ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 11th day of February, 1999, by and between KV PHARMACEUTICAL COMPANY, a
company incorporated under the laws of State of Delaware, with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("KV"),
and AMERICAN HOME PRODUCTS CORPORATION, acting through its WYETH-AYERST
LABORATORIES division, a company incorporated under the laws of the State of
Delaware, with its principal place of business at Five Giralda Farms, Madison,
NJ 07940, USA ("AHPC"). KV and AHPC are referred to herein individually as a
"Party" and collectively as the "Parties".
WHEREAS, AHPC currently manufactures and markets formulated ethical
drug products containing microencapsulated potassium chloride;
WHEREAS, AHPC is the owner of certain know-how relating to the
manufacture, use and sale of such drug products;
WHEREAS, AHPC is the owner of the Micro-K(R), Micro-KO(R), Micro-KC(R),
Extencaps(R), Micro-K Extencaps(R) and Dis-co(R) trademarks and a Canadian
patent, in conjunction with which such drug products are marketed by AHPC;
WHEREAS, KV desires to (i) acquire such drug products and know-how from
AHPC, (ii) acquire certain of such trademarks and obtain a license for such
other trademarks, (iii) obtain rights to the supply of such microencapsulated
component from Eurand America, Incorporated, and (iv) obtain rights to the
supply of the drug product from AHPC; and
WHEREAS, AHPC is willing to (i) divest such drug products and know-how
to KV, (ii) divest certain of such trademarks and grant a license to such other
trademarks, (iii) supply KV with such microencapsulated component from Eurand
America, Incorporated, and (iv) supply the drug product to KV.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual promises, covenants and conditions contained in this Agreement, the
Parties agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the capitalized terms hereunder
shall have the meanings defined below:
1.1 "Acquired Trademarks" shall mean the trademarks listed in Part
A of Exhibit A hereto.
1.2 "ADE" shall mean an Adverse Drug Experience, as defined in
Exhibit I.
1.3 "Affiliate(s)" shall mean, in the case of a Party, any
corporation, joint venture, or other business entity which
directly or indirectly controls, is controlled by, or is under
common control with that Party. "Control", as used in this
Section 1.3, shall mean having the power to direct, or cause
the direction of, the management and policies of an entity,
whether through ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, for purposes of this
Agreement, the term Affiliate shall not include Immunex
Corporation.
1.4 "Canadian Agreement" shall mean the agreement entered into
concurrently herewith by AHPC's Canadian Affiliate,
Wyeth-Ayerst Canada Inc. ("Wyeth-Canada") and KV, pursuant to
which Wyeth-Ayerst Canada Inc. shall distribute the Products
in Canada for the benefit of KV.
1.5 "Closing" shall have the meaning set forth in Section 2.4
hereof.
1.6 "Closing Date" shall mean the date on which the Closing occurs
in accordance with Section 2.4 hereof.
1.7 "Commercially Reasonable Efforts" shall mean reasonable
efforts and resources at least equal to those normally used by
a Party for a compound or product owned by it or to which it
has rights, which is of similar market potential at a similar
stage in its product life, taking into account the
competitiveness of the marketplace, the proprietary position
of the compound or product, the regulatory structure involved,
the profitability of the applicable products, and other
relevant factors.
1.8 "Component" shall mean a composition in bulk form containing
potassium chloride encapsulated with certain polymers and
certain excipients using the proprietary sustained release
know-how of Eurand.
1.9 "Current Product(s)" shall mean the pharmaceutical products
listed in Exhibit C, Part A, each of which is marketed by AHPC
as of the date this Agreement was signed by the Parties.
1.10 "Customer Contracts" shall mean those contracts listed in
Exhibit D hereto, between AHPC or its Affiliates and certain
Third Parties pursuant to which such Third Parties, inter
alia, purchase or use any Products sold by AHPC or its
Affiliates in the Territory.
1.11 "Discontinued Product(s)" shall mean the pharmaceutical
products listed in Exhibit C, Part B, each of which was
previously marketed by AHPC but is not marketed by AHPC as of
the date this Agreement was signed by the Parties.
1.12 "Eurand" means Eurand America, Incorporated, a Nevada
corporation, with offices in Vandalia, Ohio. All of the issued
and outstanding shares of Eurand are owned by AHPC.
1.13 FDA" means the United States Food and Drug Administration.
1.14 "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
1.15 "Know-How" shall mean all proprietary technical and clinical
information, data and know-how exclusively related to the
Products, whether or not patentable, owned or controlled as of
the Closing Date by AHPC or its Affiliates (with the right to
have or disclose). Know-How shall include, without limitation,
all such processes, formulae, discoveries and inventions
whether relating to biological, chemical, pharmacological,
toxicological, pharmaceutical, physical and analytical safety,
quality control and clinical data, including, without
limitation, phase IV clinical study data and all marketing
information available with respect to the Products. The term
"Know-How", however, shall not include (i) any general
manufacturing know-how not specific to the Products, and (ii)
any information relating to the manufacture of the Component
by Eurand.
1.16 "KV Bulk Supply Agreement" shall mean the supply agreement to
be entered into at the Closing between Eurand and KV, in the
form of Exhibit B-2, pursuant to which Eurand will supply the
Component to KV upon the commencement of the manufacture of
the Current Products by KV, as contemplated by the Product
Supply Agreement.
1.17 "Licensed Trademarks" shall mean the trademarks, listed in
Part B of Exhibit A hereto.
1.18 "Patents" shall mean the patents listed in Part C of Exhibit A
hereto.
1.19 "Product(s)" shall mean the Current Products and the
Discontinued Products.
1.20 "Product Supply Agreement" shall mean the supply agreement to
be entered into concurrently herewith by the Parties pursuant
to which AHPC shall supply Current Products to KV for a
limited period of time after the Closing, in the form attached
hereto as Exhibit F.
