,
properties or operations of Seller that reasonably may be expected to relate
to the Purchased Assets or the Gestiva Business.
(d) At the Closing and on the Transfer Date (prior to payment of
the Additional Purchase Price), the Seller shall deliver to the Acquiror a
duly executed and acknowledged Internal Revenue Service Form W-9 and a duly
executed and acknowledged non-foreign status FIRTPA certificate prepared
pursuant to Treasury Regulation Section 1.1445-2(b)(2) in a form satisfactory
to the Acquiror.
(e) Any payments made to any Indemnified Party pursuant to this
Agreement shall constitute an adjustment of the consideration paid for the
Purchased Assets for Tax purposes and shall be treated as such by the Acquiror
and the Seller on their Tax Returns to the extent permitted by Law.
(f) At the Closing and on the Transfer Date (prior to payment of
the Additional Purchase Price), the Seller shall deliver to the Acquiror a
duly executed bulk sales and/or Tax clearance certificate or certificates as
required by applicable Law or as reasonably requested by Acquiror.
(g) Except as otherwise provided in this Agreement, each Party
(or their respective Affiliates) shall be responsible for and shall pay all
Taxes payable on any payments made to such Party by the other Party (or their
respective Affiliates).
(h) Any dispute, controversy, or claim between Seller, on the
one hand, and Acquiror, on the other hand, arising out of or relating to the
provisions of this Agreement that relates to Taxes that cannot be resolved by
negotiations between Seller and Acquiror shall be submitted to a mutually
agreed-upon independent public accounting firm (the "ACCOUNTANTS") for
resolution. The Accountants shall control the proceedings related to the
dispute resolution and may request such evidence and information as it deems
necessary. The resolution reached by the Accountants shall be binding on the
Seller and Acquiror and their respective affiliates. The expenses of the
Accountants shall be borne equally by Seller, on the one hand, and Acquiror,
on the other hand.
45
Section 8.11 Employee Matters. Notwithstanding the
----------------
provisions of the Confidentiality Agreement or any existing Gestiva Contracts,
between the date of this Agreement and the Transfer Date, Acquiror shall have
the right, after consultation with and the prior approval of the Seller (which
approval shall not be unreasonably withheld), to contact the employees and
consultants of Seller currently performing services for the Gestiva Business
or whose work primarily relates to the Gestiva Business (each, a "Business
Employee"), and to discuss the possible employment or consultancy of such
employees by the Acquiror from and after the Transfer Date.
ARTICLE IX.
CONDITIONS TO THE OBLIGATIONS OF THE
PARTIES FOR THE CLOSING
Section 9.1 Seller's Conditions to Closing. The obligation
------------------------------
of the Seller to effect the Closing is subject to the satisfaction (or waiver
by the Seller), at or before the Closing, of each of the following conditions:
(a) The representations and warranties of the Acquiror contained
in ARTICLE VII of this Agreement shall be true and correct in all material
-----------
respects (without giving effect to any "materiality", "material adverse
effect" or "Acquiror Material Adverse Effect" qualifiers set forth therein) at
and as of the Closing Date as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case, as of such earlier
date) and the Acquiror shall have performed in all material respects all
agreements and covenants required by this Agreement or any Related Agreements
to be performed by it prior to or on the Closing Date. The Seller shall have
received a certificate as to satisfaction of the conditions set forth in this
Section 9.1(a) dated as of the Closing Date and executed by a duly authorized
- --------------
officer of the Acquiror.
(b) No Orders prohibiting the transactions contemplated hereby
shall have been instituted and not settled or otherwise terminated. No Law
shall have been enacted, entered, promulgated or enforced by any Governmental
or Regulatory Authority that is in effect and has the effect of making the
purchase and sale of the Purchased Assets illegal or otherwise prohibiting the
consummation of such purchase and sale. The waiting period (including any
extensions thereof) applicable to the consummation of the transactions
contemplated by this Agreement required pursuant to the HSR Act shall have
expired or been terminated.
(c) The Acquiror shall have delivered or caused to be delivered
to the Seller each of the documents, materials and funds as specified in
Section 5.2(b).
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(d) No Acquiror Material Adverse Effect shall have occurred.
Section 9.2 Acquiror's Obligations to Closing. The
---------------------------------
obligation of the Acquiror to effect the Closing is subject to the
satisfaction (or waiver by the Acquiror), at or before the Closing, of each of
the following conditions:
(a) The representations and warranties of the Seller contained
in ARTICLE VI of this Agreement shall be true and correct in all material
----------
respects (without giving effect to any "materiality", "material adverse
effect" or "Seller Material Adverse Effect" qualifiers set forth
46
therein) at and as of the Closing Date as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case, as
of such earlier date) and the Seller shall have performed in all material
respects all agreements and covenants required by this Agreement or any
Related Agreements to be performed by it prior to or on the Closing Date. The
Acquiror shall have received a certificate as to satisfaction of the
conditions set forth in this Section 9.2(a) dated as of the Closing Date and
--------------
executed by a duly authorized officer of the Seller.
