1
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Agreement made as of the 25th day of March, 1997 between Ascent
Pediatrics, Inc., a Delaware corporation with its principal office at 000
Xxxxxxxxxxx Xxxxxx, Xxxxx X000, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Buyer"),
and Xxxxxx-Xxxxx Laboratories, Inc., a Minnesota corporation with its principal
office at 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 (the "Seller").
Preliminary Statement
The Buyer desires to acquire from Seller and the Seller desires to
transfer to Buyer, Seller's Feverall(R) suppository ("FS"), Feverall(R) Sprinkle
Caps(R) powder ("FSC") and Acetaminophen Uniserts(R) suppository ("AUS") product
lines (collectively, the "Product Lines") (for purposes hereof, the business of
manufacturing, marketing and selling FS, FSC and AUS shall be referred to as the
"Business"), each as more particularly described on Schedule 1 hereto, for the
consideration set forth below, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Acquisition and Transfer of the Business.
1.1 Purchase of Assets.
(a) Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated by this Agreement
(the "Closing"), the Seller shall sell, transfer, convey, assign and deliver to
the Buyer, and the Buyer shall purchase from the Seller, all of Seller's right,
title and interest in and to the following specifically identified properties,
assets and other claims, rights and interests to the extent that and only to the
extent that they relate solely to the Product Lines and the Business, and
specifically excluding, without limitation, the Excluded Assets as defined in
Section 1.3:
(i) the inventories of finished goods, samples, trade
packs and similar items of the Seller which exist on the Closing Date (as
defined in Section 1.8 below) as set forth on Schedule 1.1(a)(i) hereto (the
"Inventory");
2
(ii) the regulatory approvals, registrations and
related materials set forth on Schedule 1.1(a)(ii) hereto (the "Registrations");
(iii) the rights of the Seller arising after the
Closing Date under the contracts, leases, licenses and other instruments set
forth on Schedule 1.1(a)(iii) hereto, including private label manufacturing
agreements and sales broker contracts (collectively, the "Contracts");
(iv) all rights of the Seller under express or
implied warranties from the suppliers of the Seller to the extent such
warranties relate to Inventory;
(v) the Seller's right, title and interest in and to
the trademarks Feverall(R) and Sprinkle Caps(R), but excluding the Xxxxxx-Xxxxx
name and logo and the Uniserts(R) name (the "Trademarks");
(vi) all of the Seller's right, title and interest in
and to the intangible property rights (including but not limited to inventions,
discoveries, trade secrets, master formulations for the Product Lines ("Master
Formulations"), master processes used by the Seller for manufacturing the
Product Lines from the Master Formulations ("Master Processes"), know-how,
United States and foreign patents, patent applications, copyrights, copyright
registrations) owned and used or, where not owned, used by the Seller, but only
to the extent actually so used, in connection with the manufacture of the
Product Lines and the licenses and other agreements to which the Seller is a
party (as licensor or licensee) or by which the Seller is bound relating to any
of the foregoing kinds of property or rights (collectively, the "Intangible
Property"); notwithstanding the foregoing, Buyer shall be entitled to use the
Intangible Property herein conveyed for the limited purpose of manufacturing
those products presently constituting the Product Lines of Seller, together with
future modifications, variations and additions to those products which may in
the future form a part of the expanded Product Lines as manufactured and sold by
or on behalf of Buyer; and
(vii) all unfilled orders (if any) relating to the
Product Lines or the Business as of the Closing Date, including those set forth
on Schedule 1.1(a)(vii) hereto.
(b) The Inventory, Registrations, Contracts, Trademarks,
Intangible Property and other properties, assets and business of the Seller
described in paragraph (a) above shall be referred to collectively as the
"Assets."
1.2 Product Line Information.
(a) In order to facilitate the Buyer's rights to manufacture,
market and sell the Product Lines and conduct the Business, the Seller shall
make available to the Buyer the following information to the extent and only to
the extent that such
-2-
3
information relates to the Product Lines and Business and specifically
excluding, without limitation, information relating to the Excluded Assets as
defined in Section 1.3:
(i) reasonable access to related documentation such
as copies of the Seller's batch or lot records which contain the formulations
and process conditions actually used by the Seller in manufacturing the Product
Lines, written technical information, data, specifications, and research and
development information, set forth on Schedule 1.2(a)(i) hereto (the "Technical
Information");
(ii) a copy of or reasonable access to (including
copies, if requested) correspondence and product complaint information, set
forth on Schedule 1.2(a)(ii) hereto (the "Regulatory Information");
(iii) all marketing information and materials,
including copies of customer lists and sales records, set forth on Schedule
1.2(a)(iii) hereto (the "Marketing Materials"); and
(iv) a copy of or reasonable access to (including
copies, if requested) all books, records and accounts, correspondence,
production records, technical, accounting, manufacturing and procedural manuals,
studies, reports or summaries relating to any environmental conditions or
consequences of any operation, present or former, as well as all studies,
reports or summaries relating to any environmental aspect or the general
condition of the Product Lines or the Business and any related confidential
information which has been reduced to writing (the "Records").
(b) The Technical Information, Regulatory Information,
Marketing Materials and Records of the Seller described in paragraph (a) above
shall be referred to collectively as the "Product Line Information."
1.3 Excluded Assets. The rights conveyed to the Buyer by Section
1.1(a)(vi) are limited to those presently existing rights of Seller which are
required for the manufacture, use or sale of the Product Lines, and no other
rights are conveyed and no other use of the conveyed rights by the Buyer, its
successors or assigns, except as expressly stated in Sections 1.1 and 1.2, shall
be permitted or authorized. All other rights and uses are retained by the
Seller. Without limitation, the Assets and Product Line Information shall not
include any property, assets, and other claims, rights, and interests of the
type referred to in Section 1.1(a) or any information of the type referred to in
Section 1.2(a) which relate to other products of Seller and not exclusively the
Product Lines. The Seller retains ownership of and the unrestricted right to use
any and all intangible property rights (e.g. Master Processes, know-how,
patents, etc.) for all purposes other than the manufacture, use or sale of the
Product Lines, noting that certain assets of the Seller have applicability both
to the Product Lines and to other products. The Assets specifically do not
include any know-how or technology owned by third parties including, but not
limited to, any technology used by the supplier of the
-3-
4
coated acetaminophen. The Assets also do not include cash, securities, accounts
receivable (except accounts receivable associated with unfilled orders) and
other assets derived from or relating to the Business and Assets prior to the
Closing which are not essential to the operation of the Business after the
Closing. The property, assets, information and other claims, rights and
interests excluded by this Section 1.3 are, collectively, the "Excluded Assets".
1.4 Further Assurances. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration, the Seller
promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as the
Buyer may reasonably request to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purposes and
intent of this Agreement. It is the intent of the parties that by this Agreement
the Buyer is purchasing sufficient intangible rights of the Seller needed to
manufacture the Product Lines in the same manner as they have been manufactured
by the Seller. To this end, Seller will cooperate with the Buyer, without
additional cost but at the Buyer's expense, to ensure an orderly and complete
transfer to the Buyer of all information of the Seller which is reasonably
needed by trained and qualified personnel of Buyer to manufacture the Product
Lines.
1.5 Purchase Price; Sprinkle Caps(R) Performance Payments.
(a) The total purchase price of the Assets shall be Eleven
Million Five Hundred Thousand Dollars ($11,500,000) plus Seller's fully
allocated costs of manufacturing the Inventory (the "Inventory Cost" and,
together with the $11,500,000, the "Total Purchase Price"). The Total Purchase
Price shall be payable in the manner described in paragraph (b) of this
Subsection 1.5.
(b) Upon execution of that certain letter of intent dated
November 13, 1996 between the Buyer and the Seller, Buyer paid Seller a
non-refundable cash payment in the amount of $250,000, which amount shall be
applied against the Total Purchase Price. At the Closing, the Buyer shall
deliver to the Seller (i) the sum of Five Million Seven Hundred Fifty Thousand
Dollars ($5,750,000) plus the Inventory Cost in cash (the "Closing Payment"), by
wire transfer of immediately available funds to an account designated by the
Seller, and (ii) a promissory note of the Buyer for the remaining Five Million
Five Hundred Thousand Dollars ($5,500,000) of the purchase price (the
"Promissory Note") substantially in the form attached hereto as Exhibit A. The
Promissory Note shall be secured by a security agreement executed by the Buyer
in favor of the Seller (the "Security Agreement"), substantially in the form
attached hereto as Exhibit B. Within 225 days after the Closing, Buyer shall
deliver to Seller the sum of Five Million Five Hundred Thousand Dollars
($5,500,000) in cash, in accordance with the
-4-
5
provisions of the Promissory Note, by wire transfer of immediately available
funds to an account designated by the Seller, in satisfaction of the Promissory
Note.
(c) (i) Buyer also shall pay to the Seller performance based
payments, at the times specified in subclause (c)(ii) below, equal to five
percent (5%) of Net Sales (as defined below) attributable to Feverall(R)
Sprinkle Caps(R) non-time release capsules (the "Performance Payments") for a
period of seven (7) years (the "Performance Period") commencing on the date on
which Buyer shall have made its first substantial commercial sale of the
Feverall(R) Sprinkle Caps(R) product following the relaunch by Buyer of the
Feverall(R) Sprinkle Caps(R) product to the market by active promotional and
marketing efforts (the "Performance Commencement Date"). The Buyer agrees to
commence within 90 days of the Closing Date and to pursue vigorously the market
research for the Feverall(R) Sprinkle Caps(R) product, and, if in Buyer's sole
judgment commercialization of the Feverall(R) Sprinkle Caps(R) product is
feasible, to re-launch the product as soon as possible after completing the
research and to market the product diligently during the Performance Period. In
the event that the United States Food and Drug Administration ("FDA"), by order
or otherwise, requires or causes sales of Feverall(R) Sprinkle Caps(R) non-time
release capsules to be suspended or materially curtailed, whether the cause of
such suspension or curtailment is related to the formulation, delivery system,
packaging or suggested method of use or ingestion, at any time or from time to
time during the Performance Period, Seller may, by notice to Buyer, temporarily
suspend the Performance Period and thereafter, by similar notice to Buyer, may
declare the Performance Period to recommence for the unexpired balance of the
Performance Period. For purposes of this Section 1.5(c), "Net Sales" shall mean
gross receipts from sales of Feverall(R) Sprinkle Caps(R) products by the Buyer
less: (A) customary trade, quantity or cash discounts actually allowed, (B)
amounts repaid or credited for rejections or returns, (C) customs duties or
charges, (D) shipping, insurance and packing, to the extent that such amounts
are separately billed, and (E) sales or other excise taxes or other governmental
charges levied on or measured by sales, but not franchise, value-added, gross
receipts or income taxes of any kind whatsoever. In the event that Buyer decides
not to market the Feverall(R) Sprinkle Caps(R) product, ceases to market such
product for reasons other than FDA action or chooses not to take action to
remedy any FDA impediments to marketing such product, Buyer shall give Seller a
right of first refusal for a period of 180 days following notice by Buyer to
Seller of any offer Buyer may receive to acquire all or any part of the
Feverall(R) Sprinkle Caps(R) Product Line, including any and all assets and
product line information then relating to the Feverall(R) Sprinkle Caps(R)
Product Line (specifically including the related trademarks) and any and all
modifications, improvements and enhancements thereof to the date of sale to
Seller.
(ii) Within 45 days after the end of each quarterly
fiscal period of the Buyer in the Performance Period, commencing with the
quarterly period that ends immediately after the Performance Commencement Date,
Buyer (a) shall submit to Seller a report ("Performance Report") setting forth
(I) the Net Sales for such period and (II)
-5-
6
the Performance Payment due thereon and (b) shall remit the required Performance
Payment with the corresponding Performance Report.
(iii) Buyer shall keep or shall cause to be kept
accurate and correct records of gross and Net Sales. Such records shall be
retained for three (3) years following the delivery of a given Performance
Report. Upon five (5) business days written notice by Seller, such records shall
be available for inspection during normal business hours, at the expense of
Seller (except as otherwise provided below) by a certified public accountant
selected by Seller and approved by Buyer, such approval not to be unreasonably
withheld, for the sole purpose of verifying Performance Reports and Performance
Payments hereunder. In the event that such inspection discloses a shortfall in
the Performance Payment due to Seller as to any quarterly period in an amount
equal to or greater than 3% of the Performance Payment made for such quarterly
period, the cost of inspection shall be borne by Buyer. Such accountant shall
not disclose to Seller any information other than information relating to the
accuracy of Performance Reports and Performance Payments. Buyer agrees that
Seller may, at Seller's cost and election, request the outside auditors for
Buyer to verify the Performance Reports and Performance Payments as provided in
this Section 1.5(c) as part of their normal audit of Buyer's financial
statements.
1.6 Assumption of Liabilities.
(a) At the Closing, the Seller and the Buyer shall execute and
deliver an Assignment and Assumption Agreement (the "Assignment and
Assumption"), substantially in the form attached hereto as Exhibit C, pursuant
to which the Buyer shall assume and agree to perform, pay and discharge all
obligations of the Seller continuing after the Closing under the contracts set
forth on Schedule 1.6 hereto which are to be performed or become due and payable
after the Closing Date (the "Assumed Liabilities").
(b) Except as provided in Section 9.3, with respect to
indemnification for operations of the Buyer or other liabilities of the Buyer,
the Buyer shall not at the Closing assume or agree to perform, pay or discharge,
and the Seller shall remain unconditionally liable and shall indemnify Buyer
for, all obligations, liabilities and commitments, fixed or contingent, of the
Seller other than the Assumed Liabilities.
1.7 Allocation of Total Purchase Price and Assumed Liabilities. The
aggregate amount of the Total Purchase Price and the Assumed Liabilities shall
be allocated among the Assets and Product Line Information as follows: (i) an
aggregate of $10,500,000 allocated to the Assets and Product Line Information
other than the Inventory and Trademarks; (ii) $500,000 allocated to the
Trademarks; (iii) $500,000 allocated to the non-competition agreement contained
in Section 10.2 hereof; and (iv) the amount of the Inventory Cost to the
Inventory.
-6-
7
1.8 The Closing. The Closing shall take place at the offices of
Xxxxxxx, Rumble & Xxxxxx Professional Association, 000 Xxxxx Xxxxx Xxxxxx, 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx at 9:00 a.m., Minneapolis time, on
July 10, 1997 or at such other place, time or date as may be mutually agreed
upon in writing by the parties hereto. The transfer of the Assets by the Seller
to the Buyer shall be deemed to occur at 9:00 a.m., Minneapolis time, on the
date of the Closing (the "Closing Date").
2. Representations of the Seller.
The Seller represents and warrants to the Buyer as follows:
2.1 Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has all requisite corporate power and authority to own its properties, to
carry on its business as now being conducted, to execute and deliver this
Agreement and the agreements contemplated herein, and to consummate the
transactions contemplated hereby. The Seller is duly qualified to do business
and in good standing in all jurisdictions in which its ownership of property or
the character of its business requires such qualification and such a failure to
qualify has or will have a material adverse effect upon the Assets or the
ability of the Seller to perform its obligations under this Agreement.
2.2 Authorization and Noncontravention. The execution and delivery of
this Agreement by the Seller, and the agreements provided for herein, and the
consummation by the Seller of all transactions contemplated hereby, have been
duly authorized by all requisite corporate and shareholder action. This
Agreement and all such other agreements and written obligations entered into and
undertaken in connection with the transactions contemplated hereby to which the
Seller is a party constitute the valid and legally binding obligations of the
Seller, enforceable against the Seller in accordance with their respective
terms, except as limited by applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally and subject to general principles of equity. The execution,
delivery and performance by the Seller of this Agreement and the agreements
provided for herein, and the consummation by the Seller of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to the Seller; (b) violate the provisions of the Articles
of Incorporation or Bylaws of the Seller; (c) violate any judgment, decree,
order or award of any court, governmental body or arbitrator; or (d) conflict
with or result in the breach or termination of any term or provision of, or
constitute a default under, or cause any acceleration under, or cause the
creation of any lien, charge or encumbrance upon the properties or assets of the
Seller pursuant to, any indenture, mortgage, deed of trust or other instrument
or agreement to which the Seller is a party or by which the Seller or any of the
Assets is or may be bound, which violation or conflict will have a material
adverse effect on the ability of the Seller to perform its obligations under
this Agreement in accordance with the terms hereof.
-7-
8
Schedule 2.2 hereto sets forth a true, correct and complete list of all consents
and approvals of third parties that are required in connection with the
consummation by the Seller of the transactions contemplated by this Agreement.
2.3 Ownership of the Assets. Schedule 2.3(i) hereto sets forth a true,
correct and complete list of all claims, liabilities, liens, pledges, charges,
encumbrances and equities of any kind affecting the Assets (collectively, the
"Encumbrances"). The Seller is, and at the Closing will be, the true and lawful
owner of the Assets, and will have the right to sell and transfer to the Buyer
good title to the Assets, free and clear of all Encumbrances of any kind, except
as set forth on Schedule 2.3(ii) hereto (the "Permitted Encumbrances"). The
delivery to the Buyer of the instruments of transfer of ownership contemplated
by this Agreement will vest good title to the Assets in the Buyer, free and
clear of all liens, mortgages, pledges, security interests, restrictions, prior
assignments, encumbrances and claims of any kind or nature whatsoever, except
for the Permitted Encumbrances and subject to the lien established by the
Security Agreement.
2.4 Product Profitability Analyses. The Seller has previously delivered
to the Buyer product profitability analyses for each product in the Product
Lines for each of the years in the six-year period ended December 31, 1996 (the
"Product Profitability Analyses"), copies of which are attached as Schedule 2.4
hereto. The Product Profitability Analyses have been derived from the books and
records of the Seller, which books and records were kept in the ordinary course
of Seller's business. All Interim Product Profitability Analyses furnished
pursuant to Section 5.3 will be prepared on a basis similar to the Product
Profitability Analyses prepared in accordance with this Section 2.4.
2.5 Absence of Undisclosed Liabilities. Except as and to the extent set
forth on Schedule 2.5 hereto, the Seller does not have any material liability or
obligation, secured or unsecured, whether accrued, absolute, contingent,
unasserted or otherwise, affecting the Assets or the business of the Seller
relating to the Product Lines or the Business. For purposes of this Subsection
2.5, "material" means any amount in excess of $50,000 in the aggregate.
2.6 Litigation. Except as set forth on Schedule 2.6 hereto, the Seller
is not a party to, or to the Seller's best knowledge threatened with, and none
of the Assets is subject to, any material litigation, suit, action,
investigation, proceeding or controversy before any court, administrative agency
or other governmental authority relating to or affecting the Assets or the
Business. The Seller is not in violation of or in default with respect to any
judgment, order, writ, injunction, decree or rule of any court, administrative
agency or governmental authority or any regulation of any administrative agency
or governmental authority relating to or affecting the Assets or the Business,
which violation or default has a material adverse effect on the Assets or the
Business or which would prevent the Seller from transferring the Assets or the
Business to the Buyer according to the terms hereof.
-8-
9
2.7 Insurance. Schedule 2.7 hereto sets forth a true, correct and
complete list of all insurance policies insuring the Assets or the Business,
specifying the type of coverage, the amount of the coverage, the premium, the
insurer and the expiration date of each such policy (collectively, the "Seller's
Insurance Policies") and all claims made with respect to the Assets and the
Business under the Seller's Insurance Policies since January 1, 1992. True,
correct and complete copies of all of the Seller's Insurance Policies have been
previously delivered by the Seller to the Buyer. The Seller's Insurance Policies
are in full force and effect. All premiums due on the Seller's Insurance
Policies or renewals thereof have been paid and, to the best of Seller's
knowledge, the Seller is not in default under any of the Seller's Insurance
Policies. Except as set forth on Schedule 2.7 hereto, the Seller has not
received any notice or other communication from any issuer of the Seller's
Insurance Policies since January 1, 1992 canceling or materially amending any of
the Seller's Insurance Policies, materially increasing any deductibles or
retained amounts thereunder, or materially increasing the annual or other
premiums payable thereunder, and, to the best knowledge of the Seller, no such
cancellation, amendment or increase of deductibles, retainages or premiums is
threatened.
2.8 Inventory and Returns, Rebates and Contract Pricing. Schedule
1.1(a)(i) hereto sets forth a true, correct and complete list of the Inventory
as of the date hereof, including a description and the book value thereof. To
the best of Seller's knowledge, such Inventory consists of items of a quality
and quantity which are usable or saleable without discount in the ordinary
course of the business conducted by the Seller. The value of all items of
obsolete materials and of materials of below standard quality has been written
down to zero and the values at which such Inventory is carried reflect the
normal inventory valuation policy of the Seller of stating the Inventory at the
lower of cost or market value. Schedule 2.8 hereto sets forth a true, correct
and complete summary of the historic levels of returns, rebates and contract
pricing relating to Product Line products, in each case, measured as a
percentage of total product sales of Product Line products sold during each of
the two fiscal years ended December 31, 1996.
2.9 Change in Financial Condition and Assets, Except as set forth on
Schedule 2.9 hereto, since December 31, 1996, there has been no change which
materially and adversely affects the Assets or the condition (financial or
otherwise) or prospects of the Business.
2.10 Books and Records. The general ledgers and books of account of the
Seller, with respect to the Assets and the Business, and all other books and
records of the Seller, are in all material respects complete and correct and
have generally been maintained in all material respects in accordance with good
business practice and in accordance with all applicable procedures required by
laws and regulations.
2.11 Contracts and Commitments.
-9-
10
(a) Schedule 1.1(a)(iii) hereto contains a true, complete and
correct list and description of the Contracts which are to be assumed by the
Buyer at the Closing.
(b) Except as set forth on Schedule 2.11 hereto:
(i) each Contract is a valid and binding agreement of
the Seller, and the Seller does not have any knowledge that any Contract is not
a valid and binding agreement of the other parties thereto;
(ii) the Seller has fulfilled all material
obligations required pursuant to the Contracts to have been performed by the
Seller on its part on or prior to the date hereof.
(iii) the Seller is not in material breach or default
of any material obligation of the Seller under, or a material term applicable to
the Seller under, any Contract, and no event has occurred which with the passage
of time or giving of notice or both would constitute such a material default,
result in a loss of any material rights of the Seller or result in the creation
of any material lien, charge or encumbrance, thereunder or pursuant thereto;
(iv) to the best of Seller's knowledge, there is no
existing material breach or default by any other party to any Contract, and, to
the best of Seller's knowledge, no event has occurred which with the passage of
time or giving of notice or both would constitute a material default by such
other party, result in a loss of any material rights or result in the creation
of any material lien, charge or encumbrance thereunder or pursuant thereto; and
(v) the Seller is not restricted by any Contract from
carrying on the Business anywhere in the world.
For purposes of this paragraph 2.11(b), the term "material" means the sum of
$10,000.00 or more per contract or series of related contracts.
(c) Except as set forth on Schedule 2.11 hereto, the
continuation, validity and effectiveness of each Contract will not be affected
by the transfer thereof by Buyer under this Agreement and all such Contracts are
assignable to Buyer without a consent.
(d) True, correct and complete copies of all Contracts have
previously been delivered or made available by the Seller to the Buyer.
2.12 Compliance with Agreements and Laws. Except as set forth in
Schedule 2.12 hereto, the Seller has all requisite licenses, permits, approvals
and certificates, including any required by the FDA, and all environmental,
health and safety permits, from foreign, federal, state and local authorities
necessary to conduct the Business and
-10-
11
own and operate the Assets, the absence of any one of which, or any combination
of which, would have a material adverse effect on the condition (financial or
otherwise) of the Business or the ownership or operation of the Assets
(collectively, the "Seller's Permits"). Schedule 2.12 hereto sets forth a true,
correct and complete list of all such Seller's Permits, copies of which have
previously been delivered by the Seller to the Buyer. The Seller is not in
violation of any foreign, federal, state or local law, regulation or ordinance
relating to the Assets or the Business, the violation of any one of which, or
any combination of which, would have a material adverse effect on the condition
(financial or otherwise) of the Business or the ownership or operation of the
Assets. Except as set forth on Schedule 2.12 hereto, to the best of Seller's
knowledge, Seller has conducted and is currently conducting the manufacture and
sale of the products in the Product Lines in substantial compliance with all
applicable foreign, federal, state and local laws, rules, regulations and
judicial or administrative orders and processes, the violation of any one of
which, or any combination of which, would have a material adverse effect on the
condition (financial or otherwise) of the Business or the ownership or operation
of the Assets. To the best of Seller's knowledge, the manufacture of such
products by Seller and its contract manufacturers conforms in all material
respects to the current "good manufacturing practices" regulations of the FDA.
Except as set forth on Schedule 2.12 hereto, the Seller has not since January 1,
1992 received any notice or communication from any foreign, federal, state or
local governmental or regulatory authority or otherwise of any such violation or
noncompliance. To the best of Seller's knowledge, the regulatory approvals and
registrations and related materials set forth on Schedule 1.1(a)(ii) hereto
constitute all such approvals and registrations necessary to conduct the
Business, the lack of any one of which, or any combination of which, would have
a material adverse effect on the condition (financial or otherwise) of the
Business or the ownership or operation of the Assets.
2.13 Absence of Certain Changes or Events. Except as set forth on
Schedule 2.13 hereto, since December 31, 1996, the Seller has not entered into
any transaction relating to the Business which is not in the usual and ordinary
course of business, and, without limiting the generality of the foregoing, the
Seller has not:
(a) Made any material amendment to or terminated any material
Contract or done any act or omitted to do any act which would cause the breach
of any material term or obligation applicable to the Seller under any material
Contract;
(b) Authorized or issued recall notices for any products in
the Product Lines or initiated any investigations relating to any material
safety or technical problems with respect to any of the Product Lines; or
(c) Received notice of any material litigation, warranty claim
or products liability claim relating to the Assets or the Business.
-11-
12
2.14 Customers. Schedule 2.14 hereto sets forth a true, correct and
complete list of the names and addresses of all customers of the Seller each of
which accounted for 2.5% or more of the Seller's total sales relating to the
Product Lines in the fiscal year ended December 31, 1996. None of such customers
has notified the Seller that it intends to discontinue its relationship with the
Seller. All unfilled orders (if any) relating to the Product Lines and the
Business as of the Closing Date will be described in Schedule 1.1(a)(vii)
hereto.
2.15 Suppliers. Schedule 2.15 hereto sets forth a true, correct and
complete list of the names and addresses of all approved suppliers (by the FDA
or any foreign regulatory authority) relating to the Product Lines for each of
the last five fiscal years ended December 31, 1996. None of the suppliers for
the fiscal year ended December 31, 1996 has notified the Seller that it intends
to discontinue its relationship with the Seller.
2.16 Trade Names and Other Intangible Property.
(a) (i) Schedule 1.1(a)(v) hereto sets forth a true, correct,
and complete list of all the trademarks and trade names (other than the
Xxxxxx-Xxxxx name and logo and the Uniserts(R) name) used in connection with the
Product Lines. True, correct and complete copies of all licenses and other
agreements relating to the trademarks and trade names listed on Schedule
1.1(a)(v) hereto have been previously delivered by the Seller to the Buyer.
(ii) True, correct and complete copies of all
licenses and other agreements relating to the Intangible Property have been
previously delivered by the Seller to the Buyer.
(b) Schedule 2.16(b) hereto sets forth a true, correct and
complete copy of the current formulations and product methodologies relating to
each product in the Product Lines. Such formulations and methodologies are
sufficient to enable Buyer to manufacture all of such products.
(c) Except as otherwise disclosed in Schedule 2.16(c) hereto,
to the best of Seller's knowledge, the Seller is the sole and exclusive owner of
all Intangible Property and the Trademarks and all designs, permits, labels, and
packages used on or in connection therewith. To the best of Seller's knowledge,
the Intangible Property and the Trademarks owned by the Seller are sufficient to
conduct the Business as presently conducted and, when transferred to the Buyer
pursuant to this Agreement, will be sufficient to permit the Buyer to conduct
the Business as presently conducted by the Seller. Except as otherwise disclosed
in Schedule 2.16(c) hereto, the Seller has received no notice of, and has no
knowledge of any reasonable basis for, a claim against it that the Business or
any of the Assets infringes any patent, trademark, trade name, copyright or
other property right of a third party, or that it is illegally or otherwise
using the trade secrets, formulae or any property rights of others. To the best
of Seller's knowledge, the
-12-
13
Seller has no disputes with or claims against any third party for infringement
by such third party of any rights relating to the Trademarks or other Intangible
Property. To the best of Seller's knowledge, the Seller has taken all steps
deemed by Seller to be reasonably necessary to protect its right, title and
interest in and to the Intangible Property.
2.17 Regulatory Approvals. To the best of Seller's knowledge, all
consents, approvals, authorizations and other requirements prescribed by any
law, rule or regulation, including all applicable foreign, federal, state, and
local laws and regulations (including those of the FDA), which must be obtained
or satisfied by the Seller and which are necessary for the execution and
delivery by the Seller of this Agreement and the documents to be executed and
delivered by the Seller in connection herewith are set forth on Schedule 2.17
hereto and have been, or will be on or prior to the Closing Date, obtained and
satisfied. All regulatory approvals and registrations relating to the Product
Lines or the Business are described in Schedule 1.1(a)(ii) hereto.
