THIS SECURITIES PURCHASE AGREEMENT is entered into as of May 18, 2004 (the
"EFFECTIVE DATE"), by and among Medicis Pharmaceutical Corporation, a Delaware
corporation ("MEDICIS"), Ascent Pediatrics, Inc., a Delaware corporation
("ASCENT"), BioMarin Pharmaceutical Inc., a Delaware corporation ("BIOMARIN"),
and BioMarin Pediatrics Inc., a Delaware corporation and wholly-owned subsidiary
of BioMarin ("BIOMARIN ACQUISITION"). Capitalized terms used in this Agreement
are defined herein and in EXHIBIT A.
RECITALS
WHEREAS, Medicis owns, of record and beneficially, all of the issued and
outstanding capital stock of Ascent; and
WHEREAS, Medicis desires to grant to BioMarin Acquisition an option to
purchase all of the issued and outstanding capital stock of Ascent, pursuant to
and subject to the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. OPTION TO ACQUIRE ASCENT.
1.1 OPTION GRANT. Medicis hereby grants to BioMarin Acquisition an
exclusive option (the "OPTION") to acquire good and valid title to all of the
issued and outstanding shares of capital stock of Ascent, free and clear of all
Encumbrances (the "OPTION SHARES"), the purchase and sale of which shall be
pursuant to the terms and conditions of this Agreement.
1.2 OPTION EXERCISE.
(a) The Option shall be exercised by BioMarin Acquisition and
concurrently therewith the purchase and sale of the Option Shares shall occur,
subject to Section 1.2(b), (c), (d), (e), and 1.5(b) on the later of August 17,
2009 (the "TARGET CLOSING DATE"), or the fifth (5th) Business Day after the last
of the conditions set forth in Article 5 and Article 6 shall have been satisfied
or waived, except for conditions which by their terms must be satisfied as of
the date of consummation of the purchase and sale of the Option Shares (the
"OPTION CLOSING Date"); provided, however, that if the aggregate number of
prescriptions for products with an equivalent or greater economic value per
prescription using ORAPRED(R), oral liquid prednisolone solution products and
oral dissolving tablet prednisolone products that are sold by BioMarin
Acquisition or its Affiliates or licensees during the period from, April 1, 2008
to March 31, 2009 exceeds 150% of the aggregate number of prescriptions for
products using ORAPRED(R), oral liquid prednisolone solution products and oral
dissolving tablet prednisolone products that were sold by Medicis, Ascent or
their Affiliates or licensees during the twelve month period ending on March 31,
2004, as reported by IMS Health Incorporated, then BioMarin Acquisition may
elect, in its sole and absolute discretion, not to exercise the Option, in which
case it shall deliver to Medicis, on or prior to the Option Closing Date, a
notice that it declines to exercise the Option (the
"NOTICE OF NON-EXERCISE"). The Notice of Non-Exercise shall be given by the
delivery of written notice to such effect to Medicis on or before the Option
Closing Date.
(b) Medicis may, in its sole discretion, accelerate the Option
Closing Date if BioMarin Acquisition fails to timely make any License Payment or
Contingent Payments Reimbursement Payment (as such terms are defined in the
License Agreement) pursuant to the terms of the License Agreement and such
failure is not cured within twenty (20) Business Days of the due date thereof,
including the payment of accrued interest. If Medicis elects to accelerate the
Option Closing Date pursuant to this Section 1.2(b): (i) Medicis shall deliver
notice of such election (a "NOTICE OF ACCELERATION") to BioMarin Acquisition
within sixty (60) days of the end of the cure period specified in the
immediately preceding sentence; and (ii) the Option Closing Date shall occur
twenty (20) Business Days after receipt by BioMarin Acquisition of the Notice of
Acceleration and the Option Closing shall occur on such Option Closing Date in
accordance with Section 1.4. BioMarin's right to deliver a Notice of
Non-Exercise pursuant to Section 1.2(a) shall immediately terminate upon receipt
of a Notice of Acceleration from Medicis delivered in accordance herewith.
(c) BioMarin Acquisition may, in its sole discretion, accelerate the
Option Closing Date if either Ascent or Medicis is in material Breach of any its
obligations under the License Agreement and BioMarin Acquisition gives Medicis
written notice of such Breach, specifying in reasonable detail the particulars
of the alleged Breach, and such Breach has not been cured within twenty (20)
Business Days after Medicis' receipt of such notice. If BioMarin Acquisition
elects to accelerate the Option Closing Date pursuant to this Section 1.2(c):
(i) BioMarin Acquisition shall deliver a Notice of Acceleration to Medicis
within sixty (60) days of the end of the cure period specified in the
immediately preceding sentence; and (ii) the Option Closing Date shall occur
twenty (20) Business Days after receipt by Medicis of the Notice of Acceleration
and the Option Closing shall occur on such Option Closing Date in accordance
with Section 1.4; provided, however, that the payment of the Cash Option Payment
by BioMarin Acquisition to Medicis pursuant to Section 1.4(b)(ii) and the
delivery of the BioMarin Payment Shares by BioMarin to Medicis pursuant to
Section 1.4(b)(iii) shall not occur until the Target Closing Date.
(d) In the event that a case is commenced by or against Ascent to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or there is appointed a trustee, receiver, conservator,
assignee, sequestrator, custodian, liquidator (or other similar official) with
respect to Ascent or with respect to all or any substantial part of its
properties or assets, or Ascent makes an assignment for the benefit of
creditors, or Ascent admits in writing its inability to pay its debts generally
as they become due, or Ascent declares or effects a moratorium on its debt or
takes any corporate action in furtherance of any of the foregoing, then BioMarin
Acquisition may, in its sole discretion, accelerate the Option Closing Date. If
BioMarin Acquisition elects to accelerate the Option Closing Date pursuant to
this Section 1.2(d): (i) BioMarin Acquisition shall deliver a Notice of
Acceleration to Medicis within sixty (60) days of any filing, consent,
admission, declaration or action specified in the immediately preceding
sentence; and (ii) the Option Closing Date shall occur twenty (20) Business Days
after receipt by Medicis of the Notice of Acceleration and the Option Closing
shall occur on such Option Closing Date in accordance with Section 1.4;
provided, however, that the payment of the Cash Option Payment by BioMarin
Acquisition to Medicis pursuant to
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Section 1.4(b)(ii) and the delivery of the BioMarin Payment Shares by BioMarin
to Medicis pursuant to Section 1.4(b)(iii) shall not occur until the Target
Closing Date.
(e) In the event that a case is commenced by or against Medicis to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or there is appointed a trustee, receiver, conservator,
assignee, sequestrator, custodian, liquidator (or other similar official) with
respect to Medicis or with respect to all or any substantial part of its
properties or assets, or Medicis makes an assignment for the benefit of
creditors, or Medicis admits in writing its inability to pay its debts generally
as they become due, or Medicis declares or effects a moratorium on its debt or
takes any corporate action in furtherance of any of the foregoing, then the
Option Closing Date shall automatically accelerate to the date immediately prior
to any such commencement, filing, consent, appointment, admission, declaration
or action. If the Option Closing Date is accelerated pursuant to this Section
1.2(e) the parties shall immediately make the payments and deliveries specified
in Section 1.4(b); provided, however, that the payment of the Cash Option
Payment by BioMarin Acquisition to Medicis pursuant to Section 1.4(b)(ii) and
the delivery of the BioMarin Payment Shares by BioMarin to Medicis pursuant to
Section 1.4(b)(iii) shall not occur until the Target Closing Date.
1.3 OPTION EXERCISE PRICE. The aggregate consideration for the Option
Shares shall be Eighty Two Million Dollars ($82,000,000) payable as follows:
(a) Sixty Two Million Dollars ($62,000,000) (the "CASH OPTION
PAYMENT"), payable in cash at the Option Closing;
(b) Twenty Million ($20,000,000), payable at the Option Closing in
that number of shares of BioMarin Common Stock with an aggregate value, as of
the Option Closing Date, of Twenty Million Dollars ($20,000,000), as measured by
the average closing sales price per share of BioMarin Common Stock over the
twenty trading days immediately preceding the Option Closing Date (or to the
extent the Option Closing Date is accelerated pursuant to Section 1.2(c), (d) or
(e), as measured by the average closing sales price per share of BioMarin Common
Stock over the twenty (20) trading days immediately preceding the Target Closing
Date) (the "BIOMARIN PAYMENT SHARES"); provided, however, (i) if BioMarin is
unable to deliver such BioMarin Payment Shares at the Option Closing, (ii) if
BioMarin determines that the representations and warranties in Section 3.12 or
3.14 are not accurate as of the Option Closing Date, or (iii) the registration
statement for BioMarin Payment Shares described in Section 4.8(a) is not
effective on the Option Closing Date, then in cash (and, in such event, BioMarin
shall have no further obligation under Section 4.8); and
(c) In the event that the Option Closing Date is accelerated
pursuant to Section 1.2(b), (c), (d) or (e), the aggregate consideration for the
Option Shares shall be increased by an amount equal to the then remaining unpaid
License Payments and Contingent Payments Reimbursement Payments (each as defined
in the License Agreement) payable under the License Agreement (the "ADDITIONAL
CONSIDERATION). For avoidance of doubt, upon the Option Closing Date, neither
Medicis nor Ascent shall have any rights in or be entitled to receive any
remaining License Payments (as defined on the License Agreement) or Contingent
Payments Reimbursement Payments (as defined in the License Agreement) payable or
that become payable under the License Agreement.