(b) No Orders prohibiting the transactions contemplated hereby
shall have been instituted and not settled or otherwise terminated. No Law
shall have been enacted, entered, promulgated or enforced by any Governmental
or Regulatory Authority that is in effect and has the effect of making the
purchase and sale of the Purchased Assets illegal or otherwise prohibiting the
consummation of such purchase and sale. The waiting period (including any
extensions thereof) applicable to the consummation of the transactions
contemplated by this Agreement required pursuant to the HSR Act shall have
expired or been terminated.
(c) No Seller Material Adverse Effect shall have occurred.
(d) The Seller shall have delivered or caused to be delivered to
the Acquiror each of the documents and materials specified in Section 5.2(a).
--------------
(e) There shall not be pending any action, litigation or
proceeding by any Governmental or Regulatory Authority seeking to (i) prohibit
or restrain the transactions contemplated by this Agreement or (ii) seeking to
impose or confirm limitations on the ability of Acquiror or any of its
Subsidiaries to effectively exercise full rights of ownership of the Gestiva
Business or the Purchased Assets after the Closing.
ARTICLE X.
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES FOR THE TRANSFER DATE
Section 10.1 Seller's Obligations for the Transfer Date. The
------------------------------------------
obligation of the Seller to effect the transactions contemplated on the
Transfer Date is subject to the satisfaction (or waiver by the Seller), at or
before the Transfer Date, of each of the following conditions:
(a) The representations and warranties of the Acquiror contained
in ARTICLE VII of this Agreement shall be true and correct in all respects
-----------
(without giving effect to any "materiality", "material adverse effect" or
"Acquiror Material Adverse Effect" qualifiers set forth therein) at and as of
the Transfer Date as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case, as of such earlier date),
except where the failure of such representations and warranties to be true and
correct (without giving effect to any "materiality", "material adverse effect"
or "Acquiror Material Adverse Effect" qualifiers set forth therein) would not,
individually or in the aggregate, result in an Acquiror Material Adverse
Effect, and the Acquiror shall have performed in all material respects all
agreements and covenants required by this Agreement or any Related Agreements
to be performed by it prior to or on the Transfer Date. The Seller shall have
received a certificate as to satisfaction of the conditions set forth in this
Section 10.1(a) dated as of the Transfer Date and executed by a duly
- ---------------
47
authorized officer of the Acquiror.
(b) No Orders prohibiting the transactions contemplated hereby
shall have been instituted and not settled or otherwise terminated. No Law
shall have been enacted, entered, promulgated or enforced by any Governmental
or Regulatory Authority that is in effect and has the effect of making the
purchase and sale of the Purchased Assets illegal or otherwise prohibiting the
consummation of such purchase and sale.
(c) The Acquiror shall have delivered or caused to be delivered
to the Seller each of the documents, materials and funds specified in Section
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5.4(b).
- ------
(d) The Gestiva NDA Approval shall have occurred.
Section 10.2 Acquiror's Obligations for the Transfer Date.
--------------------------------------------
The obligation of the Acquiror to effect the transactions contemplated on the
Transfer Date is subject to the satisfaction (or waiver by the Acquiror), at
or before the Transfer Date, of each of the following conditions:
(a) The representations and warranties of the Seller contained
in ARTICLE VI of this Agreement shall be true and correct in all respects
----------
(without giving effect to any "materiality", "material adverse effect" or
"Seller Material Adverse Effect" qualifiers set forth therein) at and as of
the Transfer Date as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case, as of such earlier date),
except where the failure of such representations and warranties to be true and
correct (without giving effect to any "materiality", "material adverse effect"
or "Seller Material Adverse Effect" qualifiers set forth therein) would not,
individually or in the aggregate, result in a Seller Material Adverse Effect,
and the Seller shall have performed in all material respects all agreements
and covenants required by this Agreement or any Related Agreements to be
performed by it prior to or on the Transfer Date. The Acquiror shall have
received a certificate as to satisfaction of the conditions set forth in this
Section 10.2(a) dated as of the Transfer Date and executed by a duly
- ---------------
authorized officer of the Seller.
(b) No Orders prohibiting the transactions contemplated hereby
shall have been instituted and not settled or otherwise terminated. No Law
shall have been enacted, entered, promulgated or enforced by any Governmental
or Regulatory Authority that is in effect and has the effect of making the
purchase and sale of the Purchased Assets illegal or otherwise prohibiting the
consummation of such purchase and sale.
(c) All Seller Governmental Consents set forth on Section 6.3 of
-----------
the Seller Disclosure Schedule shall have been obtained or made.
