ASSET PURCHASE AGREEMENT

 

 

 

EXHIBIT 10.1

EXECUTION COPY

 

 

 

ASSET PURCHASE AGREEMENT

between

SPECTRUM PHARMACEUTICALS, INC.

and

PAR PHARMACEUTICAL, INC.

dated as of May 6, 2008

 

 

 

 

EXECUTION COPY

 

 

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”), is hereby entered into as of May 6, 2008 (the “ Execution Date ”), by and between Spectrum Pharmaceuticals, Inc., a Delaware corporation, with offices located at 157 Technology Drive, Irvine, California 92618 (the “ Spectrum ”), and Par Pharmaceutical, Inc., a Delaware corporation having its office at 300 Tice Boulevard, 3rd Floor, Woodcliff Lake, NJ 07677 (the “ Par ”).  Spectrum and Par may each be referred to herein individually as a “ Party ” and collectively as the “ Parties .”

W  I  T  N  E  S  S  E  T  H:

WHEREAS , the Parties have previously entered into a certain Development and Marketing Agreement dated February 22, 2006 (as amended on November 10, 2006 and as further defined below, the “ Original Agreement ”) related to certain generic products including products containing sumatriptan as the active ingredient (as further defined below, the “ Products ”);

WHEREAS , the Parties settled a litigation related to the Products with Glaxo Group Limited (“ GSK ”) pursuant to which Spectrum entered into an Agreement with GSK dated November 10, 2006 (as further defined below, the “ GSK Settlement Agreement ”) and Par entered into a Supply and Distribution Agreement with GSK dated November 10, 2006 (as further defined below, the “ GSK Supply and Distribution Agreement ”, and collectively with the GSK Settlement Agreement, the “ GSK Agreements ”); and

WHEREAS , Spectrum currently owns or possesses certain assets and rights related to the Products and the GSK Agreements, and otherwise related to the drug substance sumatriptan and wishes to sell those assets and rights to Par, and Par desires to so acquire those assets and rights; and Spectrum desires to transfer and assign to Par, and Par desires to assume, certain obligations, relating to such assets and rights; all upon the terms of this Agreement.

NOW, THEREFORE , in consideration of the foregoing premises and of the representations, warranties, covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1
DEFINITIONS

Whenever used in this Agreement, unless otherwise clearly indicated by the context, the terms defined below shall have the indicated meanings.  Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

1.1.

“ Affiliate ” shall mean with respect to a Party, a Person that controls, is controlled by or is under common control with a Party. For the purposes of this definition, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such Person, whether by the ownership of fifty percent (50%) or more of the voting stock of such Person (it being understood that the

 

 

 

 

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direct or indirect ownership of a lesser percentage of such stock shall not necessarily preclude the existence of control), or by contract or otherwise.

1.2.

“ Aggrieved Party ” shall have the meaning set forth in Section 6.2(a).

1.3.

“ Agreement” shall have the meaning set forth in the Preamble.

1.4.

“ Applicable Laws ” shall mean all laws, statutes, regulations, ordinances or the like of any Governmental Authority having jurisdiction over the Purchased Assets or the Products or a Party in connection with its obligations under this Agreement.

1.5.

“ Assumed Contracts ” shall mean the contracts and agreements set forth on Schedule 1.5 .  Such contracts that do not relate exclusively to Assets are so indicated on Schedule 1.5 .

1.6.

“ Assumed Liabilities ” shall mean the obligations of Spectrum or their Affiliates, as applicable, under the Assumed Contracts and the Product Regulatory Files and all liabilities associated with Purchased Assets that arise on or after the Closing Date, provided , however , that “Assumed Liabilities” shall not include any Excluded Liabilities.  Assumed Liabilities shall specifically include any and all liabilities arising out of (i) breach by Par and/or its Affiliates of any GSK Agreements prior to the Closing Date, and/or (ii) the gross negligence or willful misconduct of Par and/or its Affiliates related to the Purchased Assets prior to the Closing Date.

1.7.

“ Books and Records ” shall mean all material books and records of Spectrum and its Affiliates necessary to Manufacture, test, use or sell the Products and/or Drug Substance.

