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EXHIBIT 2.1
***TEXT OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL
TREATMENT REQUESTED UNDER
17 C.F.R. SECTIONS 200.80(b)(4)
AND 240.24b-2
================================================================================
EXECUTION COPY
PRODUCT
ACQUISITION AGREEMENT
by and
between
VALEANT PHARMACEUTICALS
NORTH AMERICA
(as
buyer)
and
INTERMUNE, INC.
(as
seller)
================================================================================
November
28, 2005
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TABLE OF
CONTENTS
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Section
Page
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ARTICLE I - DEFINITIONS 1
SECTION 1.1.
DEFINED TERMS 1
SECTION 1.2.
CONSTRUCTION 12
ARTICLE II - THE TRANSACTION
12
SECTION 2.1.
TRANSFER OF PURCHASED ASSETS AND INVENTORY. 12
SECTION 2.2.
EXCLUDED ASSETS. 13
SECTION 2.3.
ASSUMED LIABILITIES 14
SECTION 2.4.
EXCLUDED LIABILITIES. 14
SECTION 2.5.
PURCHASE PRICE AND INVENTORY COST 14
SECTION 2.6.
RISK OF LOSS 15
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER 16
SECTION 3.1.
ORGANIZATION AND AUTHORITY 16
SECTION 3.2.
TITLE TO PURCHASED ASSETS AND INVENTORY 16
SECTION 3.3.
CONSENTS; NO VIOLATIONS. 16
SECTION 3.4.
REGULATORY APPROVALS. 17
SECTION 3.5.
COMPLIANCE WITH LAWS AND LITIGATION. 17
SECTION 3.6.
NO MATERIAL ADVERSE CHANGE. 18
SECTION 3.7.
CONTRACTS.
18
SECTION 3.8.
INVENTORY AND RETURNS. 18
SECTION 3.9.
TAX MATTERS 19
SECTION 3.10.
INTELLECTUAL PROPERTY. 19
SECTION 3.11.
PRODUCT RECORDS 21
SECTION 3.12.
BROKERS, FINDERS, ETC 21
SECTION 3.13. FINANCIAL STATEMENTS. 21
SECTION 3.14.
INSURANCE.
21
SECTION 3.15.
SUFFICIENCY 22
SECTION 3.16.
GOVERNMENT MULTI-PRODUCT CONTRACTS. 22
SECTION 3.17.
REGULATORY COMPLIANCE 23
SECTION 3.18.
PRODUCT REGISTRATIONS. 24
SECTION 3.19.
NO OTHER WARRANTIES 25
SECTION 3.20.
ADEQUACY OF DISCLOSURE 25
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER 25
SECTION 4.1.
ORGANIZATION AND AUTHORITY 25
SECTION 4.2.
CONSENTS; NO VIOLATIONS. 26
SECTION 4.3.
BROKERS, FINDERS, ETC 26
SECTION 4.4.
FINANCING
26
SECTION
4.5. LITIGATION
26
ARTICLE V - COVENANTS OF SELLER PRIOR TO CLOSING 27
SECTION 5.1.
ACCESS TO INFORMATION 27
SECTION 5.2. CONDUCT OF THE PRODUCT BUSINESS. 27
SECTION 5.3.
REQUIRED APPROVALS AND CONSENTS 27
SECTION 5.4.
NOTICE OF DEFAULT 27
SECTION 5.5.
NO NEGOTIATION 28
SECTION 5.6.
REASONABLE BEST EFFORTS 28
SECTION 5.7.
TRANSITION ACTIVITIES. 28
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ARTICLE VI - COVENANTS OF BUYER PRIOR TO CLOSING 28
SECTION 6.1.
REQUIRED APPROVALS AND CONSENTS 28
SECTION 6.2.
NOTICE OF DEFAULT 28
SECTION 6.3.
REASONABLE BEST EFFORTS 29
ARTICLE VII - CLOSING AND TERMINATION 29
SECTION 7.1.
CLOSING
29
SECTION 7.2.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
BUYER AND
SELLER
29
SECTION 7.3.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS 29
SECTION 7.4.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS 30
SECTION 7.5.
CLOSING DELIVERIES. 31
SECTION 7.6.
TERMINATION
32
SECTION 7.7.
PROCEDURE AND EFFECT OF TERMINATION 33
ARTICLE VIII - CERTAIN OTHER COVENANTS 33
SECTION 8.1.
HSR FILINGS 33
SECTION 8.2.
INVENTORY COST ADJUSTMENT 34
SECTION 8.3.
PRODUCT RETURNS, REBATES AND CHARGEBACKS 35
SECTION 8.4.
TRANSITIONAL TRADEMARK LICENSE. 38
SECTION 8.5.
CUSTOMER BILLING 39
SECTION 8.6.
COVENANT NOT TO COMPETE 39
SECTION 8.7.
COOPERATION. 39
SECTION 8.8.
CLINICAL TRIALS 40
SECTION 8.9.
EMPLOYEES
40
SECTION 8.10.
TAX MATTERS. 40
SECTION 8.11.
NOTICE TO CUSTOMERS 42
SECTION 8.12.
ASSISTANCE IN SUPPLY OF PRODUCT 42
SECTION 8.13.
ADVERSE EXPERIENCE REPORTS 42
SECTION 8.14.
REGULATORY MATTERS.
42
SECTION 8.15.
DIFFERENTIATION OF PRODUCT 43
SECTION 8.16.
[***]
43
SECTION 8.17.
BOOKS AND RECORDS 44
SECTION 8.18.
NON-EXCLUSIVE LICENSE 44
SECTION 8.19.
ASSISTANCE REGARDING REQUIRED SEC
FINANCIAL
DISCLOSURES
44
ARTICLE IX - INDEMNIFICATION 45
SECTION 9.1.
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES 45
SECTION 9.2.
INDEMNIFICATION. 45
SECTION 9.3.
INDEMNIFICATION PROCEDURES. 47
SECTION 9.4.
LIMITATIONS. 49
SECTION 9.5.
RIGHT OF SETOFF 49
ARTICLE X - MISCELLANEOUS PROVISIONS 49
SECTION 10.1.
CONFIDENTIALITY AND PUBLICITY. 49
SECTION 10.2.
NOTICES
51
SECTION 10.3.
MODIFICATION; WAIVER 52
SECTION
10.4. EXPENSES
52
SECTION 10.5.
ENTIRE AGREEMENT 52
SECTION 10.6.
ASSIGNMENT
53
SECTION 10.7. THIRD PARTIES 53
SECTION 10.8.
WAIVER
53
SECTION 10.9.