(d) The Acquiror shall have received all Seller Third Party
Consents and all Gestiva Governmental Permits necessary to effect the
transactions contemplated by this Agreement and the Related Agreements (which
shall include the consents and permits set forth on Section 6.3(b) and Section
-------------- -------
6.8 of the Seller Disclosure Schedule, excluding the Gestiva FDA Submissions).
- ---
(e) There shall not be pending any action, litigation or
proceeding by any Governmental or Regulatory Authority seeking to (i) prohibit
or restrain the transactions
48
contemplated by this Agreement or (ii) seeking to impose or confirm
limitations on the ability of Acquiror or any of its Subsidiaries to
effectively exercise full rights of ownership of the Gestiva Business or the
Purchased Assets after the Transfer Date.
(f) The Acquiror shall have received the Initial Gestiva
Inventory.
(g) The Seller shall have delivered or caused to be delivered to
the Acquiror each of the documents and materials specified in Section 5.4(a).
--------------
(h) The Gestiva NDA Approval shall have occurred.
ARTICLE XI.
INDEMNIFICATION
Section 11.1 Survival of Representations, Warranties,
----------------------------------------
Covenants, Etc. The representations and warranties of the parties contained in
- ---------------
ARTICLE VI and ARTICLE VII hereof and in the Related Agreements (if any) shall
- ---------- -----------
survive the Closing until twenty-one (21) months after the Closing Date;
provided, however, that the representations and warranties of the Seller in
Section 6.2, Section 6.12 and Section 6.14 hereof shall survive the Closing
- ----------- ------------ ------------
until sixty (60) days following the expiration of the applicable statute of
limitations (with extensions) with respect to the matters addressed in such
sections. The period of time a representation or warranty survives the Closing
pursuant to the preceding sentence shall be the "SURVIVAL PERIOD" with respect
to such representation or warranty. The covenants and agreements of the
parties hereto contained herein shall survive in accordance with their
respective terms. So long as an Indemnified Party gives an Indemnification
Claim Notice for such claim on or before the expiration of the applicable
Survival Period, such Indemnified Party shall be entitled to pursue its rights
to indemnification under Section 11.2(a) or Section 11.2(b) hereof, as
--------------- ---------------
applicable. In the event notice of any claim for indemnification under Section
-------
11.2(a) or Section 11.2(b) hereof shall have been given within the applicable
- ------- ---------------
Survival Period and such claim has not been finally resolved by the expiration
of such Survival Period, the representations and warranties that are the
subject of such claim shall survive the end of the Survival Period of such
representations or warranties until such claim is finally resolved, but such
representations and warranties shall only survive with respect to such
asserted claim.
Section 11.2 Indemnification.
---------------
(a) By the Seller. Subject to Section 11.1 and Section 11.3,
------------- ------------ ------------
from and after the Closing, the Seller shall indemnify, reimburse, defend and
hold harmless the Acquiror, its Affiliates and their respective officers,
directors, employees, agents, successors and assigns from and against any and
all costs, losses, Liabilities, damages, fines, penalties, interest,
judgments, lawsuits, deficiencies, claims, expenses (including reasonable fees
and disbursements of attorneys and other professionals, including third party
consultants) (collectively, "DAMAGES") incurred in connection with, arising
out of, resulting from or incident to (i) any breach of, or inaccuracy in, any
representation or warranty of the Seller set forth in this Agreement, any
Related Agreement or any certificate of the Seller delivered to Acquiror at
the Closing or the Transfer Date, (ii) the failure to perform any covenant or
agreement of the Seller set forth in the
49
Agreement or in any of the Related Agreements, (iii) any Excluded Asset, (iv)
any Excluded Liability (including, but not limited to, any Excluded Tax
Liability); and (v) the fraud or willful misconduct of the Seller.
(b) By the Acquiror. Subject to Section 11.1 and Section 11.3,
--------------- ------------ ------------
from and after the Closing, the Acquiror shall indemnify, defend and hold
harmless the Seller, its Affiliates and their respective officers, directors,
employees, agents, successors and assigns from and against any and all Damages
incurred in connection with, arising out of, resulting from or incident to (i)
any breach or inaccuracy in any representation or warranty of the Acquiror set
forth in this Agreement, any Related Agreement or any certificate of the
Acquiror delivered to the Seller at Closing or the Transfer Date, (ii) the
failure to perform any covenant or agreement of the Acquiror set forth in this
Agreement or in any of the Related Agreements, (iii) any Assumed Liabilities;
and (iv) the fraud or willful misconduct of the Acquiror.
