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EXHIBIT 10.16
CONFIDENTIAL
================================================================================
AGREEMENT
FOR
PURCHASE AND SALE
OF ASSETS
BY AND BETWEEN
GLAXO WELLCOME INC.
AND
MONARCH PHARMACEUTICALS, INC.
================================================================================
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TABLE OF CONTENTS
ARTICLE 1 CONVEYANCE OF ASSETS; OTHER AGREEMENTS...........................2
1.01 Assets to be Conveyed ...............................................2
1.02 Purchase Price.......................................................3
1.03 Payment..............................................................3
1.04 Existing Inventory of Products.......................................3
1.05 Closing .............................................................4
1.06 Delivery of Documents ...............................................4
1.07 Conveyance of Assets and Inventory ..................................5
1.08 Scope of Monarch's Rights ...........................................5
1.09 Supply Agreement ....................................................7
1.10 Taxes ...............................................................7
1.11 Xxxx-Xxxxx-Xxxxxx ...................................................7
ARTICLE 2 ACCOUNTS RECEIVABLE AND RETURNED GOODS ..........................7
2.01 Pre Closing Accounts Receivable .....................................7
2.02 Post-Closing Accounts Receivable ....................................7
2.03 Returned Goods ......................................................8
2.04 Excess Returned Goods ...............................................8
ARTICLE 3 REGULATORY MATTERS .............................................10
3.01 Filings with FDA Regarding Transfer of NDAs and INDs ...............10
3.02 Responsibility for the Products ....................................10
3.03 Rebates for Amounts Paid under Government Programs .................12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES .................................12
4.01 Representations and Warranties of GW ...............................12
4.02 Representations and Warranties of Monarch ..........................16
4.03 Survival of Representations and Warranties .........................18
4.04 Certain Limitations ................................................19
ARTICLE 5 INDEMNIFICATION ................................................19
5.01 Indemnification by GW ..............................................19
5.02 Indemnification by Monarch .........................................20
5.03 Payments ...........................................................20
5.04 Conduct of Litigation ..............................................20
ARTICLE 6 MISCELLANEOUS ..................................................22
6.01 Entire Agreement ...................................................22
6.02 Counterparts .......................................................22
6.03 Brokerage and Other Commissions ....................................22
6.04 Notices ............................................................23
6.05 Assignment .........................................................24
6.06 Governing Law ......................................................24
6.07 Headings ...........................................................25
6.08 Expenses............................................................25
6.09 Successors and Assigns..............................................25
6.10 Agreement to Take Necessary and Desirable Actions...................25
6.11 No Implied Waiver ..................................................25
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6.12 Force Majeure ......................................................26
6.13 Confidentiality ....................................................26
6.14 Relationship .......................................................26
6.15 Severability .......................................................26
6.16 Press Release ......................................................27
6.17 Affiliates .........................................................27
6.18 Waiver of Bulk Sales ...............................................27
6.19 Exhibits and Schedules .............................................27
6.20 Guaranty ...........................................................28
SCHEDULES
Schedule 1 List of Products
Schedule 1.01(a) Trademarks
Schedule 1.01(b) Description of Know-How
Schedule 1.01(c) Regulatory Approvals and Filings
Schedule 1.03 Wiring Instructions to Glaxo Wellcome Inc.
Schedule 1.04 Inventory
Schedule 1.07 Liens, Claims, Charges, Encumbrances and Restrictions on the
Assets and the Inventory
Schedule 4.01(f) Litigation
Schedule 4.01(k) Form 483s, Warning Letters, Etc.
EXHIBITS
Exhibit A - Xxxx of Sale
Exhibit B - Assignment of Trademarks
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AGREEMENT
THIS AGREEMENT, is dated and entered into as of March 21, 1997 (this
"Agreement"), between GLAXO WELLCOME INC., a corporation organized and existing
under the laws of the State of North Carolina, having a principal place of
business at Five Xxxxx Drive, Research Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
("GW") and MONARCH PHARMACEUTICALS, INC., a corporation organized and existing
under the laws of the State of Tennessee, having a principal place of business
at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 ("Monarch").
WITNESSETH:
WHEREAS, GW desires to sell to Monarch, and Monarch desires to purchase
from GW, certain assets relating to GW's pharmaceutical products marketed under
the Cortisporin(R) and Pediotic(R) trademarks listed on Schedule 1 attached
hereto (collectively, the "Products"), on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby mutually acknowledged, GW and Monarch
hereby covenant, contract, and agree as follows:
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ARTICLE 1
CONVEYANCE OF ASSETS; OTHER AGREEMENTS
1.01 ASSETS TO BE CONVEYED.
On the Closing Date (as defined below), and subject to the terms and
conditions of this Agreement, GW will sell, assign, convey, transfer, and
deliver to Monarch, and Monarch will purchase and accept from GW, the following:
(A) All of GW's right, title, and interest in the United States of
America, its territories and possessions (the "Territory") in and to the
trademarks set forth on Schedule 1.01(a) attached hereto (collectively, the
"Trademarks"), together with the goodwill of the business symbolized by the
Trademarks in the Territory;
(B) All of GW's right, title, and interest in the Territory in and to
the know-how relating to the production, manufacturing, packaging, release,
validation, and stability of the Products as described or referenced in the
documents and other materials set forth on Schedule 1.01(b) attached hereto (the
"Know-How");
(C) All of GW's right, title, and interest in and to the new drug
applications (and other regulatory applications) for the Products set forth on
Schedule 1.01(c) attached hereto (collectively, the "NDAs"), including
supplements, records, and reports that are required to be kept under 21 C.F.R.
