SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2002
ENZON, INC
(Exact name of registrant as specified in its charter)
DELAWARE 0-12957 22-2372868
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
685 Route 202/206, Bridgewater, New Jersey 08807
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (732) 541-4600
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
On October 1, 2002, Enzon, Inc., a Delaware corporation ("Enzon"), and Elan
Corporation, plc, a public limited company organized under the laws of Ireland,
Elan Pharmaceuticals, Inc., a Delaware corporation, Elan Operations, Inc., a
Delaware corporation, and Elan Canada, Inc., a Canadian corporation
(collectively, "Elan"), entered into an Asset Purchase Agreement (the "Asset
Purchase Agreement"), pursuant to which, and subject to the terms and conditions
of which, Enzon has agreed to acquire the United States and Canadian rights to
ABELCET(R) (Amphotericin B Lipid Complex Injection),an FDA-approved, injectable,
antifungal pharmaceutical product, along with any line extensions, new
indications, new formulations and new dosage forms of ABELCET, for an aggregate
purchase price of $370 million, subject to certain adjustments described in the
Asset Purchase Agreement. In addition, the Asset Purchase Agreement contemplates
the acquisition of the manufacturing facility for ABELCET in Indianapolis,
Indiana, marketing materials, finished inventory and raw materials and certain
contracts related to ABELCET and the manufacturing facility. Elan will retain
rights to ABELCET outside of Canada and the United States, except to the extent
Elan has rights in Japan which will also be conveyed to Enzon.
In connection with the transactions, Enzon expects to hire a hospital sales
force of approximately 60 Elan employees who currently market and sell ABELCET
in the United States and Canada, as well as the manufacturing facility
personnel.
Elan and Enzon have also agreed to enter into a patent assignment agreement, a
license agreement, trademark assignment agreements, two supply agreements, and
an interim services agreement, among other documents, in order to implement the
terms of the transactions. Elan and Enzon have agreed to the assignment of
certain patent rights and improvements specifically related to ABELCET, as well
as an exclusive license as to certain patent rights, improvements and related
intellectual property for ABELCET. With respect to the intellectual property
assigned to Enzon, the license agreement will include a grant by Enzon to Elan
of an exclusive license (i) inside the United States and Canada for certain
technologies outside the scope of ABELCET, and (ii) outside the United States
and Canada for all technologies.
The transactions are expected to close during the fourth calendar quarter of
2002, subject to certain closing conditions, including, among others, the
approval of Elan's shareholders, the delivery to Enzon of required audited
financial statements relating to ABELCET, the receipt of certain third-party
consents, the receipt of required regulatory approvals and clearances, including
termination of the applicable waiting period under the Hart-Scott-Rodino Act,
approvals of the UK Listing Authority and Dublin Stock Exchange and clearance
under the Ireland Mergers and Takeovers (Control) Acts 1978-1996, and other
customary closing conditions.
A copy of the Asset Purchase Agreement is attached hereto as Exhibit 2.1. A copy
of the press release dated October 2, 2002 announcing the transactions
contemplated by the Asset Purchase Agreement is attached hereto as Exhibit 99.1.
Such Exhibits are incorporated by reference into this Item 5 and the foregoing
description is qualified in its entirety by reference to such Exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit Number Description
-------------- -----------
2.1 - Asset Purchase Agreement, dated as of October 1, 2002, by and
among Elan Corporation, plc, Elan Pharmaceuticals, Inc., Elan
Operations, Inc., Elan Canada, Inc. and Enzon, Inc.*
99.1 - Press Release, dated as of October 2, 2002
*Certain schedules to the Asset Purchase Agreement have been omitted. Enzon,
Inc. will furnish a supplementary copy of any omitted schedule to the Commission
upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENZON, INC.
Date: October 2, 2002 By: /s/ Kenneth J. Zuerblis
-----------------------------------
Kenneth J. Zuerblis
Vice President, Finance and
Chief Financial Officer
Exhibit 2.1
================================================================================
ASSET PURCHASE AGREEMENT
by and among
ELAN CORPORATION, PLC
ELAN PHARMACEUTICALS, INC.
ELAN OPERATIONS, INC.
ELAN CANADA, INC.
and
ENZON, INC.
dated as of October 1, 2002
================================================================================
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms................................................1
Section 1.02. Construction of Certain Terms and Phrases...................17
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.01. Purchase and Sale of Assets at the Closing..................17
Section 2.02. Assignability and Consents..................................20
ARTICLE III
ASSUMPTION OF LIABILITIES
Section 3.01. Assumption of Liabilities...................................21
ARTICLE IV
PURCHASE PRICE AND PAYMENT
Section 4.01. Purchase Price..............................................24
Section 4.02. Allocation of Purchase Price................................24
Section 4.03. Payment of Sales, Use and Other Taxes.......................24
Section 4.04. Closing Date Inventory Value Adjustments....................25
ARTICLE V
CLOSING
Section 5.01. Time and Place..............................................26
Section 5.02. Deliveries at Closing.......................................26
Section 5.03. Deliveries Relating to the Plant............................27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ELAN COMPANIES
Section 6.01. Organization, Etc...........................................28
Section 6.02. Authority of the Elan Companies.............................29
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Section 6.03. Consents and Approvals......................................29
Section 6.04. Non-Contravention...........................................29
Section 6.05. Contracts...................................................30
Section 6.06. Intellectual Property Rights................................30
Section 6.07. Employee Matters............................................32
Section 6.08. Litigation..................................................33
Section 6.09. Environmental Matters.......................................33
Section 6.10. Compliance with Law.........................................34
Section 6.11. Inventory...................................................36
Section 6.12. Brokers.....................................................36
Section 6.13. Title to and Sufficiency of Transferred Assets..............36
Section 6.14. Financial Information.......................................36
Section 6.15. Certain Personal Property...................................36
Section 6.16. Non-Real Estate Leases......................................37
Section 6.17. Insurance...................................................37
Section 6.18. Customers and Suppliers.....................................37
Section 6.19. Operation of the Business; Description of the Business......37
Section 6.20. Plant Matters...............................................38
Section 6.21. No Other Warranties.........................................39
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
Section 7.01. Corporate Organization......................................40
Section 7.02. Authority of the Acquiror...................................40
Section 7.03. Consents and Approvals......................................40
Section 7.04. Non-Contravention...........................................40
Section 7.05. Litigation..................................................41
Section 7.06. Brokers.....................................................41
Section 7.07. Financial Capability........................................41
Section 7.08. No Other Warranties.........................................41
ARTICLE VIII
COVENANTS OF THE PARTIES
Section 8.01. Preservation of Purchased Assets; Limitations on
Distribution................................................41
Section 8.02. Commercially Reasonable Efforts.............................42
Section 8.03. Cooperation.................................................42
Section 8.04. Risk of Loss................................................44
Section 8.05. Access......................................................44
Section 8.06. Public Announcements; Confidentiality.......................46
Section 8.07. Corporate Names.............................................47
Section 8.08. Product Trademarks..........................................48
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Section 8.09. Regulatory Matters..........................................49
Section 8.10. Employee Matters............................................49
Section 8.11. Bulk Transfer Laws..........................................52
Section 8.12. Covenant Not to Compete.....................................52
Section 8.13. Oversight Committee.........................................53
Section 8.14. Medical Inquiries and Complaints............................54
Section 8.15. Insurance...................................................55
Section 8.16. Further Assurances..........................................55
Section 8.17. No Solicitation.............................................55
Section 8.18. Incentive Compensation......................................56
Section 8.19. Expenses....................................................56
Section 8.20. HSR Act and Irish Mergers Act Filings.......................56
Section 8.21. Indiana Disclosure Document.................................57
Section 8.22. Rights In Japan.............................................57
Section 8.23. Construction of Certain Provisions..........................58
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE ELAN COMPANIES FOR THE CLOSING
Section 9.01. Representations, Warranties and Covenants...................58
Section 9.02. No Actions or Proceedings...................................58
Section 9.03. Consents....................................................58
Section 9.04. Elan Shareholder Approval...................................58
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE ACQUIROR FOR THE CLOSING
Section 10.01. Representations, Warranties and Covenants.................59
Section 10.02. No Actions or Proceedings.................................59
Section 10.03. Consents..................................................59
Section 10.04. No Adverse Effect.........................................59
Section 10.05. Audited Financial Statements..............................59
Section 10.06. Elan Shareholders Meeting.................................59
ARTICLE XI
INDEMNIFICATION
Section 11.01. Survival of Representations, Warranties, Covenants, Etc...60
Section 11.02. Indemnification...........................................60
Section 11.03. Limitations...............................................63
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ARTICLE XII
TERMINATION AND ABANDONMENT
Section 12.01. Methods of Termination....................................64
Section 12.02. Procedure upon Termination................................65
Section 12.03. Specific Performance......................................65
Section 12.04. Other Remedies............................................65
Section 12.05. Effect of Certain Terminations............................66
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Notices...................................................66
Section 13.02. Entire Agreement..........................................67
Section 13.03. Waiver....................................................67
Section 13.04. Amendment.................................................67
Section 13.05. Third Party Beneficiaries.................................67
Section 13.06. Assignment; Binding Effect................................68
Section 13.07. Headings..................................................68
Section 13.08. Severability..............................................68
Section 13.09. Governing Law.............................................68
Section 13.10. Expenses..................................................68
Section 13.11. Counterparts..............................................68
Section 13.12. Schedules, Exhibits and Other Agreements..................68
Exhibit A - Form of License Agreement
Exhibit B - Form of Product Supply Agreement
Exhibit C - Form of Myocet Supply Agreement
Exhibit D - Form of Interim Services Agreement
Exhibit E - Form of Trademark Assignment Agreement
Exhibit F - Form of Canadian Trademark Assignment Agreement
Exhibit G - Form of Patent Assignment Agreement
Exhibit H - Form of Bill of Sale
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of October 1, 2002, by and among Enzon, Inc., a Delaware corporation
(the "Acquiror"), and Elan Corporation, plc, a public limited company organized
under the laws of Ireland (the "Elan Parent"), Elan Pharmaceuticals, Inc., a
Delaware corporation ("EPI"), Elan Operations, Inc., a Delaware corporation
("EOI"), and Elan Canada, Inc., a Canadian corporation ("ECI" and, together with
Elan Parent, EPI and EOI, the "Elan Companies").
RECITALS
This Agreement sets forth the terms and conditions upon which the
Acquiror is purchasing the Purchased Assets (defined below) and assuming the
Assumed Liabilities (defined below) of the Elan Companies from the Elan
Companies, and the Elan Companies are selling the Purchased Assets (defined
below) and transferring the Assumed Liabilities (defined below) of the Elan
Companies to the Acquiror.
AGREEMENT
In consideration of the premises and the mutual covenants and
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the
following defined terms shall have the meanings described below:
"Accountants" means an accounting firm of national reputation
(excluding each of the Acquiror's and the Elan Companies' respective regular
outside accounting firms) as may be mutually acceptable to the Acquiror and the
Elan Companies; provided, however, that in the event that the Acquiror and the
Elan Companies are unable to agree on such an accounting firm within ten (10)
days, then the accounting firm shall be selected by lot.
"Accounts Receivable" means all trade accounts and notes receivable
and other miscellaneous receivables of the Business, including those that are
not evidenced by instruments or invoices, existing as of the Closing Date.
"Acquiror" has the meaning set forth in the Preamble to this
Agreement.
"Acquiror Adverse Effect" means an effect or condition that
individually or when taken together with all other effects or conditions of like
nature would individually or in the aggregate or would be reasonably expected to
have individually or in the aggregate a material adverse effect on the business,
assets, results of operations or financial condition of the Acquiror taken as a
whole.
"Acquiror Disclosure Schedule" has the meaning set forth in the
preamble to Article VII.
"Acquiror's Defined Contribution Plan" has the meaning set forth in
Section 8.10(c).
"Acquiror Governmental Consents" has the meaning set forth in
Section 7.03.
"Acquiror Severance" has the meaning set forth in Section 8.10(f).
"Acquisition Proposal" has the meaning set forth in Section 8.17.
"Action or Proceeding" means any action, suit, proceeding,
arbitration, Order, inquiry, hearing, assessment with respect to fines or
penalties or litigation (whether civil, criminal, administrative or
investigative) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental or Regulatory Authority.
"Adverse Effect" means an effect or condition that individually or
when taken together with all other effects or conditions of like nature would
individually or in the aggregate (i) would be reasonably expected to have
individually or in the aggregate a material adverse effect on the business,
assets, results of operations or financial condition of the Business taken as a
whole or (ii) result in a material diminution in the capacity or capability of
the Plant to manufacture and supply the Acquiror with finished and saleable
Product, which is reasonably expected to continue for a period greater than the
period which is likely to be covered by the saleable Finished Product Inventory
on hand plus six weeks, based on Finished Product Inventory consumption and
sales rates over the preceding 180 days.
"Affiliate" means, with respect to any Person, any other Person
which Controls, is Controlled by or is under common Control with such Person.
"Agreement" has the meaning set forth in the Preamble hereto.
"Applicable Period" has the meaning set forth in Section 8.12(a).
"Assets or Properties" of any Person means all assets and properties
of any kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person, including cash, cash equivalents,
accounts and notes receivable, chattel paper, documents, instruments, general
intangibles, equipment, inventory, goods and intellectual property.
"Assumed Contracts" has the meaning set forth in Section
2.01(a)(iii).
"Assumed Liabilities" has the meaning set forth in Section 3.01(a).
"Bill of Sale" means the Bill of Sale conveying certain assets of
the Business from the Elan Companies to the Acquiror and its Affiliates, a form
of which is attached as Exhibit H.
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"Books and Records" means the Product Books and Records and the
Manufacturing Process and Plant Books and Records.
"Business" means the research, development, manufacture,
distribution, marketing, sale and promotion of the Product and, to the extent
applicable, Current Product Improvements in the Territory.
"Business Day" means a day other than Saturday, Sunday or any day on
which commercial banks located in New York are authorized or obligated by Law to
close.
"Business Employees" has the meaning set forth in Section 8.10(a).
"Canadian Sales Force Employees" has the meaning set forth in
Section 8.10(a).
"Canadian Trademark Assignment Agreement" means the Canadian
Trademark Assignment Agreement to be dated as of the Closing Date by and between
the Acquiror and EPI, a form of which is attached hereto as Exhibit F.
"Chargeback" means, with respect to the Product, an amount paid to a
wholesaler for the Product after such Product has been resold by that wholesaler
for less than the wholesaler's acquisition cost.
"Charter Documents" has the meaning set forth in Section 6.01.
"Closing" has the meaning set forth in Section 5.01.
"Closing Date" has the meaning set forth in Section 5.01.
"Closing Date Inventory Value" means the value of all Product
Inventory, Finished Non-Product Inventory, Work-In-Progress Non-Product
Inventory and Raw Material Non-Product Inventory as of the Closing Date, each
valued in the following fashion: (i) with respect to all Finished Non-Product
Inventory, Finished Product Inventory, Work-In-Progress Non-Product Inventory
and Work-In-Progress Product Inventory, at standard cost, calculated in
accordance with the Elan Companies' historical accounting practices; and (ii)
with respect to Raw Material Non-Product Inventory and Raw Material Product
Inventory, at actual cost.
"Closing Date Inventory Value Adjustment" means the Closing Date
Inventory Value minus $8 million.
"Closing Date Inventory Value Statement" has the meaning set forth
in Section 4.04(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Competing Product" has the meaning set forth in Section 8.12(a).
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"Confidential Information" has the meaning set forth in Section
8.06(b).
"Confidentiality Agreement" has the meaning set forth in Section
8.06(c).
"Contracts" means any and all binding commitments, contracts,
purchase orders, leases, licenses, easements, permits (excluding Governmental
Permits), instruments, commitments, arrangements, undertakings, practices or
other agreements, whether written or oral.
"Control" means:
(a) ownership (directly or indirectly) of at least fifty percent
(50%) of the shares or stock entitled to vote for the election of
directors in the case of a company or corporation; or
(b) the ability otherwise to direct and control the actions of a
Person, other than a company or a corporation; or
(c) with respect to Product Intellectual Property, the possession
(whether by ownership or license or sublicense and other than pursuant to
this Agreement) of the ability to grant intellectual property rights,
except as limited by the agreements set forth on Schedule 1.01(a).
"Copyrights" means, in the Territory, copyrights, whether registered
or unregistered, and, if any, applications in the Marketing Materials Product
Books and Records, all Finished Product Inventory, all Plant Software Products,
Plant Embedded Controls, Plant Custom Software (including documentation and
related object and source codes) and all Manufacturing Process and Plant Books
and Records.
"Corporate Names" has the meaning set forth in Section 8.07(c).
"Current" means the existing, prepared, made or being made, tested
or being tested, or physically reduced to practice or contained in an invention
disclosure form prior to or as of the Closing Date.
"Damages" has the meaning set forth in Section 11.02(a).
"Database" means all data and other information necessary for the
operation of or predominantly used in the Business that is recorded, stored,
transmitted and retrieved in electronic form.
"Default" means (a) a breach, default or violation, (b) the
occurrence of an event that with or without the passage of time or the giving of
notice, or both, would constitute a breach, default or violation or cause an
Encumbrance to arise, or (c) with respect to any Contract, the occurrence of an
event that with or without the passage of time or the giving of notice, or both,
would give rise to a right of termination, renegotiation or acceleration or a
right to receive Damages or a payment of penalties.
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"DEL" means the Drug Establishment License for the Product, a
license required for all businesses in Canada engaged in fabrication,
packaging/labeling, importation, distribution, wholesaling and testing as
defined in the Food and Drug Regulations passed pursuant to the FDA Act.
"Development Contracts" has the meaning set forth in Section
2.01(a)(i).
"DIN" means the drug identification number assigned by Health Canada
which is required to be located on the label of prescription and
over-the-counter drug products that have been evaluated by Health Canada and
approved for sale in Canada.
"Distribution Contracts" has the meaning set forth in Section
2.01(a)(iii).
"ECI" has the meaning set forth in the Preamble to this Agreement.
"Elan Companies" has the meaning set forth in the Preamble to this
Agreement.
"Elan Disclosure Schedule" has the meaning set forth in the preamble
to Article VI.
"Elan Governmental Consents" has the meaning set forth in Section
6.03(a).
"Elan Parent" has the meaning set forth in the Preamble to this
Agreement.
"Elan Shareholders Meeting" has the meaning set forth in Section
8.02.
"Elan Third Party Consents" has the meaning set forth in Section
6.03(b).
"Elan's 401(k) Plan" has the meaning set forth in Section 8.10(c).
"Employee Benefit Plans" means the Pensions Plans, Welfare Plans and
any other benefit arrangements, obligations or practices, including employment
agreements, severance policies or agreements, executive compensation
arrangements, incentive arrangements, bonus plans, stock option plans, stock
purchase plans or any plans providing benefits or payments in the event of a
change of ownership or control, providing benefits to one or more present or
former employees or independent contractors of the Business that are sponsored
or contributed to by EPI or its Affiliates.
"Encumbrance" means any mortgage, pledge, assessment, security
interest, deed of trust, lease, lien, levy, license, restriction on
transferability, defect in title, charge or other encumbrance of any kind, or
any conditional sale or title retention agreement or other agreement to give any
of the foregoing in the future.
"Environment" means all air, surface water, groundwater or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
"Environmental Claim" means any and all administrative or judicial
actions, suits, Orders, claims, liens, written notices, written notices of
violations, written notices of investigations, complaints, requests for
information or other written communication, whether criminal or civil, pur-
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suant to or relating to any applicable Environmental Law by any Person based
upon, alleging, asserting or claiming any actual or potential (i) violation of
or liability under any Environmental Law, (ii) violation of any Environmental
Permit or (iii) liability for investigatory costs, cleanup costs, removal costs,
remedial costs, response costs, natural resource damages, property damage,
personal injury, medical monitoring costs or expenses, fines or penalties
arising out of, based on, resulting from or related to the presence, Release, or
threatened Release into the Environment, of any Hazardous Materials at any
location, including at any off-Site location to which Hazardous Materials were
sent for handling, storage, treatment or disposal.
"Environmental Clean-up Site" means any location that is listed or
proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on any
similar state list of sites requiring investigation or cleanup under, or that is
the subject of any pending or, to the Knowledge of Elan Companies threatened,
action, suit, proceeding or investigation related to or arising from any alleged
violation.
"Environmental Damages" has the meaning set forth in Section
11.02(a)(iii).
"Environmental Law" means any and all federal, state, local,
provincial and foreign, civil and criminal laws, statutes, common law doctrines,
ordinances, Orders, codes, rules, regulations, judgments, decrees, injunctions
or agreements with any Governmental or Regulatory Authority, relating to
pollution or the protection of health and the Environment, or worker health and
safety, including those relating to the handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling or Release of Hazardous Materials, including: the Clean Air
Act, 42 U.S.C. ss. 7401 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. ss. 136 et seq.; the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. ss. 6901 et seq.; the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Occupational
Safety & Health Act of 1970, 29 U.S.C. ss.651 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. ss. 2701 et seq.; and the Safe Drinking Water Act of 1974, 42
U.S.C. ss. 300(f) et seq.
"Environmental Permits" means any federal, state, local, provincial
or foreign permits, licenses, approvals, consents or authorizations required by
any Governmental or Regulatory Authority under any Environmental Law.
"EOI" has the meaning set forth in the Preamble to this Agreement.
"EPI" has the meaning set forth in the Preamble to this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Excluded Assets" has the meaning set forth in Section 2.01(b).
"Excluded Liabilities" has the meaning set forth in Section 3.01(c).
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"Excluded Tax Liability" has the meaning set forth in Section
3.01(c)(ii).
"Excluded Technology" has the meaning set forth in the License
Agreement.
"Expiration Date" has the meaning set forth in Section 11.01.
"FDA" means the United States Food and Drug Administration and its
Canadian counterpart, Health Canada, or any successors thereto.
"FDA Act" means the U.S. Food, Drug and Cosmetic Act of 1938, as
amended from time to time, and its Canadian counterpart, the Food and Drugs Act
(Canada), as they may be superseded or amended from time to time.
"Financial Information" has the meaning set forth in Section 6.14.
"Finished Inventory" means all inventory of finished pharmaceutical
product (but not any works in progress or materials used in the manufacture of
finished pharmaceutical product) that is formulated, labeled or otherwise
intended for use, sale or offer for sale, whether held at a location or facility
of the Elan Companies or any Affiliate thereof (or of any other Person on behalf
of the Elan Companies or any Affiliate thereof) or in transit to or from the
Elan Companies or any Affiliate thereof (or any such other Person). For the
purposes of this Agreement, "Finished Inventory" shall be deemed to include
samples of finished pharmaceutical product designated for use in promoting
pharmaceutical product and that are not intended to be sold, consistent with FDA
requirements.
"Finished Non-Product Inventory" means all Finished Inventory of any
pharmaceutical product produced at the Plant other than Product owned as of the
Closing Date by the Elan Companies or any Affiliate thereof.
"Finished Product Inventory" means all Finished Inventory of Product
owned or controlled as of the Closing Date by the Elan Companies or any
Affiliate thereof.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, department, ministry, official or
other instrumentality of the United States, Canada, Ireland or other country, or
any supra-national organization, or any foreign or domestic province, state,
county, city or other political subdivision.