(c) Procedure for Claims. The Indemnified Party shall give the
--------------------
indemnifying party prompt written notice (an "INDEMNIFICATION CLAIM NOTICE")
of any Damages or discovery of fact upon which such Indemnified Party intends
to base a request for indemnification under Section 11.2(a) or Section
--------------- -------
11.2(b). Failure to give any such Indemnification Claim Notice shall not
- -------
constitute a waiver of any right to indemnification or reduce in any way the
indemnification available hereunder, except to the extent the indemnifying
party demonstrates that such failure to notify has materially prejudiced the
indemnifying party. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount of such Damages (to the
extent that the nature and amount of such Damages are known at such time). The
Indemnified Party shall furnish promptly to the indemnifying party copies of
all papers and official documents received in respect of any Damages. All
indemnification claims in respect of a party, its Affiliates or their
respective directors, officers, employees and agents (collectively, the
"INDEMNITEES" and each an "INDEMNITEE") shall be made solely by such party to
this Agreement (the "INDEMNIFIED PARTY").
(d) Third Party Claims. The obligations of an indemnifying party
------------------
under this Section 11.2(d) with respect to Damages arising from claims of any
---------------
third party that are subject to indemnification as provided for Section 11.2(a)
---------------
or Section 11.2(b) (a "THIRD PARTY CLAIM") shall be governed by and be
---------------
contingent upon the following additional terms and conditions:
(i) Subject to Section 11.2(d)(iii) and Section
-------------------- -------
11.2(d)(iv), at its option, the indemnifying party may assume the defense of
- -----------
any Third Party Claim by giving written Notice to the Indemnified Party within
ten (10) days after the indemnifying party's receipt of an Indemnification
Claim Notice, provided, however, that prior to assuming control of the defense
of such Third Party Claim the indemnifying party shall agree that the
indemnifying party shall be obligated to indemnify the Indemnified Party and
hold the Indemnified Party harmless from and against any and all Damages
caused by or arising out of any settlement of such Third Party Claim or any
judgment in connection with such Third Party Claim when and only if it is
finally determined that such Indemnified Party is entitled to indemnification
pursuant to Section 11.2. 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; provided,
however, that such counsel is reasonably acceptable to the Indemnified Party,
provided, further, that in the event that (i) a conflict of interest arises
between the indemnifying
50
party and the Indemnified Party such that such legal counsel cannot represent
both the indemnifying party and the Indemnified Party or (ii) the Indemnitee
has been advised in writing by counsel that there may be one or more legal
defenses available to the Indemnitee that are different from or in addition to
that of the indemnifying party, the Indemnified Party may retain its own legal
counsel at the expense of the indemnifying party and the indemnifying party
and its counsel shall cooperate with the Indemnified Party and its counsel, as
may be reasonably requested. Except as set forth above, should the
indemnifying party assume the defense of a Third Party Claim, 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.
(ii) Without limiting Section 11.2(d)(i), 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 sole cost
and expense, except as described in Section 11.2(d)(i), unless (A) the
------------------
employment thereof has been specifically authorized by the indemnifying party
in writing, or (B) the indemnifying party has failed to assume the defense and
employ counsel in accordance with Section 11.2(d)(i) (in which case the
------------------
Indemnified Party shall control the defense).
(iii) With respect to any Damages relating solely to the
payment of money damages in connection with a Third Party Claim and that will
not result in the Indemnitee's or the Indemnified Party's becoming subject to
injunctive or other relief or otherwise adversely affect the business or
reputation 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 Damages, on such terms as the indemnifying party, in its sole
discretion, shall deem appropriate, provided that, as a result of or in
connection with any such settlement each Indemnitee or Indemnified Party shall
receive a full release with respect to such claim and such settlement would
not otherwise adversely affect the business or reputation of the Indemnitee.
The indemnifying party shall not be liable for any settlement or other
disposition of Damages by an Indemnitee or Indemnified Party that is reached
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld. If the indemnifying party chooses to defend or
prosecute any Third Party Claim, no Indemnitee or Indemnified Party 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.
(iv) Notwithstanding the foregoing, the indemnifying party
shall not be entitled to assume the defense of any Third Party Claim (and
shall be liable for the reasonable fees and expenses of counsel incurred by
the Indemnified Party in defending such Third Party Claim) if the Third Party
Claim seeks an order, injunction or other equitable relief or relief for other
than money damages against the Indemnified Party that the Indemnified Party
reasonably determines cannot be separated from any related claim for money
damages. If such equitable relief or other relief portion of the Third Party
Claim can be so separated from that for money damages, the indemnifying party
shall be entitled to assume the defense of the portion relating to money
damages, subject to the provisions of this Section 11.2(d).
---------------
51
(v) Regardless of whether the indemnifying party chooses
to defend or prosecute any Third Party Claim, the Indemnified Party and the
indemnifying party shall, and shall cause each other Indemnitee or Affiliate
of the indemnifying party, as applicable, 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 or Indemnified Party, as applicable, to,
and reasonable retention by each such Person of, records and information that
are reasonably relevant to such Third Party Claim, and making each such Person
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 each such Person for all
its reasonable out-of-pocket expenses in connection therewith.