Section 314.81 (or under any comparable regulation applicable to an abbreviated
antibiotic drug application), whether issued, pending, or in draft form,
together with correspondence to or from the United States Food and Drug
Administration (the "FDA") which relates to the Products; and
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(D) The tradedress, if any, associated with the Products, excluding
any corporate or division name of GW or any of its Affiliates, any logo of GW or
its Affiliates, and any trademark (other than the Trademarks) of GW or any of
its Affiliates (the "Tradedress").
All of the assets described in Sections 1.01(a) - (d) are hereinafter
sometimes referred to collectively as the "Assets."
1.02 PURCHASE PRICE. The purchase price for the Assets (the
"Purchase Price") shall be twenty-two Million Eight Hundred Thousand Dollars
($22,800,000).
1.03 PAYMENT.
The Purchase Price shall be paid as follows: (a) Monarch heretofore has
paid to GW the sum of One Million Dollars ($1,000,000) and GW acknowledges the
receipt of same; and (B) at the Closing (as defined below) Monarch shall pay to
GW the sum of Twenty-One Million Eight Hundred Thousand Dollars ($21,800,000) by
wire transfer of immediately available funds to the account specified in
Schedule 1.03 attached hereto.
1.04 EXISTING INVENTORY OF PRODUCTS.
On the Closing Date, GW will sell, assign, convey, and transfer to
Monarch, and Monarch will purchase and accept from GW, all of GW's finished
goods inventory of the Products as set forth on Schedule 1.04 attached hereto
(the "Inventory"). The purchase price for the Inventory shall be Seven Hundred
Eighty-Seven Thousand, One Hundred Fourteen Dollars ($787,114.00), and shall be
paid by Monarch to GW one hundred twenty (120) days after the Closing by wire
transfer of immediately available funds to the account specified in Schedule
1.03. GW will begin shipping the Inventory on the Closing Date and will complete
shipping of the Inventory within ten (10) days after the Closing Date. All
Inventory will be shipped at Monarch's expense to Monarch's facilities in
Bristol, Tennessee or such other
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locations as the parties may mutually agree via a carrier designated by Monarch.
GW shall bear the risk of loss to the Inventory until the Inventory has been
delivered to the carrier designated by Monarch, thereafter Monarch shall bear
the risk of loss to the Inventory. GW will provide to Monarch (i) upon shipment
of the Inventory, GW's standard certificate of analysis for each batch of
Product and (ii) within ten (10) days of the initial shipment of each Product, a
complete copy of one representative batch record for such Product.
1.05 CLOSING.
The closing of the transactions provided for in this Agreement (the
"Closing") shall take place at 1:00 p.m. local time on March 21, 1997, or on
such other date as GW and Monarch may agree in writing (the "Closing Date"), at
the offices of GW located at Five Xxxxx Drive, Research Triangle Park, North
Carolina.
1.06 DELIVERY OF DOCUMENTS.
Subject to the terms and conditions of this Agreement, GW will deliver
to Monarch at the Closing (unless otherwise specified):
(a) An irrevocable xxxx of sale in the form of Exhibit A hereto (the
"Xxxx of Sale");
(b) An assignment in the form of Exhibit B hereto regarding the
Trademarks (the "Assignment of Trademarks");
(c) Copies of the materials comprising the Know-How described on
Schedule 1.01(b), all in accordance with a time frame and in a manner reasonably
acceptable to the parties, but in no event later than thirty (30) days after the
Closing Date; and
(d) A complete copy of the NDAs, INDs and other materials described
in Section 1.01(c) all in accordance with a time frame and in a manner
reasonably acceptable to the parties, but in no event later than thirty (30)
days after the Closing Date.
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1.07 CONVEYANCE OF ASSETS AND INVENTORY.
The Assets and the Inventory shall be transferred and conveyed to
Monarch free and clear of all liens, claims, charges, encumbrances, or
restrictions except as specifically described on Schedule 1.07 attached hereto.
1.08 SCOPE OF MONARCH'S RIGHTS.
(a) Monarch hereby acknowledges and agrees that: (i) GW manufactures,
sells, and distributes one or more pharmaceutical products outside of the
Territory that are equivalent or substantially equivalent to the Products and
that GW will continue to do so after the Closing Date; (ii) neither Monarch nor
its Affiliates shall interfere with, or have the right to prohibit, the
development, manufacture, sale, or distribution of the Products outside the
Territory; (iii) Monarch will acquire no right, title, or interest whatsoever in
any property or assets of GW or any of GW's Affiliates except as expressly set
forth in this Agreement, including no right, title, or interest to any property
or assets outside the Territory; (iv) neither Monarch nor its Affiliates shall
use or disclose the Know-How outside of the Territory; and (v) neither Monarch
nor its Affiliates shall manufacture, market, distribute, or sell any of the
Products outside of the Territory or knowingly cause the Products to be
manufactured, marketed, distributed, or sold outside the Territory.
(b) Monarch acknowledges and agrees that GW and its Affiliates shall
be entitled to use the Trademarks and the Know-How after Closing only to the
extent necessary to fulfill GW's obligations hereunder, under the Supply
Agreement (as defined below), or under applicable laws or regulations.
