Asset Purchase Agreement - Elan Corp. plc, Elan Pharma International Ltd., Elan Pharmaceuticals Inc., King Pharmaceuticals Inc., Jones Pharma Inc. and Monarch Pharmaceuticals Inc.
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
by and among
ELAN CORPORATION, PLC
ELAN PHARMA INTERNATIONAL LIMITED
ELAN PHARMACEUTICALS, INC.
and
KING PHARMACEUTICALS, INC.
JONES PHARMA INCORPORATED
MONARCH PHARMACEUTICALS, INC.
dated as of May 19, 2003
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms..................................................1
SECTION 1.02. Construction of Certain Terms and Phrases ....................18
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01. Purchase and Sale of Assets at the Closing ...................19
SECTION 2.02. Excluded Assets...............................................20
SECTION 2.03. Retention of Assets...........................................21
SECTION 2.04. Assignability and Consents....................................21
ARTICLE III
ASSUMPTION OF LIABILITIES
SECTION 3.01. Assumption of Liabilities.....................................22
ARTICLE IV
PURCHASE PRICE AND PAYMENT
SECTION 4.01. Purchase Price................................................25
SECTION 4.02. Allocation of Purchase Price..................................26
SECTION 4.03. Sales, Use and Other Taxes....................................26
SECTION 4.04. Tax Withholding...............................................27
SECTION 4.05. Closing Date Inventory Value Adjustments......................27
SECTION 4.06. Skelaxin Purchase Price Adjustment............................28
ARTICLE V
CLOSING
SECTION 5.01. Time and Place................................................28
SECTION 5.02. Deliveries at Closing.........................................29
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ELAN COMPANIES
SECTION 6.01. Organization, Etc.............................................30
SECTION 6.02. Authority of the Elan Companies...............................31
SECTION 6.03. Consents and Approvals........................................32
SECTION 6.04. Non-Contravention.............................................32
SECTION 6.05. Contracts.....................................................32
SECTION 6.06. Intellectual Property Rights..................................33
SECTION 6.07. Employee Matters..............................................35
SECTION 6.08. Litigation....................................................36
SECTION 6.09. Compliance with Law...........................................36
SECTION 6.10. Inventory.....................................................38
SECTION 6.11. Brokers.......................................................38
SECTION 6.12. Sufficiency of Purchased Assets...............................38
SECTION 6.13. Customers and Suppliers.......................................38
SECTION 6.14. Operation of the Business; Description of the Business .......39
SECTION 6.15. Financial Information.........................................39
SECTION 6.16. Title.........................................................39
SECTION 6.17. Voting Requirements...........................................39
SECTION 6.18. Insurance.....................................................40
SECTION 6.19. Pharma Marketing Settlement Agreement.........................40
SECTION 6.20. Certain Covenants Under the Original Agreement ...............40
SECTION 6.21. No Other Representations and Warranties.......................40
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
PARENT AND THE ACQUIRORS
SECTION 7.01. Corporate Organization........................................41
SECTION 7.02. Authority of the Acquiror Parent and the Acquirors ...........41
SECTION 7.03. Consents and Approvals........................................41
SECTION 7.04. Non-Contravention.............................................42
SECTION 7.05. Litigation....................................................42
SECTION 7.06. Brokers.......................................................42
SECTION 7.07. Financial Capability..........................................42
SECTION 7.08. No Other Representations or Warranties........................43
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ARTICLE VIII
COVENANTS OF THE PARTIES
SECTION 8.01. Operation of the Businesses...................................43
SECTION 8.02. Commercially Reasonable Efforts...............................44
SECTION 8.03. Cooperation...................................................45
SECTION 8.04. Access........................................................46
SECTION 8.05. Public Announcements; Confidentiality.........................48
SECTION 8.06. Corporate Names...............................................50
SECTION 8.07. Regulatory Matters............................................51
SECTION 8.08. Returns, Rebates and Chargebacks..............................51
SECTION 8.09. Indigent Patient Program......................................56
SECTION 8.10. Employee Matters..............................................56
SECTION 8.11. Bulk Transfer Laws............................................59
SECTION 8.12. Covenant Not to Compete.......................................59
SECTION 8.13. Further Assurances............................................60
SECTION 8.14. HSR Act and Irish Competition Act Filings ....................60
SECTION 8.15. Elan Companies' Right of Reference............................61
SECTION 8.16. Litigation Substitution.......................................62
SECTION 8.17. Cooperation Regarding Financial Statements ...................64
SECTION 8.18. No Solicitation...............................................64
SECTION 8.19. Medical Inquiries and Complaints..............................65
SECTION 8.20. Wyeth/Elan Supply Agreement; Wyeth/Elan Master Agreement .....65
SECTION 8.21. Pharma Marketing Settlement Agreement.........................65
SECTION 8.22. Distribution and Co-Promotion Agreement.......................66
SECTION 8.23. Skelaxin License..............................................66
SECTION 8.24. NanoCrystal Technology........................................67
SECTION 8.25. Additional Skelaxin Formulations..............................67
SECTION 8.26. Annual Adjustment Amount......................................68
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF
THE ELAN COMPANIES FOR THE CLOSING
SECTION 9.01. Representations, Warranties and Covenants ....................69
SECTION 9.02. No Actions or Proceedings.....................................69
SECTION 9.03. Consents......................................................69
SECTION 9.04. Elan Shareholder Approval.....................................69
SECTION 9.05. Wyeth/King Agreements.........................................69
SECTION 9.06. Absence of Acquiror Material Adverse Effect ..................70
SECTION 9.07. Wyeth/Elan Supply Agreement...................................70
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ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE ACQUIROR
PARENT AND THE ACQUIRORS FOR THE CLOSING
SECTION 10.01. Representations, Warranties and Covenants ....................70
SECTION 10.02. No Actions or Proceedings.....................................70
SECTION 10.03. Consents......................................................71
SECTION 10.04. Elan Shareholder Approval.....................................71
SECTION 10.05. Wyeth/King Agreements.........................................71
SECTION 10.06. Absence of Material Adverse Effect............................71
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. Survival of Representations, Warranties, Covenants, Etc.......71
SECTION 11.02. Indemnification...............................................71
SECTION 11.03. Limitations...................................................75
ARTICLE XII
TERMINATION AND ABANDONMENT
SECTION 12.01. Methods of Termination........................................75
SECTION 12.02. Procedure upon Termination....................................77
SECTION 12.03. Effect of Certain Terminations................................77
SECTION 12.04. Specific Performance..........................................78
SECTION 12.05. Settled Claims................................................78
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Notices.......................................................79
SECTION 13.02. Entire Agreement..............................................80
SECTION 13.03. Waiver........................................................80
SECTION 13.04. Amendment.....................................................81
SECTION 13.05. Third Party Beneficiaries.....................................81
SECTION 13.06. Assignment; Binding Effect....................................81
SECTION 13.07. Headings......................................................81
SECTION 13.08. Severability..................................................81
SECTION 13.09. Governing Law; Jurisdiction; and Venue........................82
SECTION 13.10. Expenses......................................................82
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Page
SECTION 13.11. Counterparts..................................................82
Exhibit A - Form of Assignment of Domain Names
Exhibit B - Form of Bill of Sale
Exhibit C - Form of Development Agreement
Exhibit D - Form of Irish Assignment Agreement
Exhibit E - Form of Patent Assignment Agreement
Exhibit F - Form of Skelaxin Payment Agreement
Exhibit G - Form of Trademark Assignment Agreement
Exhibit H - Form of Detailing Agreement
Exhibit I - Form of Asset Transfer Agreement
Exhibit J - Form of Joint Litigation and Prosecution Agreement
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this "Agreement")
is made and entered into as of May 19, 2003, by and among King Pharmaceuticals,
Inc., a Tennessee corporation (the "Acquiror Parent"), Jones Pharma
Incorporated, a Delaware corporation ("JPI"), and Monarch Pharmaceuticals, Inc.,
a Tennessee corporation ("MPI") (JPI and MPI each an "Acquiror" and collectively
the "Acquirors"; the Acquirors, together with the Acquiror Parent, the "King
Companies"), and Elan Corporation, plc, a public limited company organized under
the laws of Ireland (the "Elan Parent"), Elan Pharma International Limited, a
private limited company organized under the laws of Ireland ("EPIL"), and Elan
Pharmaceuticals, Inc., a Delaware corporation ("EPI" and, together with the Elan
Parent and EPIL, the "Elan Companies").
RECITALS
The King Companies and the Elan Companies are parties to that certain
Asset Purchase Agreement (the "Original Agreement") dated as of January 30, 2003
(the "Original Agreement Date") and desire to amend and restate the Original
Agreement in its entirety.
Acquiror Parent and Elan Parent have entered into an Escrow Agreement
(the "Escrow Agreement") dated the date hereof pursuant to which Acquiror Parent
has deposited $400,000,000 (the "Escrow Amount"), which Escrow Amount and the
earnings thereon are subject to the release provisions set forth in the Escrow
Agreement.
This Agreement sets forth the terms and conditions upon which the
Acquirors are purchasing the Purchased Assets (as defined below) and assuming
the Assumed Liabilities (as defined below) from the Elan Companies, and the Elan
Companies are selling the Purchased Assets and transferring the Assumed
Liabilities to the Acquirors.
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 specified below:
"Accountants" means an accounting firm of national reputation
(excluding each of the King Companies' and the Elan Companies' respective
regular outside accounting
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firms) as may be mutually acceptable to the Acquiror and the Elan Companies;
provided, however, that in the event that the Acquirors 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, including those that are not evidenced by
instruments or invoices, existing as of the Closing Date.
"Acquiror" and "Acquirors" have the meaning set forth in the preamble
to this Agreement.
"Acquiror Disclosure Schedule" has the meaning set forth in the
preamble to Article VII.
"Acquiror Governmental Consents" has the meaning set forth in Section
7.03.
"Acquiror Material 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 have, or would be reasonably
expected to have, individually or in the aggregate a material adverse effect (i)
on the business, assets, results of operations or financial condition of the
King Companies and their Subsidiaries, taken as a whole, or (ii) on the ability
of the King Companies to perform their obligations under this Agreement, the
Related Agreements and the Wyeth/King Agreements or on the ability of the
Acquirors to consummate the transactions contemplated hereby and thereby.
"Acquiror Parent" has the meaning set forth in the preamble to this
Agreement.
"Acquiror's Defined Contribution Plan" has the meaning set forth in
Section 8.10(c).
"Acquisition Proposal" has the meaning set forth in Section 8.18(a).
"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 Recommendation Change" has the meaning set forth in Section
8.18(b).
"Affiliate" means, with respect to any Person, any other Person which
Controls, is Controlled by or is under common Control with such Person.
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"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Period" has the meaning set forth in Section 8.12(a).
"Assignment of Domain Names" means the Assignment of Domain Names
conveying certain domain names from the Elan Companies to the Acquirors,
substantially in the form attached hereto as Exhibit A.
"Assumed Contracts" means the Assumed Skelaxin Contracts and the
Assumed Sonata Contracts.
"Assumed Liabilities" has the meaning set forth in Section 3.01(a).
"Assumed Skelaxin Contracts" has the meaning set forth in Section
2.01(a)(i).
"Assumed Sonata Contracts" has the meaning set forth in Section
2.01(b)(i).
"Bill of Sale" means one or more Bills of Sale conveying the Purchased
Assets from the Elan Companies to the Acquirors, substantially in the form
attached hereto as Exhibit B.
"Books and Records" means all books, records, files, documents, data,
information and correspondence (including customer lists, credit and collection
records, correspondence and miscellaneous records with respect to customers and
supply sources, all other general correspondence and, to the extent not
originals, true and complete copies of all files relating to the filing,
prosecution, issuance, maintenance, enforcement and/or defense of any patents,
patent applications, trademarks, copyrights or other intellectual property
rights, whether on paper or in electronic format; provided, however, that no
documents constituting attorney work product shall be included in this
definition) owned by any of the Elan Companies or any of their respective
Subsidiaries as of the Closing Date.
"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.
"Businesses" means, collectively, the Skelaxin Business and the Sonata
Business.
"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 Inventory as of
the Closing Date valued as described on Schedule 1.01(a) of the Elan Disclosure
Schedule;
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provided, however, that Closing Date Inventory Value shall not include the value
of any Inventory with, as of the Closing Date, a shelf life of less than 12
months.
"Closing Date Inventory Value Adjustment" means the Closing Date
Inventory Value minus the Estimated Closing Date Inventory Value.
"Closing Date Inventory Value Statement" has the meaning set forth in
Section 4.05(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commonly Controlled Entity" means each person or entity that, together
with EPI, is treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code or any other similar Law.
"Compliance Information" means documentation that is reasonably
sufficient to demonstrate that the representations and warranties set forth in
Section 7.07 would have been true and correct as of the date of delivery of such
documentation assuming the Closing had occurred on such date of delivery and an
officer's certificate from the Acquiror Parent certifying such compliance.
"Competing Product" has the meaning set forth in Section 8.12(a).
"Confidential Information" has the meaning set forth in Section
8.05(b).
"Confidentiality Agreement" has the meaning set forth in Section
8.05(f).
"Contracts" means any and all binding commitments, contracts, purchase
orders, leases, licenses, easements, commitments, arrangements, undertakings 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;
(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 the Skelaxin Intellectual Property and the Sonata
Copyrights, the possession (whether by ownership or license or sublicense
and other than pursuant to this Agreement) of the ability to grant
intellectual property rights.
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"Corporate Names" means the trademark and service mark "ELAN", the Elan
corporate logo, and trade names of the Elan Companies, including the word "ELAN"
together with any 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 Skelaxin Trademarks.
"Credit Agreement" means the Credit Agreement, dated as of April 23,
2002, by and among the Acquiror Parent, certain lenders from time to time party
thereto, Credit Suisse First Boston, as administrative agent and collateral
agent, and certain other banks from time to time party thereto.
"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).
"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.
"Development Agreement" means the Sonata Reformulation Option Agreement
to be dated as of the Closing Date by and among the Elan Parent, EPIL and the
applicable Acquiror, substantially in the form attached hereto as Exhibit C.
"Distribution and Co-Promotion Agreement" means the Distribution and
Co-Promotion Agreement dated as of December 19, 2001 by and between EPIL and
Wyeth as amended by Amendment No. 1 to Distribution and Co-Promotion Agreement
dated as of January 13, 2003.
"DMFs" has the meaning set forth in Section 8.15.
"Elan Companies" has the meaning set forth in the preamble to this
Agreement.
"Elan Companies Proceeding" means any Action or Proceeding commenced by
or against any of the Elan Companies or any of their respective Affiliates or
officers or directors prior to the Closing or commenced after the Closing but
based on events occurring prior to Closing.
"Elan Disclosure Schedule" has the meaning set forth in the preamble to
Article VI.
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"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 Severance Plan" has the meaning set forth in Section 8.10(f).
"Elan Shareholder Approval" has the meaning set forth in Section
8.02(a).
"Elan Shareholders Meeting" has the meaning set forth in Section
8.02(a).
"Elan Shares" means (i) the ordinary shares of the Elan Parent, nominal
value Euro 0.05 each, (ii) the American Depositary Shares of the Elan Parent and
(iii) the "B" Executive Shares of the Elan Parent, nominal value Euro 0.05 each.
"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 Pension Plans, Welfare Plans, and
each other employment, bonus, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock appreciation, restricted stock, stock
option, "phantom" stock, performance, stock bonus, paid time off, perquisite,
fringe benefit, vacation, severance or other plan, program, policy or
arrangement (i) maintained, contributed to or required to be maintained or
contributed to by EPI or any Commonly Controlled Entity or (ii) with respect to
which the Elan Companies or any of their Affiliates has or could have any
Liability, in each case providing benefits to any Employee.
"Employees" has the meaning set forth in Section 8.10(a).
"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.
"EPI" has the meaning set forth in the preamble to this Agreement.
"EPI Consideration" has the meaning set forth in Section 4.01(a).
"EPIL" has the meaning set forth in the preamble to this Agreement.
"EPIL Consideration" has the meaning set forth in Section 4.01(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Escrow Agreement" has the meaning set forth in the preamble to this
Agreement.
"Escrow Amount" has the meaning set forth in the preamble to this
Agreement.
"Estimated Closing Date Inventory Value" means the Elan Parent's good
faith estimate of the Closing Date Inventory Value set forth in reasonable
detail in writing and delivered to the Acquirors at least three Business Days
prior to the Closing Date.
"Excluded Assets" has the meaning set forth in Section 2.02.
"Excluded Books and Records" means all Books and Records solely to the
extent related to or constituting (i) human resources and any other employee
related files and records, (ii) original financial and accounting records, (iii)
any items set forth on Schedule 1.01(b) of the Elan Disclosure Schedule to the
extent that any applicable Law prohibits their transfer, (iv) any tax files,
documents, instruments, papers, books and records, (v) the Elan Companies'
rights and obligations under the Formulation Development Agreement dated as of
December 19, 2001 by and among the Elan Parent, EPIL and Wyeth, as amended by
Amendment No. 1 to Formulation Development Agreement dated January 13, 2003, and
the Development Agreement (as such agreements may be amended or amended and
restated from time to time) and (vi) original Sonata Books and Records except to
the extent that delivery of originals thereof is legally required to effectuate
the transfer of any Sonata Asset.
"Excluded Liabilities" has the meaning set forth in Section 3.01(b).
"Excluded Tax Liability" has the meaning set forth in Section
3.01(b)(ii).
"Expiration Date" has the meaning set forth in Section 11.01.
"FDA" means the United States Food and Drug Administration or any
successor thereto.
"FDA Act" means the U.S. Food, Drug and Cosmetic Act of 1938, as it may
be superseded or amended from time to time.
"Financial Information" has the meaning set forth in Section 6.15.
"FSS" has the meaning set forth in Section 8.08(d)(ii).
"Generic Skelaxin" means any pharmaceutical product containing
metaxalone that obtains regulatory approval by reliance on data previously
submitted to the FDA (NDA No. 13-217, including NDA Nos. 13-217/S36 and
13-217/S44) in support of a Skelaxin Product Registration.
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"Generic Sonata" means any pharmaceutical product containing zaleplon
that obtains regulatory approval by reliance on data previously submitted to the
FDA (NDA No. 020-859, including NDA Nos. 020-859/001 and 020-859/02 and NDA No.
20-859/S-001) in support of a product registration relating to Sonata in the
Sonata Territory.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, department, ministry, official or
other instrumentality of the United States, Ireland or other country, or any
supra-national organization, or any foreign or domestic, state, county, city or
other political subdivision.
"Government Rebates" has the meaning set forth in Section 8.08(b)(i).
"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.
"IND" means (a) an Investigational New Drug Application, as defined in
the FDA Act, as amended, and the regulations promulgated thereunder, which 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 (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).
"Indemnitee" and "Indemnitees" has the meaning set forth in Section
11.02(c).
"Indigent Patient Program" means the Indigent Patient Program governed
by the Patient Assistance Program Agreement between Mckesson Health Solutions
Arizona Inc. and EPI dated December 31, 2001.
"Interim Chargeback Period" has the meaning set forth in Section
8.08(d)(i).
"Interim Rebate Period" has the meaning set forth in Section 8.08(c).
"Inventory" means the Skelaxin Inventory and the Sonata Inventory owned
as of the Closing Date by any of the Elan Companies or any of their respective
Subsidiaries.
"Irish Assignment Agreement" means one or more Assignment Agreements
relating to the Irish Purchased Assets to be dated as of the Closing Date by and
among the applicable Acquirors, EPIL and EPI, substantially in the form attached
hereto as Exhibit D.
"Irish Competition Act" means the Competition Act, 2002 of Ireland.
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"Irish Purchased Assets" means any Purchased Assets which are situated
in Ireland as a matter of Irish Law.
"Joint Litigation and Prosecution Agreement" means the Joint Litigation
and Prosecution Agreement to be dated as of the Closing Date by and among the
Elan Companies and the King Companies, substantially in the form which is
attached hereto as Exhibit J.
"JPI" has the meaning set forth in the preamble to this Agreement.
"King Companies" has the meaning set forth in the preamble to this
Agreement.
"Know-How" means any proprietary or nonproprietary information directly
related to the manufacture, preparation, development (both research and
clinical), or commercialization of a product, including product specifications,
processes, product designs, plans, trade secrets, ideas, concepts, inventions,
formulae, chemical, pharmacological, toxicological, pharmaceutical, physical,
analytical, stability, safety, quality assurance, quality control and clinical
data or information, technical information, research records or information, and
all other confidential or proprietary technical and business information,
whether or not embodied in any documentation or other tangible materials, but in
no event shall the definition of "Know-How" include information properly in the
public domain as of the Closing Date.
"Knowledge" with respect to (i) the Elan Companies, means the knowledge
following reasonable investigation of the officers, directors or senior managers
of the Elan Companies and their respective Subsidiaries with responsibility for,
or supervision of, the relevant matters and (ii) the King Companies, means the
knowledge following reasonable investigation of the officers, directors or
senior managers of the King Companies and their Subsidiaries with responsibility
for supervision of the relevant matters.
"Labeling" shall be as defined in Section 201(m) of the FDA Act, 21
U.S.C. (Section) 321(m), including the applicable Product's label, packaging and
package inserts accompanying such Product, and any other written, printed, or
graphic materials accompanying such Product, including, but not limited to,
patient instructions or patient indication guides.
"Law" means any federal, state, local or foreign law, statute or
ordinance, or any rule or regulation promulgated by any Governmental or
Regulatory Authority or any Order.
"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.
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"Material 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 have, or would be reasonably
expected to have, individually or in the aggregate a material adverse effect (i)
on the business, assets, results of operations or financial condition of the
Businesses, taken as a whole, or (ii) on the ability of the Elan Companies to
perform their obligations under this Agreement, the Related Agreements and the
Wyeth/Elan Agreements or on the ability of the Elan Companies to consummate the
transactions contemplated hereby and thereby.
"Modified Release Skelaxin" has the meaning set forth in Section
8.25(a).
"MPI" has the meaning set forth in the preamble to this Agreement.