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1.4 OPTION CLOSING.
(a) The closing of the sale of the Option Shares to BioMarin
Acquisition (the "OPTION CLOSING") shall take place at the offices of Paul,
Hastings, Janofsky & Walker LLP, Twenty-Fourth Floor, 55 Second Street, San
Francisco, California, at 10:00 a.m. on the Option Closing Date.
(b) At the Option Closing:
(i) Medicis shall execute and deliver to BioMarin Acquisition
a certificate or certificates evidencing the Option Shares, properly endorsed
for transfer or with stock powers authorizing the transfer of the Option Shares
duly and validly executed in blank attached or otherwise in proper form for
transfer to BioMarin Acquisition, together with such other documents as BioMarin
Acquisition may reasonably request to evidence the transfer to BioMarin
Acquisition of good and valid title to the Option Shares, free and clear of all
Encumbrances;
(ii) BioMarin Acquisition shall pay to Medicis the Cash Option
Payment by wire transfer of immediately available funds, to an account
designated by Medicis not less than five (5) Business Days prior to the Option
Closing Date; provided, however, that in the event that the Option Closing Date
is accelerated pursuant to Section 1.2(c), (d) or (e), the payment of the Cash
Option Payment shall not occur until the Target Closing Date;
(iii) BioMarin shall deliver to Medicis a certificate or
certificates evidencing the BioMarin Payment Shares, each of which shall be
registered in the name of Medicis; provided, however, that in the event that the
Option Closing Date is accelerated pursuant to Section 1.2(c), (d) or (e), the
delivery of the BioMarin Payment Shares shall not occur until the Target Closing
Date;
(iv) Medicis shall deliver to BioMarin Acquisition all legal
analyses and opinions prepared for and in the name of Ascent related to the
Technology that are in the control and possession of Ascent;
(v) In the event that the Option Closing Date is accelerated
pursuant to Section 1.2(b), (c), (d) or (e), BioMarin Acquisition shall pay to
Medicis, by wire transfer of immediately available funds, to an account
designated by Medicis not less than five (5) Business Days prior to the Option
Closing Date, an amount equal to the Additional Consideration; and
(vi) In the event that the Option Closing Date is accelerated
pursuant to Section 1.2(b), (c), (d) or (e) prior to the termination of that
certain Escrow Agreement dated May 18, 2004 among BioMarin, BioMarin
Acquisition, Ascent and U.S. Bank, National Association, the parties shall, upon
payment by BioMarin or BioMarin Acquisition to Medicis of the amounts due to
Medicis under Section 1.4(b)(v), immediately deliver joint instructions to U.S.
Bank, National Association to terminate such Escrow Agreement and release all
remaining Escrow Assets (as defined in such Escrow Agreement) to BioMarin
Acquisition.
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1.5 ESCROW FOR DISCOVERED LIABILITIES.
(a) If, prior to the Option Closing Date, Medicis becomes aware of
any actual or potential Liability (including, without limitation, Third Party
Claims) of Ascent, except any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing of the Products, following the Effective Date, except
Damages suffered or incurred or arising from the Breach of Medicis, Ascent or
Medicis Manufacturing, as applicable, under the Supply Agreement, the Transition
Services Agreement or the License Agreement ("ASCENT LIABILITY"), then (i) at
least ninety (90) days prior to the Option Closing Date for each Ascent
Liability of which Medicis becomes aware prior to such ninety-day period, and
(ii) within at least two (2) Business Days for each Ascent Liability of which
Medicis becomes aware during such ninety-day period, Medicis shall notify (the
"LIABILITIES NOTICE") BioMarin Acquisition of such Ascent Liability.
(b) BioMarin Acquisition shall have the right to conduct an
investigation into such Ascent Liabilities and the amount thereof and Medicis
shall afford BioMarin Acquisition such access and assistance as BioMarin
Acquisition may reasonably request as permitted under Section 4.4. If any
Liabilities Notice describes any Proceeding, Medicis will deliver or make
available to BioMarin Acquisition accurate and complete copies of all pleadings
(to which Medicis or Ascent has access) that relate to such Proceedings. The
senior executives of both Medicis and BioMarin Acquisition shall attempt in good
faith, within five (5) Business Days of receipt by BioMarin Acquisition of the
Liabilities Notice (the "RESOLUTION PERIOD"), to agree upon a reasonable
estimate of the potential Damages that BioMarin Acquisition would incur as a
result of such Ascent Liabilities if the Option Closing were consummated (the
"ESTIMATED DAMAGES"). If at the conclusion of the Resolution Period the parties
have not reached an agreement on the Estimated Damages, then Medicis and
BioMarin Acquisition shall engage an independent Entity expert in the type of
Liability that is the subject of the dispute (the "INDEPENDENT APPRAISER")
within five (5) Business Days of the end of the Resolution Period to determine
the Estimated Damages. Each party agrees to execute, if requested by the
Independent Appraiser, a reasonable engagement letter. The determination of the
Independent Appraiser of the Estimated Damages shall be made within sixty (60)
days after its engagement, shall be set forth in a written statement delivered
to Medicis and BioMarin Acquisition and shall be final, binding, conclusive and
nonappealable solely for the purpose of determining the amount of the Estimated
Damages under this Section 1.5. If the Option Closing Date would occur prior to
the final determination of the Estimated Damages, the Option Closing Date shall
be delayed until two (2) Business Days after such final determination. For
purposes of this Section 1.5(b), the Independent Appraiser will not be
considered "independent" if (A) it would not meet the independence requirements
set forth in Section 2-01(c) of Regulation S-X promulgated under the Exchange
Act, except substituting "Independent Appraiser" for "accountant" and "a party"
for "an audit client" as used therein, or (B) has been retained by either of the
parties within the preceding twelve month period.
(c) The amount of the Estimated Damages as determined pursuant to
the procedures set forth in Section 1.5(b) shall be deducted from the Option
Shares deliverable at the Option Closing and the Cash Option Payment payable at
the Option Closing in the ratio of 20% of the Estimated Damages in Option Shares
and 80% of the Estimated Damages in Cash Option Payment (the "ESCROW CASH"). The
number of shares to be deducted from the Option Shares
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(the "ESCROW SHARES") shall be that number of BioMarin Shares (up to the total
number of Option Shares) with an aggregate value equal to 20% of the Estimated
Damages, as of the Option Closing Date, as measured by the average closing sales
price per BioMarin Share over the twenty (20) trading days immediately preceding
the Option Closing Date (such average closing sales price, as such amount shall
be appropriately adjusted to reflect stock splits, reverse stock splits, stock
dividends and similar events, being referred to as the "ESCROW SHARE PRICE").
The Escrow Shares and the Escrow Cash shall be deposited on the Option Closing
Date with an escrow agent mutually agreeable to the parties and on terms and
conditions substantially as set forth in the escrow agreement attached hereto as
EXHIBIT B (the "ESCROW AGREEMENT"). From and after the Option Closing Date, if
BioMarin Acquisition incurs any Damages in connection with any Ascent Liability,
the Escrow Shares (valued at the Escrow Share Price) and the Escrow Cash shall
be released to BioMarin Acquisition in the ratio of 20% of the Damages in Escrow
Shares and 80% of the Damages in Escrow Cash in satisfaction of such Damages up
to the amounts released from escrow. If after the Option Closing Date, BioMarin
Acquisition and Medicis agree in writing that the Ascent Liabilities cease to
exist, then the parties shall cause any Escrow Shares and Escrow Cash not
released to BioMarin in satisfaction of Damages to be released to Medicis.
Nothing contained in this Section 1.5 shall be deemed to limit or restrict the
rights of any BioMarin Indemnitee to pursue indemnification under Section 8.2.
Nothing herein shall be deemed an admission of liability as to any Third Party
by any party hereto with respect to any Ascent Liability. The parties hereto
agree that the receipt by a BioMarin Indemnitee of Escrow Shares shall be
treated as satisfaction of Damages as of the date of receipt thereof in an
amount equal to the product of the number of Escrow Shares received and the
Escrow Share Price.
1.6 ALTERNATIVE STRUCTURE. In the event that any of the conditions set
forth in Article 5 are not satisfied on or prior to a date not later than 180
days prior to the sixth anniversary of the Effective Date, the parties shall
agree to and promptly thereafter shall consummate an alternative structure for
the transactions contemplated hereby so as to achieve the same result as
contemplated by this Agreement. For example, the parties shall consider a sale
of good and valid title to all of the assets of Ascent to BioMarin Acquisition
free and clear of all Encumbrances.
2. REPRESENTATIONS AND WARRANTIES OF MEDICIS.
Medicis represents and warrants as of the Effective Date and as of the
Option Closing Date, to and for the benefit of BioMarin and BioMarin
Acquisition, that each of the following representations and warranties is true
and correct.