3. Representations of the Buyer.
The Buyer represents and warrants to the Seller as follows:
3.1 Organization and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has all requisite corporate power and authority to own its
properties and to carry on its business as now being conducted. The Buyer has
full power to execute and deliver this Agreement, the Promissory Note, the
Security Agreement, the License Agreements, the Manufacturing Agreement and the
Assignment and Assumption and to consummate the transactions contemplated hereby
and thereby. The Buyer is duly qualified to do business and in good standing in
all jurisdictions in which its ownership of property or the character of its
business requires such qualification and such a failure to qualify has or will
have a material adverse effect on the ability of the Buyer to perform its
obligations under this Agreement, the Promissory Note, the Security Agreement,
the License Agreements, the Manufacturing Agreement, the Assignment and
Assumption and all other agreements and instruments entered into by Buyer in
connection with the transactions contemplated by this Agreement.
3.2 Authorization. The execution and delivery of this Agreement by the
Buyer, and the agreements provided for herein, and the consummation by the Buyer
of all transactions contemplated hereby, have been duly authorized by all
requisite corporate action. This Agreement and all such other agreements and
written obligations entered into and undertaken in connection with the
transactions contemplated hereby constitute the valid and legally binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms, except as limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of equity. The
execution, delivery and performance of this Agreement and the agreements
-13-
14
provided for herein, and the consummation by the Buyer of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of the any law, rule
or regulation applicable to the Buyer; (b) violate the provisions of the Buyer's
Certificate of Incorporation or Bylaws; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or assets of the Buyer pursuant
to, any indenture, mortgage, deed of trust or other agreement or instrument to
which it or its properties is a party or by which the Buyer is or may be bound,
which conflict, breach, termination, default, acceleration or encumbrance will
materially affect the ability of the Buyer to perform its obligations under this
Agreement in accordance with the terms hereof. Schedule 3.2 hereto sets forth a
true, correct and complete list of all consents and approvals of third parties
that are required in connection with the consummation by the Buyer of the
transactions contemplated by this Agreement.
3.3 Financial Statements. The Buyer has previously delivered to the
Seller copies of the Buyer's audited financial statements as of December 31,
1995 and 1996 and for each of the years in the three-year period ended December
31, 1996 (the "Financial Statements"), copies of which are attached as Schedule
3.3 hereto. The Financial Statements fairly present the information set forth
therein in accordance with generally accepted accounting principles. The
Financial Statements, including the notes thereto, disclose any and all security
arrangements for indebtedness of the Buyer in existence at the date thereof.
3.4 Litigation. Except as set forth on Schedule 3.4 hereto, the Buyer
is not a party to, or to the Buyer's best knowledge threatened with, any
material litigation, suit, action, investigation, proceeding or controversy
before any court, administrative agency or other governmental authority. The
Buyer is not in violation of or in default with respect to any judgment, order,
writ, injunction, decree or rule of any court, administrative agency or
governmental authority or any regulation of any administrative agency or
governmental authority, which violation or default has a material adverse effect
on the business of the Buyer or which would prevent the Buyer from operating the
Business after the Closing.
3.5 Insurance. Schedule 3.5 hereto sets forth a true, correct and
complete list of all insurance policies which will insure the Assets or the
Business after the Closing, specifying the type of coverage, the amount of the
coverage, the premium, the insurer and the expiration date of each such policy
(collectively, the "Buyer's Insurance Policies") and all claims made with
respect to the Assets and the Business under the Buyer's Insurance Policies
since January 1, 1996. True, correct and complete copies of all of the Buyer's
Insurance Policies have been previously delivered by the Buyer to the Seller.
The Buyer's Insurance Policies are in full force and effect. All premiums due on
-14-
15
the Buyer's Insurance Policies or renewals thereof have been paid and, to the
best of Buyer's knowledge, the Buyer is not in default under any of the Buyer's
Insurance Policies. Except as set forth on Schedule 3.5 hereto, the Buyer has
not received any notice or other communication from any issuer of the Buyer's
Insurance Policies since January 1, 1996 canceling or materially amending any of
the Buyer's Insurance Policies, materially increasing any deductibles or
retained amounts thereunder, or materially increasing the annual or other
premiums payable thereunder, and, to the best knowledge of the Buyer, no such
cancellation, amendment or increase of deductibles, retainages or premiums is
threatened.
3.6 Change in Financial Condition and Business. Except as set forth on
Schedule 3.6 hereto, since December 31, 1996, there has been no change which
materially and adversely affects the business or the condition (financial or
otherwise) or prospects of the Buyer. Since December 31, 1996, there has been no
change in the security arrangements for indebtedness of the Buyer which is not
disclosed in the Financial Statements.
3.7 Compliance with Agreements and Laws. Except as set forth in
Schedule 3.7 hereto, the Buyer has all requisite licenses, permits, approvals
and certificates, including any required by the FDA, and all environmental,
health and safety permits, from foreign, federal, state and local authorities
necessary to conduct the business of the Buyer, including the Business, and to
own and operate the Assets, the absence of any one of which, or any combination
of which, would have a material adverse effect on the condition (financial or
otherwise) of the business of the Buyer (collectively, the "Buyer's Permits").
The Buyer is not in violation of any foreign, federal, state or local law,
regulation or ordinance relating to its business, the violation of any one of
which, or any combination of which, would have a material adverse effect on the
condition (financial or otherwise) of the business of the Buyer. Except as set
forth on Schedule 3.7 hereto, to the best of Buyer's knowledge, Buyer has
conducted and is currently conducting the manufacture and sale of its products
in substantial compliance with all applicable foreign, federal, state and local
laws, rules, regulations and judicial or administrative orders and processes,
the violation of any one of which, or any combination of which, would have a
material adverse effect on the condition (financial or otherwise) of the
business of the Buyer. To the best of Buyer's knowledge, the manufacture of such
products by Buyer and its contract manufacturers conforms in all material
respects to the current "good manufacturing practices" regulations of the FDA.
Except as set forth on Schedule 3.7 hereto, the Buyer has not since January 1,
1992 received any notice or communication from any foreign, federal, state or
local governmental or regulatory authority or otherwise of any such violation or
noncompliance. To the best of Buyer's knowledge, the Buyer has all regulatory
approvals and registrations necessary to conduct the business of the Buyer, the
lack of any one of which, or any combination of which, would have a material
adverse effect on the condition (financial or otherwise) of the business of the
Buyer.
-15-
16
3.8 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.8 hereto, since December 31, 1996, the Buyer has not entered into any
transaction relating to the business of the Buyer which is not in the usual and
ordinary course of business, and, without limiting the generality of the
foregoing, the Buyer has not:
(a) Made any material amendment to or terminated any material
contract or done any act or omitted to do any act which would cause the breach
of any material term or obligation applicable to the Buyer under any material
contract;
(b) Authorized or issued recall notices for any of its
products or initiated any investigations relating to any material safety or
technical problems with respect to any of its products;
(c) Received notice of any material litigation, warranty claim
or products liability claim relating to any of its products;
(d) Received notice from any substantial customer or group of
customers that it or they intend to discontinue its or their relationship with
the Buyer, which discontinuance would have a material adverse effect on the
business or the condition (financial or otherwise) of the Buyer; or
(e) Received notice from any substantial supplier or group of
suppliers that it or they intend to discontinue its or their relationship with
the Buyer, which discontinuance would have a material adverse effect on the
business or the condition (financial or otherwise) of the Buyer.
3.9 Intangible Property.
(a) To the best of Buyer's knowledge, the patents, trademarks,
trade names and other intangible property owned or used by the Buyer are
sufficient to conduct the business of the Buyer as presently conducted. Except
as otherwise disclosed in Schedule 3.9 hereto, the Buyer has received no notice
of, and has no knowledge of any reasonable basis for, a claim against it that
the business of the Buyer infringes any patent, trademark, trade name, copyright
or other property right of a third party, or that it is illegally or otherwise
using the trade secrets, formulae or any property rights of others, the
consequences of which would have a material adverse effect on the business or
the condition (financial or otherwise) of the Buyer. To the best of Buyer's
knowledge, the Buyer has no disputes with or claims against any third party for
infringement by such third party of any rights relating to patents, trademarks,
trade names or other intangible property owned or used by the Buyer. To the best
of Buyer's knowledge, the Buyer has taken all steps deemed by the Buyer to be
reasonably necessary to protect its right, title and interest in and to all of
such intangible property.
4. Access to Information; Public Announcements.
-16-
17
4.1 Access to Management, Properties and Records.
(a) Subject to the terms of the Nondisclosure and
Confidentiality Agreement between the parties dated November 9, 1993, from the
date of this Agreement until the Closing Date, the Seller shall afford the
officers, attorneys, accountants and other authorized representatives of the
Buyer free and full access upon reasonable notice and during normal business
hours to all management personnel, offices, properties, books and records of the
Seller relating to the Assets or the Business, so that the Buyer may have full
opportunity to make such investigation as it shall desire to make of the
management, business, properties and affairs of the Seller relating to the
Assets or the Business, and the Buyer shall be permitted to make abstracts from,
or copies of, all such books and records. The Seller shall furnish to the Buyer
such financial and operating data and other information as to the Assets and the
Business of the Seller as the Buyer shall reasonably request.
(b) The Seller shall authorize the release to the Buyer of all
files pertaining to the Assets or the Business held by any foreign, federal,
state or local authorities, agencies or instrumentalities.
4.2 Public Announcements. The parties agree that prior to the Closing
Date, except as otherwise required by law, any and all public announcements or
other public communications concerning this Agreement and the purchase of the
Assets by the Buyer (other than as Buyer or Seller deems necessary in connection
with the offering of their respective securities or other financing, or in
communications with holders of securities issued prior to the date of this
Agreement), shall be subject to the approval of both parties, which approval
shall not be unreasonably withheld.
5. Pre-Closing Covenants of the Seller.
From and after the date hereof and until the Closing Date:
5.1 Conduct of Business. The Seller shall carry on the Business
diligently and substantially in the same manner as heretofore and shall not make
or institute any unusual or new methods of manufacture, purchase, sale, shipment
or delivery, lease, management, accounting or operation, and shall not ship or
deliver any quantity of products in excess of normal shipment or delivery
levels, except as agreed to in writing by the Buyer. All of the property of the
Seller relating to the Business shall be used, operated, repaired and maintained
in a normal business manner consistent with past practice. Buyer and Seller will
mutually agree on the levels of Inventory to be maintained by Seller during the
period from the date of this Agreement until the Closing Date, and in the
absence of such mutual agreement the level of Inventory shall not exceed
$250,000 in value over the level necessary to satisfy unfilled orders set forth
on Schedule 1.1(a)(vii) hereto. The Seller shall not increase its prices with
respect to any of
-17-
18
the products in the Product Lines in a manner that is inconsistent, as to timing
or magnitude, with increases imposed by Seller since January 1, 1993.
5.2 Absence of Material Changes. Without the prior written consent of
the Buyer, the Seller shall not with respect to the Business or the Assets:
(a) Incur any obligation or liability (absolute or
contingent), except current liabilities incurred and obligations under contracts
entered into in the ordinary course of business;
(b) Mortgage, pledge, or subject to any lien, charge or any
other encumbrance any of the Assets;
(c) Sell, assign, or transfer any of the Assets, except for
inventory sold in the ordinary course of business;
(d) Merge or consolidate with or into any corporation or other
entity;
(e) Take or permit any act or omission constituting a breach
or default under any contract, indenture or agreement by which it or its
properties are bound;
(f) Fail to (i) preserve the possession and control of its
assets and business, (ii) keep in faithful service its present officers and key
employees, (iii) preserve the goodwill of its customers, suppliers, agents,
brokers and others having business relations with it, and (iv) keep and preserve
its business existing on the date hereof until after the Closing Date;
(g) Fail to operate its business and maintain its books,
accounts and records in the customary manner and in the ordinary or regular
course of business and maintain in good repair its business premises, fixtures,
machinery, furniture and equipment; or
(h) Commit or agree to do any of the foregoing in the future.
5.3 Delivery of Interim Product Profitability Analyses and Other
Information. As promptly as possible following the last day of each month after
the date hereof, and in any event within 30 days after the end of each such
month, the Seller shall deliver to the Buyer updated Product Profitability
Analyses (collectively, the "Interim Product Profitability Analyses"). In
addition, prior to Closing, the Seller shall provide to the Buyer an update of
the information specified in Sections 2.14 and 2.15 hereof.
5.4 Communications with Customers, Suppliers, Distributors and
Wholesalers.
-18-
19
(a) The Seller will accept customer orders in the ordinary
course of business and consistent with past practice as the Buyer's agent for
all products in the Product Lines offered by the Seller but expected to be
shipped by the Buyer after the Closing Date.
(b) The Seller and the Buyer will cooperate in communication
with customers, suppliers, distributors and wholesalers, to accomplish the
transfer of the Assets to the Buyer on the Closing Date. The Seller and the
Buyer further agree that prior to the Closing Date, except as otherwise required
by law, neither party shall disclose the existence of this Agreement or this
transaction to any third party (other than their respective professional
advisors, and other than any disclosure Buyer or Seller deems necessary in
connection with the offering of their respective securities or other financing,
or in communications with holders of securities issued prior to the date of this
Agreement) without the prior written consent of the other party.
5.5 Compliance with Laws. The Seller will comply with all laws and
regulations which are applicable to it, its ownership of the Assets or to the
conduct of the Business and will perform and comply with all contracts,
commitments and obligations by which it is bound relating to the Business and
the Assets.
5.6 Continuing Obligation to Inform. From time to time prior to the
Closing, the Seller will deliver or cause to be delivered to the Buyer
supplemental information concerning events subsequent to the date hereof which
would render any statement, representation or warranty in this Agreement or any
information contained in any Schedule inaccurate or incomplete in any material
respect at any time after the date hereof until the Closing Date.
5.7 Exclusive Dealing. From the date hereof to the Closing Date, the
Seller will not, directly or indirectly, through any officer, director, agent or
otherwise, (a) solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a material
portion of the Assets or the Business, or (b) participate in any discussions or
negotiations regarding, or furnish to any other person, any nonpublic
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. The Seller shall promptly notify the
Buyer if any such proposal or offer, or any inquiry or contact with any person
with respect thereto, is made.
6. Best Efforts to Obtain Satisfaction of Conditions.
Each of the Seller and the Buyer covenant and agree to use their
respective reasonable best efforts to obtain the satisfaction of the conditions
specified in this Agreement.
-19-
20
7. Conditions to Obligations of the Buyer.
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
7.1 Continued Truth of Representations and Warranties of the Seller;
Compliance with Covenants and Obligations. The representations and warranties of
the Seller shall be true on and as of the Closing Date as though such
representations and warranties were made on and as of such date, except for any
changes permitted by the terms hereof or consented to in writing by the Buyer.
The Seller shall have performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
7.2 Corporate Proceedings. All corporate and other proceedings required
to be taken on the part of the Seller to authorize or carry out this Agreement
and to convey, assign, transfer and deliver the Assets shall have been taken.
7.3 Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Seller of the transactions contemplated by this
Agreement and the operation of the Business by the Buyer shall have consented
to, authorized, permitted or approved such transactions.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Seller
and the Buyer shall have received all requisite consents and approvals of all
lenders, lessors and other third parties whose consent or approval is required
in order for the Seller and the Buyer to consummate the transactions
contemplated by this Agreement, including without limitation, those set forth on
Schedule 2.2 and Schedule 3.2 hereto.
7.5 Adverse Proceedings. No action or proceeding by or before any court
or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Seller to transfer the Assets or of the Buyer to own or use the
Assets or operate the Business after the Closing.
7.6 Opinion of Counsel. The Buyer shall have received an opinion of
Xxxxxxx, Rumble & Xxxxxx Professional Association, counsel to the Seller, dated
as of the Closing Date, in substantially the form attached hereto as Exhibit D,
and as to such other matters as may be reasonably requested by the Buyer or its
counsel.
-20-
21
7.7 The Assets. Except for the Permitted Encumbrances and the lien
established by the Security Agreement, at the Closing the Buyer shall receive
good title to the Assets, free and clear of all liens, liabilities, security
interests and encumbrances of any nature whatsoever.
7.8 Tax Lien Waivers. On or prior to the Closing Date, the Seller shall
have obtained and delivered to the Buyer tax lien waivers from all jurisdictions
in which Assets are located and which provide such tax lien waivers.
7.9 Sales Broker Agreements. On or prior to the Closing Date, Buyer
shall have entered into sales broker agreements with members of the sales
representatives group currently marketing the Product Lines, on terms acceptable
to Buyer and such sales representatives.
7.10 Due Diligence. On or prior to the Closing Date, Buyer shall have
completed to its satisfaction its due diligence investigation relating to the
Assets and the Business.
7.11 Agreements. Buyer and Seller shall have executed and delivered (a)
a manufacturing agreement relating to the Product Lines in substantially the
form attached hereto as Exhibit E (the "Manufacturing Agreement"), (b) the
trademark license agreement relating to the Uniserts(R) trademark in
substantially the form attached hereto as Exhibit F (the "Uniserts(R) License"),
and (c) the trademark license agreement relating to the Sprinkle Caps(R)
trademark in substantially the form attached hereto as Exhibit G (the "Sprinkle
Caps(R) License", which, together with the Uniserts(R) License, are collectively
referred to as the "License Agreements").
7.12 Closing Deliveries. The Buyer shall have received at or prior to
the Closing each of the following documents:
(a) a certificate of the Secretary of State of the State of
Minnesota as to the legal existence and good standing (including tax) of the
Seller in Minnesota;
(b) certificates of the Secretary of the Seller attesting to
the incumbency of the Seller's officers, and the authenticity of the resolutions
authorizing the transactions contemplated by the Agreement;
(c) such certificates of the Seller's officers and such other
documents evidencing satisfaction of the conditions specified in Section 7 as
the Buyer shall reasonably request;
(d) a xxxx of sale substantially in the form attached hereto
as Exhibit H;
(e) The Assignment and Assumption, executed by the Seller;
-21-
22
(f) such instruments of conveyance, assignment and transfer,
in form and substance, reasonably satisfactory to the Buyer, as shall be
appropriate to convey, transfer and assign to, and to vest in, the Buyer good
title to the Assets;
(g) cross receipt executed by the Seller; and,
(h) such other documents, instruments or certificates as the
Buyer may reasonably request.
8. Conditions to Obligations of the Seller.
The obligations of the Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing at the sole discretion of the Seller:
8.1 Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations. The representations and warranties of
the Buyer in this Agreement shall be true on and as of the Closing Date as
though such representations and warranties were made on and as of such date,
except for any changes consented to in writing by the Seller. The Buyer shall
have performed and complied with all terms, conditions, obligations, agreements
and restrictions required by this Agreement to be performed or complied with by
it prior to or at the Closing Date.
8.2 Corporate Proceedings. All corporate and other proceedings required
to be taken on the part of the Buyer to authorize or carry out this Agreement
shall have been taken.
8.3 Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
8.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer and
the Seller shall have received all requisite consents and approvals of all
lenders, lessors and other third parties whose consent or approval is required
in order for the Buyer and the Seller to consummate the transactions
contemplated by this Agreement, including, without limitation, those set forth
on Schedule 2.2 and Schedule 3.2 hereto.
8.5 Adverse Proceedings. No action or proceeding by or before any court
or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Seller
-22-
23
to transfer the Assets or of the Buyer to own or use the Assets or operate the
Business after the Closing.
8.6 Opinion of Counsel. The Seller shall have received an opinion of
Xxxx and Xxxx LLP, counsel to the Buyer, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit I, and as to such other
matters as may be reasonably requested by the Seller or its counsel.
8.7 Seller Financing. The Buyer shall have executed and delivered to
the Seller the Promissory Note, the Security Agreement, financing statements on
Form UCC-1 in a form reasonably required by the Seller and such other related
instruments reasonably necessary to secure the Promissory Note and confirm the
lien of the Security Agreement, and the Seller shall have executed and delivered
the Intercreditor Agreement.
8.8 Agreements. The Buyer and the Seller shall have executed and
delivered (a) the Manufacturing Agreement, (b) the Uniserts(R) License and (c)
the Sprinkle Caps(R) License.
8.9 Closing Deliveries. The Seller shall have received at or prior to
the Closing each of the following documents:
(a) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing (including tax) of the
Buyer in Delaware;
(b) a certificate of the Secretary of the Buyer attesting to
the incumbency of the Buyer's officers, and the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement;
(c) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Seller shall reasonably request;
(d) the Assignment and Assumption executed by the Buyer;
(e) duly executed termination statements releasing any
encumbrances on the Assets;
(f) payment of the Closing Payment payable pursuant to Section
1.5(b);
(g) executed Promissory Note;
(h) duly executed Security Agreement substantially in the form
of Exhibit B hereto with such modifications as the Seller may reasonably
require;
-23-
24
(i) duly executed financing statements substantially in the
form of Exhibit J hereto;
(j) duly executed Intercreditor Agreement in the form of
Exhibit K hereto;
(k) cross receipt executed by the Buyer; and
(l) such other documents, instruments or certificates as the
Seller may reasonably request.
9. Indemnification.
9.1 By the Buyer and the Seller. Subject to and limited by the
provisions of Section 15 hereof, the Buyer and the Seller each hereby
indemnifies and holds harmless the other party against all claims, damages,
losses, liabilities, costs and expenses (including, without limitation,
settlement costs and any legal, accounting or other expenses for investigating
or defending any actions or threatened actions) (collectively, "Losses")
reasonably incurred by the Buyer or the Seller in connection with each and all
of the following:
(a) Any material breach by the indemnifying party of any
representation or warranty in this Agreement (other than those representations
and warranties which are already qualified as to materiality, as to which any
breach (not just a material breach) shall be applicable to this paragraph (a))
or in any certificate or schedule furnished by the indemnifying party pursuant
to this Agreement; and
(b) Any material breach of any covenant, agreement or
obligation of the indemnifying party contained in this Agreement or any other
agreement, instrument or document contemplated by this Agreement;
but, with respect to clause (a) above, only to the extent that the aggregate
amount of Losses resulting from a material breach or breaches of such
representations and warranties exceeds $200,000, and provided, however, that
$5,000,000 shall be the maximum amount which the Seller shall be required to
indemnify the Buyer for Losses resulting from any and all material breach or
breaches of the Seller's representations and warranties contained in clause (a)
irrespective of the actual amount of such Losses.
9.2 By the Seller. Subject to and limited by the provisions of Section
15 hereof, the Seller further agrees to indemnify and hold harmless the Buyer
from any and all Losses reasonably incurred by the Buyer, in connection with
each and all of the following:
-24-
25
(a) Any claims against, or liabilities or obligations of, the
Seller which do not arise out of the use or possession of the Assets or the
operation of the Business;
(b) The failure of the Buyer to obtain the protections
afforded by compliance with the notification and other requirements of the bulk
sales laws in force in the jurisdictions in which such laws may be applicable to
either the Seller or the transactions contemplated by this Agreement;
(c) Any violation by the Seller of, or any failure by the
Seller to comply with, any law, ruling, order, decree, regulation or zoning,
environmental or permit requirement applicable to the Seller, the Assets or the
Business prior to Closing, whether or not any such violation or failure to
comply has been disclosed to the Buyer;
(d) Any warranty claim or product liability claim relating to
(i) products manufactured or sold by the Seller prior to the Closing Date or
(ii) the Seller's business or operations prior to the Closing Date; and
(e) Any tax liabilities or obligations of the Seller other
than the liability, if any, of the Buyer for sales taxes arising out of the
transactions contemplated hereby.
9.3 By the Buyer. The Buyer further agrees to indemnify and hold
harmless the Seller from any and all Losses reasonably incurred by the Seller,
in connection with each and all of the following:
(a) Any claims against, or liabilities or obligations which
arise out of the use, possession or ownership of the Assets by, the Buyer after
the Closing, any act or failure to act by the Buyer with respect to the Assets
or the operation of the Business after the Closing, and the Assumed Liabilities
after the Closing;
(b) Any violation by the Buyer of, or any failure by the Buyer
to comply with, any law, ruling, order, decree, regulation or zoning,
environmental or permit requirement applicable to the Buyer in connection with
the transfer of the Assets and the Business;
(c) Any violation by the Buyer after the Closing of, or any
failure by the Buyer to comply with, any law, ruling, order, decree, regulation
or zoning, environmental or permit requirement applicable to the Buyer, the
Assets or the Business; and
(d) Any warranty claim or product liability claim relating to
(i) the Buyer's business and its operations; (ii) the Assets or the Business
(other than those warranty claims arising out of the acts of the Seller pursuant
to the Manufacturing Agreement); or (iii) any Inventory sold by Buyer after the
Closing (other than those warranty claims pertaining to Product Lines
manufactured by Seller and arising out of
-25-
26
the acts of the Seller or the failure of Seller to act as required pursuant to
the Manufacturing Agreement).
9.4 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the party seeking indemnification (the "Indemnified
Party") shall promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the event of any claim for indemnification hereunder
resulting from or in connection with any claim or legal proceedings by a third
party, the notice to the Indemnifying Party shall specify, if known, the amount
or an estimate of the amount of the liability arising therefrom. The Indemnified
Party shall not settle or compromise any claim by a third party for which it may
claim indemnification hereunder without the prior written consent of the
Indemnifying Party except as provided in Section 9.5 of this Agreement.
9.5 Defense by Indemnifying Party. In connection with any claim by an
Indemnified Party resulting from or arising out of any claim or legal proceeding
by a person who is not a party to this Agreement, the Indemnifying Party at its
sole cost and expense may, upon written notice to the Indemnified Party, assume
the defense of any such claim or legal proceeding if it acknowledges to the
Indemnified Party in writing its obligation to indemnify the Indemnified Party
with respect to all elements of such claim. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense. If the Indemnifying Party does not
assume the defense of any such claim or litigation resulting therefrom within 30
days after the date such claim is made, (a) the Indemnified Party may defend
against such claim or litigation, in such manner as it may deem appropriate,
including, but not limited to, settling such claim or litigation, after giving
notice of the same to the Indemnifying Party, on such terms as the Indemnified
Party may deem appropriate, and (b) the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such action, with its counsel
and at its own expense.
9.6 Payment of Indemnification Obligation. The Buyer hereby agrees that
no claim for indemnification by the Buyer under this Section 9 or under any
other provision of this Agreement shall be set off against the Buyer's
obligation to make payments under the Promissory Note. All indemnification by
the Buyer or the Seller hereunder shall be effected by payment of cash or
delivery of a cashier's or certified check in the amount of the indemnification
liability.
9.7 Survival of Representations. The representations and warranties of
each of the parties hereto shall survive until the date that is eighteen (18)
months after the Closing Date; provided, however, that the representations of
the Seller contained in Section 2.3 hereof as to title to the Assets shall
survive until the date that is two (2) years after the Closing Date.
-26-
27
9.8 Limit on Claims. No claim under this Agreement, including but not
limited to any claim for damages or indemnification, shall be enforceable unless
the party against whom the claim is made receives written notice of such claim
in the manner set forth in Sections 9.4 and 14 hereof not later than (i) in the
case of claims made by either party under Section 9.1, the date that is eighteen
(18) months from the Closing Date; provided, however, that if such claim arises
as a consequence of a breach of any representation of the Seller as to title to
the Assets contained in Section 2.3 hereof, such date shall be two (2) years
from the Closing Date; (ii) in the case of claims made by Buyer pursuant to
Sections 9.2(a), (b) or (c), the earlier of the date which is one (1) year from
the date payment is made to a creditor or the date which is two (2) years after
the Closing Date; (iii) for claims made by Buyer pursuant to Sections 9.2(d) or
(e) or claims made by the Seller pursuant to Section 9.3 the earlier of (A) the
expiration of the applicable underlying statute of limitations plus six months
or (B) the date which is four (4) years after the Closing Date.
9.9 Limit on Damages. The aggregate amount payable by Seller to Buyer
under this Section 9 shall not exceed the Total Purchase Price.
10. Post-Closing Agreements.
10.1 Proprietary Information.
(a) The Seller agrees that from and after the Closing Date the
Seller shall hold in confidence, and use its best efforts to have all of its
officers, directors and personnel hold in confidence, all knowledge and
information of a secret or confidential nature with respect to the Business and
the Assets and shall not disclose, publish or make use of the same without the
consent of the Buyer, except to the extent that such information shall have
become public knowledge other than by breach of this Agreement by the Seller.
Nothing contained herein shall prevent Seller from disclosing, publishing or
using such knowledge or information in connection with its other products or
future products or providing or disclosing such information as may be required
by law.