"Governmental Permits" means all governmental permits, licenses,
registrations, certificates of occupancy, approvals and other governmental
authorizations necessary for the operation of the Business and the Plant.
"Hazardous Material" means petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, radioactive materials, asbestos or
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and
any other chemicals, materials, substances, contaminants or wastes regulated
under any Environmental Law.
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"Hired Employee" has the meaning set forth in Section 8.10(a).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, together with any rules or regulations promulgated thereunder.
"Immaterial Lease" has the meaning set forth in Section 6.16.
"IND" means (a) (i) an Investigational New Drug Application, as
defined in the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the
regulations promulgated thereunder, that is required to be filed with the FDA
before beginning clinical testing of a product in human subjects, or any
successor application or procedure and (ii) any Canadian counterpart of a U.S.
Investigational New Drug Application, including an Investigational New Drug
Submission, made pursuant to Division 8 of the Food and Drugs Act Regulations
(Canada), and (b) all supplements and amendments that may be filed with respect
to the foregoing.
"Indemnification Claim Notice" has the meaning set forth in Section
11.02(c).
"Indemnified Party" has the meaning set forth in Section 11.02(c).
"Indemnitees" has the meaning set forth in Section 11.02(c).
"Indiana Disclosure Document" has the meaning set forth in Section
8.21.
"Interim Services Agreement" means the Interim Services Agreement to
be dated as of the Closing Date by and between the Acquiror, EPI and ECI, a form
of which is attached hereto as Exhibit D.
"Irish Mergers Act" means the Mergers and Takeovers (Control) Acts
1978-1996 (Ireland).
"Japanese Rights" has the meaning set forth in Section 8.22.
"Knowledge" with respect to (i) the Elan Companies, means the
knowledge following reasonable investigation of the officers, directors or
senior managers of the Elan Parent, EPI or EOI with responsibility for, or
supervision of, the relevant matters and (ii) the Acquiror, means the knowledge
following reasonable investigation of the officers, directors or senior managers
of the Acquiror with responsibility for supervision of the relevant matters.
"Know-How" has the meaning attributed thereto in the License
Agreement.
"Labeling" shall be as defined in Section 201(m) of the Federal
Food, Drug and Cosmetic Act, 21 U.S.C. ss. 321(m), and any Canadian counterpart
thereof in the Territory, including the Product label, packaging and package
inserts accompanying the Product, and any other written, printed, or graphic
materials accompanying the Product, including, but not limited to, patient
instructions or patient indication guides.
-8-
"Law" means any federal, state, provincial or local law, statute or
ordinance, or any rule or regulation promulgated by any Governmental or
Regulatory Authority.
"Liability" means any, direct or indirect, liability, obligation,
claim, deficiency, guarantee or commitment of any kind or nature (whether known
or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, or due or to become due), including any
liability for Taxes.
"License Agreement" means the License Agreement to be dated as of
the Closing Date by and between the Acquiror and EPI, a form of which is
attached hereto as Exhibit A.
"Manufacturing Process and Plant Books and Records" means copies of
all files, documents, instruments, papers, books and records, whether on paper
or in electronic form in a Database (but if in electronic format, not including
any related software) owned or Controlled by the Elan Companies or their
respective Affiliates and necessary for or to the extent related to the
manufacture, supply, formulation, Labeling or packaging of Product or a Current
Product Improvement intended for use, sale or offer for sale in the Territory,
including (a) any pricing lists, vendor lists or financial data necessary for or
to the extent related to the manufacture of Product or a Current Product
Improvement intended for use, sale or offer for sale in the Territory, (b) any
documentation relating to raw materials used in the manufacture of Product (or
any components thereof) or a Current Product Improvement intended for use, sale
or offer for sale in the Territory, or to the suppliers of such raw materials,
and (c) any batch records, flow diagrams, quality control or quality assurance
records and data, standard operating procedures, internal good manufacturing
practices, audits or assessments, correspondence with any Governmental or
Regulatory Authority and any Product Registrations, manuals and other
manufacturing process reports or documentation to the extent related to the
Plant or to Product or a Current Product Improvement intended for use, sale or
offer for sale in the Territory, but excluding any such items set forth on
Schedule 1.01(b) of the Elan Disclosure Schedule that (i) any applicable Law
prohibits their transfer, (ii) any transfer thereof would subject the Elan
Companies or any of their respective Affiliates to any Liability or (iii) are
tax files, documents, instruments, papers, books and records.
"Manufacturing Process and Plant Registrations" means (i) the
approvals or registrations, which have been received by the Elan Companies as of
the date of this Agreement, or which are received by the Elan Companies after
the date of this Agreement but before the Closing Date, for the Plant and/or the
equipment or process(es) used to manufacture Product or a Current Product
Improvement intended for use, sale or offer for sale in the Territory (including
all Drug Master Files), and (ii) all dossiers, reports, data and other written
materials filed as part of such approvals or registrations, or maintained by the
Elan Companies and to the extent related to such approvals or registrations.
"Marketing Authorizations" has the meaning set forth in Section
8.03(b).
"Marketing Materials" means those items of advertising and
promotional materials and literature owned or controlled by the Elan Companies
or their respective Affiliates as of the Closing to the extent used in the
advertising and promotion of Product in the Territory.
-9-
"Medicaid Rebate" means any rebate paid to any Governmental or
Regulatory Authority in respect of the Product.
"Myocet Supply Agreement" means the Myocet(TM) Toll Manufacturing
and Supply Agreement by and between Elan Pharma International Limited and the
Acquiror, a form of which is attached hereto as Exhibit C.
"NDA" means a New Drug Application for any product, as appropriate,
requesting permission to place a drug on the market in accordance with 21 C.F.R.
Part 314, and all supplements or amendments filed pursuant to the requirements
of the FDA, including all documents, data and other information concerning a
product which are reasonably necessary for FDA approval to market a product in
the United States and any Canadian counterpart of a New Drug Application,
including a New Drug Submission made pursuant to Division 8 of the Food and
Drugs Act Regulations (Canada).
"Net Sales Revenue" means gross amounts actually received, less any
applicable discounts, allowances, credits, chargebacks, rebates, taxes, duties,
freight and insurance charges and provisions for product returns.
"NOC" means the notice of compliance issued by Health Canada
notifying a sponsor that the New Drug Submission has been evaluated by Health
Canada and that the product has been determined to comply with the applicable
provisions of Division 8 of the Food and Drugs Act Regulations (Canada).
"Non-Assignable Asset" has the meaning set forth in Section 2.02(a).
"Non-Real Estate Leases" has the meaning set forth in Section 6.16.
"Notice" with respect to a party means notice actually received by
an officer, director or senior manager of Elan Parent or EPI, in the case of the
Elan Companies, or of Acquiror, in the case of Acquiror, in each case with
responsibility in the relevant area, or delivered in accordance with the terms
of the document, Law or Order pursuant to which such notice was given.
"Notice of Objection" has the meaning set forth in Section 4.04(b).
"Off-the-Shelf Software" means any application software that the
Elan Companies license for use in the Business, in any individual case, under a
license with a maximum payment obligation of less than $10,000.
"Order" means any writ, judgment, decree, injunction or similar
order, including consent orders, of any Governmental or Regulatory Authority (in
each such case whether preliminary or final).
"Ordinary Course of Business" means such action that is consistent
with the past practices of the Business (including with respect to quantity and
frequency).
"Oversight Committee" has the meaning set forth in Section 8.13(a).
-10-
"Parents" means Elan Parent and Acquiror.
"Patent Assignment Agreement" means the Patent Assignment Agreement
to be dated as of the Closing Date by and between the Acquiror and EPI, a form
of which is attached hereto as Exhibit G.
"Patent Rights" has the meaning attributed thereto in the License
Agreement.
"Pension Plans" means "employee pension benefit plans" as defined in
Section 3(2) of ERISA.
"Permitted Encumbrance" means, collectively, (a) Encumbrances for
Taxes or assessments which are not delinquent or are being contested in good
faith by appropriate proceedings, (b) statutory, warehousemen's and carriers'
liens and other similar Encumbrances arising in the ordinary course for
obligations which are not delinquent, and (c) the rights, if any, of third
parties appearing in product advertisements for the Product being transferred as
part of the Purchased Assets that are set forth on Schedule 1.01(c).
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, joint venture,
other business organization, trust, entity, union, association or Governmental
or Regulatory Authority.
"Plant" means the manufacturing plant and land located at 6925 Guion
Road, Indianapolis, Indiana 46268-2582 and all buildings, fixtures,
improvements, facilities or other structures located on such land and
appurtenances thereto, as described on Schedule C of the title insurance
commitment issued by Fidelity National Title Insurance Company of New York (File
No. 02-PHI-1328GD) and such other real property interests owned or ground-leased
by the Elan Companies and their Affiliate contiguous to the above-described
property.
"Plant Assets" has the meaning set forth in Section 2.01(a)(xiii).
"Plant Contracts" has the meaning set forth in Section
2.01(a)(xiii)(D).
"Plant Custom Software" means any computer software that has been
developed or designed exclusively or predominantly for use in the Plant, but not
including any accounting, finance or other software used by the Elan Companies
and their Subsidiaries generally in the operation of their business.
"Plant Embedded Control" means any microprocessor, microcontroller,
smart instrumentation or other sensor, driver, monitor, robotic or other device
necessary for the operation of or predominantly used in the Plant that contains
a semiconductor, memory circuit, BIOS, PROM or other microchip, but not
including any such device used by the Elan Companies and their Subsidiaries
generally in the operation of their business.
"Plant Employees" has the meaning set forth in Section 8.10(a).
-11-
"Plant Liabilities" has the meaning set forth in Section 3.01(b).
"Plant Licenses and Permits" has the meaning set forth in Section
2.01(a)(xiii)(M).
"Plant Permitted Encumbrances" means those items listed on Schedule
1.01(d) hereto and statutory liens for real estate Taxes or other governmental
charges or assessments not yet due and payable.
"Plant Personal Property" has the meaning set forth in Section
2.01(a)(xiii)(C).
"Plant Reports and Plans" has the meaning set forth in Section
2.01(xiii)(L).
"Plant Software Products" means (i) any computer software products
sold, distributed or marketed by the Elan Companies, other than Off-the-Shelf
Software, necessary for the operation of or predominantly used in the Plant, and
(ii) all computer operating, security or programming software that is owned by
or licensed to the Elan Companies and necessary for the operation of or
predominantly used in the Plant or that has been developed or designed for or is
in the process of being developed or designed for use and that is necessary for
the operation of or predominantly used in the Plant, but not including any
accounting, finance or other software used by the Elan Companies and their
Subsidiaries generally in the operation of their business.
"Post-November 15 Adjustment" shall mean the greater of (a) zero, or
(b) (i) the Net Sales Revenue of Product between November 15, 2002 and the
Closing Date or December 15, 2002, whichever is earlier (such Net Sales Revenue,
"Post-November 15 Net Product Sales"), minus (ii) the product of (x) the number
of weeks (or fraction thereof) between November 15, 2002 and the Closing Date or
December 31, 2002, whichever is earlier, and (y) $1.5 million.
"Pre-Closing Net Product Sales" means the dollar amount of Net Sales
Revenue of Product in the Territory by the Elan Companies from the date of this
Agreement to the earlier to occur of the Closing Date and November 15, 2002.
"Pre-Closing Tax Date Period" means all taxable periods ending on or
before the Closing Date and the portion ending on the Closing Date of any
taxable period that includes (but does not end on) the Closing Date.
"Pre-Conditions of Transfer" has the meaning set forth in Section
8.22.
"Pre-November 15 Adjustment" shall mean (i) if the Closing shall
occur prior to November 15, 2002, the product of (x) $1.5 million and (y) the
number of weeks (or fraction thereof) between the Closing Date and November 15,
2002 and (ii) if the Closing shall occur on or after November 15, 2002, zero.
"Price Protection Payment" means any amount to be paid to a
wholesaler of the Product as a result of a decrease in the market price of such
Product after such Product has been sold to the wholesaler.
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"Product" shall mean that pharmaceutical product currently approved
by the U.S. Food and Drug Administration pursuant to NDA No. 50-724 or approved
by Health Canada pursuant to a NOC and issued DIN 02231950 and marketed in the
United States and Canada under the trademark ABELCET.
"Product Books and Records" means copies of all files, documents,
instruments, papers, books and records, whether on paper or in electronic form
in a Database (but if in electronic format, not including any related software),
owned or Controlled by the Elan Companies or their respective Affiliates and
necessary for or to the extent related to the development of the Product or a
Current Product Improvement or the sale, marketing or distribution of the
Product or a Current Product Improvement in the Territory, including (a) all
market research, marketing plans, media plans, advertising, customer marketing
records, call lists or similar materials, pricing lists, current and prospective
customer lists and records, including principal contacts, addresses, telephone
numbers, purchasing history and payment information, and promotional and
marketing books and records, (b) any documentation evidencing or embodying the
Product Intellectual Property, and (c) any documentation to the extent related
to investigations being conducted with respect to the Product or a Current
Product Improvement, including pursuant to a Development Contract, or to the
receipt or maintenance of regulatory approvals for the Product or a Current
Product Improvement in the Territory (including study protocols, study plans,
pre-clinical and clinical study test results and data, and investigator and
study site lists and contact reports), but excluding any such items set forth on
Schedule 1.01(e) of the Elan Company Disclosure Schedule that (i) any applicable
Law prohibits their transfer, (ii) any transfer thereof would subject the Elan
Companies or any of their respective Affiliates to any Liability or (iii) are
tax files, documents, instruments, papers, books and records.
"Product Improvement" shall mean any (a) line extension of the
Product; (b) new indication of the Product; (c) composition or matter or article
of manufacture consisting essentially of a chemical derivative of Amphotericin
B; (d) pharmaceutical combination containing the Product and another active
ingredient; (e) new formulations or new dosage forms comprising a lipid or
liposomal combination or formulation of Amphotericin B; (f) other combinations
or formulations comprising Amphotericin B, or any chemical derivatives thereof,
with respect to which the Elan Companies or their Affiliates are conducting or
have conducted clinical or pre-clinical research prior to the date hereof
(including any aerosol formulations of or combination products with Amphotericin
B); and/or (g) the making, having made, using, selling, offering for sale or
importing of such compositions of matter or articles of manufacture constituting
any of the foregoing. Product Improvements shall not include any composition of
matter or article of manufacture which contains or is made or manufactured using
any Excluded Technology.
"Product Intellectual Property" means the Copyrights, the Product
Patent Rights, the Product Know-How and the Product Trademarks.
"Product Inventory" means the Finished Product Inventory, Raw
Material Product Inventory and Work-In-Progress Product Inventory.
"Product Know-How" means the Product Specific Know-How and the
Product Related Know-How.
-13-
"Product License Agreements" has the meaning set forth in Section
2.01(a)(ii).
"Product Patent Rights" has the meaning attributed thereto in the
License Agreement.
"Product Registrations" means (i) the approvals or registrations
which have been received by the Elan Companies as of the date of this Agreement,
or which are received by the Elan Companies after the date of this Agreement but
before the Closing Date, for the investigation, sale, distribution and/or
marketing of the Product or a Current Product Improvement in the Territory
(including any NDAs, INDs, NOCs and DINs), and (ii) all dossiers, reports, data
and other written materials filed as part of such approvals or registrations, or
maintained by the Elan Companies and relating to such approvals or
registrations.
"Product Related Intellectual Property" has the meaning attributed
thereto in the License Agreement.
"Product Related Know-How" has the meaning attributed thereto in the
License Agreement.
"Product Related Patent Rights" has the meaning attributed thereto
in the License Agreement.
"Product Specific Intellectual Property" has the meaning attributed
thereto in the License Agreement.
"Product Specific Know-How" has the meaning attributed thereto in
the License Agreement.
"Product Specific Patent Rights" has the meaning attributed thereto
in the License Agreement.
"Product Supply Agreement" shall mean the Abelcet(TM) Manufacturing
and Supply Agreement to be dated as of the Closing Date by and between Elan
Pharma International Limited and the Acquiror, a form of which is attached
hereto as Exhibit B.
"Product Trademarks" means the trademarks and trademark
registrations and registration applications for the Product in the Territory,
any associated logos and any Internet domain names in the Territory including
such trademarks or any portions thereof, in each case to the extent Controlled
by the Elan Companies or their Affiliates, including those trademarks, trademark
registrations and registration applications, logos and Internet domain names
identified on Schedule 1.01(f) hereto (the "Scheduled Product Trademarks") but
not including any Corporate Names.
"PROMDAS" has the meaning set forth in the License Agreement.
"Purchase Price" has the meaning set forth in Section 4.01(a)(i).
"Purchased Assets" has the meaning set forth in Section 2.01(a).
-14-
"Raw Material Inventory" means all materials used in the manufacture
of a finished pharmaceutical product that is formulated, labeled or otherwise
intended for use, sale or offer for sale, whether held at a location or facility
of the Elan Companies or any Affiliate thereof (or of any other Person on behalf
of the Elan Companies or any Affiliate thereof) or in transit to or from the
Elan Companies or any Affiliate thereof (or any such other Person).
"Raw Material Non-Product Inventory" means all Raw Material
Inventory of any pharmaceutical product produced at the Plant other than Product
owned as of the Closing Date by the Elan Companies or any Affiliate thereof.
"Raw Material Product Inventory" means all Raw Material Inventory of
Product owned or controlled as of the Closing Date by the Elan Companies or any
Affiliate thereof.
"Real Estate Leases" has the meaning set forth in Section 6.20(g).
"Registrations" means the Product Registrations and the
Manufacturing Process and Plant Registrations.
"Related Agreements" means each agreement whose form is set forth as
an Exhibit to this Agreement.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing or
migration of a Hazardous Material into the Environment.
"Sales Force Employees" has the meaning set forth in Section
8.10(a).
"Scheduled Product Patent Rights" means those Product Patent Rights
specifically scheduled on Schedule A and B of the License Agreement.
"Second Ampho B Source" has the meaning set forth in Section
8.03(f).
"Service Contracts" has the meaning set forth in Section 6.20(h).
"Site" means any of the real properties, including all soil,
subsoil, surface waters and groundwater thereat and improvements thereon,
currently or previously owned, leased or operated by the Elan Companies in
connection with the Product or the Purchased Assets, any predecessors of the
Elan Companies in connection with the Product or the Purchased Assets, or any
entities previously owned by the Elan Companies in connection with the Product
or the Purchased Assets, including the Plant.
"Subsidiary" of a Person means any entity Controlled by that Person.
"Supply Agreements" means the Product Supply Agreement and the
Myocet Supply Agreement.
-15-
"Supply Contracts" has the meaning set forth in Section
2.01(a)(xiii)(H).
"Taxes" means all of the following in connection with the operations
of the Business or the Plant or the transactions contemplated hereby: (i) any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, value added, ad valorem, transfer, franchise, profits, license,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, capital tax, customs duty or other tax, governmental fee or
other like assessment imposed by any governmental, regulatory or administrative
entity or agency responsible for the imposition of any such tax (domestic or
foreign); (ii) any Liability for the payment of any amounts of the type
described in (i) as a result of being a member of any affiliated, consolidated,
combined, unitary or other group for any Taxable period; and (iii) any Liability
for the payment of any amounts of the type described in (i) or (ii) as a result
of any express or implied obligation to indemnify any other Person.
"Tax Return" means any return, declaration, report, claim for refund
or information return or statement filed with a Governmental or Regulatory
Authority relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Termination Date" has the meaning set forth in Section 12.01(b).
"Territory" means the United States of America, Canada, Puerto Rico
and any territory or possession of the United States of America or Canada.
"Third Party Accounting Firm" has the meaning set forth in Section
4.04(b).
"Third-Party Claim" has the meaning set forth in Section 11.02(d).
"Trademark Assignment Agreement" means the Trademark Assignment
Agreement to be dated as of the Closing Date by and between the Acquiror and
EPI, a form of which is attached hereto as Exhibit E.
"Transferred Assets" means the Purchased Assets, together with all
assets conveyed, assigned, transferred, licensed or sublicensed by the Elan
Companies or their Affiliates to the Acquiror or its Affiliates pursuant to the
Related Agreements.
"WARN Act" means the Workers Adjustment and Retraining Notification
Act of 1988.
"Welfare Plans" means "welfare benefit plans" as defined in Section
3(1) of ERISA.
"Work-In-Progress Inventory" means all works in progress of a
finished pharmaceutical product, whether held at a location or facility of the
Elan Companies or any Affiliate thereof (or of any other Person on behalf of the
Elan Companies or any Affiliate thereof) or in transit to or from the Elan
Companies or any Affiliate thereof (or any such other Person).
-16-
"Work-In-Progress Non-Product Inventory" means all Work-In-Progress
Inventory of any pharmaceutical product produced at the Plant other than Product
owned as of the Closing Date by the Elan Companies or any Affiliate thereof.
"Work-In-Progress Product Inventory" means all Work-In-Progress
Inventory of Product owned or controlled as of the Closing Date by the Elan
Companies or any Affiliate thereof.