"NDA" means a New Drug Application for any product, as appropriate,
requesting permission to place a drug on the market in accordance with the FDA
Act, 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.
"NDC" has the meaning set forth in Section 8.08(a)(iii).
"Net Sales" means, with respect to any Product, gross amounts actually
received from sales by the Elan Companies of such Product, less any applicable
discounts, allowances, credit, chargebacks, rebates, taxes, duties, freight and
insurance charges and provisions for product returns related to such sales.
"New Sonata Formulation" shall mean, to the extent owned by any of the
Elan Companies or any of their respective Subsidiaries, any composition of
matter, other than Sonata or a Sonata Line Extension, which is suitable for
administration to a human or an animal and which contains zaleplon as an active
ingredient.
"Non-Assignable Asset" has the meaning set forth in Section 2.04(a).
"Notice" with respect to a party means notice actually received by an
officer, director or senior manager of the Elan Parent, EPIL or EPI, in the case
of the Elan Companies, or of the applicable Acquiror, in the case of the King
Companies, 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 4.05(b).
"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).
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"Ordinary Course of Business" means an action that is consistent in
nature, scope and magnitude with the past practices of the Elan Companies and
their respective Subsidiaries with respect to the Skelaxin Business or the
Sonata Business, as the case may be.
"Original Agreement" has the meaning set forth in the recitals to this
Agreement.
"Original Agreement Date" has the meaning set forth in the recitals to
this Agreement.
"Patent Assignment Agreement" means the Patent Assignment Agreement to
be dated as of the Closing Date by and between the applicable Acquiror and EPI,
substantially in the form attached hereto as Exhibit E.
"Patent Litigations" has the meaning set forth in Section 8.16(a).
"Patent Rights" means rights conferred or represented by a granted or
issued patent in force, or such like rights related to a patent application and
any divisionals, continuations, continuations-in-part, provisionals,
substitutions, patents of addition, reissues, extensions, reexaminations or
renewal applications related to, or claiming priority to, the foregoing
(including any supplemental patent certificates) or any confirmation patent or
registration patent and all patents issuing and all foreign counterparts of any
of the foregoing.
"Pension Plans" means "employee pension benefit plans" as defined in
Section 3(2) of ERISA.
"Performance Period" has the meaning set forth on Section 8.10(h).
"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 of Business for
obligations which are not delinquent and (c) the rights, if any, of third
parties appearing in product advertisements for the Products that are set forth
on Schedule 1.01(c) of the Elan Disclosure Schedule.
"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.
"Personal Property Leases" has the meaning set forth in Section
2.01(d).
"Pharma Marketing Settlement Agreement" has the meaning set forth in
Section 6.19.
"PHS Entity" has the meaning set forth in Section 8.08(b)(iv).
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"Post-Closing Tax Period" means all taxable periods other than any
Pre-Closing Tax Period.
"Pre-Closing Tax 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. For purposes of
this definition, all real estate Taxes, personal property Taxes and similar ad
valorem Taxes (but excluding, for the avoidance of doubt, any Transfer Taxes)
arising out of, directly or indirectly, the Purchased Assets or the ownership or
Control, lease or license of any of the Purchased Assets for a taxable period
that includes (but does not end on) the Closing Date shall be (i) apportioned
between the Elan Companies and the applicable Acquiror based on the number of
days of such period included in the Pre-Closing Tax Period and the number of
days of such period after the Closing Date and (ii) determined in a manner
consistent with the past practice of the Elan Companies.
"Product Improvements" means Skelaxin Product Improvements and Sonata
Line Extensions.
"Products" means Skelaxin and Sonata.
"Purchase Price" has the meaning set forth in Section 4.01(a)(i).
"Purchased Assets" has the meaning set forth in Section 2.01.
"Purchased Sonata Books and Records" shall mean (a) true and complete
copies of all Sonata Books and Records and (b) any original Sonata Books and
Records, the delivery of which to the Acquirors is legally required to
effectuate the transfer of any Sonata Asset (it being understood that the Elan
Companies shall retain copies at their expense of all such original items
included in the Purchased Sonata Books and Records).
"Related Agreements" means the Development Agreement, the Trademark
Assignment Agreement, the Patent Assignment Agreement, the Bill of Sale, the
Irish Assignment Agreement, the Assignment of Domain Names, the Pharma Marketing
Settlement Agreement, the Skelaxin Payment Agreement, the Escrow Agreement and
the Joint Litigation and Prosecution Agreement.
"Scheduled Shareholder Vote Date" has the meaning set forth in Section
8.02(a).
"Settlement Agreement" means the Settlement Agreement to be dated as of
the date hereof by and among the Elan Companies and the King Companies.
"Skelaxin" means that pharmaceutical product containing metaxalone
currently approved by the FDA pursuant to NDA Nos. 13-217, including NDA Nos.
13-217/S36 and 13-217/S44, and marketed in the United States under the trademark
SKELAXIN.(R)
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"Skelaxin Adverse Determination Event" means the determination, which
need not be final or nonappealable, by a court of competent jurisdiction or
applicable Governmental or Regulatory Authority in the United States (including
the U.S. Patent and Trademark Office or the FDA) that all claims contained in
U.S. Patent No. 6,407,128 are invalid or such patent is not enforceable or is or
was improperly issued or listed in the FDA's Approved Drug Products with
Therapeutic Equivalence Evaluations, including any such determination by the
court in the matter of Case No. EDNY 03 CV 0006, Elan Pharmaceuticals, Inc. v.
Eon Labs, Inc. and Elan Pharmaceuticals, Inc. v. Core Pharma, LLC.
"Skelaxin Assets" has the meaning set forth in Section 2.01(a).
"Skelaxin Books and Records" shall mean all of the Books and Records
necessary for, or solely to the extent related to, the research, development and
manufacture of Skelaxin or a Current Skelaxin Product Improvement or the
distribution, marketing, sale, promotion, importation or use of Skelaxin or, to
the extent applicable, Current Skelaxin Product Improvements in the Skelaxin
Territory, but excluding the Excluded Books and Records.
"Skelaxin Business" means the research, development, manufacture,
distribution, marketing, sale, promotion, importation or use of Skelaxin and, to
the extent applicable, Current Skelaxin Product Improvements in the Skelaxin
Territory.
"Skelaxin Copyrights" means, in the Skelaxin Territory, copyrights,
whether registered or unregistered, and applications, if any, set forth on
Schedule 1.01(d) of the Elan Disclosure Schedule.
"Skelaxin Formulation Agreement" has the meaning set forth in Section
8.25(a).
"Skelaxin Governmental Permits" means all governmental permits,
licenses, registrations, certificates of occupancy, approvals and other
governmental authorizations necessary for the operation of the Skelaxin Business
that are held in the name of any of the Elan Companies or any of their
respective Subsidiaries.
"Skelaxin Intellectual Property" means the Skelaxin Copyrights, the
Skelaxin Patent Rights, the Skelaxin Know-How and the Skelaxin Trademarks, and
all rights to sue and recover Damages or obtain injunctive relief for past or
future infringement, misappropriation, violation, dilution or breach of any of
the foregoing.
"Skelaxin Inventory" means all inventory of finished pharmaceutical
product that is formulated, labeled or otherwise intended for use, sale or offer
for sale under the Skelaxin Trademark, owned by any of the Elan Companies or any
of their respective Subsidiaries as of the Closing Date together with all
work-in-progress and all bulk active pharmaceutical ingredient owned by any of
the Elan Companies or any of their respective Subsidiaries as of the Closing
Date. For the purposes of this Agreement, "Skelaxin Inventory" shall be deemed
to include samples of finished pharmaceutical product labeled
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under the Skelaxin Trademarks and designated for use in promoting pharmaceutical
product and that are not intended to be sold, consistent with FDA requirements.
"Skelaxin Know-How" shall mean any and all Skelaxin Manufacturing
Know-How, product specifications, processes, product designs, plans, trade
secrets, ideas, concepts, inventions, manufacturing, engineering and other
manuals and drawings, standard operating procedures, formulae, flow diagrams,
chemical, pharmacological, toxicological, pharmaceutical, physical, analytical,
stability, safety, quality assurance, quality control and clinical data or
information, technical information, research records or information, and all
other confidential or proprietary technical and business information, that is
currently owned, leased or licensed by any of the Elan Companies or any of their
respective Subsidiaries and which is exclusively related to, or is necessary and
primarily related to, the Skelaxin Business as of the Closing Date. For the sake
of clarity, none of the foregoing information shall be included in Skelaxin
Know-How to the extent that such information is covered by any claim of any
Skelaxin Patent Rights.
"Skelaxin Manufacturing Know-How" shall mean the percentages and
specifications of ingredients, the manufacturing processes, specifications,
technology, inventions, assays, quality control and testing procedures, know-how
and trade secrets exclusively related to, or necessary and primarily related to,
the manufacture, formulation, testing and packaging of Skelaxin or any Current
Skelaxin Product Improvement for sale, marketing and distribution in the
Skelaxin Territory as of the Closing Date. For the sake of clarity, none of the
foregoing information shall be included in Skelaxin Manufacturing Know-How to
the extent that such information is covered by any claim of any Skelaxin Patent
Rights.
"Skelaxin Marketing Materials" means those items of advertising and
promotional materials and literature owned by any of the Elan Companies or any
of their respective Subsidiaries as of the Closing Date solely to the extent
used in the advertising and promotion of Skelaxin or any Current Skelaxin
Product Improvement, if any, in the Skelaxin Territory.
"Skelaxin Maximum Returns Credit Amount" has the meaning set forth in
Section 8.08(a)(iii).
"Skelaxin Patent Rights" shall mean, to the extent owned, Controlled or
licensed by any of the Elan Companies or any of their respective Subsidiaries,
those Patent Rights listed on Schedule 1.01(e) of the Elan Disclosure Schedule
and any other Patents Rights that are owned, Controlled or licensed by any of
the Elan Companies or any of their respective Subsidiaries, the practice of
which during the making, having made, use, having used, marketing, sale, having
sold, offering to sell and importation of Skelaxin or any Current Skelaxin
Product Improvement in the Skelaxin Territory would result in the infringement
thereof.
"Skelaxin Payment Agreement" means the Skelaxin Payment Agreement
relating to sales of Skelaxin by the King Companies to be dated as of the
Closing Date by and
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among the applicable Acquirors and EPI, substantially in the form attached
hereto as Exhibit F.
"Skelaxin Product Improvement" shall mean, to the extent owned or
Controlled or licensed by any of the Elan Companies or any of their respective
Subsidiaries, any: (a) line extension of Skelaxin; (b) new indication of
Skelaxin; (c) composition of matter or article of manufacture consisting
essentially of a chemical derivative of metaxalone; or (d) method of making,
having made, using, selling, offering for sale or importing of such compositions
of matter or articles of manufacture constituting any of the foregoing. For the
avoidance of doubt, the term "Skelaxin Product Improvement" shall not include
any (a) pharmaceutical combination containing metaxalone and another active
ingredient, (b) new formulation comprising metaxalone or (c) method of making,
having made, using, selling, offering for sale or importing of such compositions
of matter or articles of manufacture constituting any of the foregoing.
"Skelaxin Product Registrations" means (i) the approvals or
registrations which have been received by any of the Elan Companies or any of
their respective Subsidiaries as of the Original Agreement Date, or which are
received by any of the Elan Companies or any of their respective Subsidiaries
after the Original Agreement Date but before the Closing Date, for the
investigation, sale, distribution and/or marketing of Skelaxin or a Current
Skelaxin Product Improvement in the Skelaxin Territory (including any NDAs or
INDs), and (ii) all dossiers, reports, data and other written materials filed as
part of such approvals or registrations, or maintained by any of the Elan
Companies or any of their respective Subsidiaries and relating to such approvals
or registrations.
"Skelaxin Returns Termination Date" has the meaning set forth in
Section 8.08(a)(iii).
"Skelaxin Territory" means the United States, its territories and
possessions, the District of Columbia and the Commonwealth of Puerto Rico.
"Skelaxin Trademarks" means the trademarks, trade names, domain names,
designs and logos, whether or not registered set forth on Schedule 1.01(f) of
the Elan Disclosure Schedule.
"Sonata" means those forms of zaleplon currently sold in the United
States of America under the authority of NDA No. 020-859, including NDA Nos.
020-859/001 and 020-859/02 and sNDA No. 20-859/S-001. Notwithstanding anything
to the contrary in this Agreement, the term Sonata shall not include New Sonata
Formulations or Sonata Line Extensions.
"Sonata Assets" has the meaning set forth in Section 2.01(b).
"Sonata Books and Records" shall mean all of the Books and Records
necessary for, or solely to the extent related to, the development of Sonata or
a Sonata Line
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Extension or the distribution, marketing, sale, promotion or use of Sonata or a
Sonata Line Extension in the Sonata Territory, but excluding the Excluded Books
and Records.
"Sonata Business" means the distribution, marketing, sale, promotion or
use of Sonata or Sonata Line Extensions in the Sonata Territory.
"Sonata Copyrights" means, in the Sonata Territory, copyrights, whether
registered or unregistered, and applications, if any, in each case owned by the
Elan Companies or any of their respective Subsidiaries and set forth on Schedule
1.01(g) of the Elan Disclosure Schedule.
"Sonata Inventory" means all inventory of finished Sonata owned by any
of the Elan Companies or any of their respective Subsidiaries as of the Closing
Date. For the purposes of this Agreement, "Sonata Inventory" shall be deemed to
include samples of finished Sonata or Sonata Line Extensions, if any, designated
for use in promoting Sonata and that are not intended to be sold, consistent
with FDA requirements.
"Sonata Line Extension" means any new indication, new dosage strength
of a solid capsule, or Labeling or packaging change for Sonata.
"Sonata Marketing Materials" means those items of advertising and
promotional materials and literature owned by any of the Elan Companies or any
of their respective Subsidiaries as of the Closing Date solely to the extent
used in the advertising and promotion of Sonata or Sonata Line Extensions, if
any, in the Sonata Territory.
"Sonata Maximum Returns Credit Amount" has the meaning set forth in
Section 8.08(a)(iii).
"Sonata Returns Termination Date" has the meaning set forth in Section
8.08(a)(iii).
"Sonata Territory" means the United States, its territories and
possessions, the District of Columbia and the Commonwealth of Puerto Rico.
"Specified Facts" has the meaning set forth in Section 12.05.
"Stub Period Bonus" has the meaning set forth in Section 8.10(h).
"Subsidiary" of a Person means any entity Controlled by that Person.
"Superior Proposal" has the meaning set forth in Section 12.03.
"Tangible Personal Property" has the meaning set forth in Section
2.01(c).
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"Taxes" means all of the following: (i) any net income, withholding,
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, together with any interest, penalty or additional amount due,
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 clause (i)
above 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 clause (i) or (ii) above as a
result of any express or implied obligation to indemnify any other Person.
"Tax Benefit" shall mean the Tax savings, net of any Tax increases,
actually realized by the Indemnified Party as a result of any deduction, loss,
credit or other Tax reduction allowable to the Indemnified Party as a result of
the Damages giving rise to the indemnification claim, calculated on an
incremental basis (i.e., by comparing the Indemnified Party's total Tax
liabilities with and without the benefit of such deduction, loss, credit or
other Tax reduction item). The Indemnified Party shall provide the indemnifying
party with a good faith computation of the Tax Benefit in reasonable detail;
provided, however, that nothing in this sentence shall give the indemnifying
party the right to review the Tax returns of the Indemnified Party or its
Affiliates. The parties agree to consult with each other in good faith to
resolve any dispute concerning the amount or timing of any Tax Benefit.
"Termination Date" has the meaning set forth in Section 12.01(b).
"Termination Fee" has the meaning set forth in Section 12.03.
"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 applicable
Acquiror and EPI, substantially in the form attached hereto as Exhibit G.
"Transfer Taxes" has the meaning set forth in Section 4.03(a).
"WAC" has the meaning set forth in Section 8.08(f).
"WARN Act" means the Workers Adjustment and Retraining Notification Act
of 1988.
"Welfare Plans" means "employee welfare benefit plans" as defined in
Section 3(1) of ERISA.
"Wyeth" means Wyeth (formerly known as American Home Products
Corporation), acting through its Wyeth Pharmaceuticals Division.
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"Wyeth Purchase Price" means the "Purchase Price" as defined in the
Wyeth/King Asset Transfer Agreement.
"Wyeth/Elan Agreements" means (i) the Wyeth/Elan Master Agreement, (ii)
the Wyeth/Elan Supply Agreement, (iii) the Wyeth/Elan Development Agreement,
(iv) the Distribution and Co-Promotion Agreement and (v) the Bulk Supply
Agreement dated as of January 13, 2003 by and between Wyeth and EPIL.
"Wyeth/Elan Development Agreement" means the Amended and Restated
Formulation Development Agreement dated as of January 13, 2003 by and among
Wyeth, the Elan Parent and EPIL, as amended by Amendment No. 1 to Amended and
Restated Formulation Development Agreement dated as of January 29, 2003.
"Wyeth/Elan Master Agreement" means the Agreement dated as of January
13, 2003 by and among Wyeth, Wyeth Pharmaceuticals Company, Inc., the Elan
Parent and EPIL, as amended by Amendment No. 1 to Master Agreement dated as of
January 29, 2003.
"Wyeth/Elan Supply Agreement" means the Amended and Restated Supply
Agreement dated as of January 13, 2003 by and between Wyeth Pharmaceutical
Company, Inc. and EPIL.
"Wyeth/King Agreements" means (i) the Wyeth/King Asset Transfer
Agreement, (ii) the Detailing Agreement to be dated as of the Closing Date by
and between Wyeth and the applicable Acquiror, substantially in the form which
is attached hereto as Exhibit H, and (iii) the Escrow Agreement to be dated as
of the Closing Date by and among Wyeth Pharmaceuticals Company, Inc., the
applicable Acquiror and JPMorgan Chase Bank, substantially in the form which is
attached as Exhibit 3.01(c) to the Wyeth/Elan Supply Agreement.
"Wyeth/King Asset Transfer Agreement" means the Asset Transfer
Agreement to be dated as of the Closing Date by and between Wyeth and the
applicable Acquiror, substantially in the form which is attached hereto as
Exhibit I.
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.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01. Purchase and Sale of Assets at the Closing. Upon the
terms and subject to the conditions set forth in this Agreement, at the Closing,
each of the Elan Companies shall sell, convey, assign, transfer and deliver to
the Acquirors, and the Acquirors shall purchase and acquire from each of the
Elan Companies, all of such Elan Company's right, title and interest in and to
the Skelaxin Assets, the Sonata Assets, the Tangible Personal Property and the
Personal Property Leases free and clear of all Encumbrances, other than
Permitted Encumbrances (collectively, the "Purchased Assets"), in the manner set
forth in Section 2.01(e).
(a) The following assets shall constitute the "Skelaxin Assets":
(i) all rights of the Elan Companies under the Contracts set forth on
Schedule 2.01(a)(i) of the Elan Disclosure Schedule (the "Assumed Skelaxin
Contracts");
(ii) all Skelaxin Marketing Materials;
(iii) all Skelaxin Books and Records;
(iv) all Skelaxin Inventory;
(v) all Skelaxin Patent Rights;
(vi) all Skelaxin Product Registrations;
(vii) all Skelaxin Copyrights;
(viii) all Skelaxin Trademarks;
(ix) all Skelaxin Governmental Permits, to the extent legally
transferable;
(x) all Skelaxin Know-How; and
(xi) any other assets set forth on Schedule 2.01(a)(xi) of the Elan
Disclosure Schedule.
(b) The following assets shall constitute the "Sonata Assets":
(i) the rights of the Elan Companies under the Contracts set forth
on Schedule 2.01(b)(i) of the Elan Disclosure Schedule (the "Assumed Sonata
Contracts");
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(ii) all Sonata Marketing Materials;
(iii) all Purchased Sonata Books and Records;
(iv) all Sonata Inventory;
(v) all Sonata Copyrights; and
(vi) any other assets set forth on Schedule 2.01(b)(vi) of the Elan
Disclosure Schedule.
(c) The following assets shall constitute the "Tangible Personal
Property": all computers, printers, facsimile machines, projectors, exhibit and
display booths, controlled substance lockers and other similar tangible personal
property owned by any of the Elan Companies and used exclusively in the sales
field as of the Closing Date by the Hired Employees, but not including software,
data or other information stored in any such computers.
(d) The following assets shall constitute the "Personal Property
Leases": the leases set forth on Schedule 2.01(d) of the Elan Disclosure
Schedule.
(e) Pursuant to this Section 2.01, (i) MPI shall purchase and acquire
from the applicable Elan Companies the following: all Skelaxin Marketing
Materials; all Skelaxin Books and Records; all Skelaxin Inventory; all Skelaxin
Governmental Permits, to the extent legally transferable; all Sonata Marketing
Materials; all Purchased Sonata Books and Records; all Sonata Inventory; any
asset set forth on Schedule 2.01(b)(vi) of the Elan Disclosure Schedule; all
Tangible Personal Property; and all Personal Property Leases, and (ii) JPI shall
purchase and acquire from the applicable Elan Companies the following: all
rights of the Elan Companies under the Assumed Skelaxin Contracts and the
Assumed Sonata Contracts; any asset set forth on Schedule 2.01(a)(xi) of the
Elan Disclosure Schedule; all Skelaxin Patent Rights; all Skelaxin Product
Registrations; all Skelaxin Copyrights; all Skelaxin Trademarks; all Skelaxin
Know-How; and all Sonata Copyrights.
(f) Notwithstanding anything to the contrary in this Agreement, EPIL
and EPI shall sell, convey, assign, transfer and deliver to the Acquirors, and
the Acquirors shall purchase and acquire from each of the Elan Companies, all of
EPIL's and EPI's right, title and interest in and to the Irish Purchased Assets
solely pursuant to the Irish Assignment Agreement.