1.8.

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in New York City, New York are authorized or obligated by law or executive order to not open or remain closed.

1.9.

“ cGMP Rules ” shall mean the quality systems and current good manufacturing practices set forth in 21 C.F.R. (Parts 210 and 211 and Parts 600 and 610 (as applicable)), and applicable FDA rules and regulations, promulgated thereunder.

1.10.

“ Claim ” shall have the meaning set forth in Section 6.2(a) .

1.11.

“ Closing Date ” shall mean May 6, 2008.   

1.12.

“ Confidential Information ” means with respect to a Party (as the “Disclosing Party”), all non-public information of any kind whatsoever (including without limitation, data, materials, compilations, formulae, models, patent disclosures, procedures, processes, projections, protocols, results of experimentation and testing, specifications, strategies, techniques and all non-public intellectual property and know-how), and all tangible and intangible embodiments thereof of any kind whatsoever (including without limitation, materials, samples, apparatus, compositions, documents, drawings, machinery, patent applications, records and reports), which are disclosed by the Disclosing Party to the other Party (as the “Receiving Party”) including any and all copies, replication or embodiments thereof.  The Confidential Information of Par shall also include all non-public information associated with the Purchased Assets as acquired by Par

 

 

 

 

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pursuant to this Agreement.  Notwithstanding the foregoing, Confidential Information of a Disclosing Party shall not include information which the Receiving Party can establish by competent proof (a) to have been publicly known prior to disclosure of such information by the Disclosing Party to the Receiving Party, (b) to have become publicly known, without fault on the part of the Receiving Party, subsequent to disclosure of such information by the Disclosing Party to the Receiving Party, (c) to have been received by the Receiving Party free of an obligation of confidentiality from a source rightfully having possession of and the right to disclose such information free of an obligation of confidentiality, (d) to have been otherwise known by the Receiving Party free of an obligation of confidentiality prior to disclosure of such information by the Disclosing Party to the Receiving Party, or (e) to have been independently developed by employees or agents of the Receiving Party without the use of Confidential Information of the Disclosing Party.   The terms, conditions and provisions of this Agreement shall be the Confidential Information of both Parties.

1.13.

“ Drug Substance ” shall mean sumatriptan in all forms including all salts thereof.

1.14.

“ Encumbrances ” shall mean all encumbrances of any kind, including security interests, liens, pledges, claims, charges, equitable interests, hypothecations, mortgages, options, licenses, assignments, powers of sale, retentions of title, rights of pre-emption, rights of first refusal, restrictions on transferability, or defects of title.

1.15.

“ Excluded Liabilities ” shall mean all liabilities or obligations of Spectrum that are not specifically assumed by Par pursuant to this Agreement, and Excluded Liabilities shall specifically include any and all liabilities arising out of (i) breach by Spectrum or its Affiliates of any Assumed Contracts (including the breach by Spectrum of its obligations under the GSK Settlement Agreement before and after the Closing Date, whether or not the GSK Settlement Agreement is assigned to Par in accordance with Section 2.6), (ii) any financial obligations under the SL Pharma Agreement as set forth therein on the Closing Date which are due or become due in the future and/or (iii) the gross negligence or willful misconduct of Spectrum or its Affiliates.

1.16.

“ FDA ” shall mean the United States Food and Drug Administration, and any successor agency thereto.

1.17.

“ FDA Letter ” shall mean the letter attached hereto as Exhibit B duly executed by an authorized officer of Spectrum notifying the FDA of the transfer of the Product Regulatory Files to Par.

1.18.

“ General Assignment and Bill of Sale ” shall mean the General Assignment and Bill of Sale attached hereto as Exhibit A .

1.19.

“ Governmental Authority ” or “ Governmental Authorities ” shall mean any national, foreign, federal, state or local judicial, legislative, executive, administrative or regulatory body or authority, or its equivalent, including the FDA.

1.20.

“ GSK Agreements ” shall have the meaning set forth in the Recitals.

 

 

 

 

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1.21.