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC. Each of Medicis and Ascent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Ascent is qualified, authorized, registered or
licensed to do business as a foreign corporation in each jurisdiction where its
business requires such qualification, except where the failure to be so
qualified, authorized, registered or licensed would not have an Ascent Material
Adverse Effect. Medicis has delivered to (or made available for inspection by)
BioMarin Acquisition accurate and complete copies of the certificate of
incorporation and bylaws of Ascent, including all amendments thereto. Ascent has
no Subsidiaries and does not hold any securities of any other Entity.
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2.2 CAPITALIZATION. The authorized capital stock of Ascent consists solely
of (i) 60,000,000 shares of common stock, $0.0004 par value per share (the
"ASCENT COMMON STOCK"), and (ii) 5,000,000 shares of preferred stock, $0.01 par
value per share, none of which are issued and outstanding. Subject to a reverse
stock split as permitted under Section 4.1(a)(viii), there are 20,000,000 shares
of Ascent Common Stock issued and outstanding. All of the issued and outstanding
shares of capital stock of Ascent are owned of record and beneficially, solely
by Medicis and all such outstanding shares are duly authorized, validly issued,
fully paid and nonassessable. Such shares were issued in compliance with Federal
securities laws and applicable state securities laws. None of such outstanding
shares are subject to any Encumbrance of any kind. There are no restrictions on
or contractual or other provisions affecting the ability of Medicis to vote such
outstanding shares or to sell such shares pursuant to this Agreement. There are
no outstanding options, warrants, rights (including conversion or preemptive
rights or stock appreciation rights or rights to participate in Ascent's
profits) or agreements for the purchase or acquisition from Ascent of any shares
of its capital stock.
2.3 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of Ascent and Medicis
has all corporate power and authority to enter into and to perform its
obligations under this Agreement. The execution, delivery and performance by
each of Ascent and Medicis of this Agreement have been duly authorized by all
necessary action on the part of each of Ascent and Medicis and its stockholders,
board of directors and officers. This Agreement, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid
and binding obligation of each of Ascent and Medicis enforceable against it in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereinafter in
effect relating to creditors' rights generally or to general principles of
equity (the "ENFORCEABILITY EXCEPTION").
2.4 GOVERNMENTAL AND OTHER AUTHORIZATIONS. The execution and delivery of
this Agreement and the consummation or performance by Medicis of its obligations
hereunder:
(a) do not require any approval of any Governmental Body on the part
of Medicis or any material consent, waiver or approval of any other Person on
the part of Medicis, other than the filing of a report and notification pursuant
to the HSR Act and the expiration of all waiting periods thereunder; and
(b) as of the date of this Agreement, do not give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is part of the Intellectual Property.
2.5 NON-CONTRAVENTION; CONSENTS. The execution and delivery of this
Agreement and the consummation or performance by Medicis or Ascent, as
applicable, of their respective obligations hereunder, do not and will not (a)
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any loan, credit or note agreement, mortgage,
security agreement, promissory note, license or other agreement to which Medicis
or Ascent is bound or affected, the contravention or conflict with or violation
of which would have an Ascent Material Adverse Effect, (b) contravene or
conflict with the certificate of incorporation or bylaws of Medicis or Ascent,
or (c) contravene, conflict with or result in a violation of any Legal
Requirement or any Order to which Medicis is subject, the contravention
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or conflict with or violation of which would have an Ascent Material Adverse
Effect, or to which Ascent or any of the Intellectual Property is subject.
2.6 TITLE TO OPTION SHARES; ACQUISITION TRANSACTION.
(a) Except as set forth in Part 2.6(a) of the Ascent Disclosure
Schedule, Ascent has good and valid title to all of the Intellectual Property
and the Development Technology.
(b) None of the Intellectual Property or the Development Technology
is subject to any Encumbrance other than Permitted Encumbrances and the Supply
Agreement as of the Effective Date and the Permitted Encumbrances as of the
Option Closing Date.
(c) Medicis has good and valid title to all of the Option Shares,
and none of the Option Shares is subject to any Encumbrance, and, on the Option
Closing Date, Medicis will transfer to BioMarin Acquisition good and valid title
to all of the Option Shares, free and clear of any and all Encumbrances.
(d) Except for the License Agreement and the Lyne License, none of
Medicis, Ascent or any of their Affiliates has any agreement, absolute or
contingent, written or oral, with any other Person to effect any Acquisition
Transaction.
2.7 LIABILITIES.
(a) Neither Medicis nor Ascent has, since November 15, 2001 (i) made
a general assignment for the benefit of creditors, (ii) filed, or had filed
against it, any bankruptcy petition or similar filing, (iii) suffered the
attachment or other judicial seizure of all or a substantial portion of its
assets, (iv) admitted in writing its inability to pay its debts as they become
due, or (v) been convicted of, or pleaded guilty or no contest to, any felony.
(b) As of the Option Closing Date, Ascent will have no assets or
properties, other than the assets and properties licensed under the License
Agreement and the Secondary ANDA, and will have no Liabilities (including for
Taxes), except Liabilities that may have arisen as a direct result of the Breach
of BioMarin Acquisition of its obligations under the License Agreement. As of
the Option Closing Date, Ascent will not have any employees or independent
contractors. As of the Option Closing Date, neither Medicis nor Ascent will be
in material Breach of any of the terms and conditions of the License Agreement.
2.8 TAX MATTERS.
(a) All material Tax Returns required to be filed by or on behalf of
Ascent with any Governmental Body with respect to any taxable period ending on
or before the Option Closing Date have been or will be filed on or before the
applicable due date (including any extensions of such due date). The information
contained in such Tax Returns is accurate and complete in all material respects.
All amounts shown on such Tax Returns to be due on or before the Option Closing
Date have been or will be paid on or before the Option Closing Date. Medicis has
delivered to (or made available for inspection by) BioMarin Acquisition accurate
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and complete copies of all material Tax Returns that have been filed by or on
behalf of Ascent since December 31, 2002.
(b) There are no liens for Taxes upon any of the Intellectual
Property or Secondary ANDA, except liens for current Taxes not yet due and
payable. No extension or waiver of the limitation period applicable to any of
the Tax Returns has been granted (by Ascent or any other Person), and no such
extension or waiver has been requested from Ascent other than an extension
resulting from the filing of a Tax Return after its due date in the Ordinary
Course of Business. Ascent has not entered into a closing agreement pursuant to
Section 7121 of the Code, or any predecessor provisions thereof or any similar
provision of state or other law. No claim or Proceeding is pending or, to the
Knowledge of Ascent and Medicis, has been threatened against or with respect to
Ascent in respect of any material Tax.
(c) On the Option Closing Date, no powers of attorney or other
authorizations will be in effect that grant to any Person the authority to
represent Ascent in connection with any Tax matter or Proceeding.
(d) Medicis, with respect to the Pediatrics Business, and Ascent
have properly withheld and paid all material Taxes required to be withheld and
paid in connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
(e) Ascent is not, nor has ever been, a party to or bound by any Tax
indemnity agreement, Tax sharing agreement, Tax allocation agreement or similar
Contract, including any obligation arising by reason of Treasury Regulations
Section 1.1502-6, and Ascent has not or, by reason of the consummation of the
transactions contemplated hereby, will not have any liability or obligation
under any Tax indemnity agreement, Tax sharing agreement, Tax allocation
agreement or similar Contract.
(f) None of the Intellectual Property is subject to, or constitutes,
a safe harbor lease within the meaning of former Section 168(f) of the Code.
(g) There is no proposal for increasing the assessed value of any of
the Intellectual Property or Secondary ANDA for Tax purposes and there are no
pending Proceedings or public improvements which would result in the levy of any
material special Tax or assessment against any of such assets.
(h) Neither Medicis nor Ascent is a "foreign person" within the
meaning of Section 1445 of the Code.
(i) Ascent has never been a "reporting corporation" subject to the
information and reporting and record maintenance requirements of Section 6038A
and the regulations thereunder.
(j) Medicis with respect to the Pediatrics Business and Ascent have
collected all material sales, use and value added Taxes required to be
collected, and have remitted, or will remit on a timely basis, such amounts to
the appropriate Governmental Body and have furnished properly completed
exemption certificates for all exempt transactions.
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(k) Except as set forth in Part 2.8(k) of the Ascent Disclosure
Schedule, neither Medicis with respect to the Pediatrics Business nor Ascent has
been, and neither Medicis with respect to the Pediatrics Business nor Ascent
will be, required to include any material adjustment in taxable income for any
Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or
any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Option Closing Date.
2.9 PROCEEDINGS; ORDERS. Except as set forth in Part 2.9 of the Ascent
Disclosure Schedule, there is no pending Proceeding, and to the Knowledge of
Ascent and Medicis, no Person has threatened to commence any Proceeding
involving (a) Ascent or the Intellectual Property or the Pediatrics Business; or
(b) that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. To the Knowledge of Ascent and Medicis, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that would reasonably
be expected to give rise to or serve as a basis for the commencement of any such
Proceeding. Except as set forth in Part 2.9 of the Ascent Disclosure Schedule,
to the Knowledge of Ascent and Medicis, there is no Order to which Ascent or any
of the Intellectual Property or the Pediatrics Business is subject.