SECTION 2.02. Excluded Assets. 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"):
(a) all cash and cash equivalents of the Elan Companies or any of their
respective Subsidiaries;
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(b) all Accounts Receivable of the Elan Companies or any of their
respective Subsidiaries;
(c) the Corporate Names, except as expressly provided in Section 8.06;
(d) all human resources and any other employee related files and
records;
(e) any refund or credit of Taxes attributable to any Pre-Closing Tax
Period;
(f) all Books and Records (including the Excluded Books and Records)
other than the Skelaxin Books and Records and the Purchased Sonata Books
and Records;
(g) all tangible personal property owned by any of the Elan Companies
and used outside of, or not exclusively in the field as of the Closing Date
by the Hired Employees;
(h) except as otherwise expressly provided in Section 8.10, any assets
relating to any Employee Benefit Plan; and
(i) all tangible and intellectual property rights and assets relating
generically to Elan's drug delivery technology.
SECTION 2.03. Retention of Assets. Notwithstanding anything to the
contrary contained in this Agreement, the Elan Companies may retain, at their
expense, archival copies of all Assumed Contracts, Skelaxin Books and Records,
Purchased Sonata Books and Records, Skelaxin Marketing Materials, Sonata
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 8.05.
SECTION 2.04. Assignability and Consents. (a) Notwithstanding anything
to the contrary contained in this Agreement, if the sale, conveyance,
assignment, transfer or delivery or attempted sale, conveyance, assignment,
transfer or delivery to the Acquirors of any Purchased Asset is (i) prohibited
by any applicable Law or (ii) would require any authorizations, approvals,
consents or waivers from a third Person and such authorizations, approvals,
consents or waivers shall not have been obtained prior to the Closing Date
(each, a "Non-Assignable Asset"), in either case, the Closing shall proceed, but
the Closing shall not constitute the sale, conveyance, assignment, transfer or
delivery of such Non-Assignable Asset, and this Agreement shall not constitute a
sale, conveyance, assignment, transfer or delivery of such Non-Assignable Asset
unless and until such authorization, approval, consent or waiver is obtained;
provided, however, that if any one or more of the Purchased Assets set forth on
Schedule 2.04(a) of the Elan Disclosure Schedule shall constitute Non-Assignable
Assets, the Acquirors shall have the right not to consummate the Closing. After
the Closing, the Elan Companies shall continue to use commercially reasonable
efforts to obtain any Elan
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Third Party Consent, and the Acquirors shall cooperate with the Elan Companies
in any commercially reasonable arrangement and at the Elan Companies' expense to
provide that the Acquirors shall receive the interest of the Elan Companies in
the benefits, including economic benefits, under such Non-Assignable Asset until
such time as such Elan Third Party Consent shall have been obtained, and the
Elan Companies shall cooperate with the Acquirors in any such commercially
reasonable arrangement, including performance by the Elan Companies as agent if
commercially reasonable to the Elan Companies, and, in such case, the Acquirors
shall be liable to the Elan Companies in a fashion equivalent to what the
Acquirors' Liabilities would be under the Non-Assignable Asset if it were
assigned; provided, however, that the Acquirors shall only be so liable to the
Elan Companies to the extent that the Acquirors correspondingly receive such
benefits, including economic benefits, under such commercially reasonable
arrangements.
(b) The Elan Companies shall pay and discharge, and shall indemnify and
hold harmless the Acquirors from and against, any and all reasonable
out-of-pocket costs of cooperation with the 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,
conveyance, assignment, transfer or delivery of any such Non-Assignable Asset
not sold, conveyed, assigned, transferred or delivered at the Closing is
obtained, the Elan Companies shall convey, assign, transfer and deliver such
Non-Assignable Asset to the Acquirors at no additional cost to the Acquirors.
Notwithstanding anything to the contrary contained in this Agreement, the
Acquirors shall not assume any Liabilities under a Non-Assignable Asset until
they have been assigned to the Acquirors; provided, however, that the Acquirors
shall be liable to the Elan Companies for performing their obligations under the
commercially reasonable arrangements described in Section 2.04(a); and provided
further, however, that the Acquirors shall only be so liable to the Elan
Companies to the extent that the Acquirors correspondingly receive such
benefits, including economic benefits, under such commercially reasonable
arrangements.
ARTICLE III
ASSUMPTION OF LIABILITIES
SECTION 3.01. Assumption of Liabilities. (a) Upon the terms and subject
to the conditions set forth in this Agreement, as of the Closing Date, the
Acquirors jointly and severally agree to assume, satisfy, perform, pay and
discharge each of the following Liabilities (the "Assumed Liabilities"):
(i) all Liabilities of any of the Elan Companies or any of their
respective Subsidiaries arising out of any product liability, patent
infringement, breach of warranty or similar claim for injury to person or
property asserted on or after the Closing Date but only to the extent
resulting from the use or misuse of Products sold on or after the Closing
Date by or on behalf of the Acquirors (including all proceedings relating
to any such Liabilities);
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(ii) all Liabilities of any of the Elan Companies or any of their
respective Subsidiaries 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) on or after the Closing Date;
(iii) all Liabilities of any of the Elan Companies or any of their
respective Subsidiaries arising out of government seizures, field
corrections, withdrawals or recalls of Products sold on or after the
Closing Date by or on behalf of the Acquirors, which are claimed on or
after the Closing Date;
(iv) all Liabilities for Taxes arising out of, directly or indirectly,
the Purchased Assets or the ownership, Control, lease or license of any of
the Purchased Assets for any Post-Closing Tax Period, other than the
Excluded Tax Liabilities;
(v) all Liabilities of any of the Elan Companies or any of their
respective Subsidiaries arising out of user or other similar fees payable
to the FDA or other Governmental or Regulatory Authority but only to the
extent that such fees are due and payable on account of the operation of
the Businesses on or after the Closing Date (and to the extent that any of
the Elan Companies or any of their respective Subsidiaries have paid any
such fee prior to the Closing Date, the Acquirors shall promptly reimburse
the appropriate Elan Company or Subsidiary for such payment, subject to the
provisions of Section 11.02(b)); and
(vi) all other Liabilities of any of the Elan Companies or any of their
respective Subsidiaries arising out of, directly or indirectly, the
Purchased Assets or the ownership, Control, lease or license of any of the
Purchased Assets, but only to the extent such Liabilities arise from the
Acquirors' operation of the Businesses on or after the Closing Date.
(b) Notwithstanding anything contained in this Agreement to the
contrary or any disclosure to the Acquirors, from and after the Closing Date,
the Acquirors shall not assume any, and the Elan Companies shall retain and pay,
perform and discharge when due, all of the following Liabilities ("Excluded
Liabilities"):
(i) all accounts payable and other Liabilities of the Elan Companies
and their respective Subsidiaries for materials and services with respect
to the manufacture of the Products or any Current Skelaxin Improvement or
Sonata Line Extension incurred prior to the Closing Date;
(ii) any income Tax payable by the Elan Companies or any member of any
affiliated group of which the Elan Companies are, or have been, a member,
or any Tax arising out of, directly or indirectly, the Purchased Assets or
the ownership, Control, lease or license of any of the Purchased Assets for
any Pre-Closing Tax Period, other than any transfer Tax for which the
Acquirors are responsible pursuant to Section 4.03 ("Excluded Tax
Liability");
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(iii) all Liabilities of the Elan Companies and their respective
Subsidiaries arising out of any product liability, patent infringement,
breach of warranty or similar claim for injury to person or property
whenever asserted which resulted from the use or misuse of Products sold
prior to the Closing Date (including all proceedings relating to any such
Liabilities);
(iv) all Liabilities of the Elan Companies and their respective
Subsidiaries arising out of government seizures, field corrections,
withdrawals or recalls of Products sold prior to the Closing Date, which
are claimed prior to, on or after the Closing Date;
(v) except as otherwise expressly provided in Section 8.16, all
Liabilities of the Elan Companies and their respective Subsidiaries with
respect to any litigation or other claims to the extent arising from any
event, circumstance or condition occurring or alleged to have occurred
prior to the Closing Date;
(vi) all Liabilities of the Elan Companies and their respective
Subsidiaries 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 Businesses prior to the
Closing Date;
(vii) any Liability of the Elan Companies or any of their respective
Affiliates arising out of any Excluded Asset or arising out of the
operation or conduct by the Elan Companies or their Affiliates of any
business other than the Businesses;
(viii) except as otherwise expressly provided in Section 2.04, any
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 Acquirors waive delivery of such Elan Third Party Consent;
(ix) except as otherwise expressly provided in Section 8.10, 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 Employees by the Elan Companies or any of their Affiliates;
(x) except as otherwise expressly provided in Section 8.10, any
Liabilities for severance or other obligations arising out of the cessation
of employment at or prior to the Closing of Employees or any other former
employees of the Elan Companies or their Affiliates by the Elan Companies
or their Affiliates;
(xi) any Liability of the Elan Companies to any of their respective
Affiliates;
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(xii) except as otherwise expressly provided in Section 8.16, all
Liabilities of the Elan Companies and their respective Subsidiaries arising
out of any Elan Companies Proceeding; and
(xiii) any other Liability of any of the Elan Companies or any of their
respective Subsidiaries that is not specifically listed as an Assumed
Liability under Section 3.01(a).
ARTICLE IV
PURCHASE PRICE AND PAYMENT
SECTION 4.01. Purchase Price. (a) As consideration for the Purchased
Assets, at the Closing, the Acquirors shall:
(i) deliver or cause to be delivered to (A) EPIL, (x) the sum of
$95,000 in respect of the Sonata Assets (other than the Irish Purchased
Assets) owned by EPIL, (y) the sum of $301,975,000 in consideration for
EPIL terminating the Distribution and Co-Promotion Agreement, whereby EPIL
will forego its exclusive right to research, develop, distribute, market,
sell and promote Sonata in the Sonata Territory and the right to use
certain of Wyeth's trademarks, patents and certain other intellectual
property relating to Sonata in connection therewith, and its option to
purchase from Wyeth the rights in and to Sonata in the Sonata Territory and
(z) the sum of $2,500 in respect of the Irish Purchased Assets owned by
EPIL (collectively, the "EPIL Consideration") and (B) EPI, (x) subject to
clause (i)(B)(z) below, the sum of $200,000,000 in respect of the Skelaxin
Assets and the Sonata Assets owned by EPI, (y) the sum of $2,500 in respect
of the Irish Purchased Assets owned by EPI and (z) if positive, the
Estimated Closing Date Inventory Value minus $40,000,000 (to the extent
that the amount in this clause (z) is negative, it will reduce the amount
to be delivered under clause (i)(B)(x) above by a corresponding amount)
(collectively, the "EPI Consideration" and, together with the EPIL
Consideration, the "Purchase Price"), in each case payable on the Closing
Date by electronic funds transfer of immediately available funds to the
accounts of such entities; and
(ii) assume the Assumed Liabilities.
(b) The aggregate Purchase Price payable on the Closing Date shall be
adjusted as follows:
(i) the Purchase Price shall be decreased by an amount equal to the
increase over $55,000,000 in the Wyeth Purchase Price to be paid by the
Acquirors pursuant to Section 1.01 of the Wyeth/King Asset Transfer
Agreement as a result of the Closing occurring on or after April 1, 2003;
and
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(ii) (x) the Purchase Price shall be increased by an amount equal to
the aggregate amount of the reduction in the aggregate Capacity Commitment
Fees (as defined in the Wyeth/Elan Supply Agreement) required to be paid
pursuant to the Wyeth/Elan Supply Agreement because the Closing has
occurred on or after April 1, 2003 pursuant to Section 3.01(a) of the
Wyeth/Elan Supply Agreement and (y) the Purchase Price shall be increased
by an amount equal to the aggregate amount of the reduction in the
aggregate Supply Incentive Fees (as defined in the Wyeth/Elan Supply
Agreement) required to be paid pursuant to Section 3.01(b) of the
Wyeth/Elan Supply Agreement.
(c) The aggregate Purchase Price payable on the Closing Date shall be
funded through (i) release of the Escrow Amount and (ii) to the extent such
aggregate Purchase Price exceeds the Escrow Amount, by wire transfer of
immediately available funds to the accounts specified in writing by the Elan
Companies and, in each case, in accordance with clause (a)(i) set forth above in
this Section 4.01.
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 Acquirors 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 Acquirors of the allocation of the
Purchase Price within 30 days after the Closing Date. The Acquirors will be
deemed to have accepted such allocation unless it provides written Notice of
disagreement to the Elan Companies within 10 days after the receipt of the Elan
Companies' Notice of allocation. If the Acquirors provide 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 Acquirors' 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 Acquirors shall share equally the fees of
such Accountants. Notwithstanding anything to the contrary elsewhere in this
Section 4.02, in no event shall any portion of the EPIL Consideration be
allocated to EPI (or to the assets owned by EPI) or any portion of the EPI
Consideration be allocated to EPIL (or to the assets owned by EPIL).
SECTION 4.03. Sales, Use and Other Taxes. (a) All transfer,
documentary, sales, use, valued-added, gross receipts, stamp, registration or
other similar transfer taxes (collectively, "Transfer Taxes") incurred in
connection with the transfer and sale of the Purchased Assets as contemplated by
the terms of this Agreement, including all recording or filing fees, notarial
fees and other similar costs of Closing, that may be imposed, payable,
collectible or incurred shall be borne by the Acquirors. The Acquirors shall
execute and deliver to the Elan Companies at Closing any resale exemption
certificate or other document required to secure an exemption from any
applicable Transfer Taxes. The parties hereto agree to reasonably cooperate with
each other to claim any applicable exemption from, or reduction of, any
applicable Transfer Taxes.
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(b) The Purchase Price shall be exclusive of any value added tax which,
if charged, shall be payable by the Acquirors.
SECTION 4.04. Tax Withholding. All payments under this Agreement will
be made without any deduction or withholding for or on account of any Taxes. The
parties hereto agree to reasonably cooperate with each other, including by
completing or filing documents required under the provisions of any applicable
income tax treaty or applicable Law, to claim any applicable exemption from, or
reduction of, any such applicable Taxes.
SECTION 4.05. Closing Date Inventory Value Adjustments. (a) As promptly
as practicable, but in any event not later than 30 days after the Closing Date,
the Elan Companies shall prepare and deliver to the Acquirors a statement
calculating the Closing Date Inventory Value (the "Closing Date Inventory Value
Statement").
(b) During the 30 day period immediately following the Acquirors'
receipt of the Closing Date Inventory Value Statement, the Acquirors shall be
permitted to review the Elan Companies' Books and Records to the extent
reasonably necessary for the Acquirors to evaluate the Closing Date Inventory
Value Statement. The Closing Date Inventory Value Statement shall become final
and binding upon the Acquirors and the Elan Companies at the end of such 30 day
period, unless the Acquirors object to the Closing Date Inventory Value
Statement, in which case they shall send written notice (the "Notice of
Objection") to the Elan Companies within such period, setting forth in specific
detail the basis for their objection and their 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 Acquirors on the first to
occur of (x) the date the Elan Companies and the Acquirors 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 Accountants, in each case as provided below. The Elan Companies
and the Acquirors 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 Elan Companies and the Acquirors shall revise the Closing
Date Inventory Value Statement accordingly. If the Elan Companies and the
Acquirors are unable to reach agreement within 10 days following receipt of the
Notice of Objection, then the Accountants 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
Accountants shall be delivered as soon as practicable following engagement of
the Accountants, but in no event more than 30 days thereafter, and shall be
final, conclusive and binding upon the Elan Companies and the Acquirors and the
parties shall revise the Closing Date Inventory Value Statement accordingly. The
parties agree that judgment may be entered on such determination in any court
having jurisdiction. The Elan Companies, on the one hand, and the Acquirors, on
the other hand, shall each pay one-half of the cost of the Accountants. Within
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10 days after the date on which the Closing Date Inventory Value Statement
becomes final and binding on the Elan Companies and the Acquirors, the Acquirors
shall pay 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 Acquirors, if negative.
SECTION 4.06. Skelaxin Purchase Price Adjustment. If a Skelaxin Adverse
Determination Event shall not have occurred on or prior to December 31, 2003, on
January 2, 2004, the Acquirors shall pay or cause to be paid to EPI, by
electronic funds transfer of immediately available funds to the account of EPI,
the additional sum of $25,000,000 in respect of the Skelaxin Assets. Any payment
pursuant to this Section 4.06 shall be deemed to be part of the Purchase Price.
The Acquirors shall not sell, assign, transfer or otherwise dispose of all or
substantially all of the Skelaxin Intellectual Property in any transaction or
series of related transactions to any Person unless, as a condition thereto,
such Person assumes in writing (in form and substance reasonably satisfactory to
the Elan Companies) all of the King Companies' obligations under this Section
4.06 (it being understood that nothing in this sentence shall prohibit any
security interest on the Skelaxin Intellectual Property; provided, however, that
upon the foreclosure of any such security interest, the assignee shall take such
Skelaxin Intellectual Property subject to the King Companies' obligations under
this Agreement). In addition, (x) not less than ten (10) Business Days prior to
any sale, assignment, transfer or other disposition of any portion of the
Skelaxin Intellectual Property and (y) not less than five (5) Business Days
prior to the grant of any Encumbrance on any portion of the Skelaxin
Intellectual Property, in each case, the King Companies shall notify the Elan
Companies thereof in writing and promptly provide the Elan Companies with any
information relating thereto as the Elan Companies shall reasonably request.
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 this Agreement, including the purchase and sale of the Purchased Assets and
the assumption of the Assumed Liabilities (the "Closing"), shall take place on
June 19, 2003 or, if the conditions set forth in Articles IX and X have not been
satisfied or waived on such date (other than those conditions that by their
terms are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions), as promptly as practicable, but in no event later
than two (2) Business Days thereafter, in each case at 10:00 a.m., New York City
time, at the offices of Cahill Gordon & Reindel llp, 80 Pine Street, New York,
New York 10005, unless another time or place shall be agreed to by the parties
(the "Closing Date").
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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 Acquirors:
(i) an original of each of the Related Agreements (other than the
Pharma Marketing Settlement Agreement) and the Wyeth/Elan Agreements (other
than the Distribution and Co-Promotion Agreement and the Bulk Supply
Agreement), 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 and by Wyeth or its Affiliates pursuant to the
Wyeth/Elan Agreements (other than the Distribution and Co-Promotion
Agreement and the Bulk Supply Agreement);
(ii) a copy of each of the Wyeth/King Agreements, each executed by
Wyeth or its Affiliates party thereto, and copies of all documents required
to be delivered by Wyeth or such Affiliates pursuant to the Wyeth/King
Agreements;
(iii) an unredacted, fully executed copy of each of the Assumed
Contracts;
(iv) the Skelaxin Product Registrations;
(v) assignment and assumption agreements and/or subcontracts or
other instruments of transfer, as applicable, in form and substance
reasonably acceptable to the Elan Companies and JPI, assigning to JPI all
rights of the Elan Companies in and to the Assumed Contracts;
(vi) copies of all Elan Governmental Consents set forth on Schedule
6.03(a) of the Elan Disclosure Schedule (to the extent available in
writing, and to the extent not available in writing, a schedule setting
forth in reasonable detail such Elan Governmental Consents shall be
provided by the Elan Companies) and all Elan Third Party Consents set forth
on Schedule 6.03(b) of the Elan Disclosure Schedule (to the extent
received);
(vii) executed releases of any Encumbrances that are identified on
Schedule 5.02(a)(vii) of the Elan Disclosure Schedule; and
(viii) an original of the Joint Litigation and Prosecution Agreement,
executed by each of the Elan Companies, and all documents required to be
delivered by the Elan Companies in connection therewith.
(b) Closing Deliveries by the Acquirors. At the Closing, the
Acquirors will deliver or cause to be delivered to the Elan Companies:
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(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 (other than the
Pharma Marketing Settlement Agreement), executed by the applicable
Acquirors, and copies of all documents required to be delivered by the
applicable Acquirors pursuant to the Related Agreements;
(iii) an original of each of the Wyeth/King Agreements, executed by
the applicable Acquirors, and copies of all documents required to be
delivered by the applicable Acquirors pursuant to the Wyeth/King
Agreements;
(iv) such instruments of assumption and other instruments or
documents, in form and substance reasonably acceptable to the Elan
Companies and the Acquirors, as may be necessary to effect the Acquirors'
assumption of the Assumed Liabilities;
(v) copies of all Acquiror Governmental Consents set forth on
Schedule 7.03 of the Acquiror Disclosure Schedule (to the extent available
in writing, and to the extent not available in writing, a schedule setting
forth in reasonable detail such Acquiror Governmental Consents shall be
provided by the Acquirors); and
(vi) an original of the Joint Litigation and Prosecution Agreement,
executed by each of the King Companies, and all documents required to be
delivered by the King Companies in connection therewith.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ELAN COMPANIES
Each Elan Company represents and warrants, jointly and severally, to
the Acquirors as of (i) the date hereof with respect to the representations and
warranties set forth in Sections 6.01 through 6.04, 6.11, 6.20 and 6.21 (ii) the
Original Agreement Date with respect to the representations and warranties set
forth in Sections 6.05 through 6.10 and 6.12 through 6.21 and (iii) the Closing
Date with respect to all representations and warranties contained in Article VI,
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 disclosed in the disclosure schedule supplied by the Elan Companies to the
Acquirors and dated as of the Original Agreement Date (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 organization and has all requisite power and
authority to own its assets and carry on the Businesses 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
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qualification is required, except for any jurisdiction where failure to so
qualify would not have a Material 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 Acquirors 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, the Related Agreements and the Wyeth/Elan
Agreements to which it is or will be a party and to execute and deliver this
Agreement, the Related Agreements and the Wyeth/Elan Agreements to which it is
or will be a party and, assuming the receipt of consent of the Elan Parent's
shareholders, to carry out the transactions contemplated hereby and by the
Related Agreements and the Wyeth/Elan 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
them to authorize (a) the execution and delivery of this Agreement, the Related
Agreements and the Wyeth/Elan Agreements to which each Elan Company is or will
be a party and (b) the consummation of the transactions contemplated hereby and
by the Related Agreements and the Wyeth/Elan Agreements to which each Elan
Company is or will be a party. The governing body of (i) each of the Elan Parent
and EPIL consider the terms of this Agreement, the Related Agreements and the
Wyeth/Elan Agreements and the transactions contemplated hereby and thereby to be
in the best interests of each of the Elan Parent and EPIL and their respective
shareholders as a whole and that the value of the Purchased Assets justifies the
consideration receivable pursuant to this Agreement and (ii) the Elan Parent, by
resolution duly adopted, has recommended that the shareholders of the Elan
Parent vote in favor of the transactions contemplated under this Agreement, the
Related Agreements and the Wyeth/Elan Agreements. The governing body of EPI, by
resolution duly adopted, has declared the sale of the Purchased Assets to the
Acquirors to be expedient and for the best interests of EPI and deems it
advisable and in the best interests of its shareholders to consummate, and has
approved, this Agreement, the Related Agreements and the Wyeth/Elan Agreements
and the transactions contemplated hereby and thereby on the terms and conditions
set forth in this Agreement, the Related Agreements and the Wyeth/Elan
Agreements. This Agreement has been duly and validly executed and delivered by
each Elan Company and, when executed and delivered by the King Companies, will
constitute a legal, valid and binding obligation of each Elan Company
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting generally the enforcement of
creditors' rights and (ii) the availability of equitable remedies (whether in a
proceeding in equity or at law). When executed and delivered by the applicable
Elan Company and each applicable Affiliate, Wyeth (as applicable) and each
applicable Affiliate and by the applicable King Company, each Related Agreement
and each Wyeth/Elan Agreement will constitute a legal, valid and binding
obligation of the applicable Elan Company and each applicable Affiliate
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting generally the
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enforcement of creditors' rights and (ii) the availability of equitable remedies
(whether in a proceeding in equity or at law).
