Exhibit 10.24
EXECUTION COPY
TERMINATION
AGREEMENT
This Termination Agreement (“
Termination Agreement ”) is made and dated as of
November 19 2008 by and between AstraZeneca UK Limited, a
company incorporated under the laws of England and Wales with
offices at 15 Stanhope Gate, London W1K 1LN, England (“
AstraZeneca ”), and Abraxis Bioscience, LLC (“
Abraxis ”), a Delaware limited liability company with
offices at 11755 Wilshire Boulevard, Suite 2000, Los Angeles,
California 90025, U.S.A., as successor-in-interest to Abraxis
BioScience, Inc. (“ ABI ”). Each of AstraZeneca
and Abraxis is a “ Party ” to this Termination
Agreement.
BACKGROUND
AstraZeneca and Abraxis are parties
to that certain Co-Promotion and Strategic Marketing Services
Agreement, dated April 26, 2006 (the “ Co-Promotion
Agreement ”).
Abraxis Bioscience, Inc. (formerly
New Abraxis, Inc.) (“ ABBI ”) is the parent
company and controlling member of Abraxis.
The Parties are entering into this
Termination Agreement in order to terminate the Co-Promotion
Agreement and to take certain other actions set forth
herein.
AGREEMENT
In consideration of the mutual
covenants and promises contained in this Termination Agreement, the
Parties agree as follows:
Capitalized terms not otherwise
defined in this Termination Agreement shall have the meaning given
to them in the Co-Promotion Agreement.
Notwithstanding anything to the
contrary in Sections 21.1 and 21.2 of the Co-Promotion Agreement,
the Co-Promotion Agreement shall be terminated effective on and as
of the date, not sooner than January 1, 2009 and not later
than January 5, 2009, on which AstraZeneca shall have received
written notice in the form attached hereto as Exhibit A (“
Approval Notice ”) stating that the Board of Directors
of ABBI has voted to approve the termination of the Co-Promotion
Agreement (the “ Termination Date ”). From and
after the Termination Date, except as specifically set forth
herein, neither Party shall have any further rights,
responsibilities, obligations or duties, financial or otherwise,
under the Co-Promotion Agreement. In furtherance of the foregoing,
Abraxis agrees (i) to cause a meeting of the Board of
Directors of ABBI to be convened no sooner than January 1,
2009 and no later than January 5, 2009 for the purpose of
considering the termination of the Co-Promotion Agreement as
described in the first sentence of this Section 2 and
(ii) that in the event the Board of Directors of ABBI shall
have approved such termination of the Co-Promotion Agreement, then
Abraxis shall promptly, and in no event later than January 5,
2009 deliver the Approval Notice to AstraZeneca. In the event
AstraZeneca does not receive the Approval Notice on or before
January 5, 2009, the Co-Promotion Agreement shall not be
terminated, and the provisions of Sections 14 and 15(k) of this
Termination Agreement shall apply.
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3.
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Payments to
AstraZeneca.
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a)
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Termination
Fee . Abraxis shall pay
to AstraZeneca a termination fee in the amount of Two Hundred
Sixty-Eight Million United States Dollars (US$268,000,000)
(the “ Termination Fee ”) on or before
March 31, 2009 no later than 1:30 PM New York time (but in no
event earlier than the Termination Date) by wire transfer of
immediately available funds pursuant to wiring instructions set
forth on Exhibit B attached hereto, which wiring instructions may
be modified at any time by AstraZeneca upon forty-eight
(48) hours prior written notice thereof to Abraxis. If Abraxis
in good faith determines that it is required under U.S. tax rules
and regulations (and interpretations thereof) to withhold an amount
from the Termination Fee for income or other taxes, then Abraxis
shall withhold such required amount and provide AstraZeneca
appropriate documentation to facilitate AstraZeneca obtaining a
full foreign or other tax credit for such withheld
amount.
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b)
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Letters of
Credit . To secure the
obligation of Abraxis to pay the Termination Fee and the Final
Compensation Payment, Abraxis shall provide to AstraZeneca on the
date of this Termination Agreement two (2) irrevocable standby
letters of credit issued by JPMorgan Chase Bank, N.A., in the
aggregate stated amount of US$286,000,000, as follows: (1) the
first such letter of credit (the “ Termination Fee LOC
”) shall be in the stated amount of US$268,000,000, shall be
scheduled to expire on the close of business on April 7, 2009,
shall provide for payment to AstraZeneca as beneficiary of the
Termination Fee LOC of the sum of US$268,000,000 at any time on or
after 1:31 PM New York time on March 31, 2009 and shall be in
the form attached to this Termination Agreement as Exhibit C;
and (2) the second such letter of credit (the “ Final
Payment LOC ”) shall be in the stated amount of
US$18,000,000, shall be scheduled to expire on the close of
business on April 7, 2009, shall provide payment to
AstraZeneca as beneficiary of the Final Payment LOC of the sum of
US$18,000,000 at any time on or after 1:31 PM New York time on
March 31, 2009 and shall be in the form attached to this
Termination Agreement as Exhibit D. The Termination Fee LOC and the
Final Payment LOC are sometimes hereinafter referred to
collectively as the “ Letters of Credit ” or
individually as a “ Letter of Credit ”. The
delivery of the Letters of Credit to AstraZeneca shall not be
deemed to satisfy or release the obligation of Abraxis to pay the
Termination Fee or Final Compensation Payment when due in
accordance with the terms of this Termination Agreement. However,
AstraZeneca agrees that the amount drawn by AstraZeneca under each
of the Termination Fee LOC and the Final Payment LOC shall be
applied to the Termination Fee and the Final Compensation Payment,
respectively. Abraxis shall pay all fees and expenses necessary to
cause JPMorgan Chase Bank, N.A. to issue the Letters of Credit
pursuant to the terms of this Termination Agreement. AstraZeneca
will surrender for cancellation the original Termination Fee LOC
and the original Final Payment LOC to JPMorgan Chase Bank, N.A.
