EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
By and Among
HALSEY DRUG CO., INC.
and
AXIOM PHARMACEUTICAL CORPORATION
as the Seller,
and
IVAX PHARMACEUTICALS NEW YORK LLC
as the Purchaser
Dated and Entered into on this the 19th day of March, 2004
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TABLE OF CONTENTS
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EXHIBITS
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Exhibit A Products
Exhibit B Form of Bill of Sale
Exhibit C Halsey Equipment
Exhibit D Excluded Assets
Exhibit E Assignment of Contract of Sale
Exhibit F Par's consent to the assignment of the Brenner Contract of
Sale
Exhibit G Form of Assignment of Service Contract
Exhibit H Use and License Agreement
Exhibit I Agent's Release of Liens
Exhibit J Par-Purchaser Closing Statement
Exhibit K Par Equipment
Exhibit L Seller-Purchaser Closing Statement
Exhibit M Voting Agreement
Exhibit N Acknowledgement terminating the Brenner Drive Lease
Exhibit O Assignment to the Purchaser Halsey's rights as tenant under
Wells Avenue Lease
Exhibit P Consent of Rendahl Corporation to the assignment of Halsey's
rights as tenant under Wells Avenue Lease
Exhibit Q Rendahl Corporation's estoppel letter relating to the Wells
Facility
Exhibit R Halsey's estoppel letter relating to the Wells Facility
Exhibit S Seller's Officer's Certificate
Exhibit T Legal Opinion of Seller's Counsel
Exhibit U Purchaser's Officer's Certificate
Exhibit V Legal Opinion of Purchaser's Counsel
Exhibit W Security Agreement
Exhibit X Form of FDA Transfer Letter
SCHEDULES
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Schedule A Seller's Representatives for Knowledge Representations
Schedule B Purchaser's Representatives for Knowledge Representations
Schedule C Transferred Deposits and Prepaid Expenses
DISCLOSURE SCHEDULES
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Part 2.3(a)(ii) Assumed Contracts
Part 2.4(b)(viii) Terminated Contracts
Part 2.5(c)(xii) Seller's Wire Instructions for the First Closing
Part 2.6(c)(iii) Seller's Wire Instructions for the Second Closing
Part 3.1 Affiliates of Halsey
Part 3.2(d) Halsey Capitalization
Part 3.3(a) Consents and Approvals
Part 3.3(b) Product Registrations
Part 3.6(a) Intellectual Property
Part 3.6(b) Exceptions to Intellectual Property
Part 3.7 Computer Systems
Part 3.8 Contracts
Part 3.9(b) Violations
Part 3.9(c) Government Action
Part 3.10 Litigation
Part 3.11 Medical Information
Part 3.14(a) Compliance with Environmental Laws
Part 3.14(b) Release of Hazardous Materials at or from the Facilities
Part 3.14(c) Pending or Threatened Environmental Litigation or
Enforcement
Part 3.15 Notices
Part 3.16 Reporting and Remediation Obligations
Part 3.18 Insurance
Part 3.19(a) Wells Avenue Lease
Part 3.19(b) Brenner Drive Lease
Part 3.19(c) Contract Of Sale' as Exhibit F to the Brenner Avenue Lease
Part 3.19(j) Violations of Certain Ordinances
Part 3.19(m) Service Agreements
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated and entered into as of
this the 19th day of March, 2004, by and among HALSEY DRUG CO., INC., a New York
corporation with offices at 616 N. North Court, Suite 120, Palatine, Illinois
60067 ("Halsey"), AXIOM PHARMACEUTICAL CORPORATION, a Delaware corporation and
wholly-owned direct subsidiary of Halsey with offices at 616 N. North Court,
Suite 120, Palatine, Illinois 60067 ("Axiom" and, together with Halsey,
collectively and individually, the "Seller"), and IVAX PHARMACEUTICALS NEW YORK
LLC, a New York limited liability company with offices at 77 Brenner Drive,
Congers, New York 10920 (the "Purchaser") (the Seller and the Purchaser,
collectively, the "Parties", and each individually, a "Party").
PRELIMINARY STATEMENTS
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In connection with the assignment to the Purchaser of (i) all the Seller's
rights, title and interests in and to the Brenner Contract of Sale (as defined
herein) relating to the Brenner Facility (as hereinafter defined) and (ii)
Seller's tenant interest in the Wells Avenue Lease relating to the Wells
Facility (as hereinafter defined, collectively together with the Brenner
Facility, the "Facilities", and each individually, a "Facility"), each pursuant
to the transactions, documents and deliveries contemplated by this Agreement,
the Seller also desires to sell, and the Purchaser desires to purchase, subject
to the terms and conditions set forth herein, the Seller's rights in the
Products as well as the Halsey Equipment, Intellectual Property, Product
Registrations, Transferred Documentation and Manufacturing Information (each, as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing preliminary statements
and the mutual agreements and covenants set forth herein, the Parties hereby
agree as follows:
SECTION 1
DEFINITIONS AND REFERENCES
1.1. Defined Terms. As used in this Agreement, the following defined terms
shall have the meanings specified below:
"Acquired Assets" shall mean the First Closing Acquired Assets and the
Second Closing Acquired Assets.
"Act" shall mean the federal Food, Drug and Cosmetic Act, as amended, and
the regulations promulgated thereunder.
"Affiliates" shall mean, with respect to any Person, any Persons directly
or indirectly controlling, controlled by, or under common control with, such
Person. For purposes hereof, the term "controlled" (including the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the direct or indirect ability or power to
direct or cause the direction of management policies of such Person or otherwise
direct the affairs of such Person, whether through ownership of voting
securities or otherwise.
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"Agent's Release of Liens" shall have the meaning set forth in Section
2.5(b)(vii).
"Allocation Schedule" shall have the meaning set forth in Section 2.2(b).
"ANDA" shall mean an abbreviated new drug application requesting permission
to place a drug on the market in accordance with 21 C.F.R. Part 314 Subpart C,
and all supplements filed pursuant to the requirements of the FDA, including all
documents, data and other information concerning the applicable drug which are
necessary for FDA approval to market the drug in the United States.
"API" shall mean the active pharmaceutical ingredient(s) in a Product.
"Applicable Law" shall mean all federal, regional, state, county, municipal
or local laws, statutes, ordinances, decisional law, rules, regulations, codes,
orders, decrees, directives, judgments and governmental policies applicable to,
covering or relating to the Business, Seller's conduct thereof, the Acquired
Assets, the Par Equipment or either of the Facilities, including, without
limitation, the Act, the Chemical Diversion and Trafficking Act of 1988, the
Domestic Chemical Diversion Control Act of 1993, the Comprehensive
Methamphetamine Control Act of 1996, the Methamphetamine Anti-Proliferation Act
of 2000, the rules, regulations and policies applicable under the federal
Medicare program and all state Medicaid programs, and Environmental Laws, as
well as the requirements of any local board of fire underwriters (or other body
exercising similar functions).
"Assignment of Contract of Sale" shall have the meaning set forth in
Section 2.5(b)(iv).
"Assignment and Assumption of Tenant's Interest in Lease" shall have the
meaning set forth in Section 2.5(b)(xii).
"Assumed Contracts" shall have the meaning set forth in Section
2.3(a)(iii).
"Assumed Liabilities" shall have the meaning set forth in Section 2.4(a).
"Auditor" shall have the meaning set forth in Section 5.11.
"Bill of Sale" shall mean each Bill of Sale and Assignment of Assets, dated
as of the First Closing Date or Second Closing Date, as the case may be, and
executed by the Seller, in the form attached hereto as Exhibit B.
"Brenner Contract of Sale" shall have the meaning set forth in Section
2.5(b)(iii).
"Brenner Drive Lease" shall have the meaning set forth in Section 3.19(b).
"Brenner Facility" shall mean the land, facilities and equipment leased by
the Seller at 77 Brenner Drive, Congers, New York, being formerly known as Lot
22.02, Block A, Section 128 and being currently known as Lot 12, Block 2,
Section 44.7 on the tax map of the Town of Clarkstown, Rockland County, New
York.
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"Business" shall mean the Seller's (a) ownership, operation and use of the
Acquired Assets, (b) operation, use, validation and qualification of the Halsey
Equipment and the Par Equipment, (c) operation, use and approval of each of the
Facilities, (d) operation of the Facilities in the State of New York for
pharmaceutical product manufacturing, packaging, labeling, storage, warehousing
and distribution, including, but not limited to pharmaceutical products
containing controlled substances, and (e) the development, validation,
manufacturing, packaging, use, labeling, storage, warehousing, distribution and
sale of the Products; in each case, on or before the First Closing Date.
"C.F.R." shall mean the United States Code of Federal Regulations.
"Closing" shall mean the First Closing and/or the Second Closing, as the
case may be.
"Closing Asset Shortfall" shall have the meaning set forth in Section 5.11.
"Closing Date" shall mean the First Closing Date and/or the Second Closing
Date, as the case may be.
"Computer Systems" shall have the meaning set forth in Section 3.7.
"Confidential Asset Information" shall have the meaning set forth in
Section 5.3(a).
"Confidential Information" shall have the meaning set forth in Section
5.3(a).
"Confidential Party Information" shall have the meaning set forth in
Section 5.3(a).
"Consent to Assignment of Lease" shall have the meaning set forth in
Section 2.5(b)(xiv).
"Contingent Obligation" means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.
"Contracts" shall have the meaning set forth in Section 3.8.
"Damages" shall mean any and all costs (including amounts paid in
settlement), losses, damages, claims, liabilities, fines, penalties and
expenses, court costs, and reasonable fees and disbursements of counsel,
consultants and expert witnesses.
"DEA" shall mean the United States Drug Enforcement Administration and any
successor agency or entity that may be established hereafter.
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"Designated Products" shall mean Dextromethorphan-Guaifenesin-
Pseudoephedrine, Dextromethorphan-Guaifenesin, Dextromethorphan-Guaifenesin-
Pyrilamine, and Pseudoephedrine-Dextromethorphan-Chlorpheniramine.
"Dextromethorphan-Guaifenesin" shall mean the formulation of
Dextromethorphan HBr and Guaifenesin described on Exhibit A.
"Dextromethorphan-Guaifenesin-Pseudoephedrine" shall mean the formulation
of Dextromethorphan HBr, Guaifenesin and Pseudoephedrine HCl Liquid described on
Exhibit A.
"Dextromethorphan-Guaifenesin-Pyrilamine" shall mean the formulation of
Dextromethorphan HBr, Guaifenesin and Pyrilamine Maleate described on Exhibit A.
"Environment" shall mean air, land, surface soil, subsurface soil,
sediment, surface water, groundwater, wetlands and all flora and fauna present
therein or thereon.
"Environmental Claim" shall mean any and all claims, demands, causes of
action, suits, proceedings, administrative proceedings, orders, losses,
judgments, decrees, debts, investigations, requests or demands for information,
damages (whether to person, property or natural resources), liabilities, court
costs, attorneys' fees and other expenses.
"Environmental Conditions" shall mean any pollution or contamination of, or
the Release of Hazardous Materials into, the Environment.
"Environmental Laws" shall mean all federal, regional, state, county or
local laws, statutes, ordinances, decisional law, rules, regulations, codes,
orders, decrees, directives and judgments relating to public health or safety,
pollution, damage to or protection of the Environment, Environmental Conditions,
Releases or threatened Releases of Hazardous Materials into the Environment or
the use, manufacture, processing, distribution, treatment, storage, generation,
disposal, transport or handling of Hazardous Materials, including but not
limited to: the Federal Water Pollution Control Act, 33 U.S.C.ss.ss.1231-1387;
the Resource Conservation and Recovery Act, 42 U.S.C.ss.ss.6901-6991 ("RCRA");
the Clean Air Act, 42 U.S.C.ss.ss.7401-7642; the Comprehensive Environmental
Response ---- Compensation and Liability Act, 42 U.S.C.ss.ss.9601-9675
("CERCLA"); the Toxic Substances Control Act, 15 U.S.C.ss.ss.2601-2629; the
- ------ Federal Occupational Safety and Health Act, 29 U.S.C.ss. 657 et seq.
("OSHA"); Air Pollution Control Act, New York Environmental ---- Conservation
Laws ("NYECL")ss.19-0101 et seq.; Water Pollution Control Act, NYECLss.17-0101
et seq.; Flood Control Act, NYECL sec. ----- 16-010ss.; Water Resources Law,
NYECLss.15-010 et seq.; Fresh Water Wetlands Act, NYECLss.24-010 et seq.; Tidal
Wetlands Act, NYECLss. 25-0101 et seq.; Hazardous Substances Bulk Storage Act,
NYECLss.40-010 et seq.; Environmental Protection Act, NYECLss.54-010 et seq.;
Bulk Storage of Petroleum Act, NYECLss.17-1001 et seq.; Navigation Law, N.Y.Nav.
Law. Art. 12ss.176 et. seq.; Brownfield Cleanup Act, NYECLss.15-0101 et seq.;
and any and all rules and regulations promulgated under any of the foregoing.
"Excluded Assets" shall have the meaning set forth in Section 2.3(c).
"Excluded Liabilities" shall have the meaning set forth in Section 2.4(b).
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"FDA" shall mean the United States Food and Drug Administration and any
successor agency or entity that may be established hereafter.
"FDA Transfer of Ownership Letter" shall mean the letter submitted by each
of the Parties to the FDA notifying the agency of the change in ownership of an
ANDA in accordance with 21 C.F.R. 314.72.
"Final Asset Measurement Date" shall have the meaning set forth in Section
5.11.
"First Closing" shall have the meaning set forth in Section 2.5(a).
"First Closing Acquired Assets" shall have the meaning set forth in Section
2.3(a).
"First Closing Date" shall have the meaning set forth in Section 2.5(a).
"First Closing Payment" shall have the meaning set forth in Section
2.2(a)(i).
"Governmental Authority" shall mean any court of competent jurisdiction,
governmental agency, board or commission or other governmental authority or
other instrumentality of the United States, any state, county, city or other
political subdivision within the United States or any other jurisdiction within
the Territory (including, without limitation, the FDA and DEA).
"Guaifenesin-Codeine" shall mean the formulation of Guaifenesin and Codeine
described on Exhibit A.
"Guaifenesin-Hydrocodone" shall mean the formulation of Guaifenesin and
Hydrocodone Bitartrate described on Exhibit A.
"Guaifenesin-Pseudoephedrine-Codeine" shall mean the formulation of
Guaifenesin, Pseudoephedrine HCl and Codeine described on Exhibit A.
"Halsey Equipment" shall mean all machinery, equipment, furniture, vehicles
and other similar tangible assets located at the Facilities, including
manufacturing, packaging and labeling equipment for the production of solid and
liquid products, equipment for various utilities, boilers, compressors and water
systems, tools, laboratory equipment and accessories, including without
limitation, the equipment identified on Exhibit C, except (a) the Par Equipment,
(b) the assets identified on Exhibit D and (c) the Inventory.
"Hazardous Materials" shall mean any substances, materials or wastes,
whether liquid, gaseous or solid, or any pollutant or contaminant, that is
infectious, toxic, hazardous, explosive, corrosive, flammable or radioactive,
including without limitation, petroleum, polychlorinated biphenyls, asbestos and
asbestos containing materials and urea formaldehyde, or that is regulated under,
defined, listed or included in any Environmental Laws, including without
limitation, CERCLA, RCRA and OSHA.
"Homatropine-Hydrocodone" shall mean the formulation of Homatropine
Methylbromide and Hydrocodone Bitartrate described on Exhibit A.
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"Indebtedness" of any Person means, without duplication: (1) all
indebtedness for borrowed money, (2) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business), (3) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (4) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (5) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (6) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (7) all
indebtedness referred to in clauses (1) through (6) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (8) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (1) through (7)
above.
"Indemnified Party" shall have the meaning set forth in Section 8.5(a).
"Indemnifying Party" shall have the meaning set forth in Section 8.5(a).
"Insurance Policies" shall have the meaning set forth in Section 3.18.
"Intellectual Property" shall mean any and all formulae, formulations,
specifications, technologies, inventions, assays, quality control and testing
methods and procedures, manufacturing processes, know-how and trade secrets,
whether or not patentable, relating to the Business, the conduct thereof by the
Seller or otherwise, operation of the Facilities, operation or use of the Par
Equipment, operation or use of the Halsey Equipment, or the Products or the
manufacture, formulation, testing or packaging thereof, including, without
limitation, synthesis, preparation, recovery and purification processes and
techniques, control methods and assays, chemical data, toxicological and
pharmacological data and techniques, clinical data and medical uses.