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 consents, waivers, approvals, Orders, permits or
authorizations of, or registrations, declarations, payments or filings with, any
Governmental or Regulatory Authority that are required by or with respect to the
Elan Companies in connection with the execution and delivery of this Agreement,
the Related Agreements and the Wyeth/Elan Agreements by the Elan Companies or
the performance of their respective obligations hereunder and thereunder, except
for those consents, waivers, approvals, Orders, permits, authorizations,
registrations, declarations, payments or filings which a failure to obtain or
make would not have a Material Adverse Effect.
(b) Schedule 6.03(b) of the Elan Disclosure Schedule sets forth a
complete and accurate list (the "Elan Third Party Consents") of all 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 in connection with the execution and delivery of
this Agreement, the Related Agreements and the Wyeth/Elan Agreements by the Elan
Companies or the performance of their respective obligations hereunder and
thereunder, except for those consents, waivers, approvals, authorizations or
notices which a failure to obtain or make would not have a Material Adverse
Effect.
SECTION 6.04. Non-Contravention. The execution and delivery by the Elan
Companies of this Agreement, the Related Agreements and the Wyeth/Elan
Agreements to which they are or will be a party does not, and the performance by
them of their respective obligations under this Agreement, the Related
Agreements and the Wyeth/Elan Agreements to which they are or will be a party
and the consummation of the transactions contemplated hereby and thereby will
not:
(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) assuming the receipt of the Elan Governmental Consents, conflict
with or result in a violation or breach of any term or provision of any Law
applicable to any Elan Company, the Businesses or the Purchased Assets; or
(c) conflict with or result in a Default under any Contract to which
any Elan Company is a party or by which Elan Company or any of their assets
is bound,
except, in the case of clauses (b) and (c), for such conflicts, breaches or
Defaults as would not have a Material Adverse Effect.
SECTION 6.05. Contracts. Schedule 6.05 of the Elan Disclosure Schedule
sets forth a complete and correct list of each Assumed Contract and each
Contract to
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which each Elan Company or any of its Subsidiaries is a party that is material
to the research, development, manufacture, marketing, sale or distribution of
Skelaxin, Sonata, a Current Skelaxin Product Improvement or a Sonata Line
Extension and provides for aggregate annual payments, or has a value in excess,
of $1,000,000. The Elan Companies have delivered to the Acquirors complete and
correct copies of all such Contracts. Except as would not have a Material
Adverse Effect, each of the Contracts is in effect and constitutes a legal,
valid and binding agreement of the Elan Company or Subsidiary party to such
Contract and is enforceable in accordance with its terms by such Elan Company or
Subsidiary party thereto against the applicable counterparties, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting generally the enforcement of
creditors' rights and (ii) the availability of equitable remedies (whether in a
proceeding in equity or at law); 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. Except as would not have a Material Adverse Effect,
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 Skelaxin
Intellectual Property set forth in Schedule 6.06(a) of the Elan Disclosure
Schedule constitutes all of the Skelaxin Patent Rights, Skelaxin Copyrights,
Skelaxin Trademarks and schedulable Skelaxin Know-How that are necessary to the
operation of the Skelaxin Business as it has been and is now being conducted,
and the Sonata Copyrights set forth on Schedule 1.01(g) of the Elan Disclosure
Schedule constitute all of the copyrights owned by the Elan Companies or any of
their respective Subsidiaries that are necessary to the operation of the Sonata
Business as has been and is now being conducted by the Elan Companies. As of the
Closing Date, the Elan Companies or their respective Subsidiaries will own all
of the Skelaxin Intellectual Property set forth on Schedule 6.06(a) of the Elan
Disclosure Schedule, and all of the Sonata Copyrights set forth on Schedule
1.01(g) of the Elan Disclosure Schedule.
(b) To the Knowledge of the Elan Companies, neither the operation of
the Skelaxin Business, in the Skelaxin Territory, nor the operation of the
Sonata Business in the Sonata Territory, as has been and is now being conducted,
infringes Patent Rights of any Person and neither any Elan Company, nor any
Subsidiary thereof, has received any written notice from any Person, or has
Knowledge of, any actual or threatened claim or assertion to the contrary, nor
any actual or threatened claim or assertion that the practice of any Skelaxin
Intellectual Property or of the use of any of the Sonata Copyrights would
infringe any of the Patent Rights or other intellectual property rights of any
third party, nor any facts or alleged facts which are likely to serve as the
basis for any such claim or assertion.
(c) To the Knowledge of the Elan Companies, the Skelaxin Patent Rights
and Skelaxin Trademarks have been duly filed, prosecuted, obtained and
maintained by the Elan Companies in accordance with all applicable Laws. Any
necessary registration, maintenance and renewal fees due in connection with the
Skelaxin Patent Rights and Skelaxin Trademarks have been paid in a timely manner
and all necessary documents and certificates in connection with the Skelaxin
Patent Rights and Skelaxin Trademarks have, for the
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purposes of maintaining such Skelaxin Patent Rights and Skelaxin Trademarks,
been filed in a timely manner with the relevant Governmental or Regulatory
Authorities.
(d) The Skelaxin Intellectual Property set forth on Schedule 6.06(a) of
the Elan Disclosure Schedule and the Sonata Copyrights are free and clear of all
Encumbrances, except Permitted Encumbrances, and no Person other than the Elan
Companies and their respective Subsidiaries, including any current or former
employee or consultant of the Elan Companies and their respective Subsidiaries,
has any proprietary, commercial or other interest in any of the Skelaxin
Trademarks, Skelaxin Patent Rights, Skelaxin Copyrights, schedulable Skelaxin
Know-How or Sonata Copyrights. 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 Skelaxin Patent Rights, Skelaxin Copyrights, Skelaxin Trademarks,
schedulable Skelaxin Know-How set forth on Schedule 6.06(a) of the Elan
Disclosure Schedule or any of the Sonata Copyrights.
(e) The Elan Companies or their respective Subsidiaries have the
unrestricted right to assign, transfer and/or grant to the Acquirors all rights
in the Skelaxin Intellectual Property and the Sonata Copyrights that are being
assigned, transferred and/or granted to the Acquirors 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) To the Knowledge of the Elan Companies, there is no unauthorized
use or infringement of any of the Skelaxin Intellectual Property or the Sonata
Copyrights by any Person.
(g) 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 Skelaxin Intellectual Property or the Sonata Copyrights
nor have any such Actions or Proceedings been brought during the past one (1)
year.
(h) The Elan Companies have not entered into any Contract (i) granting
any Person the right to bring infringement or misappropriation actions, or
defend declaratory judgment actions, with respect to, or otherwise to enforce
rights with respect to, any of the Skelaxin Intellectual Property or the Sonata
Copyrights, or (ii) expressly agreeing to indemnify any Person against any
charge of infringement of any of the Skelaxin Intellectual Property or the
Sonata Copyrights.
(i) The Elan Companies have not entered into any Contract granting any
Person the right to control the prosecution or registration of any of the
Skelaxin Patent Rights, the Skelaxin Trademarks, the Skelaxin Copyrights or the
Sonata Copyrights.
(j) None of the Skelaxin Trademarks is or has been the subject of any
opposition, cancellation, abandonment or similar proceeding, and neither any
Elan Company, nor any of its Subsidiaries, has received any written notice from
any Person, or has
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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.
(k) 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 Skelaxin Trademarks, nor any patents or patent
applications of any Person that are interfering or potentially interfering with
the Skelaxin Patent Rights.
(l) The Skelaxin Trademarks are currently in use and have been used
continuously for the goods claimed in the registration identified on Schedule
1.01(f) of the Elan Disclosure Schedule since June 1, 1998 and to the Knowledge
of the Elan Companies, use of the trademark Skelaxin(TM) was not discontinued
with the intent not to resume at any time prior to June 1, 1998.
(m) The employment by the Acquirors of the Hired Employees 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 Hired Employees were engaged in as of the Closing Date.
(n) This Section 6.06 contains the only representations and warranties
of the Elan Companies regarding Skelaxin Intellectual Property or the Sonata
Copyrights 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. (a) The Elan Companies have provided to
the Acquirors a list setting forth (i) the names, addresses, titles and dates of
hire of each of the Employees, (ii) the then current annual base salary (or
hourly rate) and bonus for the four (4) immediately preceding fiscal quarters
for which bonuses have been paid and the estimated bonus for the immediately
preceding fiscal quarters, in each case for each Employee and (iii) to the
extent any Employee is on leave of absence, the type of leave, the date it
commenced and the expected duration of leave (based on information provided to
the Elan Companies by the Employees or their physicians). All Employees are
employed on an at-will basis. Except as set forth on Schedule 6.07(a) of the
Elan Disclosure Schedule, no Employee has a right to take more than four weeks
of vacation per year. Except as set forth on Schedule 6.07(a) of the Elan
Disclosure Schedule, no Employee is, or will become, other than as required by
Law, entitled to any payment, benefit or right, or any increased and/or
accelerated payment, benefit or right, as a result of such Employee's
termination of employment with the Elan Companies or any of their Affiliates, or
the execution of this Agreement or the consummation of the transactions
contemplated hereby and by the Related Agreements, the Wyeth/Elan Agreements and
the Wyeth/King Agreements.
(b) Schedule 6.07(b) of the Elan Disclosure Schedule contains a true
and complete list of all Employee Benefit Plans (other than stock option plans
and plans providing benefits of immaterial value to Employees) currently
maintained or contributed to by the Elan
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Companies and providing benefits to the Employees. The Elan Companies have
delivered or made available to the Acquirors a true and complete copy of each
Employee Benefit Plan set forth on Schedule 6.07(b) of the Elan Disclosure
Schedule. No Employee Benefit Plan (i) provides for defined benefit pension
benefits or (ii) is a "multiemployer plan" (as defined in Section 3(37) of
ERISA). Except as would not have a Material Adverse Effect, each Employee
Benefit Plan complies with and has at all times been administered in accordance
with all applicable Laws, including ERISA and the Code.
(c) No fewer than 80% of the management personnel set forth on Schedule
6.07(c) of the Elan Disclosure Schedule are actively employed (within the
meaning of Section 8.10(a)) in such capacities as set forth on Schedule 6.07(c)
of the Elan Disclosure Schedule by the Elan Companies as of the date which is
two (2) Business Days prior to the Original Agreement Date.
SECTION 6.08. Litigation. Except as would not have a Material Adverse
Effect, there are no Actions or Proceedings pending or threatened in writing or,
to the Knowledge of the Elan Companies, threatened, against or in connection
with (i) the Purchased Assets or the Businesses, (ii) this Agreement, any
Related Agreement or any Wyeth/Elan Agreement or (iii) the transactions
contemplated under this Agreement, any Related Agreement or any Wyeth/Elan
Agreement. No Elan Company is subject to any Order that would materially impair
or delay the ability of such Elan Company to perform its obligations under this
Agreement, the Related Agreements or the Wyeth/Elan Agreements or is in Default
with respect to any court order applicable to the Purchased Assets.
SECTION 6.09. Compliance with Law. (a) Except as would not have a
Material Adverse Effect, the Businesses are conducted by the Elan Companies and
their respective Subsidiaries in compliance with all applicable Law.
(b) Except as would not have a Material Adverse Effect, all
governmental licenses, permits, registrations, Skelaxin Product Registrations,
approvals, concessions, franchises and authorizations principally employed in,
or necessary to the ongoing conduct of, the Skelaxin Business that are held in
the name of the Elan Companies or any of their respective Subsidiaries are in
full force and effect.
(c) Except as would not have a Material Adverse Effect, since December
31, 2000, no Governmental or Regulatory Authority has served notice on any of
the Elan Companies or any of their respective Subsidiaries that the Businesses
(as of the Original Agreement Date) or the Purchased Assets were or are in
violation of any Law or the subject of any investigation.
(d) Except as would not have a Material Adverse Effect, since December
31, 2000, none of the Elan Companies or any of their respective Subsidiaries has
received written notice from any Governmental or Regulatory Authority that there
are any circumstances currently existing which would reasonably be expected to
lead to any loss of or
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refusal to renew any material governmental licenses, permits, registrations,
Skelaxin Product Registrations, approvals, concessions, franchises and
authorizations relating to Skelaxin or the Purchased Assets on terms less
advantageous to the Elan Companies and their respective Subsidiaries than the
terms of those governmental licenses, permits, registrations, Skelaxin Product
Registrations, approvals, concessions, franchises and authorizations currently
in force.
(e) (i) Except as would not have a Material Adverse Effect, the
Skelaxin 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 that are held in the name of any of the Elan Companies or any of their
respective Subsidiaries relating to Skelaxin or a Current Skelaxin Product
Improvement (if any), and each of the INDs or NDAs that are held in the name of
any of the Elan Companies or any of their respective Subsidiaries relating to
Skelaxin or a Current Skelaxin Product Improvement (if any) has been approved
by, and none of the Elan Companies or any of their respective Subsidiaries 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 that are held in the name of any of the Elan Companies or any
of their respective Subsidiaries relating to Skelaxin or a Current Skelaxin
Product Improvement are not currently in good standing with, the FDA. The Elan
Companies or their respective Subsidiaries 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 that are held in the
name of any of the Elan Companies or any of their respective Subsidiaries
relating to Skelaxin or a Current Skelaxin Product Improvement. With respect to
Skelaxin, the applicant of each IND or NDA that is held in the name of an Elan
Company or one of its Subsidiaries relating to Skelaxin or a Current Skelaxin
Product Improvement, and all Persons performing operations covered by the
application acted in compliance with 21 U.S.C. (Section) 355 or 357, 21 C.F.R.
Parts 312 or 314 et seq., respectively, and all terms and conditions of such
applications.
(ii) To the Knowledge of the Elan Companies, no Governmental or
Regulatory Authority has commenced or threatened to initiate any action to
withdraw the Skelaxin Product Registrations or request the recall of Skelaxin,
or commenced or threatened to initiate any action to enjoin production of
Skelaxin at any facility in the Skelaxin Territory, nor have the Elan Companies
or any of their Subsidiaries received any notice to such effect since December
31, 2000.
(iii) None of the Employees, have been disqualified or debarred by the
FDA for any purpose, or have been charged with or convicted under United States
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 or have made an
untrue statement of a material fact to any Governmental or Regulatory Authority
with respect to Skelaxin or a Current Skelaxin Product Improvement (whether in
any submission to such Governmental or Regulatory Authority or otherwise), or
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failed to disclose a material fact required to be disclosed to any Governmental
or Regulatory Authority with respect to Skelaxin or a Current Skelaxin Product
Improvement.
(iv) The Elan Companies and their respective Subsidiaries have
delivered to the Acquirors copies of all material (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 December 31, 2000
by the Elan Companies or any of the Elan Companies' Subsidiaries from the FDA or
any other Governmental or Regulatory Authority relating to Skelaxin or a Current
Skelaxin Product Improvement and/or arising out of the conduct of the
Businesses.
SECTION 6.10. Inventory. All of the Inventory (a) is good, issuable and
merchantable in the Ordinary Course of Business, (b) in the case of Skelaxin
Inventory, was produced or manufactured in accordance with the specifications
for Skelaxin as set forth in the applicable Skelaxin Product Registrations and
in compliance with applicable Law and (c) has at least a twelve (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.
During the period beginning on February 1, 2003 and ending on May 8, 2003, the
Elan Companies have sold the Skelaxin Inventory and Sonata Inventory in the
Skelaxin Territory and Sonata Territory, respectively, as set forth on Schedule
6.10 of Elan Disclosure Schedule.
SECTION 6.11. Brokers. The King Companies have 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, the Original Agreement, the Related Agreements, the Wyeth/Elan
Agreements or the transactions contemplated hereby and thereby by reason of any
action taken by or on behalf of the Elan Companies or any of their respective
Subsidiaries.
SECTION 6.12. Sufficiency of Purchased Assets. The Purchased Assets
(together with the rights to be transferred or granted to the Acquirors and
their Affiliates under the Related Agreements and the Wyeth/King Agreements)
constitute all of the assets, Contracts, Skelaxin Governmental Permits, rights
and services required for the continued operation of the Businesses by the
Acquirors as operated by the Elan Companies during the past twelve (12) months.
SECTION 6.13. Customers and Suppliers. The Elan Companies have used
reasonable business efforts to maintain, and currently maintain, good working
relationships with all of the customers and suppliers of the Businesses.
Schedule 6.13 of the Elan Disclosure Schedule specifies for the period beginning
January 1, 2002 to the Original Agreement Date the names of the customers that
were, in the aggregate, the ten (10) largest customers in terms of dollar value
of each of the Products, sold by the Businesses. None of such customers has
given any of the Elan Companies or any of their respective Subsidiaries
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notice terminating, canceling or threatening to terminate or cancel any Contract
or relationship with any of the Elan Companies or any of their respective
Subsidiaries relating to the Businesses. Schedule 6.13 of the Elan Disclosure
Schedule also specifies for the period beginning January 1, 2002 to the Original
Agreement Date the names of the suppliers of each of the Products. None of such
suppliers has given any of the Elan Companies or any of their respective
Subsidiaries notice terminating, canceling or threatening to terminate or cancel
any Contract or relationship with any of the Elan Companies or any of their
respective Subsidiaries relating to the Businesses.
SECTION 6.14. Operation of the Business; Description of the Business.
Since December 31, 2001 (a) the Businesses have been conducted only through EPI
and EPIL and their respective predecessors and not through any other divisions
or any direct or indirect Subsidiary or Affiliate of EPI and EPIL, and (b) no
part of the Businesses have been operated by any Person other than EPI and EPIL
or their respective predecessors. No Person other than the Elan Companies owns
or possesses any material assets or properties that have been used in the
Businesses, other than Persons who have granted to the Elan Companies or their
respective predecessors leasehold interests in or valid licenses to use other
assets or properties used in the Businesses pursuant to Contracts that are
listed on Schedule 6.14 of the Elan Disclosure Schedule. Neither the Elan Parent
nor any of its Subsidiaries engages in research, development, manufacture,
distribution, marketing, sale or promotion of Competing Products in the Skelaxin
Territory or the Sonata Territory other than in the Businesses.
SECTION 6.15. Financial Information. Schedule 6.15 of the Elan
Disclosure Schedule sets forth certain unaudited financial information regarding
Skelaxin and Sonata (the "Financial Information"). The Financial Information
accurately presents in all material respects such financial information for the
periods indicated, based upon the accounting principles, and subject to the
limitations, set forth on Schedule 6.15 of the Elan Disclosure Schedule.
SECTION 6.16. Title. (a) The Elan Companies have good and valid title
to all the Purchased Assets free and clear of all Encumbrances, except Permitted
Encumbrances.
(b) This Section 6.16 does not relate to Skelaxin Intellectual Property
or Sonata Copyrights, such items being the subject of Section 6.06, or
Inventory, such item being the subject of Section 6.10.
SECTION 6.17. Voting Requirements. The affirmative vote at the Elan
Shareholders Meeting or any adjournment or postponement thereof of a majority of
the votes represented by the Elan Shares cast on the resolutions required to be
passed to permit the Elan Parents to give effect to the transactions
contemplated by this Agreement, the Related Agreements and the Wyeth/Elan
Agreements is the only vote or consent of the holders of any class or series of
the share capital of the Elan Parent which may be necessary to approve such
transactions.
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SECTION 6.18. Insurance. All material policies of insurance and the
amounts of coverage on the Purchased Assets held by the Elan Companies or their
respective Affiliates are reasonable and customary in the pharmaceutical
industry and in relation to the nature of the Purchased Assets. There is no
Default with respect to any such policy, nor has there been any failure to give
any notice or present any claim under any such policy in a timely fashion or in
the manner or detail required by the policy. There is no Notice of non-renewal
or cancellation with respect to, or disallowance of any claim under, any such
policy that has been received by the Elan Companies or any of their respective
Affiliates.
SECTION 6.19. Pharma Marketing Settlement Agreement. The Elan Companies
have delivered true and correct copies of Settlement Agreement (excluding
exhibits), dated as of January 29, 2003, by and among Pharma Marketing Ltd.,
Pharma Operating Ltd., the Elan Parent, EPIL and Axogen Limited (the "Pharma
Marketing Settlement Agreement") to the Acquirors at or prior to the Original
Agreement Date. None of the Elan Companies nor Axogen Limited, are in breach of
any of their respective obligations under, or any provision of, the Pharma
Marketing Settlement Agreement. As of and after the Closing, there will be no
Encumbrances relating to the Products arising out of the Pharma Marketing
Settlement Agreement.
SECTION 6.20. Certain Covenants Under the Original Agreement. The Elan
Companies performed in all material respects the agreements and covenants set
forth in Sections 8.01(a), 8.01(b), 8.03, 8.09, 8.14 and 8.21 of the Original
Agreement, to be performed by them from the Original Agreement Date through the
date hereof.