SEVERABILITY 53
SECTION 10.10.
GOVERNING LAW 53
SECTION 10.11.
HEADINGS
53
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REQUESTED
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SECTION 10.12.
EXECUTION IN COUNTERPARTS 53
SECTION 10.13.
FORCE MAJEURE 53
SECTION 10.14.
RELATIONSHIP OF THE PARTIES 54
SECTION 10.15.
ARBITRATION 54
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PRODUCT
ACQUISITION AGREEMENT
This PRODUCT ACQUISITION AGREEMENT
(as amended from time to time, the
"Agreement"), dated November 28, 2005 (the "Execution
Date"), is made and
entered into by and between VALEANT PHARMACEUTICALS NORTH AMERICA, a Delaware
corporation (the "Buyer"), and INTERMUNE, INC., a Delaware
corporation (the
"Seller"). Buyer and Seller are sometimes collectively referred to
herein as the
"Parties" and separately as a "Party."
RECITALS
WHEREAS, Seller is a
biopharmaceutical company focused on developing and
commercializing innovative therapies in hepatology and pulmonology;
WHEREAS, Buyer is a global,
research-based, specialty pharmaceutical
company that discovers, develops, manufactures and markets pharmaceutical
products, primarily in the areas of neurology, dermatology and infectious
disease;
WHEREAS, Seller has determined that
the sale of certain products and
product related rights at this time is consistent with its current business
strategy;
WHEREAS, Buyer has determined that
the acquisition of those certain
products and product related rights at this time is consistent with its current
business strategy; and
WHEREAS, Seller desires to sell such
products and product related rights to
Buyer, and Buyer desires to purchase such products and product related rights
from Seller, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of
the promises, representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto, intending to be legally bound hereby, agree
as
follows:
ARTICLE I --
DEFINITIONS
SECTION 1.1. DEFINED TERMS. For the
purposes of this Agreement, the
following words and phrases shall have the following meanings whether in the
singular or the plural:
"Affiliate" shall mean any
Person which controls, is controlled by, or is
under common control with the applicable Person. For purposes of this
definition, "control" shall mean: (a) in the case of corporate
entities, direct
or indirect ownership of at least fifty percent (50%) of the stock or shares
(or
such lesser percentage which is the maximum allowed to be owned by a foreign
corporation in a particular jurisdiction) entitled to vote for the election of
directors or otherwise having the power to vote on or direct the affairs of
such
Person; and (b) in the case of
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non-corporate entities, direct or indirect ownership of at least fifty percent
(50%) of the equity interest or the power to direct the management and policies
of such non-corporate entities.
"AGHC Trial" shall mean
the AGHC-002 (IND #11,599) Phase 2, randomized,
dose-ranging, open label study of safety and tolerability of consensus
interferon-alpha (CIFN) plus interferon gamma-1b (IFN-y 1b) with or without
Ribavirin (RBV) in the treatment of patients with chronic Hepatitis C who are
nonresponders to pegylated-interferon-a (2a or 2b) plus RBV.
"Agreement" shall have the
meaning set forth in the first paragraph of this
Agreement.
"Amgen" means Amgen Inc.
"Amgen Agreements" means
the Amgen License Agreement, Amgen Assignment,
Assumption and Consent Agreement, and Amgen Quality Agreement.
"Amgen Assignment, Assumption
and Consent Agreement" means the Assignment,
Assumption and Consent Agreement, dated June 15, 2001, by and among Amgen,
InterMune, and Yamanouchi Europe, B.V.
"Amgen Consent" means that certain
consent, in the form agreed upon by
Buyer and Seller on or prior to the date hereof, to be executed by Amgen, Buyer
and Seller pursuant to which Amgen consents to Seller assigning to Buyer the
Amgen Agreements.
"Amgen License Agreement"
shall mean that certain License and
Commercialization Agreement, dated June 15, 2001, by and between Amgen, Inc.
and
Seller, as amended from time to time, including but not limited to that certain
Amendment No. 1, dated April 24, 2002, that certain Amendment Number 2, dated
December 31, 2004, and that certain Amendment No. Three, dated January 13,
2005.
"Amgen License Rights"
shall mean all of the rights of Seller, including
but not limited to Seller's rights as licensee and sublicensee, under the Amgen
License Agreement.
"Amgen Quality Agreement"
means the Quality Agreement, dated March 22,
2002, between Amgen and Seller.
"Ancillary Agreements"
shall have the meaning set forth in Section 7.3(g).
"Applicable Law" shall
mean all applicable provisions of all statutes,
laws, rules, regulations, administrative codes, ordinances, decrees, orders,
decisions, guidance documents, injunctions, awards, judgments, and permits and
licenses of or from Governmental Authorities relating to or governing the use
or
regulation of the subject item, including, where applicable, Tax Law.
"Asset Acquisition
Statement" shall have the meaning set forth in Section
8.10(a).
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"Assumed Liabilities"
shall mean the Liabilities set forth in Section 2.3.
"Basket" shall have the
meaning set forth in Section 9.4(a).
"BI Austria" means
Boehringer Ingelheim Austria GmbH.
"BI Austria Agreement"
means that certain Data Transfer, Clinical Trial and
Market Supply Agreement, dated November 3, 2005, by and between BI Austria and
Seller, as amended from time to time
"Bill of Sale" shall have
the meaning set forth in Section 7.5(a)(i).
"BLA" means the
application for Infergen prepared pursuant to applicable
FDA Regulations and filed with the FDA for authorization to market Infergen
within the United States.
"Business Day" means a
day, which is not a Saturday, a Sunday, or a
statutory holiday in the United States.
"Buyer" shall have the
meaning set forth in the first paragraph of this
Agreement.
"Buyer Indemnitee" shall
have the meaning set forth in Section 9.2(a).
"Buyer Labeling" means the
printed labels, labeling and packaging
materials, including printed carton, container labels and package inserts, used
by Buyer and bearing Buyer's name for, or in connection with, packaging of
Infergen.
"Buyer Losses" shall have
the meaning set forth in Section 9.2(a).
"Buyer Proprietary Information"
shall have the meaning set forth in Section
10.1(b).
"Buyer's Closing
Certificate" shall have the meaning set forth in Section
7.4(c).
"Cap" shall have the
meaning set forth in Section 9.4(a).
"Cardinal Health
Acknowledgement" means that certain written
acknowledgement from Cardinal Health, in form and substance reasonably
acceptable to Buyer, pursuant to which Cardinal Health shall acknowledge and
agree to continue to provide to Seller, for the benefit of Buyer, through
ninety
days following the Closing, the same services, including but not limited to
inventory storage, distribution, accounts payable and accounts receivable
services, at the same cost as Cardinal Health is currently providing to Seller
under that certain Distribution Services Agreement, dated January 15, 1999.