1.21 "Regulatory Approval" shall mean all authorizations by the
competent Regulatory Authorities which are required for the
marketing, promotion, pricing and sale of Product in countries
within the Territory. Regulatory Approval shall include,
without limitation, an approved New Drug Application or the
equivalent, approved by the applicable Regulatory Authority.
1.22 "Regulatory Authority" shall mean any national,
supra-national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental
entity in the Territory involved in the granting of Regulatory
Approval for a Product including, but not limited to, the FDA.
1.23 "Territory" shall mean worldwide.
1.24 "Third Party(ies)" shall mean any person(s) or entity(ies)
other than AHPC, KV, Eurand or their respective Affiliates.
1.25 "Trademark License Agreement" shall mean the license agreement
covering the Licensed Trademarks in the Territory to be
executed and delivered by the Parties at the Closing, in the
form attached hereto as Exhibit E.
1.26 "Transaction Agreements" is defined in Section 15.8.
2. PRE-CLOSING ACTIVITIES; CLOSING.
2.1 Government Approvals.
2.1.1 HSR Filing. The parties will prepare and make
appropriate filings under Title II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules
promulgated thereunder (16 C.F.R. 801.1 et seq.) ("the Act")
as soon as reasonably practicable and shall request early
termination upon the filing thereof. The parties agree to
cooperate in the antitrust clearance process and to furnish
promptly to the Federal Trade Commission and the Antitrust
Division of the Department of Justice any additional
information reasonably requested by them in connection with
such filings. Each Party shall be responsible for paying any
fees required of a party in its position in connection with
making such filings, and each Party shall bear its own
expenses, including, without limitation, legal fees, incurred
in connection with preparing such filings. This Agreement
shall bind the Parties upon execution but the other provisions
of this Agreement shall not become effective until the waiting
period provided by the Act shall have terminated or shall have
expired without any action by any government agency or
challenge to the termination (hereinafter the "Effective
Date"). In the event the expiration of the waiting period does
not occur within three (3) months after the date first written
above, the parties shall revert to their status prior to
signing this Agreement.
2.1.2 KV's and AHPC's Obligations. Each of AHPC and KV
shall use its good faith efforts to eliminate any concern on
the part of any court or government authority regarding the
legality of the proposed transaction, including, if required
by federal or state antitrust authorities, promptly taking all
steps to secure government antitrust clearance, including,
without limitation, cooperating in good faith with any
government investigation including the prompt production of
documents and information demanded by a second request for
documents and of witnesses if requested.
2.1.3 Additional Approvals. AHPC and KV will cooperate
and use respectively all reasonable efforts to make all other
registrations, filings and applications, to give all notices
and to obtain as soon as practicable all governmental or other
consents, transfers, approvals, orders, qualifications,
authorizations, permits and waivers, if any, and to do all
other things necessary or desirable for the consummation of
the transactions as contemplated hereby. No Party shall be
required, however, to divest products or assets or materially
change its business if doing so is a condition of obtaining
approval under the HSR Act or other governmental approvals of
the transactions contemplated by this Agreement.
2.2 Systems Transfer. During the time period between the signing
of this Agreement by the Parties and the Closing, the Parties
will develop a mutually acceptable post Closing operation plan
to transfer the processing of chargebacks, government and
managed care rebates, returns (including the processing of
customer credits), the management of services provided by
Third Party vendors and/or contractors, and customer service
functions from AHPC to KV. Such plan shall be reduced to
writing and approved by both Parties not later than one week
prior to the Closing and shall be implemented by the Parties
as soon as practicable after the Closing Date.
2.3 Conduct of Business. During the time period between the date
of execution of this Agreement by the Parties and the Closing,
AHPC shall continue to operate its business as it relates to
the Products in the ordinary course.
2.4 The Closing.
2.4.1 Time and Place. Subject to the conditions set
forth in this Agreement, the Closing of the transactions
contemplated hereby shall take place at the later of 10:00
A.M. (local time) on March 8, 1999 or on the next succeeding
business day on which the last to be fulfilled or waived of
the conditions set forth in this Agreement shall be fulfilled
or waived in accordance with this Agreement, or at such other
time, date or place as the parties may mutually agree in
writing (the "Closing Date") at the offices of AHPC, Five
Giralda Farms, Madison, New Jersey but in no event later than
the latter of (i) March 31, 1999 and (ii) thirty (30) business
days after such approvals have been obtained or the notice and
waiting period under the HSR Act has expired or been
terminated without adverse action. For purposes of this
Agreement, the Closing will be treated as if it occurred at
11:59 p.m. on the Closing Date.
2.4.2 Transfers. At the Closing, AHPC will transfer and
deliver or cause to be transferred and delivered to KV full,
marketable right, title and interest in and to the Products,
the Know-How and the Acquired Trademarks and Patent, free and
clear of all encumbrances and subject to no liabilities or
rights or interests of any third party.
2.4.3 Purchase Price. At the Closing, KV shall make the
payment required by Section 4.1 hereof, which payment shall be
made by wire transfer in funds immediately available to such
bank account as AHPC may designate.
2.4.4 Customer Information. Not later than two weeks
prior to the Closing, to the extent the following items have
not previously been provided to KV, AHPC will deliver to KV:
2.4.4.1 complete and accurate copies of AHPC's customer
lists, including related sales and marketing data, for the
Products; and
2.4.4.2 copies of Customer Contracts for the Products,
which contracts shall be redacted for purposes of deleting
information that is not related to the Products and other
confidential information.
2.4.5. Officer Certificates. At the Closing, and as a
condition thereto, AHPC and KV shall each deliver to the other
a certificate, signed by its duly authorized officer, to the
effect that its representations and warranties are true and
correct, as provided in Section 9.2 and 9.1, respectively, as
of the Closing.