"Inventory" shall mean any and all (a) finished goods, raw materials, API,
other chemical compounds, excipients, labels, inserts and other product
components and products labeling and packaging materials, and (b) market
research data, customer information, sales information, and all sales or
marketing training materials in whatever medium (e.g., audio, visual, print or
electronic); in each case, owned by the Seller, in the Seller's possession or
located at either of the Facilities as of the First Closing Date.
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"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other constitution, law, ordinance,
principle of common law, regulation, statute, or treaty.
"Liabilities" means, as to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of such
Person, whether accrued, vested or otherwise, whether known or unknown, whether
in contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by generally accepted accounting principles to be
reflected, in such Person's balance sheets or other financial books and records.
"Lien" shall mean any lien (statutory or otherwise), claim, charge, option,
security interest, judgment, pledge, mortgage, restriction, financing statement
or similar encumbrance or right of any kind or nature whatsoever, including
without limitation, any conditional sale or other title retention agreement and
any lease having substantially the same effect as any of the foregoing and any
assignment or deposit arrangement in the nature of a security device, or any
statutory mechanics', warehousemen's, materialmen's, contractors', workmen's,
repairmen's and carriers' liens and other similar liens.
"Losses" shall have the meaning set forth in Section 8.3.
"Knowledge" shall mean (i) with respect to the Seller, the actual knowledge
of the representatives of the Seller set forth on Schedule A after due inquiry;
and (ii) with respect to the Purchaser, the actual knowledge of the
representatives of the Purchaser set forth on Schedule B after due inquiry.
"Manufacturing Information" shall mean any and all information, data,
documentation, schedules and procedures relating to manufacturing processes,
process validation, process qualification, equipment validation, equipment
qualification, equipment maintenance, equipment calibration, equipment
installation, equipment control parameters, environmental controls, and
equipment and process operating information, operating manuals and training
materials, in whatever medium (e.g., audio, visual, print or electronic), held
by the Seller or to which the Seller has rights, including, without limitation,
any and all such information, data, documentation, schedules and procedures
required by any Governmental Authority or relating to compliance with good
manufacturing practice or other Applicable Law, including, without limitation,
equipment drawings; in each case to the extent not included in Intellectual
Property.
"Non-Packaging Assets" shall have the meaning assigned to such term in the
Use and License Agreement.
"NYDEC" shall mean the New York State Department of Environmental
Conservation, its divisions, bureaus and subdivisions.
"Other Brenner Real Estate Documents" shall have the meaning set forth in
Section 2.5(b)(ix).
"Other Wells Real Estate Documents" shall have the meaning set forth in
Section 2.5(b)(xvii).
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"Outside Meeting Date" shall have the meaning set forth in Section 2.11.
"Packaging Equipment" shall have the meaning assigned to such term in the
Use and License Agreement.
"Par" shall mean Par Pharmaceutical, Inc.
"Par Consent" shall have the meaning set forth in Section 2.5(b)(v).
"Par Equipment" shall mean the equipment identified on Exhibit K.
"Par-Purchaser Closing Statement" shall have the meaning set forth in
Section 2.5(b)(xix).
"Permitted Liens" shall mean Liens for taxes or assessments which are not
due and payable.
"Person" shall mean a natural person, a corporation, a partnership, a
trust, a joint venture, a limited liability company, any governmental authority
or any other entity or organization.
"Prednisolone Syrup" shall mean the formulation of Prednisolone Syrup
described on Exhibit A.
"Proceeding" shall mean all obligations, liabilities, and commitments in
respect of any claims, action or proceeding, including product liability claims.
"Product Registrations" shall mean the approvals, registrations,
applications, licenses and permits (including but not limited to the ANDAs and
the master batch records) for the Products which have been prepared, fixed
and/or received in order to manufacture, distribute, market or sell same (and
related submissions to and correspondence with the FDA, DEA or other
Governmental Authority), in each case held in the Seller's name on or prior to
the First Closing Date to, from or with the FDA, DEA or other Governmental
Authority.
"Products" shall mean Prednisolone Syrup, Homatropine-Hydrocodone,
Guaifenesin-Codeine, Guaifenesin-Pseudoephedrine-Codeine,
Guaifenesin-Hydrocodone, Dextromethorphan-Guaifenesin-Pseudoephedrine,
Dextromethorphan-Guaifenesin, Dextromethorphan-Guaifenesin-Pyrilamine, and
Pseudoephedrine-Dextromethorphan-Chlorpheniramine.
"Proxy Statement" shall have the meaning set forth in Section 2.10(a).
"Pseudoephedrine-Dextromethorphan-Chlorpheniramine" shall mean the
formulation of Pseudoephedrine HCl, Dextromethorphan HBr and Chlorpheniramine
Maleate described on Exhibit A.
"Purchase Price" shall have the meaning set forth in Section 2.2(a).
"Refundable Amount" shall have the meaning set forth in Section 2.2(a)(i).
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"Related Agreements" shall mean the Brenner Contract of Sale, Assignment of
Contract of Sale, Par Consent, Agent's Release of Liens, Use and License
Agreement, Voting Agreement, Other Brenner Real Estate Documents, Other Wells
Real Estate Documents, Termination of Lease, Assignment and Assumption of
Tenant's Interest in Lease, Consent to Assignment of Lease, Wells Landlord
Estoppel Letter, Wells Tenant Estoppel Letter, Par-Purchaser Closing Statement,
Seller-Purchaser Closing Statement, each Bill of Sale entered into by the
Parties, the Security Agreement, the Seller's Officer's Certificates, the
Purchaser's Officer's Certificates and all other documents and agreements
delivered at either Closing.
"Release" shall mean any intentional or unintentional release, discharge,
burial, spill, leaking, pumping, pouring, emitting, emptying, injection,
disposal or dumping into the Environment.
"Remedial Action" means any and all: (i) investigations of Environmental
Conditions of any kind or nature whatsoever, including site assessments, site
investigations, remedial investigations, soil, groundwater, surface water,
sediment sampling or monitoring; or (ii) actions of any kind or nature
whatsoever taken to remove, abate or remediate Environmental Conditions,
including the use, implementation, application, installation, operation or
maintenance of removal actions, in-situ or ex-situ remediation technologies
applied to the surface or subsurface soils, encapsulation or stabilization of
soils, excavation and off-site treatment or disposal of soils, systems for the
recovery and/or treatment of groundwater or free product.
"Retained Information" shall mean the books and records prepared and
maintained by the Seller containing the laboratory books and batch records for
the Products, in each case the originals or copies of which are required to be
kept by the Seller pursuant to applicable government regulations in connection
with the Seller's conduct of the Business.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Second Closing" shall have the meaning set forth in Section 2.6(a).
"Second Closing Acquired Assets" shall have the meaning set forth in
Section 2.3(b).
"Second Closing Date" shall have the meaning set forth in Section
2.6(a).
"Second Closing Payment" shall have the meaning set forth in Section
2.2(a)(ii).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall have the meaning set forth in Section
2.5(b)(xxii).
"Seller-Purchaser Closing Statement" shall have the meaning set forth
in Section 2.5(b)(xx).
"Service Agreements" shall have the meaning set forth in Section
3.19(m).
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"Shareholder Approval" shall mean the adoption and approval of the
Transactions Requiring Shareholder Approval by the holders of Halsey's Voting
Securities representing two-thirds or greater of the outstanding Voting
Securities of Halsey, such adoption and approval obtained pursuant to the New
York Business Corporation Law, any other applicable laws, Halsey's certificate
of incorporation and bylaws, each as amended to date, and all contracts binding
on Halsey.
"Shareholder Meeting" shall have the meaning set forth in Section 2.11.
"Tax" shall mean any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum, and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever,
and any interest, penalties, additions or additional amounts thereon, imposed,
assessed, collected by or under the authority of any Governmental Authority or
payable under any tax-sharing agreement, any other contract or any of the
Contracts.
"Tax Liabilities" shall have the meaning set forth in Section 2.4(b)(vi).
"Terminated Contracts" shall have the meaning set forth in Section
2.4(b)(viii).
"Termination of Lease" shall have the meaning set forth in Section
2.5(b)(xi).
"Territory" shall mean the fifty (50) states of the United States of
America, the District of Columbia, the Commonwealth of Puerto Rico and all
territories or possessions of the United States.
"Third Party" shall mean any person or entity who or which is neither a
Party nor an Affiliate of a Party.
"Third Party Claim" shall have the meaning set forth in Section 8.5(a).
"Transactions Requiring Shareholder Approval" shall mean only the purchase
and sale of the Second Closing Acquired Assets as contemplated in this Agreement
and no other transaction, right or obligation of any Party, whether or not set
forth in this Agreement or any Related Agreement.
"Transferred Deposits and Prepaid Expenses" shall have the meaning set
forth in Section 2.5(b)(xx).
"Transferred Documentation" shall mean all documentation, whether in
hard-copy or electronic form, which the Seller owns, has rights to or has in its
possession, pertaining to the validation, approval, analysis, manufacture,
marketing or distribution of any of the Products, including, but not limited to,
all of the following with respect to each of the Products, complete: (a)
regulatory filings and supporting documents, correspondence sent to and from
regulatory
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authorities, warnings and notices from regulatory authorities, chemistry,
manufacturing and controls data and documentation, preclinical and clinical
studies and tests, including, without limitation, the master batch records, for
each Product, analytical test methods and validation reports, stability data and
change controls; (b) supplier and customer lists; (c) records maintained under
record keeping or reporting requirements of the FDA, DEA, any other Governmental
Authority or under Applicable Law; (d) field alerts, investigational reports,
complaint, adverse event and medical inquiry filings and records with respect to
the Products; and (e) if the Product has an ANDA, a complete copy of such ANDA
for such Product.
"Use and License Agreement" shall have the meaning set forth in Section
2.5(b)(vi).
"Voting Agreement" shall have the meaning set forth in Section
2.5(b)(viii).
"Voting Securities" shall mean any and all (a) common stock and other
voting stock of Halsey, and (b) rights, warrants, contract rights, options,
notes, debentures and other securities which are (i) convertible into or
exercisable for common stock or other voting stock of Halsey, or (ii) whose
holders have the right to vote at shareholder meetings of Halsey.
"Wells Avenue Lease" shall have the meaning set forth in Section 3.19(a).
"Wells Facility" shall mean the land and facilities leased by the Seller at
125 Wells Avenue, Congers, New York, being formerly known as Lot 26, Block A,
Section 128 and being currently known as Lot 3, Block 3, Section 44.11 on the
tax maps of the Town of Clarkstown, New York.
"Wells Landlord Estoppel Letter" shall have the meaning set forth in
Section 2.5(b)(xv).
"Wells Tenant Estoppel Letter" shall have the meaning set forth in Section
2.5(b)(xvi).
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1. Purchase and Sale.
(a) First Closing. On the terms and subject to the conditions of this
Agreement, at the First Closing, the Seller shall sell, assign, transfer, convey
and deliver to the Purchaser, and the Purchaser shall purchase, acquire and
accept from the Seller, the First Closing Acquired Assets, free and clear of all
Liens, other than Permitted Liens, and the Purchaser shall pay to Halsey the
First Closing Payment.
(b) Second Closing. On the terms and subject to the conditions of this
Agreement, at the Second Closing, the Seller shall sell, assign, transfer,
convey and deliver to the Purchaser, and the Purchaser shall purchase, acquire
and accept from the Seller, the Second Closing Acquired Assets, free and clear
of all Liens, other than Permitted Liens, and the Purchaser shall pay to Halsey
the Second Closing Payment.
11
2.2. Purchase Price; Allocation.
(a) Purchase Price. Subject to the other terms and conditions of this
Agreement, including any setoff amounts and any applicable deductions, prorated
amounts and credits, the total payments to be made by the Purchaser to the
Seller under this Agreement and any Related Agreement shall be Two Million Five
Hundred Thousand Dollars ($2,500,000) (the "Purchase Price") and the Purchase
Price shall be payable in the following payments:
(i) The "First Closing Payment" shall mean Two Million Dollars
($2,000,000), all of which (the "Refundable Amount") shall be refundable in
accordance with the terms of Section 9.2.
(ii) The "Second Closing Payment" shall mean Five Hundred
Thousand Dollars ($500,000).
(b) The Purchase Price shall be allocated among the First Closing
Acquired Assets and Second Closing Acquired Assets in accordance with the
determination of a Third Party appraiser selected by the Purchaser, such
determination to be made in the sole discretion of such Third Party appraiser
based upon appraisals undertaken by it following each Closing, at the
Purchaser's cost, (the "Allocation Schedule"). The Seller and the Purchaser
shall sign and submit all necessary forms to report this transaction for
federal, state and foreign income tax purposes in accordance with the Allocation
Schedule as provided in Treasury Regulations Section 1.1060-1.
2.3. Acquired Assets.
(a) First Closing. The term "First Closing Acquired Assets" shall mean
all of the Seller's rights, title and interest in, to and under the following
assets of the Seller:
(i) all Intellectual Property and Manufacturing Information
relating to the Par Equipment and the Facilities;
(ii) all of the Transferred Deposits and Prepaid Expenses; and
(iii) all rights under the contracts listed on Part 2.3(a)(ii) of
the Disclosure Schedules (collectively, the "Assumed Contracts").
(b) Second Closing. The term "Second Closing Acquired Assets" shall
mean all of the Seller's rights, title and interest in, to and under the
following assets of the Seller:
(i) all of the Halsey Equipment;
(ii) all Intellectual Property and Manufacturing Information
relating to the Halsey Equipment;
(iii) all of the Product Registrations;
12
(iv) all of the Transferred Documentation; and
(v) all Intellectual Property and Manufacturing Information
relating to the Products.
(c) The Purchaser acknowledges and agrees that it is not acquiring any
rights, title or interest in, to and under any of the following assets (the
"Excluded Assets"):
(i) cash and cash equivalents of the Seller;
(ii) accounts receivable, notes receivable and other indebtedness
due and owed by any Third Party or Affiliate to the Seller arising or held in
connection with the Business;
(iii) the assets listed on Exhibit D attached hereto, and
(iv) the Inventory and any other assets, properties or rights of
the Seller other than the First Closing Acquired Assets and Second Closing
Acquired Assets.
2.4. Assumed Liabilities.
(a) Upon the terms and subject to the conditions of this Agreement,
the Purchaser shall assume, as of the First Closing Date, and the Purchaser
shall pay, perform and discharge when due, all performance obligations of the
Seller under the Assumed Contracts with respect to periods after the First
Closing Date, other than (i) liabilities for amounts owed and other obligations
thereunder by the Seller with respect to periods on or prior to the First
Closing Date and (ii) liabilities and other obligations arising out of any
breach thereof by the Seller, (the "Assumed Liabilities").