"Chargeback Claims" shall
have the meaning set forth in Section 8.3(d).
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"Clinical Trials" shall
mean, collectively, the IRHC-001 Trial, the
IRHC-002 Trial, the IRHC-003 Trial, and the IST Trials.
"Clinical Trial Inventory"
shall mean the pharmaceutical products listed on
Schedule 1.1, being the pharmaceutical products held in inventory, estimated as
of [***], by Seller for use by Seller in the Clinical Trials and transferred to
Buyer on the Closing Date in accordance with Section 2.1(d); provided, however,
that Clinical Trial Inventory shall not include such amounts of pharmaceutical
products as required by Seller to complete the AGHC Trial.
"Closing" shall have the meaning set
forth in Section 7.1.
"Closing Date" shall have
the meaning set forth in Section 7.1.
"Closing Payment" shall
have the meaning set forth in Section 2.5(a).
"Code" means the United
States Internal Revenue Code of 1986, as amended.
"Confidentiality
Agreement" shall have the meaning set forth in Section
10.1.
"Contract" shall mean any
agreement, contract, lease, consensual
obligation, promise, or undertaking (whether written or oral), to which Seller
is a party that relates exclusively to the Product, the Product Business, the
Purchased Assets, or the Assumed Liabilities, or which are necessary for the
conduct of the Product Business as conducted by the Seller.
"Effective Time" shall
have the meaning set forth in Section 7.1.
"Encumbrance" shall mean
claims, security interests, liens, pledges,
charges, escrows, options, proxies, rights of first refusal, preemptive rights,
mortgages, hypothecations, assessments, prior assignments, title retention
agreements, conditional sales agreements, indentures, deeds of trust, leases,
levys or security agreements of any kind whatsoever imposed upon the subject
property or item.
"Estimated Inventory Cost"
shall have the meaning set forth in Section
8.2(b).
"Estimated Inventory
Statement" shall have the meaning set forth in Section
8.2(a).
"Execution Date" shall
mean the date set forth in the first paragraph of
this Agreement.
"Excluded Assets" shall
mean all assets and properties of Seller, other
than the Purchased Assets, Other Intellectual Property, Inventory (subject to
the Inventory Cap), and Clinical Trial Inventory.
"Excluded Intellectual
Property" shall mean all Intellectual Property owned
or controlled by Seller other than the Product Intellectual Property and the
Other Intellectual Property.
-4- ***CONFIDENTIAL TREATMENT
REQUESTED
<PAGE>
"Excluded Liabilities"
shall mean all Liabilities or obligations of Seller
(other than the Assumed Liabilities), including any obligation or Liability of
Seller created as a result of this Agreement and those items set forth on
Schedule 2.4(a).
"FDA" means the United
States Food and Drug Administration.
"FSS" shall have the
meaning set forth in Section 8.3(d).
"Government Multi-Product
Contracts" means all written contracts or
agreements by which Seller dispenses Infergen through a government agency,
together with other pharmaceutical products of Seller.
"Governmental Authority"
means the government of the applicable country in
the Territory and any state, province, municipality or other political
subdivision thereof or therein, or any court, tribunal, agency, department,
board, instrumentality, authority or commission (including regulatory and
administrative bodies) of any of the foregoing.
"HSR Act" shall mean the
U.S. Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnification Claim
Notice" shall have the meaning set forth in Section
8.2(b).
"Indemnified Party" shall
have the meaning set forth in Section 8.2(b).
"Indemnifying Party" shall
have the meaning set forth in Section 8.2(b).
"Indemnitee(s)" shall mean
either a Buyer Indemnitee or Seller Indemnitee,
as the case may be.
"Infergen" shall mean the
finished pharmaceutical product containing
interferon alfacon-1 in the formulation sold by Seller under the trademark
Infergen(R) prior to the Closing.
"Instruments of Transfer"
shall mean such instruments and documents in
addition to the Ancillary Agreements that are necessary pursuant to Applicable
Law to effectuate and consummate the transactions contemplated hereby,
including, bills of sale, assumption agreements, assignment and assumption of
contracts and other conveyance documents in the forms agreed-upon in good faith
by the Parties.
"Intellectual Property"
shall mean all domestic and foreign (i) trademarks,
trademark registrations, trademark applications, service marks, service mark
registrations, service mark applications, business marks, brand names, trade
names, trade dress, names, logos and slogans, internet domains and URLs, and
all
goodwill associated therewith; (ii) patents, patent rights, provisional patent
applications, patent applications, designs, registered designs, registered
design applications, industrial designs, industrial design applications and
industrial design registrations,
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including any and all divisions, continuations, continuations in part,
extensions, substitutions, renewals, registrations, revalidations,
reexaminations, reissues or additions, including supplementary certificates of
protection, of or to any of the foregoing items; (iii) copyrights, copyright
registrations, copyright applications, original works of authorship fixed in
any
tangible medium of expression, including literary works (including all forms
and
types of computer software, including all source code, object code, firmware,
development tools, files, records and data, and all documentation related to
any
of the foregoing), musical, dramatic, pictorial, graphic and sculptured works;
(iv) trade secrets, technology, discoveries and improvements, know how,
proprietary rights, formulae, confidential and proprietary information,
technical information, techniques, inventions, designs, drawings, procedures,
processes, models, formulations, manuals and systems, whether or not patentable
or copyrightable, including all biological, chemical, biochemical,
toxicological, pharmacological and metabolic material and information and data
relating thereto and formulation, clinical, analytical and stability
information
and data which have actual or potential commercial value and are not available
in the public domain; and (v) all other intellectual property or proprietary
rights, in each case whether or not subject to statutory registration or
protection.
"Inventory" shall mean the
Infergen owned or controlled by Seller for
Seller's marketing and sale in the Territory, which (i) are in finished dosage
form, including Seller's trade dress, (ii) are of a quality usable and salable
in the ordinary course of business, (iii) comprise unsold lots, and (iv) as of
the Closing Date, have at least two-thirds of their shelf life remaining. For
the avoidance of doubt, for purposes of this Agreement, unless otherwise
expressly stated herein, the term "Inventory" shall not include (and,
among
other things, Buyer shall not be required to purchase pursuant hereto) the
Clinical Trial Inventory or any Infergen which does not satisfy all of the
foregoing conditions. For the avoidance of doubt, for purposes of this
Agreement, the term "Inventory" shall include Infergen held in inventory
by
Seller and acquired by Seller from Amgen under Purchase Order No. 6273;
provided, that such Infergen otherwise satisfies all of the conditions of
subparagraphs (i)-(iv) above and is subject to the Inventory Cap, all as
otherwise provided in this Agreement.