(b) The Buyer agrees that from and after the Closing Date the
Buyer shall hold in confidence, and use its best efforts to have all of its
officers, directors and personnel hold in confidence, all knowledge and
information of a secret or confidential nature with respect to (i) the business
of Seller other than specifically with respect to the Business and the Assets,
and (ii) the Business and Assets to the extent the Seller will continue to have
the right under this Agreement and agreements and instruments entered into
hereunder to use such knowledge or information in connection with its other
products or future products; and the Buyer shall not disclose, publish or make
use of the same without the consent of the Seller, except to the extent that
such information shall have become public knowledge other than by breach of this
Agreement by the Buyer. Nothing contained herein shall prevent the Buyer from
providing or disclosing such information as may be required by law.
-27-
28
10.2 Non-Competition Agreement.
(a) For a period of five (5) years after the Closing Date,
neither the Seller nor any Affiliate thereof shall (i) manufacture, market or
sell any acetaminophen suppository or non-steroid suppository product, (ii)
manufacture, market or sell any particle-coated acetaminophen product
principally for pediatric use, or (iii) manufacture, market or sell any
controlled-release particle-coated acetaminophen product. For purposes of this
Section , "Affiliate" shall have the meaning ascribed to such term under Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as amended.
(b) In the event that any court determines that the duration
or the geographic scope, or both, are unreasonable and that such provision is to
that extent unenforceable, the parties hereto agree that the provision shall
remain in full force and effect for the greatest time period and in the greatest
area that would not render it unenforceable. The parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective.
10.3 Sharing of Data.
(a) The Seller shall have the right for a period of seven
years (or such longer period as any applicable law requires Seller to maintain
such records) following the Closing Date, to have reasonable access to such
books, records and accounts, including financial and tax information,
correspondence, production records, employment records and other similar
information, as are transferred to the Buyer pursuant to the terms of this
Agreement for the limited purposes of concluding its involvement in the Business
prior to the Closing Date and for complying with its obligations under
applicable securities, tax, environmental, employment or other laws and
regulations, and Buyer agrees to maintain such books, records and accounts for
such period. The Buyer shall have the right, for a period of seven years (or
such longer period as any applicable law requires Seller to maintain such
records) following the Closing Date, to have reasonable access to those books,
records and accounts, including financial and tax information, correspondence,
production records, employment records and similar records, which are retained
by the Seller pursuant to the terms of this Agreement to the extent that any of
the foregoing relates to the Business and is needed by the Buyer in order to
comply with its obligations under applicable securities, tax, environmental,
employment or other laws and regulations, and Seller agrees to maintain such
books, records and accounts for such period. The provisions of this Section 10.3
shall not limit the obligation of Buyer to maintain records for the purposes set
forth in Section 1.5(c)(iii).
-28-
29
(b) The Seller and Buyer agree that from and after the Closing
Date they shall cooperate fully with each other to facilitate the transfer of
the Assets from the Seller to the Buyer and the operation thereof and of the
Business by the Buyer and in other respects to carry out and facilitate the
transactions contemplated by this Agreement.
10.4 Cooperation in Litigation. Each party hereto will fully cooperate
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the Business (other than litigation
arising out of the transactions contemplated by this Agreement). The party
requesting such cooperation shall pay the out-of-pocket expenses (including
legal fees and disbursements) of the party providing such cooperation and of its
officers, directors, employees and agents reasonably incurred in connection with
providing such cooperation, but shall not be responsible to reimburse the party
providing such cooperation for such party's time spent in such cooperation or
the salaries or costs of fringe benefits or similar expense paid by the party
providing such cooperation to its officers, directors, employees and agents
while assisting in the defense or prosecution of any such litigation or
proceeding.
10.5 Product Claims and Returns. In the event that returns, rebates or
other contract pricing relating to sales of Product Line products made by the
Seller prior to the Closing Date exceed the levels set forth on Schedule 2.8
hereto, the Buyer shall indemnify the Seller from such liabilities unless such
returns, rebates or other contract pricing are the result of (i) one or more
recalls affecting Product Line products or (ii) the failure of any Product Line
products to conform with applicable specifications.
11. Termination of Agreement.
11.1 Termination by Lapse of Time. This Agreement shall terminate at
5:00 p.m., Minneapolis, Minnesota time, on July 17, 1997, if the transactions
contemplated hereby have not been consummated, unless such date is extended by
the written consent of all of the parties hereto.
11.2 Termination by Agreement of the Parties. This Agreement may be
terminated by the mutual written agreement of the parties hereto. In the event
of such termination by agreement, the Buyer shall have no further obligation or
liability to the Seller under this Agreement, and the Seller shall have no
further obligation or liability to the Buyer under this Agreement.
11.3 Termination by Reason of Breach. This Agreement may be terminated
by the Seller, if at any time prior to the Closing there shall occur a breach of
any of the representations, warranties or covenants of the Buyer or the failure
by the Buyer to perform any condition or obligation hereunder, and may be
terminated by the Buyer, if at any time prior to the Closing there shall occur a
breach of any of the representations, warranties or covenants of the Seller or
the failure of the Seller to
-29-
30
perform any condition or obligation hereunder.
11.4 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.1 or by the Seller pursuant to Section 11.3,
then the non-refundable cash payments of (a) $250,000 (paid by the Buyer
pursuant to Section 1.5(b)) and (b) $100,000 (payable by the Buyer pursuant to
Section 17(b)) shall be liquidated damages, in full and complete satisfaction of
any claims or causes of action that the Seller may have for a breach of any
provision of this Agreement or the failure of the Buyer to consummate the
transactions contemplated hereby, and shall be the Seller's sole and exclusive
remedy in connection with, or arising out of, any such breach or failure, and
the Buyer shall have no further obligation or liability to the Seller under this
Agreement except as provided in Section 11.5.
11.5 Survival in Event of Termination. Notwithstanding the other
provisions of this Section 11, the obligations of the parties contained in
Section 10.1 and Section 17(a) hereof shall survive the termination of this
Agreement, in the case of Section 10.1 notwithstanding the fact that the Closing
has not occurred.
12. Transfer and Sales Tax.
Notwithstanding any provisions of law imposing the burden of such taxes
on the Seller or the Buyer, as the case may be, the Buyer shall be responsible
for and shall pay (a) all sales, use and transfer taxes, and (b) all
governmental charges, if any, upon the sale or transfer of any of the Assets
hereunder. If the Buyer shall fail to pay such amounts on a timely basis, the
Seller may pay such amounts to the appropriate governmental authority or
authorities, and the Buyer shall promptly reimburse the Seller for any amounts
so paid by the Seller.
13. Brokers.
13.1 For the Seller. The Seller agrees to pay all fees, expenses and
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on the Seller's behalf in connection with the
transactions contemplated by this Agreement. The Seller agrees to indemnify and
hold harmless the Buyer against any claims or liabilities asserted against it by
any person acting or claiming to act as a broker or finder on behalf of the
Seller.
13.2 For the Buyer. The Buyer agrees to pay all fees, expenses and
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on the Buyer's behalf in connection with the
transactions contemplated by this Agreement. The Buyer agrees to indemnify and
hold harmless the Seller against any claims or liabilities asserted against it
by any person acting or claiming to act as a broker or finder on behalf of the
Buyer.
-30-
31
14. Notices.
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally, by telefacsimile or sent by
regular overnight mail or courier service, registered or certified mail, postage
prepaid, addressed as follows or to such other address of which the receiving
party may have given notice:
To the Seller: Xxxxxx-Xxxxx Laboratories, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Vice President, CFO
Telefacsimile: (000) 000-0000
With a copy to: Xxxxxxx, Rumble & Xxxxxx
Professional Association
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telefacsimile: (000) 000-0000
To the Buyer: Ascent Pediatrics, Inc.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
Attention: President
Telefacsimile: (000) 000-0000
With copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telefacsimile: (000) 000-0000
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally; (b) on the
next business day, if delivered by regular overnight mail, courier, or
telefacsimile; or (c) three business days after being sent, if sent by
registered or certified mail.
15. Binding Effect; Successors and Assigns; Benefit; Disclaimer of
Liability; Securities Indemnification.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Buyer and the Seller may not assign their respective obligations
hereunder without the prior written
-31-
32
consent of the other party; provided, however, that the Buyer may assign this
Agreement, and its rights and obligations hereunder, to a wholly-owned
subsidiary of Buyer, but no assignment shall release the Buyer from any
obligation or liability under this Agreement. Any assignment in contravention of
this provision shall be void.
(b) This Agreement is made solely and specifically between and
for the benefit of the parties hereto and their respective successors and
permitted assigns, and nothing in this Agreement, expressed or implied, is
intended to confer or shall confer on any person other than the parties hereto
and their respective successors and permitted assigns, any rights, interests,
benefits, claims, remedies, obligations or liabilities under or by reason of
this Agreement or any provisions or representations contained in this Agreement,
whether such other person claims as a third party beneficiary or otherwise.
(c) The Buyer and the Seller agree that each is acting as an
independent party in the negotiation and execution of this Agreement and with
respect to the transactions contemplated hereby, that the Seller is not a
founder, promoter, controlling person, partner, joint venturer or affiliate of
Buyer, and that the Buyer is solely responsible for any and all disclosures made
by the Buyer to any third party with respect to this Agreement, the transactions
contemplated hereby, the Business, the Assets and any representations made by
the Seller to the Buyer in this Agreement or in connection with the transactions
contemplated hereby, the Business or the Assets (such representations being made
for the exclusive benefit of the Buyer and not to be relied on by any other
person or investor in the Buyer). Accordingly, the Buyer hereby disclaims any
right to rely on any such representations made by the Seller in connection with
any securities offering, financing or other transaction conducted by the Buyer
with any other person, and agrees to indemnify and hold harmless the Seller from
and against any and all Losses incurred by the Seller in connection with any
claim against the Seller, directly or indirectly, by any other person. The Buyer
further agrees that it shall not seek, and shall have no right to claim or
receive, any damages from the Seller which are derived from, occasioned by or
measured by any Losses incurred by the Buyer as a consequence of or related to
the issuance by the Buyer of its securities or any other financing transaction
by Buyer.
(d) The Buyer will indemnify and hold harmless the Seller, its
directors and officers and each person, if any, who controls the Seller within
meaning of the Securities Act of 1933 (the "1933 Act") or the Securities
Exchange Act of 1934 (the "1934 Act"), against any Losses to which they may
become subject under the 1933 Act or the 1934 Act, or any other statute or at
common law, insofar as such Losses (or actions in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, offering
memorandum or other document prepared or used in connection with the offer or
sale of securities by the Buyer, including any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated
-32-
33
therein, or necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Buyer of the 1933 Act, the 1934 Act,
any rule or regulation promulgated under the 1933 Act or the 1934 Act, or any
other statute or at common law.
16. Entire Agreement; Attachments; Amendments; Waiver.
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto,
including the Confidentiality and Non-Disclosure Agreement between the Buyer and
the Seller dated November 9, 1993, represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior oral and written and all contemporaneous oral
negotiations, commitments and understandings between such parties.
(b) The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
If the provisions of any agreement or instrument attached as an Exhibit to this
Agreement are inconsistent with the provisions of this Agreement after execution
thereof, the provisions of such other agreement or instrument shall prevail.
(c) The Buyer and the Seller may amend or modify this
Agreement, in such manner as may be agreed upon, only by a written instrument
executed by the Buyer and the Seller.
(d) Any failure of a party to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party;
provided, however, that any such waiver may be made only by a written instrument
signed by the party granting such waiver. Any waiver or failure to insist upon
strict compliance with any obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
16(d) with appropriate notice in accordance with Section 14 of this Agreement.
17. Expenses.
(a) Except as otherwise expressly provided herein, whether or
not the transactions contemplated by this Agreement shall be consummated, the
Buyer and the Seller shall each pay their own expenses in connection with this
Agreement and the transactions contemplated hereby.
(b) In the event that the Closing hereunder does not occur on
or prior to July 17, 1997 for reasons other than the Buyer's conditions to
Closing set forth in
-33-
34
Section 7 hereof, the Buyer shall promptly pay to the Seller $100,000 in cash to
cover a portion of the Seller's costs and expenses incurred in connection with
this Agreement.
18. Governing Law; Remedies.
(a) The validity, interpretation and effect of this Agreement
shall be governed by and construed under the laws of the State of Minnesota
without regard to its conflicts of laws principles.
(b) The parties agree to attempt to settle any disputes that
arise in connection with this Agreement through good faith mediation efforts.
The parties agree that any dispute that arises in connection with this Agreement
which is not settled through good faith mediation efforts shall be settled by
arbitration which shall be in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. Such arbitration shall be held in
Chicago, Illinois. There shall be three (3) arbitrators, one (1) to be chosen by
Buyer one (1) to be chosen by Seller and a third to be selected by the two
arbitrators so chosen. The decision of the arbitrators shall be final and
binding upon all parties and their respective successors and assigns. The costs
of arbitration, including reasonable attorney's fees, shall be borne by the
losing party.
19. Section Headings.
The section headings are for the convenience of the parties
and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
20. Severability.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
21. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which shall be one
and the same document.
-34-
35
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
XXXXXX-XXXXX LABORATORIES, INC.
By: /s/Xxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Chairman and CEO
--------------------------
ASCENT PEDIATRICS, INC.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------
Title: Chairman
--------------------------
-35-
36
LIST OF EXHIBITS
TO
ASSET PURCHASE AGREEMENT
BETWEEN
ASCENT PEDIATRICS, INC.
AND
XXXXXX-XXXXX LABORATORIES, INC.
A. PROMISSORY NOTE
B. SECURITY AGREEMENT
C. ASSIGNMENT AND ASSUMPTION AGREEMENT
X. XXXXXXX, RUMBLE & XXXXXX OPINION
E. MANUFACTURING AGREEMENT
F. UNISERTS(R) LICENSE
X. XXXXXXXX CAPS(R) LICENSE
H. XXXX OF SALE
X. XXXX AND XXXX OPINION
J. FINANCING STATEMENTS
K. INTERCREDITOR AGREEMENT
37
LIST OF SCHEDULES
TO
ASSET PURCHASE AGREEMENT
BETWEEN
ASCENT PEDIATRICS, INC.
AND
XXXXXX-XXXXX LABORATORIES, INC.
1 Description of Business
1.1(a)(i) Inventory
1.1(a)(ii) Registrations
1.1(a)(iii) Contracts
1.1(a)(v) Trademarks
1.1(a)(vii) Unfilled Orders
1.2(a)(i) Technical Information
1.2(a)(ii) Regulatory Information
1.2(a)(iii) Marketing Materials
1.6 Assumed Liabilities
2.2 Consents and Approvals of Third Parties (Seller)
2.3(i) Encumbrances
2.3(ii) Permitted Encumbrances
2.4 Product Profitability Analyses
2.5 Undisclosed Liabilities
2.6 Seller's Litigation
2.7 Seller's Insurance Policies
2.8 Returns, Rebates and Contract Pricing
2.9 Change in Financial Condition and Assets (Seller)
2.11 Contract Exceptions
2.12 Seller's Permits and Permit Exceptions
2.13 Transactions Out of Ordinary Course (Seller)
2.14 Customers
2.15 Suppliers
2.16(b) Current Formulations and Product Methodologies
2.16(c) Intangible Property and Trademark Exceptions (Seller)
2.17 Regulatory Approvals
3.2 Consents and Approvals of Third Parties (Buyer)
3.3 Financial Statements
3.4 Buyer's Litigation
3.5 Buyer's Insurance Policies
3.6 Change in Financial Condition and Business (Buyer)
3.7 Buyer's Permit Exceptions
3.8 Transactions Out of Ordinary Course (Buyer)
3.9 Intangible Property Exceptions (Buyer)
38
EXHIBIT A
PROMISSORY NOTE
$5,500,000.00 July_____________, 1997
1. FOR VALUE RECEIVED, ASCENT PEDIATRICS, INC., a Delaware corporation (the
"Borrower") hereby promises to pay to the order of XXXXXX-XXXXX LABORATORIES,
INC., a Minnesota corporation ("Holder"), at its principal office located 00000
00xx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX, the principal sum of Five Million Five
Hundred Thousand and 00/100 Dollars ($5,500,000.00), in lawful money of the
United States and immediately available funds, on ____________________, 1998,
without set-off, deduction on counterclaim, unless sooner prepaid or accelerated
in accordance with the terms of this Note.
2. This Note shall not bear interest, provided, however, that if this Note is
not fully paid on or prior to ___________________, 1998, then interest shall
be payable at the rate of 18% per annum (or such lower rate as is equal to the
maximum rate permitted by law from time to time) on the principal amount
outstanding, calculated and charged on the basis of the actual days that
principal remains unpaid from and after ________, 1998 until the principal and
interest thereon shall have been paid in full.
3. The outstanding principal balance of this Note may be prepaid at any time at
the option of the Borrower, in whole or in part, without premium or penalty.
4. All payments and prepayments shall, at the option of the Holder, be applied
first to any costs of collection, second to any accrued interest on this Note
and lastly to principal.
5. This Note has been issued pursuant to that certain Asset Purchase Agreement
dated March ___, 1997, by and between the Borrower and the Holder in connection
with the Borrower's purchase of certain product lines of the Holder (the
"Purchase Agreement"), and is secured by, among other things, that certain
Security Agreement of even date herewith executed by Borrower, as debtor, in
favor of the Holder, as secured party (the "Security Agreement"), and is
entitled to all of the benefits provided for in said Security Agreement.
6. Upon the occurrence of an Event of Default or at any time thereafter, the
principal balance hereof and any accrued interest and all other amounts due
hereon shall, at the option of the Holder, become immediately due and payable,
without notice or demand, and the Holder shall be entitled to enforce and
exercise its rights by action at law, suit in equity and any other appropriate
means.
39
7. The Borrower promises to pay all reasonable costs of collection of this Note
which are incurred after the occurrence of an Event of Default, including but
not limited to reasonable attorneys' fees, paid or incurred by the Holder on
account of such collection, whether or not suit is filed with respect thereto
and whether such cost or expense is paid or incurred, or to be paid or incurred,
prior to or after the entry of judgment.
8. As used herein, the term "Event of Default" shall mean and include each or
all of the following events:
(a) the Borrower shall fail to pay, when due, any amounts required to
be paid by it under this Note or the Security Agreement (collectively, the
"Transaction Documents"), or the Borrower shall fail to pay within thirty (30)
days of its due date the principal balance of any indebtedness which is
outstanding in excess of $500,000 to any third party or parties which is not
being contested in good faith, whether any such indebtedness is now existing or
hereafter arises and whether direct or indirect, due or to become due, absolute
or contingent, primary or secondary or joint or joint and several;
(b) the Borrower shall fail to observe or perform any of its covenants,
conditions or agreements to be observed or performed by it under any of the
Transaction Documents (other than defaults which are otherwise covered by the
terms of this Paragraph 8 or which can be cured by a money payment) for a period
of thirty (30) days after the Holder has forwarded to the Borrower written
notice thereof, specifying such default and requesting that it be remedied;
(c) the Borrower shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any present or future state or
federal bankruptcy act or under any similar federal or state law, or shall be
adjudicated a bankrupt or insolvent, or shall make a general assignment for the
benefit of its creditors, or shall admit in writing its inability to pay its
debts generally as they become due; or if a petition or answer proposing the
adjudication of the Borrower as a bankrupt or its reorganization under any
present or future state or federal bankruptcy act or any similar federal or
state law shall be filed in any court and such petition or answer shall not be
discharged or denied within sixty (60) days after the filing thereof; or if a
receiver, trustee or liquidator of the Borrower or of all or substantially all
of its assets shall be appointed in any proceeding brought against the Borrower
and shall not be discharged within sixty (60) days of such appointment; or if
the Borrower shall consent to or acquiesce in such appointment; or if any
property of the Borrower shall be levied upon or attached in any proceeding in
an amount in excess of $500,000 and which is not released or discharged within
thirty (30) days of the date of the levy or attachment, as applicable;
(d) final judgment(s) for the payment of money in excess of $250,000,
individually or in the aggregate, shall be rendered against the Borrower and
shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed;
-2-
40
(e) the Borrower shall be or become insolvent (whether in the equity or
bankruptcy sense);
(f) any representation or warranty made by the Borrower in the
Transaction Documents shall prove to be untrue or misleading in any material
respect, or any statement, certificate or report furnished hereunder or under
any of the foregoing documents by or on behalf of the Borrower shall prove to be
untrue or misleading in any material respect on the date when the facts set
forth and recited therein are stated or certified;
(g) the Borrower shall liquidate, dissolve, terminate or materially
suspend its business operations, or sell all or substantially all of its assets,
or shall sell any of its assets in violation of the terms of the Security
Agreement, without the prior written consent of the Holder; or
(h) the Borrower shall fail to pay, withhold, collect or omit any tax
or tax deficiency when assessed or due (other than any tax or tax deficiency
which is being contested in good faith and by proper proceedings and for which
it shall have set aside on its books adequate reserves therefor) the failure to
pay which is likely to have a material adverse effect on the financial condition
of the Borrower or a notice of any state or federal tax liens shall be filed or
issued which is not stayed or discharged within thirty days thereof.
9. Demand, presentment, protest and notice of nonpayment and dishonor of this
Note are hereby waived.
10. No failure or delay on the part of the Holder in exercising any right, power
or remedy hereunder or under the Security Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein and in the
Security Agreement are cumulative and are not exclusive of any remedies that may
be available to the Holder at law or in equity or otherwise. This Note may not
be amended and the provisions hereof may not be waived without the written
consent of the Holder.
11. If more than one person or individual has executed this Note, their
liability for the obligations arising hereunder shall be joint and several; and
each agrees that it is not merely an accommodation party with respect to this
Note and hereby waives any and all defenses based upon accommodation or
suretyship status.
-3-
41
12. This Note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts without regard to its conflicts of laws
principles.
BORROWER:
ASCENT PEDIATRICS, INC.
By:________________________________
Its:______________________
By:________________________________
Its:______________________
COMMONWEALTH OF MASSACHUSETTS )
)ss.
SUFFOLK COUNTY )
The foregoing instrument was acknowledged before me this _______ day of
July, 1997, by ____________________ and ____________________,
the _______________________ and _____________________ of Ascent Pediatrics,
Inc., a Delaware corporation, for and on behalf of said corporation.
_____________________________
Notary Public
-4-
42
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made and entered into this day of July,
1997, between ASCENT PEDIATRICS, INC., a Delaware corporation ("Debtor") and
XXXXXX-XXXXX LABORATORIES, INC., a Minnesota corporation ("Secured Party").
RECITALS
WHEREAS, Debtor has executed and delivered to Secured Party that
certain Promissory Note of even date herewith made payable by Debtor to the
order of the Secured Party in the original principal amount of Five Million Five
Hundred Thousand and 00/100 Dollars ($5,500,000.00) (the "Note"), which Note was
issued pursuant to that certain Asset Purchase Agreement dated March , 1997, by
and between Debtor and Secured Party (the "Purchase Agreement");
WHEREAS, as a material inducement to Secured Party to enter into the
Purchase Agreement, Debtor has agreed to execute this Security Agreement in
favor of Secured Party and to pledge all its right, title and interest in the
property described herein to Secured Party.
NOW, THEREFORE, in consideration of the premises contained herein, the
mutual covenants hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Creation of Security Interest. Debtor hereby assigns, pledges and
grants to Secured Party a security interest in Debtor's right, title and
interest in and to the collateral described in Section 2 hereof (the
"Collateral"), in each case whether now owned or hereafter acquired by Debtor,
in order to secure the payment and performance of the obligations of Debtor to
Secured Party described in Section 3 hereof.
2. Collateral. Collateral means Debtor's now owned or hereafter
acquired right, title and interest in and to the following categories of the
Debtor's properties, assets and other claims, rights and interests which are
used by the Debtor in the development, sale or manufacture of Feverall(R)
suppository ("FS"), Feverall(R) Sprinkle Caps(R) powder ("FSC") and
Acetaminophen Uniserts(R) suppository ("AUS") product lines (collectively, the
"Product Lines") (for purposes hereof, the business of manufacturing, marketing
and selling FS, FSC and AUS shall be referred to as the "Business"):
(i) all inventories of finished goods, samples, trade packs,
raw materials, supplies and similar items (the "Inventory");
43
(ii) all regulatory approvals, registrations and related
materials (the "Registrations");
(iii) all rights of the Debtor under contracts, leases,
licenses and other instruments, including private label manufacturing agreements
and sales broker contracts (collectively, the "Contracts");
(iv) all rights of the Debtor under express or implied
warranties from the suppliers of the Debtor;
(v) all of Debtor's right, title and interest in and to all
trademarks, whether owned by Debtor or used under license, registered, pending
or unregistered, and applications for registration, trade dress, logos, drawings
and trade names and related goodwill and business, and including, without
limitation, Feverall(R), Sprinkle Caps(R) and Uniserts(R) (the "Trademarks");
(vi) all of the Debtor's right, title and interest in and to
intangible property rights (including but not limited to inventions,
discoveries, trade secrets, processes, formulas, know-how, United States and
foreign patents, patent applications, copyrights, copyright registrations) owned
and used or, where not owned, used by the Debtor, in connection with the
manufacture of the Product Lines and the licenses and other agreements to which
the Debtor is a party (as licensor or licensee) or by which the Debtor is bound
relating to any of the foregoing kinds of property or rights (collectively, the
"Intangible Property");
(vii) all unfilled orders (if any) relating to the Product
Lines or the Business;
(viii) all product formulations, process conditions and
related documentation, written technical information, data, specifications, and
research and development information (the "Technical Information");
(ix) all correspondence and product complaint information (the
"Regulatory Information");
(x) all marketing information and materials, including copies
of customer lists and sales records (the "Marketing Materials");
(xi) all books, records and accounts, correspondence,
production records, technical, accounting, manufacturing and procedural manuals,
studies, reports or summaries relating to any environmental conditions or
consequences of any operation, present or former, as well as all studies,
reports or summaries relating to any environmental aspect or the general
condition of the Product Lines or the Business and any related confidential
information which has been reduced to writing (the "Records");
-2-
44
(xii) all patents and copyrights, including, without
limitation, those registered, pending or unregistered and applications therefor
(the "Patents and "Copyrights", respectively);
(xiii) all of the inventory, registrations,
contracts, trademarks, technical information, regulatory information, marketing
materials, records and other personal property acquired by Debtor from the
Secured Party under the Purchase Agreement;
(xiv) all items described in this Section 2, whether
now owned or hereafter at any time acquired by Debtor and wherever located, and
all modifications, improvements and enhancements to the Collateral and proceeds
arising from sales of Collateral not in the ordinary course of business,
relating thereto or therefrom; and
(xv) proceeds arising from sales of Collateral not in
the ordinary course of business hereunder include (i) whatever is now or
hereafter receivable or received by Debtor upon the sale, exchange, collection
or other disposition of any item of Collateral not in the ordinary course of
business, whether voluntary or involuntary, and (ii) any insurance or payments
under any indemnity, warranty or guaranty now or hereafter payable by reason of
loss or damage or otherwise with respect to any item of Collateral.
Notwithstanding anything contained herein to the contrary, Collateral shall not
include any property of the Debtor which is not used in the development, sale or
manufacture of the Product Lines.
3. Secured Obligations of Debtor. The Collateral secures and shall
hereafter secure (i) the payment by Debtor to Secured Party of all indebtedness
now or hereafter owed to Secured Party by Debtor under the Note or this Security
Agreement (collectively, the "Transaction Documents"), whether at stated
maturity, by acceleration or otherwise, together with any interest thereon, (ii)
the performance by Debtor of all other obligations under the Security Agreement,
(iii) any and all sums advanced by Secured Party in order to preserve the
Collateral or preserve Secured Party's security interest in the Collateral (or
the priority thereof) and (iv) the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Collateral,
of any proceeding for the collection or enforcement of any indebtedness,
obligations or liabilities of Secured Party referred to above, or of any
exercise by Secured Party of its rights hereunder, together with reasonable
attorneys fees and disbursements and court costs (collectively, the "Secured
Obligations"). All payments and performance by Debtor with respect to any
Secured Obligations shall be in accordance with the terms under which said
indebtedness, obligations and liabilities were or are hereafter incurred or
created.