(c) GW shall not, and shall not permit any of its Affiliates to, for a
period of five (5) years from the Closing Date, except as provided in the Supply
Agreement, sell, produce,
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manufacture, market, or distribute in the Territory any products which contain
hydrocortisone as an active ingredient in combination with neomycin and/or
bacitracin and/or polymyxin (or a base, an ester, or a salt of any of the
foregoing) whether in an otic, topical, or opthalmic dosage form ("Identical
Products"); and neither GW nor its Affiliates shall knowingly cause the Products
to be manufactured, marketed, distributed, or sold inside the Territory;
provided, however, that this Section 1.08(c) shall not apply to any products
produced, sold, manufactured, marketed, or distributed by any business (or any
portion thereof), person, or group of persons, which is acquired by, or which
acquires, or which forms a merger with GW or any of its Affiliates (whether
through the formation of a new holding company or otherwise), in a single
transaction or a series of related transactions. GW agrees that neither GW nor
its Affiliates shall use or disclose the Know-How inside the Territory.
(d) Nothing in this Section 1.08 shall prohibit (i) the sale of any
manufacturing facility owned by GW or any of its Affiliates or the provision by
GW or any of its Affiliates of assistance to the purchaser of any such facility
that is of a type that is customarily provided by sellers of manufacturing
facilities to purchasers of such facilities and that relates solely to
manufacturing; or (ii) the manufacture by GW or any of its Affiliates of any
Identical Products in the Territory for sale or distribution outside the
Territory.
(e) The parties acknowledge that the Inventory purchased under this
Agreement and the Products to be supplied under the Supply Agreement will
contain packaging and labeling with the names, logos, and trademarks of GW and
its Affiliates. Monarch may distribute such Inventory and Products with such
packaging and labeling; however, Monarch shall not, and shall have no right to,
use such names, logos, or trademarks for any other purpose and Monarch shall
acquire no right, title, or interest in or to such names, logos, and trademarks.
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1.09 SUPPLY AGREEMENT.
Contemporaneously with the execution of this Agreement, GW and Monarch
are entering into a supply agreement (the "Supply Agreement") under which GW
agrees to supply, and Monarch agrees to purchase, certain of the Products on the
terms and conditions more specifically described therein, and which provides for
certain other matters.
1.10 TAXES.
Monarch shall be responsible for and shall promptly pay all federal,
state, and local transfer, sales, and other taxes, if any, levied or imposed as
a result of the transactions contemplated by this Agreement, excluding any tax
payable on any income or gain of GW.
1.11 XXXX-XXXXX-XXXXXX.
The parties have made the requisite filings pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and all
applicable waiting periods thereunder have expired or terminated.
ARTICLE 2
ACCOUNTS RECEIVABLE AND RETURNED GOODS
2.01 PRE-CLOSING ACCOUNTS RECEIVABLE.
GW and Monarch agree that any accounts receivable or invoices arising
out of sales of the Products by or on behalf of GW on or prior to 11:59 p.m.
(E.S.T.) on the Closing Date shall inure to the benefit of GW.
2.02 POST-CLOSING ACCOUNTS RECEIVABLE.
Monarch and GW agree that any accounts receivable or invoices arising
out of sales of the Products by or on behalf of Monarch after 11:59 p.m.
(E.S.T.) on the Closing Date shall inure to the benefit of Monarch.
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2.03 RETURNED GOODS.
Except as otherwise expressly set forth below and subject to Monarch's
timely compliance with its obligations set forth in this Section 2.03 and
Section 2.04, GW and Monarch agree that during the one (1) year period
immediately following the Closing Date, GW shall be responsible for handling
returns of all Products that were sold by GW prior to the Closing Date and that
are returned by customers for credit after the Closing Date. GW shall handle
such returns during such period in accordance with its then applicable returned
goods policy. Monarch agrees to provide GW with any information reasonably
requested by GW from time to time regarding Monarch's selling prices for the
Products in order to assist GW in its determination of the reimbursement prices
for returned Products. Such information shall be provided by Monarch to GW
promptly, and in any event within ten (10) days, after GW's written request
therefor. In the event that during such one year period any returns are
delivered to Monarch, such returns shall be shipped by Monarch to GW and GW
shall reimburse Monarch for the shipping costs incurred.
2.04 EXCESS RETURNED GOODS.
(a) Notwithstanding Section 2.03, or any other provisions of this
Agreement, to the extent the aggregate amount of all credits for returned
Products granted by GW from and after the Closing Date exceeds One Million Five
Hundred Thousand Dollars ($1,500,000) (the "Excess Aggregate Amount"), Monarch
agrees to reimburse GW for the Excess Aggregate Amount promptly, and in any
event within thirty (30) days, after written demand therefor by GW; provided,
however, that any credits granted by GW for any Products as a result of any
product withdrawal or recall by GW (other than a withdrawal or recall resulting
from acts or omissions of Monarch, its Affiliates, or their respective
employees, agents, or distributors) shall not be included for purposes of
determining whether credits for returned goods granted by GW in respect of the
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Products exceed the Excess Aggregate Amount. GW shall submit to Monarch any
request for an Excess Aggregate Amount within one hundred twenty (120) days
following the end of the one (1) year period described in Section 2.03.