2.4.6 Other Documents. At or immediately after the
Closing, AHPC and KV shall work together to execute and to
transfer and deliver to KV assignments of any Regulatory
Approvals, as required by Section 6.2.1 hereof. Additionally,
AHPC and KV shall execute and deliver to each other the
Trademark License Agreement and the Product Supply Agreement
and AHPC shall cause: (a) Wyeth-Ayerst Canada Inc. to enter
into, and KV shall enter into, the Canadian Agreement, and (b)
Eurand to enter into, and KV shall enter into, the KV Bulk
Supply Agreement. AHPC shall also deliver the assignment of
the Acquired Trademarks and Patent and such other assignments
and other documents as KV may reasonably request in a
transaction of this nature in form reasonably acceptable to
counsel for the Parties.
2.5 Retained Rights. AHPC shall retain ownership of and all rights
to (i) the Licensed Trademarks (except as are granted to KV
under the Trademark License Agreement), (ii) the real and
personal property (including, without limitation, all
equipment) and general manufacturing know-how used by AHPC in
manufacturing the Products (either before, during or after the
term of this Agreement), (iii) all accounts receivable from
sales of the Product by or on behalf of AHPC prior to the
Closing Date, (iv) all inventories of the Products that have
not otherwise been purchased by KV and transferred to KV
pursuant to Section 6.4 hereof, and (v) the NDC numbers of the
Products.
3. POST-CLOSING ADJUSTMENT.
3.1 Following the Closing, from time to time, as may be required,
AHPC shall pay KV all sums as and when required pursuant to
the terms of Sections 5.3-5.5.
3.2 The Parties agree that they will, and agree to cause their
respective employees and independent accountants to, cooperate
and assist in the conduct of audits and reviews necessary to
implement the actions referred to in this Section 3.1,
including without limitation making available to the extent
necessary at reasonable times and upon reasonable notice, of
books, records and personnel for verification.
4. CONSIDERATION.
4.1 Purchase Price. KV shall pay AHPC a nonrefundable purchase
price and licensing fee, in the aggregate, of Thirty-Six
Million Dollars ($36,000,000.00). This payment excludes
payment for samples and inventory of Current Products, as
described as Section 6.4.2 herein.
4.2 Purchases of Inventories and Samples. KV shall pay AHPC for
its purchase of samples and Inventory of Current Products in
accordance with the provisions of Section 6.4.2.
5. DISCLOSURE OF KNOW-HOW; ASSUMPTION OF OBLIGATIONS
5.1 Disclosure of Know-How. Within thirty (30) days after the
Closing Date, to the extent not already accomplished, AHPC
shall promptly disclose to KV that Know-How and other
manufacturing, processing, marketing and sales information
then in its possession which is necessary to enable KV to make
Products from the Components, and to market and sell the
Products. All Know-How and other information disclosed to KV
under this Section 5.1 shall be disclosed in writing.
5.2 Customer Contracts. A complete and accurate list of each
Customer Contract pursuant to which AHPC or its Affiliates is,
immediately prior to the date of this Agreement, selling any
of the Current Products, either with or without other products
of AHPC and its Affiliates, to Third Party buyers is attached
hereto as Exhibit C. AHPC has provided to KV a complete and
accurate copy of each such Customer Contract, except that such
copies may have information redacted to the extent that they
include information relating to the sale of products other
than the Products by AHPC. At the Closing, AHPC will assign
and transfer to KV, and KV will assume and accept from AHPC,
the Customer Contracts, and thereafter AHPC and KV shall use
their mutual reasonable commercial efforts to obtain the
release of AHPC and/or its Affiliate(s) from any further
obligation under each of the Customer Contracts, except that
AHPC will continue to comply with the Customer Contracts in
respect to its obligations thereunder relating to products
other than the Products. The Parties understand and agree
that, because the right to sell the Products is being
transferred to KV pursuant to this Agreement, as of the
Closing Date AHPC will no longer have the right to sell the
Products under the Customer Contracts, provided, however, that
KV covenants and agrees that it will continue to honor all of
AHPC's and its Affiliates' commitments made in each such
Customer Contract with respect to supplying the Current
Product, including, without limitation, the sale prices, for
the Current Products throughout the term of each such Customer
Contract. If and to the extent that AHPC and KV are unable to
obtain a release from a Third Party of AHPC's obligations to
supply the Current Products under any such Customer Contract,
then upon the request of KV, AHPC shall use its Commercially
Reasonable Efforts to take actions that are permitted under
the terms of such Customer Contract to minimize the commitment
for Products thereunder, including, without limitation,
adjusting Current Product prices upward and reducing the term
of such Customer Contract solely with respect to the Current
Products, provided, however, that AHPC shall not be required
to either (i) adjust prices or terms relating to products
other than Products or (ii) make any payments to such Third
Party in consideration for making such price adjustments or
modifications to the Customer Contract. AHPC agrees that it
will not take any action with respect to any Customer Contract
which will extend the term of such Customer Contract for any
Current Product or otherwise adversely affect KV with respect
to any Current Product, without the prior written consent of
KV.
5.3 Chargebacks. As of the Closing Date and thereafter, KV will be
responsible for all customer chargebacks for the Products sold
in the United States, provided, however, that, for a period of
three months with respect to such Product sales, AHPC will
reimburse KV, in an aggregate amount not to exceed $650,000,
for all qualified customer chargebacks having Activity Dates
prior to or within 45 days after the Closing Date. For
purposes of this Section 5.3, the "Activity Date" is the date
that a wholesaler ships the Product to a customer under terms
of a Customer Contract or pursuant to a purchase order issued
by such customer. To be a "qualified" chargeback, KV must
submit a request for the chargeback to AHPC and provide AHPC
with all related supporting documentation reasonably requested
by AHPC and in the possession or control of KV.