2.10 FRAUDULENT TRANSFERS. Medicis is not insolvent, nor will be rendered
insolvent by any of the transactions contemplated hereby. Immediately after the
Option Closing, (i) Medicis will be able to pay its debts as they become due,
and (ii) Medicis will not have unreasonably small assets with which to conduct
its present or proposed business. As used in this Section 2.10, "insolvent"
means that the sum of the Person's assets does not and will not exceed its debts
and other liabilities at a fair valuation.
2.11 REAL PROPERTY. Ascent does not own any real property or lease any
material real property.
2.12 INVESTMENT BANKING FEES. None of Medicis, Ascent or any of their
Affiliates has incurred any investment banking, broker or finder fees that will
become the responsibility of BioMarin or BioMarin Acquisition before or after
the Effective Date.
2.13 INVESTMENT REPRESENTATIONS OF MEDICIS. With respect to the BioMarin
Payment Shares acquired by Medicis pursuant to this Agreement:
(a) Medicis will acquire such BioMarin Payment Shares for investment
purposes only, for its own account and not as nominee or agent for any other
Person and not with a view to or for resale in connection with any distribution
thereof within the meaning of the Securities Act.
(b) Medicis knows of no public solicitation or advertisement of an
offer in connection with such BioMarin Payment Shares.
(c) Medicis has had the opportunity to ask questions of and receive
answers from BioMarin concerning the terms and conditions of the BioMarin
Payment Shares. Medicis has received all information that it has requested
regarding BioMarin and believes that such
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information is sufficient to make an informed decision with respect to the
acquisition of the BioMarin Payment Shares.
(d) Medicis is able to bear the economic risk of its investment in
the BioMarin Payment Shares and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
and protecting its interests with respect to its investment in the BioMarin
Payment Shares. Medicis is aware of the risk involved in its investment in the
BioMarin Payment Shares and has determined that such investment is suitable for
Medicis in light of its financial circumstances and available investment
opportunities.
(e) Medicis is and will be an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
(f) Medicis hereby further agrees with BioMarin that the instruments
or certificates evidencing the BioMarin Payment Shares and each instrument or
certificate issued in transfer thereof will bear the following legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933 and have been taken for
investment purposes only and not with a view to the distribution
thereof, and, except as stated in an agreement between the holder of
this certificate or its predecessor in interest, and the issuer
corporation, such securities may not be sold or transferred unless
there is an effective registration statement under such Act covering
such securities or the issuer corporation receives an opinion, in
form and content reasonably satisfactory to the issuer corporation,
of counsel reasonably acceptable to the issuer corporation (which
may be counsel for the issuer corporation) stating that such sale or
transfer is exempt from the registration and prospectus delivery
requirements of such Act."
(g) The instruments or certificates representing the BioMarin
Payment Shares and each instrument or certificate issued in transfer thereof
will also bear any legend required under any applicable state securities law.
(h) Prior to any proposed sale, assignment, transfer or pledge of
any of the BioMarin Payment Shares by Medicis, unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
Medicis shall give written notice to BioMarin of Medicis' intention to effect
such transfer, sale, assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail and shall be accompanied, at Medicis' expense, by an
unqualified written opinion of legal counsel, who shall and whose legal opinion
shall be reasonably satisfactory to BioMarin (which may be counsel for
BioMarin), addressed to BioMarin, to the effect that the proposed transfer of
the BioMarin Payment Shares may be effected without registration under the
Securities Act, whereupon Medicis shall be entitled to transfer such BioMarin
Payment Shares in accordance with the terms of the notice delivered by Medicis
to BioMarin.
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(i) Medicis consents to BioMarin's making a notation on its records
or giving instructions to any transfer agent of the BioMarin Payment Shares in
order to implement the restrictions on transfer of the BioMarin Payment Shares.
(j) Medicis is aware that the BioMarin Payment Shares will be issued
and sold in reliance on an exemption from the registration requirements of the
Securities Act and that such exemption is expressly conditioned on the accuracy
of the representations and warranties contained in this Section 2.13.
(k) Medicis is not a company established solely to acquire the
BioMarin Payment Shares.
2.14 COMPLIANCE WITH LEGAL REQUIREMENTS. Ascent is in compliance with each
Legal Requirement that is applicable to it or to the conduct of its business or
the ownership or use of any of its assets, except to the extent any such
noncompliance, individually or in the aggregate, would not reasonably be
expected to have an Ascent Material Adverse Effect. To the Knowledge of Medicis
and Ascent, no event has occurred, and no condition or circumstance exists, that
could (with or without notice or lapse of time) constitute or result in a
violation by Medicis or Ascent of, or a failure on the part of Ascent to comply
with, any Legal Requirement, except to the extent any such noncompliance,
individually or in the aggregate, would not reasonably be expected to have an
Ascent Material Adverse Effect. Neither Medicis nor Ascent has received any
notice or other communication (in writing or otherwise) from any Governmental
Body or any other Person regarding any actual or alleged violation of, or
failure to comply with, any Legal Requirement that would reasonably be expected
to have an Ascent Material Adverse Effect.
3. REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION.
Each of BioMarin and BioMarin Acquisition represents and warrants jointly
and severally as of the Effective Date and as of the Option Closing Date, to and
for the benefit of Medicis, that each of the following representations and
warranties is true and correct.
3.1 DUE ORGANIZATION; ETC. Each of BioMarin and BioMarin Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of BioMarin and BioMarin Acquisition is
qualified, authorized, registered or licensed to do business as a foreign
corporation in each jurisdiction where its business requires such qualification,
except where the failure to be so qualified, authorized, registered or licensed
would not have a BioMarin Material Adverse Effect. Each of BioMarin and BioMarin
Acquisition has delivered to (or made available for inspection by) Medicis
accurate and complete copies of the certificate of incorporation and bylaws of
BioMarin and BioMarin Acquisition, as applicable, including all amendments
thereto.
3.2 CAPITALIZATION.
(a) As of the Effective Date, the authorized capital stock of
BioMarin consists solely of (i) 1,000,000 shares of preferred stock, $0.001 par
value per share; and (ii) 150,000,000 shares of common stock, $0.001 par value
per share (the "BIOMARIN COMMON STOCK"), and
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BioMarin has no authority to issue any other capital stock. All of the BioMarin
Payment Shares will be duly authorized, validly issued, fully paid and
nonassessable and will be issued in compliance with Federal securities laws and
applicable state securities laws
(b) As of the Effective Date, (i) 64,364,988 shares of BioMarin
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable and free of preemptive rights, (ii) no shares of BioMarin
Common Stock are held in the treasury of BioMarin, and (iii) 18,392,703 shares
of BioMarin Common Stock are reserved for issuance upon exercise or conversion
of options, warrants or other rights to acquire shares of BioMarin Common Stock.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of BioMarin and BioMarin
Acquisition has all corporate power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery by each of
BioMarin and BioMarin Acquisition of this Agreement have been duly authorized by
all necessary action on the part of each of BioMarin and BioMarin Acquisition
and its stockholders, board of directors and officers. This Agreement, assuming
the due authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of each of BioMarin and
BioMarin Acquisition, enforceable against it in accordance with its terms,
subject to the Enforceability Exception.
3.4 GOVERNMENTAL AND OTHER AUTHORIZATIONS. The execution and delivery of
this Agreement and the consummation or performance by BioMarin or BioMarin
Acquisition, as applicable, of their respective obligations hereunder, do not
require any approval of any Governmental Body on the part of BioMarin or
BioMarin Acquisition or any material consent, waiver or approval of any other
Person on the part of BioMarin or BioMarin Acquisition, other than the filing of
a report and notification pursuant to the HSR Act and the expiration of all
waiting periods thereunder and the filing of a Form D with the Commission, "blue
sky" filings and the filings contemplated under Section 4.8.
3.5 NON-CONTRAVENTION. The execution and delivery of this Agreement and
the consummation or performance by BioMarin or BioMarin Acquisition, as
applicable, of their respective obligations hereunder, do not and will not (a)
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any loan, credit or note agreement, mortgage,
security agreement, promissory note, license or other agreement or instrument to
which BioMarin or BioMarin Acquisition is bound or affected, the contravention
or conflict with which or violation of which would have a BioMarin Material
Adverse Effect, (b) contravene or conflict with the certificate of incorporation
or bylaws of BioMarin or BioMarin Acquisition, or (c) contravene, conflict with
or result in a violation of any Legal Requirement or any Order to which BioMarin
or BioMarin Acquisition, is subject, the contravention or conflict with which or
violation of which would have a BioMarin Material Adverse Effect.