(b) Notwithstanding any other provision of this Agreement or any
Related Agreement to the contrary, other than the Assumed Liabilities, the
Purchaser shall not assume or be deemed to have assumed any Liability or other
obligation of the Seller whatsoever (the "Excluded Liabilities"), including,
without limitation, any Liability arising out of, resulting from or relating to:
(i) any accounts payable of the Seller;
(ii) the Business or the Seller's conduct thereof, including,
without limitation, (A) any product liability, breach of warranty or similar
causes of action or claims, whether in tort, contract or otherwise, regardless
of when asserted, which resulted from the use or misuse of any Product
manufactured by or on behalf of or sold or distributed by the Seller, (B) any
violation of Applicable Laws, and (C) any Liabilities relating to the pricing of
the Products by the Seller, rebates, chargebacks or other forms of discounts,
allowances or other deductions granted by the Seller, or the marketing of the
Products by the Seller or any Person acting on behalf of the Seller;
13
(iii) Environmental Claims, Environmental Conditions and natural
resources damages and injuries existing on or prior to the First Closing Date,
or arising from events on or prior to the First Closing Date, in each case
including, but not limited to, (1) Environmental Claims, Environmental
Conditions and natural resources damages or injuries, respecting any of the
Acquired Assets, the Halsey Equipment or the Par Equipment, either of the
Facilities or improvements thereon, the Excluded Assets, the Business as
conducted by the Seller or otherwise, and (2) any and all Losses and events
giving rise to Losses covered by Section 8.3(d);
(iv) employment, payroll, compensation or benefits (including
severance) for the past, present or future employees of the Seller or any
contractor of the Seller, including Liability arising under federal or state
plant shutdown laws such as the Warn Act, arising in connection with any
termination of employment, movement of place of employment, shutdown or wind
down of operations at the Facilities or any other operation of the Seller, at
any time past, present or future;
(v) Seller's past, present or future agreements with labor
unions;
(vi) any Liabilities of Seller for Taxes, including (A) any Taxes
arising as a result of the Seller's operation of its business in the past,
present or future, (B) any Taxes arising as a result of the Business, (C) any
Taxes, other than sales taxes, that will arise as a result of the sale of the
Acquired Assets pursuant to this Agreement and (D) any deferred Taxes of any
nature ("Tax Liabilities");
(vii) rebates, chargebacks or other forms of discounts,
allowances or other deductions granted by the Seller with respect to any
Product, or with respect to any returns of any Product sold by the Seller; or
(viii) all contracts, agreements, leases, licenses, commitments,
sales and purchase orders and other instruments of the Seller relating to the
Business or otherwise other than the obligations under the Assumed Contracts
assumed pursuant to Section 2.3(a)(ii), but including without limitation, those
listed as Part 2.4(b)(viii) of the Disclosure Schedules (collectively, the
"Terminated Contracts") which shall be terminated by the Seller on or prior to
the First Closing Date and all sums due thereunder shall be paid in full by the
Seller and all obligations due thereunder shall be performed by the Seller to
completeness.
(c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY
RELATED AGREEMENT TO THE CONTRARY, (I) PURCHASER IS NOT IN ANY WAY A SUCCESSOR
OF SELLER OR ANY OF ITS AFFILIATES UNDER APPLICABLE ENVIRONMENTAL LAWS OR ANY
OTHER LAWS, AND (II) PURCHASER DOES NOT IN ANY WAY ASSUME ANY RESPONSIBILITY OR
LIABILITIES OF THE SELLER FOR ENVIRONMENTAL CONDITIONS EXISTING ON OR RELATING
TO THE FACILITIES OR ENVIRONMENTAL CLAIMS RELATING THERETO.
14
2.5. First Closing.
--------------
(a) First Closing. The simultaneous consummation of the transactions
contemplated in this Section 2.5 (the "First Closing") shall, subject to the
satisfaction or waiver of the conditions set forth in Sections 6.1, 6.2 and 6.3,
take place at 10:00 a.m. on March 19, 2004, at the offices of Reed Smith LLP,
Princeton Forrestal Village, 136 Main Street, Princeton, New Jersey 08543, or at
such other time and place as shall be mutually agreed upon by the Parties. The
date on which the First Closing occurs is referred to in this Agreement as the
"First Closing Date". As promptly as reasonably practicable after the First
Closing Date and in any event within 10 business days after the First Closing
Date, the Seller shall deliver to the Purchaser any information, records and
materials identified in Section 2.3(a) which shall not have been theretofore
delivered. All such information, records and materials provided by the Seller
shall be filed in files at the Facilities or packaged, organized and listed in a
commercially reasonable manner, at the Seller's cost.
(b) Seller's Obligations at the First Closing. At the First Closing,
the Seller shall undertake, cause to be undertaken, deliver to the Purchaser
and/or cause to be delivered to the Purchaser, as applicable, the following,
each duly undertaken or executed on behalf of the applicable party by an
authorized officer thereof:
(i) The Seller shall deliver to the Purchaser a Bill of Sale
executed by the Seller with respect to the First Closing Acquired Assets in the
form of Exhibit B;
Brenner Purchase Option and Agreement
- -------------------------------------
(ii) Halsey shall exercise the option to purchase the Brenner
Facility in accordance with the Brenner Drive Lease and in connection therewith
shall cause to be paid to Par Two Hundred and Fifty Thousand Dollars ($250,000)
in immediately available funds as a deposit on the full purchase price for the
Brenner Facility and the Par Equipment;
(iii) Halsey and Par shall execute and deliver to the Purchaser
the contract of sale for the Brenner Facility in the form attached to the
Brenner Drive Lease pursuant to which Halsey shall purchase from Par, and Par
shall sell to Halsey, the Brenner Facility and the Par Equipment (the "Brenner
Contract of Sale");
(iv) Halsey shall deliver to the Purchaser the Assignment and
Assumption of Contract of Sale executed by Halsey in the form attached hereto as
Exhibit E (the "Assignment of Contract of Sale");
(v) Par shall consent in writing in the form attached hereto as
Exhibit F (the "Par Consent") to the assignment of the Brenner Contract of Sale
as contemplated by the Assignment of Contract of Sale;
Use and License; Release of Liens and Grant of Consent by Third Parties
- -----------------------------------------------------------------------
15
(vi) The Seller shall deliver to the Purchaser the Use and
License Agreement executed by the Seller in the form attached hereto as Exhibit
H (the "Use and License Agreement");
(vii) Galen Partners III, L.P. shall execute and deliver to the
Seller and the Purchaser the Agent's Release of Liens attached hereto as Exhibit
I (the "Agent's Release of Liens");
(viii) The Voting Agreement in the form attached hereto as
Exhibit M (the "Voting Agreement") shall be executed by the parties thereto and
delivered to the Seller and the Purchaser;
Brenner Facility Real Estate Closing
- ------------------------------------
(ix) Par shall execute and deliver to the Purchaser the following
relating to the Brenner Facility: Deed, Affidavit of Title, Form 1099, a Bill of
Sale relating to the Par Equipment, and other ancillary documentation and
customary real estate closing deliveries as may be required by the title company
in connection with the transactions relating to the Brenner Facility
(collectively, the "Other Brenner Real Estate Documents");
(x) Halsey shall, on the earlier of the First Closing Date or
March 19, 2004, remove any and all assets, furniture, chemicals and other
materials and documents at the Brenner Facility which are not included in the
Acquired Assets or the Par Equipment, including, without limitation, the
Inventory and the assets set forth on Exhibit D;
(xi) Halsey and Par shall execute and deliver to the Purchaser
the Termination of Lease attached hereto as Exhibit N (the "Termination of
Lease");
Wells Facility Lease
- --------------------
(xii) Halsey shall provide the Purchaser with the Assignment and
Assumption of Tenant's Interest in Lease executed by Halsey in the form attached
hereto as Exhibit O (the "Assignment and Assumption of Tenant's Interest in
Lease");
(xiii) Halsey shall, on the earlier of the First Closing Date or
March 19, 2004, remove any and all assets, furniture, chemicals and other
materials and documents at the Wells Facility which are not included in the
Acquired Assets or the Par Equipment, including, without limitation, the
Inventory and the assets set forth on Exhibit D;
(xiv) Rendahl Corporation shall provide the Purchaser with the
Consent to Assignment of Lease executed by Rendahl Corporation in form attached
hereto as Exhibit P (the "Consent to Assignment of Lease");
(xv) Rendahl Corporation shall provide the Purchaser with the
Landlord Estoppel Letter executed by Rendahl Corporation in form attached hereto
as Exhibit Q (the "Wells Landlord Estoppel Letter");
16
(xvi) Halsey shall provide the Purchaser with the Tenant Estoppel
Letter executed by Halsey in the form attached hereto as Exhibit R (the "Wells
Tenant Estoppel Letter");
(xvii) Such other real estate closing deliveries as may be
required by the title company in connection with the transactions relating to
the Wells Facility (the "Other Wells Real Estate Documents");
Assignment and Assumption of Service Contracts
- ----------------------------------------------
(xviii) The Seller shall assign, and the Purchaser shall assume,
the Assumed Contracts pursuant to the form of assignment attached hereto as
Exhibit G or in another form of assignment acceptable to the Purchaser. The
Parties acknowledge that there are no Service Contracts relating to Computer
Systems.
Closing Statements; Air Permits; Security Agreement
- ---------------------------------------------------
(xix) Par shall provide to the Purchaser a closing statement
executed by the Seller in the form attached hereto as Exhibit J (the
"Par-Purchaser Closing Statement");
(xx) The Seller shall provide to the Purchaser a closing
statement executed by the Seller in the form attached hereto as Exhibit L (the
"Seller-Purchaser Closing Statement"), which shall reflect, among other things,
the amounts set forth on Schedule C of the Disclosure Schedules ("Transferred
Deposits and Prepaid Expenses");
(xxi) The Seller and Purchaser shall execute and file with
appropriate Governmental Authorities documentation to transfer the air permits
for the Brenner Facility that have been issued as of the First Closing Date;
(xxii) The Seller shall provide the Purchaser with the Security
Agreement executed by the Seller in the form attached hereto as Exhibit W (the
"Security Agreement");
Seller's Officer's Certificate; Opinion of the Seller's Counsel
- ---------------------------------------------------------------
(xxiii) The Seller shall deliver to the Purchaser the Seller's
Officer's Certificate executed by the Seller in the form of Exhibit S; and
(xxiv) Counsel for the Seller shall deliver a legal opinion to
the Purchaser in the form attached hereto as Exhibit T.
17
(c) Purchaser's Obligations at the First Closing. At the First
Closing, the Purchaser shall undertake, cause to be undertaken, deliver to the
Seller and/or cause to be delivered to the Seller, as applicable, the following,
each duly undertaken or executed on behalf of the Purchaser by an authorized
officer thereof:
Brenner Purchase Option
- -----------------------
(i) In connection with Halsey's exercise of the option to
purchase the Brenner Facility in accordance with the Brenner Drive Lease, the
Purchaser shall pay to Par Two Hundred and Fifty Thousand Dollars ($250,000) in
immediately available funds as a deposit on the full purchase price for the
Brenner Facility and the Par Equipment;
(ii) The Purchaser shall deliver to Halsey the Assignment of
Contract of Sale executed by the Purchaser;
Real Estate Closing on the Brenner Facility
- -------------------------------------------
(iii) Pursuant to the Brenner Contract of Sale that has been
assigned to the Purchaser, the Purchaser shall pay to Par Five Million Dollars
($5,000,000) less (A) the deposit of Two Hundred and Fifty Thousand Dollars
($250,000) delivered by the Purchaser to Par upon exercise of the option to
purchase the Brenner Facility in accordance with the Brenner Drive Lease, and
(B) any other applicable deductions and prorated amounts as set forth in the
Par-Purchaser Closing Statement;
Wells Facility Lease
- --------------------
(iv) The Purchaser shall deliver to Halsey the Assignment and
Assumption of Tenant's Interest in Lease executed by the Purchaser;
(v) The Purchaser shall exercise the option to renew the Wells
Avenue Lease;
Closing Statements; Air Permits; Security Agreement
- ---------------------------------------------------
(vi) The Purchaser shall provide to Par the Par-Purchaser Closing
Statement executed by the Purchaser;
(vii) The Purchaser shall provide to the Seller the
Seller-Purchaser Closing Statement executed by the Purchaser, which shall
reflect, among other things, the amounts set forth on Schedule C of the
Disclosure Schedules;
(viii) The Seller and Purchaser shall execute and file with
appropriate Governmental Authorities documentation to transfer the air permits
for the Brenner Facility that have been issued as of the First Closing Date;
18
(ix) The Purchaser shall deliver to the Seller the Security
Agreement executed by the Purchaser;
Purchaser's Officer's Certificate; Opinion of Purchaser's Counsel
- -----------------------------------------------------------------
(x) The Purchaser shall deliver to the Seller the Purchaser's
Officer's Certificate executed by the Purchaser in the form of Exhibit U;
(xi) Counsel for the Purchaser shall deliver a legal opinion to
the Seller in the form attached hereto as Exhibit V; and
First Closing Payment
- ---------------------
(xii) Subject to any applicable deductions or credits and
prorated amounts under the Seller-Purchaser Closing Statement, the Purchaser
shall deliver to the Seller cash in the amount of the First Closing Payment by
wire transfer to the account of the Seller listed as Part 2.5(c)(xii) of the
Disclosure Schedules.
2.6. Second Closing.
(a) Second Closing. The simultaneous consummation of the transactions
contemplated in this Section 2.6 (the "Second Closing") shall, subject to the
satisfaction or waiver of the conditions set forth in Sections 6.1, 6.2 and 6.3,
take place at 10:00 a.m. three business days following Halsey receiving
Shareholder Approval, at the offices of Reed Smith LLP, Princeton Forrestal
Village, 136 Main Street, Princeton, New Jersey 08543, or at such other time and
place as shall be mutually agreed upon by the Parties. The date on which the
Second Closing occurs is referred to in this Agreement as the "Second Closing
Date". As promptly as reasonably practicable after the Second Closing Date and
in any event within 10 business days after the Second Closing Date, the Seller
shall deliver to the Purchaser any information, records and materials identified
in Section 2.3(b) which shall not have been theretofore delivered. All such
information, records and materials provided by the Seller shall be filed in
files at the Facilities or packaged, organized and listed in a commercially
reasonable manner, at the Seller's cost.
(b) Seller's Obligations at the Second Closing. At the Second Closing,
the Seller shall undertake, cause to be undertaken, deliver to the Purchaser
and/or cause to be delivered to the Purchaser, as applicable, the following,
each duly undertaken or executed on behalf of the applicable party by an
authorized officer thereof:
(i) The Seller shall deliver to the Purchaser an executed
affidavit certifying Shareholder Approval given by the Inspector of Election to
whom Halsey's Board of Directors has delegated responsibility with respect to
the voting of the holders of Halsey's Voting Securities at the Shareholder
Meeting;
(ii) The Seller shall deliver to the Purchaser a Bill of Sale
executed by the Seller with respect to the Second Closing Acquired Assets in the
form of Exhibit B;
19
(iii) If notwithstanding Section 5.10, any Lien exists on any of
the Second Closing Acquired Assets, then the Seller shall cause each such Lien,
and the security interest evidenced thereby, to be terminated, and this shall
include, but not be limited to, filing of UCC-3 termination statements with
respect to such Liens;
(iv) The Parties shall file with the FDA the information required
pursuant to 21 C.F.R. 314.72, or any successor regulation thereto, regarding the
transfer of the ANDAs from the Seller to the Purchaser in the form attached as
Exhibit X;
(v) The Seller shall deliver to the Purchaser the Seller's
Officer's Certificate executed by the Seller in the form of Exhibit S; and
(vi) Counsel for the Seller shall deliver a legal opinion to the
Purchaser in the form attached hereto as Exhibit T.
(c) Purchaser's Obligations at the Second Closing. At the Second
Closing, the Purchaser shall undertake, cause to be undertaken, deliver to the
Seller and/or cause to be delivered to the Seller, as applicable, the following,
each duly undertaken or executed on behalf of the Purchaser by an authorized
officer thereof:
(i) The Parties shall file with the FDA the information required
pursuant to 21 C.F.R. 314.72, or any successor regulation thereto, regarding the
transfer of the ANDAs from the Seller to the Purchaser in the form attached as
Exhibit X;
(ii) The Purchaser shall deliver to the Seller the Purchaser's
Officer's Certificate executed by the Purchaser in the form of Exhibit U;
(iii) Subject to any Losses arising on or before the Second
Closing Date, unpaid amounts owed as the value of the Closing Asset Shortfall
under Section 5.11, or any other unpaid amounts owed by the Seller to the
Purchaser as of the Second Closing Date, which amounts shall be set off against
and deducted from the amount that would otherwise be due at the Second Closing,
thereby reducing the Second Closing Payment otherwise payable at the Second
Closing, the Purchaser shall deliver to the Seller cash in the amount of the
Second Closing Payment by wire transfer to the account of the Seller listed as
Part 2.6(c)(iii) of the Disclosure Schedules; and
(iv) Counsel for the Purchaser shall deliver a legal opinion to
the Seller in the form attached as Exhibit V.
20
2.7. License to the Retained Information. The Seller hereby grants to the
Purchaser and its Affiliates, effective immediately upon the Second Closing, an
exclusive, perpetual, fully paid-up and royalty-free, transferable and
sublicensable right and license to use the Retained Information to (i) make,
have made, use, offer for sale, sell, import, develop and commercialize the
Products, (ii) use and operate the Facilities, the Par Equipment and the Halsey
Equipment for any purpose, and (iii) utilize for any purpose the Intellectual
Property, Product Registrations, Transferred Documentation and Manufacturing
Information relating to either the Par Equipment or the Halsey Equipment.