5.4 Rebates. As of the Closing Date and thereafter, KV will be
responsible for all United States Federal and State rebate
programs, and managed care rebate programs, for Products sold
in the United States, including all reporting activities
associated with such programs, provided, however, that for a
period of six months following the Closing Date with respect
to such Product sales, AHPC will reimburse KV for all
qualified Federal and State rebates, managed care rebates, and
retail pharmacy discounts having Report Dates prior to or
within 45 days after the Closing Date. For purposes of this
Section 5.4, the "Report Date" is the date a qualified rebate
invoice is issued under applicable Federal or State rebate
programs, managed care rebate programs, or retail pharmacy
discount programs. The Parties will provide reasonable
assistance, data and information to each other in order to
meet their respective responsibilities for such programs. To
be a "qualified" rebate, KV must submit a request for the
rebate to AHPC and provide AHPC with all related supporting
documentation reasonably requested by AHPC and in the
possession or control of KV.
5.5 Returns. As of the Closing Date and thereafter, KV will be
responsible for all returns of Product sold in the United
States, provided, however, that for the period of six months
following the Closing Date, AHPC will reimburse KV in an
amount not to exceed $75,000 for all qualified returns of such
Products sold by AHPC or its Affiliates prior to the Closing
Date. AHPC's reimbursement obligation shall not extend to
storage or other defects attributable to KV. KV shall not
encourage Product returns or accept unusual amounts of Product
returns outside of the normal course of business without prior
consultation with AHPC. AHPC shall have the right to audit the
Product returns submitted by KV for reimbursement. For
reimbursement, KV must submit a written request for
reimbursement to AHPC and supply AHPC with all related
supporting documentation reasonably requested by AHPC and in
the possession or control of KV.
6. REGULATORY MATTERS.
6.1 Disclosure of Regulatory Approvals. Not later than one week
before the Closing Date, AHPC shall, to the extent applicable,
provide KV with complete copies of AHPC's Regulatory Approvals
for the Products in the Territory and all correspondence or
other documents reasonably related thereto.
6.2 Transfer of Regulatory Approvals.
6.2.1 Assignment. At or immediately after the Closing,
AHPC and KV shall work together to transfer and assign all
Regulatory Approvals it holds for the Products in the
Territory to KV at such times and in such a manner as is
reasonably acceptable to KV.
6.2.2 In the event that KV assigns any Regulatory
Approvals to an Affiliate or Third Party, KV shall remain
liable for the performance of its obligations under this
Agreement, regardless of the assignment of such Regulatory
Approvals.
6.3 Reporting Obligations. Upon the transfer and assignment of
each of the Regulatory Approvals to KV, as provided in Section
6.2.1, and thereafter, KV shall be solely responsible for
making all reports to the appropriate Regulatory Authorities
as are required in connection with such Regulatory Approvals
assigned to KV and for conducting all pharmacovigilence
activities in connection with the Products. After the Closing
Date, AHPC will advise any person making an inquiry or report
in connection with the Products to contact KV. Prior to the
Closing, AHPC shall provide KV with a list of, and a copy of
all written documents, correspondence, reports and other
written information in the possession or control of AHPC
related to, any ADE known to AHPC and its Affiliates on or
prior to the Closing Date. In order for the parties to comply
with their respective responsibilities under this Article 6
and otherwise relating to the reporting of ADE, to the extent
either party receives any information regarding an ADE related
to the use of the Product(s) within the Territory, such party
shall promptly provide the other party with such information
in accordance with the Adverse Event Reporting Procedures (as
may be amended from time to time upon mutual agreement) set
forth in Exhibit I.
6.4 Product Supply.
6.4.1. Except as may be provided under the Product
Supply Agreement and/or the KV Bulk Supply Agreement, as of
the Closing Date and thereafter, KV shall be responsible, at
its own expense, for manufacturing its requirements of
Products and the Components.
6.4.2 Within a period not to exceed three (3) months
following the Closing, KV shall purchase all inventory of
finished, packaged Current Products having not less than
eighteen (18) months' remaining dating in AHPC's inventory as
of the Closing Date. Such purchases of inventory shall be made
by KV through submission of periodic purchase orders with
payment by KV due to AHPC net thirty (30) days at the prices
set forth in Exhibit H.
6.4.3 If at any time or from time to time after the
twenty-fourth (24th) month anniversary of the Closing Date and
after the KV Bulk Supply Agreement becomes effective: (i) KV
has a qualified third party offer to supply a substitutable
potassium chloride for use in the manufacture of the Finished
Dosage Form (as defined in the KV Bulk Supply Agreement) at a
price ten percent (10%) or more below the then current price
under Paragraph 3 of the KV Bulk Supply Agreement, or (ii) KV
provides documentation to establish to AHPC (if done prior to
the fifth anniversary of the Closing Date) and/or to Eurand
(subject, during the third, fourth and fifth 12 month periods
following the Closing Date, to confirmation by AHPC's
independent auditor and, if requested by Eurand during such
period, to confirmation thereof to Eurand by KV's independent
auditor, or, subsequent to the five year anniversary of the
Closing Date, to confirmation by Eurand's independent auditor,
in each case which independent auditor is reasonably
acceptable to KV, it being understood that any of the "Big
Five" audit firms is acceptable to KV) that it has the ability
to manufacture a substitutable potassium chloride for use in
the manufacture of the Finished Dosage Form at a fully
absorbed manufacturing cost which is ten percent (10%) or more
below the then current price under Paragraph 3 of the KV Bulk
Supply Agreement, then KV shall, if KV intends to seek a lower
price therefor from Eurand hereunder, disclose the lower price
or cost to AHPC (if prior to the fifth anniversary of the
Closing Date) and Eurand. If and so long as Eurand and KV
agree on a lower price or cost, but one which exceeds the
lower price or cost available to KV, as provided above, and
Eurand continues to supply KV under the KV Bulk Supply
Agreement at any time or from time to time during the third,
fourth and fifth 12 month periods following the Closing Date,
AHPC agrees to pay KV the difference between KV's available
lower price or cost and the price paid by KV to Eurand under
the KV Bulk Supply Agreement, up to a maximum aggregate amount
per each such 12 month period of $333,333.