-3-
45
4. Debtor Representations and Warranties. Debtor represents and
warrants that:
(a) Debtor is (or, to the extent that the Collateral
is acquired after the date hereof, will be) the sole legal and beneficial owner
of the Collateral and has exclusive possession and control thereof; there are no
security interests in, liens, charges or encumbrances on, or adverse claims of
title to, or any other interest whatsoever in, such Collateral or any portion
thereof except such liens as are specifically described on Annex 1 attached
hereto, or such other liens or encumbrances which the Secured Party has
heretofore or may hereafter consent to in writing (collectively, the "Permitted
Liens"); and that no financing statement, notice of lien, mortgage, deed of
trust or instrument similar in effect covering the Collateral or any portion
thereof or any proceeds thereof ("Lien Notice") exists or is on file in any
public office, except as relates to Permitted Liens and except as may have been
filed in favor of Secured Party relating to this Security Agreement;
(b) Debtor has full right, power and authority to
execute, deliver and perform this Security Agreement. This Security Agreement
constitutes a legally valid and binding obligation of Debtor, enforceable
against Debtor in accordance with its terms. Subject to the Permitted Liens, the
completion of the items identified in Section 4(c) below, and the execution of
an Intercreditor Agreement between Secured Party and Triumph-Connecticut Limited
Partnership, the provisions of this Security Agreement are effective to create
in favor of Secured Party a valid and enforceable first, prior and perfected
security interest in the Collateral;
(c) except for the filing or recording of the
financing statements, fixture filings or other notices that are to be filed in
connection with this Security Agreement, and the execution of an Intercreditor
Agreement between Secured Party and Triumph-Connecticut Limited Partnership, no
authorization, approval or other action by, no notice to or registration or
filing with, any person or entity, including without limitation, any stockholder
or creditor of Debtor or any governmental authority or regulatory body is
required (x) for the grant by Debtor of the security interest in the Collateral
pursuant to this Security Agreement or for the execution, delivery or
performance of this Security Agreement by Debtor, (y) for the perfection or
maintenance of such security interest created hereby, including the first
priority nature of such security interest, or the exercise by Secured Party of
the rights and remedies provided for in this Security Agreement (other than any
required governmental consent or filing with respect to any patents, trademarks,
copyrights, governmental claims, tax refunds, licenses or permits), or (z) for
the enforceability of such security interest against third parties, including,
without limitation, judgment lien creditors;
(d) Debtor does not do business, and for the previous
ten (10) years has not done business, under any fictitious business names or
trade names;
-4-
46
(e) Debtor's chief executive office is located at 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000. Debtor has no place of
business other than such address and the Collateral is now and will at all times
hereafter be located at such place of business of Debtor or at the principal
place of business of Secured Party, namely 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, or at such other location as to which Debtor may notify Secured
Party in writing. Debtor's Federal Tax Identification Number is 00-0000000; and
(f) none of the execution, delivery and performance
of this Security Agreement by Debtor, the consummation of the transactions
herein contemplated, the fulfillment of the terms hereof or the exercise by
Secured Party of any rights or remedies hereunder will constitute or result in a
breach of any of the terms or provisions of, or constitute a default under, or
constitute an event which with notice or lapse of time or both will result in a
breach of or constitute a default under, any agreement, indenture, mortgage,
deed of trust, equipment lease, instrument or other document to which) Debtor is
a party, conflict with or require approval, authorization, notice or consent
under any law, order, rule, regulation, license or permit of any court or any
federal or state government, regulatory body or administrative agency, or any
other governmental body having jurisdiction over Debtor or its properties or
require notice, consent, approval or authorization by or registration or filing
with any person or entity (including, without limitation, any stockholder or
creditor of Debtor) other than any notices to Debtor from Secured Party required
hereunder. Except for the Permitted Liens, none of the Collateral is subject to
any agreement, indenture, mortgage, deed of trust, equipment lease, instrument
or other document to which Debtor is a party which may restrict or inhibit
Secured Party's rights or ability to sell or dispose of the Collateral or any
part thereof after the occurrence of an Event of Default (as defined herein).
5. Covenants of Debtor. The Debtor covenants and agrees that:
(a) Debtor will not move or permit to be moved the
Collateral or any portion thereof to any location other than that set forth in
Section 4(f) hereof or locations established in compliance with Section 5(b)
hereof without the prior written consent of the Secured Party and the prior
filing of a financing statement(s) with the proper office(s) and in the proper
form to perfect or continue the perfection (without loss of priority) of the
security interests created herein, which filing(s) shall be satisfactory in
form, substance and location to Secured Party prior to such filing;
(b) Debtor will not voluntarily or involuntarily
change its name, identity, corporate structure, or location of its chief
executive office or any of its other places of business, unless in any such case
(i) Debtor shall have first received the prior written consent of Secured Party,
(ii) Debtor shall have executed and caused to be filed financing statements with
the proper offices and in the proper form to perfect or continue the perfection
(without loss of priority) of the security interests created herein, which
filing shall be satisfactory in form, substance and location to Secured Party
prior
-5-
47
to such filing, and (iii) Debtor shall have delivered to Secured Party any other
documents required by Secured Party in a form and substance satisfactory to
Secured Party;
(c) Debtor will maintain all material licenses,
permits, approvals, authorizations and certificates prescribed by all applicable
foreign, federal, state and local laws and regulations, including any required
by the FDA, which are necessary for the conduct of the Business by the Debtor
where the failure to maintain such licenses, permits, approvals, authorizations
and certificates will have a material adverse effect on the Business of Debtor,
will conduct the Business in substantial compliance with all material applicable
foreign, federal, state and local laws, rules, regulations and judicial or
administrative orders and processes, will take all steps deemed by the Debtor to
be reasonably necessary to protect its right, title and interest in and to all
of its Trademarks, Patents and Copyrights, and will perform and comply with all
contracts, commitments and obligations by which it is bound relating to the
Business.
(d) Debtor will promptly, and in no event later than
10 days after a request by Secured Party, procure or execute and deliver all
further instruments and documents (including, without limitation, notices and
financing statements) necessary or appropriate to and take any other actions
which are necessary or, in the judgment of Secured Party, desirable or
appropriate to perfect or to continue the perfection, priority and
enforceability of Secured Party's security interests in the Collateral, to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, to protect the Collateral against the rights,
claims or interests of third persons, or to effect or to assure further the
purposes and provisions of this Security Agreement, and will pay all reasonable
costs incurred in connection therewith.
(e) without the prior written consent of Secured
Party, Debtor will not in any way encumber, or hypothecate, or create or permit
to exist, any lien, security interest, charge or encumbrance or adverse claim
upon or other interest in the Collateral, except for Permitted Liens, and the
liens created by this Security Agreement, and Debtor will defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein, except as expressly provided herein. Debtor will not
permit any Lien Notices to exist or be on file in any public office with respect
to all or any portion of the Collateral except, in each case, for Lien Notices
of holders of Permitted Liens or except as may have been filed by or for the
benefit of Secured Party relating to this Security Agreement or related
agreements. Debtor shall promptly notify Secured Party of any attachment or
other legal process levied against any of the Collateral and any information
received by Debtor relative to the Collateral, which may in any material way
affect the value of the Collateral or the rights and remedies of Secured Party
in respect thereto;
(f) without the prior written consent of Secured
Party, Debtor will not sell, transfer, assign (by operation of law or
otherwise), exchange, allow to go
-6-
48
abandoned, or otherwise dispose of all or any portion of the Collateral or any
interest therein, except that Debtor may sell worn-out or obsolete Equipment and
may sell Inventory in the ordinary course of its business. If the proceeds of
any such prohibited sale are notes, instruments, documents of title, letters of
credit or chattel paper, such proceeds shall be promptly delivered to Secured
Party to be held as Collateral hereunder (with all necessary or appropriate
endorsements). If the Collateral, or any part thereof or interest therein, is
sold, transferred, assigned, exchanged, or otherwise disposed of in violation of
these provisions, the security interest of Secured Party shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange or other disposition, and Debtor will hold the proceeds thereof in a
separate account for Secured Party's benefit. Debtor will, at Secured Party's
request, transfer such proceeds to Secured Party in kind;
(g) Secured Party is hereby authorized to file one or
more financing statements or fixture filings, and continuations thereof and
amendments thereto, relative to all or any part of the Collateral, without the
signature of Debtor where permitted by law;
(h) Debtor will not enter into, modify or amend any
existing or future contracts or agreements relating to the sale or disposition
of the Collateral or any part thereof outside the ordinary course of business
without the prior written consent of Secured Party. Upon request of Secured
Party, Debtor will provide Secured Party with copies of all existing and
hereafter created contracts and agreements pertaining to any such sale or
disposition and of all amendments and modifications thereto;
(i) Debtor will pay and discharge all taxes,
maintenance fees, renewal fees, assessments and governmental charges or levies
against the Collateral prior to the delinquency thereof and will keep the
Collateral free of all unpaid claims and charges (including claims for labor,
materials and supplies) whatsoever, except for the payment of taxes contested by
it in good faith, by appropriate proceedings, and for which Debtor has made
appropriate reserve therefor and so long as no levy or lien has been imposed
upon any of the Collateral;
(j) Debtor will provide Secured Party with current
financial information concerning Debtor's business on a monthly, quarterly and
audited fiscal year-end basis, with detail satisfactory to Secured Party and
which shall be prepared in accordance with generally accepted accounting
principles consistently applied.
(k) Secured Party shall have at reasonable times on
prior notice, the right to enter into and upon any premises where any of the
Collateral or records with respect thereto are located for the purpose of
inspecting the same, performing any audit, making copies of records, observing
the use of any part of the Collateral, or otherwise protecting its security
interest in the Collateral;
-7-
49
(l) Secured Party shall have the right at any time,
but shall not be obligated, to make any payments and do any other acts Secured
Party may deem necessary or desirable to protect its security interest in the
Collateral, including, without limitation, the right to pay, purchase, contest
or compromise any encumbrance, charge or lien (excluding any Permitted Liens)
applicable to any Collateral hereunder, and appear in and defend any action or
proceeding purporting to affect its security interest in and/or the value of any
Collateral, and in exercising any such powers or authority, the right to pay all
expenses incurred in connection therewith, including attorneys fees. Debtor
hereby agrees that it shall be bound by any such payment made or incurred or act
taken by Secured Party hereunder and shall reimburse Secured Party for all
reasonable payments made and expenses incurred under the Security Agreement,
which amounts shall be secured under this Security Agreement. Secured Party
shall have no obligation to make any of the foregoing payments or perform any of
the foregoing acts;
(m) Secured Party may take any actions permitted
hereunder or in connection with the Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of counsel concerning all such matters;
(n) Debtor hereby agrees not to assign, license,
abandon or divest itself of any right under any Trademark (other than as
provided in Section 1.5(c)(i) of the Purchase Agreement with respect to the
Feverall(R) Sprinkle Caps(R) Trademark) absent prior written approval of the
Secured Party;
(o) Debtor agrees, promptly upon learning thereof, to
notify the Secured Party in writing of the name and address of, and to furnish
such pertinent information that may be available with respect to, any party who
Debtor believes is infringing or otherwise violating any of such Debtor's rights
in and to any Trademark, or with respect to any party claiming that Debtor's use
of any Trademark violates in any material respect any property right of that
party. Debtor further agrees, unless otherwise agreed by the Secured Party,
diligently to prosecute any person or entity infringing any material Trademark;
(p) Subject to the provisions of Section 1.5(c)(i) of
the Purchase Agreement relating to the Feverall(R) Sprinkle Caps(R) Trademark,
Debtor agrees to use the Trademarks in interstate commerce during the time in
which this Security Agreement is in effect, sufficiently to preserve such
Trademarks as trademarks or service marks registered under the laws of the
United States or any other country, as applicable;
(q) Debtor shall, at its own expense, diligently
process all documents required by the Trademark Act of 1946, 15 U.S.C.
Sections 1051 et seq. and any applicable foreign laws to maintain
trademark registrations, including but not limited to affidavits of use and
applications for renewals of registration in the United States Patent and
Trademark Office for all of its registered Trademarks pursuant to 15 U.S.C.
-8-
50
Sections 1058(a), 1059, 1065 and otherwise, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without the prior written consent of
the Secured Party. Debtor agrees to notify the Secured Party three (3) months
prior to the date on which the affidavits of use or the applications for renewal
registration are due with respect to any registered Trademark that the
affidavits of use or the renewal is being processed;
(r) if any registration for any Trademark for a
product constituting part of the Product Line issues hereafter to Debtor as a
result of any application now or hereafter pending before the United States
Patent and Trademark Office or any similar such foreign governmental office or
agency, within thirty (30) days of receipt of such certificate Debtor shall
deliver a copy of such certificate, and a grant of security in such Trademark
and registration, to the Secured Party;
(s) Debtor agrees, promptly upon learning thereof, to
furnish the Secured Party in writing with all pertinent information available to
Debtor with respect to any infringement or other violation of Debtor's rights in
any Patent or Copyright, or with respect to any claims that Debtor's activities
violate any property right of a third party. Debtor further agrees, absent
direction of the Secured Party to the contrary, diligently to prosecute any
person infringing any of Debtor's Patents or Copyrights;
(t) at its own expense, Debtor shall make timely
payment of all postissuance fees required by the U.S. Patent Office or under any
applicable federal or foreign laws to maintain in force rights under each
Patent;
(u) at its own expense, Debtor shall diligently
prosecute all applications for Patents and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies,
absent written consent of the Secured Party;
(v) within 30 days of acquisition of a Patent or
Copyright for a product constituting part of the Product Line, or of filing of
an application for a Patent or Copyright for a product constituting part of the
Product Line, Debtor shall deliver to the Secured Party a copy of said Patent or
Copyright or such applications, as the case may be, with a grant of a security
interest in the Patent or Copyright for a product constituting part of the
Product Line, as the case may be, and a grant of a security interest in the
invention or work embodied in the Patent or Copyright; and
(w) Debtor hereby agrees not to abandon or divest
itself of any right under any Patent or Copyright absent prior written approval
of the Secured Party.
6. Defaults and Remedies.
-9-
51
(a) The occurrence of any "Event of Default" as defined in the
Note shall constitute an Event of Default under this Security Agreement.
(b) Upon the occurrence and continuation of an Event of
Default hereunder, Debtor expressly covenants and agrees that Secured Party may,
at its option, in addition to other rights and remedies provided herein or
otherwise available to it, without notice to or demand upon Debtor (except as
otherwise required herein), exercise any one or more of the rights as set forth
as follows:
(i) declare all amounts outstanding, including
principal, interest and all other amounts owed by Secured Party to Debtor under
the Note and all Secured Obligations to be immediately due and payable,
whereupon all unpaid principal, interest and other amounts and Secured
Obligations shall become and be immediately due and payable;
(ii) immediately take possession of any of the
Collateral wherever it may be found or require Debtor to assemble the Collateral
or any part thereof and make it available at one or more places as Secured Party
may designate, and to deliver possession of the Collateral or any part thereof
to Secured Party, who shall have full right to enter upon any or all of such
Debtors' places of business, premises and property to exercise Secured Party's
rights hereunder;
(iii) exercise any or all of the rights and remedies
provided for by the Massachusetts Uniform Commercial Code or any other
applicable law, specifically including, without limitation, the right to recover
the reasonable attorneys fees and other expenses incurred by Secured Party in
the enforcement of this Security Agreement or in connection with Debtor
redemption of the Collateral. Secured Party may exercise its rights under this
Security Agreement independently of any other collateral or guaranty that Debtor
may have granted or provided to Secured Party in order to secure payment and
performance of the Secured Obligations, and Secured Party shall be under no
obligation or duty to foreclose or levy upon any other collateral given by
Debtor to secure any Secured Obligation or to proceed against any guarantor
before enforcing its rights under this Security Agreement;
(iv) without notice (except as specified below), sell
the Collateral or any part thereof in one or more parcels at one or more public
or private sales, at any of Secured Party's offices or elsewhere, at such time
or times, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as shall be commercially reasonable. Debtor
acknowledges and agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days written notice to Debtor of the time and place of
any public sale or of the date on or after which any private sale is to be made
shall constitute reasonable notification;
-10-
52
(v) proceed by an action or actions at law or in
equity to recover the indebtedness secured hereunder or to foreclose this
Security Agreement and sell the Collateral or any portion thereof, pursuant to a
judgment or decree of a court or courts of competent jurisdiction in any manner
permitted by law, or provided for herein;
(vi) enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to estop or
prevent Secured Party from pursuing any other or further remedy which it may
have hereunder or by law, and any repossession or retaking or sale of the
Collateral pursuant to the terms hereof shall not operate to release Debtor
until full and final payment of any deficiency has been made in cash. Debtor
shall reimburse Secured Party upon demand for, or Secured Party may apply any
proceeds of Collateral to, the reasonable costs and expenses (including
reasonable attorneys fees, transfer taxes and any other charges) incurred by
Secured Party in connection with any sale, disposition, repair, replacement,
alteration, addition, improvement or retention of any Collateral hereunder;
(vii) upon the occurrence of a default hereunder, any
cash held by Secured Party as Collateral and all cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral may, in the discretion of Secured Party,
be held by Secured Party as collateral for and/or then or at any time thereafter
applied (including application to the payment of any reasonable costs, expenses,
indemnification and other amounts payable to Secured Party hereunder, which
amounts may be paid in whole or in part prior to the other obligations secured
hereby) in whole or in part by Secured Party against all or any part of the
obligations secured hereby in such order as Secured Party shall elect. Any
surplus of such cash or cash proceeds held by Secured Party and remaining after
payment in full of all the obligations secured hereby shall be paid over to
Debtor or to whomever may be lawfully entitled to receive such surplus or as a
court of competent jurisdiction may direct provided, however, that in the event
that all of the conditions to termination of this Security Agreement under
Section 7(k) shall not have been fulfilled, such balance shall be held as
additional Collateral hereunder and applied from time to time to Secured Party's
costs and expenses and as otherwise provided hereunder until all such conditions
shall have been fulfilled; and/or
(viii) effect an absolute assignment of all of such
Debtor's right, title and interest in and to each Trademark (and the goodwill of
the business of Debtor associated therewith), Patent and Copyright.
(c) The Debtor agrees, following the occurrence of an Event of
Default, to execute and file with the United States Patent and Trademark Office,
the United States Copyright Office and with such other governmental bodies as
the Secured Party may reasonably request such applications, requests for
transfer of Trademarks, Patents and Copyrights or other documents or instruments
and take such other actions
-11-
53
as may be necessary or desirable to permit the Secured Party to consummate the
sale of the Collateral. In addition to any other remedies available to the
Secured Party upon the occurrence of an Event of Default, Debtor agrees that the
Secured Party shall be entitled to orders in equity directing the specific
performance by Debtor of its obligations under this paragraph, and expressly
waives the defense that any remedy in damages for such breach of its obligations
hereunder will be adequate.
7. Miscellaneous Provisions.
(a) Notices. All notices, requests, approvals,
consents and other communications required or permitted to be made hereunder
shall, except as otherwise provided, be in writing and may be delivered
personally or sent by telegram, telecopy, facsimile, telex, first class mail or
overnight courier, postage prepaid, to the parties addressed as follows:
To Debtor: Ascent Pediatrics, Inc.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
Attention: President
Telefacsimile: (000) 000-0000
With copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telefacsimile: (000) 000-0000
To Secured Party: Xxxxxx-Xxxxx Laboratories, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Vice President, CFO
Telefacsimile: (000) 000-0000
With copy to: Xxxxxxx, Rumble & Xxxxxx
Professional Association
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telefacsimile: (000) 000-0000
Such notices, requests and other communications sent as provided hereinabove
shall be effective when received by the addressee thereof, unless sent by
registered or certified mail, postage prepaid, in which case they shall be
effective exactly three (3) business
-12-
54
days after being deposited in the United States mail. The parties hereto may
change their addresses by giving notice thereof to the other parties hereto in
conformity with this section.
(b) Headings. The various headings in this Security
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof
(c) Amendments. This Security Agreement or any
provision hereof may be changed, waived, or terminated only by a statement in
writing signed by the party against which such change, waiver or termination is
sought to be enforced, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
(d) No Waiver. No failure on the part of Secured
Party to exercise, and no delay in exercising, and no course of dealing with
respect to, any power, privilege or right under this Security Agreement or any
related agreement shall operate as a waiver thereof nor shall any single or
partial exercise by Secured Party of any power, privilege or right under this
Security Agreement or any related agreement preclude any other or further
exercise thereof or the exercise of any other power, privilege or right. The
powers, privileges and rights in this Security Agreement are cumulative and are
not exclusive of any other remedies provided by law. No waiver by Secured Party
of any default hereunder shall be effective unless in writing, nor shall any
waiver operate as a waiver of any other default or of the same default on a
future occasion.
(e) Binding Agreement. All rights of Secured Party
hereunder shall inure to the benefit of its successors and assigns. Debtor shall
not assign any of its interest under this Security Agreement without the prior
written consent of Secured Party. Any purported assignment inconsistent with
this provision shall, at the option of Secured Party, be null and void.
(f) Entire Agreement. This Security Agreement,
together with any other agreement executed in connection herewith, is intended
by the parties as a final expression of their agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof. Acceptance
of or acquiescence in a course of performance rendered under this Security
Agreement shall not be relevant to determine the meaning of this Security
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
(g) Severability. If any provision or obligation of
this Security Agreement should be found to be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions and obligations or
-13-
55
any other agreement executed in connection herewith, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby and shall nonetheless remain in full force and effect to the
maximum extent permitted by law.
(h) Survival of Provisions. All representations,
warranties and covenants of Debtor contained herein shall survive the execution
and delivery of this Security Agreement, and shall terminate only upon the
termination of this Security Agreement pursuant to Section 7(k) hereof.
(i) Power of Attorney. Debtor hereby irrevocably
appoints Secured Party its attorney-in-fact, which appointment is coupled with
an interest, with full authority in the place and stead of Debtor and in the
name of Debtor, Secured Party or otherwise, from time to time in Secured Party's
discretion (a) to execute and file financing and continuation statements (and
amendments thereto and modifications thereof) on behalf and in the name of
Debtor with respect to the security interests granted or purported to be granted
hereby, (b) to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to exercise its rights under Section 5(l) or
otherwise hereunder, and (c) upon the occurrence and during the continuance of
an Event of Default, to take any action and to execute any instrument which
Secured Party may deem necessary or advisable to accomplish the purposes of this
Security Agreement, including, without limitation:
(i) to obtain and adjust insurance required
to be paid to Secured Party pursuant hereto;
(ii) to ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Collateral;
(iii) to receive, endorse and collect any
drafts or other instruments, documents and chattel paper, in connection with
clauses (i) and (ii) above;
(iv) to sell, convey, or otherwise transfer
any item of Collateral to any purchaser thereof;
(v) to take any action regarding the
prosecution, maintenance, sale, assignment or licensing of any Trademark, Patent
or Copyright; and
(vi) to file any claims or take any action
or institute any proceedings which Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Collateral.
-14-
56
(j) Counterparts. This Security Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same agreement.
(k) Termination of Agreement. This Security Agreement
and the security interest hereunder shall terminate upon payment in full of all
indebtedness and obligations secured hereunder. At such time, Secured Party
shall reassign and redeliver to Debtor all of the Collateral hereunder which has
not been sold, disposed of, retained or applied by Secured Party in accordance
with the terms hereof, and execute and deliver to Debtor such documents as
Debtor may reasonably request to evidence such termination. Such reassignment
and redelivery shall be without warranty by or recourse to Secured Party, and
shall be at the expense of Debtor; provided, however, that this Security
Agreement (including all representations, warranties and covenants contained
herein) shall continue to be effective or be reinstated, as the case maybe, if
at any time any amount received by Secured Party in respect of the indebtedness
and obligations secured hereunder is rescinded or must otherwise be restored or
returned by Secured Party upon or in connection with the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Debtor or any other person or upon
or in connection with the appointment of any intervenor or conservator of, or
trustee or similar official for, Debtor or any other person or any substantial
part of its assets, or otherwise, all as though such payments had not been made.
(l) Successors and Assigns. This Security Agreement
shall inure to the benefit of Secured Party, its successors and assigns,
including the assignees of any Secured Obligation or of the benefit of any
Secured Obligation and shall bind the heirs, executors, administrators,
successors and assigns of qDebtor. This Security Agreement is assignable by
Secured Party with respect to all or any portion of the Secured Obligations, and
when so assigned, Debtor shall be liable to the assignees under this Security
Agreement without in any manner affecting the liability of Debtor hereunder with
respect to any of the Secured Obligations retained by Secured Party. Each
reference herein to powers or rights of Secured Party shall also be deemed a
reference to the same power or right of such assignees, to the extent of the
interest assigned to them.
(m) Governing Law. This Security Agreement shall be
governed by and construed in accordance with the procedural and substantive laws
of the Commonwealth of Massachusetts without regard to its conflicts of laws
principles.
-15-
57
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered by their respective undersigned duly
authorized officers as of the date first above written.
DEBTOR:
ASCENT PEDIATRICS, INC.,
a Delaware corporation
By:__________________________________
Name:________________________________
Title:_______________________________
SECURED PARTY:
XXXXXX-XXXXX LABORATORIES, INC.
a Minnesota corporation
By:__________________________________
Name:________________________________
Title:_______________________________
-16-
58
ANNEX 1
PERMITTED LIENS
Liens created by the Security Agreement dated January 31, 1997 entered into by
Debtor in connection with the issuance of an aggregate of $7,000,000 in
Subordinated Secured Notes, due January 31, 2002, issued pursuant to the terms
of the Securities Purchase Agreement, dated as of January 31, 1997, among
Debtor, Triumph-Connecticut Limited Partnership and certain other purchasers
named therein, which liens are, pursuant to an Intercreditor Agreement dated as
of July ___, 1997 between the Secured Party and such purchasers, subordinate to
the lien of the Security Agreement to which this Annex 1 relates.
-17-
59
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement, dated July __, 1997, is made
by and between Ascent Pediatrics, Inc., a Delaware corporation (the "Buyer") and
Xxxxxx-Xxxxx Laboratories, Inc., a Minnesota corporation (the "Seller"). All
capitalized words and terms used in this Agreement and not otherwise defined
shall have the respective meanings ascribed to them in the Asset Purchase
Agreement as of March ___, 1997 between the Buyer and the Seller (the "Purchase
Agreement").
WHEREAS, pursuant to the Purchase Agreement, the Seller has agreed to
sell, transfer, convey, assign and deliver to the Buyer certain of the assets of
the Seller referred to in the Purchase Agreement; and
WHEREAS, in partial consideration therefor, the Purchase Agreement
requires the Buyer to assume certain of the liabilities of the Seller;
NOW, THEREFORE, in consideration of the mutual promises set forth in
the Purchase Agreement and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereby agree as follows:
1. The Seller hereby assigns and transfers to the Buyer the Assumed
Liabilities and all of Seller's rights and obligations thereunder.
2. The Buyer hereby assumes and agrees to perform, pay and discharge
the obligations of the Seller arising from and after the date hereof under the
Assumed Liabilities.
3. Notwithstanding the foregoing, except as specifically provided in
the Purchase Agreement, the Buyer does not assume or agree to perform, pay or
discharge, and the Seller shall remain unconditionally liable for, all
obligations, liabilities and commitments, fixed or contingent, of the Seller
other than the Assumed Liabilities.
4. Nothing contained herein shall require the Buyer to perform, pay or
discharge any liability, obligation or commitment expressly assumed by the Buyer
herein so long as the Buyer in good faith contests or causes to be contested the
amount or validity thereof, subject, however, to the provisions of Paragraph 7
below.
5. Nothing herein shall be deemed to deprive the Buyer of any defenses,
set-offs or counterclaims which the Seller may have had or which the Buyer shall
have with respect to any of the obligations, liabilities and commitments hereby
assumed (the "Defenses and Claims"). The Seller hereby transfers, conveys and
assigns to the Buyer all Defenses and Claims and agrees to cooperate with the
Buyer to maintain, secure, perfect and enforce such Defenses and Claims,
including the signing of any documents,
60
the giving of any testimony or the taking of any such other action as is
reasonably requested by the Buyer in connection with such Defenses and Claims.
6. It is expressly understood and agreed that all liabilities,
obligations and commitments not assumed hereunder by the Buyer pursuant to
Paragraph 2 above shall remain the sole obligation of the Seller and its
respective successors and assigns.
7. The Buyer agrees to indemnify and hold harmless the Seller from and
against all claims, damages, losses, liabilities, costs and expenses, including
without limitation reasonable attorneys' fees, with respect to the failure of
the Buyer to perform, pay or discharge the liabilities, obligations and
commitments hereby assumed by the Buyer.
8. The Buyer, by its execution of this Agreement, and the Seller, by
its acceptance of this Agreement, each hereby acknowledges and agrees that
neither the representations and warranties nor the rights, obligations or
remedies of either party under the Purchase Agreement shall be deemed to be
modified or altered in any way by such execution and acceptance of this
Agreement.
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement
to be duly executed as of and on the date first above written.
ASCENT PEDIATRICS, INC.
By:_____________________________________
Xxxx X. Xxx
Title: President and Chief Executive
Officer
XXXXXX-XXXXX LABORATORIES, INC.
By:_____________________________________
Title:__________________________________
-2-
61
Exhibit D
Draft Subject to Opinions Committee Review
[Letterhead of Xxxxxxx, Rumble & Xxxxxx Professional Association]
July ___, 1997
Ascent Pediatrics, Inc.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
Re: Asset Purchase Agreement dated March , 1997, between
Xxxxxx-Xxxxx Laboratories, Inc. and Ascent Pediatrics, Inc.