Section 1.02. Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires: (a) words of any gender include
each other gender; (b) words using the singular or plural number also include
the plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (d) the
terms "Article" or "Section" refer to the specified Article or Section of this
Agreement; (e) the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or"; and (f) the term
"including" means "including without limitation." Whenever this Agreement refers
to a number of days, such number shall refer to calendar days unless Business
Days are specified.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.01. Purchase and Sale of Assets at the Closing. (a)
Subject to the terms and conditions of this Agreement, at the Closing, the Elan
Companies shall, jointly and severally, transfer and deliver to the Acquiror or
one or more designated Subsidiaries of Acquiror, and the Acquiror or one or more
designated Subsidiaries of Acquiror shall acquire and accept from the Elan
Companies, all of the Elan Companies' right, title and interest, in and to the
following assets free and clear of all Encumbrances, other than Permitted
Encumbrances (collectively the "Purchased Assets"):
(i) rights and obligations of the Elan Companies under each of the
Contracts for the development of aerosol formulations, combinations,
therapies, comparative trials, and safety studies for the Product or a
Current Product Improvement, by way of assignment and/or subcontract, in
each case as set forth on Schedule 2.01(a)(i) (the "Development
Contracts"); it being understood that the rights and obligations of the
Elan Companies under the Development Contracts are to be transferred at
the Closing from the Elan Companies to the Acquiror, and the Elan
Companies retain all rights to all data, information and any intellectual
property for use outside of the Territory;
(ii) rights of the Elan Companies under each of the Contracts
relating to the license of intellectual property and the performance of
related research services, by way of assignment and/or sublicense, in each
case as set forth on Schedule 2.01(a)(ii) (the "Product License
Agreements"); it being understood that the rights and obligations of the
Elan Companies under the Product License Agreements are to be divided at
the Closing between the Elan Companies and the Acquiror so that Acquiror
acquires and assumes all such rights and obligations within the Territory,
and the Elan Companies retain all such rights and obligations for use
outside of the Territory;
-17-
(iii) all rights of the Elan Companies under the Contracts for
distribution of the Product in the Territory, by way of assignment and/or
subcontract, in each case as set forth on Schedule 2.01(a)(iii) (the
"Distribution Contracts" and, together with the Development Contracts, the
Product License Agreements, the Contracts responsive to Section
2.01(a)(xii), the Plant Contracts and the Supply Contracts, the "Assumed
Contracts");
(iv) all Marketing Materials;
(v) all Product Books and Records;
(vi) all Finished Product Inventory and Finished Non-Product
Inventory;
(vii) the license and/or ownership rights to all Product
Intellectual Property, as set forth in the License Agreement, the
Trademark Assignment Agreement, the Canadian Trademark Assignment
Agreement and the Patent Assignment Agreement;
(viii) all Copyrights;
(ix) all Product Registrations;
(x) all legally transferable rights under Governmental Permits;
(xi) all rights related to any prepaid expenses of or predominantly
related to the Business;
(xii) any other assets and Contracts set forth on Schedule
2.01(a)(xii); and
(xiii) the following assets (the "Plant Assets"):
(A) the Plant;
(B) security deposits and assignments of all security
deposits, if any, with respect to the Plant (but not the Plant
Employees), leases, lease guaranties, assignment of leases and lease
guaranties;
(C) all fixed assets, fixtures, vehicles, trailers, leasehold
improvements, tooling, machinery, equipment, furniture, furnishings,
appliances, signs, tools, and other personal property and all
plumbing, heating, air conditioning, security, mechanical,
electrical and all other systems and equipment and all component
parts thereof, owned by Elan Companies and located in, or attached
to, or used at the Plant (collectively, "Plant Personal Property");
(D) all service contracts, maintenance contracts, operating
contracts, listing agreements, commission agreements, equipment
leases, warranties and/or guaranties, agreements relating to the
construction of any unfinished improvements and like contracts and
agreements necessary for the operation of the Plant or relating
predomi-
-18-
nantly to the Plant, including those listed on Schedule
2.01(a)(xiii)(D) (collectively, "Plant Contracts") and the
assignments or subcontract of all Plant Contracts;
(E) all Plant Software Products, Plant Embedded Controls and
Plant Custom Software (including documentation and related object
and source codes);
(F) all legally transferable Governmental Permits necessary
for the operation of the Plant;
(G) all manufacturing, warehouse and office supplies used
predominantly in the Plant;
(H) the Contracts for the supply of raw materials and relating
predominantly to the manufacturing, packaging, labeling or storage
of Product, by way of assignment or subcontract, in each case as set
forth on Schedule 2.01(a)(xiii)(H) (the "Supply Contracts");
(I) all rights related to any prepaid expenses of or related
predominantly to the Plant;
(J) all Manufacturing Process and Plant Books and Records;
(K) all Manufacturing Process and Plant Registrations;
(L) (a) preliminary, final and proposed building plans and
specifications (including "as built" plans and drawings) and any and
all other plans and specifications for the Plant, (b) surveys,
grading plans, topographical maps, architectural and structural
drawings and engineering, soils, seismic, environmental, geologic
and architectural reports, studies and tests relating to the Plant,
and (c) lock combinations, keys, passwords, operating manuals and
technical data relating to the Plant ((a), (b), and (c)
collectively, "Plant Reports and Plans");
(M) all legally transferable rights under (a) licenses,
permits, approvals, including building inspection approvals,
variances, special use permits, certificates of occupancy,
subdivision maps and entitlements issued, approved or granted by any
Governmental or Regulatory Authority necessary for the operation of
the Plant, (b) development rights, covenants, conditions and
restrictions, reciprocal easement agreements and rights, area
easement agreements and rights and other common or planned
development agreements and rights necessary for the operation of the
Plant and (c) other Governmental Permits relating to the Plant ((a),
(b) and (c) collectively, "Plant Licenses and Permits");
(N) all Raw Material Product Inventory, Raw Material
Non-Product Inventory, Work-in-Progress Product Inventory and
Work-in-Progress Non-Product Inventory; and
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(O) all other Assets or Properties and Contracts necessary for
the operation or ownership of the Plant and/or the Plant Personal
Property, except as set forth on Schedule 2.01(a)(xiii)(M).
(b) Notwithstanding anything to the contrary contained in this
Agreement, from and after the Closing, the Elan Companies shall retain all of
their right, title and interest in and to the following assets (the "Excluded
Assets"):
(i) all cash and cash equivalents of the Elan Companies or any of
their respective Affiliates;
(ii) all Accounts Receivables of the Elan Companies or any of their
respective Affiliates;
(iii) the Corporate Names, except as expressly provided in Section
8.07; and
(iv) any refund or credit of Taxes attributable to any Pre-Closing
Tax Period.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Elan Companies may retain, at their expense, archival copies of
all Assumed Contracts, Plant Contracts, Supply Contracts, Books and Records,
Marketing Materials and other documents or materials conveyed hereunder;
provided, however, that the Elan Companies shall maintain such items in
accordance with the provisions of Section 8.06.
Section 2.02. Assignability and Consents. (a) Notwithstanding
anything to the contrary contained in this Agreement, if the sale, assignment,
transfer, conveyance or delivery or attempted sale, assignment, transfer,
conveyance or delivery to the Acquiror of any Contract, Plant Contracts, Supply
Contracts, the Plant Personal Property and the Governmental Permits is (i)
prohibited by any applicable Law or (ii) would require any authorizations,
approvals, consents or waivers from a third Person or Governmental or Regulatory
Authority and such authorizations, approvals, consents or waivers shall not have
been obtained prior to the applicable Closing Date (each a "Non-Assignable
Asset"), and in either case, the Closing shall proceed, but the Closing shall
not constitute the sale, assignment, transfer, conveyance or delivery of
Non-Assignable Asset, and this Agreement shall not constitute a sale,
assignment, transfer, conveyance or delivery of such Contract unless and until
such authorization, approval, consent or waiver is obtained; provided that if
any of the Purchased Assets set forth on Schedule 2.02 shall constitute
Non-Assignable Assets, the Acquiror shall have the right not to consummate the
Closing, but shall have no such right with regard to any other Non-Assignable
Assets. In the event that the Closing occurs without the sale, assignment,
transfer, conveyance or delivery of any Non-Assignable Asset, then the Elan
Companies shall continue to use commercially reasonable efforts to obtain any
Elan Third Party Consent or novation after the Closing Date, and the Acquiror
shall cooperate with the Elan Companies in any economically feasible arrangement
to the Elan Companies to provide that the Acquiror shall receive the interest of
the Elan Companies in the benefits under such Non-Assignable Asset until such
time as such Elan Third Party Consent or novation shall have been obtained, and
the Elan Companies shall cooperate with the Acquiror in any such economically
feasible arrangement, including performance by the Elan Companies as agent if
eco-
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nomically feasible to the Elan Companies, and that the Acquiror shall be liable
to the Elan Companies in a fashion economically equivalent to what the
Acquiror's Liabilities would be under the Non-Assignable Asset if it were
assigned; provided, that the Acquiror shall only be so liable to the Elan
Companies to the extent that it correspondingly receives benefits under such
economically feasible arrangement.
(b) The Elan Companies shall pay and discharge, and shall indemnify
and hold harmless the Acquiror and its Affiliates from and against, any and all
out-of-pocket costs of cooperation with Elan Companies seeking to obtain or
obtaining the Elan Third Party Consents whether before or after the Closing
Date. Once authorization, approval or waiver of or consent for the sale,
assignment, transfer, conveyance or delivery of any such Contract not sold,
assigned, transferred, conveyed or delivered at the applicable Closing is
obtained, the Elan Companies shall assign, transfer, convey and deliver such
Contract to the Acquiror at no additional cost to the Acquiror. Notwithstanding
anything to the contrary contained in this Agreement, the Acquiror shall not
assume any Liabilities under a Non-Assignable Asset until it has been assigned
to the Acquiror; provided, that the Acquiror will be liable to the Elan
Companies for performing its obligations under the economically feasible
arrangements described in Section 2.02(a); and provided, further, that the
Acquiror shall only be so liable to the Elan Companies to the extent that it
correspondingly receives benefits under such economically feasible arrangement.
ARTICLE III
ASSUMPTION OF LIABILITIES
Section 3.01. Assumption of Liabilities. (a) Subject to the terms
and conditions of this Agreement, as of the Closing Date, the Acquiror agrees to
assume, satisfy, perform, pay and discharge each of the following Liabilities
(the "Assumed Liabilities"):
(i) all Liabilities arising out of any product liability, breach of
warranty or similar claim for injury to person or property asserted on or
after the Closing Date, which resulted from the use or misuse of the
Product sold on or after the Closing Date (including all proceedings
relating to any such liabilities);
(ii) all Liabilities of the Elan Companies under the Assumed
Contracts, but only to the extent such Liabilities arise from any event,
circumstance or condition occurring in a period (or portion thereof) after
the Closing;
(iii) all Liabilities arising out of the return of the Product sold
on or after the Closing Date, which are claimed on or after the Closing
Date;
(iv) all Liabilities arising out of any Chargebacks, Medicaid
Rebates, Price Protection Payments or any other post-sale rebates,
refunds, price adjustments or other similar credits or liabilities
relating to the Product either (A) sold on or prior to the Closing Date
which are claimed on or after the Closing Date, and that are based on
practices introduced on or after the Closing Date or (B) sold after the
Closing Date;
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(v) all Liabilities for Taxes arising out of or relating to,
directly or indirectly, the Purchased Assets (including the Product) or
the ownership, sale or lease of any of the Purchased Assets, other than
the Excluded Tax Liabilities, and other than all liabilities for transfer
Taxes for which the Acquiror is responsible pursuant to Section 4.03;
(vi) all Liabilities arising out of user or other similar fees
payable to the FDA or other Governmental or Regulatory Authority to the
extent that such fees are payable on account of the operation of the
Business on or after the Closing Date (and to the extent that the Elan
Companies have paid any such fee prior to the Closing Date, the Acquiror
shall promptly reimburse Elan Companies for such payment); and
(vii) all other Liabilities arising out of or relating to, directly
or indirectly, the Purchased Assets (including the Product), the
ownership, sale or lease of any of the Purchased Assets, or any Assumed
Liabilities, but only to the extent such Liabilities arise from any event,
circumstance or condition occurring in a period (or portion thereof) after
the Closing.
(b) Subject to the terms and conditions of this Agreement, the
Acquiror also agrees to assume, satisfy, perform, pay and discharge each of the
following Liabilities (the "Plant Liabilities," which shall also constitute
Assumed Liabilities):
(i) all Liabilities of the Elan Companies under the Plant Contracts
and the Supply Contracts, but only to the extent such Liabilities arise
from any event, circumstances or condition occurring in a period (or
portion thereof) after the Closing;
(ii) all Liabilities for Taxes directly arising out of or relating
to the Plant Assets (including the Plant) or the ownership, sale or lease
of any of the Plant Assets, other than the Excluded Tax Liabilities and
other than all Liabilities for transfer Taxes for which the Elan Companies
are responsible pursuant to Section 4.03; and
(iii) all other Liabilities arising out of or relating to, directly
or indirectly, the Plant Assets (including the Plant), the ownership, sale
or lease of any of the Plant Assets, or any of the Plant Liabilities, but
only to the extent such Liabilities arise from or with respect to any
event, circumstance or condition occurring in a period (or portion
thereof) after the Closing.
(c) Notwithstanding anything contained in this Agreement to the
contrary, from and after the Closing Date, the Elan Companies shall retain all
of the following Liabilities ("Excluded Liabilities"):
(i) accounts payable and Liabilities of the Elan Companies or any of
their respective Affiliates for materials and services with respect to the
manufacture of the Product or a Current Product Improvement incurred prior
to the Closing Date;
(ii) any Tax payable with respect to any business, assets, property
or operation of the Elan Companies or any member of any affiliated group
of which the Elan Companies are a
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member (including any Taxes relating to or arising out of the Purchased
Assets or the operation of the Business) for any Pre-Closing Tax Period,
other than any transfer Tax for which the Acquiror is responsible pursuant
to Section 4.03 ("Excluded Tax Liability");
(iii) any Liability of the Elan Companies or any of their respective
Affiliates arising out of or relating to any Excluded Asset;
(iv) all Liabilities arising out of any product liability, patent
infringement, breach of warranty or similar claim for injury to person or
property which resulted from the use or misuse of the Product sold prior
to the Closing Date (including all proceedings relating to any such
liabilities);
(v) all Liabilities arising out of the return, government seizures,
field corrections, withdrawals or recalls of the Product sold prior to the
Closing Date, which are claimed prior to, on or after the Closing Date;
(vi) all Liabilities arising out of any Chargebacks, Medicaid
Rebates, Price Protection Payments or any other post-sale rebates,
refunds, price adjustments or other similar credits or Liabilities
relating to the Product, which are claimed prior to, on or after the
Closing Date and based on practices introduced prior to the Closing Date;
(vii) any federal, state, local or foreign income or other Tax
payable with respect to the Business, the Purchased Assets or other
properties or operations of the Elan Companies or any member of any
affiliated group of which the Elan Companies are, or have been, a member
for a period prior to the Closing Date;
(viii) Liabilities arising from or pursuant to any Contracts as to
which an Elan Third Party Consent is not obtained by the Closing Date
regardless of whether the Acquiror waives delivery of such Elan Third
Party Consent;
(ix) any Liabilities to give credits or take other remedial actions
for defective goods or services based upon Product sold prior to the
Closing Date;
(x) any Liabilities with respect to any litigation or other claims
to the extent arising from any event, circumstance or condition occurring
or alleged to have occurred on or before the Closing Date;
(xi) any Liability with respect to the employees or independent
contractors of the Elan Companies or their Affiliates, including any
Liability with respect to the Employee Benefit Plans and any Liability
with respect to the employment of Business Employees or the Canadian Sales
Force Employees by the Elan Companies or any of their Affiliates;
(xii) any Liabilities for severance or other obligations arising out
of the termination of Business Employees, Canadian Sales Force Employees
or any other former employees of the Elan Companies or their Affiliates by
the Elan Companies or their Affiliates;
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(xiii) all Liabilities arising out of user or other similar fees
payable to the FDA or other Governmental or Regulatory Authority to the
extent that such fees are payable on account of the operation of the
Business prior to the Closing Date; and
(xiv) any other Liability of the Elan Companies or any of their
Affiliates that is not specifically listed as an Assumed Liability under
this Section 3.01.
ARTICLE IV
PURCHASE PRICE AND PAYMENT
Section 4.01. Purchase Price. (a) As consideration for the Purchased
Assets, at the Closing, the Acquiror shall:
(i) deliver or cause to be delivered to the Elan Companies the sum
of $370 million, payable on the Closing Date by electronic funds transfer
of immediately available funds to the accounts of such entities as are
designated by the Elan Companies not less than two Business Days prior to
the Closing Date (the "Purchase Price"); and
(ii) assume the Assumed Liabilities.
(b) At the Closing, the Purchase Price shall be decreased by the
lesser of (i) the sum of (x) Pre-Closing Net Product Sales and (y) the
Pre-November 15 Adjustment and (ii) $10 million. If the Closing Date shall be
later than November 15, 2002, the Purchase Price shall also be decreased by the
Post-November 15 Adjustment.
Section 4.02. Allocation of Purchase Price. The Purchase Price shall
be allocated among the Purchased Assets in accordance with Section 1060 of the
Code, and the Acquiror and the Elan Companies agree (a) to report the sale and
purchase of the Purchased Assets for Tax purposes in accordance with such
allocations and (b) not to take any position inconsistent with such allocations
on any of their respective tax returns. The Elan Companies shall initially
determine and send written notice to the Acquiror of the allocation of the
Closing Purchase Price within 60 days following the execution of this Agreement.
The Acquiror will be deemed to have accepted such allocation unless it provides
written notice of disagreement to the Elan Companies within 10 days of receipt
of the Elan Companies' notice of allocation. If the Acquiror provides such
notice of disagreement to the Elan Companies, the parties shall proceed in good
faith to determine the allocation in dispute. If within 10 days after the Elan
Companies receive the Acquiror's notice of disagreement the parties have not
reached agreement, the Accountants shall be engaged to determine the final
allocation in dispute. The Elan Companies and the Acquiror shall share equally
the fees of such Accountants.
Section 4.03. Payment of Sales, Use and Other Taxes. The Elan
Companies, on the one hand, and the Acquiror, on the other hand, shall share
equally all sales, use, transfer, value added and other related Taxes, if any,
arising out of the sale by the Elan Companies and their respective Affiliates of
the Purchased Assets to the Acquiror pursuant to this Agreement; provided,
however, that the Elan Companies shall pay all Indiana gross income taxes in the
form of tax stamps to be attached
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to the deed transferring the Plant at Closing to the Marion County Treasurer's
Office at the time of recording such deed at Closing.
Section 4.04. Closing Date Inventory Value Adjustments. (a) As
promptly as practicable, but in any event not later than 30 days after the
Closing, the Elan Companies shall prepare and deliver to the Acquiror a
statement calculating the Closing Date Inventory Value (the "Closing Date
Inventory Value Statement").
(b) During the 30 day period immediately following the Acquiror's
receipt of the Closing Date Inventory Value Statement, the Acquiror shall be
permitted to review the Elan Companies' books and records reasonably necessary
for the preparation of the Closing Date Inventory Value Statement. The Closing
Date Inventory Value Statement shall become final and binding upon the Acquiror
and the Elan Companies at the end of such 30 day period, unless the Acquiror
objects to the Closing Date Inventory Value Statement, in which case it shall
send written notice (the "Notice of Objection") to the Elan Companies within
such period, setting forth in specific detail the basis for its objection and
its proposal for any adjustments to the Closing Date Inventory Value Statement.
If a timely Notice of Objection is received by the Elan Companies, then the
Closing Date Inventory Value Statement shall become final and binding (except as
provided below with respect to resolution of disputes) on the Elan Companies and
the Acquiror on the first to occur of (x) the date the Elan Companies and the
Acquiror resolve in writing any differences they have with respect to the
matters specified in the Notice of Objection and (y) the date all matters in
dispute are finally resolved in writing by the Third Party Accounting Firm (as
defined), in each case as provided below. The Elan Companies and the Acquiror
shall seek in good faith to reach agreement as to any such proposed adjustment
or that no such adjustment is necessary within 10 days following receipt of the
Notice of Objection. If agreement is reached in writing within such 10 day
period as to all proposed adjustments, or that no adjustments are necessary, the
parties shall revise the Closing Date Inventory Value Statement accordingly. If
the Elan Companies and the Acquiror are unable to reach agreement within 10 days
following receipt of the Notice of Objection, then such certified public
accounting firm of national reputation other than the auditors of the Elan
Companies and the Acquiror as agreed upon by the Elan Companies and the Acquiror
(the "Third Party Accounting Firm") shall be engaged at that time to review the
Closing Date Inventory Value Statement, and shall make a determination as to the
resolution of any adjustments. The determination of the Third Party Accounting
Firm shall be delivered as soon as practicable following engagement of the Third
Party Accounting Firm, but in no event more than 30 days thereafter, and shall
be final, conclusive and binding upon the Elan Companies and the Acquiror and
the parties shall revise the Closing Date Inventory Value Statement accordingly.
The Elan Companies, on the one hand, and the Acquiror, on the other hand, shall
each pay one-half of the cost of the Third Party Accounting Firm. Within 10 days
of the date on which the Closing Date Inventory Value Statement becomes final
and binding on the Elan Companies and the Acquiror, the Acquiror shall pay the
Elan Companies the Closing Date Inventory Value Adjustment to the Elan
Companies, if positive, and the Elan Companies shall pay the Closing Date
Inventory Value Adjustment to the Acquiror, if negative.
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ARTICLE V
CLOSING
Section 5.01. Time and Place. Unless this Agreement is earlier
terminated pursuant to Article XII, the closing of the transactions contemplated
by Sections 2.01(a) and 3.01(a) of this Agreement, including the purchase and
sale of the Purchased Assets and the assumption of the Assumed Liabilities (the
"Closing"), shall take place as promptly as practicable, but no later than five
Business Days following satisfaction or waiver of the conditions set forth in
Articles IX and X, at 10:00 a.m. at the offices of Cahill Gordon & Reindel, 80
Pine Street, New York, New York 10005, unless another time or place shall be
agreed to by the parties (the "Closing Date").
Section 5.02. Deliveries at Closing.
(a) Closing Deliveries by the Elan Companies. At the Closing, the
Elan Companies shall deliver or cause to be delivered to the Acquiror:
(i) the Bill of Sale;
(ii) an original of each of the Related Agreements, executed by the
Elan Companies party thereto, and copies of all documents required to be
delivered by the Elan Companies pursuant to the Related Agreements;
(iii) an unredacted, fully executed copy of each of the Assumed
Contracts;
(iv) the Product Registrations;
(v) assignment and assumption agreements and/or subcontracts, as
applicable, in form and substance reasonably acceptable to the Elan
Companies and the Acquiror, assigning to the Acquiror all rights of the
Elan Companies in and to the Assumed Contracts;
(vi) copies of all Elan Governmental Consents set forth on Schedule
5.02(a)(vi) (to the extent available in writing) and Elan Third Party
Consents;
(vii) a FIRPTA affidavit for EOI as required by Section 1445 of the
Code for EOI;
(viii) executed releases of any Encumbrances that are identified on
Schedule 5.02(a)(viii); and
(ix) a certificate signed by an officer of Elan Parent certifying as
to the amount of Pre-Closing Net Product Sales and, if the Closing shall
occur after November 15, 2002, Post-November 15 Net Product Sales.
In addition, the Elan Companies shall use their commercially
reasonable efforts to deliver such other instruments and documents of conveyance
and transfer as shall be necessary and effective to transfer and assign to, and
vest in, the Acquiror all of the Elan Companies' right, title and
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interest in and to the Purchased Assets and such other respective agreements and
other documents, instruments and certificates in addition to good standing
certificates, certified resolutions, receipts and such other items as may be
reasonably requested by the Acquiror. Simultaneously with such deliveries, all
such commercially reasonable steps will be taken by the Elan Companies as may be
required to put the Acquiror in actual possession and operating control of the
Purchased Assets.
Furthermore, the Elan Companies shall use their commercially
reasonable efforts to obtain and deliver all approvals, consents and actions of,
filings with and notices to any Governmental or Regulatory Authority necessary
(x) to permit the Elan Companies to perform their obligations under this
Agreement and (y) for the parties to consummate the transactions contemplated
hereby, as are required under any Contract to which the Elan Companies are a
party or by which any of the respective Purchased Assets are bound.
(b) Closing Deliveries by the Acquiror. At the Closing, the Acquiror
will deliver or cause to be delivered to the Elan Companies:
(i) the Purchase Price in immediately available funds by wire
transfer to an account or accounts that shall have been designated by the
Elan Companies not less than two Business Days prior to the Closing Date;
(ii) an original of each of the Related Agreements, executed by the
Acquiror or its Affiliates party thereto, and copies of all documents
required to be delivered by the Acquiror or its Affiliates pursuant to the
Related Agreements;
(iii) such instruments of assumption and other instruments or
documents, in form and substance reasonably acceptable to the Elan
Companies and the Acquiror, as may be necessary to effect the Acquiror's
assumption of the Assumed Liabilities; and
(iv) copies of all the Acquiror Governmental Consents (to the extent
available in writing) set forth on Schedule 5.02(b)(iv).
Additionally, the Acquiror shall use its commercially reasonable
efforts to deliver such other respective agreements and other documents,
instruments and certificates in addition to good standing certificates,
certified resolutions and such other items as may be reasonably requested by the
Elan Companies.
Section 5.03. Deliveries Relating to the Plant.