"Inventory Cap" shall have
the meaning set forth in Section 2.1(b).
"Inventory Cost" shall
have the meaning set forth in Section 8.2(b).
"Inventory Statement"
shall have the meaning set forth in Section 8.2(b).
"IP Assignment" shall have
the meaning set forth in Section 7.5(a)(i).
"IRHC-001 Trial" means the
randomized, open-label, phase III
investigational research study (identified as IRHC-001) designed by and
initiated by Seller as of the date hereof to evaluate the safety and efficacy
of
daily administration of Infergen plus ribavirin versus no treatment in patients
infected with the hepatitis C virus (HCV) who have not responded to previous
combination therapy with pegylated interferon alfa plus ribavirin.
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"IRHC-002 Trial" means the
randomized, open-label phase III investigational
research study (identified as IRHC-002) designed by and initiated by Seller as
of the date hereof to evaluate the safety and efficacy of two dose levels of
daily Infergen plus ribavirin in patients infected with the hepatitis C virus
(HCV) who failed to achieve virologic response after previous pegylated
interferon alfa plus ribavirin therapy and during at least 24 weeks of no
treatment in the IRHC-001 Trial.
"IRHC-003 Trial" means the
single arm study of daily Infergen plus
ribavirin in patients infected with the hepatitis C virus (HCV) as designed and
presented in the briefing package prepared and submitted to FDA on September
22,
2005 in connection with a meeting with the Division of Antiviral Drug Products
held on October 24, 2005.
"IRS" means the United
States Internal Revenue Service.
"IST Trials" means all
investigator-sponsored trials with respect to
Infergen as set forth on Section 3.17(j) of the Seller Disclosure Schedule.
"Knowledge of the Buyer"
or "to Buyer's Knowledge" or any similar such
statement shall mean that an executive officer or director of Buyer, or a key
employee of Buyer directly involved on behalf of Buyer in the transactions
contemplated herein, either (i) has or had actual knowledge of a fact or
matter,
or (ii) could reasonably be expected to have become aware of the fact or matter
had he or she conducted a reasonable investigation regarding the accuracy of
the
subject representation or warranty.
"Knowledge of the Seller"
or "to Seller's Knowledge" or any similar such
statement shall mean that an executive officer or director of Seller, or a key
employee of Seller directly involved in the Product Business, either (i) has or
had actual knowledge of a fact or matter, or (ii) could reasonably be expected
to have become aware of the fact or matter had he or she conducted a reasonable
investigation regarding the accuracy of the subject representation or warranty.
"Liability" shall mean,
collectively, any indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, choate or inchoate,
liquidated or unliquidated, secured or unsecured, direct or indirect, matured
or
unmatured, or absolute, contingent or otherwise, including any product
liability.
"Material Adverse Change"
means any change, event or occurrence that has,
or has had, or is reasonably likely to have, a Material Adverse Effect;
provided, however, that for purposes hereof, the commencement of, threatened
commencement of, or announced intention to commence any action or investigation
of the Product Business prior to the Closing by the U.S. Department of Justice,
the Office of the Inspector General, or any other Governmental Authority shall
constitute a Material Adverse Change.
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"Material Adverse Effect"
means a material adverse effect upon (i) the
business, financial condition or results of operations of the Product Business
or the Purchased Assets, or (ii) the ability of a Party to consummate the
transactions contemplated by this Agreement, other than (a) any change, effect,
event or condition that arises from changes in general economic conditions or
conditions affecting the pharmaceutical industry generally, or (b) such
changes,
events or conditions resulting from the announcement of, or the consummation
of,
the transactions contemplated hereby.
"Material Consents" shall
have the meaning set forth in Section 7.3(c).
"Nektar Agreements" means
the (i) Development, Licensing and Manufacturing
Agreement dated as of June 20, 2002 by and between Seller and Nektar
Therapeutics (successor-in-interest to Shearwater Corporation) and (ii)
Collaborative Research Agreement dated as of December 19, 2001 by and between
Seller and Nektar Therapeutics (successor-in-interest to Shearwater
Corporation).
"[***]" shall have the
meaning set forth in Section 8.16(a).
"[***]" shall have the
meaning set forth in Section 8.16(a).
"[***]" shall have the
meaning set forth in Section 8.16(b).
"Other Intellectual
Property" shall mean the Intellectual Property listed
on Schedule 2.1(c), being that certain Intellectual Property owned by Seller as
of the Execution Date that is not included within the Purchased Assets but that
will be conveyed to Buyer as of the Effective Time in accordance with Section
2.1(c).
"Party" or
"Parties" shall have the meaning set forth in the first
paragraph of this Agreement.
"Permitted Encumbrances"
means (i) the Encumbrances and exceptions set
forth in Section 3.2 of the Seller Disclosure Schedule, and (ii) liens imposed
by any Governmental Authority for Taxes not yet due and payable, or for Taxes
that Seller is contesting in good faith.
"Person" shall mean any
natural person, corporation, unincorporated
organization, partnership, association, joint stock company, joint venture,
limited liability company, trust or government, or any agency or political
subdivision of any government, or any other entity.
"Prime Rate" shall mean
the rate of interest that Citibank N.A. lists as
its prime lending rate on the last day of the applicable calendar quarter, or
if
such rate is not available, the prime lending rate listed in the New York City,
USA version of The Wall Street Journal on the last day of the applicable
calendar quarter.
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REQEUSTED
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"Product" shall mean any
finished pharmaceutical product containing
interferon alphacon-1, including Infergen.
"Product Business" shall
mean the manufacturing, using, developing,
promoting, selling, offering to sell, or importing of Infergen for sale in the
Territory as currently being conducted by Seller; provided, however, that
Product Business shall not include the development of Infergen in combination
with Actimmune.
"Product Copyrights"
means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the copyrights (whether or not
registered) and registrations and applications for registration or renewals
thereof, including all derivative works, moral rights, renewals, extensions,
reversions or restorations associated with such copyrights, now or hereafter
provided by law, regardless of the medium of fixation or means of expression,
and all goodwill associated therewith listed on Section 3.10(b)(iii) of the
Seller Disclosure Schedule.
"Product Domains" means,
as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the internet domains and URLs in
the Territory, listed on Section 3.10(b)(iv) of the Seller Disclosure Schedule.