2.8. Risk of Loss.
Until the First Closing Date, any loss of or damage to the Acquired Assets
from fire, casualty or any other occurrence shall be the sole responsibility of
the Seller. At the First Closing, title and risk of loss to the First Closing
Acquired Assets shall be transferred to the Purchaser. Title to the Second
Closing Acquired Assets shall be maintained at all times with the Seller until
the Second Closing, however beginning with the First Closing Date and thereafter
until and if this Agreement is terminated, the Purchaser shall bear all risk of
loss associated with the Halsey Equipment and be solely responsible for
procuring adequate insurance to protect such Halsey Equipment against any such
loss to the extent the Purchaser desires in its sole discretion; provided,
however the Parties acknowledge and agree that in the event of any such loss (1)
the Purchaser shall be promptly paid and shall retain any and all insurance and
other payments received by any Party in connection with such loss and the Seller
shall have no claim on any such payments whatsoever, (2) the terms set forth in
Section 4.2(e) of the Use and License Agreement shall apply, and (3) neither
such loss to the Halsey Equipment nor any of the foregoing terms shall prevent
the Second Closing and there shall be no deduction in the Second Closing Payment
due to such loss. At the Second Closing, title and, except as provided above,
risk of loss to the Second Closing Acquired Assets shall be transferred to the
Purchaser.
2.9. Scope of the Parties' Rights.
(a) The Purchaser hereby acknowledges and agrees that it will acquire
no right, title, or interest whatsoever in any property or assets of the Seller
except as set forth in this Agreement and the Related Agreements.
(b) The Seller hereby acknowledges and agrees that the Seller shall
not interfere with, nor have the right to prohibit, the development,
manufacture, sale, or distribution of the Products in the Territory by
Purchaser.
2.10. Proxy Statement.
(a) Halsey shall as promptly as is reasonably practicable, but no
later than May 31, 2004, prepare and file with the SEC a preliminary proxy
statement and related soliciting materials under the Securities Exchange Act of
1934, as amended, such that the holders of Halsey's Voting Securities may
consider and vote upon the adoption of a resolution approving the Transactions
Requiring Shareholder Approval in accordance with the New York Business
Corporation Law at the Shareholder Meeting (the "Proxy Statement"); provided,
however, prior
21
to filing or mailing of the definitive Proxy Statement, any supplement or
amendment thereto, and any correspondence with the SEC, Halsey shall use its
best efforts to respond to the comments of the SEC thereon and shall promptly
make any further filings (including amendments and supplements) in connection
therewith that may be necessary. Halsey shall cause the Proxy Statement, related
materials and all other documents it is filing with the SEC or other regulatory
authorities under this Section 2.10 to comply as to form and substance in all
material respects with applicable law, including without limitation the
Securities Exchange Act. Halsey shall permit the Purchaser to review and comment
on any documents and filings with the SEC, including without limitation, the
Proxy Statement and any related soliciting material provided to holders of
Halsey's Voting Securities in connection with the Transactions Requiring
Shareholder Approval, to the extent such documents and filings contain any
references to the Purchaser, its Affiliates and/or the transactions contemplated
by this Agreement or any Related Agreement.
(b) Halsey shall notify the Purchaser promptly upon receipt of any
comments from the SEC or its staff or any other government officials in
connection with any filing made pursuant to this Section 2.10 and of any request
by the SEC or its staff or any other government officials for amendments,
revisions or supplements to the Proxy Statement of other SEC filings, or for
additional information made pursuant hereto. Halsey shall supply the Purchaser
with copies of all correspondence between the SEC, its staff or any other
government officials, on the one hand, and Halsey or any of its representatives,
on the other hand, with respect to Halsey's Proxy Statement, the transactions
contemplated by this Agreement and the Related Agreements or any other filing
with the SEC related to the transactions contemplated by this Agreement and the
Related Agreements.
(c) The Proxy Statement and any related soliciting material provided
to the holders of Halsey's Voting Securities in connection with the Transactions
Requiring Stockholder Approval shall not contain any untrue statement of
material fact or omit a fact necessary to make the statements contained therein,
in light of the circumstances in which they were made, not misleading.
2.11. Shareholder Meeting.
Following the First Closing Date, Halsey shall take all action necessary in
accordance with applicable law, Halsey's certificate of incorporation and
bylaws, each as amended to date, and all contracts binding on Halsey to give
timely notice of the annual meeting of its shareholders that first follows the
First Closing Date (the "Shareholder Meeting"). Subject to the fiduciary duty of
Halsey's directors and applicable law, Halsey shall use its reasonable best
efforts to solicit from the holders of Halsey's Voting Securities proxies in
favor of the adoption and approval of the Transactions Requiring Shareholder
Approval, and at the Shareholder Meeting shall do so first before considering
any other proposals, and shall take all other action necessary to secure the
approval of the holders of Halsey's Voting Securities (by vote or consent)
required by applicable law, Halsey's certificate of incorporation and bylaws,
each as amended to date, and all contracts binding on Halsey. The Proxy
Statement shall contain the affirmative recommendation of the board of directors
of Halsey in favor of the adoption of a resolution approving the Transactions
Requiring Shareholder Approval; provided, however, no director or
22
officer of Halsey shall be required to violate any fiduciary duty or other
requirement imposed by applicable law in connection therewith. In accordance
with Halsey's bylaws and applicable law, Halsey shall as promptly as is
reasonably practicable, but no later than September 30, 2004; provided, however,
that, if Halsey receives comments from the SEC on the Proxy Statement, Halsey
may extend such date to October 31, 2004 (the "Outside Meeting Date"), convene
the Shareholder Meeting. If (a) Halsey does not convene the Shareholder Meeting
on or before by the Outside Meeting Date or (b) Halsey does convene the
Shareholder Meeting by the Outside Meeting Date but does not secure Shareholder
Approval by the Outside Meeting Date or (c) anytime prior to Shareholder
Approval, proxies subject to the Voting Agreement represent less than two-thirds
of the issued and outstanding Voting Securities of Halsey, then the Purchaser
may, but shall not be required to, terminate this Agreement. The effects of such
termination shall be set forth in Section 9.2.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Seller hereby represents and warrants to the Purchaser that, except as
may be set forth in the Disclosure Schedules delivered to the Purchaser
simultaneously with the execution of this Agreement:
3.1. Organization.
Halsey is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York. Axiom is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and a wholly owned direct subsidiary of Halsey. The Seller is duly
qualified to do business if required to do so pursuant to the laws of each
jurisdiction in which it does business. The Seller has all requisite power and
authority to own and operate all of the Acquired Assets, to lease each of the
Facilities and the Par Equipment and to carry on the Business as presently and
heretofore conducted. Part 3.1 of the Disclosure Schedules identifies (a) the
name, jurisdiction of formation and principal place of business for each of
Halsey's Affiliates, (b) ownership interests of Halsey in each such Affiliate,
and (c) which, if any, of the Acquired Assets each such Affiliate owns or has
any rights or claims to. Each Affiliate of Halsey is duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation,
and is duly qualified to do business if required to do so pursuant to the laws
of each jurisdiction in which it does business.
3.2. Authority; Execution and Delivery; Enforceability; Equity
Capitalization.
(a) The Seller has the requisite power and authority to execute and
deliver this Agreement and the Related Agreements and to perform all of its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Related Agreements and the performance by the Seller of its
obligations hereunder and thereunder have been authorized by all requisite
action on the part of the Seller. This Agreement has been validly executed and
delivered by the Seller and constitutes, and each Related Agreement that is to
be executed and delivered by the Seller will, when executed and delivered by the
Seller, constitute, a legal, valid
23
and binding obligation of such the Seller, enforceable against the Seller in
accordance with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, fraudulent transfer, moratorium, reorganization or similar laws
affecting creditors' rights generally and to general equitable principles.
(b) The Seller has furnished or made available to the Purchaser true,
correct and complete copies of the Seller's Certificate of Incorporation, as
amended and as in effect on the date hereof, and the Seller's bylaws, as amended
and as in effect on the date hereof, and the terms of all securities convertible
into, or exercisable or exchangeable for, common stock of Halsey and the
material rights of the holders thereof in respect thereto.
(c) Except with respect to the Transactions Requiring Shareholder
Approval at the Shareholder Meeting, Halsey is not required under the New York
Business Corporation Law, Securities Exchange Act, any stock exchange rules or
any other applicable law to obtain the approval of its shareholders in order for
it to enter into any transaction, right or obligation contemplated by this
Agreement or any of the Related Agreements, including without limitation the
transactions, rights and obligations of the Parties relating to the First
Closing, the Use and License Agreement, the Brenner Facility Transactions and
the Wells Facility Transactions.
(d) As of the First Closing Date, the authorized capital stock of
Halsey is as set forth on Part 3.2(d) of the Disclosure Schedules. In addition,
as of the First Closing Date, the Voting Securities of Halsey is as set forth on
Part 3.2(d) of the Disclosure Schedules. All of such outstanding shares of
common stock have been, or upon issuance will be, validly issued and fully paid
and nonassessable. Except as set forth on Part 3.2(d) of the Disclosure
Schedules: (A) no shares of the Seller's capital stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Seller; (B) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Seller or any of its
Affiliates, or contracts, commitments, understandings or arrangements by which
the Seller or any of its Affiliates is or may become bound to issue additional
shares of capital stock of the Seller or any of its Affiliates or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any shares of capital stock of the Seller or any of its
Affiliates; (C) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Seller or any of its Affiliates or by which the
Seller or any of its Affiliates is or may become bound; (D) there are no
agreements or arrangements under which the Seller or any of its Affiliates is
obligated to register the sale of any of their securities under the Securities
Act; (E) there are no outstanding securities or instruments of the Seller or any
of its Affiliates which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Seller or any of its Affiliates is or may become bound to redeem a security of
the Seller or any of its Affiliates; (F) there are no securities or instruments
containing anti-dilution or similar provisions; and (G) the Seller does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement.
24
(e) The Voting Agreement is irrevocable and such Voting Agreement, and
proxies contained therein, confer the requisite number of votes of the debenture
holders option holders, stockholders, and/or holders of any other voting rights
of Halsey, as of the date hereof, on a non-diluted basis, and, assuming all
Persons who have been designated by the Parties as signatories to the Voting
Agreement execute and deliver the Voting Agreement, on a fully-diluted basis as
if all securities providing for conversion rights were converted, necessary to
approve the obligation to transfer the Acquired Assets to the Purchaser. The
Voting Agreement confers rights to the Purchaser as a third-party beneficiary.
3.3. Consents and Approvals; No Violations.
(a) Except as set forth in Part 3.3(a) of the Disclosure Schedules,
neither the execution and delivery of this Agreement nor the Related Agreements
by the Seller, nor the performance by the Seller of their obligations hereunder
or thereunder will: (i) violate the organizational documents of the Seller; (ii)
conflict with or result in a violation or breach of, or constitute a default
under, any contract, agreement or instrument to which the Seller is a party or
by which the Acquired Assets are bound (including, without limitation, any
Assumed Contract), or result in the creation or imposition of any Lien upon any
of the Acquired Assets; or (iii) violate or conflict with any law, rule,
regulation, judgment, order or decree of any court.
(b) Except with respect to the Transactions Requiring Shareholder
Approval which require approval only by the Persons holding two-thirds of
Halsey's Voting Securities, no filing with, and no permit, authorization,
consent or approval of, any Governmental Authority or any other Person is
necessary for the consummation by the Seller of the transactions contemplated by
this Agreement. Except as set forth on Part 3.3(b) of the Disclosure Schedules,
there are no Product Registrations for the Products.
3.4. Equipment.
(a) All of the Par Equipment is currently present at the Brenner
Facility.
(b) All of the Halsey Equipment is currently present at either the
Brenner Facility or the Wells Facility.
(c) All of the Par Equipment and the Halsey Equipment was, when last
used by the Seller, in working order, normal wear and tear excepted.
(d) Since February 29, 2004, no material changes have been made to or
occurred with respect to the Facilities, the Par Equipment or the Halsey
Equipment, except that Seller has discontinued manufacturing, labeling and
packaging operations at the Facilities and terminated substantially all of its
employees at the Facilities.
(e) EXCEPT AS SET FORTH IN THIS AGREEMENT OR IN ANY RELATED AGREEMENT,
(1) THE SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE ACQUIRED ASSETS, THE FACILITIES OR THE PAR EQUIPMENT (2) THE
PURCHASER IS PURCHASING THE ACQUIRED ASSETS "AS IS", AND (3) THE SELLER HEREBY
DISCLAIMS ALL
25
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
3.5. Title to Assets.
The Seller has good and marketable title to all the Acquired Assets.
As of the First Closing Date, the Purchaser shall acquire good and marketable
title to, and all right, title and interest of the Seller in and to, the First
Closing Acquired Assets, free and clear of all Liens and Environmental Claims,
other than Permitted Liens. As of the Second Closing Date, the Purchaser shall
acquire good and marketable title to, and all right, title and interest of the
Seller in and to, the Second Closing Acquired Assets, free and clear of all
Liens and Environmental Claims, other than Permitted Liens. As of the First
Closing Date there are no Liens, other than Permitted Liens, on any of the First
Closing Acquired Assets or the Second Closing Acquired Assets. The Seller owns
and is transferring to the Purchaser the formulas, master batch records,
analytical testing methods, other Intellectual Property and Transferred
Documents with respect to the Products. Subject to necessary regulatory
approvals, the Seller has all rights to manufacture, distribute, market and sell
the Products in the Territory and, in accordance with the terms of this
Agreement and the Related Agreements, the Seller is transferring all such rights
to the Purchaser. While the Seller owns the formulas, master batch records,
analytical testing methods, other Intellectual Property and Transferred
Documents relating to the Designated Products, to date, the Seller has not sold
the Designated Products under the Seller's name in the Territory and the Seller
has engaged in contract manufacturing of the Designated Products under which
Designated Products have been sold to Deliz Pharmaceutical Corp. for
distribution, marketing and sale in Puerto Rico by Deliz Pharmaceutical Corp.
under trademarks owned by Deliz Pharmaceutical Corp. Other than
Homatropine-Hydrocodone, the Products were made by the Seller at the Facilities
utilizing only the improvements at the Facilities, the Par Equipment and the
Acquired Assets. The Seller has not received regulatory approvals to market and
sell the Designated Products in the Territory.
3.6. Intellectual Property.
(a) Part 3.6(a) of the Disclosure Schedules sets forth a list of the
Intellectual Property and all licenses or similar agreements or arrangements to
which the Seller is a party, either as licensee or licensor, relating to the
Intellectual Property.
(b) Except as set forth on Part 3.6(b) of the Disclosure Schedules:
(i) the Seller is the sole owner of all rights, title and
interest in and to the Intellectual Property;
(ii) the Seller has not assigned, transferred, terminated,
licensed, pledged, or otherwise encumbered or disposed of any of the
Intellectual Property;
(iii) to the Seller's Knowledge, no Third Party has a superior
right to the Seller to use any of the Intellectual Property relating to the
Products;
26
(iv) to the Seller's Knowledge, no Third Party has questioned or
challenged the scope or validity of the Intellectual Property;
(v) the Seller has not received notice from any Third Party and
has no Knowledge that the use of the Intellectual Property infringes, has
infringed or has misappropriated, or will infringe the intellectual property
rights of any Third Party or has constituted or does or will constitute unfair
competition or unfair trade practices under the laws of any jurisdiction; and
(vi) none of the Intellectual Property is subject to any
contractual obligation restricting the Seller's use or transfer thereof within
the Territory or entitling others to use the same or in any way obligating the
Seller to make payments to others.
(c) The Intellectual Property included in the Acquired Assets
constitutes all of the rights to patents, trade secrets, know-how, proprietary
information and other intellectual property rights that were used in the
Business.