3.6 FILINGS WITH THE COMMISSION.
(a) BioMarin's Annual Report on Form 10-K for its fiscal year ended
December 31, 2003, at the time it was filed with the Commission (or, if amended
or superseded
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by a filing prior to the date of this Agreement, then on the date of such
filing): (i) complied in all material respects with the applicable requirements
of the Exchange Act; and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) With respect to such documents and reports as BioMarin may be
required to file with the Commission under Section 13 of the Exchange Act within
the twelve months preceding the Effective Date and within the twelve months
preceding the Option Closing Date (collectively, the "BIOMARIN FILINGS"), at the
respective dates they were filed (or if amended or superceded by a filing prior
to the date of this Agreement or prior to the Option Closing Date, then on the
date so amended or superceded), each such BioMarin Filing, including without
limitation any financial statements or schedules included therein, (i) complied
in all material respects with all applicable requirements of the Exchange Act
and the applicable rules and regulations promulgated thereunder, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.7 LIABILITIES. Neither BioMarin nor BioMarin Acquisition has, since
November 15, 2001, (i) made a general assignment for the benefit of creditors,
(ii) filed, or had filed against it, any bankruptcy petition or similar filing,
(iii) suffered the attachment or other judicial seizure of all or a substantial
portion of its assets, (iv) admitted in writing its inability to pay its debts
as they become due, (v) been convicted of, or pleaded guilty or no contest to,
any felony, or (vi) taken or been the subject of any action that may have an
adverse effect on its ability to comply with or perform any of its covenants or
obligations under this Agreement.
3.8 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of BioMarin and BioMarin
Acquisition is in compliance with each Legal Requirement that is applicable to
it or to the conduct of its business or the ownership or use of any of its
assets, except to the extent any such noncompliance, individually or in the
aggregate, would not reasonably be expected to have a BioMarin Material Adverse
Effect. To the Knowledge of BioMarin and BioMarin Acquisition, no event has
occurred, and no condition or circumstance exists, that could (with or without
notice or lapse of time) constitute or result in a violation by BioMarin or
BioMarin Acquisition of, or a failure on the part of BioMarin or BioMarin
Acquisition to comply with, any Legal Requirement, except to the extent any such
noncompliance, individually or in the aggregate, would not reasonably be
expected to have a BioMarin Material Adverse Effect.
3.9 PROCEEDINGS; ORDERS. There is no pending Proceeding, and to the
Knowledge of BioMarin or BioMarin Acquisition, no Person has threatened to
commence any Proceeding involving (a) BioMarin or BioMarin Acquisition which
would reasonably be expected to have a BioMarin Material Adverse Effect; or (b)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. To the Knowledge of BioMarin and BioMarin Acquisition, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
would reasonably be expected to give rise to or serve as a basis for the
commencement of any such Proceeding.
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3.10 FRAUDULENT TRANSFERS. Neither BioMarin nor BioMarin Acquisition is
insolvent, nor will be rendered insolvent by any of the transactions
contemplated hereby. Immediately after the Option Closing, (i) each of BioMarin
and BioMarin Acquisition will be able to pay its debts as they become due, and
(ii) neither BioMarin nor BioMarin Acquisition will have unreasonably small
assets with which to conduct its present or proposed business. As used in this
Section 3.10, "insolvent" means that the sum of the Person's assets does not and
will not exceed its debts and other liabilities at a fair valuation.
3.11 INVESTMENT BANKING FEES. None of BioMarin, BioMarin Acquisition or
any of their Affiliates has incurred any investment banking, broker or finder
fees that will become the responsibility of Medicis or Ascent before or after
the Effective Date.
3.12 NASDAQ LISTING COMPLIANCE. The BioMarin Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq
National Market or any United States national securities exchange and BioMarin
has taken no action designed to, or likely to have the effect of, terminating
the registration of the BioMarin Common Stock under the Exchange Act or
de-listing the BioMarin Common Stock from the Nasdaq National Market or any
United States national securities exchange, nor has BioMarin received any
notification that the SEC or Nasdaq, Inc. is contemplating terminating such
registration or listing.
3.13 INVESTMENT REPRESENTATIONS OF BIOMARIN.
(a) BioMarin Acquisition will acquire the Option Shares for
investment purposes, for its own account and not as nominee or agent for any
other Person and not with a view to or for resale in connection with any
distribution thereof within the meaning of the Securities Act.
(b) BioMarin Acquisition has had the opportunity to ask questions of
and receive answers from Medicis concerning the terms and conditions of the
Option Shares subject to this Agreement.
(c) BioMarin Acquisition is able to bear the economic risk of its
investment in the Option Shares and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of protecting its interests with respect to its investment in the Option
Shares.
(d) BioMarin Acquisition is and will be an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
(e) BioMarin Acquisition is aware that the Option Shares will be
issued and sold in reliance on an exemption from the registration requirements
of the Securities Act and that such exemption is expressly conditioned on the
accuracy of the representations and warranties contained in this Section 3.13.
(f) BioMarin Acquisition is not a company established solely to
acquire the Option Shares.
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3.14 ABSENCE OF CHANGES. For the period from the date of the filing by
BioMarin with the Commission of its Annual Report on Form 10-K or its Quarterly
Report on Form 10-Q, whichever is last filed with the Commission immediately
preceding the Effective Date, to the Effective Date, and for the period from the
date of the filing by BioMarin with the Commission of its Annual Report on Form
10-K or its Quarterly Report on Form 10-Q, whichever is last filed with the
Commission immediately preceding the Option Closing Date, to the Option Closing
Date, there will not have been any adverse change in, and no event shall have
occurred that could reasonably be expected to have a BioMarin Material Adverse
Effect, except as may be disclosed by BioMarin in any report or statement filed
with the Commission.
4. OTHER AGREEMENTS.
4.1 OPERATION OF MEDICIS AND ASCENT. Each of Medicis and Ascent shall
ensure that from and after the Effective Date (or, with respect to clauses (c)
and (k) below, from and after the third month anniversary of the Effective Date)
until the end of the Option Term, Ascent shall not, without the prior written
consent of BioMarin Acquisition:
(a) engage in any business or activity other than the ownership,
operation and maintenance of the assets and properties licensed under the
License Agreement and Secondary ANDA, and activities incidental thereto except
for:
(i) the collection of accounts receivable outstanding as of
the Effective Date;
(ii) the exercise of the option granted under that certain
license agreement by and between Medicis and Taro Pharmaceuticals, North
America, Inc., January 14, 2003;
(iii) any actions reasonably required for Ascent to perform
its obligations under the Transition Services Agreement;
(iv) any actions reasonably required for Ascent to perform its
obligations under the Ascent Merger Agreement;
(v) any actions reasonably required for Ascent to perform its
obligations under this Agreement, the License Agreement, the Domain Name and Web
Site License Agreement, the Supply Agreement and the Lyne License;
(vi) any actions reasonably required as a party to the
Litigation Matters, and any litigation matter arising on or after the Effective
Date and prior to the Option Closing Date;
(vii) the issuance or payment of dividends or other
distributions to Medicis, including but not limited to the distribution of
equity securities of BioMarin, if any; and
(viii) any actions reasonably required to effect a reverse
stock split.
16
(b) acquire or own any material assets other than the Intellectual
Property and other than the Secondary ANDA;
(c) adopt, maintain, sponsor, contribute to, or incur any Liability
with respect to, any Employee Benefit Plan other than as required by law or the
applicable Employee Benefit Plan or as may be required in connection with any
continuing obligations to former employees of Ascent;
(d) merge into or consolidate with any other Entity or voluntarily
dissolve, liquidate or wind up in whole or in part (or adopt any resolution or
plan to do so), lease, license, transfer or otherwise dispose of any of the
Intellectual Property Assets or Secondary ANDA or all or substantially all of
its assets or change its legal structure;
(e) fail to preserve its existence as an Entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization or formation, or, amend, modify or terminate the provisions of its
articles or certificate of incorporation and bylaws other than as permitted
under Section 4.1(a)(viii);
(f) fail to observe corporate formalities in any material respect;
(g) own any Subsidiary or make any investment in any Person other
than shares of BioMarin under the License Agreement;
(h) commingle its assets with the assets of any other Entity;
(i) fail to hold its assets or conduct its business in its own name;
(j) become insolvent or fail to pay its debts and liabilities from
its assets as the same may become due;
(k) fail to maintain its books and records and bank accounts
separate and apart from those of any other Entity;
(l) have any of its obligations guaranteed by an Affiliate, except
for guarantees to BioMarin and BioMarin Acquisition;
(m) enter into any Contract or agreement with any director or
officer other than ordinary and customary indemnification arrangements;
(n) acquire obligations or securities of any stockholder, director,
officer, partner, member, principal, or Affiliate of itself or of any of its
Affiliates;
(o) fail to correct any known misunderstanding regarding the
separate identity of Ascent or any stockholder, director, officer, partner,
member, principal, or Affiliate of itself or of any of its Affiliates;
(p) assume or hold itself out to be responsible for the debts of any
other Person or hold out its credit as being available to satisfy the
obligations of any other Person;
17
(q) pledge its assets for the benefit of any other Person or make
any loans or advances to any other Person, including to any stockholder,
director, officer, partner, member, principal, or Affiliate of itself or of any
of its Affiliates;
(r) permit or allow any Technology or Development Technology to be
subject to any Encumbrance (other than pursuant to a Permitted Encumbrance and
the Supply Agreement);
(s) fail to file its own tax returns, to the extent it is required
to file any such tax returns, or file or permit the filing of a consolidated
federal income tax return with any other Person;
(t) fail either to hold itself out to the public as a legal entity
separate and distinct from any other Entity or to conduct its own business
solely in its own name in order not (A) to mislead others as to the identity
with which such other party is transacting business or (B) to suggest that
Ascent or any Affiliate, as the case may be, is responsible for the debts of any
third party (including any stockholder, director, officer, partner, member,
principal, or Affiliate of Ascent or of any of its Affiliates);
(u) retain any employee or consultant other than as necessary to
engage in the activities described in Section 4.1(a) or fail to pay the salaries
of such employees;
(v) file or consent to the filing of any petition, either voluntary
or involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or otherwise institute bankruptcy or
insolvency proceedings with respect to itself, or seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, liquidator (or other similar official) with respect to itself or with
respect to all or any substantial part of its properties or assets or make an
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due or declare or effect a moratorium on
its debt or take any corporate action in furtherance of such action; or
(w) issue any capital stock or other security, any option or right
to acquire any capital stock or other security, or any instrument convertible or
exchangeable for any capital stock or other security;
(x) borrow money or issue evidence of or maintain any indebtedness;
(y) fail to maintain its financial statements separate and apart
from those of any other Entity (if it maintains, or is required by law to
maintain, financial statements), or otherwise permit its assets to be listed as
assets on the consolidated financial statements of any other Entity except as
required by GAAP;
(z) take any action that, or omit to take any action not otherwise
prohibited by the terms of this Agreement the omission of which, would, or is
reasonably likely to, (A) result in failure to satisfy the condition contained
in Section 5.1 or (B) result in failure to satisfy the condition contained in
Section 5.4; or
18
(aa) authorize, commit, enter into, or offer to enter into, any
Contract to take any of the actions prohibited by this Section 4.1.