(e) Other Claims. In the event any Indemnified Party has a claim
------------
against any indemnifying party under Section 11.2(a) or Section 11.2(b) that
--------------- ---------------
does not involve a Third Party Claim being asserted against or sought to be
collected from such Indemnified Party, the Indemnified Party shall deliver an
Indemnification Claim Notice regarding such claim with reasonable promptness
to the indemnifying party. The failure by any Indemnified Party so to notify
the indemnifying party shall not relieve the indemnifying party from any
liability that it may have to such Indemnified Party under Section 11.2(a) or
---------------
Section 11.2(b), except to the extent that the indemnifying party demonstrates
- ---------------
that such failure to notify has materially prejudiced the indemnifying party.
If the indemnifying party does not notify the Indemnified Party within twenty
(20) Business Days following its receipt of such notice that the indemnifying
party disputes its liability to the Indemnified Party under Section 11.2(a) or
---------------
Section 11.2(b), such claim specified by the Indemnified Party in such notice
- ---------------
shall be conclusively deemed a Liability of the indemnifying party under
Section 11.2(a) or Section 11.2(b) and the indemnifying party shall pay the
- --------------- ---------------
amount of such Liability to the Indemnified Party on demand or, in the case of
any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined.
(f) Resolution of Conflicts and Claims.
----------------------------------
(i) If the indemnifying party objects in writing to any
claim for indemnification made by an Indemnified Party in any Indemnification
Claim Notice (an "OBJECTION NOTICE"), the indemnifying party and the
Indemnified Party shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims and shall provide
information to the other party (as reasonably requested) related to the issues
set forth in the Objection Notice. If the indemnifying party and the
Indemnified Party should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties.
(ii) If no such agreement is reached after good faith
negotiation, either the indemnifying party or the Indemnified Party may demand
mediation of the dispute, unless the amount of the damage or loss is at issue
in a pending action or proceeding involving a Third Party Claim, in which
event mediation shall not be commenced until such amount is ascertained or
both parties agree to mediation. In any such mediation, indemnifying party and
the Indemnified Party agree to employ a mediator from the American Arbitration
Association (the
52
"AAA") to assist them in reaching resolution of such dispute according to the
Commercial Mediation Rules of the AAA. The mediator shall be a corporate
attorney mutually selected by the Acquiror and Seller. The fees and expenses
of the mediator shall be shared equally by indemnifying party and the
Indemnified Party. If, after mediation efforts, the indemnifying party and the
Indemnified Party should agree as to all or a portion of a claim, a memorandum
setting forth such agreement shall be prepared and signed by both parties. If
after reasonable efforts, and over a period of sixty (60) calendar days, the
parties are unable to reach agreement on such dispute utilizing the mediator,
the parties shall be permitted to proceed with any other remedy available to
such party.
(g) Effect of Investigation or Knowledge. Any claim by the
------------------------------------
Acquiror or its Affiliates or any of their respective directors, officers,
employees or agents for indemnification shall not be adversely affected by any
investigation by or opportunity to investigate afforded to the Acquiror, nor
shall such a claim be adversely affected by the Acquiror's Knowledge on or
before the Transfer Date of any breach of the type specified in this Section
-------
11.2 or of any state of facts that may give rise to such a breach. The waiver
- ----
of any condition based on the accuracy of any representation or warranty, or
on the performance of or compliance with any covenant or obligation, will not
adversely affect the right to indemnification, payment of Damages or other
remedy based on such representations, warranties, covenants or obligations.
(h) Interpretation. For purposes of Section 11.2(a) and Section
-------------- --------------- -------
11.2(b), in determining whether a breach of a representation, warranty,
- -------
covenant or agreement has occurred, all materiality qualifiers in such
representation, warranty, covenant or agreement (i.e. "material," "material
adverse effect," "Seller Material Adverse Effect," "Acquiror Material Adverse
Effect" or similar phrase), if any, shall be disregarded for purposes of
making such determination and shall be determined as if such representation,
warranty, covenant or agreement were made without such materiality
qualification and (ii) Damages incurred or suffered by an Indemnified Party
arising out of any breach of any representation, warranty, covenant or
agreement shall be determined without deduction on account of any materiality,
Seller Material Adverse Effect or Acquiror Material Adverse Effect
qualification contained in any representation, warranty, covenant or agreement
giving rise to the claim for indemnification hereunder.
Section 11.3 Limitations.