Ladies and Gentlemen:
We have acted as counsel to Xxxxxx-Xxxxx Laboratories, Inc., a
Minnesota corporation ("Xxxxxx-Xxxxx"), in connection with the Asset Purchase
Agreement dated March , 1997 (the "Asset Purchase Agreement") between
Xxxxxx-Xxxxx and Ascent Pediatrics, Inc., a Delaware corporation ("Ascent"), and
the Xxxx of Sale, the Assignment and Assumption Agreement, the Manufacturing
Agreement, the Uniserts(R) License, the Sprinkle Caps(R) License, the Promissory
Note, the Security Agreement and the Intercreditor Agreement delivered pursuant
to the Asset Purchase Agreement (collectively, the "Documents"). This opinion is
delivered to you pursuant to Section 7.6 of the Asset Purchase Agreement. Terms
defined in the Asset Purchase Agreement and not otherwise defined herein are
used herein with the meanings set forth in the Asset Purchase Agreement.
We are familiar with the proceedings taken by the Xxxxxx-Xxxxx in
connection with the foregoing. We have examined and relied upon the following:
1. The Asset Purchase Agreement (including the Exhibits and
Schedules thereto);
2. Xxxx of Sale;
3. The Assignment and Assumption Agreement;
4. The Manufacturing Agreement;
5. The Uniserts(R) License;
6. The Sprinkle Caps(R) License;
7. The Promissory Note;
62
Ascent Pediatrics, Inc.
____________________, 1997
Page 2
8. The Security Agreement;
9. The Intercreditor Agreement;
10. The UCC-1 financing statements (the "Financing Statements") to
be filed pursuant to the Security Agreement in the offices
listed on Schedule 1 hereto;
11. The UCC-3 amendments (the "Financing Statement Amendments") to
be filed pursuant to the Intercreditor Agreement in the
offices listed on Schedule 1 hereto;
12. Resolutions adopted by the sole Director of the Xxxxxx-Xxxxx
dated March ___, 1997;
13. The Articles of Incorporation of Xxxxxx-Xxxxx, as amended, as
certified by the Secretary of State of the State of Minnesota
on July ___, 1997 (the "Articles");
14. A Certificate of Good Standing relating to Xxxxxx-Xxxxx,
issued by the Secretary of State of the State of Minnesota,
dated July ___, 1997 (the "Certificate");
15. A Certificate of Xxxxxx-Xxxxx, executed on behalf of
Xxxxxx-Xxxxx by an officer of Xxxxxx-Xxxxx, dated July ___,
1997, certifying as to the correctness of representations and
warranties and as to the fulfillment of the agreements and
conditions of Xxxxxx-Xxxxx specified in the Asset Purchase
Agreement;
16. A Certificate of the Assistant Secretary of Xxxxxx-Xxxxx,
dated July ___, 1997;
17. A Certificate of the Vice President, Treasurer and Chief
Financial Officer of Xxxxxx-Xxxxx dated July ___, 1997,
certifying as to payment of state and federal income taxes;
18. Xxxxxx-Xxxxx'x By-laws and corporate minute and stock record
books; and
63
Ascent Pediatrics, Inc.
____________________, 1997
Page 3
19. Such other documents, corporate records, certificates and
materials as we have deemed necessary for the purposes of the
opinions rendered herein.
In our examination, we have assumed the completeness of the corporate
minute books and stock record books of Xxxxxx-Xxxxx as provided to us by
Xxxxxx-Xxxxx, the authenticity of original documents, the accuracy of all copies
(whether certified or not), the genuineness of all signatures and the legal
capacity of all persons executing all documents examined by us.
In rendering this opinion, we have relied, as to all questions of fact
material to this opinion, upon certificates of public officials and officers of
Xxxxxx-Xxxxx and upon the representations and warranties made by you and
Xxxxxx-Xxxxx in the Documents. Except for our examination of the documents
listed above, we have not attempted to verify independently such facts, although
we know of no facts which lead us to question the accuracy of such information.
In particular, for purposes of the opinions expressed in Paragraph 1 below as to
the valid existence and good standing of Xxxxxx-Xxxxx, we have relied solely
upon the Certificate, and such opinion is limited accordingly and rendered as of
the date of the Certificate. For purposes of the opinions expressed in clause
(iv) of Paragraph 4 and Paragraph 5 below, we have relied solely on
representations of officers of Xxxxxx-Xxxxx. For purposes of this opinion, we
have not conducted a search of any computerized or electronic databases or the
dockets of any court, administrative or other regulatory body, agency or other
filing office in any jurisdiction. Any reference to "our knowledge" or
"knowledge" or any variation thereof shall mean the conscious awareness of the
attorneys in this firm who have rendered substantive attention to this
transaction of the existence of absence of any facts which would contradict our
opinions set forth below. We have not undertaken any independent investigation
to determine the existence or absence of such facts, and no inference as to our
knowledge of the existence or absence of such facts should be drawn from the
fact of our representation of Xxxxxx-Xxxxx.
We have not made an independent review of the laws of any state or
jurisdiction other than the state laws of the State of Minnesota. Accordingly,
we express no opinion herein with respect to the laws of any country, state or
jurisdiction other than the state laws of the State of Minnesota govern any
agreement to which Xxxxxx-Xxxxx is a party, we have assumed that the laws of
such jurisdiction are identical to the laws of the state of Minnesota. For the
purposes of this opinion, we have assumed that the facts and law governing the
performance by the respective parties of their respective obligations under the
Agreement will be identical to the facts and law governing such performance as
of the date of this opinion.
64
Ascent Pediatrics, Inc.
____________________, 1997
Page 4
We have assumed that each of the Documents has been duly authorized,
executed and delivered by Ascent and that Ascent has all requisite power and
authority to effect the transactions contemplated by the Documents. We have also
assumed that each of the Documents is the valid and binding obligation of
Ascent, enforceable against Ascent in accordance with its terms. We do not
render any opinion as to the application of any foreign, federal or state law or
regulation to the power, authority or competence of Ascent.
We are expressing no opinion as to (i) the registration, validity,
status, rights, claims, infringement or lack thereof, priorities or any other
matter relating to the existence, ownership or other rights under the patent,
trademark or copyright laws or other laws, including the common law, relating to
intellectual property of the United States, any state or other jurisdiction;
(ii) the implications under the rules and regulations of the United States Food
and Drug Administration with respect to any of the transactions contemplated by
the Documents; (iii) the existence or lack of existence, filing, priority,
perfection, termination or waiver of any security interest affecting the right,
title or interest of any person in, to or under, any property; (iv) the
implications under United States tax law, including all federal, state and local
tax laws, or the tax laws of any foreign jurisdiction with respect to any of the
transactions contemplated by the Documents; (v) the implications under any
applicable antitrust laws of any of the transactions contemplated by the
Documents; (vi) the implications under any applicable usury laws of any of the
transactions contemplated by the Documents; or (vii) the implications under any
federal, state or foreign securities laws or regulations of any of the
transactions contemplated by the Documents.
The opinions hereinafter expressed are qualified to the extent that they
may be subject to or affected by (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws relating to or
affecting the rights of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice or
hearing, and (iii) duties and standards imposed on creditors and parties to
contracts, including, without limitations requirements of good faith,
reasonableness and fair dealing. Furthermore, we express no opinion as to the
availability of any equitable or specific remedy upon any breach of any of the
covenants, warranties or other provisions contained in any of such agreements,
instruments or documents, or upon the successful assertion of any equitable
defense. Moreover, we express no opinion as to the enforceability of any
indemnity provision that indemnities any person against damages arising from its
own negligence or misconduct. We express no opinion as to the rights of any
person to set-off against the accounts of any other person.
65
Ascent Pediatrics, Inc.
____________________, 1997
Page 5
Based upon and subject to the foregoing, we are of the opinion that:
1. Xxxxxx-Xxxxx is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Minnesota. Xxxxxx-Xxxxx
has all requisite corporate power and authority to execute and deliver the
Documents and to consummate the transactions contemplated thereby.
2. The execution and delivery of the Documents and the consummation of
the transactions contemplated thereby have been duly and validly authorized by
all necessary corporate action on the part of Xxxxxx-Xxxxx.
3. The Documents have been duly and validly executed and delivered by
Xxxxxx-Xxxxx and constitute valid and binding obligations of Xxxxxx-Xxxxx,
enforceable against Xxxxxx-Xxxxx in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or effecting the rights and remedies of creditors
generally and to general principles of equity.
4. Neither the execution and delivery of the Documents nor the
consummation of the transactions contemplated thereby, (i) conflicts with or
violate any provision of the Articles of Incorporation or By-laws of
Xxxxxx-Xxxxx; (ii) requires on the part of Xxxxxx-Xxxxx any filing with, or
permit, authorization, consent or approval of, any governmental entity, other
than any filing, permit, authorization, consent or approval which (a) has been
obtained or (b) if not obtained or made would not have a material adverse effect
on the assets, business, financial condition or results of operations of
Xxxxxx-Xxxxx (a "Material Adverse Effect"); (iii) conflicts with, results in a
breach of, constitutes (with or without due notice or lapse of time or both) a
default under, results in the acceleration of, creates in any party the right to
accelerate, terminates or cancels any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, security interest or other written agreement
set forth on Exhibit A hereto, other than any conflict, breach, default,
acceleration, termination or cancellation which individually or in the aggregate
would not have a Material Adverse Effect; or (iv) to our knowledge, violates any
order, writ, injunction or decree specifically naming Xxxxxx-Xxxxx or any of its
property or assets, or any statute, rule or regulation applicable to
Xxxxxx-Xxxxx or any of its property or assets, other than any such violation
which individually or in the aggregate would not have a Material Adverse Effect.
5. To our knowledge, there is no action, proceeding, suit or
investigation pending or threatened in writing wherein an unfavorable judgment,
ruling, order or
66
Ascent Pediatrics, Inc.
____________________, 1997
Page 6
decision would (i) prevent the consummation of the sale of the Assets under the
Agreement or (ii) cause the sale of the Assets to be rescinded following the
Closing.
This opinion is provided to Ascent as a legal opinion only and not as a
guaranty or warranty of the matters discussed herein.
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions, and we disclaim any obligation to advise you
of any changes in any of these sources of law or subsequent developments which
might affect any matters or opinions set forth herein. Please note that we are
opining only as to the matters expressly set forth herein, and no opinion should
be inferred as to any other matters.
This opinion is furnished to you by us as counsel to Xxxxxx-Xxxxx in
connection with the transactions contemplated by the Agreement, and may not be
relied upon by any other person or entity or for any other purpose without our
prior written consent.
Very truly yours,
XXXXXXX RUMBLE & XXXXXX
PROFESSIONAL ASSOCIATION
By:
67
EXHIBIT E
MANUFACTURING AGREEMENT
This Manufacturing Agreement (the "Agreement") is made as of this day of
July, 1997 by and between Ascent Pediatrics, Inc. a Delaware corporation, with a
place of business at 000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000, Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000 (hereinafter referred to as "Ascent") and Xxxxxx-Xxxxx
Laboratories, Inc. a Minnesota corporation with its principal place of business
at 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 (hereinafter referred
to as ("Xxxxxx-Xxxxx").
INTRODUCTION
Ascent has acquired the Feverall(R) suppository, Feverall(R) Sprinkle
Caps(R) powder and Acetaminophen Uniserts(R) suppository product lines formerly
owned by Xxxxxx-Xxxxx, each as more fully described on Schedule A hereto (the
"Product Lines"), pursuant to an Asset Purchase Agreement, dated March , 1997,
between Ascent and Xxxxxx-Xxxxx (the "Asset Purchase Agreement"). In connection
with the purchase and sale of the Product Lines, Ascent and Xxxxxx-Xxxxx desire
to provide for the manufacture and supply of the Products (as defined below) in
the Product Lines pursuant to the terms and conditions hereof.
I - DEFINITIONS
1.1 "Act" means the Federal Food, Drug and Cosmetic Act, as amended,
and regulations promulgated thereunder.
1.2 "Extended Forecasted Needs" means Ascent's estimate of Products to
be ordered during the twelve (12) months following the last month of the
corresponding Forecasted Needs.
1.3 "FDA" means the United States Food and Drug Administration or any
successor entity thereto.
1.4 "Forecasted Needs" means Ascent's estimate of Products to be
ordered from Xxxxxx-Xxxxx for each of the twelve (12) months following the month
in which such estimate is provided.
1.5 "Label", "Labeled" or "Labeling" means all labels and other
written, printed or graphic matter upon (i) Product or any container or wrapper
utilized with Product or (ii) any written material accompanying Product.
1.6 "Market Year" means a period of not more than twelve (12)
consecutive months commencing on the first day of the month following the
initial marketing
-1-
68
and/or sale of Product manufactured by Xxxxxx-Xxxxx and beginning on January 1st
of each consecutive year thereafter.
1.7 "NDA" means the new drug application Numbered 18-337 associated
with the Products and filed with the FDA.
1.8 "Packaging" means all primary containers, cartons, shipping cases,
inserts or any other like material used in packaging, or accompanying, Product.
1.9 "Product(s)" means product(s) (as listed in Schedule A)
manufactured, packaged, labeled and/or finished by Xxxxxx-Xxxxx to meet the
Specifications (as hereinafter defined).
1.10 "Specifications" means the specifications for raw materials and
manufacturing procedures of the Products as either submitted by Xxxxxx-Xxxxx and
approved in writing by Ascent or covered under Xxxxxx-Xxxxx Standard Operating
Procedures attached hereto as Schedule B ("SOP's"). The Specifications shall
include, without limitation: (i) raw material specifications (including approved
suppliers, art proofs, chemical, microbiological and packaging specifications);
(ii) sampling requirements (i.e., lab, chemical and microbiological); (iii)
compounding module, including compounding process and major equipment; (iv)
intermediate specifications; (v) packaging module (including packaging
procedures, sealing and fill weights); (vi) finished Product specifications
release criteria including Xxxxxx-Xxxxx Acceptable Quality Limits ("AQL's");
(vii) Product stability specifications; and (viii) test methods. Specifications
shall be established and/or amended from time to time upon the written agreement
of both Xxxxxx-Xxxxx and Ascent via a Product Change Request ("PCR") in
accordance with Section IX below.
II - PRODUCT MANUFACTURE AND SUPPLY
2.1 Manufacture and Purchase; Qualification of Third-Party Source.
(a) Subject to the terms and conditions of this Agreement,
Xxxxxx-Xxxxx agrees that it will exclusively manufacture for and provide to
Ascent, and Ascent agrees that it will purchase from Xxxxxx-Xxxxx, one hundred
percent (100%) of Ascent's annual requirements of the Products identified in
Schedule A attached hereto. Ascent shall pay Xxxxxx-Xxxxx for Products as set
forth in paragraph 2.7 below. Xxxxxx-Xxxxx shall manufacture Products in
accordance with the Specifications or pursuant to exceptions approved by Ascent
and in sufficient quantity to meet Ascent's Forecasted Needs for the term of
this Agreement.
(b) Commencing within sixty (60) days of the date of this
Agreement, Xxxxxx-Xxxxx will cooperate with Ascent in qualifying third parties
for manufacturing and testing all Products, including providing such information
and
-2-
69
personnel as Ascent may reasonably request in order to qualify such third
parties. Such third parties shall enter into confidentiality agreements
substantially similar in form and substance to Section 10.1 hereof to protect
the confidential information of Xxxxxx-Xxxxx and Ascent. Notwithstanding
anything contained herein to the contrary, Xxxxxx-Xxxxx shall not be required to
select, or negotiate with, such third-party manufacturer.
2.2 Supply of Materials.
(a) If Ascent chooses to supply any material for the
manufacture of Products as set forth under this Section II, Ascent shall notify
Xxxxxx-Xxxxx in writing, specifying which materials it intends to supply. Ascent
shall provide Xxxxxx-Xxxxx with said material at Ascent's expense along with
Certificates of Analysis relating to such materials, at a minimum of thirty (30)
days prior to scheduled production of Product requiring such material and in
sufficient amounts for Xxxxxx-Xxxxx'x manufacture of Product, but not to exceed
quantities necessary to support three (3) months of the most recently supplied
Forecasted Needs or the lot size quantity, whichever is greater. Ascent-supplied
material in excess of these amounts shall be either subject to storage fees or
returned to Ascent. Xxxxxx-Xxxxx is hereby authorized by Ascent, after
reasonable advance notice to Ascent, to return any portion of Ascent-supplied
material for which no future production is planned. Ascent shall be responsible
for the supply and quality of said materials. Ascent shall be responsible for
the payment of all personal property and other taxes incident to the storage of
Ascent-owned material at Xxxxxx-Xxxxx, after receipt of documentation thereof
reasonably acceptable to Ascent. For each lot of materials supplied by Ascent,
Xxxxxx-Xxxxx shall perform the quality control and inspection tests as agreed to
in the Specifications unless Ascent has made arrangements in writing for
Pre-Approved material. Xxxxxx-Xxxxx shall have the right to reject any
Pre-Approved material which is tested pursuant to Section 2.3 below and does not
meet the Specifications. Xxxxxx-Xxxxx warrants that it will maintain, for the
benefit of Ascent, complete and accurate records of the inventory of all such
Ascent-supplied raw materials. Xxxxxx-Xxxxx will use reasonable efforts to avoid
the commingling of Ascent-supplied raw materials with any other raw materials
and to avoid use of Ascent raw materials obtained pursuant to this Agreement for
any purpose not directly related to the completion of this Agreement. If
requested by Ascent, Xxxxxx-Xxxxx will provide to Ascent a monthly report
limited to ending monthly inventory balance of each Ascent-supplied/owned
material stored at Xxxxxx-Xxxxx. This reporting will be supplied exclusively on
Xxxxxx-Xxxxx forms.
(b) Xxxxxx-Xxxxx shall be responsible for supply of all other
components necessary for the manufacture of Products.
-3-
70
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
(c) Ascent shall provide Xxxxxx-Xxxxx with Specifications
(including art proofs) for Packaging and Labeling, and Xxxxxx-Xxxxx shall
purchase, at the expense of Ascent, Packaging and Labeling in accordance with
the Specifications.
(d) In the event that Ascent chooses to supply any materials
under this Section 2.2, Ascent shall provide Xxxxxx-Xxxxx with copies of
invoices from Ascent's supplier of such materials, or otherwise provide
Xxxxxx-Xxxxx with reasonable documentation as to the cost of such materials, and
the cost of such materials shall be used in the price calculation detailed in
Section 2.7 below for purposes of calculating the **% premium-over-cost
component, but not the cost component itself, of the purchase price.
2.3 Materials Testing. All raw materials, Labeling and packaging supplies
shall, when received by Xxxxxx-Xxxxx, be submitted to analysis and evaluation in
accordance with Xxxxxx-Xxxxx'x SOP's to determine whether or not such materials
meet the Specifications. The cost of all such analyses and evaluations shall be
borne by Xxxxxx-Xxxxx. Xxxxxx-Xxxxx agrees to maintain and make available to
Ascent records of all such analyses and evaluations.
2.4 Commencement of Manufacturing for New Products. No later than three
(3) months prior to the beginning of the initial Market Year of a new Product,
Ascent shall: (a) notify Xxxxxx-Xxxxx of its delivery requirements, including
firm orders for such new Product, for the first three (3) months of such initial
Market Year, and (b) provide its Forecasted Needs and Extended Forecasted Needs
for the first Market Year and second Market Year, respectively, in order to
ensure timely delivery of Product for initial sale and marketing.
2.5 Purchase Orders.
(a) Ascent agrees to purchase from Xxxxxx-Xxxxx all Products
manufactured for Ascent by Xxxxxx-Xxxxx in accordance with Ascent's purchase
orders, substantially in the form attached as Schedule C hereto, to the extent
such Products meet the Specifications or exceptions previously approved in
writing by Ascent.
(b) Products shall be ordered by Ascent by the issuance of
pre-numbered purchase orders in increments of single or multiple lots.
Xxxxxx-Xxxxx will supply Ascent with the estimated lot yield of each Product.
From time to time, Xxxxxx-Xxxxx may update these estimates based upon actual
manufacturing experience.
-4-
71
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
(c) (i) Ascent will deliver to Xxxxxx-Xxxxx, on the first day
of July for each calendar year, a written statement of Ascent's Forecasted
Needs. Such Forecasted Needs shall be updated quarterly on a rolling basis.
Xxxxxx-Xxxxx will use the forecast for planning purposes only. The purchase
order shall specify the requested delivery dates and be submitted at least
ninety (90) days prior to the shipment date specified. Xxxxxx-Xxxxx may, at its
sole discretion, produce product up to thirty (30) days prior to the requested
delivery date in order to accommodate fluctuations in production demands.
Although Xxxxxx-Xxxxx shall attempt to minimize the raw material inventory
purchased on behalf of Ascent, certain raw materials may have long lead time
and/or require a minimum order quantity. Should Ascent subsequently reduce its
Forecasted Needs, Ascent will be financially responsible for any material
purchased by Xxxxxx-Xxxxx on Ascent's behalf in accordance with this paragraph
(c). Any excess in inventory resulting from a reduction in Forecasted Needs over
the inventory level required to support up to six (6) months of Ascent's
Forecasted Needs may be subject to storage and inventory carrying costs based
upon ******************************************* (currently $***** per pallet
per month) plus a $**** per pallet in/out fee.
(ii) The parties agree that Ascent, in conjunction
with providing Xxxxxx-Xxxxx with the Forecasted Needs of the Product, shall also
provide Xxxxxx-Xxxxx with the Extended Forecasted Needs of the Product. The
Extended Forecasted Needs are provided solely to assist Xxxxxx-Xxxxx in its
capital planning requirements associated with this Agreement and do not
represent binding forecasts.
(d) Ascent's purchase orders shall designate the desired
quantities of Products, delivery dates and destinations. Xxxxxx-Xxxxx shall fill
and ship all orders of Products in accordance with Ascent's instructions. If
Ascent's purchase order is not received in accordance with paragraph 2.5(c)
above, then Xxxxxx-Xxxxx will make every attempt to meet Ascent's requested
delivery dates. However, Xxxxxx-Xxxxx will only be required to meet the delivery
dates confirmed to Ascent by Xxxxxx-Xxxxx in writing, so long as such dates do
not exceed one hundred twenty (120) days from receipt of Ascent's purchase
order. This Agreement allows for up to three (3) shipping destinations per lot
of Product. Additional destinations can be accommodated for a shipping
preparation fee to be negotiated by Xxxxxx-Xxxxx and Ascent.
2.6 Released/Rejected Products.
(a) Upon completion of all testing of each lot by
Xxxxxx-Xxxxx, all documents detailed in Appendix X will be forwarded promptly to
Ascent's Quality
-5-
72
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Control Manager for review. Within 20 days of receipt of such documentation,
Ascent will either authorize Xxxxxx-Xxxxx to release such lot or reject such
lot. Acceptance shall not relieve Xxxxxx-Xxxxx of its obligations under Section
6.1 herein and shall not affect Ascent's rights if any certification under
Section 5.1 is false or materially inaccurate. In the event of rejection, such
notice to Xxxxxx-Xxxxx shall specify in reasonable detail how the Product lot
failed to perform to Specifications. Xxxxxx-Xxxxx shall have an opportunity to
investigate and re-evaluate such Product lot. All Products shall be submitted to
inspection and evaluation in accordance with Xxxxxx-Xxxxx'x SOP's to determine
whether or not such Products meet the Specifications. As to any such Product lot
(including phases of or complete lots of bulk product) which is determined to
fail the Specifications and rejected by Ascent or Xxxxxx-Xxxxx ("Rejected
Product"), Xxxxxx-Xxxxx shall replace such Rejected Product promptly after all
raw materials are available to Xxxxxx-Xxxxx for the manufacture not to exceed
120 days. If requested, Xxxxxx-Xxxxx shall make arrangements with Ascent for the
return or disposal of Rejected Product.
(b) In the event of a conflict between the test results of
Xxxxxx-Xxxxx and the test results of Ascent with respect to any shipment of
Product lot, sample of such Product lot shall be submitted by Xxxxxx-Xxxxx to an
independent laboratory acceptable to both parties for testing against the
Specifications under procedures employed in the Specifications. The fees and
expenses of such laboratory testing shall be borne entirely by the party against
whom such laboratory's findings are made.
(c) In the event the Product does not meet final
Specifications, but such failure is not due to either Ascent-supplied
information or Xxxxxx-Xxxxx'x failure to follow written procedures, Ascent and
Xxxxxx-Xxxxx shall bear all costs of material, manufacture and destruction of
the Rejected Product equally. Destruction of Rejected Product shall be in
accordance with all applicable laws and regulations and the party conducting the
destruction shall indemnify the other party hereto for any liability, costs or
expenses, including reasonable attorney's fees and court costs, relating to a
failure to dispose of such Product in accordance with such laws and regulations.
The party conducting the destruction shall also provide to the other party
hereto all manifests and other applicable evidence of proper destruction as may
be required by applicable law or reasonably requested by the other party.
2.7 Product Price.
(a) The purchase price as to each Product supplied hereunder
shall be equal to (i) Xxxxxx-Xxxxx'x **************** cost as set forth on
Schedule D attached
-6-
73
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
hereto ("*************** Cost") related to the manufacture of the Product
("Product Pricing") plus (ii) **% of such *************** Cost. The parties
agree that Schedule D shall include, inter alia, costs associated with
*********************************** *****************************************
******************************************************************. The parties
further agree that the Product Pricing set forth on Schedule D shall remain
fixed for the one-year period commencing on the date of this Agreement.
Thereafter, increases or decreases in *************** Cost of the Products
manufactured hereunder may be made by mutual agreement of the parties on an
annual basis (applicable to the ensuing 12- month period) on each successive
anniversary date of the Agreement Date during the term of this Agreement;
provided, however, that any increase will not exceed the difference between (a)
the United States Producer Price Index ("PPI") measured at the beginning of such
12-month period and (b) the PPI measured at the end of such 12- month period. In
addition, in the event that at any time a component of Xxxxxx-Xxxxx'x cost of
raw material increases or decreases greater than ***** percent (**%) due to
events outside of Xxxxxx-Xxxxx'x control, Xxxxxx-Xxxxx will notify Ascent in
writing of such increase or decrease and the *************** Cost for each
affected product will be renegotiated to reflect such increase or decrease.
(b) Xxxxxx-Xxxxx shall keep or cause to be kept accurate
records of Fully-Allocated Cost of Products manufactured hereunder. Such records
shall be retained for seven years following their creation. Upon five (5)
business days written notice to Xxxxxx-Xxxxx, such records shall be available
for inspection during normal business hours, at the expense of Ascent, by Ascent
or its designated agent.
(c) Xxxxxx-Xxxxx shall invoice Ascent, for Products ordered by
Ascent, at the time of shipment by Xxxxxx-Xxxxx, and such invoices shall
reference the applicable purchase order(s). Ascent shall pay all amounts
properly shown on such invoices no later than thirty (30) days after the date of
receipt of such invoice (extended terms shall be negotiated for any material
shipped over and above the amounts designated per the applicable purchase order
reflected in such invoice); provided, however, that no payment is due for
Products that are properly rejected for non-conformance pursuant to Section 2.6.
A late fee equal to an annual percentage rate of ******** percent (**%) of the
total invoice can be added each month for late payments. Xxxxxx-Xxxxx, at its
sole discretion, has the right to discontinue Ascent's credit on future orders
and to put a hold on any production or shipment of Products if Ascent's account
is not paid in accordance with this paragraph 2.7(c). Upon Ascent's payment of
all accounts past due, any such hold shall be removed. Such hold on production
or shipment shall not be considered a breach of this Agreement by Xxxxxx-Xxxxx.
-7-
74
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
III - SHIPMENT AND RISK OF LOSS
3.1 Shipment. Shipment of Product shall be in accordance with whatever
means Ascent instructs, provided that shipment is made in accordance with all
relevant statutory requirements. Product will be shipped to Ascent or its
designee immediately upon release, freight collect. At Ascent's request,
Xxxxxx-Xxxxx may, at its sole discretion, hold Product in Xxxxxx-Xxxxx'x
warehouse for a storage fee based upon ******************* (currently $***** per
pallet per month) plus a $**** per pallet in/out fee. Product held at
Xxxxxx-Xxxxx will be subject to payment in accordance with paragraph 2.7(c)
above. If Ascent requests Xxxxxx-Xxxxx to make any miscellaneous small shipments
of Product, raw material or other items on Ascent's behalf, Ascent agrees to
reimburse Xxxxxx-Xxxxx for any shipping charges incurred.
3.2 Delivery Terms. The purchase price of Products listed on Schedule A
hereof shall be F.O.B., Xxxxxx-Xxxxx plant of manufacture, Xxxxxx-Xxxxx freight
collect. Ascent will bear all risk of loss, delay or damage in transit, as well
as cost of freight and insurance.
3.3 Claims. The weights, tares and tests affixed by Xxxxxx-Xxxxx invoice
shall govern unless established to be incorrect. Claims relating to quantity,
weight and loss or damage to any Product sold under this Agreement shall be
waived by Ascent unless made within sixty (60) days of receipt of Product by
Ascent.