"Product Intellectual
Property" shall mean the Amgen License Rights,
Product Copyrights, Product Domains, Product Know-How, Product Patents, Product
Trademarks, and Product Trade Dress, listed on Sections 3.10(b)(i) to (iv) of
the Seller Disclosure Schedule.
"Product Know How" means,
as owned, licensed or controlled by Seller and
exclusively related to the Product Business, including as developed in
connection with the Clinical Trials, the research and development information,
validation methods and procedures, unpatented inventions, know-how, trade
secrets, technical or other data or information, or other materials, methods,
procedures, processes, materials, developments or technology, including all
biological, chemical, clinical, manufacturing and other information or data,
other than such know-how which is or becomes the subject of a patent or of a
provisional or filed patent application.
"Product Patents" means,
as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the patents, patent applications,
provisional patent applications and similar instruments (including any and all
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, extensions, reexaminations, patents of addition, supplementary
protection certificates, inventors' certificates, pediatric data package
exclusivity extensions, divisions, re-filings, continuations and
continuations-in-part thereof, or the like) as well as any foreign equivalents
thereof (including certificates of invention and any applications therefor),
listed on Section 3.10(b)(i) of the Seller Disclosure Schedule.
"Product Records" shall
mean all files, documents, instruments, papers,
books and records owned or controlled by Seller, whether in electronic or
tangible form, to the extent relating to the Product Business, including any
pricing lists, customer lists, vendor lists, financial
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data, research and development files, marketing materials (if any), regulatory
files, adverse event reports and files, clinical studies and all documentation
relating to the Product Intellectual Property, but excluding any such items to
the extent that any Applicable Law prohibits their transfer. Notwithstanding
the
foregoing, prior to delivering or making the Product Records available to
Buyer,
Seller shall be entitled to redact from the Product Records any information
that
does not relate exclusively to the Product Business.
"Product Registrations"
shall mean all applications (including the BLA),
new drug applications, abbreviated new drug applications, new drug submissions,
and any comparable applications and submissions, together with any and all
supplements or modifications or amendments thereto, whether existing, pending,
withdrawn or in draft form, together with all correspondence to or from any
Governmental Authority with respect thereto, prepared and submitted to any
Governmental Authority in the Territory with respect to Infergen.
"Product Returns" shall
have the meaning set forth in Section 8.3(a).
"Product Trade Dress"
means, as owned, licensed or controlled by Seller,
the trade dress, logos and designs exclusively related to the Product Business,
listed on Section 3.10(b)(ii) of the Seller Disclosure Schedule.
"Product Trademarks"
means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the trademarks, service marks,
logos, slogans and trade names (whether or not registered), in the Territory,
including all variations, derivations, combinations, registrations and
applications for registration or renewals of the foregoing and all goodwill
associated therewith, listed on Section 3.10(b)(ii) of the Seller Disclosure
Schedule.
"Promotional Materials"
shall mean, to the extent exclusively related to
the Product Business, all advertising, promotional, selling and marketing
materials in written or electronic form existing as of the Closing and owned or
controlled and in the possession of Seller.
"Purchased Assets" shall
mean, collectively, the Contracts, Regulatory
Approvals, Promotional Materials, Product Records and the Product Intellectual
Property.
"Purchase Price" shall
have the meaning set forth in Section 2.5.
"Regulatory Approvals"
shall mean, as exclusively related to Infergen in
the Territory and/or Seller's operation of the Product Business, all material
permits, licenses, certificates, approvals, Product Registrations, filings and
authorizations issued by any Governmental Authority to Seller or its
representatives.
"Returns" means all
returns (including information returns), declarations,
reports, statements, schedules, notices, forms, declarations and other
documents
or information filed with or submitted to, or required under a Tax Law to be
filed with or submitted to a Governmental
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<PAGE>
Authority in respect of Taxes or any Tax Law relating to any Tax (and
"Return"
means any one of the foregoing Returns).
"Schedules" shall refer to
the schedules to this Agreement which are hereby
incorporated by reference into this Agreement.
"Seller" shall have the
meaning set forth in the first paragraph of this
Agreement.
"Seller Disclosure
Schedule" shall have the meaning set forth in the first
paragraph of Article III.
"Seller Indemnitee" shall
have the meaning set forth in Section 9.2(b).
"Seller Losses" shall have
the meaning set forth in Section 9.2(b).
"Seller Marks" shall mean all
Trademarks and trade dress owned, licensed or
controlled by Seller, aside from the Product Trademarks and Product Trade
Dress,
that are used in connection with the Product Business and the Assumed
Liabilities as of the Execution Date.
"Seller Proprietary
Information" shall have the meaning set forth in
Section 10.1(c).
"Seller's Closing
Certificate" shall have the meaning set forth in Section
7.3(e).
"Statement of Allocation"
shall have the meaning set forth in Section
8.10(a).
"[***]" means, in an
[***], the [***] with [***] by both [***] at [***].
"Taxes" means, with
respect to the Territory, all federal, state, local,
foreign and other income, net income, gross income, gross receipts, sales, use,
ad valorem, transfer, capital stock, franchise, profits, license, service, add
on or alternative minimum tax, occupancy, withholding, payroll, fringe
benefits,
employment, employees' income withholding, foreign or domestic withholding,
unemployment, disability, excise, severance, stamp, value added, occupation,
premium, property (including, real property and personal property taxes and any
assessments, special or otherwise), environmental, windfall profits, customs,
duties or other taxes, fees, assessments, levies, tariffs, or charges of any
kind that are in the nature of a tax, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto (and
"Tax" means any one of the foregoing Taxes).
"Tax Law" means, with
respect to the Territory, a statute, law, regulation
or administrative rule or judicial opinion enacted, issued or promulgated for
the determination, imposition, assessment or collection of any Tax.
"Termination Notice" shall
have the meaning set forth in Section 8.16(c).
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"Territory" means the
United States of America, Canada and their respective
territories and possessions.
"Third Party" shall mean
any Person other than Buyer or Seller, or an
Affiliate of either of them.
"Trademarks" means all
trademarks, service marks, logos, slogans and trade
names (whether or not registered), in the Territory, including all variations,
derivations, combinations, registrations and applications for registration or
renewals of the foregoing and all goodwill associated therewith.
"Transfer Taxes" shall
have the meaning set forth in Section 8.10(b).
"Treasury Regulations"
shall mean the income tax regulations issued under
the Code.