promptly upon confirmation of receipt of payment in full by Abraxis
of the Termination Fee and the Final Compensation Payment,
respectively.
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c)
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Substitute
Letters of Credit .
Abraxis agrees that in the event the rating from Moody’s
Investors Service (“ Moody’s ”) of the
long-term debt obligations of JPMorgan Chase Bank, N.A. shall fall
from the Moody’s rating now in effect (Aaa) to a rating below
Aa2, then and in such event Abraxis shall, upon AstraZeneca’s
written request and at AstraZeneca’s sole expense, use its
commercially reasonable efforts to promptly obtain substitute
irrevocable standby letters of credit to replace each of the
Letters of Credit (each a “ Substitute Letter of
Credit ” and collectively “ Substitute Letters
of Credit ”). Each Substitute Letter of Credit must
(1) be an irrevocable standby letter of credit from a
commercial banking institution reasonably satisfactory to
AstraZeneca whose debt obligations have at least a rating of Aa2
from Moody’s, (2) have a term that continues in effect
until the close of business on April 7, 2009 and (3) be
in the same stated amount and on terms no less favorable to
AstraZeneca than the Letter of Credit being replaced. The Letters
of Credit being replaced shall in no event be terminated or
released until the Substitute Letters of Credit, in form and
substance reasonably satisfactory to AstraZeneca, have been
delivered to AstraZeneca and are in full force and
effect.
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d)
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Final Compensation
Payment . Notwithstanding
anything to the contrary herein or in the provisions of
Section 9.2 of the Co-Promotion Agreement, the Calendar
Quarter ended December 31, 2008 shall, for purposes of
computing AstraZeneca’s final Compensation payable under
Section 9.2 of the Co-Promotion Agreement after the
Termination Date (“ Final Compensation Payment
”), be deemed the final Calendar Quarter of the Term (the
“ Final Calendar Quarter ”), and after the
Termination Date, Abraxis shall pay AstraZeneca final Compensation
in the amount of twenty-two percent (22%) of Net Sales of the
Product in the Territory recognized by Abraxis during the Final
Calendar Quarter, and such final Compensation shall be paid by
Abraxis to AstraZeneca on or before March 31, 2009 no later
than 1:30 PM New York time. The provisions of Section 9.2 of
the Co-Promotion Agreement providing for the payment of
Compensation to AstraZeneca for the final Calendar Quarter of the
Term based on Average Final Net Sales, payable sixty (60) days
after the end of the first Calendar Quarter beginning after the
Term, is superceded by the provisions of this Section 3(d). In
the event AstraZeneca draws upon the Final Payment LOC, and the
amount so paid to AstraZeneca (1) is less than the actual
amount of the Final Compensation Payment as determined in
accordance with this Section 3(d), then Abraxis shall promptly
and in any event no later than April 1, 2009 pay to
AstraZeneca the amount by which such Final Compensation Payment
exceeds the amount paid to AstraZeneca under the Final Payment LOC
or (2) exceeds the actual amount of the Final Compensation
Payment as determined in accordance with this Section 3(d),
AstraZeneca shall promptly and in any event no later than
April 1, 2009 pay to Abraxis the amount by which the amount
paid to AstraZeneca under the Final Payment LOC exceeds
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the Final Compensation Payment. If
Abraxis in good faith determines that it is required under U.S. tax
rules and regulations (and interpretations thereof) to withhold an
amount from the Final Compensation Payment for income or other
taxes, then Abraxis shall withhold such required amount and provide
AstraZeneca appropriate documentation to facilitate AstraZeneca
obtaining a full foreign or other tax credit for such withheld
amount.
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4.
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Representations and Warranties of
AstraZeneca.
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AstraZeneca represents and warrants
to Abraxis as follows:
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a)
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AstraZeneca has
the power and authority and the legal right to enter into this
Termination Agreement;
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b)
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AstraZeneca has
taken all necessary action on its part to authorize the execution
and delivery of this Termination Agreemen
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