(b) From time to time during the one (1) year period described in
Section 2.03, but no more than once every ninety (90) calendar days from the
Closing Date, GW, upon Monarch's written request, shall provide Monarch with
information related to aggregate amounts of credits extended for returned
Products and the methodology of calculating the same. In the event GW claims
that an Excess Aggregate Amount is owed to it, then Monarch shall have ten (10)
days within which to request in writing an audit (either by Monarch or its duly
authorized agents) of GW's records relative to the claimed Excess Aggregate
Amount. Further, if Monarch requests such an audit in accordance with this
Section, then GW shall permit Monarch or its duly authorized agents to audit all
necessary and reasonable information related to the actual goods returned and
GW's valuation of such goods in order to confirm the accuracy of the claimed
Excess Aggregate Amount. All persons or entities conducting or involved in such
audit shall execute a written agreement to maintain in confidence all
information obtained during the course of any such audit except for disclosure
to Monarch. Each such audit shall be conducted during GW's normal business
hours. In no event shall such audit exceed three (3) business days in duration,
and in all cases Monarch shall use its reasonable efforts to ensure that such
audits are conducted so as not to interfere with the normal and ordinary
operation of GW's business. Monarch shall be responsible for all of its and its
agents' costs and expenses incurred in connection with such audit. In the event
of an audit regarding an Excess Aggregate Amount pursuant to this Section
2.04(b), the date on which the payment of such Excess Aggregate
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Amount is due pursuant to Section 2.04(a) shall be postponed until such audit is
completed or is required to be completed pursuant to this Section 2.04(b).
ARTICLE 3
REGULATORY MATTERS
3.01 FILINGS WITH FDA REGARDING TRANSFER OF NDAs AND INDs.
At the Closing, the parties shall file with the FDA the information
required pursuant to 21 C.F.R. Section 314.72, or any successor regulation
thereto, regarding the transfer of the NDAs from GW to Monarch. GW shall file
the information required of a former owner, and Monarch shall file the
information required of a new owner. Contemporaneously with such filings, GW
also shall file with the FDA any required information regarding the transfer of
the INDs from GW to Monarch. The parties also agree to use their reasonable best
efforts to take any and all other actions required by the FDA, or other
necessary governmental agencies, if any, to effect the transfer of the NDAs and
the INDs from GW to Monarch. GW may retain an archival copy of the NDAs,
including supplements and records that are required to be kept under 21 C.F.R.
Section 314.81, and the INDs, and GW shall treat such archived copies as
Confidential Information (as defined in the Supply Agreement) of Monarch and
disclosure of such information shall be governed by the Supply Agreement.
3.02 RESPONSIBILITY FOR THE PRODUCTS.
(a) After the Closing, Monarch shall assume all regulatory
responsibilities permitted by applicable laws and regulations to be assumed by
Monarch, reporting and otherwise, in connection with the Products, the NDAs, and
the INDs including, but not limited to, responsibility for reporting any adverse
drug experiences in connection with the Products, and
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responsibility for compliance with the Prescription Drug Marketing Act of 1987,
as the same may be amended from time to time.
(b) Monarch and its Affiliates agree promptly to submit to GW all
adverse drug experience information or customer complaints brought to the
attention of Monarch or its Affiliates in respect of the Products, as well as
any material events and matters concerning or affecting the safety or efficacy
of the Products. GW and its Affiliates agree promptly to submit to Monarch all
adverse drug experience information or customer complaints brought to the
attention of GW or its Affiliates in respect of the Products, as well as any
material events and matters concerning or affecting the safety or efficacy of
the Products. Monarch and GW agree to determine promptly after Closing a
mutually agreeable reporting procedure to communicate the information required
by this Section 3.02(b).
(c) After the Closing, Monarch shall assume all responsibility for any
and all FDA fee obligations for holders or owners of approved New Drug
Applications and approved, marketed prescription drug products relating to the
Products, including, but not limited to, those defined under the Prescription
Drug User Fee Act of 1992.
(d) Promptly after the Closing, Monarch shall take all actions
necessary or required under applicable laws, rules, and regulations, to reflect
that the Assets are owned by Monarch and that Monarch has responsibility
therefor.
(e) After the Closing, GW shall direct all complaints or inquiries
concerning the Products in the Territory to Monarch to the attention of Medical
Affairs Department, at facsimile number 000-000-0000.
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3.03 REBATES FOR AMOUNTS PAID UNDER GOVERNMENT PROGRAMS.
Monarch shall reimburse GW for all rebates GW is obligated to pay
pursuant to any government rebate program for amounts charged to GW's NDC codes
for the Products with respect to sales of the Products from thirty (30) days
after the Closing Date. All payments due under this Section 3.03 shall be made
promptly to GW upon submission to Monarch of invoices that describe the
requested payments in reasonable detail. Monarch shall obtain new NDC codes for
the Products as soon as practicable after the Closing Date. In the event Monarch
disputes an amount owed under a government rebate program, GW shall provide to
Monarch copies of any documents and records evidencing original rebate claims
and any resubmissions of such claims and data relating to unit rebate
calculations in order to enable Monarch to resolve such disputed amount.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.01 REPRESENTATIONS AND WARRANTIES OF GW.
GW makes the following representations and warranties. The phrase "to
the knowledge of GW" or any substantially equivalent phrase, as used in this
Article 4, shall mean to the actual knowledge of officers and directors of GW
after reasonable inquiry.
(a) ORGANIZATION AND STANDING. GW is a corporation duly organized,
validly existing, and in good standing under the laws of the State of North
Carolina.