SECTION 6.21. No Other Representations and Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, THE ELAN
COMPANIES DISCLAIM ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
WITH REGARD TO THE PURCHASED ASSETS AND THE BUSINESSES, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
PARENT AND THE ACQUIRORS
Each of the Acquiror Parent and the Acquirors represents and warrants
to the Elan Companies as of (i) the date hereof with respect to the
representations and warranties set forth in Sections 7.01 through 7.04 and 7.06
through 7.08, (ii) the Original Agreement Date with respect to the
representations and warranties set forth in Sections 7.05 and 7.08 and (iii) the
Closing Date with respect to all representations and warranties contained in
Article VII, 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 disclosed in the disclosure
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schedule supplied by the Acquirors to the Elan Companies and dated as of the
Original Agreement Date (the "Acquiror Disclosure Schedule") as follows:
SECTION 7.01. Corporate Organization. Each of the Acquiror Parent and
the Acquirors is a corporation duly organized, validly existing and in good
standing under the laws of such corporation's jurisdiction of organization and
has all requisite corporate power and authority to own its assets and carry on
its business as currently conducted by it. Each of the Acquiror Parent and the
Acquirors 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 would not have an Acquiror Material
Adverse Effect.
SECTION 7.02. Authority of the Acquiror Parent and the Acquirors. Each
of the Acquiror Parent and the Acquirors has all necessary power and authority
and has taken all actions necessary to enter into this Agreement and to execute
and deliver the Related Agreements and the Wyeth/King Agreements to which it is
or will be a party and to carry out the transactions contemplated hereby and by
the Related Agreements and the Wyeth/King Agreements to which it is or will be a
party. The board of directors of each of the Acquiror Parent and the Acquirors
has taken all action required by Law and the Charter Documents of each King
Company and otherwise to be taken by them to authorize (a) the execution and
delivery of this Agreement, the Related Agreements and the Wyeth/King Agreements
to which the applicable King Company is or will be a party and (b) the
consummation of the transactions contemplated hereby and by the Related
Agreements and the Wyeth/King Agreements to which the applicable King Company is
or will be a party. This Agreement has been duly and validly executed and
delivered by each of the Acquiror Parent and the Acquirors and, when executed
and delivered by each Elan Company, will constitute a legal, valid and binding
obligation of the Acquiror Parent and the Acquirors enforceable against them in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to
or affecting generally the enforcement of creditors' rights and (ii) the
availability of equitable remedies (whether in a proceeding in equity or at
law). When executed and delivered by the Acquiror Parent and the applicable
Acquiror, the applicable Elan Company and each applicable Affiliate, Wyeth (as
applicable) and each applicable Affiliate, each Related Agreement and each
Wyeth/King Agreement will constitute a legal, valid and binding obligation of
the Acquiror Parent or the Acquirors, as applicable, enforceable against it in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to
or affecting generally the enforcement of creditors' rights and (ii) the
availability of equitable remedies (whether in a proceeding in equity or at
law).
SECTION 7.03. Consents and Approvals. Schedule 7.03 of the Acquiror
Disclosure Schedule 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 Parent and the Acquirors in
connection with the execution and delivery of this Agreement, the Related
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Agreements and the Wyeth/King Agreements by the Acquiror Parent and the
Acquirors or the performance of their obligations hereunder and thereunder (the
"Acquiror Governmental Consents").
SECTION 7.04. Non-Contravention. The execution and delivery by the
Acquiror Parent and the Acquirors of this Agreement, the Related Agreements and
the Wyeth/King Agreements to which they are or will be a party does not, and the
performance by them of their obligations under this Agreement, the Related
Agreements and the Wyeth/King Agreements to which they are or will be a party
and the consummation of the transactions contemplated hereby and thereby will
not:
(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
Parent or the Acquirors;
(b) assuming the receipt of the Acquiror Governmental Consents,
conflict with or result in a violation or breach of any term or provision
of any Law applicable to the Acquiror Parent or the Acquirors; or
(c) conflict with or result in a Default under any Contract to which
the Acquiror Parent or the Acquirors is a party or by which the Acquiror
Parent or any Acquiror or any of their assets is bound,
except, in the case of clauses (b) and (c), for such conflicts, breaches or
defaults as would not have an Acquiror Material Adverse Effect.
SECTION 7.05. Litigation. Except as would not have an Acquiror Material
Adverse Effect, there are no Actions or Proceedings pending, or to the Knowledge
of the Acquiror Parent or the Acquirors, threatened, against, relating to,
affecting or arising in connection with (i) this Agreement, any Related
Agreement or any Wyeth/King Agreement or (ii) the transactions contemplated by
this Agreement, the Related Agreements or the Wyeth/King Agreements. None of the
Acquiror Parent nor any Acquiror is subject to any Order that would materially
impair or delay the ability of the Acquiror Parent or the Acquirors to perform
their 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, the Related Agreements or the
Wyeth/King Agreements or the transactions contemplated hereby and thereby by
reason of any action taken by or on behalf of the Acquiror Parent or Acquirors.
SECTION 7.07. Financial Capability. As of the Original Agreement Date,
the Acquiror Parent and its Subsidiaries had at least $900 million of cash, cash
equivalents, marketable securities with maturities of less than one year and
available borrowings under the Credit Agreement. As of the date of this
Agreement, the Acquiror Parent and its Subsidiaries
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have no less than the cash, cash equivalents and marketable securities with
maturities of less than one year (including the Escrow Amount deposited under
the Escrow Agreement) set forth on Schedule 7.07 of the Acquiror Disclosure
Schedule. At the time of the Closing, the Acquiror Parent shall have at least
$750 million of cash, cash equivalents, marketable securities with maturities of
less than one year and available borrowings under the Credit Agreement
(including the Escrow Amount deposited under the Escrow Agreement.)
SECTION 7.08. No Other Representations or Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
ACQUIROR PARENT AND THE ACQUIRORS DISCLAIM ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO THE SUBJECT MATTER OF THIS
AGREEMENT, 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. Operation of the Businesses. (a) From the Original
Agreement Date to the Closing Date, except as contemplated by this Agreement,
the Related Agreements and the Wyeth/Elan Agreements, each of the Elan Companies
shall:
(i) conduct the Businesses only in the Ordinary Course of Business;
(ii) with the prior written consent of the Acquirors (which shall not
be unreasonably withheld, delayed or conditioned) use its commercially
reasonable efforts to maintain intact the Businesses as they are currently
organized, keep available the services of the Employees and maintain its
relations with suppliers, customers, creditors, employees, agents and
others, in each case having a relationship with the Businesses;
(iii) confer with the Acquirors prior to implementing material
operational decisions relating to the Businesses;
(iv) keep in full force and effect, without amendment, all material
rights relating to the Businesses;
(v) except in the Ordinary Course of Business, not alter the salaries
or other compensation paid or payable to any Employee;
(vi) comply in all material respects with all requirements of Law and
contractual obligations, in each case applicable to the operation of the
Businesses;
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(vii) maintain all Skelaxin Books and Records and Sonata Books and
Records; and
(viii) cooperate in all respects with the Acquirors with respect to the
prosecution and/or issuance of U.S. Patent Application No. 10/104,044.
(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, the Related Agreements and the Wyeth/Elan Agreements and except
with the prior consent of the Acquiror Parent (which consent shall not be
unreasonably withheld, delayed or conditioned), 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 $50,000, (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) lease, license, mortgage,
pledge, create on or subject to any Encumbrance (other than Permitted
Encumbrances) any of the Purchased Assets or (v) cause their respective
Affiliates to transfer or grant any rights or options in or to any of the
material Purchased Assets, subject to Section 8.01(c).
(c)(i) The Elan Companies shall not sell Skelaxin in the Skelaxin
Territory from the date of this Agreement until the Closing Date, except in
accordance with the limitations set forth on Schedule 8.01(c)(i) of the Elan
Disclosure Schedule.
(ii) The Elan Companies shall not sell Sonata in the Sonata Territory
from the date of this Agreement until the Closing Date, except in
accordance with the limitations set forth on Schedule 8.01(c)(ii) of the
Elan Disclosure Schedule.
(iii) The Elan Companies shall not sell Skelaxin outside of the
Skelaxin Territory from the date of this Agreement until the Closing Date.
SECTION 8.02. Commercially Reasonable Efforts. (a) 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, the Related
Agreements, the Wyeth/Elan Agreements and the Wyeth/King Agreements and to cause
the conditions to the obligations of the other party hereto and thereto to
consummate the transactions contemplated hereby and thereby to be satisfied at
the Closing, including (i) obtaining all consents and approvals of, and making
all filings and providing all notices to, 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,
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proper or advisable to the consummation of the transactions contemplated by this
Agreement, the Related Agreements, the Wyeth/Elan Agreements and the Wyeth/King
Agreements and (ii) commercially reasonable efforts by the Elan Parent to
prepare and disseminate as soon as practicable to its shareholders disclosure
materials in accordance with the requirements of, or as otherwise as approved
by, the UK Listing Authority and the Dublin Stock Exchange for the solicitation
of the approval by the Elan Parent's shareholders of the transactions
contemplated by this Agreement, and to duly and promptly convene a meeting of
such shareholders (the "Elan Shareholders Meeting" and, the scheduled date of
such meeting, the "Scheduled Shareholder Vote Date") for the purpose of voting
on such approval (such approval, the "Elan Shareholder Approval") and to seek
such shareholder action. The Elan Parent's obligations to duly and promptly
convene the Elan Shareholders Meeting for the purpose of obtaining the Elan
Shareholder Approval shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to any of the Elan Companies of any
Acquisition Proposal or (ii) the withdrawal or modification by any of the
governing bodies of the Elan Companies or any committee thereof of such
governing body's or such committee's approval or recommendation of the
transactions contemplated by this Agreement, the Related Agreements, the
Wyeth/Elan Agreements and the Wyeth/King Agreements. The Elan Parent shall
provide the Acquirors a reasonable opportunity to review such disclosure
materials before they are disseminated to the Elan Parent's shareholders and the
Elan Parent agrees that such disclosure materials shall be true and correct in
all material respects.
(b) The Elan Companies (i) shall use their commercially reasonable
efforts to cause Wyeth and its Affiliates to consummate the transactions
contemplated by this Agreement, the Related Agreements, the Wyeth/Elan
Agreements and the Wyeth/King Agreements, (ii) in accordance with Section 2.1
and Article III of the Wyeth/Elan Master Agreement and their rights thereunder,
shall cause Wyeth and its Affiliates to take all actions necessary to execute
and deliver the applicable Wyeth/Elan Agreements and the Wyeth/King Agreements
and consummate the transactions thereunder, (iii) shall take all actions
necessary to enforce Wyeth's obligations under the Wyeth/Elan Master Agreement,
(iv) shall promptly provide the Acquirors with any updates to the Wyeth
Disclosure Letter (as defined in the Wyeth/Elan Master Agreement) received by
the Elan Companies pursuant to Section 3.13 of the Wyeth/Elan Master Agreement
and (v) shall provide the Acquirors with copies of any notices or correspondence
relating to any notice delivered under, any material communication between the
parties relating to, or any breach or potential breach by Wyeth or any of its
Affiliates under, the Wyeth/Elan Master Agreement (pursuant to Section 3.12
thereunder) or any other Wyeth/Elan Agreement.
SECTION 8.03. Cooperation. (a) All rights afforded to the Elan
Companies, the King Companies or their respective Subsidiaries under this
Section 8.03 are freely transferable, in whole or in part, with that portion of
the business, assets or rights transferred by or to the Elan Companies, the King
Companies or their respective Subsidiaries to which such rights relate. Except
as where such a change is not likely to cause the Elan Companies or their
Subsidiaries a material impact on a Skelaxin Product Registration, the Acquirors
shall not, without first consulting with the Elan Companies where practical,
make
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any material change in the Drug Master File or the Skelaxin Product
Registrations relating to the Chemistry, Manufacturing and Skelaxin Control
filings made as of the Closing Date. The Elan Companies shall be provided 90
days prior notice of any such change. In addition, the Elan Companies shall have
filed notification letters with FDA for all Skelaxin Product Registrations no
later than five (5) Business Days after the Closing Date.
(b) 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 commercially reasonable efforts to consummate the
transactions contemplated by this Agreement, the Related Agreements, the
Wyeth/Elan Agreements or the Wyeth/King Agreements as required by and subject to
this Section 8.03 and Section 8.02.
SECTION 8.04. Access. (a) From the date hereof until the Closing, the
Elan Companies shall permit the Acquirors and their representatives to have
reasonable access, during regular business hours and upon reasonable advance
notice, to the Purchased Assets and shall use commercially reasonable efforts to
provide the Acquirors with all assistance, information and data reasonably
requested by the Acquirors in connection with the Acquirors' rights and
obligations under Section 8.10 hereof. The Elan Companies shall instruct their
respective employees, counsel and financial advisors to provide reasonable
cooperation to the Acquirors in their investigation of the Businesses, it being
understood that the Acquirors shall reimburse the Elan Companies promptly for
reasonable and necessary out of pocket expenses incurred by the Elan Companies
in complying with any such request by or on behalf of the Acquirors.
(b) In order to facilitate the resolution of any claims made by or
against or incurred by any of the parties or any of their respective Affiliates
or any of their respective officers or directors in any Action or Proceeding
(including any Elan Companies Proceeding), upon reasonable advance notice, the
Acquirors on the one hand, and the Elan Companies on the other hand, shall: (i)
afford the officers, employees and authorized agents and representatives of the
other party or any of their respective Affiliates reasonable access (including
the right to make copies at their own expense), during regular business hours,
to their respective offices and properties and to the Skelaxin Books and
Records, the Sonata Books and Records and the Excluded Books and Records to the
extent related to the Businesses, subject in each case to limitations imposed by
applicable Law or by any confidentiality agreement in effect on the date of this
Agreement; provided, however, that the applicable party shall use its
commercially reasonable efforts to obtain any waivers or consents to such
confidentiality agreements required in order to provide the other party with the
foregoing access; (ii) furnish to the officers, employees and authorized agents
and representatives of the other party or any of their respective Affiliates
such additional financial and other information regarding the Businesses
relating to the period prior to the Closing as the other party or any of their
respective Affiliates may from time to time reasonably request; (iii) make
available to the officers, employees and authorized agents and representatives
of the other party or any of their respective Affiliates such party's employees
whose assistance,
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testimony or presence is reasonably necessary to assist the other party or any
of their respective Affiliates in evaluating any such claims and/or in
prosecuting or defending against such claims, including the presence of such
persons as witnesses in hearings or trials for such purposes; and (iv) to the
extent that the other party or any of their respective Affiliates or any of
their respective officers or directors is legally required to produce original
documents included among the Purchased Assets or Excluded Assets for inspection
in any legal proceeding or investigation of any Governmental or Regulatory
Authority, cooperate with the other party or any of their respective Affiliates
or any of their respective officers or directors in making such original
documents available for inspection by parties to such proceeding or
investigation; provided, however, that the foregoing shall not unreasonably
interfere with the business or operations of the parties or any of their
Affiliates.
(c) Each of the Acquirors agree to make its respective 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 Elan Companies shall reimburse the Acquirors promptly for
their reasonable and necessary out-of-pocket expenses incurred in complying with
any such request.
(d) Each of the Elan Companies agree to make its personnel and those of
its Subsidiaries reasonably available to the Acquirors or their respective
representatives to the extent such access is reasonably related to any Purchased
Assets, or is otherwise reasonably necessary for the Acquirors to comply with
the terms of this Agreement or to comply with any applicable Law, it being
understood that the Acquirors shall reimburse the Elan Companies promptly for
their reasonable and necessary out-of-pocket expenses incurred in complying with
any such request.
(e) The Elan Companies agree that for a period of ten (10) years
following the Closing Date with respect to original Sonata Books and Records and
three (3) years following the Closing Date with respect to any original Excluded
Books and Records related to the Businesses, they or their respective Affiliates
will use commercially reasonable efforts to hold and maintain such original
Sonata Books and Records and such original Excluded Books and Records as in
existence on the Closing that were not delivered to Acquirors on the Closing
Date and, upon reasonable notice and for reasonable purposes and in such manner
as will not unreasonably interfere with the conduct of the Elan Companies' or
any of their respective Affiliates' business, will afford the officers,
employees and authorized agents and representatives of the Acquirors, at their
sole cost and expense, reasonable access, during normal business hours, to such
original Sonata Books and Records and to any Excluded Books and Records related
to the Businesses. The Elan Companies agree to provide, at the Elan Companies'
sole cost and expense, copies of any Excluded Books and Records related to the
Businesses reasonably requested by the Acquirors.
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(f) The Acquirors agree to use commercially reasonable efforts to hold
and maintain all of the Skelaxin Books and Records and original Purchased Sonata
Books and Records as in existence on the Closing for a period of ten (10) years
after the Closing Date. After such ten (10) year period, before the Acquirors
shall dispose of any Skelaxin Books and Records and original Purchased Sonata
Books and Records, they shall provide to the Elan Companies at least 90 calendar
days' prior written notice to such effect and the Elan Companies shall be given
an opportunity, at their sole cost and expense, to remove and retain all or any
part of such Skelaxin Books and Records and original Purchased Sonata Books and
Records.
(g) Promptly after the Closing, the Elan Companies shall deliver to the
Acquirors all photo-ready art (or its substantial equivalent) for all Skelaxin
Marketing Materials and Sonata Marketing Materials and for all packaging and
Labeling for the Products in the Skelaxin Territory and the Sonata Territory,
including all related artwork and inserts, in each case to the extent owned by
the Elan Companies or any of their respective Subsidiaries.
SECTION 8.05. Public Announcements; Confidentiality. (a) Each of the
Elan Companies and the Acquiror Parent and the Acquirors agrees that, from and
after the date hereof until the Closing, it and its representatives shall keep
the facts surrounding the negotiation of this Agreement, the Related Agreements,
the Wyeth/Elan Agreements and the Wyeth/King Agreements and the transactions
contemplated hereby or thereby, any disclosures made herein and hereunder or
therein or thereunder, 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, the Related Agreements, the Wyeth/Elan
Agreements or the Wyeth/King Agreements 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. Prior to the release of any press
release or other public announcement permitted by the preceding sentence, the
parties hereto shall agree upon the timing of release and the content of such
press release or other public announcement.
(b) Each party shall not, and shall require that its Affiliates and its
and their advisors and 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 Affiliates and its and their advisors and 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 Affiliates and its and their advisors
and distributors to take, reasonable steps to prevent any unauthorized use or
disclosure of any Confidential Information. The foregoing obligations in
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this Section 8.05 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 Products or a Current Product Improvement, or (iii)
is required by Law or any Governmental or Regulatory Authority to be disclosed;
provided, however, that the disclosing party uses commercially 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, however, 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 Products or
a Current Product Improvement or such other information that either party
identifies to the other in writing as confidential and, after the Closing,
Confidential Information of the Acquirors shall include the Skelaxin Books and
Records, the Skelaxin Intellectual Property, the Skelaxin Product Registrations,
the Skelaxin Governmental Permits, the Purchased Sonata Books and Records, and
the Sonata Copyrights.
(c) The Acquirors acknowledges that they have been informed that
information regarding the Elan Companies has been requested by the Securities
and Exchange Commission and by private litigants in connection with the Elan
Companies Proceedings and waives notice and opportunity to seek a protective
order with respect to the information that has been requested in connection with
such Elan Companies Proceedings.
(d) The disclosure of any information governed by the confidentiality
covenants contained in this Section 8.05 may be made by any of the Elan
Companies or any of their respective Affiliates without liability hereunder to
any of their Affiliates and to any employee, agent, attorney, accountant,
consultant or representative who is assisting the Elan Companies in prosecuting
or defending against any Elan Companies Proceeding.
(e) Notwithstanding the confidentiality covenants contained herein, the
Elan Companies and any of their respective Affiliates shall be permitted to use
any Confidential Information that the Elan Companies or any of their respective
Affiliates in good faith believes to be necessary for purposes of prosecuting or
defending an Elan Companies Proceeding, provided, however, that the Elan
Companies or any of their respective Affiliates will use their best efforts to
obtain an order protecting the confidentiality of such information.
(f) From and after the Original Agreement Date until the Closing Date,
the provisions of the confidentiality agreement dated as of October 29, 2002
between the Elan Parent and the Acquiror Parent (the "Confidentiality
Agreement") shall apply to any information disclosed to the Acquiror Parent or
the Acquirors pursuant to this Agreement, any Related Agreement, any Wyeth/Elan
Agreement and any Wyeth/King Agreement or otherwise in connection with the
transactions contemplated hereby or thereby. Following the Closing, the
Confidentiality Agreement will terminate in its entirety, with no further
obligation on the part of any party thereto, except for the second paragraph of
Section 4
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thereof and Section 5 thereof; provided, however, that any obligation pursuant
to Section 4 thereof shall not apply with respect to the persons set forth on
Schedule 8.05(f) of the Elan Disclosure Schedule. In addition, the transactions
contemplated by the Agreement, the Related Agreements, the Wyeth/Elan Agreements
and the Wyeth/King Agreements shall not constitute a breach or violation of the
terms of the Confidentiality Agreement.
SECTION 8.06. Corporate Names. (a) Except as set forth in this Section
8.06, the Acquirors shall promptly, and in any event within 90 days after the
Closing Date with respect to Sonata and within 120 days after the Closing Date
with respect to Skelaxin, complete the revision of all advertising and
promotional materials and literature relating to the Products (i) to delete all
references to the Corporate Names and (ii) to delete all references to the Elan
Companies' or their respective Affiliates' customer service address or phone
number; provided, however, that for a period of 90 days from the Closing Date
with respect to Sonata Marketing Materials and 120 days from the Closing Date
with respect to Skelaxin Marketing Materials, the Acquirors may continue to
distribute Skelaxin Marketing Materials and Sonata Marketing Materials that use
the Corporate Names, addresses or phone numbers to the extent that such Skelaxin
Marketing Materials and Sonata Marketing Materials exist on the Closing Date;
and provided further, however, that the Corporate Names may remain on any
Skelaxin Marketing Materials and any Sonata Marketing Materials to the extent
required by Law or any Governmental or Regulatory Authority for any reason.