7. INTERIM DISTRIBUTION SERVICES.
7.1 Following the Closing, AHPC's Affiliate, Wyeth-Ayerst Canada
Inc., shall provide interim distribution services for the
Products in Canada pursuant to the terms of the Canadian
Agreement.
8. PROMOTION AND MARKETING.
8.1 Diligence. Except as may be provided in the Canadian
Agreement, as of the Closing, KV shall have the sole rights
with respect to the promotion, marketing, sale and
distribution of the Products in the Territory.
8.2 NDC Numbers. KV shall promptly, but in no event later than 30
days after the Closing Date, change the NDC numbers, product
codes and labeling for the Products to reflect KV's ownership
of the Products.
9. REPRESENTATIONS AND WARRANTIES.
9.1 Representations and Warranties of KV. As of the Closing Date,
KV hereby represents, warrants and covenants to AHPC and its
Affiliates as follows:
9.1.1 it is a corporation or entity duly organized and
validly existing under the laws of the state or other
jurisdiction of incorporation or formation and is duly
qualified to transact business in each jurisdiction in which
the failure to so qualify would reasonably be expected to have
a material adverse effect on the business, properties, assets
or condition (financial or otherwise) of KV;
9.1.2 the execution, delivery and performance of this
Agreement by KV has been duly authorized by all requisite
corporate action and does not require any shareholder action
or approval;
9.1.3 it has the power and authority to execute and
deliver this Agreement and to perform its obligations
hereunder and has taken all requisite corporate action to
execute and deliver this Agreement; and
9.1.4 the execution, delivery and performance of this
Agreement and its compliance with the terms and provisions
hereof does not and will not conflict with or result in a
breach of any of the terms and provisions of or constitute a
default, with or without the passage of time and the giving of
notice, under (i) a loan agreement, guaranty, financing
agreement, license, agreement affecting a product or other
agreement or instrument binding or affecting it or its
property; (ii) the provisions of its charter or operative
documents or bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered against
it or by which any of its property is bound.
9.2 Representations and Warranties of AHPC. As of the Closing
Date, AHPC hereby represents and warrants to KV as follows:
9.2.1 it is a corporation or entity duly organized and
validly existing under the laws of the state or other
jurisdiction of incorporation or formation and is duly
qualified to transact business in each jurisdiction in which
the failure to so qualify would reasonably be expected to have
a material adverse effect on the business, properties, assets
or condition (financial or otherwise) of AHPC;
9.2.2 the execution, delivery and performance of this
Agreement by AHPC has been duly authorized by all requisite
corporate action and does not require any shareholder action
or approval;
9.2.3 it has the power and authority to execute and
deliver this Agreement and to perform its obligations
hereunder and has taken all requisite corporate action to
execute and deliver this Agreement; and
9.2.4 the execution, delivery and performance of this
Agreement and its compliance with the terms and provisions
hereof does not and will not conflict with or result in a
breach of any of the terms and provisions of or constitute a
default, with or without the passage of time and the giving of
notice, under (i) a loan agreement, guaranty, financing
agreement, license, agreement affecting a product or other
agreement or instrument binding or affecting it or its
property; (ii) the provisions of its charter or operative
documents or bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered against
it or by which any of its property is bound.
9.2.5 Except as listed in Exhibit G, there are no
pending or, to AHPC's knowledge, threatened product liability,
breach of warranty or other claims, actions, arbitrations,
administrative or other proceedings regarding the Products to
which AHPC or its Affiliates is a party in the Territory.
9.2.6 AHPC has not sold, transferred, sublicensed,
pledged, encumbered or granted any rights or interest to the
Know-How or the Regulatory Approvals or the Products in the
Territory to any Third Party inconsistent with the provisions
of this Agreement, and prior to the Closing AHPC will enter
into no such agreement with any Third Party.
9.2.7 Until and after the Closing, AHPC (i) will not
take any action with respect to the Know-How, the Regulatory
Approvals or the Products which is inconsistent with this
Agreement or its ordinary course of business, as heretofore
conducted, as applied to those assets and (ii) will comply in
all respects with its obligations pertaining to the Products
under the Customer Contracts.
9.2.8 Other than the Customer Contracts, there are no
oral or written agreements, commitments or understandings with
Third Parties pertaining to the manufacture, production,
packaging, labeling, filling, distribution, marketing or sale
of any of the Products.
9.2.9 AHPC has complied with the Regulatory Approvals
and all other applicable laws, rules and regulations in
connection with the sale of the Products.
9.2.10 The Acquired Trademarks, when used in connection
with the sale of the Products in the United States or Canada,
and, to the knowledge of AHPC, the Licensed Trademarks
constitute the only trademarks under which the Products are
or, in the case of the Acquired Trademarks, have been sold by
AHPC. The Acquired Trademarks and the Licensed Trademarks do
not, within the United States and Canada or, to the knowledge
of AHPC, outside the United States, infringe upon the
intellectual property rights of any other person and AHPC has
the right to sell or license the same to KV, as applicable, as
provided hereunder. AHPC is not aware of any infringement or
threatened infringement of the Acquired Trademarks or the
Licensed Trademarks by any Third Party in the United States or
Canada.
9.2.11 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, AHPC MAKES NO OTHER REPRESENTATIONS OR WARRANTIES,
EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO THE DISCONTINUED PRODUCTS, THE
CURRENT PRODUCTS, THE ACQUIRED TRADEMARKS, THE PATENTS, THE
LICENSED TRADEMARKS OR KV'S USE THEREOF. FOR THE AVOIDANCE OF
DOUBT, AHPC MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER
WITH RESPECT TO THE DISCONTINUED PRODUCTS.
9.3 Survival Of Representations and Warranties. The respective
representations and warranties of the Parties hereto shall
survive the Closing and shall remain in full force and effect
until the third anniversary of the Closing Date.
9.4 Representation by Legal Counsel. Each Party hereto represents
that it has been represented by legal counsel in connection
with this Agreement and acknowledges that it has participated
in the drafting hereof. In interpreting and applying the terms
and provisions of this Agreement, the Parties agree that no
presumption shall exist or be implied against the Party which
drafted such terms and provisions.