-----------
(a) Except for representations, warranties and covenants
relating to Taxes or any Damages arising from or related to the Excluded Tax
Liabilities or fraud, in no event shall the Seller or the Acquiror be liable
for any Damages pursuant to Section 11.2(a) or Section 11.2(b), as applicable,
--------------- ---------------
unless and until the aggregate amount of all such Damages exceeds $150,000
(the "LIABILITY THRESHOLD"), in which case the Seller or the Acquiror, as
applicable, shall be liable for all such Damages in excess of the Liability
Threshold, and then not for any Damages in excess of the Liability Cap for all
claims made under such Section 11.2(a) or Section 11.2(b), as applicable, in
--------------- ---------------
the aggregate; provided, however, that for purposes of claims made by the
Acquiror under Section 11.2(a)(iii), Section 11.2(a)(iv) or Section 11.2(a)(v),
-------------------- -----------------------------------------
the Seller shall be liable for all Damages suffered by the Acquiror without
regard to the Liability Threshold or Liability Cap; provided, further, that
for purposes of claims made by the Seller under Section 11.2(b)(iii) or
--------------------
Section 11.2(b)(iv) or for claims made by the Seller relating to the
- -------------------
Acquiror's breach of its payment obligations in Section 4.1 or Section 4.2,
----------- -----------
the Acquiror shall be liable for all
53
Damages suffered by the Seller without regard to the Liability Threshold or
Liability Cap.
(b) The amount of any Damages recoverable by a party under
Section 11.2 shall be reduced by: (i) the amount of any insurance proceeds
- ------------
actually paid to the Indemnified Party or Indemnitee, as applicable, relating
to such claim (net cost of recovery) and (ii) any recoveries actually received
by the Indemnified Party from third parties pursuant to indemnification or
otherwise with respect thereto (net of cost of recovery).
(c) Following the Closing, the indemnification expressly
provided in this Article XI (except for indemnification claims arising out of
----------
the fraud or willful misconduct of either party) shall be the sole and
exclusive remedy for any breach of representation or warranty by the parties
hereto under this Agreement or any Related Agreement, except to the extent
such indemnification is held by a court of competent jurisdiction to be
ineffective or unenforceable.
(d) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE
INDEMNIFICATION OBLIGATIONS OF THE PARTIES HERETO SHALL NOT EXTEND TO
CONSEQUENTIAL OR PUNITIVE DAMAGES.
Section 11.4 Conflict with other Provisions. To the extent
------------------------------
that any provision in this ARTICLE XI conflicts with any provision of this
----------
Agreement relating to Taxes (including, but not limited to, the provisions of
Section 8.10(b)), the other provisions of this Agreement relating to Taxes,
- ---------------
and not the provisions of this ARTICLE XI, shall govern.
----------
ARTICLE XII.
TERMINATION
Section 12.1 Methods of Termination. This Agreement may be
----------------------
terminated:
(a) at any time prior to the Transfer Date, by mutual written
agreement of the Seller and the Acquiror;
(b) at any time by either the Seller or the Acquiror, if the
Closing shall not have occurred by March 31, 2008 or if the Transfer Date has
not occurred by the second (2nd) anniversary of the Closing Date (the relevant
date being referred to herein as the "TERMINATION DATE"); provided, however,
that the right to terminate the Agreement pursuant to this Section 12.1(b)
---------------
shall not be available to a party if such party's failure to perform in all
material respects any of their obligations under this Agreement or any Related
Agreement results in the failure of the Closing to occur by such time;
(c) at any time prior to the Transfer Date by either the Seller
or the Acquiror, if there shall be in effect any Law that prohibits the
Closing or the consummation of the transactions contemplated at the Transfer
Date or if such transactions would violate any non-appealable Order, issued by
a competent Governmental Entity, that permanently restrains, enjoins or
prohibits the consummation of the transactions contemplated by this Agreement;
54
(d) at any time prior to the Closing Date by either the Seller
or the Acquiror (as the non-breaching party), if the other party has breached
any material representation, warranty, covenant or agreement hereunder, such
breach causes any condition to Closing hereunder as set forth in ARTICLE IX to
----------
not be satisfied, such breach has not been waived by the non-breaching party,
and the breach has not been cured within a period of thirty (30) days
following the terminating party's written notice of such breach and the
breaching party is diligently proceeding to cure such breach during such
period, unless such breach is not capable of cure, in which event the
non-breaching party may terminate immediately;
(e) at any time prior to the Transfer Date by either the Seller
or the Acquiror (as the non-breaching party), if the other party has breached
any material representation, warranty, covenant or agreement hereunder, such
breach causes any condition to the transfer of the Purchased Assets and
Assumed Liabilities on the Transfer Date set forth in ARTICLE X to not be
---------
satisfied, such breach has not been waived by the non-breaching party, and the
breach has not been cured within a period of thirty (30) days following the
terminating party's written notice of such breach and the breaching party is
diligently proceeding to cure such breach during such period, unless such
breach is not capable of cure, in which event the non-breaching party may
terminate immediately;
(f) at any time prior to the Transfer Date by Acquiror, if there
shall has been any materially adverse changes to the FDA requirements
necessary for Seller to submit a Complete Response amendment filing pursuant
to the Manual of Policies and Procedures 6020.4, or any successor manual of
policies and procedures;
(g) at any time prior to the Closing Date by the Acquiror, if a
Seller Material Adverse Effect shall have occurred since the date of this
Agreement;
(h) at any time prior to the Transfer Date by the Acquiror, if
the FDA requires (i) any additional clinical studies to be conducted prior to
the Gestiva NDA Approval Date for the approval of Gestiva or (ii) any
additional studies to be conducted following the Gestiva NDA Approval Date
which shall be materially more expensive or time consuming than the studies
set forth on Schedule 12.1(h), such schedule to be mutually agreed upon by the
----------------
parties in good faith prior to the Closing Date; or
(i) at any time prior to the Transfer Date by the Acquiror, if
the FDA (i) revokes or rejects Gestiva's orphan drug exclusivity, (ii)
reinstates approval of a previously approved product containing the API or
(iii) approves an ANDA or NDA which relies, in whole or in part, upon a
previously approved product containing the API as the reference drug.