“ GSK Settlement Agreement ” shall mean the Agreement between Glaxo Group Limited and Spectrum, dated November 10, 2006, including as may be amended from time to time.

1.22.

“ GSK Supply Agreement ” shall mean the Supply and Distribution Agreement between Glaxo Group Limited and Glaxo Wellcome Manufacturing PTE Limited on the one hand and Par on the other, dated November 10, 2006, including as may be amended from time to time.

1.23.

“ Indemnifying Party ” shall have the meaning set forth in Section 6.2(a) .

1.24.

“ Intellectual Property ” means all (a) Patents, (b) copyrightable works, copyrights in works of authorship of any type, including computer software and industrial designs, registrations and applications for registration thereof, (c) trade secrets, Know-How and other material confidential or proprietary technical, business and other information necessary to Manufacture, test, use or sell the Product, and all rights in any jurisdiction to limit the use or disclosure thereof, (d) any and all rights of application regarding any of the foregoing including with respect to extensions and the like, and (e) rights to sue and recover damages or obtain injunctive relief for past and future infringement, dilution, misappropriation, violation or breach thereof.

1.25.

“ Inventory ” shall mean the quantities and dosage forms of the Products listed on Schedule 1.25 .

1.26.

“ Know-How ” shall mean any and all product specifications (including the Specifications), processes, product designs, manufacturing information, engineering and other manuals and drawings, standard operating procedures, flow diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, safety, quality assurance, quality control and clinical data, technical information, data, research records, supplier lists and similar data and information.

1.27.

“ Losses ” shall mean any liability, loss, judgment, assessment paid or payable to a third party in connection with a Claim and reasonable related costs and expenses, including reasonable attorneys’ fees and costs of defending against lawsuits, complaints, actions or other litigation; provided , however , that payments in settlement of a Claim shall only be included to the extent approval of the settlement was provided in accordance with Section 6 of this Agreement.

1.28.

“ Manufacture/Manufacturing/Manufactured ” shall mean all operations in the acquisition of materials for, and the production, packaging, labeling and quality control and release testing or other analysis of Product and the associate ingredients and components.

1.29.

“ Original Agreement ” shall mean the Development and Marketing Agreement dated February 22, 2006 (as amended on November 10, 2006, the “ Original Agreement ”) between Par and Spectrum related to products containing sumatriptan as the active ingredient.

1.30.

“ Party ” or “ Parties ” shall have the meaning set forth in the Preamble.

1.31.

“ Patents ” means all patents, patent applications including provisional applications and statutory invention registrations, including reissues, divisions, continuations, continuations-in-part, and reexaminations, all inventions disclosed therein, all rights therein provided by international treaties and conventions, together with all applicable foreign counterpart patents and patent applications, and all rights to obtain patents and registrations thereto, as well as any extensions, supplementary protection certificates or the like applicable to any and all of the foregoing.

1.32.

“ Person ” shall mean an individual, a corporation, a limited liability company, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

1.33.

“ Product ” shall mean individually and collectively, the dosage forms, strengths and package forms containing the Drug Substance owned or controlled by Spectrum and/or its Affiliates as of the Closing Date, including as set forth on Schedule 1.33 .

1.34.

 “ Product Intellectual Property ” shall mean all Intellectual Property owned or controlled by Spectrum and/or its Affiliates as of the Closing Date that relates to the Products or Drug Substance and the Manufacture, testing, use or sale thereof, including as set forth on Schedule 1.34 .  

1.35.

“ Product Regulatory Files ” means all Regulatory Files, as applicable, owned or controlled by Spectrum and/or its Affiliates as of the Closing Date related to Products or Drug Substance and the Manufacture, testing, use or sale thereof, including as set forth on Schedule 1.35 .

1.36.

“ Purchase Price ” shall have the meaning set forth in Section 2.1(b) .

1.37.

“ Purchased Assets ” shall have the meaning set forth in Section 2.1(a) .

1.38.