"Valid Claim" shall mean
shall mean a claim in any (i) unexpired and issued
patent in the Product Patents rights that has not been (a) held permanently
revoked, unenforceable or invalid by a final unappealable decision of a court
or
government agency of competent jurisdiction over such claim or (b) admitted to
be invalid or unenforceable through disclaimers, consent decrees or otherwise,
or (ii) pending patent application in the Product Patents rights that has been
on file with the applicable patent office for not more than five (5) years and
for which there has been reasonably consistent activity to advance to issuance
of a patent.
SECTION 1.2. CONSTRUCTION. Unless
the context of this Agreement otherwise
requires: (a) words of any gender include each other gender; (b)
"dollars"
refers to U.S. dollars; (c) words using the singular or plural number also
include the plural or singular number, respectively; (d) the terms
"hereof,"
"herein," "hereby" and derivative or similar words refer to
this entire
Agreement; (e) the terms "Article," "Section" or
"Exhibit" refer to the
specified Article, Section or Exhibit of this Agreement; and (f) the term
"including" or any variation thereof means "including without
limitation" or any
variation thereof and shall not be construed to limit any general statement
which it follows to the specific or similar items or matters immediately
following it, unless otherwise expressly stated.
ARTICLE II --
THE TRANSACTION
SECTION 2.1. TRANSFER OF PURCHASED
ASSETS, INVENTORY, OTHER INTELLECTUAL
PROPERTY AND CLINICAL TRIAL INVENTORY.
(a) Purchase and Sale of
Purchased Assets. At the Effective Time, on
the terms and subject to the conditions hereof and in reliance upon the
representations, warranties and covenants contained herein and in consideration
of the Purchase Price paid to Seller by Buyer, Seller will sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer will purchase, take
delivery of and acquire from Seller, all of Seller's right, title and interest
in and to the Purchased Assets.
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(b) Purchase and Sale of
Inventory. At the Effective Time, on the
terms and subject to the conditions hereof and in reliance upon the
representations, warranties and covenants contained herein and in consideration
of the Inventory Cost paid to Seller by Buyer, Seller will sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer will purchase and
acquire from Seller, all of Seller's right, title and interest in and to the
Inventory; provided, however, Buyer shall only be required to purchase up to
$6.5 million of Inventory hereunder (the "Inventory Cap") and Seller
shall
retain all Inventory (other than the Clinical Trial Inventory) in excess of the
Inventory Cap.
(c) Transfer of Other
Intellectual Property. At the Effective Time, on
the terms and subject to the conditions hereof, Seller shall convey, transfer,
assign and deliver to Buyer, at no additional cost to Buyer, and Buyer shall
acquire from Seller, all of Seller's rights, title, and interest in and to the
Other Intellectual Property. Notwithstanding the foregoing, Buyer hereby grants
Seller a non-exclusive, fully paid-up and royalty free license to the Other
Intellectual Property solely for activities permitted by Section 8.6 of this
Agreement. If Buyer elects to prosecute the Other Intellectual Property, Buyer
will assume responsibility for such prosecution and will promptly provide Seller
with copies of official prosecution correspondence and provide Seller with
reasonable time to consider and comment upon prosecution strategy, such
comments
to be considered by Buyer in good faith. In the event Buyer decides to abandon
any patent or patent application included in the Other Intellectual Property,
Buyer will give Seller at least thirty (30) days prior written notice to decide
whether or not Seller wishes to assume responsibility for such patent or patent
application, in which case Buyer shall assign and transfer such patent or
patent
application back to Seller.
(d) Transfer of Clinical Trial
Inventory. At the Effective Time, on
the terms and subject to the conditions hereof, Seller shall convey, transfer,
assign and deliver to Buyer, at no additional cost to Buyer, and Buyer shall
acquire from Seller, all of Seller's rights, title, and interest in and to the
Clinical Trial Inventory. On the weekend immediately preceding the Closing
Date,
Seller shall temporarily halt the use of pharmaceutical products to be used by
Seller in the Clinical Trials, in order to allow Seller to conduct a review of
those of its locations at which pharmaceutical products used by Seller in the
Clinical Trials are located in order to determine the exact quantities of
Clinical Trials Inventory that will be transferred to Buyer hereunder, and
Seller shall provide Buyer with an itemized list of the Clinical Trials
Inventory the next Business Day.
SECTION 2.2. EXCLUDED ASSETS.
(a) Excluded Assets. The
Parties acknowledge and agree that Seller is
not selling, conveying, transferring, delivering, assigning any rights
whatsoever to the Excluded Assets to Buyer, and Buyer is not purchasing, taking
delivery of or acquiring any rights whatsoever to the Excluded Assets from
Seller.
(b) Excluded Intellectual
Property. Buyer expressly acknowledges it is
not acquiring any rights whatsoever to the Excluded Intellectual Property,
including the "InterMune" name or any variations and derivatives
thereof and any
other logos or trademarks of Seller not included in the Product Intellectual
Property, or the Other Intellectual Property, other than the
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<PAGE>
limited rights to use the Seller Marks for the limited transition period
pursuant to the provisions of Section 8.4 and other than as specifically
provided in Section 8.18.
SECTION 2.3. ASSUMED LIABILITIES. As
of the Effective Time, Buyer shall
assume and agree to pay, perform or otherwise discharge, in accordance with
their respective terms and subject to the respective conditions thereof, only
the following Liabilities (collectively, the "Assumed Liabilities"):
(a) Any Liability arising after
the Effective Time under any Contract
listed on Schedule 2.3(a) (other than any Liability arising out of or relating
to a breach of such Contract which occurred prior to the Effective Time);
(b) Any Liability arising after
the Effective Time under any Contract
which was entered into by Seller after the Execution Date in accordance with
the
provisions of Section 5.2 (other than any Liability arising out of or relating
to a breach of such Contract which occurred prior to the Effective Time); and
(c) Any other Liability
specifically set forth on Schedule 2.3(c)
hereto.
For avoidance of doubt, nothing in this Section 2.3 is intended to, or shall be
interpreted to, limit or otherwise reduce the Liabilities of Buyer as they may
occur and/or exist after the Effective Time solely by virtue of Buyer's
ownership of the Purchased Assets or operation of the Product Business, but
rather, this Section 2.3 is solely intended to identify and provide for the
assumption by Buyer of those Liabilities of Seller that are specifically
assumed
by Buyer hereunder and which, but for such assumption, would remain Liabilities
of Seller.
SECTION 2.4. EXCLUDED LIABILITIES.