IV - TERM AND TERMINATION
4.1 Term. This Agreement shall be effective as of the date of this
Agreement set forth in the first page hereof. Unless earlier terminated upon the
mutual agreement of the parties or in accordance with the provisions of this
Section IV, this Agreement shall continue in force for five (5) years from the
date of this Agreement. At the option of Ascent, this Agreement may be extended
for up to two additional terms of five (5) years each by providing written
notice thereof to Xxxxxx-Xxxxx not later than one (1) year prior to the
expiration of the then current term hereof; provided, however, that within
fifteen (15) days after receipt of said notice, Xxxxxx-Xxxxx may, by notice to
Ascent, state its desire to renegotiate the provisions of Section 2.7(a)
relating to the purchase price (a "Section 2.7(a) Renegotiation") for Products
to be effective for the additional term, and, in such case, if the parties have
not reached agreement on such provisions within sixty (60) days following the
original extension notice by Ascent, such notice by Ascent shall be deemed to be
withdrawn. Notwithstanding any provision of this Section 4.1 to the contrary,
Xxxxxx-Xxxxx and Ascent agree that no Section 2.7(a) Renegotiation shall result
in an
-8-
75
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
increase to the purchase price of Products supplied hereunder in excess of the
then current *************** Cost plus **% of such *************** Cost.
4.2 Termination. Each party hereto (the "Non-Breaching Party") shall be
entitled to terminate this Agreement by written notice to the other party (the
"Breaching Party") in the event that the Breaching Party is in default of any of
its material obligations hereunder and, in the case of a default which is
remediable, fails to remedy such default within thirty (30) days after written
notice thereof by the Non-Breaching Party. Any such notice shall specifically
state that the Non-Breaching Party intends to terminate this Agreement in the
event that the Breaching Party shall fail to remedy the default. This Agreement
may also be terminated at any time by either party upon the filing of a petition
under Chapter 7 of the United States Bankruptcy Code by the other party or by
Xxxxxx-Xxxxx upon the withdrawal by Ascent of all of the Products from the
market. Upon termination of this Agreement pursuant to this Paragraph 4.2,
neither Party shall be relieved of any obligations incurred prior to such
termination.
4.3 Payment on Termination. In the event of the termination or
cancellation of this Agreement for any reason other than Xxxxxx-Xxxxx'x breach
of its material obligations hereunder, and without prejudice to any other rights
and remedies available to Xxxxxx-Xxxxx hereunder, Ascent agrees to reimburse
Xxxxxx-Xxxxx at standard cost (based on prevailing market rates) for any raw
materials directly ordered for the manufacture of Products based on Ascent's
Forecasted Needs and for which Xxxxxx-Xxxxx has no other use, as well as for
work-in-process commenced by, and finished goods of, Xxxxxx-Xxxxx in connection
with the performance of this Agreement; provided, however, that Xxxxxx-Xxxxx
shall make commercially reasonable efforts to mitigate such reimbursable costs.
With respect to any raw materials and components ordered for manufacture of
Products for which Xxxxxx-Xxxxx can reasonably find alternate use, Xxxxxx-Xxxxx
shall only charge Ascent its inventory carrying costs for storage of such raw
materials and components until use (not to exceed twelve (12) months). Within
sixty (60) days of termination and at Ascent's written request, Xxxxxx-Xxxxx
shall furnish Ascent with a statement of all materials in inventory, and shall
ship such materials and the applicable invoice therefor to Ascent at Ascent's
cost and per Ascent's instructions. Ascent shall pay for materials within thirty
days of receipt of such invoice.
4.4 Survival. Termination of this Agreement under Paragraph 4.2 or due
to expiration or cancellation shall not relieve either party of obligations or
liability for breaches of this Agreement incurred prior to or in connection with
termination,
-9-
76
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
expiration or cancellation. Sections I, IV, VI, VII, IX, X, XI, XII and XIII
hereof shall survive the termination or cancellation of this Agreement for any
reason.
V - CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE
5.1 Certificates of Analysis. Xxxxxx-Xxxxx shall test each lot of Product
purchased pursuant to this Agreement before delivery to Ascent, and shall
provide to Ascent, promptly following such tests, all documents identified in
Appendix X with respect to the first **** lots of each Product and all
applicable documents identified in Appendix X with respect to the first *** lots
of each raw material at a cost to Ascent of $****** per lot for documents
relating to each Product lot and $****** per lot for documents relating to each
raw material lot. Thereafter, Xxxxxx-Xxxxx shall provide to Ascent, promptly
following such tests, all documents identified in Appendix Y with respect to
subsequent lots of each Product and raw material, at a ********Ascent of $******
per lot; provided that in the event that the FDA requires more extensive
documentation to be included as identified in Appendix X, Xxxxxx-Xxxxx shall
provide Ascent all such documentation at the cost specified immediately above in
this Section 5.1. Each Certificate of Analysis shall set forth the items tested,
specifications and test results for each lot delivered. Required extraordinary
reporting or documentation, outside the scope of this Agreement, may be subject
to an additional charge by Xxxxxx-Xxxxx.
5.2 Stability Testing. Xxxxxx-Xxxxx shall perform its standard stability
test program as committed to in the NDA and as defined in Xxxxxx-Xxxxx'x SOP's
or as separately agreed to in accordance with a PCR for each of the Products
contained herein. Xxxxxx-Xxxxx shall receive a copy of the portions relating to
CMC of Ascent's Annual Report for each Product as long as Xxxxxx-Xxxxx is
continuing to produce such Product for Ascent. If Ascent elects to perform its
own stability testing on Product, Ascent agrees to provide Xxxxxx-Xxxxx with a
copy of the results from such testing on an annual basis.
5.3 Validation Work or Additional Testing. It is understood by the
parties hereto that the responsibility for any validation work requested by
Ascent shall be the sole responsibility of Ascent. Xxxxxx-Xxxxx shall be under
no obligation to perform any validation work or additional testing, other than
to complete those activities set forth in Schedule E hereto initiated by
Xxxxxx-Xxxxx prior to the date hereof, in connection with the Product unless
Xxxxxx-Xxxxx and Ascent have entered into a specific written Project Protocol
establishing methodology and pricing for such services. It is understood between
the parties hereto that if Ascent or Xxxxxx-Xxxxx is required by regulatory
authority to perform validation studies or additional testing
-10-
77
in order to legitimately continue to engage in the manufacture of the Product
for Ascent, Xxxxxx-Xxxxx and Ascent shall be obligated to negotiate in good
faith a Project Protocol for such validation studies or additional testing.
5.4 FDA Inspection. Xxxxxx-Xxxxx shall advise Ascent reasonably in
advance, to the extent possible, if an authorized agent of the FDA or other
governmental agency visits Xxxxxx-Xxxxx'x manufacturing facility to perform an
inspection and requests or requires information or changes which directly
pertain to the Products. Xxxxxx-Xxxxx shall allow Ascent to be present and
assist as appropriate in the preparation for and participation in any FDA audits
related to Ascent's Products. Xxxxxx-Xxxxx shall furnish to Ascent copies of all
FDA forms 482 and 483 related to Ascent's Products given to Xxxxxx-Xxxxx by the
FDA promptly upon receipt.
5.5 NDA's and ANDA's. Ascent agrees to provide Xxxxxx-Xxxxx with copies
of any sections of NDA's, ANDA's and supplements applicable to the Products
manufactured and/or tested by Xxxxxx-Xxxxx and copies of any changes in or
updates of same as they, from time to time, hereafter occur.
VI. - WARRANTIES
6.1 Conformity with Specifications. Xxxxxx-Xxxxx warrants that all
Products sold and delivered pursuant to this Agreement will have been
manufactured in accordance with the Specifications or pursuant to exceptions
approved in advance in writing by Ascent at the time of manufacture and
shipment. Xxxxxx-Xxxxx shall be responsible for conducting full quality
assurance investigations per Xxxxxx-Xxxxx SOP's for any Products found to be out
of Ascent's specifications. Xxxxxx-Xxxxx shall immediately communicate any
quality issues or failures of FDA audits and furnish Ascent with copies of all
investigation reports relating to products delivered to Ascent. The quality,
method of manufacture, and raw material used will not be changed by Xxxxxx-Xxxxx
without prior notification of and concurrence by Ascent per Xxxxxx-Xxxxx SOP's.
6.2 Compliance with the Act. Ascent shall bear sole responsibility for
the validity of all test methods and appropriateness of all Specifications. In
addition, Ascent shall bear sole responsibility for all regulatory approvals,
filings and registrations and adequacy of all validation and stability studies.
Ascent further warrants that it will maintain any and all necessary approvals
from all applicable regulatory agencies necessary to manufacture and distribute
all Products under this Agreement.
6.3 Conformity with FDA regulations and cGMP's. Subject to Ascent's
representations set forth in Sections 6.2 and 6.4 hereof, Xxxxxx-Xxxxx warrants
that all Products manufactured, held for sale, sold and shipped pursuant to this
-11-
78
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Agreement shall have been manufactured and shipped by Xxxxxx-Xxxxx in
substantial compliance with applicable FDA regulations and current Good
Manufacturing Practices as that term is defined under the Act and that the
manufactured Products conform with the approved NDA for each Product.
6.4 Compliance of Packaging and Labeling with Laws and Regulations.
Ascent warrants that all Labeling copy and artwork approved, designed or
supplied by Ascent shall be in substantial compliance with all applicable laws
and governmental regulations. Compliance with all federal, state, and local laws
and regulations concerning Packaging and Labeling shall be the sole
responsibilities of Ascent, provided that Xxxxxx-Xxxxx purchases such Packaging
and Labeling as provided in Section 2.2(c) hereof. Ascent hereby represents and
warrants to Xxxxxx-Xxxxx that all Ascent designated formulas, components and
artwork related to the Product do not violate or infringe any copyright or
trademark laws, and agrees to indemnify Xxxxxx-Xxxxx, its employees, officers,
directors and representatives for any claim, loss or damage including reasonable
attorney's fees paid or incurred by any of them in connection therewith.
6.5 GMP Audits. Ascent shall have access to Xxxxxx-Xxxxx'x facilities at
a mutually agreeable time for the sole purpose of auditing Xxxxxx-Xxxxx'x
compliance with current Good Manufacturing Practices and the Act. Such access
shall in no way give Ascent the right to any of Xxxxxx-Xxxxx'x confidential or
proprietary information. Further, absent unusual circumstances, such audits
shall be limited to ***** (**) times during the first ****** (**) months of this
Agreement and ******** thereafter and a reasonable number of employees of Ascent
who are subject to the same requirements of confidentiality as Ascent.
6.6 Disclaimer. XXXXXX-XXXXX AND ASCENT MAKE NO OTHER WARRANTIES, EXPRESS
OR IMPLIED, WITH RESPECT TO PRODUCT, LABELING OR PACKAGING. ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
DISCLAIMED. XXXXXX-XXXXX AND ASCENT AGREE THAT IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING
FROM BREACH OF THIS AGREEMENT .
VII - PRODUCT RECALLS
-12-
79
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
In the event (i) any government authority issues a request, directive or
order that Product be recalled, or (ii) a court of competent jurisdiction orders
such a recall, or (iii) Xxxxxx-Xxxxx reasonably determines after consultation
with Ascent that the Product should be recalled because the Product does not
conform to Specifications following distribution by Ascent or (iv) Ascent
reasonably determines that the Product should be recalled for any reason, the
parties shall take all appropriate corrective actions reasonably requested by
the other party hereto or by any government agency. In the event that such
recall results from the breach of Xxxxxx-Xxxxx'x warranties under this
Agreement, Xxxxxx-Xxxxx shall be responsible for the expenses of the recall. In
the event the recall results from the breach of Ascent's warranties under this
Agreement, Ascent shall be responsible for the expenses of the recall. In the
event that neither Xxxxxx-Xxxxx nor Ascent are responsible for the recall, the
parties shall share the expenses of the recall equally. For the purposes of this
Agreement, the expenses of the recall shall be the expenses of notification and
destruction or return of the recalled Product, as well as any reasonable
out-of-pocket costs, costs of recalled product destroyed after recall, and
damages directly resulting from such recall incurred by Xxxxxx-Xxxxx and Ascent
in connection with any corrective action taken by Xxxxxx-Xxxxx and Ascent.
Ascent shall conduct and direct the recall process.
VIII - FORCE MAJEURE; FAILURE TO SUPPLY
8.1 Force Majeure Events. Failure of either party to perform its
obligations under this Agreement shall not subject such party to any liability
to the other if such failure is caused by acts such as, but not limited to, acts
of God, fires, explosion, flood, drought, war, riot, sabotage, embargo, strikes,
compliance with any court order or regulation of any government entity acting
with color of right or by any other cause beyond the reasonable control of the
parties, whether or not foreseeable.
8.2 Failure to Supply. If Xxxxxx-Xxxxx fails to supply all or part of any
shipment of Products ordered by Ascent within ****** (***) days after the
delivery date specified on the applicable purchase order for such shipment,
which shall be in accordance with paragraph 2.5 hereof, Ascent, at its sole
discretion, may require Xxxxxx-Xxxxx to supply the undelivered Products at a
future date agreed upon by Ascent and Xxxxxx-Xxxxx. If Xxxxxx-Xxxxx is unable,
or it becomes reasonably apparent to Ascent that Xxxxxx-Xxxxx will be unable, to
supply the Product in accordance with Forecasted Needs, Ascent shall have the
right to obtain the Product from third parties in an amount equal to the greater
of (i) the amount which Xxxxxx-Xxxxx is unable to supply or (ii) the minimum
amount which a third party is willing to supply on terms substantially
comparable to the terms contained in this
-13-
80
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Agreement. Thereafter Ascent shall no longer be obligated to purchase
exclusively from Xxxxxx-Xxxxx pursuant to this Agreement and either party shall
have the right to terminate this Agreement by providing the other with at least
***** (***) year's written notice thereof.
IX - IMPROVEMENTS
9.1 Changes by Ascent. If Ascent at any time requests a change to a
Product and Xxxxxx-Xxxxx agrees such change is reasonable with regard to Product
manufacture, (i) such change, following any review by the FDA as necessary,
shall be incorporated within the Master Batch Record and/or Specifications via a
written PCR reviewed and agreed upon by both Xxxxxx-Xxxxx and Ascent; (ii)
Xxxxxx-Xxxxx shall adjust, upon consent of Ascent (which consent shall not be
unreasonably withheld), the price of the Product, if necessary, and Schedule A
shall be amended accordingly; and (iii) Ascent shall pay Xxxxxx-Xxxxx for the
costs associated with such change, including, but not limited to, any additional
development work required, charged at Xxxxxx-Xxxxx'x then-prevailing research
and development rates (currently $***** per hour) in accordance with Section XI
contained herein.
9.2 Changes by Xxxxxx-Xxxxx. Xxxxxx-Xxxxx agrees that any changes
developed by Xxxxxx-Xxxxx which may be, following any review by the FDA as
necessary, incorporated into the Product shall require the written approval of
Ascent via a PCR prior to such incorporation. At the time of such incorporation,
such changes shall become part of the Specifications. It is also agreed that any
regulatory filings incident to any such change shall be the sole responsibility
of Ascent.
9.3 Changes by Regulatory Authorities. Xxxxxx-Xxxxx agrees that any
changes required by any regulatory authority shall be incorporated into the
Product as evidenced by the written approval of Ascent via a PCR prior to such
incorporation. At the time of such incorporation, such changes shall become part
of the Specifications. If Xxxxxx-Xxxxx is required by any regulatory authority
to perform validation studies for purposes of validating a new manufacturing
process or cleaning procedures or new raw material and finished Product assay
procedures with respect to Product in order to continue to engage in the
manufacture of such Product for Ascent, such studies shall be conducted in
accordance with Section 5.3 herein. In the event of such changes, Xxxxxx-Xxxxx
shall adjust the price of Product, if necessary, and Schedule D shall be amended
accordingly.
9.4 Obsolete Inventory. The cost of any Ascent-specific inventory,
including, but not limited to, raw materials, work-in-process, and finished
goods
-14-
81
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
rendered obsolete as a result of formula, artwork or packaging changes requested
by Ascent or by changes required by regulatory authority, shall be reimbursed to
Xxxxxx-Xxxxx by Ascent at Xxxxxx-Xxxxx'x Standard Cost. At such time and unless
otherwise agreed by Xxxxxx-Xxxxx, Xxxxxx-Xxxxx will ship the obsolete inventory
to Ascent for destruction by Ascent. Ascent shall bear ********** percent (**%)
of all destruction costs related to said obsolete inventory. The destruction
shall be in accordance with all applicable laws and regulations and Ascent shall
indemnify Xxxxxx-Xxxxx for any liability, costs or expenses, including
reasonable attorney's fees and court costs, relating to Ascent's failure to
dispose of such inventory in accordance with such laws and regulations. Ascent
shall also provide Xxxxxx-Xxxxx with all manifests and other applicable evidence
of proper destruction as may be requested by Xxxxxx-Xxxxx or required by
applicable law. If Xxxxxx-Xxxxx does not receive disposition instructions from
Ascent within ninety (90) days from date of obsolescence, obsolete inventory
remaining at Xxxxxx-Xxxxx facilities may be subject to storage fees.
9.5 Disposal Costs. Xxxxxx-Xxxxx reserves the right to invoice Ascent for
all disposal costs related to Xxxxxx-Xxxxx'x manufacture of Products ordered by
Ascent, unless the disposal relates to nonconforming lots due to the failure of
Xxxxxx-Xxxxx to follow established written procedures.
X - CONFIDENTIAL INFORMATION; INTELLECTUAL
PROPERTY RIGHTS AND SALES INFORMATION
10.1 Confidential Information. All confidential information furnished by
Ascent to Xxxxxx-Xxxxx, or by Xxxxxx-Xxxxx to Ascent, during the term of this
Agreement, relating to the subject matter hereof, shall be kept confidential by
the party receiving said confidential information, except for purposes
authorized by this Agreement, and shall not be disclosed by such party to any
person or firm, unless previously authorized in writing to do so, for a period
of not less than five (5) years following the date of disclosure. The party
receiving said confidential information may, however, disclose the same to its
responsible officers and employees who require said information for the purposes
contemplated by this Agreement, provided that said officers and employees shall
have assumed like obligations of confidentiality. It is understood that all
confidential information provided by either party shall be identified or marked
as such. Any oral communications which are to be considered confidential shall
be reduced to writing and identified as confidential within thirty (30) days
after disclosure.
-15-
82
Any other provisions hereof to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that the obligations of
confidence and nonuse herein assumed shall not apply to any information which:
(1) is at the time of disclosure or thereafter so becomes a part of the
public domain; or
(2) was otherwise in the receiving party's lawful possession prior to
disclosure as shown by its written record; or
(3) is hereafter disclosed to the receiving party by a third party
purporting not to be in violation of an obligation of confidentiality to
the disclosing party relative to said information; or
(4) is by mutual agreement of the parties hereto released from a
confidential status; or
(5) is required to be disclosed pursuant to regulatory or legal
requirements.
10.2 Trademarks and Trade Names.
(a) Each party hereby acknowledges that it does not have, and
shall not acquire, any interest in any of the other party's trademarks or trade
names unless otherwise expressly agreed.
(b) Each party agrees not to use any trade names or trademarks
of the other party, except as specifically authorized by the other party in
writing both as to the names or marks which may be used and as to the manner and
prominence of use.
10.3 Sales Information. Commencing on the date of this Agreement and
until the Promissory Note of Ascent to Xxxxxx-Xxxxx of even date herewith is
paid in full in accordance with its terms, Ascent shall provide Xxxxxx-Xxxxx
with a monthly report of Ascent's sales of Products manufactured hereunder
categorized by each of SKU and class of trade.
XI - RESEARCH & DEVELOPMENT SERVICES
11.1 R&D Services.
(a) From time to time, Ascent may request, in writing, that
Xxxxxx-Xxxxx evaluate, develop, manufacture, test and/or provide price
quotations for certain new items which may become Products (hereinafter referred
to as "Research Products") on behalf of Ascent. Upon receipt of such a request,
Xxxxxx-Xxxxx shall
-16-
83
determine, at its sole discretion, whether it desires to perform such services
for Ascent. If Xxxxxx-Xxxxx elects to perform such services, Xxxxxx-Xxxxx shall
so notify Ascent within thirty (30) days of its receipt of Ascent's request. To
the extent that Xxxxxx-Xxxxx agrees to perform any services hereunder for
Ascent, Xxxxxx-Xxxxx shall only be obligated to act in good faith and to use
reasonable efforts to accomplish the desired results as outlined in a mutually
agreed upon project protocol (a "Project Protocol"). Nothing herein shall
obligate Xxxxxx-Xxxxx to achieve any specific results and Xxxxxx-Xxxxx makes no
warranties or representations that it will be able to achieve the desired
results.
(b) Should Xxxxxx-Xxxxx agree to perform any services
hereunder, Xxxxxx-Xxxxx shall submit a written development proposal in the form
of a Project Protocol to Ascent identifying Xxxxxx-Xxxxx'x best estimate of the
development costs. This estimate shall include, but not be limited to, labor
hours for development, testing, scale up, stability, report writing, etc., as
well as all reasonably foreseeable associated tasks and expenses. If this
estimate is acceptable to Ascent and Ascent so notifies Xxxxxx-Xxxxx by
approving the Project Protocol in writing, Xxxxxx-Xxxxx shall begin work as
outlined in the Project Protocol. It is understood between both parties that,
during any development project, unforeseen tasks may evolve, including, but not
limited to, termination of any further activity due to unacceptable results,
significant reevaluation due to marginal results, etc. Xxxxxx-Xxxxx will
promptly notify Ascent of any such unforeseen tasks before proceeding at which
time either Ascent or Xxxxxx-Xxxxx may terminate the project or mutually agree
to amend or completely revise the Project Protocol. In the case where the
project is terminated or revised, Ascent will be obligated to pay for all of the
work performed by Xxxxxx-Xxxxx up to that point.
(c) Raw material costs involved will be billed to Ascent at
Xxxxxx-Xxxxx'x cost. The foregoing development costs shall be paid to
Xxxxxx-Xxxxx in accordance with Xxxxxx-Xxxxx'x standard invoicing procedures
regardless of whether Xxxxxx-Xxxxx is able to accomplish the results which
Ascent requested. All invoices shall be paid by Ascent in accordance with
Section 2.7 above. On or before sixty (60) days of the development of a finished
product prototype (which shall include final primary container selection filled
with Research Product), Xxxxxx-Xxxxx will provide an estimate of the fees
associated with manufacturing such product. Xxxxxx-Xxxxx may also provide an
estimate of costs for raw materials should specifications be known for these
items at such time. The estimated manufacturing fees shall automatically be
adjusted annually based upon PPI adjustments pending commencement of Production.
(d) In consideration of its expertise in the design and
manufacture of the Research Products, and its familiarity with the component
materials best suited to the manufacture of the Research Products, Xxxxxx-Xxxxx
shall be responsible for the acquisition of selected components of the Research
Products. All raw materials
-17-
84
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
delivered to Xxxxxx-Xxxxx and invoiced to Ascent in accordance with Section
11.1(c) of this Agreement are the sole and exclusive property of Ascent.
(e) Any Ascent-specific inventory including, but not limited
to, raw materials, bulk Research Product, waste by-products, testing supplies,
stability samples, work-in-process, and finished goods rendered obsolete at the
conclusion, revision or termination of the development project shall be either
shipped to Ascent or destroyed, whichever Ascent so directs. Ascent shall bear
********** percent (**%) of all destruction costs related to said obsolete
inventory. In the event Ascent elects to destroy obsolete inventory, the
destruction shall be in accordance with all applicable laws and regulations and
Ascent shall indemnify Xxxxxx-Xxxxx for any liability, costs or expenses,
including attorney's fees and court costs, relating to Ascent's failure to
dispose of such inventory in accordance with such laws and regulations. Ascent
shall also provide Xxxxxx-Xxxxx with all manifests and other applicable evidence
of proper destruction as may be requested by Xxxxxx-Xxxxx or required by
applicable law. If Xxxxxx-Xxxxx does not receive disposition instructions from
Ascent within ninety (90) days from date of obsolescence, obsolete inventory
remaining at Xxxxxx-Xxxxx facilities may be subject to storage fees.
(f) Results of all research activity will be considered the
property of Ascent. Xxxxxx-Xxxxx shall assign to Ascent all of its right, title
and interest in and to any inventions, including without limitation any patents
or patent applications thereon resulting from those activities outlined in the
Project Protocol.
11.2 New Product Development. In addition to the foregoing, if from time
to time, at Ascent's request, Xxxxxx-Xxxxx develops a new Research Product for
Ascent and Ascent elects to market, sale, license or transfer such Product, the
parties shall negotiate the addition of said Research Product to this Agreement.
XII - INDEMNIFICATION
12.1 Indemnification by Xxxxxx-Xxxxx. Xxxxxx-Xxxxx will indemnify and
hold Ascent harmless against any and all liability, damage, loss, cost or
expense (including reasonable attorney's fees) resulting from any third-party
claims made or suits brought against Ascent which arise from Xxxxxx-Xxxxx'x
breach of its warranties set forth in this Agreement.
12.2 Indemnification by Ascent. Ascent will indemnify and hold
Xxxxxx-Xxxxx harmless against any and all liability, damage, loss, cost or
expense (including reasonable attorney's fees) resulting from any third-party
claims made or suits
-18-
85
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
brought against Xxxxxx-Xxxxx which are related to the breach of any of Ascent's
warranties provided for in this Agreement or which arise out of the promotion,
distribution, use or sales of Products by Ascent, including, without limitation,
any claims, express, implied or statutory, made as to the efficacy, safety, or
use to be made of Products, and claims made by reason of any Product Labeling or
any Packaging containing Product (provided such packaging and Labeling was
purchased by Xxxxxx-Xxxxx as provided in Section 2.2(c) hereof), unless such
liability, damage, loss or expense is caused by a breach of a warranty in this
Agreement by Xxxxxx-Xxxxx.
12.3 Patent and Other Intellectual Property Rights.
(a) Ascent shall indemnify, defend and hold harmless Xxxxxx-Xxxxx from
any damage, judgment, loss, cost or other reasonable expense (including
reasonable attorney's fees) arising from claims that any change or modification
of the Products by Ascent or at Ascent's direction, whether related to the
formulation, delivery system, packaging, suggested method of use or ingestion or
otherwise, causes the use or sales of the Products to infringe any patent or
other proprietary rights or that the use by Ascent of any trademarks, trade
names or trade dress in connection with the Products, other than the trademarks
Feverall(R), Sprinkle Caps(R) and Uniserts(R), infringes patent or other
proprietary rights of a third party.
(b) Xxxxxx-Xxxxx shall indemnify and hold Ascent harmless from all costs,
damages and expense (including reasonable attorney's fees) arising out of any
suit or action brought against Ascent based upon a claim that any process or
technical data furnished or utilized by Xxxxxx-Xxxxx infringes any patent or
other proprietary rights.
12.4 Conditions of Indemnification. If either party seeks indemnification
from the other under Sections 12.1, 12.2 or 12.3 hereof, it shall promptly give
notice to the other party of any such claim or suit threatened, made or filed
against it which forms the basis for such claim of indemnification and shall
cooperate fully with the other party in the defense of all such claims or suits.
No settlement or compromise shall be binding on a party hereto without its prior
written consent.
12.5 Evidence of Liability Insurance. It is further agreed that each
party hereto shall furnish to the other evidence of products and contractual
liability insurance coverage affording not less than ********** dollars
($**********) each occurrence combined single limit, bodily injury, property
damage and ********** dollars ($**********) aggregate liability limits. Each
insurer shall name the other as an
-19-
86
additional insured. Such evidence of insurance coverage can be in the form of
the original policy or Certificate of Insurance which shall provide that the
insurer has assumed the liability as provided for herein. In addition, such
insurers shall warrant that such insurance will not be changed or canceled
without at least thirty (30) days prior written notice to the respective
indemnitees.
XIII - GENERAL PROVISIONS
13.1 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if (i) delivered personally, (ii) sent by
facsimile, (iii) sent by overnight delivery by a nationally recognized courier
service, or sent by registered or certified mail, postage prepaid, return
receipt, addressed as follows or to such other address of which the parties may
have given notice:
To Xxxxxx-Xxxxx: Xxxxxx-Xxxxx Laboratories, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Vice President, CFO
Telecopy: (000) 000-0000
To Ascent: Ascent Pediatrics, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx X000
Xxxxxxxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
If any notice hereunder relates to a breach or termination of the Agreement, a
copy of such notice shall also be sent to the respective counsel for each party:
For Xxxxxx-Xxxxx: Xxxx X. Xxxxxxx, Esq.
Xxxxxxx, Rumble & Xxxxxx
Professional Association
0000 0xx Xx. Towers
000 X. 0xx Xx.
Xxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
For Ascent: Xxxxx X. Xxxxxxx, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
-20-
87
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally or by
facsimile (provided such delivery is actually received by 5:00 p.m. local time
on a business day at the place of receipt); (b) on the next business day, if
delivered by overnight courier; or (c) five business days after being sent, if
sent by registered or certified mail.