“ Regulatory Files ” shall mean:

(a)

means the technical, medical and scientific licenses, permits, waivers, exemptions, registrations, authorizations and approvals (including applications therefore, supplements and amendments, pre- and post- approvals, pricing and third party reimbursement approvals, and labeling approvals) of any Governmental Authority necessary for the development (including the conduct of clinical trials), manufacture, distribution, marketing, promotion, offer for sale, use, import, export or sale of a drug product or a drug substance.

(b)

all technical, scientific, chemical, biological, pharmacological, and toxicological data as well as all clinical and preclinical reports (together with clinical data sets associated with such reports), and all validation documents and data.

(c)

all correspondence to or from Governmental Authorities.

1.39.

“ SL Pharma Agreement ” shall mean the Master Services Agreement between Spectrum and SL Pharma Labs, Inc. dated July 31, 2007 as it relates to the Products or Drug Substance and the associated Project Proposals numbered P-06-031, P-07-010 and P-05-SP-01, and Purchase Orders numbered 10868, 9758 and 9758-A.  

1.40.

“ Spectrum’s Deliverables ” shall have the meaning set forth in Section 2.4 .

1.41.

“ Specifications ” shall mean, collectively, as applicable, (i) all material applicable formulae, production and packaging specifications with respect to the Products and (ii) all material applicable quality control specifications with respect to the Products.

1.42.

  “ Transaction Agreements ” shall mean this Agreement and the General Assignment and Bill of Sale, and each individually a “ Transaction Agreement .”

1.43.

“ United States/U.S. ” shall mean the United States of America, its territories, possessions, protectorates and the Commonwealth of Puerto Rico and any installation, territory, location or jurisdiction under the purview of the FDA or control of the United States government.

ARTICLE 2
PURCHASE AND SALE; ALLOCATION

2.1.

Purchase and Sale .

(a)

On the Closing Date, and subject to payment of the Purchase Price by Par, Spectrum will, and will cause its Affiliates to, sell, assign, convey, license, transfer and deliver to Par, and Par will purchase and accept from Spectrum and its Affiliates, sole and exclusive (even as to Spectrum and its Affiliates) right, title and interest in and to all of the following assets (collectively, the “Purchased Assets”) free and clear of all Encumbrances:  

(i)

all Product Intellectual Property;

(ii)

all Product Regulatory Files;

(iii)

the Assumed Contracts, provided , however , that, with respect to any such contract or agreement which relates to the Purchased Assets and one or more other products of Spectrum or their Affiliates, such contract or agreement shall only be assigned to, and assumed by, Par or its designees in part and solely to the extent it relates to the Products; and

(iv)

all Inventory.

For purposes of clarity, the Purchased Assets shall not include such confidential and proprietary manufacturing information for the Drug Substance provided to the FDA by the manufacturer of the Drug Substance that is owned and controlled by the third party Drug Substance supplier.

(b)

On the Closing Date, and subject to the terms and conditions set forth herein, in consideration of the sale, assignment, conveyance, transfer and delivery of the Purchased Assets, Par shall make a non-refundable, non-creditable payment to Spectrum, in the manner described in Section 2.3, an aggregate purchase price of Twenty Million Dollars ($20,000,000) (the “ Purchase Price ”).

2.2.

Assumption of Assumed Liabilities . With respect to the purchase and sale of the Purchased Assets, in addition to payment of the Purchase Price, Par shall assume the Assumed Liabilities on the Closing Date, and subsequently, in due course in accordance with the terms applicable thereto, pay, honor and discharge the Assumed Liabilities including the financial and related obligations to GSK under the GSK Settlement Agreement.   Par assumes no Excluded Liabilities, and the Parties hereto agree that all such Excluded Liabilities shall remain the sole responsibility of Spectrum.

2.3.

Deliveries by Par .  On the Closing Date, Par shall deliver, or cause to be delivered, to Spectrum cash in the aggregate amount of the Purchase Price, payable by wire transfer in immediately available funds to Spectrum’s U.S. bank account in U.S. dollars in accordance with the following instructions:

 

2.4.