(a) Deliveries by the Elan Companies. At the Closing, the Elan
Companies shall deliver or cause to be delivered to the Acquiror the following
with respect to the Plant:
(i) a special warranty deed including warranties against grantor's
acts, bill of sale, FIRPTA affidavit of EOI, general assignment, vendor's
and title affidavits, tenant notices, and all documents reasonably
requested by the Acquiror's title company in connection with the purchase
of the Plant;
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(ii) copies of all consents required to be obtained from, or filings
required to be made with, any Governmental or Regulatory Authority or
other Person in connection with the Plant Assets (to the extent available
in writing);
(iii) an original of each of the Plant Contracts and the Supply
Contracts;
(iv) all the Plant Personal Property; and
(v) ALTA owner's title insurance policies issued by a national title
insurance company selected by Acquiror at regular rates (at Acquiror's
expense) insuring Acquiror's fee simple title to the Plant, free and clear
of all Encumbrances excepting only Plant Permitted Encumbrances, on the
Plant and containing such affirmative insurance as the Acquiror may
reasonably request.
Additionally, the Elan Companies shall use their commercially
reasonable efforts to deliver such other respective agreements and other
documents, instruments and certificates in addition to good standing
certificates, certified resolutions, receipts and such other items as may be
reasonably requested by the Acquiror.
(b) Prorations. Real estate Taxes, personal property Taxes, if
applicable, and water and sewer rents and charges (if any) against the Plant for
the year or quarter in which the Closing is held, shall be apportioned on a per
diem basis between the Acquiror and the Elan Companies as of the date of the
Closing, and all Tax adjustments shall be based on the fiscal year used by the
Taxing authority. Utility charges and other current charges in connection with
the Plant shall be apportioned in the same manner.
(c) Deliveries by the Acquiror. The Acquiror shall use its
commercially reasonable efforts to deliver or cause to be delivered to the Elan
Companies such instruments of assumption and other instruments or documents, in
form and substance reasonably acceptable to the Elan Companies and the Acquiror,
as may be necessary to effect the Acquiror's assumption of the Plant
Liabilities.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ELAN COMPANIES
Each Elan Company represents and warrants, jointly and severally, to
the Acquiror as of (i) the date hereof and (ii) the Closing Date, except as to
certain representations and warranties which expressly speak as of a date
certain, which shall speak as of such date, subject to such exceptions as are
specifically disclosed in the disclosure schedule (referencing the appropriate
Sections hereof) supplied by the Elan Companies to the Acquiror and dated as of
the date hereof (the "Elan Disclosure Schedule"), as follows:
Section 6.01. Organization, Etc. Each Elan Company is duly
organized, validly existing and, where applicable, in good standing under the
laws of such Elan Company's jurisdiction of
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organization and has all requisite power and authority to own its assets and
carry on the Business as currently conducted by it. Each Elan Company is duly
authorized to conduct its business and is in good standing in each jurisdiction
where such qualification is required, except for any jurisdiction where failure
to so qualify could not reasonably be expected to have an Adverse Effect. The
certificate of incorporation, bylaws or other similar governing instruments and
organizational documents (the "Charter Documents") of the Elan Companies that
have been delivered to the Acquiror on or prior to the date hereof are effective
under applicable Laws and are current, correct and complete.
Section 6.02. Authority of the Elan Companies. Each Elan Company has
all necessary corporate power and authority and has taken all actions necessary
to enter into this Agreement and to execute and deliver the Related Agreements
to which it is or will be a party and carry out the transactions contemplated
hereby and by the Related Agreements to which it is or will be a party. The
governing body of each Elan Company has taken all action required by Law and the
Charter Documents of each Elan Company and otherwise to be taken by it to
authorize (a) the execution and delivery of this Agreement and the Related
Agreements to which it is or will be a party and (b) the consummation of the
transactions contemplated hereby and by the Related Agreements to which it is or
will be a party. This Agreement has been duly and validly executed and delivered
by each Elan Company and, when executed and delivered by the Acquiror, will
constitute a legal, valid and binding obligation of each Elan Company
enforceable against it in accordance with its terms. When executed and delivered
by each Elan Company and each Affiliate to which it is a party and by the
Acquiror, each Related Agreement will constitute a legal, valid and binding
obligation of each Elan Company and each Affiliate to which it is a party
enforceable against it in accordance with its terms.
Section 6.03. Consents and Approvals. (a) Schedule 6.03(a) of the
Elan Disclosure Schedule sets forth a complete and accurate list (the "Elan
Governmental Consents") of all material consents, waivers, approvals, Orders,
permits or authorizations of, or registrations, declarations, payments or
filings with, any Governmental or Regulatory Authority that are required by
(including those that are required by applicable Law or any court order) or with
respect to the Elan Companies or their respective Affiliates in connection with
the execution and delivery of this Agreement and the Related Agreements by the
Elan Companies or the performance of their respective obligations hereunder.
(b) Schedule 6.03(b) of the Elan Disclosure Schedule sets forth a
complete and accurate list (the "Elan Third Party Consents") of all material
consents, waivers, approvals, or authorizations of, or notices to, any third
party (other than a Governmental or Regulatory Authority) that are required by
or with respect to the Elan Companies or their respective Affiliates in
connection with the execution and delivery of this Agreement and the Related
Agreements by the Elan Companies or the performance of their respective
obligations hereunder and thereunder.
Section 6.04. Non-Contravention. The execution and delivery by the
Elan Companies of this Agreement does not, and the performance by them of their
respective obligations under this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby will not, except as would
not have an Adverse Effect:
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(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Charter Documents of any Elan
Company;
(b) conflict with or result in a violation or breach of any term or
provision of any Law applicable to any Elan Company, the Business or the
Purchased Assets; or
(c) conflict with or result in a breach or Default (or an event
which, with notice or lapse of time or both, would constitute a breach or
Default in any material respect) under any Assumed Contract.
Section 6.05. Contracts. Schedule 6.05 of the Elan Disclosure
Schedule sets forth a complete and correct list of each Contract to which each
Elan Company or any of its Affiliates is a party that is material to the
research, development, manufacture, marketing, sale or distribution of the
Product or a Current Product Improvement, or to the ownership and/or operation
of the Plant, and provides for aggregate annual payments, or has a value in
excess, of $10,000. The Elan Companies have delivered to the Acquiror complete
and correct copies of all such Contracts. Each of the Assumed Contracts is in
effect and constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Elan Company party to such contract; and each
Elan Company has performed all of its required obligations under, and is not in
violation or breach of or Default under, each such Contract. To the Knowledge of
the Elan Companies, the other parties to such Contracts are not in violation or
breach of or in Default under any such Contract.
Section 6.06. Intellectual Property Rights. (a) The Product
Intellectual Property set forth in Schedule 6.06(a) of the Elan Disclosure
Schedule constitutes all of the Product Patent Rights, schedulable Copyrights,
Scheduled Product Trademarks and schedulable Product Know-How that are necessary
to the operation of the Business as has been and is now being conducted. As of
the Closing Date, EPI owns or Controls all of the Product Intellectual Property
set forth on Schedule 6.06(a).
(b) To the Elan Companies' Knowledge, the operation of the Business,
in the Territory, as has been and is now being conducted, does not presently
infringe or misappropriate the Patent Rights or Know-How of any Person and
neither any Elan Company, nor any Affiliates thereof, has received any written
notice from any Person, or has Knowledge of, any actual or threatened claim or
assertion to the contrary or of any facts or alleged facts which are likely to
serve as the basis for any such claim or assertion.
(c) Any necessary registration, maintenance and renewal fees due in
connection with the Scheduled Product Patent Rights and Scheduled Product
Trademarks have been paid in a timely manner and all necessary documents and
certificates in connection with the Scheduled Product Patent Rights and
Scheduled Product Trademarks have, for the purposes of maintaining such
Scheduled Product Patent Rights and Scheduled Product Trademarks, been filed in
a timely manner with the relevant Governmental or Regulatory Authorities.
(d) The Product Intellectual Property set forth on Schedule 6.06(a)
is free and clear of all Encumbrances except Permitted Encumbrances, and no
Person other than the Elan Com-
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panies, including any current or former employee or consultant of the Elan
Companies, has any proprietary, commercial or other interest in any of the
Product Trademarks, Product Patent Rights, scheduled Copyrights, or material
Product Know-How. There are no existing agreements, options, commitments, or
rights with, of or to any Person to acquire or obtain any rights to, any of the
Product Trademarks, Product Patent Rights, scheduled Copyrights or material
Product Know-How.
(e) EPI has the unrestricted right to assign, transfer and/or grant
to the Acquiror all rights in the Product Patent Rights and Scheduled Product
Trademarks that are being assigned, transferred and/or granted to the Acquiror
under this Agreement and the Related Agreements, in each case free of any rights
or claims of any Person and without payment of any royalties, license fees or
other amounts to any Person.
(f) None of the Product Patent Rights are invalid and all are
subsisting and enforceable. None of the Product Patent Rights is currently
involved in any interference, reissue, reexamination, or opposition proceeding,
and neither any Elan Company, nor any of its Affiliates, has received any
written notice from any Person, or has Knowledge, of any actual or threatened
claim or assertion to the contrary, or of any facts or alleged facts which are
likely to serve as a basis for any such claim or assertion.
(g) Solely as it relates to the Product or a Current Product
Improvement or the manufacture of the Product or a Current Product Improvement,
to the Knowledge of the Elan Companies, there are no blocking Patent Rights
owned or under the control of any Person that are not being licensed or assigned
to Acquiror hereunder.
(h) To the Knowledge of the Elan Companies, there is no unauthorized
use, infringement or misappropriation of any of the Product Patent Rights or
material Product Know-How by any Person, including any current or former
employee or consultant of the Elan Companies, nor is there any material breach
of any license, sublicense or other Contract authorizing any Person to use such
Product Patent Rights or material Product Know-How.
(i) There are no Actions or Proceedings (including any inventorship
challenges) pending or to the Knowledge of the Elan Companies threatened with
respect to any of the Scheduled Product Patent Rights nor have any such Actions
or Proceedings been brought during the past five (5) years. Schedule 6.06(i)
sets forth any and all settlements or agreements reached with respect to any
such Actions or Proceedings.
(j) Solely as it relates to the Product or a Current Product
Improvement or the manufacture of the Product or a Current Product Improvement,
the Elan Companies have not entered into any Contract (i) granting any Person
the right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any of the Product Intellectual Property, or (ii)
expressly agreeing to indemnify any Person against any charge of infringement of
any of the Product Intellectual Property.
(k) The Elan Companies have not entered into any Contract granting
any Person the right to control the prosecution of any of the Scheduled Product
Patent Rights.
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(l) None of the Scheduled Product Trademarks is or has been the
subject of any opposition, cancellation, abandonment or similar proceeding, and
neither any Elan Company, nor any of its Affiliates, has received any written
notice from any Person, or has Knowledge, of any actual or threatened claim or
assertion to the contrary, or of any facts or alleged facts which are likely to
serve as a basis for any such claim or assertion.
(m) To the Knowledge of the Elan Companies, there are no trademarks
or trademark registrations or applications of any Person that are interfering or
potentially interfering with the Scheduled Product Trademarks or any other
material Product Trademarks.
(n) The Elan Companies have taken reasonable and customary measures
to maintain and protect, as applicable, the confidentiality of the Product
Patent Rights and material Product Know-How.
(o) The Elan Companies have taken reasonable and customary measures,
with respect to marking the Scheduled Product Trademarks and material Copyrights
(p) All current and former employees and consultants of the Elan
Companies who are or have been substantively involved in the design, review,
evaluation or development of the inventions embodied in the Product Trademarks,
Product Patent Rights, Copyrights or the material Product Know-How have executed
written Contracts or are otherwise obligated to protect the confidential status
and value thereof and to vest in the Elan Companies or their Affiliates
exclusive ownership of such Product Trademarks, Product Patent Rights or
material Product Know-How. The Elan Companies have provided the Acquiror with
true, correct and complete copies of all such Contracts and, to the Knowledge of
the Elan Companies, no such employee or consultant is in default under the terms
of any such Contract.
(q) The employment by Acquiror of the Sales Force Employees or
Canadian Sales Force Employees who are material to the marketing of the Product
or a Current Product Improvement or Plant Employees who are material to the
operation of the Plant will, to the Knowledge of the Elan Companies, not be
prohibited by or cause the breach of any Contract with a Person that restricts
or limits the scope or type of work which, as applicable, the material Sales
Force Employees, Canadian Sales Force Employees or Plant Employees were engaged
in as of the Closing Date.
(r) The Elan Companies, its Affiliates and its sublicensees have not
applied or utilized PROMDAS to formulate any composition of matter or article of
manufacture comprising Amphotericin B.
(s) This Section 6.06 contains the only representations and
warranties of the Elan Companies regarding Product Intellectual Property in this
Agreement and the Related Agreements and no other provision hereof or thereof
shall be construed to contain any such representation or warranty.
Section 6.07. Employee Matters. Schedule 6.07 of the Elan Disclosure
Schedule sets forth the names and titles of and current annual base salary or
hourly rate for each Business Employee and each Canadian Sales Force Employee,
together with a statement of the full amount and
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nature of any other remuneration, whether in cash or kind, paid to each such
person during the most recent fiscal year or payable to each such person in the
future, including the bonuses accrued for each such person and the vacation and
severance benefits to which each such person is entitled.
Section 6.08. Litigation. Except as would not have an Adverse
Effect, there are no Actions or Proceedings pending or threatened in writing or,
to the Knowledge of the Elan Companies, threatened orally against or in
connection with (i) the Purchased Assets or the Business; (ii) this Agreement or
any Related Agreement; or (iii) the transactions contemplated by this Agreement
or any Related Agreement. No Elan Company is subject to any Order that could
reasonably be expected to materially impair or delay the ability of such Elan
Company to perform its obligations hereunder or is in Default with respect to
any court order applicable to the Purchased Assets.
Section 6.09. Environmental Matters. (a) Except as would not have an
Adverse Effect, the Elan Companies have obtained and hold all necessary
Environmental Permits required in connection with the Product, a Current Product
Improvement and the Purchased Assets.
(b) Except as would not have an Adverse Effect, the Elan Companies
are in compliance with all terms, conditions and provisions of all applicable
(i) Environmental Permits, and (ii) Environmental Laws.
(c) None of the Elan Companies has received any written notice
regarding any requirement proposed for adoption or implementation under any
Environmental Law applicable to the Product, a Current Product Improvement or
the Purchased Assets.
(d) None of the Elan Companies has been advised in writing by any
Governmental or Regulatory Authority of any actual or potential change in the
status or terms and conditions of any Environmental Permit required for the
Product or the Purchased Assets either prior to or upon its renewal.
(e) There are no pending or, to the Knowledge of the Elan Companies,
threatened Environmental Claims against the Elan Companies in connection with
the Product, a Current Product Improvement or the Purchased Assets, and the Elan
Companies are not aware of any facts or circumstances which would reasonably be
expected to form the basis for any Environmental Claim, which would have an
Adverse Effect, against the Elan Companies in connection with the Product, a
Current Product Improvement, Purchased Assets or any Site.
(f) Except as would not reasonably be expected to give rise to an
Environmental Claim against the Elan Companies which would have an Adverse
Effect (i) no Releases of Hazardous Materials have occurred at, from, in, to, on
or under the Plant since June 30, 2000 and, to the Knowledge of the Elan
Companies, prior to June 30, 2000 and (ii) to the Knowledge of the Elan
Companies no Hazardous Materials are present in, on or migrating to or from any
Site.
(g) To the Knowledge of the Elan Companies, neither the Elan
Companies, any predecessor of the Elan Companies, nor any entity previously
owned by the Elan Companies, has transported or arranged for the treatment,
storage, disposal or transportation of any Hazardous Mate-
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rial in connection with operations at any Site to any off-Site location, which
would reasonably be expected to result in an Environmental Claim against the
Elan Companies which would have an Adverse Effect.
(h) To the Knowledge of the Elan Companies, no Site is a current or
proposed Environmental Clean-up Site.
(i) There are no Encumbrances (other than Permitted Encumbrances)
imposed pursuant to any Environmental Law on any Site, and to the Knowledge of
Elan Companies, there are no facts, circumstances, or conditions that would
reasonably be expected to result in the imposition of Encumbrances under any
Environmental Law on any Site.
(j) There are no (i) underground storage tanks, active or abandoned;
(ii) polychlorinated biphenyl-containing equipment; or (iii) friable asbestos
material at the Plant.
(k) To the Knowledge of the Elan Companies, there have been no
environmental or health and safety investigations, studies, audits (internal or
by a third party consultant), tests or other analyses (including sampling
reports) (collectively, "Environmental Reports") which are in the possession of
the Elan Companies or their agents or representatives with respect to any Site
or any of the Purchased Assets, which have not been made available to the
Acquiror or its agents or representatives prior to execution of this Agreement,
and all such Environmental Reports so made available to the Acquiror or its
agents or representatives are listed in Schedule 6.09(k).
(l) This Section 6.09 contains the only representations and
warranties of the Elan Companies regarding environmental matters in this
Agreement and the Related Agreements and no other provision hereof or thereof
shall be construed to contain any such representation or warranty.
Section 6.10. Compliance with Law. (a) Except as would not have an
Adverse Effect, the Business is conducted by the Elan Companies and their
respective Affiliates in compliance with all applicable Law including the Social
Security Act, the rules and regulations and policies of the U.S. Department of
Health and Human Services, and all public health and safety provisions of state
Law and regulations, permits, governmental licenses, registrations, approvals,
concessions, franchises, authorizations, orders, injunctions and decrees and
applicable laws, including the FDA Act.
(b) Except as would not have an Adverse Effect, all governmental
licenses, permits, registrations, Product Registrations, approvals, concessions,
franchises and authorizations principally employed in, or necessary to the
ongoing conduct of, the Business are in full force and effect.
(c) Except as would not have an Adverse Effect, since June 30, 2000,
no Governmental or Regulatory Authority has served Notice on the Elan Companies
or any of their respective Affiliates that the Business (as of the date of this
Agreement) or the Transferred Assets were or are in violation of any Law or the
subject of any investigation.
(d) Except as would not have an Adverse Effect, since June 30, 2000,
none of the Elan Companies or any of their respective Affiliates has received
written notice from any Governmen-
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tal or Regulatory Authority that there are any circumstances currently existing
which would reasonably be expected to lead to any loss of or refusal to renew
any material governmental licenses, permits, registrations, Product
Registrations, approvals, concessions, franchises and authorizations relating to
the Product or the Transferred Assets on terms less advantageous to the Elan
Companies and their respective Affiliates than the terms of those governmental
licenses, permits, registrations, Product Registrations, approvals, concessions,
franchises and authorizations currently in force.
(e) (i) Except as would not have an Adverse Effect, the Business is
conducted in compliance with all applicable Laws in connection with the
preparation and submission to the FDA of each of the INDs or NDAs relating to
the Product or a Current Product Improvement (if any), and each of the INDs or
NDAs relating to the Product or a Current Product Improvement (if any) has been
approved by, and none of the Elan Companies or any of their respective
Affiliates has received any written Notice, or otherwise has Knowledge of any
facts, which have, or reasonably should have, led the Elan Companies to believe
that any of the INDs or NDAs relating to the Product or a Current Product
Improvement are not currently in good standing with, the FDA. The Elan Companies
or its Affiliates have filed with the FDA all required notices, supplemental
applications and annual or other reports, including adverse experience reports,
with respect to each IND or NDA relating to the Product or a Current Product
Improvement. With respect to the Product, the applicant of each IND or NDA
relating to the Product or a Current Product Improvement, and all Persons
performing operations covered by the application acted in compliance with 21
U.S.C. ss. 355 or 357, 21 C.F.R. Parts 312 or 314 et seq., respectively, and all
terms and conditions of such applications and Division 8 of the Food and Drugs
Act Regulations (Canada).
(ii) To the Knowledge of the Elan Companies or any of their
Affiliates, no Governmental or Regulatory Authority (including the FDA) has
commenced or threatened to initiate any action to withdraw the Product
Registrations or request the recall of the Product, or commenced or threatened
to initiate any action to enjoin production of the Product at any facility in
the Territory, nor have the Elan Companies or any of their Affiliates received
any Notice to such effect since June 30, 2000.
(iii) All manufacturing operations conducted by the Elan Companies
and their respective Affiliates since June 30, 2000 relating to the
manufacturing of the Product have been conducted in compliance in all material
respects with Good Manufacturing Practices, 21 C.F.R. Parts 210 and 211 and the
applicable provisions of Division 2 of the Food and Drugs Act Regulations
(Canada).
(iv) The Elan Companies and their respective Affiliates have
delivered to the Acquiror copies of all (A) reports of FDA Form 483 inspection
observations, (B) establishment inspection reports, (C) warning letters, and (D)
other documents that assert ongoing lack of compliance in any material respect
with any applicable laws or regulatory requirements (including those of the
FDA), in each case to the extent received since June 30, 2000 by the Elan
Companies or any of the Elan Companies' Affiliates from the FDA or any other
Governmental or Regulatory Authority relating to the Product and/or arising out
of the conduct of the Business.
(v) None of the Business Employees or Canadian Sales Force
Employees, nor any agents of the Elan Companies employed in the Business or at
the Plant, have been disqualified or
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debarred by the FDA for any purpose, or been charged with or convicted under
United States or Canadian federal Law for conduct relating to the development or
approval, or otherwise relating to the regulation of any drug product under the
Generic Drug Enforcement Act of 1992, the FDA Act or any other relevant Law.
(vi) To the Knowledge of the Elan Companies, no employees or agents
of the Elan Companies or any of their Affiliates have made an untrue statement
of a material fact to any Governmental or Regulatory Authority with respect to
the Product or a Current Product Improvement (whether in any submission to such
Governmental or Regulatory Authority or otherwise), or failed to disclose a
material fact required to be disclosed to any Governmental or Regulatory
Authority with respect to the Product or a Current Product Improvement.
Section 6.11. Inventory. All of the Finished Product Inventory (a)
is good, issuable and merchantable in the Ordinary Course of Business, (b) was
produced or manufactured in accordance with the specifications for such Product
as set forth in the applicable Product Registrations and in compliance with
applicable Law and (c) has at least a 12 month shelf life. The Elan Companies at
Closing will have good and marketable title to the Inventory free and clear of
any Encumbrances other than Permitted Encumbrances.
Section 6.12. Brokers. The Acquiror has no, and will have no,
obligation to pay any brokers (including real estate brokers), finders,
investment bankers, financial advisors or similar fees in connection with this
Agreement or the transactions contemplated hereby by reason of any action taken
by or on behalf of the Elan Companies.
Section 6.13. Title to and Sufficiency of Transferred Assets. The
Elan Companies have good title to, or a valid and subsisting leasehold, license
or other contractual interest in or right to use, the tangible personal property
included in the Transferred Assets, subject to no Encumbrances (other than
Permitted Encumbrances). All tangible personal property (other than Product
Inventory) included in the Transferred Assets (including the Plant Assets) are
suitable for the purposes for which they are used, in good working condition,
reasonable wear and tear excepted, and are free from any known defects. The
Transferred Assets constitute all of the assets, Contracts, Governmental
Permits, rights and services required for the continued operation of the
Business by the Acquiror as operated by the Elan Companies during the past 12
months.