3.7. Computer Systems.
Part 3.7 of the Disclosure Schedules identifies (i) all of the electronic
data processing systems, information systems, computer software programs,
program specifications, charts, procedures, routines, report layouts and
formats, record file layouts, computer databases and related material
(collectively, the "Computer Systems") that are needed in the conduct of the
Business, (ii) whether such Computer Systems are owned or licensed to the Seller
and, (iii) if licensed, the name of such licensor. The Seller has, and except as
set forth on Part 3.7 of the Disclosure Schedules, the Purchaser shall have
following the Second Closing, all ownership, right and title to such Computer
Systems. Regardless of whether such Computer Systems are owned by, or licensed
to the Seller, the Purchaser shall have following the Second Closing the legal
right to use the Computer Systems as they are currently being used by the
Seller, including, but not limited to, the right to create derivative works and
to grant further sublicenses under such Computer Systems (to the extent Computer
Systems licensed to the Seller currently permit such rights). The Computer
Systems owned by the Seller, and, to the Knowledge of the Seller, the Computer
Systems licensed to the Seller, do not infringe upon the rights of any other
person or entity, nor has the Seller received any notice of a claim of such
infringement. Except as set forth in Part 3.7 of the Disclosure Schedules, there
are no sublicenses or other agreements relating to the use of the Computer
Systems by Third Parties.
3.8. Contracts.
The contracts listed in Part 3.8 of the Disclosure Schedules constitute all
of the material contracts relating to the Business, the Acquired Assets, the
Halsey Equipment or the Par Equipment or either of the Facilities to which the
Seller is a party (the "Contracts"). Except as set forth on Part 3.8 of the
Disclosure Schedules, each of the Contracts is in full force and effect and
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application affecting the
rights and remedies of creditors, and general principles of equity. Neither the
Seller nor, to the Seller's Knowledge, any other
27
party to any Contract is in default thereof, and no condition or set of facts
exists which, with notice, lapse of time or both would constitute a default
thereunder on the part of the Seller or, to the Seller's Knowledge, on the part
of any other party thereto. Except as contemplated by this Agreement, the Seller
has not assigned any of its interest in any Contract listed as Part 3.8 of the
Disclosure Schedules. The Seller shall have terminated each of the Terminated
Contracts on or prior to the First Closing Date and all sums due thereunder
shall be paid in full by the Seller and all obligations due thereunder shall be
performed by the Seller to completeness. Except for the consents to assignment
required for assignment of the Assumed Contracts to the Purchaser as set forth
in Part 2.3(a)(ii) of the Disclosure Schedules, no filing with or notice to, or
consent or approval of, any Person is required for the Seller's valid assignment
pursuant to an Assumption Agreement of the Assumed Contracts to the Purchaser in
accordance with the terms of such Assumed Contracts and applicable law. Subject
to the receipt of the consents to assignment set forth in Part 2.3(a)(ii) of the
Disclosure Schedules, upon assignment of each Assumed Contract to the Purchaser
pursuant to the Assumption Agreement, such Assumed Contract will be in full
force and effect as a contract between the Purchaser and the other parties
thereto, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, or other laws of general application
affecting the rights and remedies of creditors, and general principles of
equity.
3.9. Compliance with Law.
(a) The application numbers of the ANDAs for the applicable Products are as
set forth on Exhibit A.
(b) Except as provided on Part 3.9(b) of the Disclosure Schedules, the
Seller has no Knowledge that: (i) its conduct of the Business on or prior to the
First Closing Date was in violation of any Applicable Law or any private
limitation, restriction, covenant or condition; (ii) with respect to any
Product, the Seller was in violation of any Applicable Law as to the timely
filing with the FDA all required notices, supplemental applications and annual
or other reports or documents, including adverse experience reports; or (iii)
any manufacturing, testing, distributing and/or marketing of the Products on or
prior to the First Closing Date was in violation of any Applicable Law,
including those relating to investigational use, premarket clearance,
manufacturing in accordance with product specifications, good manufacturing
practices, labeling, advertising, record keeping, filing of reports and
security.
(c) Except as set forth on Part 3.9(c) to the Disclosure Schedules, no
Governmental Authority has commenced, or, to the Knowledge of the Seller
threatened to initiate, any action to withdraw its approval or request the
recall of any Product, or commenced or, to the Knowledge of the Seller,
threatened to initiate any action to enjoin production of any Product at any
facility.
(d) The Seller has made available to the Purchaser copies of all (i) ANDA
filings relating to the4Products, including without limitation any analytical,
sterility and biologic tests; (ii) reports of inspection observations relating
to the Products; (iii) establishment inspection reports relating to the
Products; and (iv) warning letters as well as any other documents received by
the Seller or any other Person from the FDA, DEA or any other Governmental
Authority
28
relating to any Product, either of the Facilities, the Halsey Equipment or the
Par Equipment and/or arising out of the conduct of the Business.
(e) None of the Seller or its officers, employees, or agents, nor to the
Seller's Knowledge any current or predecessor holder of any Product
Registrations nor any of their respective officers, employees or agents, has
made an untrue statement of material fact or fraudulent statement to FDA, DEA or
any other Governmental Authority, failed to disclose a material fact required to
be disclosed to the FDA, DEA or any other Governmental Authority, or committed
an act, made a statement, or failed to make a statement that could reasonably be
expected to provide a basis for the FDA to invoke its policy respecting "Fraud,
Untrue Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto with
respect to any Product.
3.10. Litigation.
Except as set forth on Part 3.10 of the Disclosure Schedules, there are no
Proceedings pending or, to Knowledge of the Seller, threatened against or
affecting the Seller, any Product, either of the Facilities, the Halsey
Equipment or the Par Equipment, the Business or any of the Acquired Assets.
3.11. Medical Information.
The Seller has delivered to the Purchaser copies of all serious adverse
event reports and periodic adverse event reports with respect to the Products
that have been filed with the FDA, including any correspondence or other
documents relating thereto. Part 3.11 of the Disclosure Schedules contains (i) a
schedule of all payouts made by or on behalf of the Seller (including, without
limitation, by any insurer) to any Person in respect of claims relating to any
Product, and (ii) a schedule of all actual or, to the Seller's Knowledge,
threatened claims made by any Person with respect to any Product against the
Seller or any prior owner of rights in the Product.
3.12. Brokers or Finders.
The Seller has had no dealings, negotiations or communications, whether in
writing or otherwise, with any broker(s), other intermediaries or other person
acting pursuant to the Seller's authority who will be entitled to make any claim
against the Purchaser for any commission, finder's fee or other fee may, in any
circumstance or event, be payable in connection with the transactions
contemplated by this Agreement, including without limitation the assignments of
the Wells Avenue Lease and the Brenner Contract of Sale Agreement.
3.13. Absence of Changes to the Acquired Assets.
Between the First Closing Date and the Second Closing Date, the Seller has
not sold, assigned, conveyed, transferred, pledged, permitted a Lien to be
placed upon, licensed or disposed any of the Acquired Assets other than as
contemplated in a transaction with the Purchaser as contemplated by this
Agreement or a Related Agreement.
29
3.14. Environmental Laws and Compliance.
(a) Except as set forth on Part 3.14(a) of the Disclosure Schedules,
to Seller's Knowledge, the Seller's Business is, and at all times has been, in
material compliance with all Environmental Laws applicable to the Business, the
Acquired Assets, the Halsey Equipment or the Par Equipment, either of the
Facilities, making of the Products, or the storage and disposal of Hazardous
Materials.
(b) Except as set forth on Part 3.14(b) of the Disclosure Schedules,
to Seller's Knowledge, no Release of Hazardous Materials has ever occurred at or
from the Facilities.
(c) Except as set forth on Part 3.14(c) of the Disclosure Schedules,
to Seller's Knowledge, neither Seller nor any owner of the Facilities has
received any notice whatsoever of pending or threatened litigation or
enforcement compliance actions under Environmental Laws.
(d) At no time after December 31, 2002 were any chlorinated solvents
used in any manner whatsoever (other than storage) at either of the Facilities,
including in connection with any manufacturing or other activity taking place at
either of the Facilities.
(e) At no time after September 30, 2003 were any chlorinated solvents
stored in any manner whatsoever at either of the Facilities, including in
connection with any manufacturing or other activity taking place at either of
the Facilities.
(f) To Seller's Knowledge, at no time during Seller's occupation of
the Facilities were any chlorinated solvents ever Released in any manner
whatsoever at or from either of the Facilities, including in connection with any
manufacturing or other activity taking place at either of the Facilities.
3.15. Notices. Except as set forth on Part 3.15 of the Disclosure
Schedules, Seller has not received any written notice that the Seller, the
Business or the conduct thereof by Seller or otherwise or either of the
Facilities: (i) is in violation of the requirements of any Environmental Laws;
(ii) is the subject of any Environmental Claim; or (iii) has actual or potential
liability under any Environmental Laws.
3.16. No Reporting or Remediation Obligations. Except as set forth on
Schedule 3.16, to the Seller's Knowledge, there are no Environmental Conditions
or other facts, circumstances or activities arising out of or relating to the
Business, the conduct thereof by Seller or otherwise, or the use, operation or
occupancy by the Seller of the Facilities, that result or reasonably could be
expected to result in (i) any obligation of the Seller to file any report or
notice, to conduct any investigation, sampling or monitoring or to effect any
Remedial Action under Environmental Laws; or (ii) liability, either to the NYDEC
or other Governmental Authority or Third Parties, for any Environmental Claim.
3.17. Taxes. The Seller has filed in compliance with all applicable Legal
Requirements all Tax returns and has paid all Taxes required to be paid as shown
to be due thereby and has duly paid all Tax Liabilities when due, in each case,
including, without limitation, interest and penalties. The Seller has taken no
action or failed to take action with respect to any Tax or Tax
30
Liabilities relating to the Acquired Assets, its business, operations, products
or sales, which would give rise to a Lien on any of the Acquired Assets. The
Seller is not required to collect or remit to New York State sales tax in the
ordinary course of the Seller's business.
3.18. Insurance. The Seller has previously delivered to the Purchaser the
various policies of general liability and other forms of insurance under which
the assets, properties and operations of the Seller are insured together with
the name of the insurance company, the type of coverage, the policy number,
coverage limits, information regarding all outstanding claims, whether or not
the policy is in full force and effect, and the expiration dates of the policy,
with respect to each such policy (the "Insurance Policies").
3.19. Real Estate.
(a) The copy of the Lease entered into by Halsey and Rendahl
Corporation on July 1, 2000, as amended by the First Amendment to Agreement of
Lease entered into on January 27, 2004 and the Second Amendment to Agreement of
Lease entered into on March 8, 2004, collectively attached hereto as Part
3.19(a) of the Disclosure Schedules (the "Wells Avenue Lease") is a true,
correct and complete copy of such Wells Avenue Lease and there has been no
assignment, amendment, modification, extension, renewal or supplement thereto of
any kind or nature.
(b) The copy of the Agreement of Lease entered into by Halsey and Par
as of March 17, 1999, as amended by the First Amendment to Agreement of Lease
entered into on January 14, 2004, the Second Amendment to Agreement of Lease
entered into on February 17, 2004, and the Third Amendment to Agreement of Lease
entered into on March 5, 2004, collectively attached hereto as Part 3.19(b) of
the Disclosure Schedules (the "Brenner Drive Lease") is a true, correct and
complete copy of such Brenner Drive Lease and there has been no assignment,
amendment, modification, extension, renewal or supplement thereto of any kind or
nature.
(c) The copy of the Brenner Contract of Sale attached hereto as Part
3.19(c) of the Disclosure Schedules and entitled `Contract of Sale' as Exhibit F
to the Brenner Avenue Lease is a true, correct and complete copy of the Brenner
Contract of Sale and there has been no assignment, amendment, modification,
extension, renewal or supplement thereto of any kind or nature.
(d) The Wells Avenue Lease represents the entire agreement between
Seller and Rendahl Corporation with respect to the leasing of the Wells
Facility.
(e) The Wells Avenue Lease is in full force and effect and is a valid,
binding and enforceable agreement between Halsey and Rendahl Corporation.
(f) Halsey entered into possession and occupancy of the Wells Facility
on or about July 1, 2000 and is in possession of and occupies the Wells Facility
for the purposes permitted under the Wells Avenue Lease.
31
(g) The term of the Wells Avenue Lease shall expire on June 30, 2004;
the rent due under the Wells Avenue Lease is paid by the Seller through March
31, 2004; the Landlord has no special right to terminate the Wells Avenue Lease
prior to such date, and, by the terms of paragraph 61 the Wells Avenue Lease,
Halsey has the contractual right to renew or extend the term of such Lease or
extend its rights under the Wells Avenue Lease.
(h) There are no uncured defaults by Rendahl Corporation or Halsey
under the Wells Avenue Lease, and Halsey has no Knowledge of any event or
condition which, with the passage of time or the giving of notice, or both,
would constitute a default by Rendahl Corporation or Halsey under the Wells
Avenue Lease. In addition, there are no existing defenses or offsets against the
enforcement of the Wells Avenue Lease by the tenant thereunder, whether when
such tenant was Halsey or, after giving effect to the transactions contemplated
hereby, when such tenant becomes and is the Purchaser.
(i) Halsey has not exercised nor waived the right to extend the term
of the Wells Avenue Lease for the additional three (3) year term as is
contemplated by Section 61 of the Wells Avenue Lease.
(j) Seller has not received, nor been informed of, the issuance of any
notice from any governmental authority, agency or body of a violation of the
zoning, safety, fire, health or other ordinances affecting the Wells Facility or
the Brenner Facility, or their respective occupancies or uses, other than as set
forth on Part 3.19(j) of the Disclosure Schedules.
(k) Halsey has not assigned, mortgaged, licensed or pledged all or any
part of its leasehold interests and estate under the Wells Avenue Lease nor
under the Brenner Contract of Sale.
(l) Halsey has not sublet all or any part of the Wells Facility or the
Brenner Facility, and possesses the full and unrestricted right and power to
make the representations set forth herein, to assign the Wells Avenue Lease and
the Brenner Contract of Sale pursuant to the respective Assignments thereof, and
both of such assignments are made free and clear of all liens, encumbrances,
security interests, equities, claims, restrictions or agreements.
(m) There are no management, services, equipment, supply, security,
maintenance, construction, concession or other agreements with respect to or
affecting either of the Facilities, except for the Agreements listed on Part
3.19(m) of the Disclosure Schedules (collectively, the "Service Agreements").
Neither Seller nor any other party to any of the Service Agreements is in
default thereunder and no event or omission has occurred which with the giving
notice or lapse of time, or both, would constitute a default or breach under the
Service Agreements; each of the Service Agreements which are included in the
Assumed Contracts is assignable by Halsey with, in some cases, the consent of
the other party thereto and will not be invalidated, violated or otherwise
adversely affected by the assignment thereof or the assignment of the Wells
Avenue Lease or the purchase and sale of the Brenner Facility pursuant to the
Brenner Contract of Sale, each as contemplated by this Agreement; the copies of
the Service Agreements previously delivered by the Seller to the Purchaser are
true and complete copies thereof, and the same have not been further amended,
modified or supplemented; and each of the
32
Services Agreements included in the Terminated Contracts shall be terminated by
Halsey on or prior to the First Closing Date and all sums due thereunder shall
be paid in full by Halsey.
(n) As of the First Closing Date: all buildings and improvements
(including all roads, parking areas, curbs, sidewalks, sewers and other
utilities) made by the Seller and included within either Facility have been
completed and installed in accordance with the plans and specifications
therefore as approved by the governmental authorities having jurisdiction
therefore. To Seller's Knowledge, no governmental authority has ordered any
improvements be made to the Facilities. To Seller's Knowledge, all street
paving, curbing, sanitary sewers, storm sewers or other municipal or other
governmental approvals which have been constructed or installed have been paid
for and will not hereafter be assessed, and all assessments heretofore made have
been paid in full. To Seller's Knowledge, there are no private contractual
obligations relating to the installation or connection to any sanitary sewers or
storm sewers affecting either Facility.
(o) As of the First Closing Date: to Seller's Knowledge, all permanent
certificates of occupancy and all of the licenses, permits, authorizations,
consents, certificates and approvals required by all governmental authorities
having jurisdiction thereof and the requisite certificates of the local board of
underwriters (or other body exercising similar functions) have been issued for
each Facility and have been paid for and are in full force and effect. To
Seller's Knowledge, the construction, operation and use by the Seller of the
buildings and other improvements located on both Facilities do not violate any
zoning, subdivision, building or similar law, ordinance, order, regulation or
recorded plat or any certificate of occupancy issued for either Facility.
Furthermore, Halsey has not received any written notice of any pending or
intended actions relating to rezoning of any of the Facilities, or relating to
the imposition of any special taxes or assessments, or payments in lieu thereof,
against any of the Facilities, or relating to an increase or proposed increase
in the tax assessment or rate against any Facility.