Subject to the terms and conditions herein, the Elan Companies hereby grant a
non-exclusive, non-transferable license to the Acquirors and their Subsidiaries
to use the Corporate Names on the Skelaxin Marketing Materials and the Sonata
Marketing Materials, to the extent specified herein. The Acquirors will destroy
their inventory of any remaining Skelaxin Marketing Materials and Sonata
Marketing Materials in their possession bearing the Corporate Names, address, or
phone number, which Corporate Names, address and phone numbers are not deleted
pursuant to Section 8.06(a)(i) and (ii), within 90 days after the Closing Date
with respect to Sonata Marketing Materials and within 120 days after the Closing
Date with respect to Skelaxin Marketing Materials. In no event shall the
Acquirors 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 the Elan Companies
during the 90-day period immediately preceding the Closing Date.
(b) The Acquirors shall be entitled to continue to use the Corporate
Names or the existing Labeling for the Products until such time as the Acquirors
have 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 the Acquirors do not prepare
within 90 days after the Closing Date with respect to Sonata and within 120 days
after the Closing Date with respect to Skelaxin final specifications for the
revised Labeling and packaging for the Products, including all necessary
photo-ready art (or its substantial equivalent) reflecting such modification,
the right of the Acquirors described in this sentence shall terminate 90 days
after the Closing Date with respect to Sonata and 120 days after the Closing
Date with respect to Skelaxin. Subject to the terms and conditions herein, the
Elan Companies hereby grant a non-exclusive, non-transferable right and license
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to the Acquirors to use the Corporate Names on Labeling and packaging for the
Products to the extent specified herein.
(c) The Elan Companies retain and shall retain all right, title and
interest in and to the Corporate Names. The Acquirors 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. The Acquirors
further agree that all use of the Corporate Names by the Acquirors or their
Affiliates shall be for the benefit of the Elan Companies and the goodwill
accrued in connection with its use of the Corporate Names shall accrue to the
Elan Parent and/or the Elan Companies as appropriate. In the event the Acquirors
acquire any rights relating to the Corporate Names for any reason, the Acquirors
agree to assign, at no cost, all such rights, together with any related
goodwill, to the Elan Parent or the Elan Companies as appropriate. The Acquirors
shall each use commercially reasonable efforts not to do any act which
endangers, destroys or similarly affects 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 Products as used by the Elan
Companies in the operation of the Businesses as of the Closing for any Product
sold under the Corporate Names. Except as provided in this Section 8.06, the
Acquirors further agree that they will not alter, change, deface or obliterate
the Corporate Names on Skelaxin Marketing Materials, Sonata Marketing Materials
or Labeling for either Skelaxin or Sonata. The Acquirors will at any time
execute any documents reasonably required by the Elan Companies to confirm the
Elan Companies' ownership of all such rights in the Corporate Names. The
Acquirors shall not use in connection with the Products, or allow any of their
Affiliates to use in connection with the Products, 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 8.07. Regulatory Matters. From and after the transfer by the
Elan Companies to the Acquirors of each Skelaxin Product Registration held by
the Elan Companies or any of their respective Subsidiaries pursuant to the terms
hereof, the Acquirors 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 Skelaxin
Product 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 Skelaxin sold pursuant to such Skelaxin Product
Registration (whether sold before or after transfer of such Skelaxin Product
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 Skelaxin
sold pursuant to such Skelaxin Product Registration (whether sold before or
after transfer of such Skelaxin Product Registration).
SECTION 8.08. Returns, Rebates and Chargebacks. (a) (i) As of the
Closing Date, each of the Elan Companies and the Acquirors will process and
issue credits (or
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render payment in such other form as the parties hereto may determine) for all
returned Products they are financially responsible for in accordance with
subsections (iii) and (iv) below. The Acquirors will not bill the Elan Companies
for the administrative costs of processing claims for returned Products for
which the Acquirors are financially responsible for in accordance with
subsections (iii) and (iv) below. The Elan Companies will not bill the Acquirors
for the administrative costs of processing claims for returned Products for
which the Elan Companies are financially responsible for in accordance with
subsections (iii) and (iv) below. Such handling of returned Products by the
Acquirors or the Elan Companies, as applicable, and the issuance of any credits
or other form of reimbursement in connection therewith, shall be in accordance
with the Acquirors' or the Elan Companies' current returned goods policy, as
applicable. The Acquirors' returned product policy is set forth on Schedule
8.08(a) of the Acquiror Disclosure Schedule and the Acquirors will not alter
such policy until at least nine (9) months after the Closing Date in any way
that may reasonably be expected to increase Product returns during such period.
The Acquirors hereby agree that they shall take no actions to solicit or
otherwise encourage Product returns after the Closing.
(ii) The Elan Companies and the Acquirors will use commercially
reasonable efforts in requesting that customers direct all Product returns after
the Closing Date to the Acquirors. All returned Products received by the
Acquirors or the Elan Companies after the Closing Date will be destroyed by such
party at its respective returns handling facility. After such destruction, each
party will forward to the other party any necessary accompanying documentation
to determine the appropriate credit. If the Acquirors or the Elan Companies
destroy Products for which the other was financially responsible as set forth in
Sections 8.08(a)(iii) and (iv), that party shall bill the other party for the
cost of the destruction. Each such invoice shall set forth the number of units
processed, together with such other information as shall be necessary to support
the invoice. Each party shall, within thirty (30) days of its receipt of
invoice, pay the other party for the full invoiced amount.
(iii) The parties hereto agree and acknowledge that the Elan Companies'
shall be financially responsible only for returned Product bearing the Elan
Companies' National Drug Code ("NDC") numbers (or a Wyeth NDC Number with
respect to Sonata) and evidenced as being sold by the Elan Companies on or
before the Closing Date; provided, however, that the Elan Companies' maximum
financial liability for or other reimbursement for such returned Products shall
be one million five hundred thousand dollars ($1,500,000) with respect to
Skelaxin (the "Skelaxin Maximum Returns Credit Amount"), and one million five
hundred thousand dollars ($1,500,000) with respect to Sonata (the "Sonata
Maximum Returns Credit Amount"). The Acquirors further agree that the Elan
Companies' financial obligation for credits or other reimbursement for such
returned Products shall terminate with respect to Sonata upon the first to occur
of the date on which the Elan Companies have issued credits in the amount of or
otherwise reimbursed the Sonata Maximum Returns Credit Amount or nine (9) months
after the Closing Date (the "Sonata Returns Termination Date"), and with respect
to Skelaxin upon the first to occur of the date on which the Elan Companies have
issued credits in the amount of or otherwise reimbursed the Skelaxin Maximum
Returns Credit Amount or nine (9) months after the Closing Date (the "Skelaxin
Returns Termination
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Date"). For purposes of this Section 8.08(a)(iii), the dollar value of returned
Products paid or credited for by the Elan Companies shall be determined in
accordance with the Elan Companies' then current returned goods policy.
(iv) The parties hereto agree and acknowledge that the Acquirors shall
be financially responsible only for returned Products bearing the Acquirors' NDC
number or evidenced as being sold by the Acquirors after the Closing Date, and
for all returned Products (regardless of NDC number or date of sale) with
respect to Sonata, after the Sonata Returns Termination Date and, with respect
to Skelaxin, after the Skelaxin Returns Termination Date. For purposes of this
Section 8.08(a)(iv), the dollar value of returned Products paid or credited for
by the Acquirors shall be determined in accordance with the Acquirors' then
current returned goods policy.
(b) (i) With respect to rebates that the Elan Companies are obligated
to pay pursuant to any government (federal or state) rebate program for amounts
charged to the Elan Companies' NDC codes with respect to Skelaxin and to Wyeth
NDC codes with respect to Sonata, relating to sales of the Products ("Government
Rebates"), the Elan Companies shall be solely responsible for the processing,
handling and payment of all such rebates relating to the Products which are
billed to the Elan Companies. The Acquirors shall reimburse the Elan Companies
for all Government Rebates that the Elan Companies pay for all invoices covering
periods fifty (50) days after Closing; provided, however, that the parties
hereto acknowledge that Government Rebates are billed on a calendar quarter
basis and to the extent that such periods do not end on a calendar quarter, the
Acquirors shall reimburse the Elan Companies for such fractional periods of any
applicable quarter and for each full quarter thereafter as may be necessary to
effect the foregoing. The Elan Companies shall promptly bill the Acquirors for
any amounts due under this Section 8.08. The Acquirors shall not be responsible
for any amounts otherwise due to the Elan Companies under this Section 8.08
which are not billed to the Acquirors within two (2) years after they are
invoiced to the Elan Companies under the government rebate program. All payments
due under this Section 8.08 shall be made promptly to the Elan Companies upon
submission to the Acquirors of invoices that describe the requested payments in
reasonable detail.
(ii) In the event any Acquiror disputes in good faith an amount owed
under a Government Rebate, the Elan Companies shall provide to such Acquiror,
upon such Acquiror's reasonable request, copies of any documents and records
evidencing the original rebate claims and any resubmissions of such claims and
data relating to unit rebate calculations which are necessary to enable such
Acquiror to resolve such disputed amount. In the event such Acquiror disputes an
amount owed under a Government Rebate, Acquiror shall be responsible for
reimbursing the Elan Companies the amounts paid by the Elan Companies and then
such Acquiror shall dispute the claim directly with the government/state.
(iii) The Elan Companies shall provide the Acquirors with all
information relating to the Products and the prices thereof which the Acquirors
reasonably need in order to comply with applicable rules and regulations
relating to the Medicaid Rebate Agreement.
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When requested, such information shall be provided by the Elan Companies to the
Acquirors promptly, and in any event, within fifteen (15) days after any
Acquiror's written request therefore. The Acquirors shall provide to the Elan
Companies within twenty-five (25) days after the end of each calendar quarter to
enable the Elan Companies to comply with their submission requirements to the
Centers for Medicare and Medicaid Services (or any successor agency), the
following information: (x) the "average manufacturer price" (as defined under
the Social Security Act, 42 U.S.C. Sections 1396r-8(k)(1)) for each Product
identified by NDC number; (y) the "best price" (as defined under the Social
Security Act, 42 U.S.C. Section 1396r-8(c)(1)(C)) for each Product identified by
the NDC number; and (z) any additional data or other information related to such
Medicaid issues reasonably requested in writing by any of the Elan Companies.
(iv) With respect to any sales of Skelaxin by the King Companies to any
"covered entity" under the Public Health Service Act, as defined in 42 U.S.C.
(Section) 256b(a)(4) (a "PHS entity"), which sales occur between the Closing
Date and that last day on which sales prior to the Closing Date are the basis
for the price to be paid by such PHS Entity pursuant to 42 U.S.C. (Section)
256b(a), the Elan Companies shall pay to the Acquirors an amount equal to the
difference between the average manufacturer price for Skelaxin for the calendar
quarter ended March 31, 2003 and the amount required to be paid by such PHS
entity pursuant to 42 U.S.C. (Section) 256b(a) for any such sales. The Elan
Companies shall make such payments to the King Companies from time to time
within ten (10) Business Days after the receipt by the Elan Companies of
documentation reasonably sufficient to document such payments and such other
documentation as the Elan Companies may reasonably request with respect to such
sales.
(c) The Elan Companies have provided to the Acquirors a list of all
commercial rebate agreements in which Products are included. The Elan Companies
and the Acquirors agree that the Elan Companies will continue to honor all
commercial rebate agreements for the fifty (50) day period immediately following
the Closing with respect to Sonata and for the fifty (50) day period immediately
following the Closing with respect to Skelaxin (collectively, the "Interim
Rebate Period") and the Elan Companies shall endeavor to terminate each such
agreement with respect to the Products at the end of the applicable Interim
Rebate Period. The Elan Companies shall be responsible, at their sole cost and
expense, for the processing, payment, administration and support of all
commercial rebates owed under these agreements for products dispensed during the
applicable Interim Rebate Period. On the first Business Day following the
Closing, the Elan Companies will issue a letter to the commercial rebate
customers advising such customers of the Elan Companies' responsibilities in
connection with commercial rebate agreements and associated rebates.
Notwithstanding anything to the contrary contained in this Section 8.08, in the
event the Elan Companies are unable to terminate the commercial rebate
agreements at the expiration of the applicable Interim Rebate Period, the
Acquirors shall reimburse the Elan Companies for the payment of commercial
rebates made by the Elan Companies for products dispensed on and after the
expiration of the applicable Interim Rebate Period.
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(d) (i) The Elan Companies have provided to the Acquirors a list of all
government and commercial chargeback agreements in which Products are included.
The Elan Companies and the Acquirors agree that the Elan Companies will continue
to honor all government and commercial chargeback agreements for the forty-five
(45) day period immediately following the Closing (the "Interim Chargeback
Period") and the Elan Companies shall endeavor to terminate each such agreement
with respect to the Products at the end of the Interim Chargeback Period. The
Elan Companies shall be responsible, at their sole cost and expense, for the
processing, payment, administration and support for all chargebacks and
administrative fees owed under these agreements with wholesaler invoice dates
within the Interim Chargeback Period. On the first Business Day following the
Closing, the Elan Companies will issue a letter to the trade (wholesalers and
distributors) and to government and commercial chargeback customers advising
such customers of the Elan Companies' responsibilities in connection with
government and commercial chargeback agreements and associated chargebacks and
administrative fees. Notwithstanding anything to the contrary contained in this
Section 8.08, in the event the Elan Companies are unable to terminate the
government and commercial chargeback agreements at the expiration of the Interim
Chargeback Period, the Acquirors shall reimburse the Elan Companies for the
payment of chargebacks made by the Elan Companies after the expiration of the
Interim Chargeback Period.
(ii) Notwithstanding anything to the contrary contained in this Section
8.08, the parties acknowledge that the VA National Acquisition Center must
approve the removal of the Products from the Elan Companies Federal Supply
Schedule ("FSS") before the responsibility of processing such rebated is
transferred from the Elan Companies to the Acquiror. Accordingly, in the event
such approval is not obtained prior to the applicable Interim Chargeback Date,
the Elan Companies shall continue to be responsible for processing the FSS
chargebacks on the Acquirors' behalf, and the Acquirors shall reimburse the Elan
Companies for the same.
(iii) The Elan Companies shall provide the Acquirors with all
information relating to the Products and the prices thereof, which the Acquirors
need in order to comply with applicable rules and regulations relating to P.L.
102-585 as it relates to the FSS and Section 340B of the Public Health Services
Act. When requested, such information shall be provided by the Elan Companies to
the Acquirors promptly, and in any event, within ten (10) Business Days after
any Acquiror's written request thereof.
(e) Promptly following the Closing, the Acquirors will be responsible
for receiving and processing customer orders and for shipping and invoicing
customers for the Products. Promptly following the Closing, the Parties will
jointly issue a letter to customers within the trade (wholesalers and
distributors) notifying such customers that all future Product orders are to
placed with the Acquirors, and providing the appropriate contact information for
the Acquirors' personnel.
(f) In the event that the Acquirors increase the published Wholesaler
Acquisition Cost ("WAC") of any of the Products during the applicable Interim
Rebate Period,
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the Acquirors shall (i) promptly notify the Elan Companies of such increase and
(ii) reimburse the Elan Companies the difference between the previous WAC and
such new increased WAC as it pertains to returns and the affected rebates,
chargebacks and administrative fees.
SECTION 8.09. Indigent Patient Program. The Elan Companies shall,
through their subcontractor, continue to process claims for the Products under
the Indigent Patient Program until the Closing Date.
SECTION 8.10. Employee Matters. (a) Effective as of the Closing, the
Acquirors shall offer to employ on an at-will basis each of the primary-care
business unit field sales force and management personnel and internal Elan
personnel dedicated to the Businesses, in each case as set forth on Schedule
8.10 of the Elan Disclosure Schedule (collectively, the "Employees") who is
actively employed as of the Closing, in each case with substantially the same
responsibilities and duties and at a total base salary plus target bonus
opportunity or hourly rate not less than the total base salary plus target bonus
opportunity or hourly rate then applicable to such Employee immediately prior to
the Closing, with such employment to commence as of the Closing. Such offers of
employment shall be delivered to applicable Employees prior to the Closing. For
purposes of this Section 8.10(a), an Employee will be treated as "actively
employed" if as of the Closing such person is actively at work, or on vacation,
holiday, jury duty, military leave, sick leave (not including short-term or
long-term disability) or bereavement leave. In addition, each Employee who as of
the Closing is not actively employed but is on an approved leave of absence
(other than long-term disability), and who within 120 days following the Closing
presents himself or herself to the Acquirors as ready to commence active
employment with the Acquirors, shall at such time also be offered employment on
an at-will basis on the terms set forth above. The Acquirors shall not be
required to offer to employ any Employee who (i) is on long-term disability as
of the Closing or (ii) is on short-term disability as of the Closing and goes on
long-term disability prior to returning to active employment with the Elan
Companies. Except as specifically provided in this Section 8.10(a), Acquirors
shall determine in their sole discretion the terms and conditions of employment
to be offered to Employees. Effective as of the Closing, the Elan Companies
shall terminate the employment of each Employee who receives an offer of
employment from the Acquirors in accordance with this Section 8.10(a). Each
Employee who becomes employed by the Acquirors is herein referred to as a "Hired
Employee".
(b) Effective as of the Closing (or on any later date of hire by the
Acquirors in the case of an Employee not actively employed at the Closing), all
Employees shall cease participation in all Employee Benefit Plans subject to the
terms of such plans.
(c) Effective as of the Closing (or on any later date of hire by the
Acquirors in the case of an Employee not actively employed at the Closing),
Employees who are participants in the Elan 401(k) 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 the Elan Companies prior to the
Closing and as provided under Elan's
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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(c)(4) of the Code, including a direct transfer of an
eligible rollover distribution within 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 the Acquirors ("Acquiror's Defined Contribution Plan"); provided,
however, that the Acquirors are reasonably satisfied (consistent with the
regulations promulgated under Section 401(a)(31) of the Code) that Elan's 401(k)
Plan meets the requirements of Section 401(a) of the Code.
(d) As of the Closing, the Acquirors shall, with respect to their
vacation, 401(k) and other employee benefit plans, policies, programs or
arrangements that contain a service credit component and that are maintained by
the Acquirors after the Closing (solely to the extent applicable to such Hired
Employee), credit each Hired Employee with the applicable service credited for
such Hired Employee's duration of employment by the Elan Companies (or any
predecessor to the Elan Companies) for purposes of their Employee Benefit Plans.
(e) Hired Employees shall be eligible to enroll in a health plan
determined by the Acquirors as of the Closing without (i) any waiting periods,
(ii) any evidence of insurability or (iii) application of any pre-existing
physical or mental condition restrictions, except to the extent that such
waiting periods, evidence of insurability or pre-existing mental or physical
condition restrictions would apply under the applicable Elan Companies' medical
benefit plan and be permitted by Law. Without limiting the generality of Section
3.01(b)(ix) and Section 3.01(b)(x), the Elan Companies shall retain
responsibility for all payment of benefits under its medical benefit plan to
Hired Employees (and their eligible dependents) for claims incurred prior to
Closing. The Acquirors shall be responsible for claims for medical benefits
incurred by each Hired Employee (and his or her dependents) on or after each
such Hired Employee's date of hire by the Acquirors under the Acquirors' 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. The Acquirors shall recognize, or cause to be recognized, the dollar
amount of all expenses incurred by each Hired Employee (and his or her eligible
dependents) during the calendar year in which the date of hire by the Acquirors
occurs for purposes of satisfying such year's deductible and co-payment
limitations and out-of-pocket maximums under the relevant welfare benefit plans
in which such Hired Employee (and his or her eligible dependents) will be
eligible to participate after the Closing. Without limiting the generality of
Section 3.01(b)(ix) and Section 3.01(b)(x), the Elan Companies and their
Affiliates shall retain sole responsibility for all Liabilities in respect of
continuation coverage of health insurance under Section 4980B of the Code or
Part 6 of Title I of ERISA or other similar state or local law to Employees and
any other current and former employees of the Elan Companies
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and their Affiliates and their eligible dependents with respect to "qualifying
events" (as defined in Section 4980B of the Code) occurring on or prior to the
Closing.
(f) The Acquirors and the Elan Companies expressly acknowledge and
agree that the Acquirors shall be obligated, in respect of any Hired Employee
whose employment is involuntarily terminated by the Acquirors within six months
following the Closing, to pay all amounts and benefits that the Elan Companies
would have been required to pay under the Elan U.S. Severance Plan (the "Elan
Severance Plan") had the Elan Companies retained such Hired Employee as of the
Closing and terminated such Hired Employee on the date terminated by the
Acquirors so long as (x) such Hired Employee's employment was terminated under
circumstances entitling such Hired Employee to severance benefits under the
terms of the Elan Severance Plan as in effect on the date hereof, and (y) 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 Severance Plan)
which remains unrevoked by such Hired Employee for the applicable seven-day
revocation period provided therein. Nothing in this Section 8.10 shall be
construed as limiting the Acquirors' right to terminate any Hired Employee at
any time, with or without cause. The Elan Companies shall have no Liability or
obligation with respect to severance benefits that may become payable under any
severance benefit plan or arrangement of the Acquirors applicable to Hired
Employees.
(g) The Acquirors shall be responsible for all Liabilities,
obligations, costs, claims, proceedings and demands, under the WARN Act, or any
state plant closing or notification law, or similar Law in other jurisdictions,
arising out of, or relating to, (i) in respect of Employees, the failure of the
Acquirors to offer employment to Employees in accordance with Section 8.10(a),
or (ii) in respect of Hired Employees, any actions taken by the Acquirors or
their Affiliates after Closing; provided, however, that the Acquirors shall not
be responsible for any such Liabilities, obligations, costs, claims, proceedings
and demands to or in respect of any employees of the Elan Companies other than
the Employees.