13.2 Entire Agreement; Amendment. The parties hereto acknowledge that
this document sets forth the entire agreement and understanding of the parties
and supersedes all prior written or oral agreements or understandings with
respect to the subject matter hereof, and shall supersede any conflicting
portions of Xxxxxx-Xxxxx'x quotation, acknowledgment and invoice forms and
Ascent's Purchase Order and other written forms. No modification of any of the
terms of this Agreement, or any amendments thereto, shall be deemed to be valid
unless in writing and signed by the party against whom enforcement is sought. No
course of dealing or usage of trade shall be used to modify the terms and
conditions herein.
13.3 Waiver. No waiver by either party of any default shall be effective
unless in writing, nor shall any such waiver operate as a waiver of any other
default or of the same default on a future occasion.
13.4 Obligations to Third Parties. Each party warrants and represents
that proceeding herein is not inconsistent with any contractual obligations,
express or implied, undertaken with any third party.
13.5 Assignment. Ascent may assign any or all of its rights and/or duties
under this Agreement without the prior consent of Xxxxxx-Xxxxx. Xxxxxx-Xxxxx
shall not assign its rights or duties under this Agreement without the prior
written consent of Ascent, except to a party which acquires all or substantially
all of the business of Xxxxxx-Xxxxx through merger, sale of assets or otherwise.
This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their successors and permitted assigns.
13.6 Governing Law; Arbitration.
(a) The validity, interpretation and effect of this Agreement
shall be governed by and construed under the laws of the State of Minnesota
without regard to its conflicts of law principles.
(b) The parties agree to attempt to settle any disputes that
arise in connection with this Agreement through good faith mediation efforts.
The parties agree that any dispute that arises in connection with this Agreement
which is not settled through good faith mediation efforts shall be settled by
arbitration which shall be in accordance with the Commercial Arbitration Rules
of the American Arbitration
-21-
88
Association. Such arbitration shall be held in Chicago, Illinois. There shall be
three (3) arbitrators, one (1) to be chosen by Ascent, one (1) to be chosen by
Xxxxxx-Xxxxx and a third to be selected by the two arbitrators so chosen. The
decision of the arbitrators shall be final and binding upon all parties and
their respective successors and assigns. The costs of arbitration, including
reasonable attorney's fees, shall be borne by the losing party.
13.7 Severability. In the event that any term or provision of this
Agreement shall violate any applicable statute, ordinance, or rule of law in any
jurisdiction in which it is used, or otherwise be unenforceable, such provision
shall be ineffective to the extent of such violation without invalidating any
other provision hereof.
13.8 Headings, Interpretation. The headings used in this Agreement are
for convenience only and are not a part of this Agreement.
13.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same original.
13.10 Independent Contractor. In performing its services hereunder,
Xxxxxx-Xxxxx shall act as an independent contractor.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
ASCENT PEDIATRICS, INC. XXXXXX-XXXXX LABORATORIES, INC.
By:_____________________________ By:_____________________________
Its:____________________________ Its:____________________________
-22-
89
SCHEDULES AND APPENDICES
Schedule A - Products
Schedule B - Xxxxxx-Xxxxx Standard Operating Procedures
Schedule C - Form of Purchase Order
Schedule D - Fully-Allocated Cost
Schedule E - Validation Work or Additional Testing
Appendix X - Documentation Required for First Five Lots of Product
and First Two Lots of Raw Materials
Appendix Y - Documentation Required for Subsequent Lots of Each
Product
90
SCHEDULE A - MANUFACTURING AGREEMENT
LIST OF FEVERALL PRODUCT LINE BY SKU AND NDC NUMBER
SKU NDC PRODUCT NAME/STRENGTH DESCRIPTION
--- --- --------------------- -----------
NUMBER
------
12112 0245-0121-12 APAP 120mg-12's Acetaminophen Uniserts(R)Suppositories
12312 0245-0123-12 APAP 325mg-12's Acetaminophen Uniserts(R)Suppositories
12212 0245-0122-12 APAP 650mg-12's Acetaminophen Uniserts(R)Suppositories
11306 0245-0113-06 Feverall 80mg-6's Feverall(R)Suppositories (Infants)
11606 0245-0116-06 Feverall 120mg-6's Feverall(R)Suppositories (Children)
11706 0245-0117-06 Feverall 325mg-6's Feverall(R)Suppositories (Junior)
17520 0245-0175-20 Sprinkle 80mg Feverall(R)Sprinkle Caps(R)Powder
17620 0245-0176-20 Sprinkle 160mg Feverall(R)Sprinkle Caps(R)Powder
11612 0245-116-12 Feverall 120mg 12's Feverall(R)Suppositories (Children)
11650 0245-116-50 Feverall 120mg 50's Feverall(R)Suppositories (Children)
11712 0245-117-12 Feverall 325mg 12's Feverall(R)Suppositories (Junior)
11750 0245-117-50 Feverall 325mg 50's Feverall(R)Suppositories (Junior)
11512 0245-115-12 Feverall 650mg 12's Feverall(R)Suppositories (Adult)
11550 0245-115-50 Feverall 650mg 50's Feverall(R)Suppositories (Adult)
11505 0245-115-05 Feverall 650mg 500's Feverall(R)Suppositories (Adult)
12412 0182-1662-11 Goldline 120mg 12's Private Label Feverall(R)Suppositories
12612 0182-7001-11 Goldline 325mg 12's Private Label Feverall(R)Suppositories
12512 0182-1095-11 Goldline 650mg 12's Private Label Feverall(R)Suppositories
12712 0603-8042-11 Qualitest 120mg 12's Private Label Feverall(R)Suppositories
12812 0603-8045-11 Qualitest 650mg 12's Private Label Feverall(R)Suppositories
91
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
SCHEDULE B - MANUFACTURING AGREEMENT
(The contents of Pages 1 - 5 of Schedule B consist of Confidential Information
which has been omitted and filed separately with the Securities and Exchange
Commission.)
92
Schedule C
Ascent Pediatrics, Inc. Work Order [ ]
000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000 Purchase Order [ ]
Xxxxxxxxxx, XX 00000
000-000-0000
VENDOR SHIP TO
EXPECTED FOB PROJECT
ITEM DESCRIPTION QTY RATE AMOUNT
TOTAL
93
[REVERSE SIDE OF
PURCHASE ORDER]
[THIS PAGE INTENTIONALLY LEFT BLANK]
94
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
SCHEDULE D - MANUFACTURING AGREEMENT
***************
PRODUCT ---------------
NDC NUMBER NAME/STRENGTH/PKG SIZE Cost + **%
---------- ----------------------
0000-0000-00 APAP 120MG-12'S $*****
0000-0000-00 APAP 325MG - 12'S $*****
0000-0000-00 ADAP 650MG-12'S $*****
0000-0000-00 FEVERALL 80MG-6'S $*****
0000-0000-00 FEVERALL 120MG-6'S $*****
0000-0000-00 FEVERALL 325MG-6'S $*****
0000-0000-00 SPRINKLE 80MG $*****
0000-0000-00 SPRINKLE 160MG $*****
0000-000-00 FEVERALL 120MG 12'S $*****
0000-000-00 FEVERALL 120MG 50'S $*****
0000-000-00 FEVERALL 325MG 12'S $*****
0000-000-00 FEVERALL 325MG 50'S $*****
0000-000-00 FEVERALL 650MG 12'S $*****
0000-000-00 FEVERALL 650MG 50'S $*****
0000-000-00 FEVERALL 650MG 500'S $*****
0000-0000-00 GOLDLINE 120MG 12'S $*****
0000-0000-00 GOLDLINE 325MG 12'S $*****
0000-0000-00 GOLDLINE 650MG 12'S $*****
95
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
0000-0000-00 QUALITEST 120MG 12'S $*****
0000-0000-00 QUALITEST 650MG 12'S $*****
96
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
SCHEDULE E
VALIDATION WORK OR ADDITIONAL TESTING
All activities as may be required to gain FDA approval of ***********
****************************************************************************
******************************************************************************
***************** as requested by the FDA.
Notwithstanding the above required activities, should the FDA require
************** on an ongoing basis, both parties agree that the ***************
Cost and Product Pricing will be adjusted to reflect the additional cost
required to perform the above-mentioned testing.
97
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
APPENDIX "X"
DOCUMENTATION REQUIRED FOR EACH LOT OF FINISHED PRODUCT
1. ******************** OF ******** FOR THE ***************** AND *******
** ******.
2. ******************** OF ******** OR *********** OF *********** FOR ***
**********.
3. ******************************* OF ************************************
AND ************* FOR ******************** BY ************ OR
************** TO A ******************* ********** FOR THE
***************** AND ***************** AND **********.
4. COPIES OF ***********************.
5. *********** OF ******** FOR ******************************************
OF ************ AND ************* FOR ******************** BY
************ OR ************** TO A ******************************.
6. A COPY OF THE *******************************************.
98
Confidential material omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
XXXXXXXX "X"
0. ******************** of ******** and *********************************
for ***************** ******* and *********.
2. ******************** of ******** or *********** of *********** for
************* ******************************* and *************** and
*********************************.
3. A copy of the ********************** and ******************************
**********************.
4. *********** of ******** for ***********************************.
99
EXHIBIT F
UNISERTS TRADEMARK LICENSE AGREEMENT
Agreement executed as of the ___ day of ________, 1997, by and between
Ascent Pediatrics, Inc. with an address at 000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000,
Xxxxxxxxxx, XX 00000 ("Ascent"), and Xxxxxx-Xxxxx Laboratories, Inc. having an
address at 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX ("Xxxxxx-Xxxxx").
INTRODUCTION
Xxxxxx-Xxxxx is the owner of rights in, and the goodwill associated with,
the trademark "UNISERTS" for rectal suppositories (the "Trademark"). Ascent
desires to obtain a license to manufacture, distribute and sell certain products
under the Trademark and Xxxxxx-Xxxxx is willing to grant to Ascent a license to
use the Trademark under the terms and conditions of this Agreement.
Accordingly, in consideration of the mutual covenants contained in this
Agreement, the parties agree as follows:
1. Grant of License. Subject to the terms and conditions specified in
this Agreement, Xxxxxx-Xxxxx hereby grants to Ascent a worldwide, perpetual,
royalty-free right and license to use the Trademark solely in connection with
the manufacture, distribution and sale of acetaminophen rectal suppository
products (such products bearing the Trademark being referred to herein as the
"Licensed Products"). Xxxxxx-Xxxxx shall not use or grant any third party the
right to use the Trademark on Licensed Products, and Xxxxxx-Xxxxx retains all
rights to use the Trademark on products other than Licensed Products.
100
2. Quality Control. Xxxxxx-Xxxxx shall have the ability to control the
quality of the Licensed Products during the period that Xxxxxx-Xxxxx is
manufacturing the Licensed Products. Xxxxxx-Xxxxx shall also have the right to
monitor Ascent's use of the Trademark. Ascent will send to Xxxxxx-Xxxxx
representative samples illustrating use of the Trademark on packaging,
advertisements and promotional materials after use of the Trademark has
commenced or upon receipt of the written request from Xxxxxx-Xxxxx. In the event
the Licensed Products are manufactured by either Ascent or a third party for
Ascent, Xxxxxx-Xxxxx shall have the right to monitor and observe the
manufacture, processing, packaging and sale of all Licensed Products for the
purpose of protecting and maintaining at least the minimum standards of quality
established by Xxxxxx-Xxxxx for products sold under the Trademark, which
standards of quality shall be the same minimum standards to which Xxxxxx-Xxxxx
adhered when Xxxxxx-Xxxxx manufactured the Licensed Products. Ascent shall also
meet or exceed any other standards imposed by law or which are needed for the
Licensed Products to be available for their intended purpose. Ascent shall
permit Xxxxxx-Xxxxx'x authorized personnel to enter the manufacturer's premises
at all reasonable times, with reasonable advance notice, to inspect the relevant
manufacturing, processing and packaging facilities and operations, and to
inspect and test all Licensed Products produced for sale under the Trademark. If
Xxxxxx-Xxxxx at any time finds that any of such products are not being
manufactured, processed, packaged or sold in accordance with such standards of
quality to which Xxxxxx-Xxxxx adhered when Xxxxxx-Xxxxx manufactured the
Licensed Products or have been packaged in a misleading or deceptive manner,
Xxxxxx-Xxxxx
-2-
101
may notify Ascent in writing of such deficiencies, and if Ascent fails to
correct such deficiencies within sixty (60) days after receipt of such notice,
Xxxxxx-Xxxxx may, at its election, terminate this Agreement effective
immediately.
3. Advertising and Packaging. Ascent shall cause to appear on all
materials on or in connection with which the Trademark is used such legends,
markings and notices as Xxxxxx-Xxxxx may reasonably request. Ascent shall use
the "(R)" marking with all uses of the "UNISERTS" trademark, including on
advertisements, promotional materials, packaging, labels, etc.
4. Trademark Matters.
(a) Ownership of Trademark. Xxxxxx-Xxxxx expressly reserves
the sole and exclusive ownership of the Trademark and all rights relating
thereto. Ascent hereby acknowledges that Xxxxxx-Xxxxx is the sole and exclusive
owner of the Trademark and agrees not to challenge at any time, directly or
indirectly, the rights of Xxxxxx-Xxxxx thereto or the validity or
distinctiveness thereof. Use of the Trademark by Ascent under this Agreement
shall inure to the benefit of Xxxxxx-Xxxxx.
(b) Maintenance of Trademark. Xxxxxx-Xxxxx owns U.S.
Registration No. 1,270,544 dated March 20, 1984 for the xxxx UNISERTS.
Xxxxxx-Xxxxx shall have the duty to maintain each registration for the
Trademark. If Xxxxxx-Xxxxx wishes to stop using the Trademark and abandon any
registration therefor, it shall first offer to assign the registration to Ascent
on terms to be negotiated by the parties. Ascent has the right to file, in
Xxxxxx-Xxxxx'x name, but at the expense of Ascent, additional trademark
applications for registration of the Trademark with respect to the Licensed
-3-
102
Products sold by Ascent under the Trademark. Ascent will sign any documents or
take any action reasonably necessary and as requested by Xxxxxx-Xxxxx to
maintain the validity of this registration. Ascent shall use its best efforts
not to do or permit to be done any act calculated or likely to prejudice,
affect, impair or destroy the title and interest of Xxxxxx-Xxxxx in and to the
Trademark. If Ascent knows that any person, firm or corporation is infringing
the Trademark, Ascent will promptly notify Xxxxxx-Xxxxx and cooperate fully with
Xxxxxx-Xxxxx in the defense and protection of the Trademark, provided that
Ascent will not be required to make any payments to Xxxxxx-Xxxxx for costs
incurred by Xxxxxx-Xxxxx in the defense and protection of the Trademark.
Xxxxxx-Xxxxx reserves the right to prosecute or defend, at its own expense, all
suits involving the Trademark and the protection thereof. In the event that a
third party is infringing the Trademark and Xxxxxx-Xxxxx decides not to
prosecute such infringer, then Ascent shall have a right to prosecute, at its
own expense, any suit involving the Trademark against such infringer.
(c) Defense of Litigation. Xxxxxx-Xxxxx agrees to indemnify,
defend and hold Ascent harmless from and against any and all liability resulting
from any claim of infringement of trademarks arising out of or related to the
use of the Trademark by Ascent in a manner authorized by this Agreement. The
obligation of Xxxxxx-Xxxxx to Ascent for such infringement or claims of
infringement, shall be conditioned on Ascent giving Xxxxxx-Xxxxx reasonably
prompt notice of any such claim or claims for infringement, and giving
Xxxxxx-Xxxxx the authority to conduct and control the defense of any such action
for infringement (including settlement) with the understanding,
-4-
103
however, that Ascent may retain additional counsel at its expense and
participate in any such litigation.
5. Indemnification. In the event Ascent manufactures the Licensed
Products, Ascent shall indemnify and hold Xxxxxx-Xxxxx harmless from any and all
claims, damages, costs and expenses that may be claimed or asserted against
Xxxxxx-Xxxxx, by any person, firm, corporation or government arising out of the
manufacture, sale, distribution, possession, use or consumption of Licensed
Products. The obligation of Ascent to indemnify Xxxxxx-Xxxxx pursuant to this
Section shall be conditioned on Xxxxxx-Xxxxx giving reasonably prompt notice of
any such claim for indemnification, and giving Ascent authority to conduct and
control the defense of any action with the understanding, however, that
Xxxxxx-Xxxxx may retain additional counsel at its expense and participate in any
such litigation.
6. Insurance. Ascent shall obtain at its own expense, and keep in force
during the license term and for not less than five years thereafter,
comprehensive public liability insurance, including products liability coverage
(with Broad Form Vendor's Endorsement naming Xxxxxx-Xxxxx as an additional
insured) with bodily injury limits of $2 million for each person, $2 million for
occurrence, and property damage limits of $2 million for each occurrence, in
addition to $5 million umbrella coverage. Ascent shall submit certificates of
each insurance and each renewal thereof to Xxxxxx-Xxxxx promptly upon receipt
thereof.
-5-
104
7. Termination. This Agreement may be terminated:
(a) by either party at any time if the other party breaches
any of the terms of this Agreement and does not cure such breach to the
reasonable satisfaction of the terminating party within 30 days after receiving
notice thereof; and
(b) by Xxxxxx-Xxxxx, pursuant to the provisions of Section 2.
Termination of this Agreement pursuant to this Section 7 shall be without
prejudice to any right to xxx for damages for any antecedent breach of this
Agreement. After the effective date of the termination of this Agreement,
Ascent shall have a reasonable period of time (not to exceed six months) to use
up any inventory then on hand of Licensed Products and packaging or advertising
materials bearing the Trademark, provided such use is otherwise in strict
accordance with the terms and conditions of this Agreement. After such
six-month period, Ascent shall discontinue entirely all use of the Trademark.
8. Miscellaneous.
(a) Waiver. The waiver by either party of a breach of or a
default under any provision of this Agreement by the other party shall not be
construed as a waiver of any subsequent breach of the same or any other
provision of this Agreement, nor shall any delay or omission on the part of
either party to exercise or avail itself of any right, power or privilege that
it has or may have hereunder operate as a waiver of any right, power or
privilege by such party.
-6-
105
(b) Relationship of Parties. Nothing herein shall create or be
deemed to create any relationship of agency, joint venture or partnership
between Xxxxxx-Xxxxx and Ascent.
(c) Notices. Any notice or other communication in connection
with this Agreement shall be furnished in writing and shall be sufficiently
given if personally delivered (effective as of the date of personal delivery) or
sent by registered or certified mail, postage prepaid (effective three business
days after being so mailed), to the addressee at the address listed below or
such other address as the addressee shall have specified in a notice actually
reserved by the addressor.
If to Ascent:
Ascent Pediatrics, Inc.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Xxxxxx-Xxxxx:
Xxxxxx-Xxxxx Laboratories, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX
Attn: Vice President and
Chief Financial Officer
Facsimile: (000) 000-0000
-7-
106
with a copy to:
Merchant Xxxxx Xxxxx
Xxxxx Xxxxxx & Xxxxxxx
Norwest Center, Suite 3100
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(d) Assignment. Neither this Agreement nor any rights granted
hereunder may be sold, assigned, transferred, pledged, mortgaged, leased or
otherwise encumbered or disposed of in whole or in part by Ascent without the
express prior written consent (which consent shall not be unreasonably withheld)
of Xxxxxx-Xxxxx, except that the consent of Xxxxxx-Xxxxx shall not be required
to assign this Agreement in connection with the reorganization or merger of
Ascent or a sale of all or substantially all of the assets of its business
related to the Licensed Products.
(e) Integration. This Agreement contains the full
understanding of the parties with respect to the subject matter hereof and
supersede all prior understandings and writings relating thereto. No waiver,
alteration or modification of any of the provisions hereof shall be binding
unless made in writing and signed by the parties by their respective authorized
officers.
(f) Governing Law; Arbitration.
(i) This Agreement shall be subject to and
interpreted in accordance with the law of the State of Minnesota.
(ii) The parties agree to attempt to settle any
disputes that arise in connection with this Agreement through good faith
mediation efforts. The parties agree
-8-
107
that any dispute that arises in connection with this Agreement which is not
settled through good faith mediation efforts shall be settled by arbitration
which shall be in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Such arbitration shall be held in Chicago,
Illinois. There shall be three (3) arbitrators, one (1) to be chosen by Ascent,
one (1) to be chosen by Xxxxxx-Xxxxx and a third to be selected by the two
arbitrators so chosen. The decision of the arbitrators shall be final and
binding upon all parties and their respective successors and assigns. The costs
of arbitration, including reasonable attorney's fees, shall be borne by the
losing party.
(g) No Election of Remedies. The remedies accorded herein to
Xxxxxx-Xxxxx and Ascent are cumulative and in addition to those provided by law,
and may be exercised separately, concurrently or successively.
(h) Binding Effect. Subject to the express limitations set
forth herein, this Agreement shall be binding upon and inure to the benefit of
Xxxxxx-Xxxxx and Ascent and their respective successors and permitted assigns.
(i) Headings. The headings contained in this Agreement are for
convenience and ease of reference only and shall not be considered in construing
this Agreement.
(j) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
-9-
108
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal in their names by their properly and duly authorized
officers or representatives as of the date set forth above.
Ascent Pediatrics, Inc. Xxxxxx-Xxxxx Laboratories, Inc.
By:____________________________ By:_____________________________
Name:__________________________ Name:___________________________
Title:_________________________ Title:__________________________
Date:__________________________ Date:___________________________
-10-
109
EXHIBIT H
XXXX OF SALE
This Xxxx of Sale, dated July __, 1997, is executed and delivered by
Xxxxxx-Xxxxx Laboratories, Inc., a Minnesota corporation (the "Seller"), to
Ascent Pediatrics, Inc., a Delaware corporation (the "Buyer"). All capitalized
words and terms used in this Xxxx of Sale and not otherwise defined shall have
the respective meanings ascribed to them in the Asset Purchase Agreement as of
March ___, 1997 between the Buyer and the Seller (the "Purchase Agreement").
WHEREAS, pursuant to the Purchase Agreement, the Buyer desires to
purchase and the Seller desires to sell certain of the Seller's assets referred
to in the Purchase Agreement for the consideration set forth in the Purchase
Agreement, subject to the terms and conditions of the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual promises set forth in the
Purchase Agreement and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Seller hereby agrees as follows:
1. The Seller hereby sells, transfers, conveys, assigns and delivers to
the Buyer, its successors and assigns, to have and to hold forever, all of the
Assets.
2. The Seller hereby covenants and agrees that it will, at the request of
the Buyer and without further consideration, execute and deliver, and will cause
its employees to execute and deliver, such other instruments of sale, transfer,
conveyance and assignment, and take such other action, as may reasonably be
necessary to more effectively sell, transfer, convey, assign and deliver to, and
vest in, the Buyer, its successors and assigns, title to the Assets, to put the
Buyer in actual possession and operating control thereof, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of the Purchase Agreement.
3. The Seller and the Buyer, by their execution of this Xxxx of Sale,
each hereby acknowledges and agrees that neither the representations and
warranties nor the rights and remedies of any party under the Purchase Agreement
shall be deemed to be modified or altered in any way by this instrument.
110
IN WITNESS WHEREOF, the Seller and the Buyer have caused this instrument
to be duly executed as of and on the date first above written.
XXXXXX-XXXXX LABORATORIES, INC.
By:_________________________________________
Title:______________________________________
ASCENT PEDIATRICS, INC.
By:_________________________________________
Xxxx X. Xxx
Title: President and Chief Executive Officer
-2-
111
Exhibit I
[Letterhead of Xxxx and Xxxx LLP]
__________, 1997
Xxxxxx-Xxxxx Laboratories, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: Asset Purchase Agreement dated
March , 1997, between Ascent Pediatrics, Inc.
and Xxxxxx-Xxxxx Laboratories, Inc.
Ladies and Gentlemen:
We are counsel to Ascent Pediatrics, Inc., a Delaware corporation (the
"Buyer"). In that capacity we have acted as counsel in connection with the
preparation of the Asset Purchase Agreement, dated March ___, 1997, between
Xxxxxx-Xxxxx Laboratories, Inc., a Minnesota corporation (the "Seller"), and the
Buyer (the "Agreement"), the Xxxx of Sale, the Assignment and Assumption
Agreement, the Manufacturing Agreement, the Uniserts(R) License, the Sprinkle
Caps(R) License, the Promissory Note, the Security Agreement, and the
Intercreditor Agreement delivered pursuant to the Agreement (collectively, the
"Documents"). This opinion is delivered to you pursuant to Section 8.6 of the
Agreement. Terms defined in the Agreement and not otherwise defined herein are
used herein with the meanings set forth in the Agreement.
We are familiar with the proceedings taken by the Buyer in connection
with the foregoing. We have examined and relied upon the following:
1. The Agreement (including the Schedules and Exhibits thereto);
2. The Xxxx of Sale;
3. The Assignment and Assumption Agreement;
4. The Manufacturing Agreement;
5. The Uniserts(R) License;
6. The Sprinkle Caps(R) License;
7. The Security Agreement;
112
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 2
8. The Promissory Note;
9. The Intercreditor Agreement;
10. The UCC-1 financing statements (the "Financing Statements") in
the form annexed to the Agreement as Exhibit , for filing in
the offices listed on Schedule I hereto;
11. Resolutions adopted by the Board of Directors of the Buyer at
a Meeting of the Board of Directors on March 7, 1997;
12. The Company's Restated Certificate of Incorporation, as filed
with the Secretary of State of the State of Delaware on
______________, 1997 (the "Amended and Restated Certificate");
13. A Certificate of Good Standing and Legal Existence relating to
the Buyer, issued by the Office of the Secretary of State of
the State of Delaware, dated _____________, 1997 (the
"Delaware Certificate");
14. A Certificate of Qualification to do Business relating to the
Buyer, issued by the Office of the Secretary of State of the
Commonwealth of Massachusetts, dated _____________, 1997 (the
"Massachusetts Certificate");
15. A Certificate of the Buyer, executed on behalf of the Buyer by
an officer of the Buyer, dated _______________, 1997,
certifying as to the correctness of representations and
warranties and as to the fulfillment of the agreements and
conditions of the Buyer specified in the Agreement;
16. A Certificate of the Assistant Secretary of the Buyer, dated
_____________, 1997;
17. A Certificate of the Vice President of Finance of the Buyer,
dated ______________, 1997, certifying as to payment of state
and federal income taxes;
18. The Company's By-laws and corporate minute and stock record
books; and
19. Such other documents, corporate records, certificates and
materials as we have deemed necessary for the purposes of the
opinions rendered herein.
113
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 3
In our examination, we have assumed the completeness of the corporate
minute books and stock record books of the Buyer as provided to us by the Buyer,
the authenticity of original documents, the accuracy of all copies (whether
certified or not), the genuineness of all signatures and the legal capacity of
all persons executing all documents examined by us.
In rendering this opinion, we have relied, as to all questions of fact
material to this opinion, upon certificates of public officials and officers of
the Buyer and upon the representations and warranties made by you and the Buyer
in the Documents. Except for our examination of the documents listed above, we
have not attempted to verify independently such facts, although we know of no
facts which lead us to question the accuracy of such information. In particular,
for purposes of the opinions expressed in clause (iv) of Paragraph 4 and
Paragraph 5 below, we have relied solely on representations of officers of the
Buyer, and we have not conducted a search of any computerized or electronic
databases or the dockets of any court, administrative or other regulatory body,
agency or other filing office in any jurisdiction. Any reference to "our
knowledge" or "knowledge" or any variation thereof shall mean the conscious
awareness of the attorneys in this firm who have rendered substantive attention
to this transaction of the existence or absence of any facts which would
contradict our opinions set forth below. We have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from the fact of our representation of the Buyer.
We have not made an independent review of the laws of any state or
jurisdiction other than the state laws of the Commonwealth of Massachusetts and
the General Corporation Law statute of the State of Delaware. Accordingly, we
express no opinion herein with respect to the laws of any country, state or
jurisdiction other than the state laws of the Commonwealth of Massachusetts and
the General Corporation Law statute of the State of Delaware. To the extent that
the laws of any jurisdiction other than the state laws of the Commonwealth of
Massachusetts or the General Corporation Law statute of the State of Delaware
govern any agreement to which the Buyer is a party, we have assumed that the
laws of such jurisdiction are identical to the laws of the Commonwealth of
Massachusetts. For the purposes of this opinion, we have assumed that the facts
and law governing the performance by the respective parties of their respective
obligations under the Agreement will be identical to the facts and law governing
such performance as of the date of this opinion.
We are expressing no opinion as to the implications under United States
tax law, including all federal, state and local tax laws, or the tax laws of any
foreign jurisdiction with respect to any of the transactions contemplated by the
Documents.
114
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 4
We are expressing no opinion as to the implications under the rules and
regulations of the United States Food and Drug Administration with respect to
any of the transactions contemplated by the Documents.
We are expressing no opinion as to the implications under any applicable
antitrust or usury laws.