(a) The Parties hereby
acknowledge and agree that, other than the
Assumed Liabilities, Buyer shall not be responsible for, assume, or be
obligated
to pay, perform or otherwise discharge any Liabilities of Seller, whether or
not
related to the Product Business, including any Excluded Liabilities as set
forth
on Schedule 2.4(a). The Parties acknowledge that in no event shall the foregoing
sentence be construed to limit Buyer's obligations under Article IX.
(b) The Parties hereby
acknowledge and agree Seller shall not be
responsible for, assume, or be obligated to pay, perform or otherwise discharge
any obligations or liabilities of Buyer. The Parties acknowledge that in no
event shall the foregoing sentence be construed to limit Seller's obligations
under Article IX.
SECTION 2.5. PURCHASE PRICE AND
INVENTORY COST. In addition to the
assumption by Buyer of the Assumed Liabilities pursuant to Section 2.3, Buyer
will pay to Seller (x) the payments set forth in Section 2.5(a) to 2.5(e) below
for the Purchased Assets (the "Purchase Price"), and (y) the
Inventory Cost for
the Inventory, as follows:
(a) On the Closing Date, Buyer
(or its Affiliates) will transfer to
Seller in accordance with the written instructions provided to Buyer by Seller,
(i) One Hundred Thirteen
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<PAGE>
Million Five Hundred Thousand Dollars ($113,500,000) (the "Closing
Payment"),
plus (ii) the Estimated Inventory Cost for the Inventory. Thereafter, the final
Inventory Cost will be determined and a final reconciliation payment with
respect thereto will be made in accordance with Section 8.2;
(b) Buyer will transfer to Seller in
accordance with the written
instructions provided to Buyer by Seller, a one time cash milestone payment of
Five Million Dollars ($5,000,000) within five (5) Business Days of the
completion of the key tables and listings generated from the locked clinical
database following the last patient visit in the IRHC-001 Trial;
(c) Buyer will transfer to
Seller in accordance with the written
instructions provided to Buyer by Seller, a one time cash milestone payment of
Ten Million Dollars ($10,000,000) within five (5) Business Days of [***] of a
[***] to the [***] of [***] in [***] with [***]; provided, however, that if
[***] has not [***], in lieu of such $10 million milestone payment, a one-time
cash milestone payment will be paid no later than January 15, 2010 as follows:
(i) if, upon completion of the
IRHC-001 Trial, the [***] in [***] of
the IRHC-001 Trial is [***] or [***]
([***]%), Buyer will have no
obligation to pay a milestone
payment pursuant to this Section 2.5(c);
(ii) if, upon completion of the
IRHC-001 Trial, the [***] the [***] of
[***] of the IRHC-001 Trial is [***]
or [***] ([***]%) but [***] ([***]%),
the cash milestone payment will
equal Five Million Dollars ($5,000,000);
(iii) if, upon completion of
the IRHC-001 Trial, the [***] the [***]
of [***] of the IRHC-001 Trial is
[***] or [***] ([***]%) but [***]
([***]%), the cash milestone payment
will equal Ten Million Dollars
($10,000,000); and
(iv) if, upon completion of the
IRHC-001 Trial, [***] the [***] of
[***] of the IRHC-001 Trial is [***]
or [***] ([***]%), the cash milestone
payment will equal Fifteen Million
Dollars ($15,000,000).
(d) Buyer will transfer to
Seller in accordance with the written
instructions provided to Buyer by Seller, a one time cash milestone payment of
Two Million Euros (E2,000,000) on January 15, 2007 in connection with the [***]
of the [***].
SECTION 2.6. RISK OF LOSS. Until the
Effective Time, any loss of or damage
to the Purchased Assets, and Inventory from fire, flood, casualty or any other
similar occurrence shall be the sole responsibility of Seller. As of the
Effective Time, title to the Purchased Assets, and Inventory shall be
transferred to Buyer. After the Effective Time, Buyer shall bear all risk of
loss associated with the Purchased Assets and Inventory and shall be solely
responsible for
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REQUESTED
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procuring adequate insurance to protect the Purchased Assets and Inventory
against any such loss.
ARTICLE III --
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to
Buyer that the following representations
and warranties are true and correct as of the Execution Date and shall be
reaffirmed at Closing pursuant to Section 7.3(a), subject in each case to the
attached disclosure schedules supplied by Seller to Buyer and dated as of the
date hereof (the "Seller Disclosure Schedule ") and provided that
each exception
set forth in such Seller Disclosure Schedule shall be deemed to qualify only
such representation and warranty that is specifically identified (by cross
reference or otherwise) in any specific section of the Seller Disclosure
Schedule.
SECTION 3.1. ORGANIZATION AND
AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has full corporate power and corporate authority to execute
and
deliver this Agreement and the Ancillary Agreements, and the transactions
contemplated hereby and thereby, and effect the transactions contemplated
hereby
and thereby and has duly authorized the execution, delivery and performance of
this Agreement and the Ancillary Agreements and transactions or documents
contemplated thereby by all necessary corporate action. Seller has all
corporate
power and corporate authority necessary to own its assets and carry on the
Product Business as currently being conducted by Seller. This Agreement and the
Ancillary Agreements are the valid and legally binding obligations of Seller,
enforceable against it in accordance with their terms, subject to applicable
bankruptcy moratorium, reorganization, insolvency and similar laws of general
application relating to or affecting the rights and remedies of creditors
generally and to general equitable principles (regardless of whether in equity
or at law).
SECTION 3.2. TITLE TO PURCHASED
ASSETS AND INVENTORY. Seller has good and
marketable title to the Purchased Assets and Inventory free and clear of any
Encumbrances, except for the Permitted Encumbrances. Seller has not received
any
notice of any adverse claims of ownership to or right to use the Purchased
Assets or Inventory, and to Seller's Knowledge, no facts or circumstances exist
which would provide a reasonable basis for any such adverse claim of ownership
or right to use any of the Purchased Assets or Inventory.
SECTION 3.3. CONSENTS; NO VIOLATIONS.
(a) Except for the requisite
filings under the HSR Act and the
expiration or termination of the waiting period thereunder, and except for all
filings and other actions contemplated by this Agreement and the Ancillary
Agreements (including the necessary transfer of filings, notices and approvals
required to transfer the Regulatory Approvals from Seller to Buyer) (the
"Consents"), the execution, delivery and performance by Seller of
this Agreement
and the Ancillary Agreements and the consummation by Seller of the transactions
contemplated hereby and thereby will not require any notice to, filing with, or
the consent, approval or authorization of, any Person or Governmental
Authority.