(p) To Seller's Knowledge, no portion of either Facility and no method
of operation of either Facility is in material violation of any Applicable Law
or provisions of either the Wells Avenue Lease or the Brenner Drive Lease, or
the Service Agreements, and there are presently no outstanding or uncured
notices of any such violations.
(q) There is, to the Knowledge of Seller, no action, suit or
proceeding pending or threatened against or affecting Seller, either Facility or
the owners of either Facility, relating to or arising out of the ownership,
management or operation of either property, in any court or before or by any
federal, state, county or municipal department, commissions, board, bureau or
agency or other Governmental Authority.
(r) Seller has no Knowledge of any defective condition, structural or
otherwise, with respect to either Facility arising after February 29, 2004 but
on or before the First Closing Date, including, without limitation, with respect
to the heating, ventilation and air conditioning, plumbing, sprinkler,
electrical drainage systems, or roofs, or any other fixtures, equipment or
systems at or serving the respective Facilities.
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(s) Water, sanitary sewer, storm sewer, drainage, electric, telephone,
gas and other public utility systems and lines serve both Facilities with
capacity and in a manner adequate to support similar activities and similar
volume and character of activities as had been previously conducted by the
Seller in the conduct of its Business at the Facilities on or prior to the First
Closing Date during active operations of the Facilities by the Seller, and such
systems and lines are directly connected to the lines and/or other facilities of
the respective public authorities or other utility companies providing such
services or accepting such discharge.
(t) Seller has not received any written notice of any condemnation
proceeding or other proceedings in the nature of eminent domain takings in
connection with either Facility, and to Seller's Knowledge, no such taking has
been threatened.
(u) The "M&S Agreement" referred to in Section 2.3 of the Brenner
Drive Lease has been terminated, is no longer in force and has no continuing
legal effect, all payments due thereunder have been paid in full, and all other
obligations one party to the other party have been fulfilled, and neither Par
nor Seller owe any remaining payments to one another with respect thereto.
(v) The entire $250,000.00 "Option Payment" (as such term is defined
in the Brenner Drive Lease) has been previously paid in full to Par by Halsey
separate and apart from any payment contemplated to be made under this
Agreement, and no other amount is due and payable by Seller to Par in connection
therewith or as a precondition to the exercise of the "Purchase Option" (as such
term is defined in the Brenner Drive Lease).
3.20. Disclosure. Neither this Agreement, nor any of the schedules,
attachments or exhibits hereto, contain any untrue statement of material fact or
omit a fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading. There is no
fact which has not been disclosed to the Purchaser of which the Seller is aware
and which materially affects the Business, the Acquired Assets, the Halsey
Equipment or the Par Equipment or either of the Facilities or the value of any
of the foregoing.
3.21. Due Diligence. The representations, warranties, covenants and
agreements of the Seller set forth in this Agreement, in the Related Agreements
and in the documents, schedules, certificates and agreements delivered pursuant
hereto shall not be affected or diminished in any way by any investigation or
failure to investigate at any time by or on behalf of the Purchaser or by the
Purchaser's knowledge.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller that:
4.1. Organization.
The Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York. The
Purchaser has all requisite power and
34
authority to own, lease and operate its properties and to conduct its business
as now being conducted.
4.2. Authority; Execution and Delivery; Enforceability.
The Purchaser has the requisite power and authority to execute and deliver
this Agreement and the Related Agreements and to perform all of its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Related Agreements and the performance by the Purchaser of its obligations
hereunder and thereunder have been authorized by all requisite action on the
part of the Purchaser. This Agreement has been validly executed and delivered by
the Purchaser and constitutes, and each Related Agreement that is to be executed
and delivered by the Purchaser will, when executed and delivered by the
Purchaser, constitute, a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization or similar laws affecting creditors' rights generally
and to general equitable principles.
4.3. Consents and Approvals; No Violations.
(a) Neither the execution and delivery of this Agreement nor any
Related Agreement by the Purchaser nor the performance by the Purchaser of its
obligations hereunder or thereunder will: (i) violate the certificate of
formation, operating agreement or other organizational document of the
Purchaser; (ii) conflict with or result in a violation or breach of, or
constitute a default under, any contract, agreement or instrument to which the
Purchaser or any of its Affiliates is a party or by which any of its or their
properties or assets are bound; or (iii) violate or conflict with any law, rule,
regulation, judgment, order or decree.
(b) No filing with, and no permit, authorization, consent or approval
of, any Governmental Authority is necessary for the consummation by the
Purchaser of the transactions contemplated by this Agreement.
4.4. No Proceedings.
There is no Proceeding pending or, to the Knowledge of the Purchaser,
threatened against or affecting the Purchaser which would affect the Purchaser's
ability to consummate the transactions contemplated by this Agreement and each
Related Agreement.
4.5. Brokers or Finders.
The Purchaser has had no dealings, negotiations or communications, whether
in writing or otherwise, with any broker(s), other intermediaries or other
person acting pursuant to the Purchaser's authority will be entitled to make any
claim against the Seller for any commission, finder's fee or other fee may, in
any circumstance or event, be payable in connection with the transactions
contemplated by this Agreement, including without limitation the assignments of
the Wells Avenue Lease and the Brenner Contract of Sale Agreement
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SECTION 5
COVENANTS
5.1. Transfer of Regulatory Filings; Responsibility for the Product.
(a) Promptly after the First Closing Date, the Parties shall file with
the FDA such information required to notify the FDA that each of the Products is
no longer being made or sold by the Seller under the applicable Product
Registrations. After the First Closing Date, promptly following the request of
the Purchaser, the Parties shall notify the FDA that each of the Products which
are the subject of the Purchaser's request will be made by the Purchaser
pursuant to a license under the applicable Product Registrations. The Seller
shall use its best commercial efforts to take any and all other actions required
by the FDA, DEA or other necessary governmental agencies, if any, to give effect
to the rights of the Purchaser to the Second Closing Acquired Assets under the
Use and License Agreement, including, without limitation, diligently fulfilling
all of the Seller's obligations under this Section 5.1.
(b) Until the Second Closing, the Seller shall have all responsibility
for any and all fees assessed with respect to the Products under the
Prescription User Drug Fee Act, as amended.
(c) Until the Second Closing, the Purchaser shall notify the Seller of
any and all complaints or inquiries received by the Purchaser concerning the
Products by sending written communications to the Seller to Kelly Robbins,
Manager of Quality Assurance and DEA Compliance, at krobbins@axiompharm.com, or
such other person or persons as the Seller may specify from time to time by
written notice to the Purchaser.
(d) Promptly after the Second Closing, the Seller shall file with the
FDA and other applicable Governmental Authorities all information required of a
former owner of the Products. The Parties also agree to use their best efforts
to take any and all other actions required by the FDA, DEA or other necessary
governmental agencies, if any, to effect the transfer of the ANDAs for the
Products from the Seller to the Purchaser. The Seller may retain and have access
to an archival copy of the ANDAs, including supplements and records that are
required to be kept under applicable law, and the Seller shall treat such
archived copies as Confidential Information of the Purchaser. With respect to
any Products sold or manufactured by the Seller at any time, whether before or
after any Closing, the Seller shall, at its expense, diligently conduct all
investigations relating to product quality complaints, adverse drug events and
all other issues necessitating such investigations, and with respect to ANDA
Products, the Seller shall be responsible for FDA reporting regarding the
foregoing for as long as the ANDAs are in its name. The Seller shall, at its
expense, promptly provide the Purchaser with all such information and reports
necessary or useful in connection with the Products to enable the Purchaser to
file all reports required to be filed by it and to comply with applicable law.
(e) Promptly after the Second Closing, the Purchaser and the Seller
shall take all actions necessary or required under applicable laws, rules, and
regulations, to reflect that the Second Closing Acquired Assets are owned by the
Purchaser.
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(f) After the Second Closing, the Seller shall notify the Purchaser of
any and all complaints or inquiries concerning the Products by sending written
communications to the Purchaser to the attention of Adel Kheir-Eldin by email to
Adel_Kleir-Eldin@ivax.com, with a copy by fax to (305) 575-4183, or such other
person or persons as the Purchaser may specify from time to time by written
notice to the Seller, within 48 hours of receiving such complaints or inquiries.
After the Second Closing, the Purchaser shall notify the Seller of any and all
complaints or inquiries of which it receives notice concerning the Products
manufactured or sold by the Seller by sending written communications to the
Seller to the attention of Kelly Robbins, Manager of Quality Assurance and DEA
Compliance, at krobbins@axiompharm.com, or such other person or persons as the
Seller may specify from time to time by written notice to the Purchaser, within
48 hours of receiving such complaints or inquiries.
(g) The Seller shall continue to conduct stability testing on the
Products manufactured by the Seller from the date of this Agreement through the
expiration date of the last lot of Product manufactured at the Facilities by the
Seller.
(h) Seller shall complete the Prednisolone Syrup annual reports for
May 2002 through April 2003 within 30 days after the First Closing Date. No
later than by May 31, 2004, Seller shall complete the Prednisolone Syrup annual
report for the period May 2003 through April 2004. No later than by May 31,
2004, Seller shall complete all other Product annual reports required by the FDA
which have been due since 12/1/2000 or cover the period ending April 2004 and
until the Second Closing Date. From the First Closing Date continuing until the
Seller's obligations under this Section 5.1(h) are satisfied, the Purchaser
shall permit the Seller and its representatives and agents to have reasonable
access during normal business hours to the Transferred Documentation necessary
in connection with the Seller's performance of its obligations under this
Section 5.1(h) and the Seller shall reimburse the Purchaser for its reasonable
out of pocket costs for having such information copied for the Seller.
(i) With respect to annual reports for Products required by the FDA
which are due on or before the Second Closing Date, the Seller shall prepare,
complete and timely file such reports. Subject to Section 5.1(h), with respect
to annual reports for Products required by the FDA which are due after the
Second Closing Date, the Purchaser shall prepare, complete and timely file such
reports. The Seller shall provide the Purchaser with all stability data relating
to the stability studies conducted by it pursuant to Section 5.1(g) and all
other information reasonably necessary or useful in the Purchaser's preparation,
completion and filing of any annual reports relating to the Products under this
Section 5.1(h) or (i). The Purchaser shall provide the Seller with all
information relating to any Products manufactured or sold by the Purchaser under
the Product Registrations prior to the Second Closing to which the Purchaser has
rights under this Agreement and the Use and License Agreement, reasonably
necessary or useful in the Seller's preparation, completion and filing of any
annual reports relating to the Products under this Section 5.1(i).
(j) To the extent the Seller does not fully and timely complete any of
reports required under this Section 5.1, the Purchaser may, but shall not be
obligated to, take such actions as necessary or useful to prepare, complete and
file such reports and the Seller shall reimburse the Purchaser for its fully
burdened costs of doing so.
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5.2. Access to Information.
(a) From the First Closing Date continuing until 2 (two) years after
the Second Closing Date, the Seller shall permit the Purchaser and its
representatives and agents to have reasonable access during normal business
hours to the Seller's books and records and personnel primarily relating to the
Acquired Assets, the Halsey Equipment or the Par Equipment, either of the
Facilities or the Business, and the Seller shall furnish promptly to the
Purchaser such available information concerning the Acquired Assets, the Halsey
Equipment and Par Equipment, either of the Facilities and the Business as the
Purchaser may reasonably request; provided the Purchaser shall reimburse the
Seller for its reasonable out of pocket costs for having such information copied
for the Purchaser to the extent such information is not included in any
information which was required to be delivered to the Purchaser at either
Closing or any other time at the Seller's expense.
(b) In addition, at any time prior to, on or after the First Closing
Date: (i) from the First Closing Date continuing until 2 years after the Second
Closing Date, unless a longer period is required by law, the Seller shall grant
the Purchaser and its employees, attorneys, accountants, officers,
representatives and agents, during normal business hours and upon reasonable
advance written notice, reasonable access to the Retained Information, for
review and photocopying by the Purchaser, at the Purchaser's expense, at the
reasonable request of the Purchaser; and (ii) the Seller shall cause its
employees, agents, auditors, Affiliates and representatives to cooperate with
the Purchaser to ensure the orderly transition of the Business from the Seller
to the Purchaser as of the First Closing Date and to minimize any disruption to
the Business and the other respective businesses of the Parties that might
result from the transactions contemplated hereby. Retained Information will be
subject to the confidentiality obligations contained in Section 5.3. Any
Retained Information to be delivered or disclosed to the Purchaser in accordance
with this Section 5.2(b) may be redacted or withheld by the Seller to the extent
such Retained Information relates to products (other than the Products) and
businesses (other than the Business) owned or operated by the Seller.
(c) Nothing in this Section 5.2 or otherwise in this Agreement shall
require the disclosure or access by any Party of any documents or information
that would cause such Party to forfeit or waive attorney-client privilege
accorded it under applicable law.
5.3. Confidentiality.
(a) As used herein, the term "Confidential Information" shall mean (i)
any information that relates exclusively to the Products or their development,
manufacture, testing or FDA approval, or manufacturing procedures, manufacturing
processes, manufacturing equipment, plant layouts, quality control procedures,
and quality control standards, and any other information included in or related
to the Acquired Assets, the Halsey Equipment or the Par Equipment, or either of
the Facilities ("Confidential Asset Information"); and (ii) any information
regarding the other business, other operations or other products of the Seller
or the Purchaser, as the case may be, that has been disclosed to the other Party
in connection with the transactions contemplated by this Agreement or the
Related Agreements, as the case may be ("Confidential Party Information").
38
(b) Each Party shall retain Confidential Party Information of the
other Party and the Seller retain the Confidential Asset Information, in each
case in strict confidence and shall not, directly or indirectly, publish or
disclose it to any Third Party, or use such Confidential Information for any
purpose other than for the purposes of this Agreement or the Related Agreements
without the prior written consent of the other Party. Each Party agrees that it
shall not communicate such Confidential Information except to its employees,
advisors, representatives and contractors who have a need to know it. Each Party
shall ensure that any employees, advisors, representatives or contractors who
are placed in a position to learn such Confidential Information will have been
previously made aware of the terms of this Agreement, have employment agreements
or other agreements obligating them to keep such information confidential
consistent with the terms of this Agreement and each Party shall indemnify the
other Party against the misuse of such Confidential Information by its
employees, advisors, representatives or contractors. For the avoidance of doubt,
the Purchaser shall be under no obligation to maintain the confidentiality of
any of the Confidential Asset Information and it may use and disclose the
Confidential Asset Information in any manner it chooses in its sole discretion.
(c) The obligations of confidentiality and nondisclosure shall not
apply to Confidential Information which:
(i) at the time of disclosure is in the public domain;
(ii) after disclosure becomes part of the public domain through
no act or omission by the receiving Party; or
(iii) a Party hereto is compelled to disclose by a court or other
tribunal of competent jurisdiction. In this case, the compelled Party shall give
the disclosing Party prompt notice so that the disclosing Party can seek a
protective order, and shall exercise reasonable efforts to ensure that the
information is accorded confidential treatment by the court or other tribunal.
(d) The obligations of confidentiality and nondisclosure shall not
apply to Confidential Party Information which:
(i) as shown by written records or other competent proof was in
the possession of the receiving Party prior to disclosure or development under
this Agreement;
(ii) is rightly received by the receiving Party, without
obligation of secrecy, from a Third Party who was entitled to receive and
transfer such; or
(iii) as shown by written records or other competent proof is
independently developed by employees of the receiving Party who did not have
access to Confidential Information.
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(e) A Party shall also be entitled to disclose Confidential Asset
Information or the other Party's Confidential Party Information, as the case may
be (i) that is required to be disclosed in compliance with applicable laws or by
order of any governmental body or a court of competent jurisdiction; (ii) as may
be necessary or appropriate in connection with the enforcement of this
Agreement; (iii) as required in furtherance of a Party's obligations under this
Agreement or the Related Agreements; (iv) as necessary or appropriate in
connection with disclosures or filings made with the FDA or other Governmental
Authorities relating to the Business or the Purchaser's ownership of the
Acquired Assets, manufacture of the Products, operation and use of the
Facilities, the Halsey Equipment or the Par Equipment (in each case, including,
without limitation, with respect to any Retained Information); (v) as may be
necessary to Third Parties in connection with business transactions with the
Parties, provided, that such Third Parties shall be bound by a confidentiality
agreement obligating them to keep such information confidential consistent with
the terms of this Agreement; and (vi) as may be required otherwise provided that
a Party give the other Party an outline of the material to be disclosed and such
other Party shall consent to such disclosure; provided, that the Party required
to disclose such information shall use commercially reasonable efforts to obtain
confidential treatment of such information by the agency or court or other
disclosee to the maximum permitted extent under law, and that, in the case of
disclosure under (i) shall provide the other Party with a copy of the proposed
disclosure in sufficient time to allow reasonable opportunity to comment
thereon.