Section 6.14. Financial Information. The Elan Companies delivered to
the Acquiror correct and complete copies of certain unaudited financial
information regarding the sales of the Product (the "Financial Information").
The Financial Information accurately presents the information for the periods
indicated, based upon the accounting principles, and subject to the limitations,
set forth on Schedule 6.14.
Section 6.15. Certain Personal Property. Schedule 6.15 is a complete
schedule of all fixed assets of the Elan Companies necessary for the operation
of the Plant or for the proper functioning of the Sales Force Employees or the
Canadian Sales Force Employees, describing all items of tangible personal
property with a value of at least $25,000. All of such personal property
included on Schedule 6.15 is usable in the Ordinary Course of Business and
conforms in all material respects and
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will conform with any applicable Laws relating to its construction, use and
operation. Except for those items subject to the Non-Real Estate Leases, no
Person other than the Elan Companies owns any vehicles, equipment or other
tangible assets located on the Plant necessary for the operation of the Plant or
for the proper functioning of the Sales Force Employees or the Canadian Sales
Force Employees. Such assets set forth on Schedule 6.15 are suitable for the
purposes for which such assets are currently used or are held for use and are in
good working condition, subject to normal wear and tear, and there are no facts
or conditions affecting such assets that interfere in any material respect with
the operation of the Business.
Section 6.16. Non-Real Estate Leases. Schedule 6.16 lists all
tangible assets and property necessary for the operation of the Plant or for the
proper functioning of the Sales Force Employees or the Canadian Sales Force
Employees (other than real property) that are possessed by an Elan Company under
an existing lease, including all trucks, automobiles, forklifts, machinery,
equipment, furniture and computers, except for any lease under which the
aggregate annual payments are less than $25,000 (each, an "Immaterial Lease").
Schedule 6.16 also lists the leases under which such assets and property listed
in Schedule 6.16 are possessed. All of such leases (excluding Immaterial Leases)
are referred to herein as the "Non-Real Estate Leases."
Section 6.17. Insurance. Schedule 6.17 lists all policies or binders
of insurance held by or on behalf of the Elan Companies or their Affiliates and
relating to or covering risks of the Business, specifying with respect to each
policy the insurer, the amount of the coverage, the type of insurance, the risks
insured, the expiration date, the policy number and any pending claims
thereunder. These policies of insurance and the amounts of coverage on the
Purchased Assets are reasonable and customary in the industry and in relation to
the nature of the Purchased Assets. There is no Default with respect to any such
policy or binder, nor has there been any failure to give any notice or present
any claim under any such policy or binder in a timely fashion or in the manner
or detail required by the policy or binder. There is no Notice of non-renewal or
cancellation with respect to, or disallowance of any claim under, any such
policy or binder that has been received by the Elan Companies or their
Affiliates.
Section 6.18. Customers and Suppliers. EPI has used reasonable
business efforts to maintain, and currently maintains, good working
relationships with all of the customers and suppliers of the Business. Schedule
6.18 specifies for the year ending December 31, 2001 the names of the customers
that were, in the aggregate, the 20 largest customers in terms of dollar value
of Products, sold by the Business. None of such customers has given EPI Notice
terminating, canceling or threatening to terminate or cancel any Contract or
relationship with EPI relating to the Business. Schedule 6.18 also specifies for
the year ending December 31, 2001 the names of the suppliers of Amphotericin B,
DMSO, MeCl2 and lipids. None of such suppliers has given EPI Notice terminating,
canceling or threatening to terminate or cancel any Contract or relationship
with such EPI relating to the Business.
Section 6.19. Operation of the Business; Description of the
Business. Since June 30, 2000 (a) the Business has been conducted only through
EPI, EOI, ECI and their respective predecessors and not through any other
divisions or any direct or indirect Subsidiary or Affiliate of EPI, EOI or ECI
and (b) no part of the Business has been operated by any Person other than EPI,
EOI, ECI or their respective predecessors. No Person other than EPI, EOI or ECI
owns or possesses any mate-
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rial Assets or Properties that have been used in the Business, other than
Persons who have granted to EPI, EOI, ECI or their respective predecessors
leasehold interests in or valid licenses to use other Assets or Properties used
in the Business pursuant to Contracts that are listed on Schedule 6.19. Neither
EPI, EOI or ECI nor any Subsidiary or Affiliate of EPI, EOI or ECI engages in
research, development, manufacture, distribution, marketing, sale or promotion
of Competitive Products in the Territory other than in the Business.
Section 6.20. Plant Matters.
(a) Title. EOI has good fee simple title to the Plant, free and
clear of all Encumbrances, except for Plant Permitted Encumbrances. The Plant
constitutes all of the real property necessary to manufacture the Product.
(b) Regulatory Compliance. The Plant and the Elan Companies'
operation thereof materially comply with all applicable federal, state and local
Laws, regulations, codes, Orders, ordinances, rules, regulations and statutes
and any restrictive covenants applicable to the Plant. The Elan Companies have
received no written Notice from any Governmental or Regulatory Authority of any
violations of any Law, regulation or ordinance affecting any portion of the
Plant. The current zoning classification of the Plant is I-2-S, and the current
use of the Plant is legal.
(c) Public Improvements. No assessment for public improvements has
been made with respect to the Plant which remains unpaid, including those for
construction of sewer, water, electric, gas or steam lines and mains, streets,
sidewalks and curbing. The Elan Companies know of no public improvements, which
have been ordered to be made or which have not heretofore been completed,
assessed and paid for.
(d) No Mechanics' Liens. No material labor has been or will be
performed or material furnished for the Plant (i) for which the Elan Companies
have not heretofore fully paid, or (ii) for which a mechanic's or materialman's
lien or liens, or any other lien, can be claimed by any Person.
(e) Condition of Improvements. The improvements included in the
Plant are (i) fit for their intended purposes, (ii) in good working order and
condition (wear and tear excepted), and (iii) in compliance in all material
respects with all applicable Laws.
(f) Utilities. The Plant is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which the
Plant is located. The Plant is serviced by public water and sewer systems which
are adequate in relation to the improvements and location on which the Plant is
located. All liquid and solid waste disposal, septic and sewer systems located
at the Plant are in good and safe condition and repair and in material
compliance with all applicable Laws.
(g) Real Estate Leases. Attached hereto as Schedule 6.20(g) is a
true, correct and complete list of all leases, if any, for any portion of the
Plant (collectively, the "Real Estate Leases"
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and individually a "Real Estate Lease"), identifying for each tenant the name,
rent, amount of security deposit, prepaid rent, lease commencement and
termination dates, renewal options, option rent, any rent escalation provisions
and provisions pertaining to reimbursement for operating costs and real estate
taxes. All of the Real Estate Leases are in full force and effect and there are
no defaults thereunder. There are no leases, tenancies, licenses or other rights
of occupancy or use for any portion of the Plant. No tenant has or has claimed
any claim, offset, right of recoupment or defense against the landlord under its
Lease or otherwise. All obligations of the landlord required to be performed
under all Real Estate Leases prior to the Closing Date, have been and will be
fully performed by the Elan Companies. No tenant has any option or right of
first refusal to purchase all or any portion of the Plant. The copies of the
Real Estate Leases delivered to the Acquiror prior to the date of this Agreement
are true, correct and complete, and there are no understandings,
representations, warranties or promises with any of the tenants which are not
fully set forth in the copies of the Real Estate Leases which have been
delivered to the Acquiror.
(h) Service Contracts. There are no management, service, equipment,
supply, maintenance or concession agreements with respect to or affecting the
Plant that will remain in effect after the sale of the Plant to the Acquiror
(the "Service Contracts"). The Elan Companies shall perform all of their
obligations under the Service Contracts through the date that the Plant is sold
to the Acquiror. The copies of the Service Contracts delivered to the Acquiror
prior to the date of this Agreement are true, correct and complete, and there
are no written understandings, representations, warranties, or promises with any
of the contractors that are not fully set forth in the copies of the Service
Contracts that have been delivered to the Acquiror.
(i) Condemnation; Other Government Action. The Elan Companies have
not received any written Notice of any condemnation Action or Proceeding or
other Action or Proceeding in the nature of eminent domain with respect to the
Plant, and no such proceedings are threatened in writing or to the Elan
Companies' Knowledge, orally. The Elan Companies have received no written Notice
of, nor do they have any Knowledge of, any pending or threatened Action or
Proceeding relating to (i) zoning changes or (ii) increase in tax assessment. If
the Elan Companies receive any such written Notice or learn of any such Action
or Proceeding, the Elan Companies shall immediately notify the Acquiror in
writing of same. In the event of any such taking or threatened taking, Elan
Companies shall assign to Acquiror all of their right, title and interest in all
proceeds and awards payable in respect to such taking.
(j) Flood Plain. The Plant is not located within a "flood plain
area" as defined by the United States government pursuant to the Flood Disaster
Protection Act of 1973, as amended.
Section 6.21. No Other Warranties. EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE RELATED AGREEMENTS,
THE ELAN COMPANIES DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH
REGARD TO THE PRODUCT AND THE PRODUCT IMPROVEMENTS, THE TRANSFERRED ASSETS AND
THE BUSINESS, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror represents and warrants to the Elan Companies as of (i)
the date hereof and (ii) the Closing Date, except as to certain representations
and warranties which expressly speak as of a date certain, which shall speak as
of such date, subject to such exceptions as are specifically disclosed in the
disclosure schedule (referencing the appropriate Sections hereof) supplied by
the Acquiror to the Elan Companies and dated as of the date hereof (the
"Acquiror Disclosure Schedule") as follows:
Section 7.01. Corporate Organization. The Acquiror is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own its
assets and carry on its business as currently conducted by it. The Acquiror is
duly authorized to conduct its business and is in good standing in each
jurisdiction where such qualification is required, except for any jurisdiction
where failure to so qualify could not reasonably be expected, individually or in
the aggregate, to have a material adverse effect on the Acquiror.
Section 7.02. Authority of the Acquiror. The Acquiror has all
necessary power and authority and has taken all actions necessary to enter into
this Agreement and to carry out the transactions contemplated hereby. The Board
of Directors of the Acquiror has taken all action required by Law, its Charter
Documents, Bylaws or other organizational documents or otherwise to be taken by
it to authorize the execution and delivery of this Agreement by the Acquiror and
the consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Acquiror and, when executed
and delivered by each Elan Company, will constitute a legal, valid and binding
obligation of the Acquiror enforceable against it in accordance with its terms.
When executed and delivered by each Elan Company and each Affiliate to which it
is a party and by the Acquiror, each Related Agreement will constitute a legal,
valid and binding obligation of the Acquiror enforceable against it in
accordance with its terms.
Section 7.03. Consents and Approvals. Schedule 7.03 sets forth a
complete and accurate list of all material consents, notices, waivers,
approvals, Orders or authorizations of, or registrations, declarations or
filings with, any Governmental or Regulatory Authority that are required by the
Acquiror in connection with the execution and delivery of this Agreement by the
Acquiror or the performance of its obligations hereunder (the "Acquiror
Governmental Consents").
Section 7.04. Non-Contravention. The execution and delivery by the
Acquiror of this Agreement does not, and the performance by it of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not, except as would not have an Acquiror Adverse
Effect:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Charter Documents of the Acquiror;
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(b) assuming the receipt of all consents, waivers, approvals, Orders
or authorizations of Governmental and Regulatory Authorities required to
be obtained by the Acquiror and the making of all registrations,
declarations or filings with Governmental and Regulatory Authorities
required to be made by the Acquiror, conflict with or result in a
violation or breach of any term or provision of any Law applicable to the
Acquiror; or
(c) conflict with or result in a breach or Default (or an event
which, with notice or lapse of time or both, would constitute a breach or
Default) under, or result in the termination or cancellation of, or
accelerate the performance required by, or result in the creation or
imposition of any Encumbrance upon any Contract to which the Acquiror is a
party or by which the Acquiror or any of its assets is bound.
Section 7.05. Litigation. Except as would not have an Acquiror
Adverse Effect, there are no Actions or Proceedings pending or threatened in
writing, or to the Knowledge of the Acquiror threatened orally, against,
relating to, affecting or arising in connection with (i) this Agreement or any
Related Agreement or (ii) the transactions contemplated by this Agreement. The
Acquiror is not subject to any Order that could reasonably be expected to
materially impair or delay the ability of the Acquiror to perform its
obligations hereunder.
Section 7.06. Brokers. The Elan Companies have no, and will have no,
obligation to pay any brokers, finders, investment bankers, financial advisors
or similar fees in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf of the
Acquiror.
Section 7.07. Financial Capability. As of the date of this
Agreement, the Acquiror and its subsidiaries have at least $400 million of cash,
cash equivalents and marketable securities with a maturity of less than one
year. Prior to the Closing, the Acquiror shall not permit such assets to fall
below $400 million, unless otherwise agreed to in writing with the Elan Parent.
Section 7.08. No Other Warranties. EXCEPT FOR THE WARRANTIES
EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE RELATED AGREEMENTS, THE ACQUIROR
DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, WITH
REGARD TO THE SUBJECT MATTER OF SUCH AGREEMENTS, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS.
ARTICLE VIII
COVENANTS OF THE PARTIES
Section 8.01. Preservation of Purchased Assets; Limitations on
Distribution. (a) Except as otherwise contemplated by this Agreement or the
Related Agreements, from the date of this Agreement until the Closing Date,
without the prior written consent of the Acquiror (which consent shall not be
unreasonably withheld), the Elan Companies (i) shall not, and shall cause their
respective
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Affiliates not to, lease, license, mortgage, pledge or subject to any
Encumbrance any Purchased Asset and (ii) shall not, and shall cause their
respective Affiliates not to, transfer or grant any rights or options in or to
any of the Purchased Assets (other than Product Inventory).
(b) In furtherance of and in addition to subsection (a), none of the
Elan Companies shall (i) except in the Ordinary Course of Business incur any
Liability which would be an Assumed Liability, (ii) except as contemplated by
this Agreement or the Related Agreements enter into, amend, modify, terminate
(partially or completely), grant any waiver under or give any consent with
respect to any Contract which would be an Assumed Liability or incur any
Liability which would be an Assumed Liability outside the Ordinary Course of
Business unless the executory obligation on the part of such Elan Company in any
such individual case is less than $10,000, (iii) violate, breach or Default
under, or take or fail to take any action that (with or without notice or lapse
of time or both) would constitute a violation or breach of, or a Default under
any term or provision of any material Contract, (iv) other than pursuant to or
in connection with its financing arrangements with its lenders create any
Encumbrance on any of the Purchased Assets, (v) except in the Ordinary Course of
Business, alter the salaries or other compensation payable to any Business
Employee or Canadian Sales Force Employee or (vi) sell Product in the Territory
other than in the Ordinary Course of Business and, to the extent the Closing has
not occurred by November 15, 2002, generate more than $1.5 million per week (or
fraction thereof) of Net Sales Revenue from such date. Each Elan Company shall
maintain and service the Purchased Assets consistent with past practice and use
its best commercially reasonable efforts to preserve intact the Business as it
is currently organized.
Section 8.02. Commercially Reasonable Efforts. Following the date
hereof, each of the parties hereto shall use its commercially reasonable efforts
to take, or cause to be taken, all action, or to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement and to cause the
conditions to the obligations of the other party hereto to consummate the
transactions contemplated hereby to be satisfied at the Closing, including (i)
obtaining all consents and approvals of all Persons and Governmental or
Regulatory Authorities and removing any injunctions or other Encumbrances, other
than Permitted Encumbrances, on the Purchased Assets, impairments or delays the
obtaining or removal of which are necessary, proper or advisable to the
consummation of the transactions contemplated by this Agreement and (ii)
commercially reasonable efforts by Elan Parent to prepare and disseminate to its
shareholders a "Class 1 Circular" in accordance with the requirements of the UK
Listing Authority and the Dublin Stock Exchange for the solicitation of the
approval by Elan Parent's shareholders of the transactions contemplated by this
Agreement and the Related Agreements, and to duly and promptly convene a meeting
of such shareholders (the "Elan Shareholders Meeting") for the purpose of voting
on such approval and to seek such shareholder approval.
Section 8.03. Cooperation. (a) Following the date hereof, each party
shall cooperate fully with the other in preparing and promptly filing all
notices, applications, submissions, reports and other instruments and documents
that are necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement, including the
Elan Companies' cooperation in the efforts of the Acquiror to obtain any
consents and approvals of any Governmental or Regulatory Authority required for
the Acquiror to be able to own the Purchased Assets. In any event, Elan
Companies shall have filed transfer letters with FDA for all Product
Registra-
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tions and for all Manufacturing Process and Plant Registrations no later than
five days after the Closing Date.
(b) Following the date hereof, each party shall cooperate with and
take commercially reasonable actions required by Governmental or Regulatory
Authorities to permit the Elan Companies and their Affiliates outside the
Territory and the Acquiror and its Affiliates inside the Territory to obtain all
consents, approvals, registrations, certificates, permits, licenses or other
approvals of applicable Governmental or Regulatory Authorities required, (i) in
the case of the Elan Companies and their Affiliates, to export the Product from
the Territory and to import, market, promote, sell and distribute the Product in
any and all jurisdictions outside the Territory ("Marketing Authorizations") and
(ii) in the case of the Acquiror and its Affiliates, to market, promote, sell
and distribute the Product in the Territory. Such assistance may include
providing reasonable data, technical information, or other information owned or
controlled by such party and required by Governmental or Regulatory Authority to
obtain or maintain the Marketing Authorizations or Product Registrations, as the
case may be. Each party shall instruct its employees and financial advisors to
provide such cooperation to the other, it being understood that the requesting
party shall reimburse the responding party promptly for reasonable and necessary
out-of-pocket expenses incurred by the responding party in complying with any
such request by or on behalf of the requesting party.
Solely with respect to the manufacture of the Product in the United
States, and additionally with respect to the Elan Companies, their Affiliates
and their sublicensees, solely as required by applicable law for any Marketing
Authorizations, each party hereby grants reference rights under all Product
Registrations, including, without limitation, any Drug Master File for the
Product to the Elan Companies, their Affiliates and their sublicensees or the
Acquiror, its Affiliates and their sublicensees and agrees to rights of
reference or their regulatory equivalent, as the case may be, and agrees to
execute or cause its Affiliates, sublicensees or agents to execute any necessary
authorization letters as may be reasonably required.
(c) All rights afforded to the Elan Companies or their Affiliates
under this Section 8.03(b) and (c) are freely transferable, in whole or in part,
with that portion or the business, assets or rights transferred by the Elan
Companies or their Affiliates to which such rights relate. Except as where such
a change is not likely to cause the Elan Companies or their Affiliates a
material impact on a Product Registration or Marketing Authorization or the
right to make or have made provided for in the License Agreement, the Acquiror
shall not, without first consulting with the Elan Companies where practical,
make any material change in the Drug Master File or the Product Registrations or
Marketing Authorizations relating to the Chemistry, Manufacturing and Control
filings made as of the Closing Date. The Elan Companies shall be provided ninety
(90) days prior notice of any such change.
(d) The Elan Companies shall use commercially reasonable efforts
(and the Acquiror shall cooperate with the Elan Companies) to take all steps
required under the Food and Drugs Act (Canada) to ensure that the DEL is
maintained in full force and effect, including causing the holder of the DEL to
prepare and file an application to amend the DEL as a result of the transactions
contemplated by this Agreement and the Related Agreements, and to cause the
holder of the DEL to make all required filings and notices to Health Canada of
any changes to information previously re-
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ported to Health Canada arising out of transactions contemplated by this
Agreement and the Related Agreements.
(e) Notwithstanding anything in this Agreement to the contrary, the
Elan Companies shall fully provide to Acquiror, and shall cause their
accountants to fully cooperate, at Acquiror's expense, in providing Acquiror on
or prior to the Closing, such audited financial statements for the three most
recent fiscal years concerning the Product, the Business, the Plant or such
other audited financial information as may be required by applicable Law to be
disclosed or reported by Acquiror concerning the Product, the Business, the
Plant or as may be reasonably requested by Acquiror in connection therewith.
(f) Commencing upon the date of this Agreement, in a reasonably
prompt manner and, working together, the parties shall identify an alternative
supplier of Amphotericin B and the Acquiror, at its sole cost and expense shall
take such steps that are customary and reasonable in the industry to validate
and qualify such supplier as a supplier of Amphotericin B in each country
outside of the Territory where the Elan Companies have launched Abelcet (a
"Second Ampho B Source"). After the Acquiror has discharged its obligation in
the preceding sentence, the Elan Companies shall, in a reasonably prompt manner,
with respect to each country outside of the Territory in which the Elan
Companies have launched Abelcet and at its sole cost and expense, obtain those
approvals, or as applicable waivers, required by applicable local Law as may be
required to permit the use of the Second Ampho B Source as a source of raw
materials for Abelcet in each country outside of the Territory in which the Elan
Companies have launched Abelcet. Between the date of the execution of this
Agreement and two (2) days prior to the Closing Date, the parties shall agree
upon a schedule for the validation and qualification of the Second Ampho B
Source with respect to each country outside of the Territory in which Elan has
launched Abelcet. The Aquiror and the Elan Companies shall consult with each
other and shall provide regular reports on the status of their respective
activities under this paragraph.
(g) Notwithstanding anything herein to the contrary, none of the
parties may rely on the failure of any condition set forth in Article IX or
Article X, as applicable, to be satisfied if such failure was caused by such
party's failure to use its reasonable efforts to consummate the transactions
contemplated by this Agreement and the Related Agreements, as required by and
subject to this Section 8.03.
Section 8.04. Risk of Loss. The Elan Companies shall bear all risk
of loss with respect to the Plant and the Plant Assets unless and until the
Closing occurs. If the Plant, the Plant Assets, or any part thereof, is damaged
or destroyed by fire, or other casualty prior to the Closing, then the Acquiror
shall have the right to receive assignment of all insurance proceeds, including
any applicable deductible.
Section 8.05. Access. (a) From the date hereof until the Closing,
Elan Companies shall permit Acquiror and its representatives to have access,
during regular business hours and upon reasonable advance Notice, to the
Transferred Assets that will be transferred at the Closing and any associated
aspects of the Business and shall provide Acquiror with all assistance,
information and data reasonably requested by Acquiror in connection with
Acquiror's rights and obligations under
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Section 8.10 hereof, and shall permit the Sales Force Employees, Canadian Sales
Force Employees and Plant Employees to cooperate with Acquiror in connection
therewith, all subject to reasonable rules and regulations of Elan Companies and
any applicable Laws. Elan Companies shall instruct their respective employees,
counsel and financial advisors to cooperate with Acquiror in its investigation
of the Business, it being understood that Acquiror shall reimburse Elan
Companies promptly for reasonable and necessary out of pocket expenses incurred
by Elan Companies in complying with any such request by or on behalf of
Acquiror.
(b) Upon the reasonable request of Elan Companies, Acquiror shall at
all times following the Closing, to the extent permitted by Law, grant to Elan
Companies and their respective representatives the right, during normal business
hours and upon reasonable prior Notice, to inspect and copy the Books and
Records and other documents in Acquiror's possession to the extent pertaining to
the operation of the Business prior to the Closing Date for Tax purposes and in
connection with Actions or Proceedings involving third parties (except as
otherwise stated in Section 8.05(c) below). Elan Companies shall maintain all
such Books and Records, and any information derived therefrom, as confidential
information of Acquiror in accordance with the provisions of Section 8.06 of
this Agreement.