(b) POWER AND AUTHORITY. GW has all requisite corporate power and
authority to execute, deliver, and perform this Agreement and the other
agreements and instruments to be executed and delivered by it pursuant hereto
and to consummate the transactions contemplated herein and therein. The
execution, delivery, and performance of this Agreement by GW does not,
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and the consummation of the transactions contemplated hereby will not, violate
any provisions of GW's Articles of Incorporation, Bylaws, any law or regulation
applicable to GW, or any agreement, mortgage, lease, instrument, order,
judgment, or decree to which GW is a party or by which GW is bound or result in
the creation or acceleration of any lien, charge, security interest, or other
encumbrance on the Assets.
(c) CORPORATE ACTION; BINDING EFFECT. GW has duly and properly taken
all action required by law, its Articles of Incorporation, its Bylaws, or
otherwise, to authorize the execution, delivery, and performance of this
Agreement, the Xxxx of Sale, the Supply Agreement, and the Assignment of
Trademarks (collectively, the Xxxx of Sale, the Supply Agreement, and the
Assignment of Trademarks are referred herein to as the "Collateral Agreements"),
and the other instruments to be executed and delivered by it pursuant hereto and
the consummation of transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by GW and constitutes, and the Collateral
Agreements and the other instruments contemplated hereby when duly executed and
delivered by GW will constitute, legal, valid, and binding obligations of GW
enforceable against it in accordance with their respective terms, except as
enforcement may be affected by bankruptcy, insolvency, or other similar laws and
by general principles of equity.
(d) CONSENTS. No consent or approval of, or filing with or notice to,
any federal, state, or local governmental or regulatory authority, agency, or
department or any other person not a party to this Agreement is required or
necessary to be obtained by GW or on its behalf in connection with the
execution, delivery, and performance of this Agreement or to consummate the
transactions contemplated hereby, except as contemplated by Sections 1.11 and
3.01 hereof.
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(e) OWNERSHIP OF ASSETS. GW is the owner of the Assets described in
Sections l.01(a), 1.01(c), and 1.01(d) and, to GW's knowledge, the Assets
described in Section l.01(b), free and clear of all liens, claims, charges, or
encumbrances, except for liens for taxes not yet due and payable.
(f) LITIGATION OR DISPUTES. Except as disclosed in Schedule 4.01(f)
attached hereto, there is no claim, outstanding commitment to any governmental
regulatory agency, action, suit, proceeding, investigation, or arbitration
pending or, to GW's knowledge, threatened against GW relating to the Assets, and
GW is not in violation of or in default with respect to any applicable law,
rule, regulation, judgment, order, writ, injunction, award, or decree of any
arbitrator, court, or administrative body, the result of any of which, either
individually or cumulatively, would have a materially adverse effect on the
Assets in the Territory or GW's compliance with and performance under the terms
of this Agreement or the Collateral Agreements.
(g) TRADEMARKS; INTELLECTUAL PROPERTY. Schedule 1.01(a) is a true and
correct list of all trademarks owned by GW and used by GW in the manufacture,
marketing, and sale of the Products in the Territory. The Trademarks are the
only trademarks used or held by GW for use in connection with or otherwise
necessary for the conduct of GW's business as now conducted for the Products in
the Territory. GW owns no patents necessary for the conduct of GW's business as
now conducted for the Products in the Territory. GW has not received any notice
of any claim that any of the Assets infringe on any property rights of any other
party. There is no claim, action, suit, or proceeding, pending or, to GW's
knowledge, threatened alleging that the use by GW or its Affiliates of the
Trademarks or the Know-How infringes any patents or other intellectual property
rights of third parties. GW has not executed or granted to any Affiliate or any
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third party in the Territory any license, sublicense, or contract covering the
Know-How or the Trademarks, except as set forth on Schedule 1.07 attached
hereto.
(h) COMPLIANCE WITH LAW. GW has, to its knowledge, conducted its
operations in connection with the manufacture and sale of the Products in
material compliance with all applicable federal, state, and local laws and
regulations, including FDA regulations, and possesses all approvals, consents,
licenses, and permits required for the conduct of its business as now conducted
for the Products or as will be necessary to perform its obligations under the
Supply Agreement.
(i) WARRANTY AND DISCLAIMER OF WARRANTIES. GW warrants that the
inventory was manufactured in accordance with the then-applicable
specifications for the Products and in accordance with current good
manufacturing practices in effect at the time of manufacture. GW further
warrants that the Inventory, when delivered to Monarch, will not be (i)
adulterated or misbranded by GW within the meaning of the United States Federal
Food, Drug and Cosmetic Act, as amended (the "FD&C Act") or (ii) an article
that may not be introduced into interstate commerce under the provisions of
Sections 404 or 505 of the FD&C Act. Set forth on Schedule 1.04 attached hereto
is a list accurate in all material respects of the expiration dates of the
Inventory. WITH RESPECT TO THE INVENTORY, GW MAKES NO OTHER WARRANTY, EXPRESS
OR IMPLIED, AND SPECIFICALLY MAKES NO WARRANTY OF MERCHANTABILITY OR WARRANTY
OF FITNESS FOR ANY PARTICULAR PURPOSE.
(j) RECALLS OR WITHDRAWALS. During the period commencing on January
1, 1996, and ending on the date hereof, there have been no: (i) Products which
have been recalled or withdrawn by GW or its Affiliates in the Territory
(whether voluntarily or otherwise) or (ii)
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proceedings in the Territory brought against GW or its Affiliates (whether such
proceedings have since been completed or remain pending) seeking the recall,
withdrawal, or seizure of any of the Products or seeking to enjoin GW or any of
its Affiliates from distributing such Products.