Section 12.2 Procedure upon Termination. In the event of
--------------------------
termination of this Agreement under Section 12.1, written Notice thereof shall
------------
forthwith be given to the other party, and the transactions contemplated by
this Agreement shall be terminated and abandoned, without further action by
the parties hereto. If this Agreement is terminated as provided herein:
(a) each party, if requested, will redeliver all documents, work
papers and other material received from of the other party and its Affiliates
relating to the transactions contemplated hereby, whether so obtained before
or after the execution hereof, to the party
55
furnishing the same; and
(b) no party hereto and none of their respective directors,
officers, stockholders or Affiliates shall have any further liability or
obligation to any other party to this Agreement, other than Section 12.2, and
------------
ARTICLE XIII; provided, however, that nothing in this Section 12.2(b) shall
- ------------ ---------------
prejudice any rights, claims, or causes of action that may have accrued
hereunder or with respect hereto prior to the date of such termination,
including for breach of this Agreement (whether based upon the termination or
otherwise).
Section 12.3 Termination Fee. In the event of termination of
---------------
this Agreement by the Acquiror pursuant to Section 12.1(d) or Section 12.1(e),
--------------- ---------------
the Seller shall pay to the Acquiror an amount equal to the Initial Purchase
Price Amount and the NDA Milestone Payment, to the extent such payments were
previously made by the Acquiror, and shall pay an additional amount to the
Acquiror equal to all Reimbursable Expenses paid by the Acquiror to the Seller
hereunder. All payments under this Section 12.3 will be made within five (5)
------------
Business Days from the termination of this Agreement.
ARTICLE XIII.
MISCELLANEOUS
Section 13.1 Notices. All Notices, requests and other
-------
communications hereunder must be in writing and will be deemed to have been
duly given only if delivered personally against written receipt or by
facsimile transmission with answer back confirmation or mailed (postage
prepaid by certified or registered mail, return receipt requested) or by
nationally recognized overnight courier that maintains records of delivery to
the parties at the following addresses or facsimile numbers:
If to the Acquiror to:
K-V Pharmaceutical Company
2503 S. Hanley Road
St. Louis, Missouri 63144
Facsimile: (314) 645-4705
Attention: Vice President, Business Development
General Counsel
With copies to:
Latham & Watkins LLP
650 Town Center Drive. 20th Floor
Costa Mesa, California 92626
Facsimile: (714) 755-8290
Attention: Charles K. Ruck, Esq.
Kevin B. Espinola, Esq.
If to the Seller to:
56
Hologic, Inc.
35 Crosby Drive
Bedford, Massachusetts 01730-1401
Facsimile: (781) 280-0669
Attention: Mark Casey
With copies to:
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, Massachusetts 02111
Facsimile: (617) 856-8201
Attention: Philip J. Flink, Esq.
All such Notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 13.1, be deemed given
------------
upon receipt, (ii) if delivered by facsimile to the facsimile number as
provided in this Section 13.1, be deemed given upon receipt by the sender of
------------
the answer back confirmation and (ii) if delivered by mail in the manner
described above or by overnight courier to the address as provided in this
Section 13.1, be deemed given upon receipt (in each case regardless of whether
- ------------
such Notice, request or other communication is received by any other Person to
whom a copy of such Notice, request or other communication is to be delivered
pursuant to this Section 13.1). Any party from time to time may change its
------------
address, facsimile number or other information for the purpose of Notices to
that party by giving Notice specifying such change to the other party hereto
in accordance with the terms of this Section 13.1.