10. TERM AND TERMINATION.
10.1 Term. This Agreement shall be effective as provided in Section
2.1.1 and may only be terminated by written agreement of the
Parties or pursuant to this Article 10.
10.2 Termination. After 90 days following the date of this
Agreement, any Party may terminate this Agreement upon written
notice to the other Parties if (i) the Closing has not
occurred through no fault of the terminating party and (ii)
approval of the transactions contemplated by this Agreement
under the HSR Act has not been obtained or the notice and
waiting period under the HSR Act has not expired without
adverse action regarding this Agreement or the transactions
contemplated hereby. If this Agreement is terminated pursuant
to this Section 10.2, KV shall have no further obligation to
AHPC with respect to the subject matter of this Agreement, and
AHPC shall have no further obligation to KV, except in each
case for the obligations set forth in Article 13 hereof, which
obligations shall survive any termination of this Agreement.
11. NON-COMPETITION.
11.1 Except as provided in the AHPC Bulk Supply Agreement and the
KV Bulk Supply Agreement, AHPC and its Affiliates shall not
market or sell an 8 mEq. or 10 mEq. potassium chloride
product, directly or indirectly (a "Competing Product"),
within the United States and Canada for a period of five (5)
years subsequent to the Closing Date.
11.2 Notwithstanding the existence of Section 11.1, AHPC or an
Affiliate may market and/or sell a Competing Product acquired
as a result of the acquisition of or merger with a Third Party
after the Closing Date, provided that the net sales of
Competing Products do not comprise more than ten percent (10%)
of the total net sales of the Third Party.
12. INDEMNIFICATION.
12.1 Notice and Assistance. Each Party shall promptly notify the
other, in writing, if it learns of any litigation, claim, or
administrative or criminal proceedings (collectively
"Actions"), related to the Product, the Acquired Trademarks
and Patent, the Licensed Trademarks or any Regulatory
Approval, asserted or threatened against such Party (the
"Defending Party"). With respect to any Actions relating to
the Product, the Acquired Trademarks and Patent, the Licensed
Trademarks or any Regulatory Approval asserted against a
Defending Party, the other Party shall, at no out-of-pocket
expense to it except as otherwise provided in this Article 12,
reasonably cooperate with and provide such reasonable
assistance to such Defending Party as such Defending Party may
reasonably request in connection with its defense against such
Actions. Such reasonable assistance shall include, without
limitation, providing copies of all relevant correspondence
and other materials that the Defending Party may reasonably
request, provided, however, that any Confidential Information
so provided shall be treated in accordance with the provisions
of Article 13 hereof.
12.2 Indemnification by AHPC AHPC shall indemnify, defend and hold
harmless KV and its Affiliates and each of their respective
employees, officers, directors and agents (each, a "KV
Indemnified Party") from and against any and all liability,
loss, damage, cost and expense (including reasonable
attorneys' fees) (collectively, a "Liability") which the KV
Indemnified Party may incur, suffer or be required to pay
resulting from or arising in connection with: (a) the breach
by AHPC of any obligation, covenant, representation or
warranty contained in this Agreement; or (b) the sale of the
Products or ownership or use of the Products, the Know-How or
any Acquired Trademark or Patent or Licensed Trademark by AHPC
prior to the Closing. Notwithstanding the foregoing, AHPC
shall have no obligation under this Agreement to indemnify,
defend or hold harmless any KV Indemnified Party with respect
to claims, demands, costs or judgments which result from
willful misconduct or negligent acts or omissions of KV, its
Affiliates, or any of their respective employees, officers,
directors or agents.
12.3 Indemnification by KV. KV shall indemnify, defend and hold
harmless AHPC and its Affiliates and each of their respective
employees, officers, directors and agents (each, an "AHPC
Indemnified Party") from and against any Liability which the
AHPC Indemnified Party may incur, suffer or be required to pay
resulting from or arising in connection with (i) the breach by
KV of any obligation, covenant, representation or warranty
contained in this Agreement; (ii) the manufacture, promotion,
distribution, testing, use, marketing, sale or other
disposition of Products by KV, its Affiliates, its permitted
sublicensees or their respective subcontractors (except as the
same may be applicable to AHPC or Eurand under the Product
Supply Agreement and under the KV Bulk Supply Agreement,
respectively); or (iii) the use of the Trademark by KV, its
Affiliates, its permitted sublicensees or their respective
subcontractors. Notwithstanding the foregoing, KV shall have
no obligation under this Agreement to indemnify, defend, or
hold harmless any AHPC Indemnified Party with respect to
claims, demands, costs or judgments which result from willful
misconduct or negligent acts or omissions of AHPC, its
Affiliates, or any of their respective employees, officers,
directors or agents.
12.4 Conditions to Indemnification. The obligations of the
indemnifying Party under Sections 12.2 and 12.3 are
conditioned upon the delivery of written notice to the
indemnifying Party of any potential Liability promptly after
the indemnified Party becomes aware of such potential
Liability; however, the failure to give prompt notice thereof
shall be a defense only to the extent the indemnifying party
is actually damaged thereby. The indemnifying Party shall have
the right to assume the defense of any suit or claim related
to the Liability; however, if in the reasonable judgment of
the indemnified Party, such suit or claim involves an issue or
matter which could have a materially adverse effect on the
business operations or assets of the indemnified Party, the
indemnified Party may waive its rights to indemnity under this
Agreement and control the defense or settlement thereof, but
in no event shall any such waiver be construed as a waiver of
any indemnification rights such Party may have at law or in
equity. If the indemnifying Party defends the suit or claim,
the indemnified Party may participate in (but not control) the
defense thereof at its sole cost and expense.