(c) Following the date hereof, each of the parties agrees to use
commercially reasonable efforts to keep and maintain all Books and Records and
other documents in existence on the Closing. Acquiror further agrees to make its
personnel and those of its Affiliates reasonably available to the other parties
or their respective representatives to the extent such access is reasonably
related to any Excluded Assets, or is otherwise reasonably necessary to comply
with the terms of this Agreement or to comply with any applicable Law, it being
understood that the parties requesting access shall reimburse the other party
promptly for its reasonable and necessary out-of-pocket expenses incurred in
complying with any such request.
(d) Elan Companies agree to make personnel of Elan Companies or
their Affiliates reasonably available to Acquiror or its respective
representatives to the extent such access is reasonably related to any Purchased
Assets, or is otherwise reasonably necessary for Acquiror to comply with the
terms of this Agreement or to comply with any applicable Law, it being
understood that Acquiror shall reimburse Elan Companies promptly for their
reasonable and necessary out-of-pocket expenses incurred in complying with any
such request by or on behalf of Acquiror.
(e) Acquiror, from time to time prior to the Closing, shall have the
right to inspect and investigate the Plant and audit and copy all existing
books, records, surveys, plans and all other materials relating to the Plant,
perform surveys, make engineering studies and perform whatever tests and
evaluations of the Plant as Acquiror may elect, all either independently or
through agents, representatives or contractors of Acquiror's choosing; provided,
however, that such actions shall not include the right to conduct any sampling
or testing, including, without limitation, sampling or testing of soil, surface
water, ground water or wastes or perform any other intrusive acts. Such
investigation by Acquiror may include: (i) matters relating to governmental and
other legal requirements with respect to the Plant, including taxes,
assessments, zoning, use permit requirements and building codes; (ii) compliance
with zoning, land use, building, environmental and other statutes, rules, or
regulations applicable to the Plant; (iii) the operation, management and
physical condition of the Plant, including
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the interior, the exterior, the square footage of the improvements, the
structure, the roof, the paving, the utilities, and all other physical,
functional and other aspects of the Plant; and (iv) all matters relating to the
income and operating or capital expenses of the Plant and all related financial
matters. In connection with any entry by Acquiror or any of its agents,
employees or contractors onto the Plant, Acquiror shall give Elan Companies
reasonable advance Notice of such entry and shall conduct such entry and any
inspections so as to reasonably minimize interference with the business
conducted therein.
(f) At the Closing, Elan Companies shall deliver to Acquiror all
necessary photo-ready art (or its substantial equivalent) for all Marketing
Materials, and for all packaging and labeling for the Product in the Territory,
including all related artwork and inserts.
Section 8.06. Public Announcements; Confidentiality. (a) Each of the
Elan Companies and the Acquiror agrees that, prior to the Closing, it and its
representatives shall keep the facts surrounding the negotiation of this
Agreement and the transactions contemplated hereby, any disclosures made herein
and hereunder, confidential and shall not disclose such information to any other
Person, except for its advisors, accountants, attorneys, consultants and agents
with a need to know and who agree to maintain the confidentiality of such
information, through a press release or otherwise (except as necessary to carry
out the terms of this Agreement or to the extent such information becomes public
information or generally available to the public through no fault of such party
or its Affiliates) without the prior written consent of the other party, unless
such party has been advised by counsel that disclosure is required to be made
under applicable Law or the requirements of a national securities exchange or
another similar regulatory body.
(b) Each party shall not, and shall require that its Affiliates and
its and their distributors do not, use or reveal or disclose to third parties
any Confidential Information without first obtaining the written consent of the
other party, except as may be reasonably necessary in performing such party's
obligations or exercising such party's rights under this Agreement.
Notwithstanding the foregoing, each party may disclose any Confidential
Information to its Advisors and Affiliates and its and their distributors on a
need-to-know basis only, and such party shall be responsible for such Persons'
compliance with the provisions of this paragraph with respect thereto. Each
party shall take, and shall require its Advisors and Affiliates and its and
their distributors to take, reasonable steps to prevent any unauthorized use or
disclosure of any Confidential Information. The foregoing obligations in this
Section 8.06 shall not apply to information which (i) is or becomes a matter of
public knowledge through no fault of a party or any Person to whom such party
provided such information, (ii) is reasonably required to be disclosed in
connection with obtaining or maintaining Patent Rights or regulatory approvals
for the Product or a Current Product Improvement, or (iii) is required by Law to
be disclosed, provided that the disclosing party uses reasonable efforts to give
the other party advance written notice of such required disclosure in sufficient
time to enable the other party to seek confidential treatment for such
information, and provided further that the disclosing party limits the
disclosure to that information which is required to be disclosed. As used
herein, "Confidential Information" means all Know-How and any proprietary or
trade secret information or data relating to the Product or a Current Product
Improvement or such other information that either party identifies to the other
in writing as confidential.
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(c) From and after the date hereof until the Closing, the provisions
of the confidentiality agreement dated as of August 16, 2002 between the Elan
Parent and the Acquiror (the "Confidentiality Agreement") shall apply to any
information disclosed to the Acquiror pursuant to this Agreement or any Related
Agreement, or otherwise in connection with the transactions contemplated hereby,
except as otherwise provided by this Agreement (including Sections 8.05 and
8.10). Following the Closing, the Confidentiality Agreement will terminate in
its entirety, with no further obligation on the part of any party thereto. In
addition, the transactions contemplated by the Agreement shall not constitute a
breach or violation of the terms of the Confidentiality Agreement.
Section 8.07. Corporate Names. (a) Except as set forth in this
Section 8.07, Acquiror shall promptly, and in any event within 120 days after
the Closing Date, complete the revision of all advertising and promotional
materials and literature relating to the Product (i) to delete all references to
the Corporate Names and (ii) to delete all references to Elan Companies' or
their respective Affiliates' customer service address or phone number; provided,
however, that for a period of 120 days from the Closing Date Acquiror may
continue to distribute advertising and promotional materials and literature that
use the Corporate Names, addresses or phone numbers to the extent that such
advertising and promotional materials and literature exist on the Closing Date;
and provided, further, that the Corporate Names may remain on any advertising
and promotional materials and literature to the extent required by Law or any
Governmental or Regulatory Authority for any reason, including due to the fact
that one of the Elan Companies is the manufacturer of the Product. Subject to
the terms and conditions herein, Elan Companies hereby grant a non-exclusive
license to Acquiror and its Affiliates to use the Corporate Names on all
advertising and promotional materials and literature for the Product (including
any Promotional Materials), to the extent specified herein. Acquiror will
destroy its inventory of any remaining advertising and promotional materials and
literature in its possession bearing the Corporate Names, address, or phone
number, which Corporate Names, address and phone numbers are not deleted
pursuant to Section 8.07(a)(i) and (ii), within 140 days after the Closing Date.
In no event shall Acquiror use any of the Corporate Names after the Closing in
any manner or for any purpose different from the use of such Corporate Names by
Elan Companies during the 90-day period immediately preceding the Closing.
(b) Acquiror shall be entitled to continue to use the existing
Labeling and packaging for the Product until such time as Acquiror has prepared
and filed with the appropriate regulatory authorities, and such authorities
approve, if required, new Labeling that does not contain references to the
Corporate Names; provided, however, that, if Acquiror does not prepare within
120 days after the Closing Date final specifications for the revised Labeling
and packaging for the Product, including all necessary photo-ready art (or its
substantial equivalent) reflecting such modification, the right of Acquiror
described in this sentence shall terminate 120 days after the Closing Date.
Subject to the terms and conditions herein, Elan Companies hereby grant a
non-exclusive right and license to Acquiror to use the Corporate Names on
Labeling and packaging for the Product to the extent specified herein.
(c) "Corporate Names" means the trademark "Elan," the Elan corporate
logo, and trade names of the Elan Companies, including the word "Elan" together
with variations and derivatives thereof and any other logos, symbols or
trademarks, trade names or service marks of the Elan Companies or their
respective Affiliates, but excluding the Product Trademarks.
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(d) The Elan Companies retain and shall retain all right, title and
interest in and to the Corporate Names. Acquiror expressly acknowledges that the
Elan Companies own the Corporate Names, and agrees that it will not attack,
dispute or contest the validity of or ownership of the Corporate Names, or any
registrations issued or issuing with respect thereto. Acquiror further agrees
that all use of the Corporate Names by Acquiror or its Affiliates shall be for
the benefit of Elan Companies and the goodwill accrued in connection with its
use of the Corporate Names shall accrue to Elan Parent and/or Elan Companies as
appropriate. In the event Acquiror acquires any rights relating to the Corporate
Names for any reason, Acquiror agrees to assign, at no cost, all such rights,
together with any related goodwill, to Elan Parent or Elan Companies as
appropriate. Acquiror shall use commercially reasonable efforts not to do any
act which should reasonably be expected to endanger, destroy or similarly affect
the value of the goodwill pertaining to the Corporate Names and further agrees
that it will use commercially reasonable efforts to maintain the same quality of
the Product as used by Elan Companies in the operation of the Business as of the
Closing for any Product sold under the Corporate Names. Acquiror will at any
time execute any documents reasonably required by Elan Companies to confirm Elan
Companies' ownership of all such rights in the Corporate Names. Acquiror shall
not use in connection with the Product, or allow any of its Affiliates to use in
connection with the Product, any other trademark or trade name which is similar
to or substantially similar to or so nearly resembles the Corporate Names as to
be likely to cause deception or confusion.
Section 8.08. Product Trademarks. (a) Acquiror shall retain all
right, title and interest in and to the Product Trademarks in the Territory, and
Elan Companies shall retain all right, title and interest in and to any foreign
counterparts to the Product Trademarks outside of the Territory. Each party
expressly acknowledges that the other party owns its respective trademarks
relating to the Product and agrees that it will not attack, dispute or contest
the validity of such other party's ownership of such trademarks, or any
registrations issued or issuing with respect thereto. Each party shall use its
commercially reasonable efforts not to do any act which should reasonably be
expected to endanger, destroy or similarly affect the value of the goodwill
pertaining to the other party's trademarks relating to the Product and further
agrees that it will use commercially reasonable efforts to maintain the same
quality of the Product as used by Elan Companies in the operation of the
Business as of the Closing for any Product sold under such trademarks. Each
party shall not use in connection with the Product, or allow any of its
Affiliates to use in connection with the Product, any other trademark or trade
name which is similar to or substantially similar to or so nearly resembles such
trademarks as to be likely to cause deception or confusion.
(b) The parties shall cooperate with each other and use commercially
reasonable efforts to protect their respective trademarks used in connection
with the Product from infringement by third parties. Without limiting the
foregoing, each party shall promptly notify the other party of any known,
threatened or suspected infringement, imitation or unauthorized use of or unfair
competition relating to such trademarks. Each party shall reasonably cooperate
with the other party in any action taken by the other party to enforce, or
defend, its respective rights in such trademarks, at the expense of such other
party.
(c) Acquiror shall be solely responsible for determining the uses of
any Internet domain names included within the Product Trademarks in the
Territory. Elan Companies shall be
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solely responsible for determining the uses of any Internet domain names not
included in the Product Trademarks and outside the Territory.
Section 8.09. Regulatory Matters. (a) From and after the transfer by
Elan Companies to Acquiror of each Registration pursuant to the terms hereof,
Acquiror shall be solely responsible and liable for (i) taking all actions,
paying all fees and conducting all communication with the appropriate
Governmental or Regulatory Authority required by Law in respect of such
Registration, including preparing and filing all reports (including adverse drug
experience reports) with the appropriate Governmental or Regulatory Authority,
(ii) taking all actions and conducting all communication with third parties in
respect of the Product sold pursuant to such Registration (whether sold before
or after transfer of such Registration), including responding to all complaints
in respect thereof, including complaints related to tampering or contamination,
and (iii) investigating all complaints and adverse drug experiences in respect
of the Product sold pursuant to such Registration (whether sold before or after
transfer of such Registration).
(b) Each of the parties shall make its facilities relating to the
Product available at reasonable times during normal business hours or as
otherwise required by Law for inspection by representatives of applicable
Governmental or Regulatory Authorities. Each of the parties shall notify the
other party within five days following receipt of any Notice of any FDA or other
Governmental or Regulatory Authority inspection, investigation or other inquiry,
or other material governmental Notice, involving the sale, manufacture or use of
the Product including any Notice that (a) raises any material concern regarding
the safety or efficacy, or manufacturing, of any raw materials, active
ingredients or the Product; (b) raises any material concern regarding FDA's or
any other Governmental or Regulatory Authority's acceptance of any data or
information submitted with respect to the Product, requests any additional data
or information with respect to the Product, or suggests that requests for
additional data or information may be forthcoming; (c) asserts a potential
material liability for either party to a third party arising in connection with
the Product; (d) asserts suspected or actual Product tampering or contamination
or other material problems with respect to the Product, (e) is reasonably likely
to lead to a recall or market withdrawal of the Product in any country; or (f)
concerns any on-going or potential FDA or other Governmental or Regulatory
Authority investigation, inspection, detention, seizure or injunction involving
the Product, including the receipt of any warning letter or untitled letter
relating to the Product. The parties shall cooperate with each other during any
such inspection, investigation or other inquiry. The parties shall discuss any
response to observations or notifications received in connection with any such
inspection, investigation or other inquiry and each party shall give the other
party an opportunity to comment upon any proposed response before it is made.
Each of the parties shall provide the other party with copies of all
correspondence received by it from, or filed by it with, any Governmental or
Regulatory Authority to the extent pertaining to the Product and/or its
distribution, marketing, sale or promotion.
(c) Notwithstanding the foregoing or the joint written procedures,
the Acquiror shall exclusively have the right to determine regulatory strategies
in the Territory, and Elan Companies shall have such exclusive rights outside
the Territory.
Section 8.10. Employee Matters. (a) As of the Closing Date, Acquiror
shall offer to employ on an at-will basis each of the sales force employees
selected pursuant to the selection pro-
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cedures set forth on Schedule 8.10 (the "Sales Force Employees") and each Plant
employee set forth on Schedule 8.10 (the "Plant Employees" and, together with
the Sales Force Employees, the "Business Employees"), in each case at a total
cash compensation or hourly rate not less than the total cash compensation or
hourly rate then applicable to such employee immediately prior to the Closing;
provided, however, that the total cash compensation or hourly rate in effect
immediately before the Closing Date for each Business Employee shall not be
greater than the total cash compensation or hourly rate set forth on Schedule
6.07 of the Elan Disclosure Schedule with respect to such Business Employee.
Each Business Employee who becomes employed by Acquiror is herein referred to as
a "Hired Employee". Elan Companies shall reasonably permit representatives of
the Acquiror to communicate and meet with each prospective Hired Employee prior
to the Closing Date for purposes of recruitment and retention of such Hired
Employee and other human resources-related activities in preparation for
Acquiror's acquisition of the Business and the Plant, and the Elan Companies
shall permit management-level Plant Employees to cooperate with Acquiror on a
reasonable basis for such purposes.
(b) Effective as of the Closing Date, all Hired Employees shall
cease participation in all Employee Benefit Plans.
(c) Effective as of the date of hire by Acquiror (which date of hire
of any Hired Employee shall be the Closing Date unless such Hired Employee has
requested that such date of hire be a later date not more than two weeks from
the Closing Date), Hired Employees or Canadian Sales Force Employees who are
participants in the Elan 401(k) Savings Plan or a Canadian equivalent plan
(including a registered retirement savings plan) ("Elan's 401(k) Plan") shall
cease to be eligible for any future contributions to Elan's 401(k) Plan except
with respect to compensation from Elan Companies prior to the Closing Date and
as provided under Elan's 401(k) Plan, and shall be entitled to a distribution of
their account balances under Elan's 401(k) Plan in accordance with such plan and
as permitted by the Code. Hired Employees who receive an eligible rollover
distribution (within the meaning of Section 402(f)(2) of the Code, including a
direct rollover distribution with the meaning of Section 401(a)(31) of the Code)
from Elan's 401(k) Plan shall, subject to the provisions of Section 402 of the
Code, be permitted to make a rollover contribution to a defined contribution
plan of Acquiror ("Acquiror's Defined Contribution Plan"). Such rollover
contribution may not include promissory notes for loans made to Hired Employees
under the terms of Elan's 401(k) Plan.
(d) For purposes of eligibility and vesting, Acquiror shall, with
respect to vacation and 401(k) plans or Canadian equivalent plan (including an
equivalent registered retirement savings plan) maintained by Acquiror after the
Closing Date (if applicable to the Hired Employee or Canadian Sales Force
Employee), credit each Hired Employee or Canadian Sales Force Employee with all
service credited to the employee under Elan Companies' corresponding plan,
policy, program or arrangement applicable to such employee as of the Closing
Date; provided, however, that there will be no duplication by Acquiror of any
benefits provided by Elan Companies.
(e) Hired Employees who shall have accepted as of the Closing Date
employment with Acquiror shall be eligible to enroll in a health plan determined
by the Acquiror as of the Closing Date without (i) any waiting periods, (ii) any
evidence of insurability, (iii) application of any pre-existing physical or
mental condition restrictions, or (iv) deductibles or co-pays, except to the
ex-
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tent that such waiting periods, evidence of insurability, pre-existing mental or
physical condition restrictions, or deductibles or co-pays would apply under
EPI's Welfare Plans and be permitted by law. Elan Companies shall retain
responsibility for all payment of benefits under its medical benefit plan to
Hired Employees for claims incurred prior to the date of hire by Acquiror.
Acquiror shall be responsible for claims for medical benefits incurred on or
after the date of hire by Acquiror by Hired Employees under Acquiror's medical
benefit plan applicable to the Hired Employees. For purposes of the preceding
sentences, a claim shall be deemed to have been incurred on the date on which
medical or other treatment or service was rendered and not the date of inception
of the related illness or injury or the date of submission of a claim related
thereto. Acquiror's medical benefit plan shall provide that any medical expenses
incurred before the date of hire by Acquiror by a Hired Employee (and his or her
dependents) during the calendar year including the date of hire by Acquiror
shall be taken into account for purposes of satisfying the applicable
deductible, coinsurance and maximum out-of-pocket provisions of the Acquiror's
medical benefit plan.
(f) Acquiror and Elan Companies expressly acknowledge and agree that
Acquiror shall be obligated, in respect of any Hired Employee terminated by the
Acquiror (i) for any reason on or after the date of hire, to pay all
Liabilities, including any liability triggered under any severance plans,
programs and agreements of Acquiror relating to Hired Employees under statute or
common law ("Acquiror Severance"), any liability relating to the violation of
any anti-discrimination law, and any employment compensation or
government-mandated benefits relating to the termination of any Hired Employees
on or after the date of hire by Acquiror, including under the WARN Act, the
Employment Standards Act (Ontario) or the common law and (ii) without cause
between and including the date of hire and six months following the Closing
Date, to pay all Liabilities that the Elan Companies would have been required to
pay under the Elan U.S. Severance Plan had the Elan Companies retained such
Hired Employee on or after the Closing Date and terminated such Hired Employee
on the date terminated by the Acquiror; provided, however that (i) such Hired
Employee was an active employee of the Elan Companies on the date of hire by the
Acquiror, (ii) such Hired Employee's employment terminated because of death,
retirement, resignation or job abandonment and (iii) such Hired Employee
executes a valid waiver and release in substantially the same form as the Waiver
and Release Agreement (as defined in the Elan U.S. Severance Plan) which remains
unrevoked by such Hired Employee for the seven-day revocation period. Nothing in
this Section 8.10 shall be construed as limiting the Acquiror's right to
terminate any Hired Employee at any time, with or without cause. Elan Companies
shall have no liability or obligation with respect to Acquiror Severance for
Hired Employees.
(g) Acquiror shall be responsible for all liabilities, obligations,
costs, claims, proceedings and demands, under the WARN Act, the Employment
Standards Act (Ontario), the common law or any state or provincial plant closing
or notification law, or similar law in other jurisdictions, arising out of, or
relating to, any actions taken by Acquiror or its Affiliates on or after the
date of hire by Acquiror or arising out of the fact that Acquiror does not offer
employment to certain Business Employees.
(h) (i) Prior to the end of the one (1) year period following the
Closing, ECI shall provide appropriate notice in writing to its Canadian sales
force personnel for the Product ("Canadian Sales Force Employees") set forth on
Schedule 8.10(h) regarding the termination of their em-
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ployment at the end of the one (1) year period. ECI shall provide the Canadian
Sales Force Employees with appropriate termination notice or pay in lieu of
notice, as required under the provisions of the Employment Standards Act, 2000
and any other notice or pay in lieu of notice as may be required at common law.
At the end of the one (1) year period, ECI will provide each member of the sales
force personnel with an appropriate record of employment. Elan Parent and its
Affiliates remain responsible regarding any and all liability, including
liability under the Ontario Employment Standards Act, 2000, the Human Rights
Code and at common law arising as a result of the employment of the Canadian
sales force personnel with Elan and its Affiliates and/or their termination.
(ii) At or prior to the end of such one (1) year period, the
Acquiror shall offer employment to all the Canadian Sales Force Employees (or
such other employees who are ECI's Canadian sales force personnel for the
Product at the end of such period), up to a maximum of six (6) such individuals.
The Acquiror will offer employment to such persons at such compensation and on
such terms as the Acquiror deems appropriate and will provide each such hired
person with such benefits, holidays, vacation days, incentive pay and bonus
programs as the Acquiror deems appropriate; provided, however, that the total
cash compensation offered to such persons shall be no less than the total cash
compensation they are receiving from ECI as of the date of termination of their
employment by Elan, less any increases in such compensation during the
immediately preceding twelve (12) month period that are outside of the Ordinary
Course of Business. Elan Parent and its Affiliates will fully cooperate with the
Acquiror in its extension of such offers of employment and shall not prevent,
discourage or entice, directly or indirectly, any of the Canadian Sales Force
Employees to reject such offers of employment.
Section 8.11. Bulk Transfer Laws. The Acquiror hereby waives
compliance by the Elan Companies and their respective Affiliates with the
provisions of any so-called "bulk transfer law" of any jurisdiction in
connection with the sale of the Purchased Assets to the Acquiror. The Elan
Companies will defend, indemnify and hold harmless the Acquiror for any
Liabilities it suffers as a result of such "bulk transfer laws" or such waiver
in accordance with Section 11.02(a).
Section 8.12. Covenant Not to Compete. (a) For the period from the
date hereof until ten (10) years following the Closing Date (the "Applicable
Period"), neither Parent nor any of their Subsidiaries, or its or their
respective successors or assigns or any of its or their respective agents acting
on their behalf, shall engage, license or assist another to engage in the
marketing, distribution or sale in the Territory, in the case of Elan Parent and
its Subsidiaries, or outside the Territory, in the case of the Acquiror and its
Subsidiaries, of any Product or Product Improvement (each, a "Competing
Product"). Notwithstanding the foregoing sentence, if either Parent or any of
their Subsidiaries signs a definitive agreement with respect to a merger or
acquisition by which such Person would acquire rights (other than residual
financial rights) in a Competing Product at any time during the Applicable
Period, then such Person (or the entity which acquired such Person or into which
such Person has merged) shall have 12 months from the closing of such definitive
agreement to divest itself of such rights in the Competing Product (unless the
other Party agrees in writing that such divestiture is not required) and, during
such 12 month period, the manufacture, promotion, marketing and/or sale of such
Competing Product shall not be in violation of this Section 8.12. In the case of
divestiture under the preceding sentence, such divestiture can occur by either
(x) an outright sale of all rights in Competing Product to a third party, or (y)
an out-license to a third party (exclusive as to the applica-
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ble Parent and its Subsidiaries, except that the applicable Parent and its
Subsidiaries may continue manufacturing the Competing Product for the licensee
for a reasonable period of time) of the right to make, have made, use, sell,
offer for sale and import such Competing Product; provided, however, that the
applicable Parent and its Subsidiaries may only retain residual financial rights
to such Competing Product and must not exercise or have the ability to exercise
any role or influence in any manner over the performance of any clinical trials
with respect to such Competing Product, or the sale, offering for sale or other
promotion of such Competing Product.