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(b) Neither the execution and delivery of
this Agreement or the
Ancillary Agreements nor the consummation of the transactions contemplated
hereby or thereby will (i) violate or result in a breach or result in the
acceleration or termination of, or the creation in any Third Party of the right
to accelerate, terminate, modify or cancel, any Contract listed on Section 3.7
of the Seller Disclosure Schedule, (ii) conflict with, violate or result in a
breach of any provision of the certificate of incorporation or by-laws of
Seller, or (iii) conflict with or violate in any material respect Applicable
Law.
SECTION 3.4. REGULATORY APPROVALS.
(a) Section 3.4(a) of the
Seller Disclosure Schedule sets forth a
complete and correct list of all applications (including the BLA), new drug
applications, abbreviated new drug applications, new drug submissions and any
comparable applications and submissions in the Territory with respect to the
Product. Seller has provided to Buyer complete and correct copies of the
Regulatory Approvals or Buyer has had access to such copies of the Regulatory
Approvals. The Regulatory Approvals are in full force and effect and have been
duly and validly issued.
(b) Seller has all Regulatory
Approvals necessary for or used to carry
on the Product Business as being conducted by Seller as of the Execution Date
and which are required by Applicable Law.
(c) Seller is in compliance
with all of the Regulatory Approvals
listed on Section 3.4(a) of the Seller Disclosure Schedule, and, since the time
Seller acquired its rights in the Product, Seller has not received any
notification, written or oral, from any Third Party with respect to any alleged
or possible violation with respect to any such Regulatory Approvals, and to
Seller's Knowledge, there are no facts or circumstances that would form a
reasonable basis for any such violation.
SECTION 3.5. COMPLIANCE WITH LAWS
AND LITIGATION.
(a) Except with respect to any
matter relating to or arising from
Regulatory Approvals (which is addressed in Section 3.4), with respect to the
Product Business, the Purchased Assets, the Inventory and the Assumed
Liabilities, Seller is in compliance with all Applicable Law, except where such
noncompliance would not reasonably be expected to have a Material Adverse
Effect.
(b) There are no lawsuits,
claims or any civil, administrative or
criminal actions, suits, or proceedings or governmental investigations,
including any action or investigation by the U.S. Department of Justice, Office
of the Inspector General, or any Governmental Authority, existing, pending, or
to the Knowledge of Seller, threatened, with respect to the Product Business,
the Purchased Assets or the Assumed Liabilities or with respect to this
Agreement or the transactions contemplated hereby. Seller is not subject to any
decree or order of any Governmental Authority that would reasonably be expected
to impair or delay its ability to perform its obligations under this Agreement.
SECTION 3.6. NO MATERIAL ADVERSE
CHANGE.
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<PAGE>
(a) Since January 1, 2005,
there has not been any Material Adverse
Change and no event has occurred or circumstance exists that would reasonably
be
expected to result in such a Material Adverse Change.
(b) Since January 1, 2005,
Seller has, consistent with the conduct of
the Product Business during the two (2) years prior to the Execution Date: (i)
continued and conducted the Product Business in Seller's ordinary and usual
course of business, and (ii) maintained its relationships with suppliers,
distributors, customers and others having material business relationships with
Seller related to the Product Business.
SECTION 3.7. CONTRACTS.
(a) Section 3.7 of the Seller
Disclosure Schedule sets forth a
complete and correct list of each of the Contracts (i) which involve payments
totaling $50,000 or more, or (ii) which are otherwise material to the Product
Business. Such Contracts are all of the Contracts necessary to conduct the
Product Business. Seller has delivered to or made available to Buyer true and
complete copies of all such Contracts and any other contracts or agreements
identified in Section 3.7 of the Seller Disclosure Schedule. All such Contracts
to which Seller is a party are, as to Seller (and, as to the other parties
thereto, to the Knowledge of Seller), legal, valid and binding agreements in
full force and effect and enforceable in accordance with its terms (subject to
applicable bankruptcy moratorium, reorganization, insolvency and similar laws
of
general application relating to or affecting the rights and remedies of
creditors generally and to general equitable principles (regardless of whether
in equity or at law)).
(b) Seller is not in material breach or
default, and no event has
occurred that with notice or lapse of time would constitute a material breach
or
default by Seller permitting termination, modification, or acceleration, under
any Contract set forth on Section 3.7 of the Seller Disclosure Schedule. To the
Knowledge of Seller, no other party to any Contract is in material breach or
default under, or has repudiated any material provision of, any Contract set
forth on Section 3.7 of the Seller Disclosure Schedule.
(c) The Amgen Agreements are
all of the Contracts between Seller and
Amgen that pertain to the Product.
SECTION 3.8. INVENTORY AND RETURNS.
(a) Section 3.8(a) of the
Seller Disclosure Schedule sets forth a
complete and correct list of Seller's Inventory as of November 4, 2005. The
Inventory consists of finished goods usable and salable by Seller in the
ordinary course of business. The Inventory has been produced or manufactured in
accordance with all Applicable Law and Product Registrations.
(b) Since January 1, 2005,
other than entering into the Contracts with
specialty pharmacies for the direct sales by Seller to such pharmacies of
Infergen and entering into distribution Contracts or amendments to existing
distribution Contracts with two wholesalers, Seller has not (i) materially
altered its distribution practices or terms with respect to
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Infergen, or (ii) materially altered its activities and practices with respect
to inventory levels of Infergen maintained at the wholesale, chain,
institutional or retail levels in any material respect.
(c) As of the Closing Date, the
aggregate dollar value of the
inventory of Infergen (the "Aggregate Inventory Value") maintained by
(a)
Cardinal Health, McKesson, and AmeriSource Bergen (collectively, "Seller's
Principal Wholesalers"), and (b) the specialty pharmacies with which
Seller has
a contractual relationship, will not exceed the Maximum Inventory Amount. For
purposes hereof, (i) the "Aggregate Inventory Value" shall be
calculated by
multiplying the number of units of inventory of Infergen maintained by Seller's
Principal Wholesalers and the specialty pharmacies as of the Closing Date by
the
wholesale acquisition cost ("WAC") for such units as of the Closing
Date, and
(ii) the "Maximum Inventory Amount" shall mean the amount equal to:
(x) the
weekly average of the aggregate number of units of each SKU shipped by all of
Seller's Principal Wholesalers in the previous [***] ([***])[***], multiplied
by
(y) [***] ([***])[***], multiplied by (z) the WAC for each unit.
(d) Section 3.8(d) of the
Seller Disclosure Schedule sets forth, on a
[***] basis, the returns of Infergen for [***] ([***])[***].
SECTION 3.9. TAX MATTERS. There are
no Encumbrances on any of the Purchased
Assets or the Inventory that arose in connection with any