In addition, prior to the Option Closing Date, Ascent shall own all right,
title and interest in and to the Secondary ANDA.
4.2 OPERATION OF BIOMARIN AND BIOMARIN ACQUISITION. Each of BioMarin and
BioMarin Acquisition shall ensure that from and after the Effective Date until
the end of the Option Term, neither BioMarin nor BioMarin Acquisition shall,
without the prior written consent of Medicis:
(a) adopt a plan or resolution to dissolve or liquidate BioMarin or
BioMarin Acquisition;
(b) take any action that, or omit to take any action not otherwise
prohibited by the terms of this Agreement the omission of which, would, or is
reasonably likely to, (A) result in failure to satisfy the condition contained
in Section 6.1 or (B) result in failure to satisfy the condition contained in
Section 6.4; or
(c) authorize, commit, enter into, or offer to enter into, any
Contract to take any of the actions referred to in this Section 4.2.
4.3 NO DISPOSITION OR ENCUMBRANCE OF OPTION SHARES. During the Option
Term, Medicis shall not, directly or indirectly, (i) offer, sell, offer to sell,
contract to sell, grant any option to purchase or otherwise dispose of or
transfer (or announce any offer, sale, offer of sale, contract of sale or grant
of any option to purchase or other disposition or transfer of) any Option
Shares, or (ii) create or permit to exist any Encumbrance on any of the Option
Shares. During the Option Term, Medicis shall permit and Ascent shall stamp or
otherwise imprint on each certificate or instrument representing the Option
Shares the following legend:
"The securities evidenced by this certificate may not be sold
or otherwise transferred except in accordance with the terms
and conditions of that certain Securities Purchase Agreement
dated May 18, 2004 among the holder hereof, the issuer, and
the other parties thereto."
4.4 ACCESS AND INVESTIGATION.
(a) Ascent and Medicis shall afford to BioMarin Acquisition and to
BioMarin Acquisition's Representatives access, during normal business hours upon
reasonable notice throughout the period from the date hereof through the earlier
of the Option Closing Date or the termination of this Agreement, to all the
books, records, Contracts, and personnel relating to the Pediatrics Business as
BioMarin Acquisition may reasonably request and, during such period, Ascent and
Medicis shall furnish promptly to BioMarin Acquisition all other information
BioMarin Acquisition reasonably may request, provided that no investigation
pursuant to this Section 4.4 shall affect any representations or warranties made
herein or the conditions to the obligations of the respective parties to
consummate the transactions contemplated hereby.
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(b) Not less than ten (10) Business Days prior to the Option Closing
Date, Medicis shall have provided to BioMarin Acquisition a schedule that
accurately reflects the following information as to Ascent immediately prior to
the Option Closing (i) Ascent's basis in all of its assets, (ii) the amount of
any of Ascent's net operating loss, net capital loss, unused investment,
foreign, or other Tax credit, and the amount of any limitation upon any of the
foregoing (including under Section 382, 383 or 384 or the consolidated returns
rules promulgated under Section 1502 of the Code); (iii) the amount of any
deferred gain or loss allocable to Ascent arising out of any deferred
intercompany transaction as defined in Treasury Regulations Section 1.1502-13 or
any similar provision of any applicable Legal Requirement.
4.5 NOTIFICATION. During the Option Term, each party shall promptly notify
the other in writing of, and shall subsequently keep such other party updated on
a current basis regarding any event, condition, fact or circumstance that would
reasonably be expected to adversely affect the timely satisfaction of any of the
conditions set forth in Article 5 or 6.
4.6 NONCOMPETITION BY MEDICIS. Medicis agrees that, if the Option Closing
occurs, in consideration of the consummation of the transactions contemplated
hereby by BioMarin Acquisition hereunder, it shall not and shall cause its
Subsidiaries not to, during the period from the Option Closing Date through the
fifth anniversary of the Option Closing Date, whether acting alone or as a
member of an Entity, and whether as an advisor, principal, consultant,
independent contractor, agent, partner, employee, officer, director, 5% or
greater equityholder or otherwise, anywhere in the world, (a) engage in, own,
operate, maintain or finance directly or indirectly any business or other
enterprise engaged in the development, distribution, sale or commercialization
of an oral liquid prednisolone sodium solution or oral dissolving tablet
prednisolone product, or (b) take any action that is designed or intended or
would reasonably be expected to have the effect of discouraging any customer,
supplier, lessor, licensor or other business associate of the Pediatrics
Business from maintaining a business relationship with BioMarin Acquisition
after the Option Closing Date as it maintained with the Pediatrics Business
prior to the Effective Date; provided, however, that, notwithstanding the
foregoing, (a) Medicis may enter into a transaction or series of transactions
that involves the acquisition by Medicis of another Entity whose activities, but
for this proviso would violate this Section 4.6 so long as such activities are
not primary but are merely ancillary to such Entity's activities and so long as
Medicis terminates or divests such activities within a reasonable period of time
following such acquisition not to exceed 180 days, and (b) Medicis may be
acquired by merger with another Entity, where the stockholders of Medicis
immediately prior to the merger own less than 50% of the surviving entity, whose
activities, but for this proviso, would violate this Section 4.6. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 4.6 is invalid or unenforceable, the parties agree
that the court making such determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
4.7 PUBLIC ANNOUNCEMENTS. BioMarin, BioMarin Acquisition, Medicis and
Ascent will consult with each other before issuing any press release or
otherwise making any public
20
statement with respect to this Agreement, the transactions contemplated hereby
or in any of the documents executed in connection herewith. Without limiting the
generality of the foregoing, none of Medicis, Ascent, BioMarin or BioMarin
Acquisition shall, and none of Medicis, Ascent, BioMarin or BioMarin Acquisition
shall permit any of their respective Representatives to, make any disclosure
regarding this Agreement, the transactions contemplated hereby or in any of the
documents executed in connection herewith unless (a) the other parties shall
have approved such disclosure, or (b) such disclosure is required by applicable
Legal Requirements (including requirements of the Commission, the New York Stock
Exchange or NASDAQ) and the disclosing party has provided the other parties
hereto with a copy of the proposed release or statement no later than
simultaneously with the required disclosure and has used commercially reasonable
efforts to provide a copy of the proposed release or statement no less than two
(2) Business Days prior to its release or publication. In the event that a party
receives any inquiry regarding any other party, the receiving party shall refer
such inquiry to such other party.
4.8 REGISTRATION OF SHARES.
(a) REGISTRATION. On or before the thirtieth day following the
Effective Date, BioMarin shall prepare and file a registration statement on Form
S-3 under the Securities Act, covering the BioMarin Payment Shares
(collectively, the "RESTRICTED STOCK") and shall use its best efforts to cause
such registration statement to become effective as expeditiously as possible and
to remain effective until the earliest to occur of (i) the date the Restricted
Stock covered thereby has been sold (but in any event not before the expiration
of any longer period required under the Securities Act) or (ii) the date by
which all Restricted Stock covered thereby may be sold under Rule 144 without
restriction as to volume.
(b) SUSPENSION. Following the effectiveness of a registration
statement filed pursuant to this section, BioMarin may, at any time, suspend the
effectiveness of such registration for up to thirty (30) days, as appropriate (a
"SUSPENSION PERIOD"), by giving notice to Medicis, if BioMarin shall have
determined that BioMarin may be required to disclose any material corporate
development. Notwithstanding the foregoing, no more than two Suspension Periods
may occur during any twelve-month period. BioMarin shall use its best efforts to
limit the duration and number of any Suspension Periods. Medicis agrees that,
upon receipt of any notice from BioMarin of a Suspension Period, Medicis shall
forthwith discontinue disposition of Restricted Stock pursuant to such
registration statement or prospectus until the earlier of (A) Medicis (i) is
advised in writing by BioMarin that the use of the applicable prospectus may be
resumed, (ii) has received copies of a supplemental or amended prospectus, if
applicable, and (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference into
such prospectus, and (B) thirty (30) days after receipt of the notice concerning
the Suspension Period.