(b) In addition, no Elan Company will solicit any Hired Employee of
the Acquiror or its Subsidiaries for the purpose of having any such employee
terminate his or her employment with the Acquiror or its Subsidiaries for a
period of two years following the Closing Date.
(c) If a court determines that the foregoing restrictions are too
broad or otherwise unreasonable under applicable Law, including with respect to
time or space, the court is hereby requested and authorized by the parties to
revise the foregoing restriction to include the maximum restrictions allowable
under applicable Law. Each of the parties acknowledges, however, that this
Section 8.12 has been negotiated by the parties and that the geographical and
time limitations on activities, are reasonable in light of the circumstances
pertaining to the parties.
(d) The terms of this Section 8.12 (subject to Section 8.12(f))
shall apply to each Parent's respective Affiliates to the same extent as if they
were parties hereto, and each Parent shall take whatever actions are within its
control to cause any such other Persons to adhere to the terms of this Section
8.12.
(e) In the event of any breach or threatened breach by of any
provision of this Section 8.12, the other party shall be entitled to injunctive
or other equitable relief restraining such party from competing or soliciting in
violation of this Section. Such relief shall be in addition to and not in lieu
of any other remedies that may be available, including an action for the
recovery of Damages.
(f) For the avoidance of doubt, if any Person acquires Control of
either Parent, whether by stock purchase, merger or other transaction, no
provision of this Section 8.12 shall apply to such acquiror and its Affiliates
other than such Parent and its Subsidiaries but this Section 8.12 shall continue
to apply to such Parent and its Subsidiaries; provided that such Parent and its
Subsidiaries may transfer drug delivery technologies or any other assets to such
acquiror even if such acquiror uses such assets in a Competing Product, so long
as the drug delivery technologies or other assets transferred by such Parent and
its Subsidiaries do not themselves comprise a Competing Product.
Section 8.13. Oversight Committee. (a) Promptly after the Closing
Date, the parties shall form an oversight committee for the Product (the
"Oversight Committee"). The principal purpose of the Oversight Committee shall
be to: (i) create a forum enabling the parties to review and exchange
information with respect to Phase I through IV clinical trial strategies and
activities inside and outside of the Territory; (ii) review and share results
and data that may be obtained in clinical trials sponsored by either party;
(iii) review their respective development strategies and protocols for ongoing
and anticipated clinical studies; (iv) monitor each other's regulatory
strategies and activities
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for the Product and create standard operating procedures regarding regulatory
compliance for the Product; (v) review each other's public data and reports
arising from and generated in connection with the commercialization of the
Product; (vi) review and coordinate the activities of each party in relation to
the manufacture and supply of key chemical components and the Product; (vii)
coordinate marketing activities with respect to the Product inside and outside
the Territory; (viii) keep each other informed of any issues or events which
impact or relate to the Product; (ix) provide a forum for resolving strategic
differences between the parties; and (x) have such other responsibilities as may
be mutually agreed upon by the parties from time to time.
(b) In no event shall either party have any obligation to
participate in any clinical trial initiatives of the other party, or to modify
clinical trial initiatives in response to the other party, and any sharing of
costs for, or dedication of personnel to, any joint efforts shall require the
unanimous written approval of all members of the Oversight Committee, and any
proposal resulting from joint action made by either party that would result in
costs incurred by the other party shall be subject to prior written approval of
all members appointed by either party to the Oversight Committee.
(c) The Oversight Committee shall be composed of four persons, with
each party being entitled to designate two individuals. The initial members
shall be designated by each party in writing promptly following execution of
this Agreement. Each party may change its designated members at any time upon
advance written notice to the other party. The Oversight Committee shall be
chaired by a representative of the Elan Companies during the twelve months
following the Closing Date and in each year thereafter the chairmanship shall
alternate between one of the Acquiror's representatives and one of the Elan
Companies' representatives.
(d) The Oversight Committee shall meet as soon as practicable after
the Closing Date and upon either party's reasonable request thereafter, but in
any event at least twice per year. Unless otherwise agreed, all meetings shall
be conducted in the United States and shall alternate between the business
offices of each of the parties or, if mutually agreed, shall be conducted by
teleconference or video conference. Minutes for all such meetings shall be
prepared by a designated representative of one of the parties and shall be
subject to review and approval by the other party. All such minutes and any
other information presented or exchanged at such meetings shall be maintained as
Confidential Information of the disclosing party in accordance with the
provisions of Section 8.06 of this Agreement. Subject to the terms and
conditions of this Section 8.13, decisions of the Oversight Committee shall be
made by a unanimous vote of a quorum of its members. A quorum shall require at
least one representative of each party. Each party shall bear the costs and
expenses of its designated members that are incurred in connection with the
Oversight Committee meetings.
Section 8.14. Medical Inquiries and Complaints. The parties will
negotiate in good faith to jointly develop written procedures for the
administration of, and response to, medical inquiries or complaints concerning
the Product by consumers, physicians, pharmacists and other health care
professionals, as soon as practicable, but such written procedures shall be in
place no later than 30 days after the Closing Date. Each party shall use
commercially reasonably efforts to comply with the provisions thereof with
respect to the Product. Notwithstanding the foregoing or the joint written
procedures, the Acquiror shall exclusively have the right to determine how to
respond to medical in-
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quiries and complaints in the Territory and Elan Companies shall have such
exclusive right outside the Territory.
Section 8.15. Insurance. (a) From the date of this Agreement until
the Closing Date, the Elan Companies shall keep the Plant adequately insured at
all times by financially sound and reputable insurers and maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations.
(b) For so long as each party distributes any Product in or outside
of the Territory and for five years thereafter, such party shall maintain at its
sole cost and expense, product liability insurance (including any self-insured
arrangements) in amounts and with deductibles that are reasonable and customary
in the pharmaceutical industry for companies of comparable size and activities
in the relevant country. Such product liability insurance or self-insured
arrangements shall insure against all liability, including without limitation
personal injury, physical injury, or property damage arising out of the
manufacture, sale, distribution, or marketing of the Product. Each party shall
provide written proof of the existence of such insurance to the other party upon
request.
Section 8.16. Further Assurances. (a) On and after the Closing Date,
the Elan Companies shall from time to time, at the request of the Acquiror,
execute and deliver, or cause to be executed and delivered, such other
instruments of conveyance and transfer and take such other actions as the
Acquiror may reasonably request, in order to more effectively consummate the
transactions contemplated hereby and to vest in the Acquiror good and marketable
title to the Purchased Assets (including assistance in the collection or
reduction to possession of any of the Purchased Assets).
(b) On and after the Closing Date, the Acquiror shall from time to
time, at the request of the Elan Companies, take such actions as the Elan
Companies may reasonably request, in order to more effectively consummate the
transactions contemplated hereby, including the Acquiror's assumption of the
Assumed Liabilities.
Section 8.17. No Solicitation. From and after the date hereof and up
to and including the Termination Date without the prior written consent of the
Acquiror, no Elan Company will authorize or permit any representative or
employee of any Elan Company to (i) directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information) or take any other action
to facilitate knowingly any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to an Acquisition Proposal
from any Person, (ii) engage in any discussion or negotiations relating thereto
or (iii) accept any Acquisition Proposal. If any Elan Company receives any such
inquiries, offers or proposals it shall promptly notify the Acquiror orally and
in writing of such event. As used herein, "Acquisition Proposal" means any
proposal or offer (other than pursuant to this Agreement) to acquire in any
manner an ownership interest in any part of the Business, Product or Plant.
Section 8.18. Incentive Compensation. Any bonus or other incentive
compensation due any employee or consultant of the Business as of the Closing
Date, as a result of the transactions
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contemplated hereby or otherwise, shall be paid by the applicable Elan Company
to such Persons immediately prior to the Closing Date.
Section 8.19. Expenses. Except as otherwise provided herein, the
Elan Companies shall pay all of the legal, accounting, finders and bankers fees
and other expenses incurred by any Elan Company in connection with the
transactions contemplated hereby, and the Acquiror shall pay all of the legal,
accounting, finders and bankers fees and other expenses incurred by the Acquiror
in connection with the transactions contemplated hereby.
Section 8.20. HSR Act and Irish Mergers Act Filings. (a) The
Acquiror and the Elan Companies shall each: (i) take promptly all actions
necessary to make the filing required of such party or any of its Affiliates
under the HSR Act and Irish Mergers Act within five Business Days after the date
hereof, (ii) comply at the earliest practicable date with any request for
additional information or documentary material received by such party or any of
its Affiliates from the Federal Trade Commission or the Antitrust Division of
the Department of Justice pursuant to the HSR Act and from equivalent Irish
Governmental or Regulatory Authorities pursuant to the Irish Mergers Act and
(iii) cooperate with the other parties in connection with any filing under the
HSR Act and Irish Mergers Act and in connection with resolving any investigation
or other inquiry concerning the transactions contemplated under this Agreement
commenced by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general or any equivalent Irish
Governmental or Regulatory Authority. Each of the Elan Companies, on one hand,
and the Acquiror, on the other hand, shall be responsible for its own legal fees
for preparing its portion of the HSR Act and Irish Mergers Act filings.
(b) In furtherance and not in limitation of the other covenants of
the parties contained herein, each party shall use commercially reasonable
efforts to resolve such objections, if any, as may be asserted with respect to
the consummation of the transactions contemplated hereby under any antitrust
Law. If any administrative, judicial or legislative Action or Proceeding is
instituted (or threatened to be instituted) challenging the sale and purchase of
any of the Purchased Assets or any other transaction as violative of any
antitrust Law, each party shall cooperate and use commercially reasonable
efforts vigorously to contest and resist any such Action or Proceeding, and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other Order that is in effect and that restricts, prevents or prohibits
consummation of the sale and purchase of the Purchased Assets or any other
transaction contemplated under this Agreement.
(c) Each party shall promptly inform the other parties of any
material communication received by such party from the Federal Trade Commission,
the Antitrust Division of the Department of Justice or any other Governmental or
Regulatory Authority regarding any of the transactions contemplated under this
Agreement. Each party shall advise the other parties promptly of any
understandings, undertakings or agreements that such party proposes to make or
enter into with the Federal Trade Commission, the Antitrust Division of the
Department of Justice or any other Governmental or Regulatory Authority in
connection with the transactions contemplated under this Agreement.
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Section 8.21. Indiana Disclosure Document. Prior to the Closing
Date, the Elan Companies agree to undertake all activities necessary to comply
with Indiana's Responsible Property Transfer Law, Ind. Code 13-25-3-1, and the
regulations promulgated thereunder, including the delivery by the Elan Companies
to the Acquiror at least seven days prior to the Closing Date, unless otherwise
agreed to in writing by Acquiror, of a disclosure document that is in the form
set forth in Section 7 of the Indiana Responsible Property Transfer Law, Ind.
Code 13-25-3-7, and which provides the information elicited on such form
(hereinafter, the "Indiana Disclosure Document"). The Elan Companies shall
assume sole responsibility, including all costs and expenses related thereto,
for (i) recording the Indiana Disclosure Document in the office of the county
recorder of the county in which the Plant is located and (ii) filing a copy of
the Indiana Disclosure Document with the Indiana Department of Environmental
Management. The Elan Companies shall provide Acquiror with proof of such
recording and filing.
Section 8.22. Rights In Japan. If and when the Pre-Conditions of
Transfer are satisfied, the Elan Companies covenant that they and their
Affiliates shall transfer to the Acquiror their entire right, title and interest
in and to, and their rights to make, have made, sell, offer to sell, use, and
import, the Product, Current Product Improvements or Product Improvements in
Japan (the "Japanese Rights"). The Acquiror acknowledges and covenants that (i)
any transfer is and shall be on an "as is" basis; (ii) the Elan Companies make
no representations and warranties of any kind with respect to any transfer
arising out of this Section 8.22; (iii) the Acquiror, in the event the
Pre-Conditions of Transfer are met and the transfer of the Japanese Rights
occurs, shall bear, and shall hold the Elan Companies and their Affiliates
harmless for, any costs and expenses arising out of the Acquiror's obtaining the
equivalent of Product Registrations in Japan for the use, manufacture,
marketing, selling, distribution or commercialization of the Product, Current
Product Improvements or Product Improvements in Japan; and (iv) the failure of
the parties to consummate the transfer shall not be a basis for reduction of the
Purchase Price or create any right of the Acquiror to seek damages, offset any
amounts against the Purchase Price or seek any indemnification under the
provisions of Article XI. Any transfer shall be effectuated and documented by
the execution of written agreements customary for such transfers, provided,
however, that such documentation shall among other provisions contain
intellectual property and non-compete provisions consistent with this Agreement
and shall not contain provisions inconsistent with the requirements of this
Section 8.22. The term "Pre-Conditions of Transfer" shall mean that the Elan
Companies have the authority to undertake the transfer of rights, title and
interest contemplated by this Section 8.22 without breaching any contractual
obligation to a Third Party existing as of the date hereof (provided that the
Elan Companies and their Affiliates shall exercise commercially reasonable
efforts to promptly satisfy the Pre-Conditions of Transfer) and that such
transfer can be undertaken without the Elan Companies or their Affiliates
incurring a material and adverse financial cost unless the Acquiror undertakes
to, and promptly does, reimburse such cost. In the event the Pre-Conditions of
Transfer are satisfied or can be satisfied by such date, the Elan Companies and
the Acquiror covenant to complete and close any transfer within ninety (90) days
after the Closing Date; provided that if such closing shall not have occurred
within such period, either party shall have the option to extend this period for
four successive 90-day periods, and in any event during such periods or
thereafter the Elan Companies and their Affiliates shall not transfer the
Japanese Rights to any other Person.
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Section 8.23. Construction of Certain Provisions. To the extent that
any provision of any Related Agreement is inconsistent with any provision of
Sections 8.05, 8.06 or 8.09, such provision of such Related Agreement shall
govern and shall supersede such provision of Section 8.05, 8.06 or 8.09, as the
case may be, to the extent so inconsistent.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE ELAN
COMPANIES FOR THE CLOSING
The obligation of the Elan Companies to effect the Closing is
subject to the satisfaction (or waiver by the Elan Companies), at or before the
Closing, of each of the following conditions:
Section 9.01. Representations, Warranties and Covenants. All
representations and warranties of the Acquiror contained in this Agreement or
any Related Agreement (i) which are not qualified by materiality and/or Acquiror
Adverse Effect shall be true and correct in all material respects and (ii) which
are qualified by materiality and/or Acquiror Adverse Effect shall be true in all
respects, in each case on and as of the Closing Date as though given on and as
of such date, (excluding for such purpose any representations and warranties
that are by their terms given only as of a specific date,) and the Acquiror
shall have performed in all material respects all agreements and covenants
required by this Agreement or any Related Agreements to be performed by it prior
to or on the Closing Date, and the Elan Companies shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of the Acquiror.
Section 9.02. No Actions or Proceedings. No Orders prohibiting the
transactions contemplated hereby shall have been instituted or threatened and
not settled or otherwise terminated. No Law shall have been enacted, entered,
promulgated or enforced by any Governmental or Regulatory Authority that is in
effect and has the effect of making the purchase and sale of the Purchased
Assets illegal or otherwise prohibiting the consummation of such purchase and
sale. The parties shall have received any clearance that may be required under
the HSR Act and the Irish Mergers Act.
Section 9.03. Consents. All Elan Governmental Consents set forth on
Schedules 6.03(a) and the Acquiror Governmental Consents set forth on Schedule
7.03 shall have been obtained or made, as the case may be.
Section 9.04. Elan Shareholder Approval. Elan Parent's shareholders
shall have approved the proposal to approve the transactions contemplated by
this Agreement and the Related Agreements at the Elan Shareholders Meeting.
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ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE ACQUIROR
FOR THE CLOSING
The obligation of the Acquiror to effect the Closing is subject to
the satisfaction (or waiver by the Acquiror), at or before the Closing, of each
of the following conditions:
Section 10.01. Representations, Warranties and Covenants. All
representations and warranties of the Elan Companies contained in this Agreement
(other than those set forth in Section 6.09 and 6.20 and any other
representations and warranties as they relate to the Plant Assets or Plant
Employees) or any Related Agreement (i) which are not qualified by materiality
and/or Adverse Effect shall be true and correct in all material respects and
(ii) which are qualified by materiality and/or Adverse Effect shall be true in
all respects, in each case on and as of the Closing Date as though given on and
as of such date (excluding for such purpose any representations and warranties
that are by their terms given only as of a specific date), and the Elan
Companies shall have performed in all material respects all agreements and
covenants required by this Agreement or any Related Agreement to be performed by
them prior to or on the Closing Date, and the Acquiror shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of each Elan Company.
Section 10.02. No Actions or Proceedings. No Orders prohibiting the
transactions contemplated hereby shall have been instituted or threatened and
not settled or otherwise terminated. No Law shall have been enacted, entered,
promulgated or enforced by any Governmental or Regulatory Authority that is in
effect and has the effect of making the purchase and sale of the Purchased
Assets illegal or otherwise prohibiting the consummation of such purchase and
sale. The parties shall have received any clearance that may be required under
the HSR Act and the Irish Mergers Act.
Section 10.03. Consents. All Elan Governmental Consents and Elan
Third Party Consents set forth on Schedules 6.03(a) and (b) and Acquiror
Governmental Consents set forth on Schedule 7.03 shall have been obtained or
made, as the case may be, and, in the case of Elan Third-Party Consents set
forth on Schedule 2.02, shall be at specified royalty rates no less favorable
than the rates paid by the Elan Companies and on terms substantially similar to
the current agreements with the Elan Companies and reasonably satisfactory to
the Acquiror.
Section 10.04. No Adverse Effect. Subsequent to the date hereof, no
Adverse Effect shall have occurred.
Section 10.05. Audited Financial Statements. The Acquiror shall have
received the audited financial statements and information referred to in Section
8.03(d) hereof.
Section 10.06. Elan Shareholders Meeting. Elan Parent's shareholders
shall have approved the proposal to approve the transactions contemplated by
this Agreement and the Related Agreements at the Elan Shareholders Meeting.
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ARTICLE XI
INDEMNIFICATION
Section 11.01. Survival of Representations, Warranties, Covenants,
Etc. The representations, warranties, covenants and agreements of the Elan
Companies or the Acquiror contained in this Agreement and the Related Agreements
(other than the Supply Agreement) shall survive the Closing Date and remain in
full force and effect thereafter until December 31, 2003 (the "Expiration
Date"). Notwithstanding the foregoing, however:
(a) any claim with respect to a breach of Section 6.09 shall not
expire until December 31, 2004;
(b) any claim with respect to a breach of a representation or
warranty relating to title to the Product Intellectual Property, Product
Registrations and the Plant shall not expire until December 31, 2005; and
(c) any claim based upon a breach of a covenant or an agreement
contained in this Agreement or any Related Agreement to be performed after
the Closing Date (except the Supply Agreements) which shall not expire and
shall continue in perpetuity.
So long as an Indemnified Party gives an Indemnification Claim
Notice for a claim on or before the Expiration Date or the applicable date set
forth in Section 11.01(a)-(c), such Indemnified Party shall be entitled to
pursue its rights to indemnification. Indemnification pursuant to Section 11.02
shall be the exclusive contract right and remedy for damages of the Indemnified
Parties for any losses arising under this Agreement or Related Agreements based
upon breach of representation or warranty or upon a claim under Section
11.02(a)(iii) hereof.
Section 11.02. Indemnification.
(a) By the Elan Companies. Subject to Sections 11.01 and 11.03, from
and after the Closing, the Elan Companies shall jointly and severally indemnify,
reimburse, defend and hold harmless the Acquiror, its Affiliates and their
respective officers, directors, employees, agents, successors and assigns from
and against any and all costs, losses, damages, including natural resource
damages, fines, penalties, judgments, lawsuits, deficiencies, claims and
expenses (including reasonable fees and disbursements of attorneys and other
professionals, including third-party consultants and, to the extent allowable at
Law, medical monitoring costs and expenses) of every kind and nature incurred
(collectively, the "Damages") arising out of, resulting from or incident to (i)
any breach of a representation, warranty, covenant or agreement of an Elan
Company made in this Agreement or the Related Agreements (except Section 6.09),
(ii) any Excluded Liabilities (except Environmental Damages), and (iii) any
Damages arising under any Environmental Law ("Environmental Damages") based on
any of the following occurring on or prior to the Closing Date: (A) the
presence, Release or threatened Release of Hazardous Materials at, from, in, to,
on or under any Site; (B) any violation of an Environmental Law in connection
with the Product, the Purchased Assets or the operation of the Plant; (C) the
transportation, treatment, storage, or disposal of Hazardous Materials by or on
behalf of
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the Elan Companies, any predecessors or affiliates of the Elan Companies or any
entities previously owned by the Elan Companies in connection with the Product,
the Purchased Assets or the operations of the Plant; (D) a breach of a
representation or warranty in Section 6.09; or (E) the items listed on Schedule
11.02(a)(iii)(E), in each case to the extent incurred for actions (conducted in
a commercially reasonable manner) required by applicable Environmental Laws for
the existing use of the property or asset involved and based on a claim
(including a notice of violation) asserted by a third party, including a
Governmental or Regulatory Authority, and only to the extent any Environmental
Damages are not attributable to the acts or omissions of an Indemnified Party,
including without limitation, the conduct of any soil, surface water or
groundwater investigation not required to be undertaken by applicable
Environmental Laws; provided, that indemnification under this Section
11.02(a)(iii) for Environmental Damages shall be the exclusive remedy available
to any Indemnified Party and all other statutory or other rights to recover any
Environmental Damages shall hereby be waived. The requirement for a third-party
claim shall not apply to actions required under applicable Environmental Laws to
cure any non-compliance for the items on Schedule 11.02(a)(iii)(E). After the
Closing Date, the Acquiror shall have the right to control the conduct of such
actions relating to such matters set forth on Schedule 11.02(a)(iii)(E) to the
extent permitted by Law, including negotiation with governmental regulators,
subject to prior approval by the Elan Companies (which approval shall not be
unreasonably withheld); any expenses incurred by Acquiror with respect to such
actions for which indemnification will be sought shall be subject to the prior
approval of the Elan Companies, which approval shall not be unreasonably
withheld or delayed, except to the extent that the Acquiror is required to take
immediate action pursuant to applicable Environmental Laws by a Governmental or
Regulatory Authority.