(k) FACILITIES AND MANUFACTURING. Except as set forth in Schedule
4.01(k), and only to the extent it could have a material adverse effect on the
Assets or GW's performance hereunder or under any of the Collateral Agreements,
during the period commencing on January 1, 1996, and ending on the date hereof,
with respect only to the Products, neither GW nor its Affiliates have received
or been subject to: (i) any FDA Form 483's relative to the Products; (ii) any
FDA Notices of Adverse Findings relative to the Products; or (iii) warning
letters or other correspondence from the FDA or any other governmental officials
or agencies concerning the Products in which the FDA or other such governmental
officials or agencies asserted that the operations of GW were not in compliance
with applicable law, regulations, rules, or guidelines.
(l) Since January 1, 1996, GW has conducted its business relating to
the Products in the ordinary course of its business in all material respects
and, since January 1, 1996 through the date hereof, GW has not offered any
extraordinary rebates, discounts, or any other promotion or marketing incentives
relating to the Products other than in the ordinary course of its business.
4.02 REPRESENTATIONS AND WARRANTIES OF MONARCH.
Monarch represents and warrants to GW as follows:
(a) ORGANIZATION AND STANDING. Monarch is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Tennessee.
(b) POWER AND AUTHORITY. Monarch has all requisite corporate power
and authority to execute, deliver, and perform this Agreement and the other
agreements and instruments to be executed and delivered by it pursuant hereto
and to consummate the transactions contemplated
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herein and therein. The execution, delivery, and performance of this Agreement
by Monarch does not, and the consummation of the transactions contemplated
hereby will not, violate any provision of Monarch's Articles of Incorporation,
Bylaws, any law or regulation applicable to Monarch, or any agreement,
mortgage, lease, instrument, order, judgment, or decree to which Monarch is a
party or by which Monarch is bound.
(c) CORPORATE ACTION; BINDING EFFECT Monarch has duly and properly
taken all action required by law, its Articles of Incorporation, its Bylaws, or
otherwise, to authorize the execution, delivery, and performance by it of this
Agreement, the Collateral Agreements, and the other instruments to be executed
by it pursuant hereto and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by
Monarch and constitutes, and the Collateral Agreements and the other
instruments contemplated hereby when duly executed and delivered by Monarch
will constitute, legal, valid, and binding obligations of Monarch enforceable
against it in accordance with their respective terms, except as enforcement may
be affected by bankruptcy, insolvency, or other similar laws and by general
principles of equity.
(d) ACCESS TO INFORMATION. After the Closing, Monarch agrees to
cooperate with GW and to grant to GW and its employees, attorneys, accountants,
officers, representatives, and agents, during normal business hours and upon
ten (10) days' advance notice, reasonable access to Monarch's management
personnel and to the records relating to the Products (including, without
limitation, the NDAs and INDs) and to permit copying at GW's expense or, where
reasonably necessary, to loan original documents relating to the Assets during
the period the Assets were owned by GW for the sole purposes of (i) any
financial reporting or tax matters (including, without limitation, any
financial and tax audits, tax contests, tax examination,
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preparation of any GW tax returns or financial records) relating to the
Products, (ii) any claims or litigation involving GW and the Assets relating to
the Products; (iii) any investigation of GW being conducted by any federal,
state, or local governmental authority relating to the Products; (iv) any
matter relating to any indemnification or representation or warranty or any
other term of this Agreement; or (v) any similar or related matter. Monarch
shall maintain all such records and documents in the United States and shall
not destroy or dispose of any such records and documents without the prior
written consent of GW. GW shall use its reasonable efforts to ensure that its
access to and requests for records and documents pursuant to this Section are
conducted so as not to interfere with the normal and ordinary operation of
Monarch's business. GW acknowledges that the records and documents made
available to GW by Monarch pursuant to this Section constitute Confidential
Information (as defined in the Supply Agreement) of Monarch and disclosure of
such information shall be governed by the Supply Agreement.
(e) CONSENTS. No consent or approval of, or filing with or notice
to, any federal, state, or local governmental or regulatory authority, agency,
or department or any other person not a party to this Agreement is required or
necessary to be obtained by Monarch or on its behalf in connection with the
execution, delivery, and performance of this Agreement or to consummate the
transactions contemplated hereby, except as contemplated by Sections 1.11 or
3.01 hereof
4.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties, and indemnities of the parties hereto
hereto contained in this Article 4 and in Article 5, as well as any other
obligations of the parties hereunder, shall survive the Closing Date for a
period equal to three (3) years, except that Section 4.01(e) (Ownership of
Assets) and the indemnification with respect thereto shall survive the Closing
Date for a period equal to five (5) years.
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4.04 CERTAIN LIMITATIONS.
GW does not make any representation or warranty as to the business
prospects of the Products. Monarch has conducted its own review and analysis,
as it deemed necessary and appropriate, of the business prospects of the
Products and is not relying on any representations or warranties from GW as to
the business prospects.
ARTICLE 5
INDEMNIFICATION
5.01 INDEMNIFICATION BY GW.
(a) GW hereby indemnifies, defends, and holds harmless Monarch from and
against any and all damage, loss, liability, and expense (including, without
limitation, reasonable attorneys' fees and expenses) (collectively,
"Indemnified Amounts") arising out of any misrepresentation or breach of
warranty, covenant, or agreement made or to be performed by GW pursuant to this
Agreement or the Collateral Agreements; provided, however, that GW shall not
have any obligation to indemnify Monarch from and against any Indemnified
Amounts: (i) until Monarch has incurred Indemnified Amounts in excess of a
Fifty Thousand Dollar ($50,000) deductible (after which point GW will be
obligated only to indemnify Monarch from and against further such Indemnified
Amounts) or thereafter (ii) to the extent the Indemnified Amounts Monarch has
incurred exceed a Ten Million Dollar ($10,000,000) aggregate ceiling (after
which point GW will have no obligation to indemnify Monarch from and against
further such Indemnified Amounts).