We are expressing no opinion as to state or federal securities antifraud
laws.
We are expressing no opinion as to the validity of the security interest
granted to you in the Buyer's trademarks.
The opinions hereinafter expressed are qualified to the extent that they
may be subject to or affected by (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws relating to or
affecting the rights of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice or
hearing, and (iii) duties and standards imposed on creditors and parties to
contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing. Furthermore, we express no opinion as to the
availability of any equitable or specific remedy upon any breach of any of the
covenants, warranties or other provisions contained in any of such agreements,
instruments or documents, or upon the successful assertion of any equitable
defense. Moreover, we express no opinion as to the enforceability of any
indemnity provision that indemnifies any person against damages arising from its
own negligence or misconduct.
The opinions hereinafter expressed are also subject to the qualification
that we render no opinion as to the validity or enforceability of any provisions
of the Documents regarding the rights of the Seller to set-off against the
accounts of the Buyer, to the extent that (i) the funds on deposit in accounts
of the Buyer are subjected to trustee process or any other valid claim or right
of a third party, (ii) the accounts of the Buyer are special accounts created
solely for the benefit of another party, such as payroll or tax escrow accounts,
and (iii) the funds on deposit in accounts of the Buyer are contained in a
separate account containing the proceeds of collateral securing the obligation
of the Buyer to a secured party other than the Seller under Article 9 of the
Uniform Commercial Code as enacted in the Commonwealth of Massachusetts (the
"Code").
We have assumed that each of the Documents has been duly authorized,
executed and delivered by the Seller and that Seller has all requisite power and
authority to effect the transactions contemplated by the Documents. We have also
assumed that each of the Documents is the valid and binding obligation of each
of the Seller, enforceable against the Seller in accordance with its terms. We
do not render any opinion as to the
115
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 5
application of any foreign, federal or state law or regulation to the power,
authority or competence of the Seller.
For purposes of the opinions expressed in Paragraph 1 below as to the
valid existence and good standing of the Buyer in Delaware, and the
qualification and good standing of the Buyer in Massachusetts, we have relied
solely upon the Delaware Certificate and the Massachusetts Certificate,
respectively, and such opinions are limited accordingly and rendered as of the
respective dates thereof.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Buyer is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware. The Buyer is
duly qualified to conduct business and is in corporate good standing under the
laws of the Commonwealth of Massachusetts. The Buyer has all requisite corporate
power and authority to execute and deliver the Documents and to consummate the
transactions contemplated thereby.
2. The execution and delivery of the Documents and the consummation of
the transactions contemplated thereby have been duly and validly authorized by
all necessary corporate action on the part of the Buyer.
3. The Documents have been duly and validly executed and delivered by the
Buyer and constitute valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or effecting the rights and remedies of creditors generally and to
general principles of equity.
4. Neither the execution and delivery of the Documents nor the
consummation of the transactions contemplated thereby, (i) conflicts with or
violates any provision of the charter or By-laws of the Buyer; (ii) requires on
the part of the Buyer any filing with, or permit, authorization, consent or
approval of, any governmental entity, other than any filing, permit,
authorization, consent or approval which (a) has been obtained or (b) if not
obtained or made would not have a material adverse effect on the assets,
business, financial condition or results of operations of the Buyer and its
subsidiaries taken as a whole (a "Material Adverse Effect"); (iii) conflicts
with, results in a breach of, constitutes (with or without due notice or lapse
of time or both) a default under, results in the acceleration of, creates in any
party the right to accelerate, terminates or cancels any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
other written agreement set forth on Exhibit A hereto, other than any
116
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 6
conflict, breach, default, acceleration, termination or cancellation which
individually or in the aggregate would not have a Material Adverse Effect; or
(iv) to our knowledge, violates any order, writ, injunction or decree
specifically naming the Buyer or any of its property or assets, or any statute,
rule or regulation applicable to the Buyer or any of its property or assets,
other than any such violation which individually or in the aggregate would not
have a Material Adverse Effect.
5. To our knowledge, there is no action, proceeding, suit or
investigation pending or threatened in writing wherein an unfavorable judgment,
ruling, order or decision would (i) prevent the consummation of the sale of the
Assets under the Agreement or (ii) cause the sale of the Assets to be rescinded
following the Closing.
The foregoing opinions are subject to the following additional comments
and qualifications:
(A) We express no opinion as to the existence of, or the
right, title or interest of the Buyer in, to or under, any property in which the
Buyer has granted a security interest to you.
(B) We express no opinion as to the creation of security
interests in property in which a security interest cannot be created under the
Code or the perfection of security interests in fixtures or in property in which
a security interest cannot be perfected by the filing of UCC-1 financing
statements pursuant to Article 9 of the Code except with respect to the
perfection of a security interest in trademarks and patents to the extent
aforesaid.
(C) Under certain circumstances, described in Section 9-306 of
the Code, the right of a secured party to enforce a perfected security interest
in the proceeds of collateral may be limited.
(D) The grant of, or any realization on, security interests in
governmental licenses, permits, authorizations and other rights, in contracts
with government or governmental instrumentalities, commissions, boards or
agencies and in the proceeds thereof are or may be subject to restrictions or
limitations set forth therein or in applicable statutes, laws, rules or
regulations, and we express no opinion as to the creation or perfection of
security interests in such rights, contracts or proceeds.
(E) We express no opinion as to the priority of any security
interests granted by the Buyer to the Seller.
117
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 7
(F) The perfection of the security interests may be terminated
as to any Collateral (as defined in the Security Agreement) acquired more than
four months after the Buyer changes its name, identity or corporate structure so
as to make the Financing Statements seriously misleading (within in the meaning
of Section 9-402(7) of the Code) unless new, appropriate financing statements
indicating the new name, identity or corporate structure of the Buyer are
properly filed before the expiration of such four-month period and all fees in
connection therewith are paid. The perfection of security interests in accounts,
including receivables, general intangibles and certain other Collateral, may be
terminated if the Buyer changes the location of its chief executive offices
outside of the Commonwealth of Massachusetts.
(G) Pursuant to the Code, continuation statements are required
from time to time to be filed in order to preserve valid, perfected security
interests.
(H) We have assumed that the Collateral in Massachusetts is
located at the location described on Schedule II hereto and that the chief
executive office of the Borrower is located in Wilmington, Massachusetts.
(I) We express no opinion as to the adequacy of the
description of the Collateral insofar as such description includes terms which
are not defined under Article 9 of the Code.
This opinion is provided to the Seller as a legal opinion only and not as
a guaranty or warranty of the matters discussed herein.
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions, and we disclaim any obligation to advise you
of any changes in any of these sources of law or subsequent developments which
might affect any matters or opinions set forth herein. Please note that we are
opining only as to the matters expressly set forth herein, and no opinion should
be inferred as to any other matters.
118
Xxxxxx-Xxxxx Labratories, Inc.
_________________, 1997
Page 8
This opinion is furnished to you by us as counsel to the Buyer in
connection with the transactions contemplated by the Agreement, and may not be
relied upon by any other person or entity or for any other purpose without our
prior written consent. Xxxxx X. Xxxxxxx of this firm is Secretary of the Buyer.
Very truly yours,
XXXX AND XXXX LLP
119
EXHIBIT J
STATE OF MINNESOTA
UCC-1 FINANCING STATEMENT
For
Filing
Officer
This statement is presented for filing pursuant to Minnesota Uniform Commercial
Code Minnesota Status Chapter 336.9-402
(Type in Black Ink)
1. Individual Debtor - Last Name First Name Middle I.
Social Security # Mailing Address
City State Zip Code
2. Individual Debtor - Last Name First Name Middle I.
Social Security # Mailing Address
City State Zip Code
3. Business Debtor - Name ASCENT PEDIATRICS, INC.
Fed. ID# 00-0000000 Mailing Address 000 XXXXXXXXXXX XXXXXX,
XXXXX X000
Xxxx XXXXXXXXXX Xxxxx XX Zip Code 01887
4. Secured Party Name XXXXXX-XXXXX 5. Assignee of Secured Party
LABORATORIES, INC.
Mailing Address 00000 00XX XXX XXXXX Mailing Address
City XXXXXXXXXXX Xxxxx XX Xxx Xxxx 00000 Xxxx Xxxxx Zip Code
6. This financing statement covers the following types of items of property. (If
crops are covered describe the real estate and list the name of record owner.)
SEE EXHIBIT A ATTACHED.
_____Debtor is a transmitting utility
as defined by Minnesota Statues Chapter
336.9-105
RETURN ACKNOWLEDGEMENT COPY TO:
(name and address)
__________________________________________
Debtor's Signature (Required in Most Cases
see instructions)
__________________________________________
Debtor's Signature
__________________________________________
Secured Party's Signature
120
Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1
IMPORTANT - Read Instructions on back before filing out form
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the Uniform Commercial Code.
4 ( ) Filed for record to 5 ( ) Debtor is a Transmitting 6 No. of Additional Sheet
estate records Utility Presented 2
1. Owner(s)(Last Name First) and 2. Secured Party(ies) and 3. For Filing Officer (Date, Time,
address(es) address(es) Number, and Filing Officer)
ASCENT PEDIATRICS, INC. XXXXXX-XXXXX LABORATORIES, INC.
000 XXXXXXXXXXX XX., XXX X000 00000 00XX XXXXXX XXXXX
XXXXXXXXXX, XX 00000 XXXXXXXXXXX, XX 00000
7. This financing statement covers the following types (or items) of property:
SEE EXHIBIT A ATTACHED.
( ) Products of Collateral are also
covered.
Whichever is
Applicable (See
Instruction Number 9)
ASCENT PEDIATRICS, INC.
------------------------------------ ---------------------------------------
------------------------------------ ---------------------------------------
Signature(s) of Debtor (Or Assignor) Signature of Secured Party (Or Assignee)
121
EXHIBIT A
TO
UCC-1 FINANCING STATEMENT
DEBTOR: Ascent Pediatrics, Inc.
SECURED PARTY: Xxxxxx-Xxxxx Laboratories, Inc.
The Collateral described on the financing statement, to which this Exhibit A is
attached, means Debtor's now owned or hereafter acquired right, title and
interest in and to the following categories of the Debtor's properties, assets
and other claims, rights and interests which are used by the Debtor in the
development, sale or manufacture of Feverall(R) suppository ("FS"), Feverall(R)
Sprinkle Caps(R) powder ("FSC") and Acetaminophen Uniserts(R) suppository
("AUS") product lines (collectively, the "Product Lines") (for purposes hereof,
the business of manufacturing, marketing and selling FS, FSC and AUS shall be
referred to as the "Business"):
i. all inventories of finished goods, samples, trade packs, raw
materials, supplies and similar items (the "Inventory");
ii. all regulatory approvals, registrations and related materials (the
"Registrations");
iii. all rights of the Debtor under contracts, leases, licenses and
other instruments, including private label manufacturing agreements and sales
broker contracts (collectively, the "Contracts");
iv. all rights of the Debtor under express or implied warranties from
the suppliers of the Debtor;
v. all of Debtor's right, title and interest in and to all trademarks,
whether owned by Debtor or used under license, registered, pending or
unregistered, and applications for registration, trade dress, logos, drawings
and trade names and related goodwill and business, and including, without
limitation, Feverall(R), Sprinkle Caps(R) and Uniserts(R) (the "Trademarks");
vi. all of the Debtor's right, title and interest in and to intangible
property rights (including but not limited to inventions, discoveries, trade
secrets, processes, formulas, know-how, United States and foreign patents,
patent applications, copyrights, copyright registrations) owned and used or,
where not owned, used by the Debtor, in connection with the manufacture of the
Product Lines and the licenses and other agreements to which the Debtor is a
party (as licensor or licensee) or by which the Debtor is bound relating to any
of the foregoing kinds of property or rights (collectively, the "Intangible
Property");
122
vii. all unfilled orders (if any) relating to the Product Lines or the
Business;
viii. all of the product formulations and related documentation,
written technical information, data, specifications, and research and
development information (the "Technical Information");
ix. all correspondence and product complaint information (the
"Regulatory Information");
x. all marketing information and materials, including copies of
customer lists and sales records (the "Marketing Materials");
xi. all books, records and accounts, correspondence, production
records, technical, accounting, manufacturing and procedural manuals, studies,
reports or summaries relating to any environmental conditions or consequences of
any operation, present or former, as well as all studies, reports or summaries
relating to any environmental aspect or the general condition of the Product
Lines or the Business and any related confidential information which has been
reduced to writing (the "Records");
xii. all patents and copyrights, including, without limitation, those
registered, pending or unregistered and applications therefor (the "Patents" and
"Copyrights", respectively);
xiii. all of the inventory, registrations, contracts, trademarks,
technical information, regulatory information, marketing materials records and
other personal property acquired by Debtor from the Secured Party under the
Asset Purchase Agreement dated March ___, 1997 between Debtor and Secured Party;
xiv. all items described in this Exhibit A, whether now owned or
hereafter at any time acquired by Debtor and wherever located, and all
modifications, improvements and enhancements to the Collateral and proceeds
arising from sales of Collateral not in the ordinary course of business,
relating thereto or therefrom; and
xv. proceeds arising from sales of Collateral not in the ordinary
course of business hereunder include (i) whatever is now or hereafter receivable
or received by Debtor upon the sale, exchange, collection or other disposition
of any item of Collateral not in the ordinary course of business, whether
voluntary or involuntary, and (ii) any insurance or payments under any
indemnity, warranty or guaranty now or hereafter payable by reason of loss or
damage or otherwise with respect to any item of Collateral.
Notwithstanding anything contained herein to the contrary, Collateral shall not
include any property of the Debtor which is not used in the development, sale or
manufacture of the Product Lines.
123
EXHIBIT K
INTERCREDITOR AGREEMENT
This Intercreditor Agreement ("Agreement") dated as of July ____, 1997,
between Xxxxxx-Xxxxx Laboratories, Inc. ("USL"), a Minnesota corporation, with
its principal office at 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
and Triumph-Connecticut Limited Partnership, a Connecticut limited partnership,
with its principal office at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, for
itself and as agent for Xxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, Xxxxxxxxx X. Xxxxxx
XX and E. Xxxx Xxxxxx, as Trustees of the Triumph Capital Group, Inc. 401(k)
Plan and Trust for the account of Xxxxxx X. Xxxxx, and Xxxxx X. Xxxxxxx
(collectively, the "Triumph Investors").
WITNESSETH
WHEREAS, simultaneously with the execution of this Agreement, USL will
enter into an Asset Purchase Agreement (the "Asset Purchase Agreement") with
Ascent Pediatrics, Inc., a Delaware corporation ("Ascent') pursuant to which USL
will sell to Ascent certain of USL's assets relating to the Feverall and
Acetaminophen Uniserts Suppository Product Lines and Acetaminophen Sprinkle Caps
(the "Product Lines"), and Ascent will issue to USL its promissory note in the
principal amount of $5,500,000 (the "USL Note"); and
WHEREAS, Ascent has previously issued to the Triumph Investors
$7,000,000, in aggregate, of its Subordinated Secured Notes Due January 31, 2002
(the "Triumph Notes"); and
WHEREAS, Ascent's indebtedness to USL under the USL Note will be
secured by a security interest in certain assets of Ascent defined as the
Collateral ("Collateral") in and granted by Ascent to USL under a security
agreement of even date herewith ("USL Security Agreement"); and Ascent's
indebtedness to the Triumph Investors under the Triumph Notes is secured by a
security interest in the Collateral and other assets of Ascent as provided in a
124
Security Agreement dated January 31, 1997 (the "Triumph Security Agreement")
(the USL Security Agreement and the Triumph Security Agreement are hereinafter
called the "Security Documents");
WHEREAS, USL and the Triumph Investors have agreed upon their relative
rights and priorities with respect to the indebtedness evidenced by the USL Note
and the Triumph Notes and with respect to the Collateral; and
WHEREAS, USL and the Triumph Investors have agreed that the USL Note is
not Senior Indebtedness (as defined in the Triumph Notes).
NOW, THEREFORE, in consideration of the premises, USL and the Triumph
Investors agree as follows:
1. Priority of Indebtedness.
The indebtedness and payment obligations of Ascent to USL shall be
governed by the provisions of the USL Note and the USL Security Agreement, and
the indebtedness and payment obligations of Ascent to the Triumph Investors
shall be governed by the Triumph Notes and Triumph Security Agreement. Neither
USL nor the Triumph Investors shall have priority over the other with respect to
such indebtedness and payment obligations.
Priority to Collateral.
2. Priority to Collateral.
The security interests granted to USL under the USL Security Agreement
shall be senior in priority and right to the security interests granted to the
Triumph Investors under the Triumph Security Agreement or hereafter arising with
respect to the Collateral, irrespective of the time or order of attachment or
perfection of the respective security interests or the time or order of filing
financing statements or any statement in any other agreement to the contrary or
any provision of the Uniform Commercial Code ("UCC") or any other applicable law
to the contrary; and each
-2-
125
of USL and the Triumph Investors agree not to contest the perfection, priority,
validity or enforceability of the liens and security interests granted by Ascent
to the other. USL does not claim a security interest in any assets of Ascent
other than in the Collateral. In the event of (a) a foreclosure of, or exercise
of any other remedy respecting the Collateral by USL or the Triumph Investors,
or (b) the distribution of the proceeds of the liquidation of the Collateral in
connection with the bankruptcy of Ascent or otherwise, the proceeds of any such
foreclosure, enforcement action or liquidation, after payment of the reasonable
costs and expenses of the party or parties conducting such foreclosure,
enforcement action or liquidation, shall be first paid to USL until all
indebtedness owing to USL under the USL Note and USL Security Agreement have
been paid in full and then to the Triumph Investors.
3. Notice of Default.
USL and the Triumph Investors shall each provide notice to the other in
the event either of them declares Ascent to be in default under the USL Note or
the Triumph Notes, as the case may be. Notwithstanding the preceding sentence,
but subject to the requirements of Section 6, the failure of a party to provide
notice of default shall not negate or in any way adversely affect or impair the
validity of the declaration of default or the priority to Collateral provided in
Section 2 hereof.
4. No Third Party Beneficiaries.
This Agreement and the terms and provisions hereof are solely for the
benefit of USL and the Triumph Investors and shall not confer any benefit in any
way upon Ascent or any person not a party to this Agreement. Nothing herein is
intended to affect, limit, or in any way diminish the security interests that
USL and the Triumph Investors claim in the Collateral or other assets of Ascent
insofar as the rights of Ascent and third parties are concerned.
-3-
126
5. Validity and Perfection of Security Interests.
The priority of the parties in the Collateral provided in Section 2
hereof is expressly conditioned upon nonavoidability and perfection of the
security interests of each of the parties in the Collateral. If the security
interest of USL or the Triumph Investors is not perfected or is avoidable for
any reason, then the priority arrangements provided in Section 2 hereof as to
the particular part of the Collateral that is the subject of the unperfected or
avoidable security interest shall be ineffective.
6. Remedies.
Each of USL and the Triumph Investors agree not to commence a
foreclosure or similar action with respect to the Collateral until 60 days after
the notice required by Section 3 has been given unless each party hereto waives
the 60-day waiting period. In the event of the commencement of foreclosure or
similar action by either of the parties hereto with respect to the Collateral,
the parties shall cooperate with each other in the exercise of their respective
remedies, including, without limitation, rights of entry to premises upon which
personal property is located. If either party hereto shall be in possession of
any part of the Collateral after having its claims against Ascent satisfied in
full, it shall deliver (unless otherwise restricted by law and subject in all
events to the receipt of an indemnification of all liabilities arising from such
delivery) or surrender possession of such part of the Collateral to the other
party to the extent such other party may be entitled thereto in accordance with
the priorities established in this Agreement, all without recourse or warranty.
7. Recovered Payments.
To the extent either party receives any proceeds from the Collateral or
payments from Ascent which are subsequently recovered, set aside, deemed a
preference or fraudulent conveyance, or otherwise required to be repaid (a
"Recovered Payment") under any law or
-4-
127
principle of equity, then that part of the indebtedness of Ascent to such party
previously satisfied with such proceeds shall be deemed revived and unsatisfied,
and any payments made to the Triumph Investors out of proceeds from the
Collateral obtained from the exercise of remedies under paragraph 6 up to the
amount of the Recovered Payment shall be paid to USL.
8. Waiver of Marshalling.
Each of the parties hereby waives any right to require the other party
to xxxxxxxx any security or collateral or otherwise to compel the other party to
seek recourse against or satisfaction of the indebtedness owed to it from one
source before seeking recourse or satisfaction from another source.
9. Release of Collateral.
The Triumph Investors agree that any collection, sale or other
disposition of any or all of the Collateral by USL pursuant to the UCC shall be
free and clear of any and all security interests, liens, claims and/or rights of
the Triumph Investors in such Collateral, and in connection with any such
disposition of the Collateral the Triumph Investors shall promptly release any
and all security interests, liens, claims and/or rights which they may have on
or in the applicable Collateral to facilitate the collection, sale or other
disposition of such Collateral by USL so long as the proceeds thereof are
applied first to the payment of the indebtedness owed to USL and any excess is
then applied to the payment of the indebtedness owed to the Triumph Investors.
10. Insurance Proceeds.
In the event of the occurrence of any casualty with respect to any of
the Collateral valued at an amount of $100,000 or more, the Triumph Investors
and USL agree that USL shall have the sole and exclusive right, upon ten (10)
days notice to the Triumph Investors, to adjust, compromise or settle any such
loss with the insurer thereof, and to collect and receive the
-5-
128
proceeds from such insurer up to the amount of USL's claim. Any insurer shall be
fully protected if it acts in reliance on the provisions of this paragraph.
11. Effect of Bankruptcy of Ascent.
This Agreement shall remain in full force and effect notwithstanding
the filing of a petition for relief by or against Ascent under the United States
Bankruptcy Code and shall apply with full force and effect with respect to all
of the Collateral acquired by Ascent and to all indebtedness owed to USL
incurred by Ascent subsequent to the date of said petition.
12. Assignment of Indebtedness owed to the Triumph Investors.
The Triumph Investors represent and warrant to USL that they have not
previously assigned any interest in any of the indebtedness owed to the Triumph
Investors, that no other party owns an interest in any of the indebtedness owed
to the Triumph Investors other than the Triumph Investors and that the entire
indebtedness is owed only to the Triumph Investors. The Triumph Investors
covenant and agree with USL that the entire indebtedness shall continue to be
owing only to the Triumph Investors, unless such indebtedness is assigned
expressly subject to the terms, provisions and conditions of this Agreement, the
assignee of such indebtedness agrees in writing to be bound by the terms,
provisions and conditions of this Agreement and the Triumph Investors shall have
delivered such executed assignment and assumption agreements to USL.
13. Amendment of Indebtedness Owed to the Triumph Investors.
The Triumph Investors agree that during the term of this Agreement it
will not enter into any agreement with Ascent (i) increasing the principal
amount of any indebtedness of Ascent to the Triumph Investors payable on or
prior to the date of payment of the USL Note; or (ii) increasing the interest
rate of any indebtedness of Ascent to the Triumph Investors effective prior to
the scheduled maturity date for payment of the USL Note.
-6-
129
14. UCC Notices.
If any party is required by the UCC or any other applicable law to give
notice to another party of any action taken or to be taken by such party against
or with respect to any or all of the Collateral, such notice shall be given in
accordance with Section 16 hereof and ten (10) days' notice shall be
conclusively deemed to be commercially reasonable.
15. Relation of Parties.
This Agreement is entered into solely for the purposes set forth in the
recitals above, and, except as is expressly provided otherwise herein, neither
party hereto assumes any responsibility to the other party to advise such other
party concerning information regarding the financial condition of Ascent, the
Collateral, or any other circumstances bearing upon the right of nonpayment of
the obligations of Ascent to the parties hereto. Each party shall be responsible
for managing its relation with Ascent and neither party shall be deemed the
agent of the other party for any purpose. Each of the parties here may alter,
amend, supplement, release, discharge or otherwise modify any terms of the
documents evidencing or embodying their loans to Ascent without consent of the
other, except that no such alteration, amendment, supplement, release, discharge
or modification shall (i) permit the creation of any lien with respect to any of
the Collateral that is prior to the lien of the other party, or (ii) amend,
waive or modify any of the terms of the Security Documents, so as to affect the
relative priorities established herein.
16. Notices.
All notices hereunder shall be effective upon receipt and shall be in
writing and sent by either certified mail, return receipt requested, by
overnight courier, by hand delivery or by telecopier as follows:
-7-
130
If to USL: Xxxxxx-Xxxxx Laboratories, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President and Chief
Financial Officer
Telecopier: (000) 000-0000
With a copy to: Xxxxxxx, Rumble & Xxxxxx
Professional Association
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
If to the Triumph Investors: c/o Triumph-Connecticut Limited
Partnership
Xx. Xxxxxx X. Xxxxx
Managing Director
Triumph Capital Group, Inc.
Sixty Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
With a copy to: Xxxxx Xxxxxxxx, Esq.
Xxxxxxx, Procter & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
And, in either case,
with a copy to: Ascent Pediatrics, Inc.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
With a copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
or such other address or person as either of the parties hereto or Ascent may
designate in writing to the others. Notice shall be deemed received (i) three
(3) business days after the same is deposited in a United States Post Office
Box, postage prepaid, (ii) one (1) business day after the
-8-
131
same is deposited with a recognized courier service for overnight mail delivery;
or (iii) on the same day as telecopied or hand delivered.
17. Copies of the Loan Documents.
Ascent has provided to USL and the Triumph Investors copies of the
Asset Purchase Agreement, the USL Security Agreement, the USL Note, the Triumph
Notes and Triumph Security Agreement. Each of the parties shall promptly provide
the other party a copy of any amendments to such documents.
18. Further Assurances.
The Triumph Investors and USL hereby covenant and agree to take any and
all additional actions and execute, deliver, file and/or record any and all
additional agreements, documents and instruments as may be necessary or as the
Triumph Investors or USL may from time to time reasonably request to effect the
subordination and other provisions of this Agreement.
19. Waivers: Failure or Delay.
No failure or delay on the part of either party in the exercise of any
power, right, remedy or privilege under this Agreement shall impair such power,
right, remedy or privilege or shall operate as a waiver thereof; nor shall any
single or partial exercise of any such power, right, remedy or privilege
preclude any other or further exercise of any other power, right, remedy or
privilege. The waiver of any such right, power, remedy or privilege with respect
to particular facts and circumstances shall not be deemed to be a waiver with
respect to other facts and circumstances.
20. Binding Agreement; Amendment.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns and the respective assignees
of the USL Note and the Triumph Notes. This agreement may not be amended except
in writing, signed by the parties hereto.
-9-
132
21. Term of Agreement.
This Agreement shall continue in full force and effect and shall be
irrevocable by either party hereto until the earlier to occur of the following:
(a) the agreement in writing of the parties to terminate this
Agreement; or
(b) the full payment and satisfaction by Ascent of all of its
obligations under the USL
Note.
22. Section Titles.
The section titles contained in this Agreement are for convenience only
and are without substantive meaning or content and shall not be considered part
of this Agreement.
23. Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Agreement.
24. Equitable Remedies.
Each party to this Agreement acknowledges that the breach by it of any
of the provisions of this Agreement is likely to cause irreparable damage to the
other party. Therefore, the relief to which any party shall be entitled in the
event of any such breach or threatened breach shall include, but not be limited
to, a mandatory injunction for specific performance, injunctive or other
judicial relief to prevent a violation of any of the provisions of this
Agreement, damages and any other relief to which it may be entitled at law or in
equity.
25. Attorneys' Fees and Expenses.
-10-
133
In the event of any dispute concerning the meaning or interpretation of
this Agreement which results in litigation, or in the event of any litigation by
a party hereto to enforce the provisions hereof, the prevailing party shall be
entitled to recover from the non-prevailing party, fees in addition to its other
damages, its reasonable attorneys' fees and expenses and any actual court costs
incurred.
26. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
27. Counterparts.
This Agreement may be executed in several counterparts, each of which
will constitute an original and all of which together will constitute one and
the same instrument.
-11-
134
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXX-XXXXX LABORATORIES, INC. TRIUMPH-CONNECTICUT
LIMITED PARTNERSHIP
XXXX X. XXXXXX AND
By: ______________________________ XXXXXX X. XXXXXX
Its President
XXXXXXXXX X. XXXXXX XX AND E.
XXXX XXXXXX, AS TRUSTEES OF
THE TRIUMPH CAPITAL GROUP, INC.
401(K) PLAN AND TRUST FOR THE
ACCOUNT OF XXXXXX X. XXXXX
XXXXX X. XXXXXXX
By: TRIUMPH-CONNECTICUT
LIMITED PARTNERSHIP, as agent
By: ________________________________
Xxxxxx X. Xxxxx
Title: Managing Director
-12-
135
ACKNOWLEDGMENT AND CONSENT
Ascent Pediatrics, Inc. hereby acknowledges and consents to the terms
and provisions of the foregoing Agreement.
ASCENT PEDIATRICS, INC.
By: _____________________________
Its: ____________________
-13-