12.5 Settlements. Neither Party may settle a claim or action
related to a Liability without the consent of the other Party,
if such settlement would impose any monetary obligation on the
other Party or require the other Party to submit to an
injunction or otherwise limit the other Party's rights under
this Agreement, which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to
the indemnified Party a release from all liability in respect
of such claim or litigation. Any payment made by a Party to
settle any such claim or action shall be at its own cost and
expense.
12.6 Limitation of Liability. With respect to any claim by one
Party against the other arising out of the performance or
failure of performance of the other Party under this
Agreement, the Parties expressly agree that the liability of
such Party to the other Party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct
damages only and in no event shall a Party be liable for
punitive, exemplary or consequential damages. The limitations
set forth in this Section 12.6 shall not apply with respect to
the obligations of either Party to indemnify the other under
Sections 12.2 or 12.3 hereof in connection with a Liability to
a Third Party.
13. CONFIDENTIALITY.
13.1 Nondisclosure Obligation. Each of the Parties and its
Affiliates shall use only in accordance with this Agreement
and shall not disclose to any Third Party any confidential
information of the other Party (which, in the case of AHPC's
nondisclosure obligation, shall include the Know-How and other
confidential and proprietary information sold by it to KV
hereunder) (the "Information"), without the prior written
consent of the other Party. The foregoing obligations shall
survive through the fifth anniversary of the Closing Date,
except that the nondisclosure obligation of AHPC and its
Affiliates with respect to the Know-How and other confidential
and proprietary information sold or otherwise transferred by
AHPC to KV hereunder shall be continuing. These obligations
shall not apply to Information that:
(i) is known by the receiving Party and not subject to
an obligation of confidentiality at the time of its receipt,
and not through a prior disclosure by the disclosing Party, as
documented by business records;
(ii) is at the time of disclosure or thereafter becomes
published or otherwise part of the public domain without
breach of this Agreement by the receiving Party;
(iii) is subsequently disclosed to the receiving Party
on a non-confidential basis by a Third Party who has the right
to make such disclosure;
(iv) is required by law, regulation, rule, act or order
of any governmental authority or agency to be disclosed by a
Party, provided that notice is promptly delivered to the other
Party in order to provide an opportunity to seek a protective
order or other similar order with respect to such Information
and thereafter the disclosing Party discloses to the
requesting entity only the minimum Information required to be
disclosed in order to comply with the request, whether or not
a protective order or other similar order is obtained by the
other Party.
13.2 Permitted Disclosures. Information may be disclosed to
employees, agents, consultants, potential sublicensees,
sublicensees, partners, vendors or suppliers of the recipient
Party or its Affiliates, but only to the extent required to
accomplish the purposes of this Agreement or for KV to fully
exploit and protect the Products and only if the recipient
Party obtains prior agreement from its employees, agents,
consultants, sublicensees or suppliers to whom disclosure is
to be made to hold in confidence and not make use of such
Information for any purpose other than those permitted by this
Agreement and subject to the provisions of Section 13.1. Each
Party will use at least the same standard of care as it uses
to protect proprietary or confidential information of its own
to ensure that such employees, agents, consultants,
sublicensees or suppliers do not disclose or make any
unauthorized use of the Information Notwithstanding any other
provision of this Article 13, subsequent to the Closing, KV
shall have no obligation to AHPC or its Affiliates with
respect to the use of or any disclosures made by it in
connection with the Products or the Know-How and other
Information.
13.3 Disclosure of Agreement. No Party shall release to any Third
Party or publish in any way any non-public information with
respect to the terms of this Agreement or concerning their
cooperation without the prior written consent of the other
Parties, which consent will not be unreasonably withheld or
delayed, provided, however, that a Party may disclose the
terms of this Agreement to the extent required to comply with
applicable laws, including without limitation the rules and
regulations promulgated by the United States Securities and
Exchange Commission and the Party intending to disclose the
terms of this Agreement shall provide the nondisclosing
Parties an opportunity to review and comment on the intended
disclosure which is reasonable under the circumstances.
Notwithstanding any other provision of this Agreement, each
Party may disclose the terms of this Agreement to lenders,
investment bankers and other financial institutions of its
choice solely for purposes of financing the business
operations of such Party either (i) upon the written consent
of the other Party or (ii) if the disclosing Party uses
reasonable efforts to obtain a signed confidentiality
agreement with such financial institution with respect to such
information on terms substantially similar to those contained
in this Article 13.
13.4 Press Releases. On or after the date of this Agreement, KV may
issue a press release announcing the transactions agreed to
hereunder, if it determines that it is legally required to do
so. Such press release shall be subject to the prior review
and written approval of AHPC, which written approval would be
subject to any legally required timing of the release and in
any event would not be unreasonably withheld. AHPC may issue a
press release following such a release by KV, subject to the
prior review and written approval of KV, which approval shall
not be unreasonably withheld.
14. RIGHT OF FIRST REFUSAL.
14.1 If, during the two (2) year period following the Closing Date,
AHPC decides at any time to seek or enter into any agreement
with a Third Party to purchase, license, co-develop, or market
the New Product (as hereinafter defined), AHPC shall notify KV
in writing. Promptly upon KV's receipt of such notice, the
parties shall enter into good faith negotiations to conclude
such agreement; provided, however, that if another 20 mEq.
generic product is being or will be marketed in the United
States prior to the marketing of the New Product, the price at
which the New Product will be sold to KV by AHPC will not be
greater than $10 million. Should the parties not complete an
agreement with respect to the New Product within sixty (60)
days after KV's receipt of such notice, then AHPC shall be
free to enter into an agreement with respect to the New
Product with any Third Party (provided such Third Party
agreement is entered into by AHPC and the Third Party within
the six (6) month period after the expiration of such sixty
(60) day period) on terms, taken as a whole, no less favorable
than the terms of KV's last written offer to AHPC.
14.2 For the purposes of this Article 14, "New Product" shall mean
a potassium chloride drug product having a dosage of 20
milliequivalents which has been developed by or for AHPC or
its Affiliates, but shall not include the 20 milliequivalent
product covered by ANDA # 74-812 (the "ESI Product"). Under no
circumstances shall AHPC manufacture, sell, distribute or
license more than one New Product other than the ESI Product
prior to the fifth anniversary of the Closing Date.