(b) GW shall not be liable under this Section 5.01 for any
settlement effected without its consent of any claim, litigation, or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
unreasonably be withheld.
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5.02 INDEMNIFICATION BY MONARCH.
(a) Monarch hereby indemnifies, defends, and holds harmless GW from
and against any and all Indemnified Amounts arising out of any misrepresentation
or breach of warranty, covenant, or agreement made or to be performed by
Monarch pursuant to this Agreement or the Collateral Agreements; provided,
however, that Monarch shall not have any obligation to indemnify GW from and
against any Indemnified Amounts until GW has incurred Indemnified Amounts in
excess of a Fifty Thousand Dollar ($50,000) deductible (after which point
Monarch will be obligated only to indemnify GW from and against further such
Indemnified Amounts).
(b) Monarch shall not be liable under this Section 5.02 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought, which consent shall not
unreasonably be withheld.
5.03 PAYMENTS.
All amounts payable under this Article 5 shall be paid promptly after
receipt by the indemnifying party of written notice from the indemnified party
stating that such Indemnified Amounts have been incurred, the amount thereof
and of the related indemnity payment and substantiation of such amount and such
indemnity payment; provided, however, any disputed amounts shall be due and
payable promptly after such amounts are finally determined to be owing by the
indemnifying party to the indemnified party.
5.04 CONDUCT OF LITIGATION.
Each party indemnified under the provisions of this Agreement, upon
receipt of written notice of any claim or the service of a summons or other
initial legal process upon it in any action instituted against it, in respect
of the agreements contained in this Agreement, shall promptly give written
notice of such claim, or the commencement of such action, or threat thereof, to
the party
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from whom indemnity shall be sought hereunder; provided, however, the failure
to provide such notice within a reasonable period of time shall not relieve the
indemnifying party of any of its obligations hereunder except to the extent the
indemnifying party is prejudiced by such failure. Each indemnifying party shall
be entitled at its own expense to participate in the defense of such claim or
action, or, if it shall elect, to assume such defense, in which event such
defense shall be conducted by counsel chosen by such indemnifying party, which
counsel may be any counsel reasonably satisfactory to the indemnified party
against whom such claim is asserted or who shall be the defendant in such
action, and such indemnified party shall bear all fees and expenses of any
additional counsel retained by it or them. Notwithstanding the immediately
preceding sentence, if the named parties in such action (including impleaded
parties) include the indemnified and the indemnifying parties, and the
indemnified party shall have been advised by counsel that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of such action or that there are legal defenses
available to such indemnified party different from or in addition to those
available to the indemnifying party, then counsel for the indemnified party
shall be entitled, if the indemnified party so elects, to conduct the defense to
the extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party, at the expense of the indemnifying party, if
it is determined by agreement of the indemnifying party and the indemnified
party or by a court of competent jurisdiction that the indemnified party is
entitled to indemnification hereunder for the Indemnified Amounts giving rise to
such action. If the indemnifying party shall elect not to assume the defense of
such claim or action, such indemnifying party shall reimburse such indemnified
party for the reasonable fees and expenses of any counsel retained by it, and
shall be bound by the results obtained by the indemnified party in respect of
such claim or action if it is determined by
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agreement of the indemnifying party and the indemnified party or by a court of
competent jurisdiction that the indemnified party is entitled to
indemnification hereunder for the Indemnified Amounts giving rise to such
action; provided, however, that no such claim or action shall be settled
without the written consent of the indemnifying party.
ARTICLE 6
MISCELLANEOUS
6.01 ENTIRE AGREEMENT.
This Agreement and the Collateral Agreements constitute the entire
agreement between GW and Monarch with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and
thereof. This Agreement or any provision hereof cannot be amended, changed,
supplemented, or waived except in a writing signed by each of the parties
hereto.
6.02 COUNTERPARTS.
This Agreement and any amendment or supplement hereto may be executed in
several counterparts, each of which shall be deemed to be an original, and all
of which taken together shall constitute one and the same instrument.
6.03 BROKERAGE AND OTHER COMMISSIONS.
GW and Monarch each represent and warrant to the other that all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by each directly with the other without intervention of any broker,
finder, or other intermediary and that, subject to the provisions of Article 5,
each indemnifies the other and holds it harmless against any claim against the
other for brokerage or other commissions relating to this Agreement or to the
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transactions contemplated hereby by any person claiming to have been engaged as
a broker or finder by the indemnifying party.
6.04 NOTICES.
All notices and other communications required or permitted under this
Agreement shall be in writing and shall be delivered personally or sent by: (a)
registered or certified mail, return receipt requested; (b) a
nationally-recognized courier service guaranteeing next-day delivery, charges
prepaid; or (c) facsimile (with the original promptly sent by any of the
foregoing manners). Any such notices shall be addressed to the receiving party
at such party's address set forth below, or at such other address as may from
time to time be furnished by similar notice by either party.
If to GW:
Glaxo Wellcome Inc.