(f) Each Party shall be entitled, in addition to any other right or
remedy it may have, at law or in equity, to an injunction, without the posting
of any bond or other security, enjoining or restraining any other Party from any
violation or threatened violation of this Section 5.3.
5.4. Taxes.
The Seller shall pay in a timely manner, no later than within 20 days of
the First Closing Date, all Taxes, other than sales taxes, resulting from or
payable in connection with the First Closing pursuant to this Agreement,
regardless of the Person on whom such Taxes are imposed by Legal Requirements.
The Seller shall pay in a timely manner, no later than within 20 days of the
Second Closing Date, all Taxes, other than sales taxes, resulting from or
payable in connection with the Second Closing pursuant to this Agreement,
regardless of the Person on whom such Taxes are imposed by Legal Requirements.
In each case, the Seller shall promptly provide to the Purchaser evidence of the
Seller having made such payments. Furthermore, with respect to any such payments
to be made with respect to the First Closing which have not been made by the
Second Closing Date and to the extent of any breach of Section 3.17, the
Purchaser shall be entitled to set off against the amounts that would otherwise
by due to the Seller at the Second Closing such payment amounts and tax
liabilities, as the case may be.
5.5. Publicity.
Except as otherwise contemplated by this Agreement or required by law or
applicable SEC or stock exchange requirements, neither the Purchaser nor the
Seller shall, and each of them shall cause their respective Affiliates,
representatives and agents not to, issue or cause the publication of any press
release or public announcement with respect to the transactions
40
contemplated by this Agreement. The content of the initial press release for
each Party announcing the execution of this Agreement shall be mutually agreed
upon by the Purchaser and the Seller. Unless disclosure is required by
applicable law, no Party shall disclose the Purchase Price or any payment
thereof.
5.6. Further Assurances.
Each Party shall from time to time after the First Closing, without
additional consideration, execute and deliver such further instruments and take
such other action as may be reasonably requested by the other Party to make
effective the transactions contemplated by this Agreement and each Related
Agreement.
5.7. Security Interest of the Purchaser.
On the First Closing Date, the Seller consents to the Purchaser filing
UCC-1 financing statements on the Second Closing Acquired Assets to help secure
the Purchaser's first priority security interest in the Second Closing Acquired
Assets as contemplated by the Security Agreement. The Seller shall execute and
deliver all such additional documents and filings, and provide all cooperation
to the Purchaser, necessary or useful in completing the filings and granting of
the first priority security the interest contemplated by this Section 5.7.
5.8. Non-Solicitation.
From the First Closing Date and continuing for a period of one (1) year
after the Second Closing Date, the Seller shall not directly or indirectly
solicit, divert or take away any employees of the Purchaser, notwithstanding
that such employees may have been originally obtained or recruited through the
efforts of the Seller.
5.9. Additional Registration Statements; Subsequent Placements; Redemption.
Halsey hereby covenants and agrees that Halsey shall not, by amendment of
its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Agreement, and will at all times in good faith carry
out all the provisions of this Agreement. Without limiting the generality of the
foregoing, from the First Closing Date until Shareholder Approval: (a) Halsey
shall not file a registration statement under the Securities Act other than (i)
an amendment to a Form S-8 that has been filed as of the First Closing Date, and
(ii) pursuant to demand registration rights held by a Third Party on or prior to
the First Closing Date; (b) Halsey shall not, directly or indirectly, offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition of ) any of
its or its Affiliates equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for the common stock of Halsey or Voting Securities
if such securities have voting rights; (c) Halsey shall issue, if at all, no
more than 10,500,000 of its authorized, reserved shares of common stock to any
of its existing shareholders, option holders
41
and warrant holders listed, and in any case shall issue no more than its
currently authorized 80,000,000 shares of common stock until after Shareholder
Approval; and (d) Halsey shall not subdivide (by any stock split, stock
dividend, recapitalization or otherwise) any outstanding shares of its common
stock into a greater number of shares. Furthermore, prior to the Stockholder
Meeting, Halsey shall not redeem, call, cancel or take any other similar action
relating to, nor approve any action by any Third Party to redeem, call, cancel
or take any other similar action relating to, any debentures of Halsey which are
outstanding as of the First Closing Date.
5.10. No Additional Liens.
Subject to Section 5.7, after the First Closing Date the Seller (a) shall
not, and shall not permit or authorize any Affiliate or Third Party to, sell,
assign, convey, transfer, pledge, create or permit a Lien to be placed upon,
license or dispose any of the Acquired Assets, and (b) shall use its best
efforts to immediately remove any Lien that is placed on any of the Acquired
Assets. Except for transfers to the Purchaser contemplated by this Agreement or
in any Related Agreement, the Seller shall not sell, transfer, lease or
otherwise dispose of any Acquired Assets or authorize or create any obligation
to do so.
5.11. Inspection.
The Purchaser shall notify the Seller of the date on which the Purchaser
shall take a final physical asset count of the Halsey Equipment and the Par
Equipment (the "Final Asset Measurement Date"), which date shall be within 30
days following the First Closing Date. The Seller shall have the right (but not
the obligation) to observe and jointly perform such count together with the
Purchaser. On the Final Asset Measurement Date, with or without the Seller, a
physical asset count shall be conducted by the Purchaser in order to determine
the amount of asset shortfall, if any, in the Halsey Equipment and the Par
Equipment as of the Final Asset Measurement Date (the "Closing Asset
Shortfall"). Promptly upon completion of the final physical asset count, the
Purchaser shall determine if any items are missing from the Halsey Equipment or
the Par Equipment which are listed on Exhibit C and Exhibit K, respectively, and
if there are missing items, then the Purchaser and the Seller shall jointly
determine in good faith the value of the Closing Asset Shortfall.
In the event the Purchaser and the Seller agree on the Closing Asset
Shortfall and the value thereof, the Closing Asset Shortfall shall be final and
the Seller shall promptly pay to the Purchaser the full amount of the value of
the Closing Asset Shortfall. In the event the Purchaser and the Seller can not
agree on the Closing Asset Shortfall and the value thereof within 30 days
following the Final Asset Measurement Date or such later time as mutually agreed
by the Parties, then the Purchaser and the Seller hereby agree to submit such
dispute to a internationally recognized independent auditing firm or mutually
agreeable appraiser that is not then engaged by either Party for assurance
services (the "Auditor"), and the Auditor shall promptly (but in any event no
later than by the Second Closing) determine the aspects of the Closing Asset
Shortfall and the value thereof which have not been agreed to based upon
evidence on the presence or absence of such items and the fair market value
thereof, and such determination shall be binding
42
and final, and the Seller shall promptly pay to the Purchaser the full amount of
the value of the Closing Asset Shortfall.
5.12. Insurance.
The Seller shall maintain, at its expense, products liability and general
liability "tail coverage" naming the Purchaser as additional insured, having a
limit of not less than Five Million Dollars ($5,000,000) in the aggregate, for a
period from the date hereof until three (3) years from the Second Closing Date,
covering the Products manufactured or sold by the Seller on or prior to the
First Closing. The Seller shall provide to the Purchaser 30 days prior written
notice of any cancellation or change in the foregoing coverage. Upon request of
the Purchaser, the Seller shall provide to the Purchaser certificates of
insurance evidencing the foregoing coverage.
5.13. Removal of Inventory.
If on or prior to the First Closing Date Halsey fails to remove any assets,
furniture, chemicals and other materials or documents at either Facility which
are not included in the Acquired Assets or the Par Equipment, including, without
limitation, the Inventory, then the Purchaser may, at its option and in its sole
discretion, (a) require Halsey to complete the removal of such assets,
furniture, chemicals and other materials and documents, or (b) remove such
assets, furniture, chemicals and other materials and documents itself and Halsey
shall immediately pay the Purchaser its fully burden cost of having such items
removed from the Facilities and properly disposed of, and if such payment is not
received prior to the Second Closing, then set off against and reduce the Second
Closing Payment such amounts which are due under this Section 5.13.
SECTION 6
CONDITIONS
6.1. Conditions to Each Party's Obligations.
The respective obligations of each Party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver at
or prior to either Closing that there shall not be in effect any statute,
regulation, order, decree or judgment of any Governmental Authority which makes
illegal or enjoins or prevents the consummation of the transactions contemplated
by this Agreement.
6.2. Conditions to Obligations of the Purchaser.
The obligation of the Purchaser to effect each Closing shall be further
subject to the satisfaction or waiver by the Purchaser at or prior to the
applicable Closing of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Seller made in this Agreement and the Related Agreements shall be true
and correct in all
43
material respects as of the applicable Closing Date as though made on such
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
shall be true and correct in all material respects on and as of such earlier
date).
(b) Obligations and Covenants. The Seller shall have performed in all
material respects all obligations and covenants required to be performed or
complied with by the Seller under this Agreement by the time of the applicable
Closing.
(c) Liens on the Brenner Facility and the Par Equipment. With regard
to the First Closing, as of the First Closing Date the Brenner Facility and the
Par Equipment shall be free and clear of all Liens and encumbrances, other than
the Permitted Exceptions (as such term is defined in the Brenner Contract of
Sale).
(d) Actions and Documents. For the First Closing, the Seller shall
have undertaken, caused to be undertaken, delivered to the Purchaser and/or
caused to be delivered to the Purchaser, as applicable, each of the actions,
documents and instruments, as the case may be, set forth in Section 2.5(b). For
the Second Closing, the Seller shall have undertaken, caused to be undertaken,
delivered to the Purchaser and/or caused to be delivered to the Purchaser, as
applicable, each of the actions, documents and instruments, as the case may be,
set forth in Section 2.6(b).
6.3. Conditions to Obligations of the Seller.
The obligation of the Seller to effect each Closing shall be further
subject to the satisfaction or waiver by the Seller at or prior to the
applicable Closing of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Purchaser made in this Agreement and the Related Agreements shall be true
and correct in all material respects as of the applicable Closing Date as though
made on the applicable Closing Date, except to the extent such representations
and warranties expressly related to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects on and as of such earlier date).
(b) Obligations and Covenants. The Purchaser shall have performed in
all material respects all obligations and covenants required to be performed or
complied with by the Purchaser under this Agreement by the time of the
applicable Closing.
(c) Actions and Documents. For the First Closing, the Purchaser shall
have undertaken, caused to be undertaken, delivered to the Seller and/or caused
to be delivered to the Seller, as applicable, each of the actions, documents and
instruments, as the case may be, set forth in Section 2.5(c). For the Second
Closing, the Purchaser shall have undertaken, caused to be undertaken, delivered
to the Seller and/or caused to be delivered to the Seller, as applicable, each
of the actions, documents and instruments, as the case may be, set forth in
Section 2.6(c).
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SECTION 7
AMENDMENTS
7.1. Amendments.
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the Parties hereto. No delay or failure on the part of any
Party hereto in exercising any right, power or privilege under this Agreement or
under any Related Agreement shall impair any such right, power or privilege or
be construed as a waiver of any default or any acquiescence therein. No single
or partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege, or the exercise of any other
right, power or privilege
SECTION 8
SURVIVAL; INDEMNIFICATION
8.1. Survival of Representations.
The representations and warranties contained in this Agreement (including
in Sections 3 and 4 as well as in the Exhibits, Schedules and Disclosure
Schedules attached hereto), in any Related Agreement, the Seller's Officer's
Certificate, the Purchaser's Officer's Certificate and in any other document
delivered in connection herewith or therewith, together with the related
obligations to indemnify and hold harmless under Section 8.3(a) and Section
8.4(a), shall survive each Closing and shall terminate at the close of business
on the third (3rd) anniversary of the Second Closing Date; provided, however,
that such representations and warranties, together with the related obligations
to indemnify and hold harmless under Section 8.3(a), shall not terminate with
respect to:
(a) Representations and warranties made by Seller in Sections 3.5,
3.14, 3.15, 3.16 and 3.17 and Seller's related obligation to indemnify and hold
harmless the Purchaser under Section 8.3(a) with respect to such representations
and warranties as well as Seller's related obligation to indemnify and hold
harmless the Purchaser for Losses covered by Sections 8.2(a) or (b), which
representations and warranties and obligations to indemnify and hold harmless
shall survive each Closing and any termination of this Agreement forever; and
(b) Any item as to which the Person to be indemnified shall have made
a claim by delivering a notice of such claim before the expiration of the
applicable period for indemnification (stating in reasonable detail the basis of
such claim) pursuant to Section 8.4 to the Party to be providing the
indemnification.
8.2. Survival of Other Provisions.
(a) Sections 2, 5 (other than Section 5.3) and 8 (except as set forth
in Section 8.1) shall survive both the First Closing and the Second Closing, and
subject to Section 9, shall
45
continue forever. Sections 10.7, 10.12, 10.13, 10.14, 10.15 and 10.16 shall
survive both the First Closing and the Second Closing and shall continue
forever.
(b) Section 5.3, together with any liability and obligation to
indemnify and hold harmless relating to any breach of Section 5.3, shall survive
for 7 years following the Second Closing Date or the termination of this
Agreement, whichever is longer.
8.3. Indemnification by the Seller.
The Seller shall indemnify the Purchaser, its Affiliates, and its and their
respective officers, directors, employees, shareholders, agents and
representatives against, and hold them harmless from, any loss, liability,
obligation, claim, damage or expense (including reasonable legal fees and
expenses and consultants' fees and natural resource damages where applicable)
("Losses"), as incurred (payable promptly upon written request), to the extent
arising from or in connection with or otherwise with respect to:
(a) any breach of any representation or warranty of the Seller which
is contained in this Agreement (including in Section 3 as well as in the
Exhibits, Schedules and Disclosure Schedules attached hereto), in any Related
Agreement, the Seller's Officer's Certificate and in any other document
delivered in connection herewith or therewith;
(b) any breach of any covenant or agreement of the Seller or breach of
any license rights granted by the Seller to the Purchaser contained in this
Agreement or any Related Agreement;
(c) the failure by the Seller to assume, pay, perform and discharge
any Excluded Liabilities;
(d) directly or indirectly,
(i) any Environmental Conditions on, at, under or emanating from
the Facilities occurring or existing on or before the First Closing Date;
(ii) any violation or non-compliance by the Seller, the Business,
or the conduct of the Business by the Seller or otherwise at any time with any
Environmental Laws;
(iii) failure by Seller or its agents, employees, consultants or
contractors to comply with Environmental Laws applicable to the Business, the
Acquired Assets, the Halsey Equipment or the Par Equipment, or either of the
Facilities on or prior to the First Closing Date;
(iv) treatment, storage, disposal or Release at any location of
Hazardous Materials used, generated, handled, stored, manufactured, originating
at or transported from any of the Facilities or in connection with the Business
on or prior to the First Closing Date;
(v) Environmental Claims, including without limitation the NYDEC,
other Governmental Entities and any other Third Party, alleging a Environmental
Conditions on, at, under or emanating from the Facilities or damages arising
from personal injury, property
46
damage or damage to natural resources arising from or related in any way to
Environmental Conditions on, at, under or emanating from the Facilities or the
conduct of the Business on or before the First Closing Date;
(vi) breach of any of the representations or warranties set forth
in Section 3.14, 3.15 or 3.16; or
(vii) any Environmental Conditions on, at, under or emanating
from any of the Facilities after the First Closing Date arising from a Release
taking place on or before the First Closing Date.
(e) any challenge, suit, action or investigation relating to the
Shareholder Approval, the Shareholder Meeting, the Proxy Statement, the Voting
Agreement or any of the transactions contemplated by this Agreement or any
Related Agreement;
(f) except as otherwise expressly provided herein, any Liabilities
(other than Assumed Liabilities) arising out of or resulting from the Seller's
ownership of the Acquired Assets, use of the Halsey Equipment or the Par
Equipment, operation of either of the Facilities or conduct of the Business,
including, without limitation, any product liability, breach of warranty or
similar causes of action or claims, whether in tort, contract or otherwise,
regardless of when asserted, which resulted from the use or misuse of any
Product sold by the Seller; and
(g) any fees, expenses or other payments incurred or owed by the
Seller to any brokers, financial advisors or comparable other Persons retained
or employed by it in connection with the transactions contemplated by this
Agreement.