15. MISCELLANEOUS.
15.1 Force Majeure. No Party shall be liable to the other Party for
delay or failure in the performance of the obligations on its
part contained in this Agreement if and to the extent that
such failure or delay is due to circumstances beyond its
control which it could not have avoided by the exercise of
reasonable diligence. The affected Party shall notify the
other Party promptly should such circumstances arise, giving
an indication of the likely extent and duration thereof, and
shall use all Commercially Reasonable Efforts to resume
performance of its obligations as soon as practicable.
15.2 Assignment.
15.2.1 Assignment to Affiliates. A Party may assign any
of its rights or obligations under this Agreement to any of
its Affiliates, for so long as they remain Affiliates;
provided, however, that such assignment shall not relieve the
assigning Party of its responsibilities for performance of its
obligations under this Agreement.
15.2.2 Binding Nature of Assignment. This Agreement
shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties.
15.3 No Waiver. The failure of any Party to require performance by
the other Party of any of the other Party's obligations
hereunder shall in no manner affect the right of such Party to
enforce the same at a later time. No waiver by any Party
hereto of any condition, or of the breach of any provision,
term, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach, or of any other
condition or of the breach of any other provision, term,
representation or warranty hereof.
15.4 Severability. If a court or other tribunal of competent
jurisdiction should hold any term or provision of this
Agreement to be excessive, or invalid, void or unenforceable,
the offending term or provision shall be deleted or revised to
the extent necessary to be enforceable, and, if possible,
replaced by a term or provision which, so far as practicable
achieves the legitimate aims of the Parties.
15.5 Relationship between the Parties. KV and AHPC are independent
contractors under this Agreement. Nothing herein contained
shall be deemed to create an employment, agency, joint venture
or partnership relationship between the Parties hereto or any
of their agents or employees, or any other legal arrangement
that would impose liability upon one Party for the act or
failure to act of the other Party. No Party shall have on
accord of this Agreement any express or implied power to enter
into any contracts or commitments or to incur any liabilities
in the name of, or on behalf of, the other Party, or to bind
the other Party in any respect whatsoever.
15.6 Correspondence and Notices.
15.6.1 Ordinary Notices. Correspondence, reports,
documentation, and any other communication in writing between
the Parties in the course of ordinary implementation of this
Agreement shall be delivered by hand, sent by facsimile, or by
mail to the employee or representative of the other Party who
is designated by such other Party to receive such written
communication.
15.6.2 Extraordinary Notices. Extraordinary notices and
communications (including, without limitation, notices of
termination, force majeure, material breach, change of
address) shall be in writing and sent by prepaid registered,
certified or Express mail or next business day courier, or by
facsimile confirmed by prepaid registered, certified or
Express mail or next business day courier, and shall be deemed
to have been properly served to the addressee upon receipt of
such written communication.
15.6.3 Addresses. In the case of KV, the proper address
for communications and for all payments shall be:
KV Pharmaceutical Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
and in the case of AHPC, the proper address for communications
and for all payments shall be:
Wyeth-Ayerst Laboratories
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Global Business Development
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
American Home Products Corporation
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15.7 Choice of Law. This Agreement is deemed to be made, and the
Parties further agree, recognize and affirm that this
Agreement is made, in the State of New Jersey. All incidents
of this Agreement shall be governed, construed and enforced in
accordance with the laws of the State of New Jersey.
15.8 Entire Agreement; Amendment. This Agreement, together with the
Canadian Agreement, the AHPC Bulk Supply Agreement, the KV
Bulk Supply Agreement, the Product Supply Agreement and the
Trademark License Agreement (hereinafter the "Transaction
Agreements") and all the covenants, promises, agreements,
warranties, representations, conditions and understandings
contained herein and therein sets forth the complete, final
and exclusive agreement between the Parties and supersedes and
terminates all prior and contemporaneous agreements and
understandings between the Parties, whether oral or in writing
except as set forth herein. There are no covenants, promises,
agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties
other than as are set forth in the Transaction Agreements. No
subsequent alteration, amendment, change, waiver or addition
to this Agreement shall be binding upon the Parties unless
reduced to writing and signed by an authorized officer of each
Party. No understanding, agreement, representation or promise,
not explicitly set forth herein, has been relied on by any
Party in deciding to execute this Agreement.
15.9 Headings. The headings and captions used in this Agreement are
solely for the convenience of reference and shall not affect
its interpretation.
15.10 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be an original and all of
which shall constitute together the same document.
15.11 Further Actions. Each Party agrees, subject to its rights
under the Transaction Agreements, to promptly execute,
acknowledge and deliver such further instruments, and to do
all other acts, as may be necessary or appropriate in order to
carry out the purposes and intent of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized representatives of the Parties as of the date set forth below.
AMERICAN HOME PRODUCTS CORPORATION, KV PHARMACEUTICAL COMPANY
acting through its
WYETH-AYERST LABORATORIES division
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- --------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President Title: Secretary
List of Exhibits Omitted Pursuant to Item 601(b)(2) of Regulation S-K
All capitalized terms not defined herein have the meaning ascribed to such terms
in the Asset Purchase Agreement to which this list is attached.
Exhibit A: The Acquired Trademarks and Patents and the Licensed Trademarks.
Exhibit B: Purchase of certain compounds in bulk.
Exhibit C: Listing of the Current Products and Discontinued Products.
Exhibit D: Listing of the Customer Contracts.
Exhibit E: Terms under which KV can use certain trademarks.
Exhibit F: Terms under which KV can purchase Product inventories.
Exhibit G: Contains a representation to the effect that no liabilities
or other claims or actions exist or are pending regarding the
Products.
Exhibit H: Information relating to Current Products.
Exhibit I: Sets forth certain Adverse Drug Experience reporting procedures.