Five Xxxxx Xxxxx
Xxxxxxxx Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
Attention: Company Secretary
Facsimile No.: 000-000-0000
If to Monarch:
Monarch Pharmaceuticals, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
With a copy to:
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Legal Department
Facsimile No.: 000-000-0000
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Any such notice or communication shall be effective upon such
personal delivery or delivery to such courier, upon transmission by facsimile,
or three (3) days after it is sent by such registered or certified mail, as the
case may be. Copies shall be sent in the same manner as originals.
6.05 ASSIGNMENT.
Neither party may assign its rights or obligations under this
Agreement without the prior written consent of the other party; provided,
however, that either party may assign its rights and obligations under this
Agreement, without the prior written consent of the other party, to an
Affiliate or to a successor of the assigning party's business by reason of
merger, sale of all or substantially all of its assets or similar transaction,
provided that such successor agrees in writing to be bound by this Agreement.
Such consent shall not be unreasonably withheld. Any purported assignment
without a required consent shall be void. Any permitted assignee shall assume
all obligations of its assignor under this Agreement. No assignment shall
relieve either party of its responsibility for the performance of any
obligation which accrued prior to the effective date of such assignment.
6.06 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ALL RESPECTS UNDER
AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD
TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
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6.07 HEADINGS.
The table of contents and all headings used in this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
6.08 EXPENSES.
All legal and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
6.09 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective successors and permitted assigns.
6.10 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS.
GW and Monarch each agree to execute and deliver such other documents,
certificates, agreements, and other writings and to take such other actions as
may be reasonably necessary in order to consummate or implement expeditiously
the transactions contemplated by this Agreement.
6.11 NO IMPLIED WAIVER.
No failure or xxxxx on the part of the parties hereto to exercise any
right, power, or privilege hereunder or under any instrument executed pursuant
hereto shall operate as a waiver; nor shall any single or partial exercise of
any right, power, or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. All rights and
remedies granted herein shall be cumulative and in addition to other rights and
remedies to which the parties may be entitled at law or in equity.
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6.12 FORCE MAJEURE.
Any delay in the performance of any of the obligations of either
party hereto (except the payment of money owed) shall not be considered a
breach of this Agreement and the time required for performance shall be
extended for a period equal to the period of such delay, provided that such
delay is due to: acts of God, weather, fire, explosion; invasion, riot or other
civil unrest; governmental laws, orders, restrictions, actions, embargoes or
blockades; national or regional emergency, injunction, strikes, lock-outs,
labor trouble or other industrial disturbances; inability to obtain or
interruption of materials, labor, containers, fuel or transportation; or any
other cause beyond the control of the affected party. The party so affected
shall give prompt notice to the other party of such cause and shall use its
reasonable efforts to relieve the effect of such cause as rapidly as possible.
6.13 CONFIDENTIALITY.
GW and Monarch have entered into a Confidential Disclosure Agreement
dated as of May 30, 1996 (the "Disclosure Agreement").
6.14 RELATIONSHIP.
Nothing in this Agreement shall be deemed to create an agency, joint
venture, amalgamation, partnership, or similar relationship between Monarch and
GW.
6.15 SEVERABILITY.
In case any provision of this Agreement shall be held to be invalid,
illegal, or unenforceable, the validity, legality, or enforceability of the
remaining provisions hereof will not in any way be affected or impaired
thereby.
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6.16 PRESS RELEASE.
On the Closing Date, the parties shall issue a joint press release
regarding the sale of the Assets, and GW shall, in cooperation with Monarch,
inform any customer who places a purchase order with GW for the Products that
the Assets have been sold to Monarch. As soon as practicable after the
Closing, GW shall send to all of its current wholesalers and distributors a
letter, in form and substance mutually agreeable to GW and Monarch, on GW
letterhead informing them of the sale of the Assets to Monarch.
6.17 AFFILIATES.
As used in this Agreement, "Affiliate" shall mean any corporation or
non-corporate entity that controls, is controlled by, or is under common
control with the party. A corporation or non-entity shall be regarded as in
control of another corporation if it owns or directly or indirectly controls
at least fifty percent (50%) of the voting stock of the other corporation or
(a) in the absence of the ownership of at least of fifty percent (50%) of the
voting stock of a corporation or (b) in the case of a non-corporate entity,
the power to direct or cause the direction of the management and policies of
such corporation or non-corporate entity, as applicable.
6.18 WAIVER OF BULK SALES.
GW and Monarch waive compliance with any bulk sales law or similar
law in connection with the consummation of the transactions contemplated
herein.
6.19 EXHIBITS AND SCHEDULES.
All Exhibits and Schedules referred to herein form an integral part
of this Agreement and are incorporated into this Agreement by reference.
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6.20 GUARANTY.
King Pharmaceuticals, Inc., a Tennessee corporation ("King"),
irrevocably and unconditionally guarantees the full and punctual performance
of all of the obligations of Monarch (or any Affiliate to whom Monarch
assigns any right or obligation under this Agreement) contained in or arising
out of this Agreement, including, but not limited to, payment when due of all
amounts owed by Monarch to GW hereunder. This is a guaranty of payment and
performance and not of collection. King is executing this Agreement for the
sole purpose of agreeing to its guaranty obligations set forth in this
Section 6.20. Monarch and King represent and warrant to GW that Monarch is a
wholly-owned subsidiary of King.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
GLAXO WELLCOME INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President and General Manager
MONARCH PHARMACEUTICALS, INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Authorized Signatory
KING PHARMACEUTICALS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: President
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