------------
Section 13.2 Entire Agreement. This Agreement (and all
----------------
Exhibits and Schedules attached hereto and all other documents delivered in
connection herewith) supersedes all prior discussions and agreements, both
oral and written, among the parties with respect to the subject matter hereof
and contains the sole and entire agreement among the parties hereto with
respect to the subject matter hereof. Further, the parties agree and
acknowledge that the Confidentiality Agreement shall remain in effect until,
but shall terminate effective as of, the Transfer Date.
Section 13.3 Waiver. Any term or condition of this Agreement
------
may be waived at any time by the party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as
a waiver of the same or any other term or condition of this Agreement on any
future occasion. All remedies, either under this Agreement or by Law or
otherwise afforded, will be cumulative and not in the alternative.
57
Section 13.4 Amendment. This Agreement may be amended,
---------
supplemented or modified only by a written instrument mutually agreed upon and
duly executed by each party hereto.
Section 13.5 Third Party Beneficiaries. The terms and
-------------------------
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns and it is not the
intention of the parties to confer third party beneficiary rights upon any
other Person, except as achieved through the indemnification clause set forth
in Section 11.2.
------------
Section 13.6 Assignment; Binding Effect. Neither this
--------------------------
Agreement nor any rights, interests or obligations hereunder shall be
transferred, assigned or delegated by any party hereto without the prior
written consent of the other party hereto and any attempt to make any such
transfer assignment or delegation without such consent shall be null and void;
provided, however, that (i) without the consent of the Acquiror, the Seller
may (in whole or in part) transfer, assign and delegate its rights, interests
and obligations to one or more of its Affiliates or to one or more banks or
other lenders providing financing to the Seller or its Affiliates from time to
time, (ii) without the consent of the Seller, the Acquiror may (in whole or in
part) transfer, assign and delegate its rights, interests and obligations to
any Affiliate of the Acquiror (including pursuant to Section 4.7 hereof), and
-----------
(iii) without the consent of the Seller, the Acquiror may transfer and assign
its rights to indemnity, in whole or in part, to any purchaser of all or
substantially all of the Gestiva Business; provided, further, this Agreement
is binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and permitted assigns and no transfer,
assignment or delegation shall limit, affect or discharge the assignor's
obligations hereunder. In addition, notwithstanding the foregoing, either
party hereto may assign this Agreement, without the prior written consent of
the other party hereto, to a Person that succeeds to all or substantially all
of such party's business or assets related to this Agreement, whether by sale,
merger, operation of law or otherwise, provided that such assignee or
transferee agrees in writing to be bound by the terms and conditions of this
Agreement.
Section 13.7 Headings. The headings used in this Agreement
--------
have been inserted for convenience of reference only and do not define or
limit the provisions hereof.
Section 13.8 Severability. If any provision of this
------------
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom, and (iv) in
lieu of such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar to the terms of such illegal, invalid or unenforceable
provision as may be possible and reasonably acceptable to the parties herein.
Section 13.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
-------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
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DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES. ALL DISPUTES UNDER, OR
PERTAINING TO, THIS AGREEMENT SHALL BE RESOLVED EXCLUSIVELY IN THE STATE OR
FEDERAL COURTS OF THE STATE OF MISSOURI.
Section 13.10 Expenses. Except as otherwise provided in this
--------
Agreement, each party hereto shall pay its own expenses and costs incidental
to the preparation of this Agreement and to the consummation of the
transactions contemplated hereby.
Section 13.11 Counterparts. This Agreement may be executed
------------
in any number of counterparts and by facsimile, each of which will be deemed
an original, but all of which together will constitute one and the same
instrument. A facsimile copy shall be a sufficient proof of signature, without
it being necessary to produce the original copy.
Section 13.12 Remedies. Except as otherwise provided in
--------
Section 11.3(c), any and all remedies herein expressly conferred upon a party
shall be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy shall not preclude the exercise of any other remedy.
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which the parties are entitled at law or in equity.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto all as of the date first above written.
ACQUIROR:
K-V PHARMACEUTICAL COMPANY,
a Delaware corporation
By: /s/ Thomas J. Brya
----------------------------------------
Name: Thomas J. Brya
--------------------------------------
Title: VP, Commercial Growth and Strategies
-------------------------------------
SELLER:
CYTYC PRENATAL PRODUCTS, CORP.,
a Delaware corporation
By: /s/ Glenn P. Muir
----------------------------------------
Name: Glenn P. Muir
--------------------------------------
Title: Executive Vice President
-------------------------------------
PARENT (SOLELY FOR PURPOSES OF SECTION 8.6
AND ARTICLE XI):
HOLOGIC, INC.,
a Delaware corporation
By: /s/ Thomas J. Umbel
----------------------------------------
Name: Thomas J. Umbel
--------------------------------------
Title: Sr. VP Bus. Dev.
-------------------------------------
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