(h) The Elan Companies shall make pro rata bonus payments (the "Stub
Period Bonus") to Hired Employees in respect of each quarterly, annual or other
applicable performance period under the relevant Employee Benefit Plans that has
not yet been completed as of the Closing (each such period, the "Performance
Period"). Such Stub Period Bonuses shall be computed under the terms of the
applicable bonus plan, consistent with past practice. The Stub Period Bonus
shall be paid to the Hired Employees as soon as practicable following the
Closing and the determination of such amounts.
(i) Following the date of this Agreement, the Elan Companies shall use
commercially reasonable efforts to provide the Acquirors with all information
and data reasonably requested by the Acquirors in connection with the Acquirors'
rights and obligations under this Section 8.10, including exchanging information
and data relating to employee benefits and employee benefit plan coverages
(except to the extent prohibited by applicable Law).
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SECTION 8.11. Bulk Transfer Laws. The Acquirors hereby waive compliance
by the Elan Companies and their respective Subsidiaries with the provisions of
any so-called "bulk transfer law" of any jurisdiction in connection with the
sale of the Purchased Assets to the Acquirors.
SECTION 8.12. Covenant Not to Compete. (a) For a period of three (3)
years following the Closing Date (the "Applicable Period"), neither the Elan
Parent nor any of its Subsidiaries, nor its or their respective successors or
assigns nor any of its or their respective agents acting on their behalf, shall
engage, license or assist another to engage (which restriction with respect to
assisting others will commence on the Original Agreement Date) in the marketing,
distribution or sale of (i) Skelaxin, any Skelaxin Product Improvement or any
Generic Skelaxin in the Skelaxin Territory or (ii) Sonata, any Sonata Line
Extension, or any Generic Sonata in the Sonata Territory (each, a "Competing
Product"). Notwithstanding the foregoing sentence, if the Elan Parent or any of
its 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 nine (9) months from the closing of such
definitive agreement to divest itself of such rights in the Competing Product
(unless the Acquirors agree in writing that such divestiture is not required)
and, during such nine (9) 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 the Competing Product
to a third party or (y) an out-license to a third party (exclusive as to the
Elan Parent and its Subsidiaries, except that the Elan 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
Elan 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
Acquirors or their Subsidiaries for the purpose of having any such employee
terminate his or her employment with the Acquirors or their Subsidiaries for a
period of two years following the Closing Date; provided, however, that this
Section 8.12(b) shall not prohibit general solicitations of or advertisement for
employment by the Elan Companies that are not generally directed at Hired
Employees.
(c) It is the intention of the parties that if any of the restrictions
or covenants contained in this Section 8.12 is held to cover a geographic area
or to be for a length of time which is not permitted by applicable Law, or in
any way construed to be too broad or to any extent invalid, such provision shall
not be construed to be null, void and of no effect, but to the extent such
provision would be valid or enforceable under applicable Law,
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such provision shall be construed and interpreted or reformed so as to provide
for a covenant having the maximum enforceable geographic area, time period and
other provisions (not greater than those contained herein) as shall be valid and
enforceable under such 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) 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 seek injunctive or
other equitable relief restraining such party from competing or soliciting in
violation of this Section 8.12. 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.
(e) For the avoidance of doubt, if any Person acquires Control of the
Elan Parent, whether by stock purchase, merger or other transaction, no
provision of this Section 8.12 shall apply to such acquiror or its Affiliates
other than the Elan Parent and its Subsidiaries but this Section 8.12 shall
continue to apply to the Elan Parent and its Subsidiaries; provided, however,
that the Elan 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 the Elan Parent and its Subsidiaries do not
themselves comprise a Competing Product.
(f) After the Closing, the Elan Companies shall not sell Skelaxin to
any Person that the Elan Companies believe will resell such Skelaxin in the
Skelaxin Territory. After the Closing, the King Companies shall not sell
Skelaxin to any Person (other than the Elan Companies) that the King Companies
believe will resell such Skelaxin outside of the Skelaxin Territory.
SECTION 8.13. Further Assurances. (a) On and after the Closing Date,
the Elan Companies shall from time to time, at the request of the Acquirors,
execute and deliver, or cause to be executed and delivered, such other
instruments of conveyance and transfer and take such other actions as the
Acquirors may reasonably request, in order to more effectively consummate the
transactions contemplated hereby and to vest in the Acquirors 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 Acquirors 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 Acquirors' assumption of the
Assumed Liabilities.
SECTION 8.14. HSR Act and Irish Competition Act Filings. (a) The
Acquiror Parent and the Acquirors and the Elan Companies shall each: (i) take
promptly following the Original Agreement Date all actions necessary to make the
filing required of
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such party or any of its Affiliates under the HSR Act or notification required
of such party or any of its Affiliates under the Irish Competition Act, but in
any event within fourteen (14) Business Days after the Original Agreement Date;
(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 the equivalent Irish
Competition Authority pursuant to the Irish Competition Act; and (iii) cooperate
with the other parties in connection with any filing under the HSR Act and any
notification under the Irish Competition Act and in connection with resolving
any investigation or other inquiry concerning the transactions contemplated
under this Agreement, the Related Agreements, the Wyeth/Elan Agreements or the
Wyeth/King Agreements commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state attorneys general or
the Irish Competition Authority. Each of the Elan Companies, on one hand, and
the Acquiror Parent and the Acquirors, on the other hand, shall be responsible
for its own legal fees for preparing its portion of the HSR Act filings and
Irish Competition Act notification.
(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 to vigorously
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, the Related Agreements, the Wyeth/Elan Agreements and the
Wyeth/King Agreements.
(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 the Irish Competition
Authority regarding any of the transactions contemplated under this Agreement,
the Related Agreements, the Wyeth/Elan Agreements and the Wyeth/King Agreements.
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 the Irish Competition Authority in connection with the transactions
contemplated under this Agreement, the Related Agreements, the Wyeth/Elan
Agreements and the Wyeth/King Agreements.
SECTION 8.15. Elan Companies' Right of Reference. The Acquirors shall
grant the Elan Companies and any of their respective Subsidiaries a right of
cross-reference or right of reference, including as that term is defined in 21
C.F.R. (Section) 314.3(b), to all existing
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Skelaxin Governmental Permits, Drug Master Files ("DMFs") or other regulatory
submissions relating to Skelaxin as is necessary to support research,
development, regulatory registration, manufacture, distribution, marketing, sale
and promotion of Skelaxin and Current Skelaxin Product Improvements outside of
the Skelaxin Territory. The Acquirors shall provide a signed statement to this
effect, if requested by any of the Elan Companies or any of their respective
Subsidiaries, in accordance with 21 C.F.R. (Section) 314.50(g)(3). The Acquirors
shall keep the Skelaxin Governmental Permits and DMFs up-to-date in the Skelaxin
Territory, and shall inform the Elan Companies prior to any modifications in
order to permit the Elan Companies to amend or supplement any affected
regulatory application or file relating to Skelaxin outside of the Territory. At
the Elan Companies' or any of their respective Subsidiaries' request and
expense, the Acquirors shall provide a copy of any regulatory application or
file relating to Skelaxin that is the subject of a right of cross-reference or
right of reference pursuant to this Section 8.15.
SECTION 8.16. Litigation Substitution. (a) The King Companies agree and
acknowledge that, promptly after the Closing, the applicable King Companies
shall be substituted as the plaintiff in Case No. EDNY 03 CV 0006, Elan
Pharmaceuticals, Inc. v. Eon Labs, Inc., pending in the U.S. District Court for
the Eastern District of New York and Case No. 03-1013, Elan Pharmaceuticals,
Inc. v. Corepharma, LLC, pending in the District of New Jersey, and in any other
litigations filed by EPI prior to the Closing in response to any certifications
filed by any third party pursuant to 21 U.S.C. (Section) 355(b)(2)(A) or
(Section) 355(j)(2)(A)(vii) relating to the Purchased Assets (the "Patent
Litigations"). The Acquirors and EPI will use their respective commercially
reasonable efforts to accomplish such substitution(s) as soon as possible
following the Closing. In the event that, for whatever reason, a King Company
cannot be substituted as plaintiff in the Patent Litigations, the parties agree
that a King Company shall be the lead plaintiff in the Patent Litigations (with
the rights and duties customarily associated therewith). From the Closing
through and including the earlier to occur of (x) a Skelaxin Adverse
Determination Event or (y) the payment by the Acquirors of the additional
Purchase Price in respect of the Skelaxin Assets set forth in Section 4.06, the
Acquirors shall not settle or compromise the Patent Litigations, if such
settlement or compromise would reasonably be likely to result in a Skelaxin
Adverse Determination Event on or before December 31, 2003, without the prior
written consent of EPI. The Elan Companies shall cooperate with the King
Companies in all respects regarding the Skelaxin Proceedings (as defined in the
Joint Litigation and Prosecution Agreement), including without limitation any
Patent Litigation and all decisions with respect to the filing and prosecution
of any Patent Litigations, including without limitation any decision regarding
whether or not, and when, to respond to any such certification and/or initiate
any particular Patent Litigation, to the extent permitted by relevant privileges
and work product, written agreements and prior orders in the matter affecting
confidentiality of information. EPI will cooperate reasonably with the King
Companies in a full and complete transition of activity in all Patent
Litigations, including sharing with the King Companies documents reasonably
necessary to accomplish the transition, to the extent permitted by relevant
privileges and work product, written agreements and prior orders in the matter
affecting confidentiality of information, making all persons, documents and
things in the possession or control of EPI
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available to King Companies for use in connection with, or to provide testimony
regarding, the Patent Litigations. King Companies and EPI shall bear their own
expenses in the conduct of the Patent Litigations and in carrying out their
obligations under this Section 8.16, including fees of their own attorneys.
(b) To the extent EPI is subject to third party discovery in any of the
Patent Litigations following the substitution of such Acquiror, EPI shall have
the right to be represented by independent counsel; provided, however, that EPI
shall coordinate and cooperate with such Acquiror in the conduct of the Patent
Litigations. Each of such Acquiror and, subject to the foregoing, EPI, to the
extent involved as a third party in any of the Patent Litigations or in any
future litigation or proceeding involving Skelaxin, shall retain the right to
make its own independent judgments in all matters on all issues in connection
with such Patent Litigations and any such future litigation or proceeding
involving Skelaxin; provided, however, that EPI shall obtain such Acquiror's
prior consent before asserting any position, argument or defense, or filing any
motion or other pleading; and provided further, however, that EPI shall not
assert any position, argument or defense in any litigation or proceeding that
may be contrary or detrimental to the position, argument or defense asserted by
such Acquiror, nor refrain from asserting any position, argument or defense that
is contrary or detrimental to the position, argument or defense opposed by such
Acquiror. EPI hereby expressly conveys to such Acquiror the right to sue for the
past infringement by Eon Labs, Inc., and all other defendants in the Patent
Litigations or otherwise, or by any third party in connection with the patents
which are the subject of this Agreement.
(c) Such Acquiror hereby acknowledges that EPI is under no obligation
to provide such Acquiror with any information protected by the attorney-client
privilege or attorney work product immunity. Unless otherwise agreed by EPI and
such Acquiror, (a) in the event that EPI inadvertently produces information
known to such Acquiror to be privileged or work product, or which is
subsequently identified as such, such Acquiror shall not disclose that
information to any third party, including, but not limited to, any governmental
or judicial body, or use that information in any manner whatsoever, absent an
Order to do so, (b) to the extent such information is contained in documents or
things, such Acquiror shall return such documents or things to EPI, and (c)
prior to disclosing or using any such privileged or work product information
pursuant to an administrative or court order, such Acquiror shall make all
commercially reasonable efforts to provide EPI with a reasonable opportunity to
intervene and participate and oppose the order.
(d) This Agreement shall not create any agency or similar relationship
between such Acquiror and EPI regarding the Patent Litigations. Unless otherwise
agreed by EPI and the Acquiror, no party shall have the authority to waive any
applicable privilege or immunity on behalf of any other party; nor shall any
waiver of an applicable privilege or immunity by the conduct of any party be
construed to apply to any other party. The parties understand that this
Agreement does not create any attorney-client relationship between the parties.
EPI and such Acquiror will mutually discuss whether a common interest or joint
defense privilege is appropriate for the transition in the Patent Litigations
and enter into any
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agreements necessary or helpful, in the reasonable judgment of both EPI and such
Acquiror, to facilitate such Acquiror's assumption, control and continued
prosecution of the Patent Litigations.
SECTION 8.17. Cooperation Regarding Financial Statements. In the event
that the Acquirors are required to include any audited financial statements with
respect to the Businesses in any filing to be made by the Acquiror under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, with respect to or as a result of the transactions contemplated by this
Agreement, the Related Agreements, the Wyeth/Elan Agreements or the Wyeth/King
Agreements, the Elan Companies shall, beginning promptly after the date of this
Agreement, (i) use commercially reasonable efforts to provide the Acquirors with
the financial statements and other information and documents pertaining to the
Businesses that the Acquirors will be required by applicable rules and
regulations of the Securities and Exchange Commission to include in its filings;
provided, however, that notwithstanding the foregoing, such financial statements
and other information shall be delivered to the Acquirors no later than 60 days
following the Closing Date, and (ii) use commercially reasonable efforts to
cause the accountants for the Elan Companies to deliver such information and
provide access to files and work papers in connection therewith as the Acquirors
may reasonably request.
SECTION 8.18. No Solicitation. (a) Notwithstanding any waivers given by
Acquiror Parent to the Elan Companies prior to the date hereof, from and after
the date hereof and up to and including the Termination Date, without the prior
written consent of the Acquirors, 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
negotiation relating thereto or furnish information with respect to the Elan
Companies in connection therewith, except as may be required in the exercise by
it of its fiduciary duties under applicable law after receipt of an Acquisition
Proposal which was unsolicited and did not otherwise result from a breach of
this Section 8.18(a); provided, however, that the Elan Companies shall furnish
copies of any such information to the Acquirors contemporaneously with the
furnishment to any such Person (which furnishment to such Person shall be
subject to a customary confidentiality agreement), or (iii) accept or agree to
accept any Acquisition Proposal. If any Elan Company receives any such
inquiries, offers or proposals it shall promptly notify the Acquirors orally and
in writing of such event. If any Elan Company receives an Acquisition Proposal,
such Elan Company shall promptly notify the Acquirors in writing after the
receipt thereof (including providing a copy thereof in writing), the terms and
conditions of such Acquisition Proposal and the identity of the Person making
such Acquisition Proposal. Such Elan Company also shall promptly notify the
Acquirors of any change to or modification of such Acquisition Proposal. 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 Businesses or the Products.
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(b) Except as may be required in the exercise by them of their
fiduciary duties under applicable Law, none of the governing bodies of any of
the Elan Companies nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Acquiror Parent or the
Acquirors, the approval or recommendation by such governing body or any such
committee of this Agreement, the Related Agreements and the Wyeth/Elan
Agreements and the transactions contemplated hereunder and thereunder or (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal (any such action taken in accordance with the foregoing clause (i) or
(ii), an "Adverse Recommendation Change").
SECTION 8.19. 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
Skelaxin 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 reasonable efforts to comply with the provisions thereof with
respect to Skelaxin. Notwithstanding the foregoing or the joint written
procedures, the Acquirors shall exclusively have the right to determine how to
respond to medical inquiries and complaints in the Skelaxin Territory and the
Elan Companies shall have such exclusive right outside the Skelaxin Territory.
SECTION 8.20. Wyeth/Elan Supply Agreement; Wyeth/Elan Master Agreement.
At the Closing, (a) EPIL or its designee shall assign its rights and obligations
under the Wyeth/Elan Supply Agreement to the applicable Acquiror in accordance
with the terms of the proviso of the first sentence of Section 8.01 of the
Wyeth/Elan Supply Agreement; provided, however, that from the date of this
Agreement to the Closing Date, the Elan Companies shall take all actions
necessary to be in compliance with Section 9.3 of the Distribution and
Co-Promotion Agreement and (b) the Elan Parent and EPIL shall assign their
rights under the Wyeth/Elan Master Agreement to the applicable Acquiror in
accordance with the terms of the proviso of the first sentence of Section 9.1
thereof.
SECTION 8.21. Pharma Marketing Settlement Agreement. From the date of
this Agreement until the Closing, each of the Elan Companies shall take, or
cause to be taken, all action, or do, or cause to be done, all things necessary,
proper or advisable under the Pharma Marketing Settlement Agreement in order to
consummate and make effective the transactions contemplated by the Pharma
Marketing Settlement Agreement and to cause the conditions to the obligations of
the other parties thereto to consummate the transactions contemplated thereby to
be satisfied at or prior to the Closing. From the date of this Agreement until
the Closing, none of the Elan Companies shall take any action, or fail to take
any action, that could reasonably be expected to cause a breach by the Elan
Companies under the Pharma Marketing Settlement Agreement. The Elan Companies
shall take all necessary action to cause Axogen Limited to comply with the
foregoing.
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SECTION 8.22. Distribution and Co-Promotion Agreement. The Elan
Companies shall terminate the Distribution and Co-Promotion Agreement upon the
Closing.
SECTION 8.23. Skelaxin License. (a) The parties hereto agree and
acknowledge that, subject to the terms of this Agreement and except as otherwise
set forth in this Section 8.23, solely with respect to use and end users outside
of the Skelaxin Territory, the Elan Companies have retained, and do not grant to
the Acquirors, any right the Elan Companies may have to make, have made, use,
sell, offer for sale, import, develop, distribute, market and otherwise
commercialize Skelaxin or any Skelaxin Product Improvement outside of the
Skelaxin Territory. To the extent applicable, and subject to the terms of this
Agreement, the Acquirors hereby grant to the Elan Companies a non-exclusive,
paid-up, royalty-free, perpetual and irrevocable right and license, with the
right of sublicense, under the Skelaxin Assets to: (i) make, use, sell, offer to
sell Skelaxin in or import Skelaxin into, countries outside of the Skelaxin
Territory, but only to and for use by end users who are outside of the Skelaxin
Territory; (ii) within the Skelaxin Territory, make and have made Skelaxin for
use, sale or export outside the Skelaxin Territory, but only to and for use by
end users who are outside of the Skelaxin Territory; and (iii) conduct such
studies and trials within and without the Skelaxin Territory as may be necessary
or useful for the Elan Companies, solely outside the Skelaxin Territory, to
obtain regulatory approval with respect to Skelaxin. The license to the Elan
Companies provided for under this Section 8.23 shall be assignable only upon the
prior written consent of the Acquiror Parent and the Elan Parent (such consent
not to be unreasonably withheld, delayed or conditioned); provided, however,
that the rights and obligations provided for by this Section 8.23 may be
assigned, in whole or in part, on a country by country or world-wide basis,
without such consent, to a person or entity who purchases all or substantially
all of the Elan Companies' interest in Skelaxin in such country or the world.
(b) Notwithstanding anything in this Section 8.23 to the contrary, the
Elan Companies agree and acknowledge that the Acquirors shall have the right to
conduct such studies and trials outside the Skelaxin Territory as may be
necessary or useful for the Acquirors, solely in the Skelaxin Territory, to
obtain regulatory approval with respect to Skelaxin and the Elan Companies
hereby grant to the Acquirors a non-exclusive, paid-up, royalty-free, perpetual
and irrevocable right and license under any patent or patent application within
the Elan Companies' control which claims Skelaxin to, outside of the Skelaxin
Territory, make, have made and use Skelaxin solely in connection with such
studies and trials. The Elan Companies hereby further grant to the Acquirors a
non-exclusive, paid-up, royalty-free, perpetual and irrevocable right and
license outside the Skelaxin Territory to make and have made Skelaxin for use,
sale in and export to the Skelaxin Territory, but only to and for use by end
users who are within the Skelaxin Territory. The license to the Acquirors
provided for under this Section 8.23 shall be assignable only upon the prior
written consent of the Elan Parent (such consent not to be unreasonably
withheld, delayed or conditioned); provided, however, that the rights and
obligations provided for by this Section 8.23 may be assigned, in whole or in
part, on a country by country or world-wide basis, without such consent, to a
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person or entity who purchases all or substantially all of the Acquirors'
interest in Skelaxin in the Skelaxin Territory.
(c) Promptly after the execution of this Agreement, the parties hereto
shall meet to coordinate all aspects of material logistics relating to the
commercialization and supply of Skelaxin outside of the Skelaxin Territory,
including, but not limited to, procedures relating to regulatory compliance
matters and clinical coordination associated with the supply of Skelaxin outside
of the Skelaxin Territory. The Elan Companies, solely with respect to use or end
users outside of the Skelaxin Territory, may purchase their reasonable
requirements for Skelaxin manufactured by the Acquirors for delivery outside of
the Skelaxin Territory, but only upon such on terms and conditions, including
price, as are acceptable to both parties hereto. Subject to applicable legal
requirements, the King Companies may affix labeling on Skelaxin sold to the Elan
Companies for purposes of sale outside of the Skelaxin Territory indicating that
such Skelaxin may not be resold in the Skelaxin Territory. Following the Closing
Date, the parties hereto shall cooperate in good faith to apply for a new NDC
code to be applicable to sales of Skelaxin outside of the Skelaxin Territory and
shall use commercially reasonable efforts to cause such NDC code to be issued as
promptly as practicable.
SECTION 8.24. NanoCrystal Technology. Upon the Closing and immediately
following the execution and delivery of the Development Agreement, and subject
solely to the Elan Companies' contractual obligations existing as of the date of
this Agreement, the Development Agreement shall be deemed to be amended to
strike the term "NanoCrystal Technology" (as that term is defined in the
Wyeth/Elan Development Agreement) from the definition of "Excluded Technology"
and all of the licenses and rights granted to Purchaser therein shall be deemed
to include the NanoCrystal Technology. During the period from execution of this
Agreement to the Closing, if any, Elan shall not take any actions which would
prevent use of the NanoCrystal Technology to conduct any of the activities or
preclude a grant to the Acquirors of any of the rights or licenses contemplated
by the Development Agreement with respect to the NanoCrystal Technology. The
Acquirors acknowledge that Elan may, prior to or after the Closing, sell,
license or transfer the NanoCrystal Technology intellectual property or sell or
transfer the business encompassing the NanoCrystal Technology; provided,
however, that any such sale, license or transfer shall require any subsequent
purchaser, licensee or transferee to expressly acknowledge and abide by the
obligations of this Section 8.24 and the Development Agreement as it relates to
the NanoCrystal Technology. Notwithstanding any other provision of the
Development Agreement, Elan makes no representations and warranties with respect
to the commercial or technical suitability, patentability or intellectual
property regarding or arising out of the application or use of NanoCrystal
Technology, particularly with reference to a reformulation of zaleplon. In the
event of a conflict between this provision and the Development Agreement, this
provision shall govern.