Deliveries by Spectrum .  On or before the Closing Date, Spectrum shall deliver to Par the following (collectively, the “Spectrum Deliverables”):

(a)

copies of the Product Regulatory Files;

(b)

copies of the Assumed Contracts;

(c)

the FDA Letter (which will be mailed to the FDA as well);

(d)

a duly executed General Assignment and Bill of Sale; and

(e)

all Inventory; provided that such inventory that is not delivered on or before the Closing Date shall be delivered to Par as soon as reasonably practicable.

2.5.

GSK Supply Agreement .  Spectrum hereby forever disclaims, disowns, resigns and surrenders any rights and interest it has in and under the GSK Supply Agreement.

2.6.

GSK Settlement Agreement .   The Parties shall use commercially reasonable efforts to obtain GSK’s consent for Spectrum to assign the GSK Settlement Agreement to Par (the “Consent”).  Upon the receipt of the Consent the GSK Settlement Agreement shall be deemed an Assumed Contract.  Until receipt of the Consent or if GSK does not grant the Consent, the GSK Settlement Agreement shall not be considered an Assumed Contract and shall not be assigned to Par under this Agreement.  The Parties hereby agree and acknowledge that Par is the current and only Spectrum Assignee as set forth in Section 9(b)(iii) of the GSK Settlement Agreement and Spectrum hereby covenants not to take any action which would remove or forfeit such designation with respect to Par (or to confer such designation on another party) and Par hereby agrees as a Spectrum Assignee (under the terms of the GSK Settlement Agreement) to be bound by the terms of the GSK Settlement Agreement.  In addition to the Parties’ other obligations with the respect to the GSK Settlement Agreement set forth herein, Spectrum agrees to (a) not breach the GSK Settlement Agreement, (b) promptly provide Par with notice and a copy of any communication with GSK regarding the GSK Settlement Agreement and (c) promptly cooperate with Par to the extent necessary to meet all of Spectrum’s and Par’s (as a Spectrum Assignee under the GSK Settlement Agreement) obligations under the GSK Settlement Agreement and afford Par the benefit of any of Spectrum’s rights under the GSK Settlement Agreement, at Par’s reasonable request and direction.  Par hereby agrees to (as between Par and Spectrum) be responsible for and indemnify Spectrum for any obligations of Spectrum under Section 9(d) or 9(e) of the GSK Settlement Agreement and any actions or inactions of Par as a Spectrum Assignee under the GSK Settlement Agreement.

2.7.

Original Agreement . The Parties hereby mutually agree that the Original Agreement is terminated in its entirety, and further each Party hereby forever disclaims, disowns, resigns and surrenders any rights and interest it has in and under the Original Agreement including any and all rights or interests it may have or otherwise had following any expiration or termination of the Original Agreement.

2.8.

Non-Compete .  Spectrum hereby covenants and agrees that neither it nor its Affiliates shall, directly, or indirectly, in the United States, for a period of five (5) years from the Execution Date, make, have made, use, develop, import/export, register, file, promote, market, Manufacture, distribute, offer to sell, sell or otherwise commercialize any of the Products or any pharmaceutical product containing the Drug Substance or assist any third party in the forgoing.  

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SPECTRUM

Spectrum, on behalf of itself and its Affiliates, hereby represents and warrants to Par that as of the Execution Date and as of the Closing Date:

3.1.

Organization, Good Standing, Power, etc .  Spectrum is duly organized, validly existing and in good standing under the laws of the State of Delaware.  Spectrum has the requisite organizational power and authority to execute and deliver this Agreement, the other Transaction Agreements and Spectrum’s Deliverables, and to consummate the transactions contemplated hereby and thereby, as applicable.  The execution and delivery of this Agreement by Spectrum, the execution and delivery by Spectrum of the other Transaction Agreements and Spectrum’s Deliverables, as applicable, and the consummation by Spectrum of the transactions contemplated hereby and thereby, as applicable, have been duly authorized by all necessary organizational action on the part of Spectrum and no other or further organizational actions will be necessary for the execution and delivery of such agreements, as applicable, by Spectrum, the performance by Spectrum of its obligations hereunder and thereunder, as applicable,  and the consummation by Spectrum of the transactions contemplated hereby or thereby, as applicable. Each Transaction Agreement, at