8.4. Indemnification by the Purchaser.
The Purchaser shall indemnify the Seller, its Affiliates, and its and their
respective officers, directors, employees, shareholders, agents and
representatives against, and agrees to hold them harmless from, any Losses, as
incurred (payable promptly upon written request), to the extent arising from or
in connection with or otherwise with respect to:
(a) any breach of any representation or warranty of the Purchaser
which is contained in this Agreement, in any Related Agreement, the Purchaser's
Officer's Certificate and in any other document delivered in connection herewith
or therewith;
(b) any failure of the Purchaser to pay or perform any Assumed
Liabilities; or
(c) except as otherwise expressly provided herein, any Liabilities
(other than Excluded Liabilities) arising out of or resulting from any product
liability, breach of warranty or similar causes of action or claims, whether in
tort, contract or otherwise, regardless of when asserted, which resulted from
the use or misuse of any Product sold by the Purchaser.
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8.5. Procedures.
(a) In order for a Party (the "Indemnified Party") to be entitled to
the indemnification provided for under this Agreement in respect of, arising out
of or involving a claim made by any Person against the Indemnified Party (a
"Third Party Claim"), such Indemnified Party must notify the indemnifying Party
(the "Indemnifying Party") in writing (and in reasonable detail) of the Third
Party Claim promptly, and in any event within 10 business days after receipt by
such Indemnified Party of notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure. Thereafter, the Indemnified
Party shall deliver to the Indemnifying Party, within 10 business days' after
the Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so elects by giving written notice of such election to the Indemnified
Party within 10 business days of its receipt of the Indemnified Party's
notification of the Third Party Claim, to assume the defense thereof with
counsel reasonably acceptable to the Indemnifying Party; provided, that no
Indemnifying Party may so assume such defense unless it also acknowledges to the
Indemnified Party in writing that it is obligated to indemnify the Indemnified
Party against any Losses arising from such Third Party Claim as provided herein.
Should the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the so long as the Indemnifying Party diligently conducts such defense it
shall not be liable to the Indemnified Party for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel employed
by the Indemnified Party for any period during which the Indemnifying Party has
not assumed the defense thereof (other than during any period in which the
Indemnified Party shall have failed to give notice of the Third Party Claim as
provided above). Whether or not the Indemnifying Party chooses to defend a Third
Party Claim, all Parties shall cooperate in the defense thereof. Such
cooperation shall include the retention and (upon the request of the Party
defending the Third Party Claim) the provision to the Party defending the Third
Party Claim of records and information that are reasonably relevant to such
Third Party Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. If the Indemnifying Party assumes the defense of a Third Party Claim,
the Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying Party's
prior written consent (which consent shall not be unreasonably withheld). If the
Indemnifying Party does not assume the defense of a Third Party Claim, the
Indemnified Party may settle, compromise or discharge, such Third Party Claim
without the Indemnifying Party's prior written consent, and the Indemnifying
Party shall be obligated to indemnify the Indemnified Party for any Losses
(including amounts paid in settlement) incurred by the Indemnified Party which
result from such Third Party Claim to the extent such Losses are covered by the
terms of the
48
indemnities contained in Sections 8.3 or 8.4 (as applicable) If the Indemnifying
Party assumes the defense of a Third Party Claim, the Indemnified Party shall
agree to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the Indemnified Party completely in
connection with such Third Party Claim and that would not otherwise adversely
affect the Indemnified Party.
(c) In the event any Indemnified Party should have a claim against any
Indemnifying Party under Sections 8.3 or 8.4 that does not involve a Third Party
Claim being asserted against or sought to be collected from such Indemnified
Party, the Indemnified Party shall deliver notice of such claim with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
liability that it may have to such Indemnified Party under Sections 8.3 or 8.4,
except to the extent that the Indemnifying Party demonstrates that it has been
prejudiced by such failure. If the Indemnifying Party disputes its liability
with respect to such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such dispute and, if
not resolved through negotiations, such dispute shall be resolved by litigation
in an appropriate court of competent jurisdiction.
8.6. Limitation; Exclusions from Limitation.
Notwithstanding anything to the contrary contained herein, but except as
provided below in this Section 8.6, the Seller's aggregate liability to the
Purchaser for Losses under Section 8.3(a) will in no event exceed Two Million
Five Hundred Thousand Dollars ($2,500,000). The foregoing limitation on the
Seller's liability shall not apply to, and the calculation of the Seller's
aggregate liability under such limitation shall not include, any Losses
resulting from a breach of the representations and warranties made by Seller
under (i) Section 3.17, or (ii) Sections 3.14, 3.15 or 3.16.
SECTION 9
TERMINATION
9.1. Termination prior to Second Closing Date.
This Agreement may be terminated at any time prior to the Second Closing
Date:
(a) by mutual written consent of the Parties;
(b) by either Party sending notice to the other Party if a
Governmental Authority shall have issued an injunction, order, decree or ruling
or taken any other action that permanently restrains, enjoins, or otherwise
prohibits the transactions contemplated by this Agreement and such injunction,
order, decree, ruling or other actions shall have become final and
nonappealable; provided that the Party seeking to terminate this Agreement
pursuant to this Section 9.1(b) shall not have taken any action, or failed to
take any action, that would cause it to
49
be in breach of any of its agreements, representations, warranties or covenants
set forth in this Agreement;
(c) by the Purchaser in the event the Second Closing Date does not
occur on or before 10 business days following the date of Shareholder Approval,
if and when the Purchaser so elects in its sole discretion by sending notice to
the Seller of such election; provided, however, that the Purchaser will have no
right to terminate this Agreement pursuant to this Section 9.1(c) if, as of the
close of the 10th business day following the date of Stockholder Approval, the
Seller has fulfilled all of its obligations under this Agreement and is not then
in breach of any obligation under the Agreement, including, without limitation,
taking or causing to be taken all actions required under Section 2.6(b),
delivery of all documents and agreements required under Section 2.6(b), complete
performance of all covenants pursuant to Section 5, and all conditions to the
obligations of the Purchaser set forth in Section 6.2 with respect to the Second
Closing shall have been satisfied; or
(d) by either Party by sending notice to the other Party on or after
January 1, 2005 in the event that (i) by January 1, 2005 Shareholder Approval
has not been obtained and (ii) a meeting of Halsey's shareholders has been held
during which Shareholder Approval of the Transactions Requiring Shareholder
Approval was considered.
9.2. Effectiveness and Effects of Termination. The termination of this
Agreement in accordance with Sections 2.11 or 9.1 shall be effective upon notice
of such termination being given the by the terminating Party to the other Party.
Within one (1) business day following notice of such termination being given the
by the terminating Party to the other Party, the Seller shall pay to the
Purchaser the full amount of the Refundable Amount as well as any other amounts
which are then due and payable by the Seller to the Purchaser under this
Agreement or any Related Agreement. The Use and License Agreement may not be
terminated by the Seller with respect to the Non-Packaging Assets unless and
until this Agreement is terminated in accordance with this Section 9 and the
Seller pays to the Purchaser the full amount of the Refundable Amount as well as
any other amounts which are then due and payable by the Seller to the Purchaser
under this Agreement or any Related Agreement. Notwithstanding the foregoing,
with respect to the Packaging Equipment, the Use and License Agreement shall
survive any such termination of this Agreement. Furthermore, following such
termination of this Agreement:
(a) The Parties shall have no further liability hereunder with respect
to the Second Closing except that each Party shall remain liable to the other
for any breach by it of this Agreement or, for the applicable time periods set
forth in Section 8, of any representation, warranty or covenant contained herein
occurring before the date of such termination;
(b) The transactions contemplated by the First Closing shall remain
unaffected and shall not be terminated or revoked in any way, other than the
return to the Purchaser of the Refundable Amount;
(c) Notwithstanding Section 8.2(a), Sections 2.1(b), 2.6, 2.9(b), 2.10
and 2.11 shall not survive such termination. Notwithstanding Section 8.2(a),
Section 5 shall not survive such termination other than Sections 5.2 (for 2
years following such termination), 5.3, 5.4 and
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5.6, 5.12 and 5.13, each of which shall survive any such termination of this
Agreement, and 5.7 and 5.10, each of which shall survive any such termination of
this Agreement until all amounts owed and obligations secured by the Security
Agreement have been paid in full to the Purchaser by the Seller. Sections 9.3,
10.7, 10.12, 10.13, 10.14, 10.15 and 10.16 shall survive any such termination;
and (d) Termination, relinquishment or expiration of this Agreement for any
reason shall be without prejudice to any rights, claims or amounts owed that
shall have accrued to the benefit of either Party prior to such termination,
relinquishment or expiration. Such termination, relinquishment or expiration
shall not relieve either Party from obligations that are expressly indicated to
survive termination or expiration of this Agreement.
9.3. Limitation on the Purchaser's Liability. In no event shall the
Purchaser or its Affiliates have any liability to the Seller, if any at all, in
excess of the Purchase Price. In no event shall the Purchaser have any liability
to the Seller for any other actual, special, consequential or punitive damages,
and any claim, right, cause of action or liability for any damages that are
special, consequential or punitive or for specific performance of this Agreement
is hereby fully released and forever discharged. Without limiting the generality
of the foregoing, the Seller shall not have a right to specific performance
following a termination of this Agreement by the Purchaser.
SECTION 10
MISCELLANEOUS
10.1. Notices.
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be delivered personally or
sent by (a) registered or certified mail, return receipt requested; (b)
overnight via a nationally recognized courier service guaranteeing next-day
delivery, charges prepaid; or (c) facsimile (with original promptly sent by any
of the foregoing manners). Any such notices shall be addressed to the receiving
Party at such Party's address set forth below, or at such other address as may
from time to time be furnished by similar notice by either Party:
(a) if to the Seller, to:
Halsey Drug Co., Inc.
616 N. North Court, Suite 120
Palatine, Illinois 60067
Fax: (847) 705-5399
Telephone: (847) 705-7709
Attention: President and CEO
with a copy to:
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St. John & Wayne, L.L.C.
Two Penn Plaza East
Newark, New Jersey 07105
Fax: (973) 491-3555
Telephone: (973) 491-3600
Attention: William P. Oberdorf, Esq.
(b) if to the Purchaser, to:
IVAX Pharmaceuticals New York LLC
4400 Biscayne Boulevard
Miami, Florida 33137
Telephone: (305) 575-4101
Facsimile: (305) 575-4105
Attention: Rafick Henein
with a copy to:
IVAX Corporation
4400 Biscayne Boulevard
Miami, Florida 33137
Telephone: (305) 575-6000
Facsimile: (305) 575-6049
Attention: General Counsel
with a copy to:
Reed Smith LLP
599 Lexington Avenue
New York, New York 10022-7650
Telephone: (212) 549-0238
Facsimile: (212) 521-5450
Attention: William R. Griffith, Esq.
All notices shall be effective upon such personal delivery or upon transmission
by facsimile, or next business day following delivery to such courier service,
or three calendar days after it is sent by such registered or certified mail, as
the case may be. Copies shall be sent in the same manner as originals.
10.2. Descriptive Headings.
The descriptive headings in this Agreement are inserted for convenience
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
10.3. Counterparts.
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This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the Parties and
delivered to the other Party. 10.4. Entire Agreement.
This Agreement, the Related Agreements and the Schedules and Exhibits
hereto and thereto, contain the entire agreement and understanding between the
Parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter. Neither Party
shall be liable or bound to any other Party in any manner by any
representations, warranties or covenants relating to such subject matter except
as specifically set forth herein or in the Related Agreements.
10.5. Fees and Expenses.
Regardless of whether or not the transactions contemplated by this
Agreement are consummated, except as otherwise provided herein each Party shall
bear its own fees and expenses incurred in connection with the transactions
contemplated by this Agreement.
10.6. Independent Contractors.
Nothing contained in this Agreement shall be deemed to constitute a
partnership or joint venture between the Seller and the Purchaser, or to
constitute one as the agent of the other. The Seller and the Purchaser shall act
solely as independent contractors, and nothing in this Agreement shall be
construed to give either Party the power or authority, express or implied, to
act for, bind, or commit the other Party.
10.7. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida, without regard to any applicable principles of
conflicts of law.
10.8. Specific Performance.
The Parties hereto agree that if any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the Parties shall be
entitled to specific performance of the terms of this Agreement, in addition to
any other remedy at law or equity.
10.9. Assignment.
This Agreement may not be assigned by any Party hereto without the prior
written consent of the other Party, provided, however, that the Purchaser may
assign its rights under this Agreement to an Affiliate without the consent of
the Seller; provided, that such assignment shall not be deemed to release the
Purchaser from its obligations hereunder. Any attempted assignment in violation
of this Section 10.9 shall be void.
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10.10. Successors and Assigns.
This Agreement shall be binding upon and inure solely to the benefit of the
Parties hereto, their successors and permitted assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person or persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
10.11. Severability.
In the event that any one or more of the provisions contained in this
Agreement, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the Parties shall
negotiate in good faith with a view to the substitution therefor of a suitable
and equitable solution in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid provision; provided,
however, that the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained in this Agreement
shall not be in any way impaired thereby, it being intended that all of the
rights and privileges of the Parties hereto shall be enforceable to the fullest
extent permitted by law.
10.12. Consent to Jurisdiction.
Each of the Purchaser and the Seller irrevocably submits to the exclusive
jurisdiction of the U.S. District Court for the Southern District of Florida,
for the purposes of any suit, action or other proceeding arising out of this
Agreement, any Related Agreement or any transaction contemplated hereby or
thereby. Each of the Purchaser and the Seller agrees to commence any such
action, suit or proceeding either in the U.S. District Court for the Southern
District of Florida or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Courts of the State of
Florida. Each of the Purchaser and the Seller further agrees that service of any
process, summons, notice or document by U.S. registered mail to such Party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in Florida with respect to any matters to which it
has submitted to jurisdiction in this Section 10.12. Each of the Purchaser and
the Seller irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement, any
Related Agreement or the transactions contemplated hereby and thereby in the
U.S. District Court for the Southern District of Florida, and hereby and thereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
10.13. Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED INSTRUMENT. EACH PARTY HERETO (A) CERTIFIES THAT
NO
54
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THAT FOREGOING WAIVER; AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE RELATED
AGREEMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.13.
10.14. Attorney Fees.
A Party in breach of this Agreement shall, on demand, indemnify and hold
harmless the other Party for and against all reasonable out-of-pocket expenses,
including legal fees, incurred by such other Party by reason of the enforcement
and protection of its rights under this Agreement. The payment of such expenses
is in addition to any other relief to which such other Party may be entitled.
10.15. Interpretation.
(a) In the event an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provisions of this
Agreement.
(b) The definitions of the terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise, (A) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein); (B) any
reference to any Laws herein shall be construed as referring to such Laws as
from time to time enacted, repealed or amended; (C) any reference herein to any
Person shall be construed to include the Person's successors and assigns; (D)
the words "herein", "hereof" and "hereunder", and words of similar import, shall
be construed to refer to this Agreement in its entirety and not to any
particular provision hereof; and (E) all references herein to Sections, Exhibits
or Schedules shall be construed to refer to Sections, Exhibits and Schedules of
this Agreement.
10.16. Joint and Several Obligations; Interpretation of "Seller".
Halsey and Axiom shall be jointly and severally liable for the obligations
of the Seller and of each other under this Agreement and all of the Related
Agreements. Each reference to the phrase "the Seller" or "Seller" in this
Agreement or any Related Agreement to which Halsey and Axiom are both parties
shall be deemed to read as meaning "Halsey" as well as "Axiom".
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[The next page is the signature page.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
HALSEY DRUG CO., INC.
By: /s/ Andrew D. Reddick
-----------------------------------
Name: Andrew D. Reddick
Title: President and CEO
AXIOM PHARMACEUTICAL CORPORATION
By: /s/ Andrew D. Reddick
-----------------------------------
Name: Andrew D. Reddick
Title: President and CEO
IVAX PHARMACEUTICALS NEW YORK LLC
By: /s/ Jordan Siegel
-------------------------------------
Name: Jordan Siegel
Title: Vice President
57