(c) REGISTRATION PROCEDURES. When BioMarin effects the registration
of the Restricted Stock under the Securities Act pursuant to Section 4.8(a)
hereof, BioMarin will, at its expense, as expeditiously as possible:
(i) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file in accordance with Section
4.8(a), with the Commission a registration statement with respect to the
Restricted Stock and use its best efforts to cause such
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registration statement to become and remain effective for the period described
herein, and prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
and such registration statement and prospectus accurate and complete for such
period (provided that, before filing a registration statement or prospectus or
any amendments or supplements thereto, BioMarin will furnish to the counsel
selected by Medicis copies of the plan of distribution section of such
prospectus proposed to be filed);
(ii) Furnish to Medicis such reasonable number of copies of
the registration statement, preliminary prospectus, final prospectus, each
amendment and supplement thereto and such other documents as Medicis may
reasonably request in order to facilitate the disposition of the Restricted
Stock;
(iii) Use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as Medicis may reasonably
request except that BioMarin shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction where it is not so qualified;
(iv) Notify Medicis promptly after it shall receive notice
thereof, of the date and time when such registration statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(v) Notify Medicis promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(vi) Prepare and file with the Commission, promptly upon the
request of Medicis, any amendments or supplements to such registration statement
or prospectus which, in the opinion of counsel for Medicis, is required under
the Securities Act or the rules and regulations thereunder in connection with
the distribution of the Restricted Stock by Medicis;
(vii) Prepare and promptly file with the Commission, and
promptly notify Medicis of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(viii) Advise Medicis, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
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(ix) Cause all such Restricted Stock to be listed on each
securities exchange on which similar securities issued by BioMarin are then
listed and, if not so listed, to be listed on the Nasdaq National Market or any
United States national securities exchange;
(x) Provide a transfer agent and registrar for all such
Restricted Stock which shall be the transfer agent for the common stock of
BioMarin not later than the effective date of such registration statement; and
(xi) Otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
BioMarin's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
With respect to any registration effected pursuant to Section 4.8(a)
hereof, all fees, costs and expenses of and incidental to such registration and
the public offering in connection therewith shall be borne by BioMarin;
provided, however, that Medicis shall bear its own legal fees, if any, and its
pro rata share of any underwriting discounts or commissions, if any.
(d) INDEMNIFICATION.
(i) BioMarin will indemnify and hold harmless Medicis pursuant
to the provisions of this Section 4.8 and any underwriter (as defined in the
Securities Act) for Medicis, and any person who controls Medicis or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of Medicis (for purposes of this
Section 4.8(d), the "MEDICIS REGISTRATION INDEMNIFIED PARTIES"), from and
against, and will reimburse each such Medicis Registration Indemnified Party
with respect to, any and all claims, actions, demands, losses, damages,
liabilities, costs and expenses to which any such Medicis Registration
Indemnified Party may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that BioMarin will not be liable in
any such case to the extent that any such claim, action, demand, loss, damage,
liability, cost or expense is caused by an untrue statement or alleged untrue
statement or omission or alleged omission so made in strict conformity with
information furnished by such Medicis Registration Indemnified Party in writing
specifically for use in the preparation thereof.
(ii) Medicis will indemnify and hold harmless BioMarin
pursuant to the provisions of this Section 4.8, and any underwriter (as defined
in the Securities Act) for Medicis, and any person who controls BioMarin or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of BioMarin (for purposes of this
Section 4.8(d), the "BIOMARIN REGISTRATION INDEMNIFIED PARTIES", and together
with the Medicis Registration Indemnified Parties, the "REGISTRATION
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INDEMNIFIED PARTIES"), from and against, and will reimburse each such BioMarin
Registration Indemnified Party with respect to, any and all claims, actions,
demands, losses, damages, liabilities, costs or expenses to which any such
BioMarin Registration Indemnified Party may become subject under the Securities
Act or otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made solely in reliance
upon and in strict conformity with written information furnished by such Medicis
Registration Indemnified Party specifically for use in the preparation thereof;
provided, however, that the liability of any such Medicis Registration
Indemnified Party pursuant to this subsection (ii) shall be limited to an amount
not to exceed the net proceeds received by any such Medicis Registration
Indemnified Party pursuant to the registration statement which gives rise to
such obligation to indemnify.
(iii) Promptly after receipt by a party indemnified pursuant
to the provisions of clause (i) or (ii) of this Section 4.8(d) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such Registration Indemnified Party will, if a claim
thereof is to be made against the indemnifying party pursuant to the provisions
of clause (i) or (ii) of this Section 4.8(d), notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to an Registration
Indemnified Party otherwise than under this Section 4.8(d) and shall not relieve
the indemnifying party from liability under this Section 4.8(d) unless such
indemnifying party is prejudiced by such omission. In case such action is
brought against any Registration Indemnified Party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Registration Indemnified
Party, and after notice from the indemnifying party to such Registration
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Registration Indemnified Party
pursuant to the provisions of such clause (i) or (ii) for any legal or other
expense subsequently incurred by such Registration Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to an Registration
Indemnified Party for any settlement of any action or claim without the consent
of the indemnifying party. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Registration
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(iv) If the indemnification provided for in clause (i) or (ii)
of this Section 4.8(d) is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims, actions,
demands, losses, damages, liabilities, costs or expenses referred to therein,
then each indemnifying party under any such subsection, in lieu of indemnifying
such Registration Indemnified Party thereunder, hereby agrees to contribute to
the amount paid or payable by such Registration Indemnified Party as a result of
such claims, actions, demands, losses, damages, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the Registration Indemnified Party on
the other in connection with the statements or omissions which resulted in such
claims,
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actions, demands, losses, damages, liabilities, costs or expenses, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Registration Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the Registration Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount Medicis shall be obligated to contribute pursuant to this
clause (iv) shall be limited to an amount not to exceed the net proceeds
received by Medicis pursuant to the registration statement which gives rise to
such obligation to contribute. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution hereunder from any person who was not guilty of such fraudulent
misrepresentation.
(e) REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. From and after
the Option Closing Date, BioMarin shall timely file such information, documents
and reports as the Commission may require or prescribe under Section 13 of the
Exchange Act. BioMarin acknowledges and agrees that the purposes of the
requirements contained in this Section 4.8(e) are to enable Medicis to comply
with the current public information requirement contained in paragraph (c) of
Rule 144 should Medicis ever wish to dispose of any of the Restricted Stock
without registration under the Securities Act in reliance upon Rule 144 (or any
other similar exemptive provision).
(f) STOCKHOLDER INFORMATION. BioMarin may require Medicis to furnish
BioMarin such information with respect to Medicis and the distribution of its
Restricted Stock as BioMarin may from time to time reasonably request in writing
as shall be required by law or by the Commission in connection therewith.
4.9 ADDITIONAL TAX MATTERS.
(a) Medicis shall include the income of Ascent on Medicis'
consolidated federal Tax Returns for all periods through the end of the Option
Closing Date and pay all Taxes attributable to such income. After the Option
Closing Date, Ascent shall furnish Tax information to Medicis as Medicis shall
reasonably request for inclusion in Medicis' federal consolidated Tax Return for
the period which includes the Option Closing Date. The income of Ascent shall be
apportioned to the period up to and including the Option Closing Date and the
period after the Option Closing Date by closing the books of Ascent as of the
end of the Option Closing Date.
(b) BioMarin and BioMarin Acquisition shall promptly pay or cause to
be paid to Medicis all refunds of Taxes and interest thereon received by
Biomarin or Biomarin Acquisition attributable to Taxes paid by Medicis or Ascent
with respect to any taxable period up to and including the Option Closing Date.
(c) After the Option Closing Date, the Parties agree to furnish or
cause to be furnished to each other, upon reasonable request, as promptly as
practicable, such information
25
(including access to books and records) and assistance relating to Ascent as is
reasonably necessary for filing any Tax Return, for the preparation for any
audit, and for the prosecution or defense of any claim, suit or proceeding
relating to any Tax Return. The Parties agree to cooperate with each other in
the conduct of any audit or other proceedings involving Ascent for any Tax
purposes as are reasonably necessary to carry out the intent of this subsection.
4.10 UPDATE OF "KNOWLEDGE" DEFINITION. On or before the Option Closing
Date, if any individual listed on EXHIBIT F or EXHIBIT G hereto shall have
ceased to be employed by Medicis or BioMarin, or ceased to be employed in their
capacity on the Effective Date, as applicable, prior to the Option Closing Date,
the name of each such individual on EXHIBIT F or EXHIBIT G shall be replaced
with the name of another employee of Medicis or BioMarin, as applicable, that
has succeeded to any such individual's position, title or job functions and
responsibilities. EXHIBIT F as so updated shall be used for purposes of the
definition of "Knowledge" of Medicis and Ascent in this Agreement as of the
Option Closing Date. EXHIBIT G as so updated shall be used for purposes of the
definition of "Knowledge" of BioMarin and BioMarin Acquisition in this Agreement
as of the Option Closing Date.