SECTION 8.25. Additional Skelaxin Formulations. (a) Subject to Elan's
contractual obligations existing as of the execution hereof, Elan and the
Acquirors shall initiate a development program to reformulate the current dosage
form of Skelaxin either as a
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pharmaceutical combination containing metaxalone and another active ingredient
or as a new formulation comprising metaxalone using drug delivery technology
within Elan's Control (including, without limitation, as applicable, Elan's
PRODAS(R), SODAS(R) technology or NanoCrystal Technology) (a "Modified Release
Skelaxin"). Elan shall conduct preliminary studies in support of such
development as soon as practicable after the execution of this Agreement and any
expenses incurred by Elan between execution of this Agreement and the Closing as
a result of the activities contemplated by this Section 8.25 shall be paid by
the Acquirors upon either the Closing or the termination of this Agreement.
Prior to the Closing, the parties hereto shall discuss the status of the
preliminary development work provided for herein. As soon as reasonably
practicable following execution hereof, but in no event more than three (3)
months after a Closing, the parties hereto will negotiate in good faith and
execute a separate formulation agreement which shall contain the economic and
other terms provided for on Schedule 8.25 of the Elan Disclosure Schedule (the
"Skelaxin Formulation Agreement"). The activities contemplated by this Section
8.25 or the execution of any agreements relating to a Modified Release Skelaxin
shall not be a condition to a Closing.
(b) Until the execution of the Skelaxin Formulation Agreement and in
accordance with its terms, as to any Modified Release Skelaxin, regardless of
the Acquirors' ownership of any Purchased Assets constituting a Current Skelaxin
Product Improvement, the Elan Companies shall not be deemed to have granted to
the Acquirors any license to any other patent or patent application, regulatory
approval rights, manufacturing know-how or other proprietary right that may be
required to make, have made, use, sell, offer for sale, import, export or
otherwise commercialize such a Modified Release Skelaxin.
(c) Notwithstanding anything in this Section 8.25 to the contrary and
except as set forth in the Skelaxin Formulation Agreement, a Modified Release
Skelaxin and any method of making, having made, using, selling, offering for
sale or importing a Modified Release Skelaxin, solely for the purposes of
Section 8.12, shall constitute a Skelaxin Product Improvement.
SECTION 8.26. Annual Adjustment Amount. The Elan Companies hereby agree
to pay to the Acquirors the portion of the Annual Adjustment Amount (as defined
in the Wyeth/Elan Supply Agreement) that relates to the period from January 1,
2003 through and including the Amendment and Restatement Effective Date (as
defined in the Wyeth/Elan Supply Agreement) promptly after the Acquirors have
paid such Annual Adjustment Amount pursuant to Section 2.01(b) of the Wyeth/Elan
Supply Agreement and delivered to the Elan Companies a copy of the officer's
certificate referred to in such Section 2.01(b). The Acquirors agree to provide
the Elan Companies with the audit rights with respect to such certificate as is
provided to the Supplier (as defined in the Wyeth/Elan Supply Agreement)
pursuant to Section 5.01(c) of the Wyeth/Elan Supply Agreement.
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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 Parent and the Acquirors
contained in this Agreement or any Related Agreement (i) which are not qualified
by Acquiror Material Adverse Effect shall be true and correct except as will not
have an Acquiror Material Adverse Effect and (ii) which are qualified by
Acquiror Material 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 (or, in the
case of each representation and warranty which expressly speaks as of an earlier
date, as of the earlier date as of which such representation and warranty
speaks), and the Acquiror Parent and the Acquirors 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 Elan Companies shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of the Acquiror Parent
and each Acquiror.
SECTION 9.02. No Actions or Proceedings. No Orders prohibiting the
transactions contemplated by this Agreement, the Related Agreements, the
Wyeth/Elan Agreements and the Wyeth/King Agreements 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 or the other transactions contemplated by this Agreement,
the Related Agreements, the Wyeth/Elan Agreements and the Wyeth/King Agreements.
The parties shall have received any clearance that may be required under the HSR
Act and the Irish Competition Act.
SECTION 9.03. Consents. All Elan Governmental Consents and all the Elan
Third Party Consents set forth on Schedules 6.03(a) of the Elan Disclosure
Schedule and Acquiror Governmental Consents set forth on Schedule 7.03 of the
Acquiror Disclosure Schedule shall have been obtained or made, as the case may
be.
SECTION 9.04. Elan Shareholder Approval. The Elan Shareholder Approval
shall have been obtained.
SECTION 9.05. Wyeth/King Agreements. Each of the Wyeth/King Agreements
shall have been executed and delivered by each of the parties thereto.
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SECTION 9.06. Absence of Acquiror Material Adverse Effect. No event or
circumstance shall have occurred that would have an Acquiror Material Adverse
Effect.
SECTION 9.07. Wyeth/Elan Supply Agreement. The Wyeth/Elan Supply
Agreement shall have been assigned by EPIL to the applicable Acquiror in
accordance with its terms.
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE ACQUIROR
PARENT AND THE ACQUIRORS FOR THE CLOSING
The obligation of the Acquiror Parent and the Acquirors to effect the
Closing is subject to the satisfaction (or waiver by the Acquiror Parent and the
Acquirors), 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
or any Related Agreement (i) which are not qualified by Material Adverse Effect
shall be true and correct except as will not have a Material Adverse Effect and
(ii) which are qualified by Material 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 (or, in the case of each representation and warranty which
expressly speaks as of an earlier date, as of the earlier date as of which such
representation and warranty speaks), the representations and warranties set
forth in Section 6.20 shall be true and correct as of the date hereof 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 Acquirors 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 by this Agreement, the Related Agreements, the
Wyeth/Elan Agreements and the Wyeth/King Agreements 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 or the other transactions contemplated by this Agreement,
the Related Agreements, the Wyeth/Elan Agreements and the Wyeth/King Agreements.
The parties shall have received any clearance that may be required under the HSR
Act and the Irish Competition Act. There shall not have been rendered an opinion
in any of the Patent Litigations granting summary judgment adverse to any of the
Elan Companies on the grounds that (i) any of the Skelaxin Patent Rights that
are the subject of the Patent Litigations are unenforceable or (ii) all asserted
claims of the Skelaxin Patent Rights are invalid or not infringed.
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SECTION 10.03. Consents. All Elan Governmental Consents and all the
Elan Third Party Consents set forth on Schedules 6.03(a) and 2.04(a) of the Elan
Disclosure Schedule and Acquiror Governmental Consents set forth on Schedule
7.03 of the Acquiror Disclosure Schedule shall have been obtained or made, as
the case may be.
SECTION 10.04. Elan Shareholder Approval. The Elan Shareholder Approval
shall have been obtained.
SECTION 10.05. Wyeth/King Agreements. Each of the Wyeth/King Agreements
shall have been executed and delivered by each of the parties thereto.
SECTION 10.06. Absence of Material Adverse Effect. No event or
circumstance shall have occurred that would have a Material Adverse Effect.
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. Survival of Representations, Warranties, Covenants, Etc.
The representations and warranties and covenants and agreements to be performed
at or prior to the Closing of the Elan Companies or the Acquiror Parent and the
Acquirors contained in this Agreement and the Related Agreements shall terminate
twelve (12) months following the Closing Date (the "Expiration Date"); provided,
however, that any claim (i) with respect to a breach of a representation or
warranty relating to title to Skelaxin Intellectual Property, the Sonata
Copyrights or the Skelaxin Product Registrations shall not expire until three
(3) years following the Closing Date and (ii) 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 shall not expire and shall continue in
perpetuity. So long as an Indemnified Party gives an Indemnification Claim
Notice for such a claim on or before the Expiration Date or the applicable date
set forth in clause (i) or (ii) above, such Indemnified Party shall be entitled
to pursue its rights to indemnification.
SECTION 11.02. Indemnification. (a) 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 Parent and
the Acquirors, each of their 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 (collectively,
"Damages") incurred in connection with, 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 or (ii) any
Excluded Liabilities.
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(b) Subject to Sections 11.01 and 11.03, from and after the Closing,
the Acquiror Parent and the Acquirors 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
Parent and the Acquirors made in this Agreement or the Related Agreements or
(ii) any Assumed Liabilities (except for any reimbursements actually paid by the
Acquirors to any Elan Company or applicable Subsidiary pursuant to Section
3.01(v)).
(c) 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 Indemnification Claim 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").
(d) 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) The indemnifying party shall be entitled to participate in the
defense thereof and, if it so chooses and acknowledges its obligation to
fully indemnify the indemnified party therefor in accordance with this
Agreement, to assume and control the defense thereof with counsel selected
by the indemnifying party and reasonably acceptable to the indemnified
party (which acceptance shall not be unreasonably withheld or delayed).
Should the indemnifying party so elect to assume the defense of a Third
Party Claim, the indemnifying party shall not be liable to the indemnified
party for legal expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, 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. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ at its own expense counsel
not reasonably objected to by the
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indemnifying party separate from the counsel employed by the indemnifying
party, it being understood that the indemnifying party shall control such
defense, subject to the remaining terms of this Section 11.02(d). The
indemnifying party shall be liable for the reasonable fees and expenses of
one primary counsel, and to the extent reasonably required in connection
with such Third Party Claim, one or more local counsel, and such other
counsel as may be reasonably required due to a conflict among indemnified
parties, in each case employed by the indemnified party for any period
during which the indemnifying party has not assumed the defense thereof. 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) 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, however, 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 Damages in
connection with Third Party Claims or where the indemnified party
reasonably determines, after consulting its outside counsel, that such
Damages cannot be separated from any claim for money damages, the
indemnifying party shall not be entitled to assume the defense of any such
Third Party Claim and shall be liable for the reasonable fees and expenses
of one primary counsel, and to the extent reasonably required in connection
with such Third Party Claim, one or more local counsel, and such other
counsel as may be reasonably required due to a conflict among indemnified
parties, incurred by the indemnified party in defending such Third Party
Claim. In any such case, the indemnifying party shall be entitled to be
consulted about (but not control) the defense of, and receive copies of all
pleadings and other material papers in connection with, any such claim or
litigation. If such other Damages can be so separated from that for money
damages, the indemnifying party shall be entitled to assume the defense of
the portion relating to money damages in accordance with this Section
11.02(d). 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 prior written consent of the indemnifying party (which
consent shall not be
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unreasonably withheld, delayed or conditioned). 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 (which consent shall not be
unreasonably withheld, delayed or conditioned).
(iii) 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) In addition, and without giving effect to the provisions of
Sections 11.01 and 11.03, the Elan Companies shall jointly and severally, and
fully and promptly, indemnify, reimburse, defend and hold harmless the King
Companies or their Affiliates, each of 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 any
of the King Companies or their Affiliates being found by a court, tribunal or
arbitrator to be a necessary party in an action, lawsuit, arbitration or other
legal proceeding commenced in accordance with subparagraph 2.2(a) of the Pharma
Marketing Settlement Agreement.
(f) Any claim by the Acquiror Parent and the Acquirors or their
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 Parent and the Acquirors,
nor shall such a claim be adversely affected by the Acquiror Parent's and the
Acquirors' 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.
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SECTION 11.03. Limitations. (a) In no event shall the Elan Companies or
the Acquiror Parent or the Acquirors be liable for any Damages pursuant to a
claim based upon a representation or warranty or, if the Closing occurs, a
covenant or agreement to be performed at or prior to the Closing and pursuant to
Section 11.02(a)(i) or 11.02(b)(i), as applicable, unless and until (i) the
individual claim giving rise to any Damages exceeds $100,000, in which case the
Elan Companies or the Acquiror Parent and the Acquirors, as applicable, shall be
liable for all Damages arising from such claim, (ii) the aggregate amount of all
such Damages exceeds $5,000,000, in which case the Elan Companies or the
Acquiror Parent and the Acquirors, 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 $50,000,000 for all claims made under such Section 11.02(a)(i) or
11.02(b)(i), as applicable, in the aggregate. Notwithstanding the foregoing, the
provisions of this Section 11.03(a) shall not be applicable to any breach of any
representation or warranty by any party attributable to such party's fraud or
willful misrepresentation contained therein.
(b) The amount of any Damages recoverable by a party under Section
11.02 shall be (i) reduced by (x) the amount of any actual Tax Benefits realized
by the Indemnified Party that result from the Liability that gave rise to such
indemnity and (y) the amount of any insurance proceeds paid to the indemnified
party relating to such claim and (ii) if the Tax Benefits are less than zero,
increased by the amount of any actual net Tax cost (i.e., the excess of the Tax
increases over the Tax savings actually realized by the Indemnified Party)
incurred by the Indemnified Party that results from the receipt of indemnity
payments hereunder (grossed up for income Taxes on the amount of the net Tax
cost).
(c) For purposes of any right to indemnification hereunder, the
representations and warranties of the Elan Companies, the King Companies and
their respective Subsidiaries shall be deemed not qualified by any references
therein to materiality generally or to whether or not any breach would result in
a Material Adverse Effect or an Acquiror Material Adverse Effect.
(d) 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
Acquirors;
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(b) by the Elan Companies if the Closing shall not have occurred by
July 31, 2003 (the "Termination Date"); provided, however, 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) following (x) the delivery of the Compliance Information to the
Elan Companies and (y) the Scheduled Shareholder Vote Date, by the
Acquirors at any time and for any or no reason; provided, however, that, at
the time of such termination pursuant to this paragraph (c), the King
Companies deliver to the Elan Companies the Compliance Information;
(d) by either the Elan Companies or the Acquirors 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 Acquirors if the other has
breached any material obligation hereunder that remains uncured for a
period of 30 days following the delivery of written notice to the breaching
party, unless such breach is not capable of cure, in which event the
non-breaching party may terminate immediately;
(f) by either the Elan Companies or the Acquirors if the Elan
Shareholder Approval shall not have been obtained at the Elan Shareholder
Meeting (or any adjournment thereof);
(g) by the Acquirors if there is any material breach by the Elan
Companies or their governing bodies of the obligations set forth in Section
8.18;
(h) by the Acquirors in the event (i) an Adverse Recommendation Change
has occurred or (ii) the board of directors of any of the Elan Companies
fails to publicly reaffirm its recommendation of the transactions
contemplated by this Agreement, the Related Agreements and the Wyeth/Elan
Agreements within five (5) Business Days following receipt by such Elan
Company from any of the Acquirors to provide such reaffirmations;
(i) by the Elan Companies, within five (5) Business Days after the
later of (x) June 9, 2003 and (y) ten (10) calendar days prior to the
Scheduled Shareholder Vote Date if, on or prior to such date, the King
Companies shall not have delivered to the Elan Companies the Compliance
Information;
(j) by the Elan Companies if there shall have occurred any breach of
any representation or warranty or any covenant of the King Companies that
the Elan Companies believe in good faith would cause the failure of a
closing condition set
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forth in Article IX (and, if prior to the Scheduled Shareholder Vote Date,
such breach is incapable of cure prior to the Scheduled Shareholder Vote
Date);
(k) by the Acquirors if (i) there shall have occurred any breach of any
representation or warranty or any covenant of the Elan Companies that the
King Companies believe in good faith would cause the failure of a closing
condition set forth in Article X (and, if prior to the Scheduled
Shareholder Vote Date, such breach is incapable of cure prior to the
Scheduled Shareholder Vote Date) and (ii) at the time of such termination
pursuant to this paragraph (k), the King Companies deliver to the Elan
Companies the Compliance Information; and
(l) by the Elan Companies, on or prior to May 21, 2003, if the Acquiror
Parent shall have failed to comply with Section 2 of the Escrow Agreement.
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
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).
SECTION 12.03. Effect of Certain Terminations. In the event that (a)
this Agreement is terminated by (i) either the Elan Companies or the Acquirors
pursuant to Section 12.01(b), as applicable (but only if a vote to obtain the
Elan Shareholder Approval or the Elan Shareholders Meeting has not been held),
and at or prior to such termination any of the Elan Companies shall have
received a Superior Proposal or an Acquisition Proposal that could reasonably be
expected to lead to a Superior Proposal or any Person has announced an intention
(whether or not conditional and whether or not withdrawn) to make a Superior
Proposal or an Acquisition Proposal that could reasonably be expected to lead to
a Superior Proposal, (ii) the Acquirors pursuant to Section 12.01(e) or Section
12.01(g) or (iii) either the Elan Companies or the Acquirors pursuant to Section
12.01(f) and (b) the Elan Companies or their Affiliates shall have entered into
a definitive agreement regarding a transaction with a third party unaffiliated
with the Acquirors involving a sale of any assets, stock (or other
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equity or voting interests) or businesses that constitute or represent 50% or
more of the total revenue, operating income, earnings before interest, taxes,
depreciation and amortization or assets of the Businesses (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 execution of such definitive agreement, pay to the Acquirors or their
designee a fee equal to $31,500,000 (the "Termination Fee"), payable by wire
transfer of immediately available funds in United States dollars. In the event
this Agreement is terminated by the Acquirors pursuant to Section 12.01(h), the
Elan Companies shall pay to the Acquirors or their designee the Termination Fee
payable by wire transfer of immediately available funds in United States dollars
within two (2) Business Days of such termination. As used in this Section 12.03,
the term "Superior Proposal" means any bona fide Acquisition Proposal on terms
that are more favorable to the shareholders of the Elan Parent than the terms of
this Agreement, the Related Agreements, the Wyeth/Elan Agreements and the
Wyeth/King Agreements, taken as a whole. In the event this Agreement is
terminated for any reason (other than pursuant to Section 12.01(f)), the
Original Agreement shall automatically be revived and reinstated immediately
upon such termination as if this amendment and restatement shall not have
occurred and this Agreement shall be void (it being understood that the waiver
by the Acquirors of compliance by the Elan Parties with Section 8.18 of the
Original Agreement shall also automatically be revived and reinstated
immediately upon such termination).
SECTION 12.04. 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 Acquirors, 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. The right to seek specific performance
hereunder shall not preclude any party to seek any other remedy at law or in
equity.
SECTION 12.05. Settled Claims. Each of the parties hereto agrees that
(a) no claims, causes of action or theories of relief (i) the same as those
claims, causes of action or theories of relief alleged or asserted by any of the
King Companies in their Answer and Counterclaims dated April 16, 2003 and their
responses asserted in their Responses and Objections of Defendants to
Plaintiffs' First Set of Interrogatories dated May 1, 2003 or (ii) otherwise
based on the Specified Facts, and (b) no facts (the "Specified Facts") out of
which any of the claims, causes of action, theories of relief or responses set
forth in clause (a)(i) above arose, including, without limitation, the
investigation by the Federal Trade Commission
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referred to in its letters dated March 13, 2003 and May 7, 2003 (but only to the
extent the King Companies have Knowledge of the facts and circumstances
underlying the initiation of such investigation), "Study 105", and all claims
arising out of any actions taken by the Elan Companies relating to their
relationship with United Research Laboratories, Inc./Mutual Pharmaceutical
Company, Inc., shall, directly or indirectly, constitute, or form the basis for,
a breach by any of the Elan Companies of any representation and warranty or
covenant set forth in this Agreement or a failure of any condition set forth in
Article IX or X of this Agreement.
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 Parent or the Acquirors to:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, TN 37620
Facsimile: (423) 989-6282
Attention: John A.A. Bellamy
With copies to:
Cravath, Swaine & Moore llp
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-1912
Attention: Scott A. Barshay
James C. Woolery
Pennie & Edmonds
1155 Avenue of the Americas
New York, NY 10036
Facsimile: (212) 869-9742/8864
Attention: F. Dominic Cerrito
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If to the Elan Companies to:
Elan Corporation, plc
c/o Elan International Services, Ltd.
102 St. James Street
Flatts, Smiths FL04
BERMUDA
Facsimile: (441) 292-2224
Attention: Kevin Insley
With copies to:
Elan Pharmaceuticals, Inc.
800 Gateway Boulevard
South San Francisco, CA 94080
Facsimile: (858) 457-7807
Attention: Vice President, Legal Affairs
Cahill Gordon & Reindel LLP
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 13.01, be deemed given
upon receipt, (ii) if delivered by facsimile to the facsimile number as provided
in this Section 13.01, be deemed given upon receipt by the sender of the answer
back confirmation and (iii) if delivered by mail in the manner described above
or by overnight courier to the address as provided in this Section 13.01, 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 13.01). 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 13.01.
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 as
otherwise set forth in Section 8.05(f).
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
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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 permitted 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 the Acquiror Parent, an Acquiror or the
indemnified party or (c) to the lenders of the Acquiror Parent or the Acquirors
and their respective 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.
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SECTION 13.09. Governing Law; Jurisdiction; and Venue. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES. EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW
YORK, STATE OF NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO, THIS AGREEMENT. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT, AND IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY CLAIM
THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED
TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO SECTION 13.01 OF THIS AGREEMENT
SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.
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.
[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: Kevin Insley
Title: Authorised Signatory
ELAN PHARMA INTERNATIONAL LIMITED
By: /s/ KEVIN INSLEY
---------------------------------------
Name: Kevin Insley
Title: Authorised Signatory
ELAN PHARMACEUTICALS, INC.
By: /s/ JEAN M. DUVALL
---------------------------------------
Name: Jean M. Duvall
Title: Senior Vice President, Legal Affairs
<PAGE>
KING PHARMACEUTICALS, INC.
By: /s/ JAMES R. LATTANZI
-------------------------------------
Name: James R. Lattanzi
Title: Chief Financial Officer
JONES PHARMA INCORPORATED
By: /s/ JOHN BELLAMY
-------------------------------------
Name: John Bellamy
Title: Executive Vice President and
General Counsel
MONARCH PHARMACEUTICALS, INC.
By: /s/ JOHN BELLAMY
-------------------------------------
Name: John Bellamy
Title: Executive Vice President and
General Counsel