(b) By the Acquiror. Subject to Sections 11.01 and 11.03, from and
after the Closing, the Acquiror shall indemnify, defend and hold harmless each
Elan Company, its Affiliates and their respective officers, directors,
employees, agents, successors and assigns from and against any and all Damages
incurred in connection with, arising out of, resulting from or incident to (i)
any breach of a representation, warranty, covenant or agreement of the Acquiror
made in this Agreement or the Related Agreements, (ii) the use by the Acquiror
and its Affiliates of the Marketing Materials or (iii) any Assumed Liabilities.
(c) Procedure for Claims. The indemnified party shall give the
indemnifying party prompt written notice (an "Indemnification Claim Notice") of
any Damages or discovery of fact upon which such indemnified party intends to
base a request for indemnification under Section 11.02(a) or Section 11.02(b).
Failure to give any such notice shall not constitute a waiver of any right to
indemnification or reduce in any way the indemnification available hereunder,
except to the extent such failure to notify directly increases the amount to be
indemnified hereunder. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount of such Damages (to the
extent that the nature and amount of such Damages are known at such time). The
indemnified party shall furnish promptly to the indemnifying party copies of all
papers and official documents received in respect of any Damages. All
indemnification claims in respect of a party, its Affiliates or their respective
directors, officers, employees and agents (collectively, the "Indemnitees" and
each an "Indemnitee") shall be made solely by such party to this Agreement (the
"Indemnified Party").
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(d) Third Party Claims. The obligations of an indemnifying party
under this Section 11.02 with respect to Damages arising from claims of any
third party that are subject to indemnification as provided for in Section
11.02(a) or Section 11.02(b) (a "Third Party Claim") shall be governed by and be
contingent upon the following additional terms and conditions:
(i) At its option, the indemnifying party may assume the defense of
any Third Party Claim by giving written notice to the Indemnified Party
within thirty (30) days after the indemnifying party's receipt of an
Indemnification Claim Notice. The assumption of the defense of a Third
Party Claim by the indemnifying party shall not be construed as an
acknowledgment that the indemnifying party is liable to indemnify any
Indemnitee in respect of the Third Party Claim, nor shall it constitute a
waiver by the indemnifying party of any defenses it may assert against any
Indemnitee's claim for indemnification. Upon assuming the defense of a
Third Party Claim, the indemnifying party may appoint as lead counsel in
the defense of the Third Party Claim any legal counsel selected by the
indemnifying party, provided that in the event that a conflict of interest
arises between the indemnifying party and its Indemnified Party such that
such legal counsel cannot represent both the indemnifying party and the
Indemnified Party, the Indemnitee may retain its own legal counsel at the
expense of the indemnifying party and the indemnifying party and its
counsel shall cooperate with the Indemnified Party and its counsel, as may
be reasonably requested. In the event the indemnifying party assumes the
defense of a Third Party Claim, the Indemnified Party shall immediately
deliver to the indemnifying party all original notices and documents
(including court papers) received by any Indemnitee in connection with the
Third Party Claim. Except as set forth above, should the indemnifying
party assume the defense of a Third Party Claim, the indemnifying party
shall not be liable to the Indemnified Party or any other Indemnitee for
any legal expenses subsequently incurred by such Indemnified Party or
other Indemnitee in connection with the analysis, defense or settlement of
the Third Party Claim.
(ii) Without limiting Section 11.02(d)(i), any Indemnitee shall be
entitled to participate in, but not control, the defense of such Third
Party Claim and to employ counsel of its choice for such purpose;
provided, however, that such employment shall be at the Indemnitee's own
expense, except as described above, unless (A) the employment thereof has
been specifically authorized by the indemnifying party in writing, or (B)
the indemnifying party has failed to assume the defense and employ counsel
in accordance with Section 11.02(d)(i) (in which case the Indemnified
Party shall control the defense).
(iii) With respect to any Damages relating solely to the payment of
money damages in connection with a Third Party Claim and that will not
result in the Indemnitee's or the Indemnified Party's becoming subject to
injunctive or other relief or otherwise adversely affect the business or
reputation of the Indemnitee or the Indemnified Party in any manner, and
as to which the indemnifying party shall have acknowledged in writing the
obligation to indemnify the Indemnitee hereunder, the indemnifying party
shall have the sole right to consent to the entry of any judgment, enter
into any settlement or otherwise dispose of such Damages, on such terms as
the indemnifying party, in its sole discretion, shall deem appropriate,
provided that, as a result of or in connection with any such settlement
each Indemnitee or Indemnified Party shall receive a full release with
respect to such claim. With respect to all other
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Damages in connection with Third Party Claims, where the indemnifying
party has assumed the defense of the Third Party Claim in accordance with
Section 11.02(d)(i), the indemnifying party shall have authority to
consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Damages; provided that it obtains the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The indemnifying party shall not be
liable for any settlement or other disposition of Damages by an Indemnitee
or Indemnified Party that is reached without the written consent of the
indemnifying party. Regardless of whether the indemnifying party chooses
to defend or prosecute any Third Party Claim, no Indemnitee or Indemnified
Party shall admit any liability with respect to, or settle, compromise or
discharge, any Third Party Claim without the prior written consent of the
indemnifying party.
(iv) Regardless of whether the indemnifying party chooses to defend
or prosecute any Third Party Claim, the Indemnified Party and each
indemnifying party shall, and shall cause each other Indemnitee or
Affiliate of any such indemnifying party, as applicable, to, cooperate in
the defense or prosecution thereof and shall furnish such records,
information and testimony, provide such witnesses and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection therewith. Such cooperation shall
include access during normal business hours afforded to the indemnifying
party or Indemnified Party, as applicable, to, and reasonable retention by
each such Person of, records and information that are reasonably relevant
to such Third Party Claim, and making each such Person and other employees
and agents available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, and the
indemnifying party shall reimburse each such Person for all its reasonable
out-of-pocket expenses in connection therewith.
(e) Effect of Investigation or Knowledge. Any claim by the Acquiror
or its Affiliates or any of their respective directors, officers, employees or
agents for indemnification shall not be adversely affected by any investigation
by or opportunity to investigate afforded to the Acquiror, nor shall such a
claim be adversely affected by the Acquiror's Knowledge on or before the Closing
Date of any breach of the type specified in this Section 11.02 or of any state
of facts that may give rise to such a breach. The waiver of any condition based
on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not adversely affect the right
to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants or obligations.
Section 11.03. Limitations. (a) In no event shall the Elan Companies
or the Acquiror be liable for any Damages pursuant to a claim based upon a
representation or warranty and pursuant to Section 11.02(a)(i) or 11.02(b)(i) or
for Environmental Damages pursuant to Section 11.02(a)(iii), as applicable,
unless and until (i) the individual claim giving rise to any Damages exceeds
$25,000, in which case the Elan Companies or the Acquiror, as applicable, shall
be liable for all Damages arising from such claim, (ii) except for claims
pursuant to Section 11.02(a)(iii)(E), the aggregate amount of all such Damages
exceeds $2.5 million, in which case the Elan Companies or the Acquiror, as
applicable, shall be liable for all such Damages only in excess of such amount,
and then (iii) not for any amount in excess of $75 million for all claims made
under such Sections 11.02(a)(i)
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or 11.02(b)(i) and for all claims made under Section 11.02(a)(iii) except claims
made under Section 11.02(a)(iii)(E), as applicable, in the aggregate.
(b) The amount of any Damages recoverable by a party under Section
11.02 shall be reduced by (i) the amount of any actual Tax benefits received by
the Indemnified Party within three years from the Closing Date that result from
the Liability that gave rise to such indemnity and (ii) the amount of any
insurance proceeds paid to the indemnified party relating to such claim.
(c) THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES HERETO SHALL NOT
EXTEND TO SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS
INTERRUPTION OR LOST PROFITS, OR PUNITIVE DAMAGES.
ARTICLE XII
TERMINATION AND ABANDONMENT
Section 12.01. Methods of Termination. Prior to the Closing, the
transactions contemplated herein may be terminated and/or abandoned at any time:
(a) by mutual written agreement of the Elan Companies and the
Acquiror;
(b) by the Elan Companies if the Closing shall not have occurred by
December 15, 2002 (the "Termination Date"); provided, that the right to
terminate the Agreement pursuant to this Section 12.01(b) shall not be
available to the Elan Companies, if their failure to perform in all
material respects any of their obligations under this Agreement or any
Related Agreement results in the failure of the Closing to occur by such
time;
(c) by the Acquiror if the Closing shall not have occurred by the
Termination Date; provided, that the right to terminate the Agreement
pursuant to this Section 12.01(c) shall not be available to the Acquiror
if its failure to perform in all material respects any of its obligations
under this Agreement or any Related Agreement results in the failure of
the Closing to occur by such time; provided, further, that if the sole
reason that the Closing has not occurred by the Termination Date is that
the Elan Companies have failed to obtain all Elan Third Party Consents,
then the Elan Companies may, by written notice to Acquiror, request
extension of such termination date one or more times but in no event may
Elan Companies extend this termination date beyond January 31, 2003;
(d) by either the Elan Companies or the Acquiror if there shall be
in effect any Law that prohibits the Closing or if the Closing would
violate any non-appealable Order;
(e) by either the Elan Companies or the Acquiror if the other party
has breached any material obligation hereunder that remains uncured for a
period of 30 days, unless such breach is not capable of cure, in which
event the non-breaching party may terminate immediately;
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(f) by the Elan Companies, for any breach by the Acquiror of Section
7.07;
(g) by either the Elan Companies or the Acquiror if the shareholders
of Elan Parent shall have rejected the proposal to approve the
transactions contemplated by this Agreement and the Related Agreements at
the Elan Shareholder Meeting; or
(h) by the Acquiror if there is any material breach by the Elan
Companies of the obligations set forth in Section 8.17 or if the Elan
Parent board of directors withdraws its recommendation of this Agreement
or the transactions contemplated hereby or by the Related Agreements.
Section 12.02. Procedure upon Termination. In the event of
termination and abandonment under Section 12.01, written notice thereof shall
forthwith be given to the other party, and the transactions contemplated by this
Agreement shall be terminated and abandoned, without further action by the
parties hereto. If the transactions contemplated by this Agreement are
terminated and/or abandoned as provided herein:
(a) each party, if requested, will redeliver all documents, work
papers and other material of the other party and its Affiliates relating
to the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same; and
(b) no party hereto and none of their respective directors,
officers, stockholders, Affiliates or Controlling Persons shall have any
further liability or obligation to any other party to this Agreement,
except that (i) nothing in this Section 12.02 shall prejudice any rights,
claims, or causes of action that may have accrued hereunder or with
respect hereto prior to the date of such termination, including for breach
of this Agreement (whether based upon the termination or otherwise) and
(ii) the provisions of Article XIII shall survive any termination of this
Agreement.
Section 12.03. Specific Performance. The parties acknowledge that
the transactions contemplated hereby are unique and specifically identifiable.
Accordingly, the parties further agree and stipulate that, if the Closing does
not occur because of the willful failure of the Elan Companies, on the one hand,
or the Acquiror, on the other hand, to perform their respective obligations
hereunder, (a) monetary damages and any other remedy at law will not be
adequate, (b) the non-defaulting party shall be entitled to specific performance
as the remedy for such breach, (c) each party agrees to waive any objection to
the remedy of specific performance, (d) each party agrees that the granting of
specific performance by any court will not be deemed to be harsh or oppressive
to the party who is ordered specifically to perform its obligations under this
Agreement and (e) in connection with any action for specific performance, the
prevailing party shall be entitled to reasonable attorneys' fees and other costs
of prosecuting or defending such action.
Section 12.04. Other Remedies. The right to seek specific
performance hereunder shall not preclude any party to seek any other remedy at
law or in equity.
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Section 12.05. Effect of Certain Terminations. In the event that (1)
this Agreement is terminated by (i) the Elan Companies pursuant to Section
12.01(b), (ii) the Acquiror pursuant to Section 12.01(e), or (iii) either the
Elan Companies or the Acquiror pursuant to Section 12.01(g) or (h) and (2) the
Elan Companies or their Affiliates shall have entered into a definitive
agreement regarding a transaction with a party unaffiliated with the Acquiror
involving a sale of the Business (whether alone or together with other assets of
the Elan Companies) within 12 months of the date of termination of this
Agreement, then the Elan Companies shall, as a condition to the consummation of
such transaction contemplated by Section 12.05(2), pay Acquiror or its designee
a fee equal to $18 million (the "Termination Fee"), payable by wire transfer of
immediately available funds in United States dollars.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally against written receipt or by facsimile
transmission with answer back confirmation or mailed (postage prepaid by
certified or registered mail, return receipt requested) or by nationally
recognized overnight courier that maintains records of delivery to the parties
at the following addresses or facsimile numbers:
If to the Acquiror to:
Enzon, Inc.
685 Routes 202/206
Bridgewater, NJ
Facsimile: (908) 541-8838
Attention: CEO
With copies to:
Enzon, Inc.
685 Routes 202/206
Bridgewater, NJ
Facsimile: (908) 541-8838
Attention: General Counsel
If to the Elan Companies to:
Elan Corporation, plc
Lincoln House
Lincoln Place
Dublin 2, Ireland
Facsimile: (353-1) 709-4124
Attention: Colin Sainsbury
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With copies to:
Elan Pharmaceuticals, Inc.
7475 Lusk Boulevard
San Diego, CA 92121
Facsimile: (858) 457-7807
Attention: Vice President, Legal Affairs
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile: (212) 269-5420
Attention: William M. Hartnett, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
receipt, (ii) if delivered by facsimile to the facsimile number as provided in
this Section, be deemed given upon receipt by the sender of the answer back
confirmation and (ii) if delivered by mail in the manner described above or by
overnight courier to the address as provided in this Section, be deemed given
upon receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other parties hereto in accordance with the terms of this
Section.
Section 13.02. Entire Agreement. This Agreement (and all Exhibits
and Schedules attached hereto and all other documents delivered in connection
herewith) supersedes all prior discussions and agreements among the parties with
respect to the subject matter hereof and contains the sole and entire agreement
among the parties hereto with respect to the subject matter hereof, except the
Confidentiality Agreement, which shall remain in effect until the Closing, at
which time it will expire.
Section 13.03. Waiver. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not in the alternative.
Section 13.04. Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by each
party hereto.
Section 13.05. Third Party Beneficiaries. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permit-
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ted assigns and it is not the intention of the parties to confer third party
beneficiary rights upon any other Person, except as achieved through the
indemnification clause set forth in Section 11.02.
Section 13.06. Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except that an indemnified party under Article XI
may assign any of its rights, benefits or obligations hereunder, by operation of
law or otherwise, (a) to any of its Affiliates, provided such indemnified party
continues to be responsible for all of its obligations hereunder, or (b) to a
Person that (i) purchases all or substantially all of the assets being conveyed
hereunder or (ii) merges with Acquiror or the indemnified party or (c) to the
lenders of Acquiror and its successors or assigns. This Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and permitted assigns.
Section 13.07. Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
Section 13.08. Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar to the
terms of such illegal, invalid or unenforceable provision as may be possible and
reasonably acceptable to the parties herein.
Section 13.09. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS PRINCIPLES.
Section 13.10. Expenses. Except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses and costs incidental to
the preparation of this Agreement and to the consummation of the transactions
contemplated hereby.
Section 13.11. Counterparts. This Agreement may be executed in any
number of counterparts and by facsimile, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.
A facsimile copy shall be a sufficient proof of signature, without it being
necessary to produce the original copy.
Section 13.12. Schedules, Exhibits and Other Agreements. The
Exhibits, Schedules, other agreements, certificates and notices specifically
referred to herein, and delivered pursuant hereto, are an integral part of this
Agreement. Any disclosure that is made in any of the Schedules or
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certificates delivered pursuant to this Agreement shall be deemed responsive
only as to the section as to which it expressly modifies as indicated on the
relevant Schedule.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto all as of the date first above written.
ELAN CORPORATION, PLC
By: /s/ Kevin Insley
-----------------------------------------
Name:
Title:
ELAN PHARMACEUTICALS, INC.
By: /s/ Lisabeth F. Murphy
-----------------------------------------
Name:
Title:
ELAN OPERATIONS, INC.
By: /s/ Paul V. Breen
-----------------------------------------
Name:
Title:
ELAN CANADA, INC.
By: /s/ Lisabeth F. Murphy
-----------------------------------------
Name:
Title:
ENZON, INC.
By: /s/ Arthur Higgins
-----------------------------------------
Name:
Title:
Exhibit 99.1
[LOGO] ENZON For Immediate Release
================================================================================
PRESS RELEASE Contact: Susan M. Mesco
Director Investor Relations
908-541-8678
Noonan Russo Presence
Ernie Knewitz, Media Relations
212-845-4253
ENZON ACQUIRES ABELCET(R) NORTH AMERICAN BUSINESS FROM ELAN
Transaction Bolsters Bottom Line and Marks a Significant Step Toward Full
Integration
BRIDGEWATER, NJ - October 02, 2002 -- Enzon, Inc. (NASDAQ:ENZN) today announced
the signing of an agreement under which Enzon will acquire the North American
rights to Abelcet(R) (Amphotericin B Lipid Complex Injection) from Elan
Corporation, plc (NYSE: ELN). ABELCET is an antifungal used in the hospital to
treat patients with invasive fungal infections related to cancer, organ
transplantation and other conditions. The purchase will include the acquisition
by Enzon of the operating assets associated with the development, manufacture,
sales and marketing of ABELCET in North America, including a 56,000 square foot
manufacturing facility in Indianapolis, Indiana.
Enzon will pay a total of $370 million in cash upon the closing of the
deal, including an estimated $30 million for the manufacturing facility. Under
the terms of the agreement, the $370 million may be subject to certain price
deductions at closing. Enzon has cash and cash equivalents that enable it to
complete the transaction. Enzon also expects to hire from Elan approximately 60
hospital sales force employees, who currently market and sell ABELCET in the
United States and Canada, as well as the manufacturing facility personnel
located at the Indiana facility. The transaction is expected to close during the
fourth calendar quarter of 2002, subject to certain conditions.
Enzon expects that the acquisition of ABELCET, assuming a mid-second
fiscal
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
Page 2/Abelcet
quarter close, will improve its results from operations for its fiscal year
ending June 30, 2003 by adding approximately $50 million in product sales, $20
million in EBITDA, and $0.05 in fully diluted, fully taxed earnings per share.
"This transaction is a great demonstration of our continued success in
pursuing strategies that bolster Enzon's top and bottom lines; it significantly
enhances our infrastructure moving Enzon to a fully integrated pharmaceutical
company model, and adds a product with at least 12 years of patent protection to
our current portfolio," said Arthur J. Higgins, Enzon's chairman and chief
executive officer. "Not only will this transaction be immediately accretive, it
also offers excellent upside potential in the growing antifungal market. The
addition of a fully-operational 60-person hospital sales and marketing unit
provides Enzon with instant access to several key therapeutic areas, including
oncology, hematology, infectious disease, and intensive care medicine.
Additionally, the acquisition of a sterile injectable manufacturing facility
will be a significant enhancement to our manufacturing, QA, and QC capabilities.
On all fronts, this transaction is a clear winner that evidences our commitment
to successfully execute our strategy and become one of the fastest growing and
most respected biopharmaceutical companies."
ABELCET is a lipid complex formulation of amphotericin B providing
patients with significantly lower kidney toxicity than conventional amphotericin
B. Enzon has estimated ABELCET'S current annual run rate to be approximately $80
million, growing at a mid double digit rate; additionally Enzon's estimates
indicate that the intravenous antifungal market is currently growing at an
approximate rate of 20 percent. The increase in severe fungal infections is
driven primarily by advances in medical treatment, such as increasingly
aggressive chemotherapy procedures and advances in transplantation procedures.
These advances have given rise to an increased number of immuno-compromised
patients. The fungi that cause these infections are normally combated by an
individual's healthy immune system. However, for immuno-compromised patients,
such as individuals undergoing chemotherapy, immunosuppression following
transplantation, or HIV patients with AIDS, these infections represent a major
mortality
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
Page 3/Abelcet
risk. The acquisition will include the transfer to Enzon of the operating assets
associated with ABELCET in North America, including certain regulatory product
registrations, including those with the U.S. Food and Drug Administration;
rights under development agreements; rights under certain license agreements;
intellectual property associated with the product; marketing materials; product
and manufacturing books and records; and product and raw material inventories.
The transaction will also include the transfer to Enzon of any Elan Japanese
rights to ABELCET. Additionally, as part of the acquisition, the two companies
will enter into a long-term Manufacturing and Supply Agreement, whereby Enzon
will continue to manufacture products for Elan, including ABELCET, as Elan will
retain the rights to market ABELCET in any markets outside the United States,
Canada, and Japan.
The transaction is expected to close during the fourth calendar quarter of
2002, subject to certain conditions, including the approval of Elan's
shareholders, the receipt of required regulatory approvals and clearances, the
receipt of third-party consents, termination of the applicable waiting period
under the Hart-Scott-Rodino Act, and other customary closing conditions.
SG Cowen Securities Corporation acted as financial advisor to Enzon.
Company management of Enzon will be hosting a conference call on October
2, 2002 at 10:00AM EDT regarding the Company's intended acquisition of ABELCET.
All interested parties can access the call using the following information:
Domestic dial-in number 888-423-3271
International dial-in number 612-332-0418
Access Code 654864
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Phone: (908) 541-8600 Fax: (908) 575-9457
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Enzon's conference call will also be webcast in a "listen only" mode via
the internet at http://www.vcall.com. Additionally, for those parties unable to
listen at the time of Enzon's conference call, a rebroadcast will be available
following the call from October 2, 2002 at approximately 3:00PM EDT. This
rebroadcast will end on October 9, 2002 at 11:59PM. The rebroadcast may be
accessed using the following information:
Domestic Dial-In Number: 800-475-6701
International Dial-In Number: 320-365-3844
Access Code 654864
Enzon is a biopharmaceutical company dedicated to the discovery,
development and commercialization of therapeutics to treat life-threatening
diseases. The company has developed three marketed products, including
PEG-INTRON(R), marketed by Schering-Plough. Enzon's product-focused strategy
includes an extensive drug development program that leverages the Company's PEG
modification and single-chain antibody (SCA(R)) technologies. Internal research
and development efforts are complemented by strategic transactions that provide
access to additional products, projects, and technologies. Enzon has several
drug candidates in various stages of development, independently and with
partners.
Except for the historical information herein, the matters discussed in
this news release include forward-looking statements that may involve a number
of risks and uncertainties. Actual results may vary significantly based upon a
number of factors, which are described in the Company's Form 10-K, Form 10-Q's,
Form 8-K's and other documents on file with the SEC, including without
limitation, risks in obtaining and maintaining regulatory approval for existing,
new or expanded indications and other regulatory risks, risks relating to the
manufacturing facility and Enzon's ability to manufacture pharmaceutical
products on a large scale, risks concerning Enzon's ability to manage growth,
market a pharmaceutical product on a large scale and integrate and manage an
internal sales and marketing organization, risks relating to the ability to
ensure regulatory compliance, risks that Enzon will not outperform the sector,
risks related to the acquisition, risks related to the failure to consummate the
acquisition, risks related to
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research and development costs and capabilities, market acceptance of and
continuing demand for Enzon's products and the impact of increased competition,
risks associated with anticipated top and bottom line growth and the possibility
that upside potential will not be achieved, competitive products and pricing,
and risks associated with the ownership and use of intellectual property rights.
This release is also available at http://www.enzon.com
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com