4.11 CONFIDENTIALITY. The Confidentiality Agreement is hereby incorporated
herein by reference.
4.12 REASONABLE EFFORTS; FILINGS AND CONSENTS. Subject to the terms and
conditions of this Agreement, each of the parties to this Agreement will use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary under applicable Legal Requirements, so
as to permit consummation of the transactions contemplated hereby prior to the
Option Closing Date and will use reasonable efforts to cooperate fully with the
other parties hereto to that end. Without limiting the foregoing, if applicable,
each of BioMarin and Medicis agrees to file a notification and report form under
the HSR Act with the appropriate Governmental Bodies, not later than 180 days
prior to the Target Closing Date with respect to the transactions contemplated
hereby.
5. CONDITIONS PRECEDENT TO BIOMARIN ACQUISITION'S OBLIGATION TO EXERCISE
OPTION.
BioMarin Acquisition's obligation to exercise the Option, and to take the
other actions required to be taken by BioMarin Acquisition at the Option Closing
is subject to the satisfaction, at or prior to the Option Closing, of each of
the following conditions (any of which may be waived by BioMarin Acquisition, in
whole or in part, in writing):
5.1 ACCURACY OF REPRESENTATIONS. The representations and warranties made
by Medicis in this Agreement as specified in this Section 5.1 that are qualified
by materiality or Material Adverse Effect shall be true and complete as of the
Option Closing Date as if made on the Option Closing Date (except for
representations and warranties made as of a specified date, which need be true
only as of the specified date). The representations and warranties made by
Medicis in this Agreement as specified in this Section 5.1 that are not so
qualified shall be true and complete in all material respects as of the Option
Closing Date as if made on the Option Closing Date (except for representations
and warranties made as of a specified date, which need be true in all material
respects only as of the specified date). The closing condition set forth in
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this Section 5.1 shall apply only to the representations and warranties
contained in (i) the first sentence of Section 2.1 as it relates to Ascent, (ii)
the second and third sentences of Section 2.2, (iii) Section 2.3, (iv) clause
(b) in Section 2.5, (v) Section 2.6(a), (vi) Section 2.6(c), and (vii) clauses
(i) through (iv) in Section 2.7(a) as they relate to Ascent.
5.2 CONSENTS AND GOVERNMENTAL APPROVALS. All material Consents required to
be obtained by Medicis from any Governmental Body in order to consummate the
transactions contemplated hereby shall have been obtained and shall be in full
force and effect, and all waiting periods under the HSR Act shall have expired,
other than any Consents the failure of which to obtain would require only the
payment by Medicis of monetary amounts, penalties or fines not exceeding, in the
aggregate, $10,000,000.
5.3 NO RESTRAINTS. No preliminary injunction or other order, decree or
ruling issued by a court of competent jurisdiction or other Governmental Body
having jurisdiction, nor any statute, rule, regulation, or executive order
promulgated or enacted by any Governmental Body shall be in effect that would
make any of the transactions contemplated hereby illegal or otherwise prohibit
the consummation of the transactions contemplated hereby.
5.4 PERFORMANCE OF OBLIGATIONS. Each of the covenants and obligations that
Medicis and Ascent is required to comply with or to perform in Section 4.1(d)
and 4.1(v) at or prior to the Option Closing Date shall have been duly complied
with and performed in all material respects.
5.5 ADDITIONAL DOCUMENTS. BioMarin and BioMarin Acquisition shall have
received the following documents:
(a) an opinion letter from Akin Gump Strauss Hauer & Feld LLP, dated
the Option Closing Date, in the form of EXHIBIT C;
(b) a certificate executed by a duly authorized officer not less
senior than vice president of Medicis to the effect that Medicis has satisfied
each of the conditions set forth in Sections 5.1 and 5.4;
(c) a certificate executed by a duly authorized officer not less
senior than vice president of Ascent to the effect that Ascent has satisfied
each of the conditions set forth in Section 5.4; and
(d) duly executed resignations of each of the directors and officers
of Ascent dated as of the Option Closing Date.
5.6 RELEASE. Medicis and Ascent shall have executed a mutual release of
Liabilities in the form attached hereto as EXHIBIT D.
6. CONDITIONS PRECEDENT TO MEDICIS' OBLIGATION TO CLOSE.
Medicis' obligation to sell and transfer the Option Shares and to take the
other actions required to be taken by Medicis at the Option Closing is subject
to the satisfaction, at or prior to the Option Closing, of each of the following
conditions (any of which may be waived by Medicis, in whole or in part, in
writing):
27
6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties made
by BioMarin and BioMarin Acquisition in this Agreement as specified in this
Section 6.1 that are qualified by materiality or Material Adverse Effect shall
be true and complete as of the Option Closing Date as if made on the Option
Closing Date (except for representations and warranties made as of a specified
date, which need be true only as of the specified date). The representations and
warranties made by BioMarin and BioMarin Acquisition in this Agreement as
specified in this Section 6.1 that are not so qualified shall be true and
complete in all material respects as of the Option Closing Date as if made on
the Option Closing Date (except for representations and warranties made as of a
specified date, which need be true in all material respects only as of the
specified date). The closing condition set forth in this Section 6.1 shall apply
only to the representations and warranties contained in (i) the first sentence
of Section 3.1, (ii) Section 3.3 and (iii) clause (b) in Section 3.5.
6.2 CONSENTS AND GOVERNMENTAL APPROVALS. All material Consents required to
be obtained by BioMarin or BioMarin Acquisition from any Governmental Body in
order to consummate the transactions contemplated hereby shall have been
obtained and shall be in full force and effect, and all waiting periods under
the HSR Act shall have expired, other than any Consents the failure of which to
obtain would require only the payment by BioMarin and BioMarin Acquisition of
monetary amounts, penalties or fines, not exceeding, in the aggregate,
$1,000,000.
6.3 NO RESTRAINTS. No preliminary injunction or other order, decree or
ruling issued by a court of competent jurisdiction or other Governmental Body
having jurisdiction, nor any statute, rule, regulation, or executive order
promulgated or enacted by any Governmental Body shall be in effect that would
make any of the transactions contemplated hereby illegal or otherwise prohibit
the consummation of the transactions contemplated hereby.
6.4 PERFORMANCE OF OBLIGATIONS. Each of the covenants and obligations that
BioMarin and BioMarin Acquisition are required to comply with or to perform in
Section 4.2 at or prior to the Option Closing shall have been duly complied with
and performed in all material respects.
6.5 ADDITIONAL DOCUMENTS; PAYMENTS. Medicis shall have received the
following:
(a) a certificate from a duly authorized officer not less senior
than vice president of BioMarin to the effect that BioMarin has satisfied each
of the conditions set forth in Sections 6.1 and 6.4;
(b) a certificate from a duly authorized officer not less senior
than vice president of BioMarin Acquisition to the effect that BioMarin
Acquisition has satisfied each of the conditions set forth in Sections 6.1 and
6.4;
(c) an opinion letter from Paul, Hastings, Janofsky & Walker LLP,
dated the Option Closing Date, in the form of EXHIBIT E; and
(d) subject to Section 1.3(c), all payments required to be made by
BioMarin or BioMarin Acquisition pursuant to the License Agreement.
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7. TERMINATION.
7.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Option Closing Date:
(a) by BioMarin Acquisition if there is a Breach of any
representation, warranty, covenant or obligation of Medicis or Ascent set forth
in this Agreement which Breach (i) would give rise to the failure of a condition
set forth in Section 5.1 or Section 5.4 and (ii) (if susceptible to cure) has
not been cured within 20 Business Days following receipt by Medicis of notice of
such Breach (a "MEDICIS BREACH");
(b) by Medicis if there is a Breach of any representation, warranty,
covenant or obligation of BioMarin or BioMarin Acquisition set forth in this
Agreement which Breach (i) would give rise to the failure of a condition set
forth in Section 6.1 or Section 6.4 and (ii) (if susceptible to cure) has not
been cured within 20 Business Days following receipt by BioMarin Acquisition and
BioMarin of notice of such Breach (a "BIOMARIN BREACH");
(c) by the mutual written consent of the parties hereto; and
(d) by BioMarin Acquisition, upon delivery of a Notice of
Non-Exercise to Medicis in accordance with Section 1.2.
7.2 TERMINATION PROCEDURES. If BioMarin Acquisition wishes to terminate
this Agreement pursuant to Section 7.1, BioMarin Acquisition shall deliver to
Medicis a written notice stating that BioMarin Acquisition is terminating this
Agreement and setting forth a brief description of the basis on which BioMarin
Acquisition is terminating this Agreement. If Medicis wishes to terminate this
Agreement pursuant to Section 7.1, Medicis shall deliver to BioMarin Acquisition
a written notice stating that Medicis is terminating this Agreement and setting
forth a brief description of the basis on which Medicis is terminating this
Agreement.
7.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 7.1, this Agreement shall become wholly void and of no further force and
effect, without liability to BioMarin, BioMarin Acquisition, Medicis, Ascent or
any of their respective Representatives or Affiliates, except that the
provisions set forth in Sections 4.7, 4.11, 7.3, 9.2, 9.3, 9.8, 9.11 and, in the
case of termination of this Agreement pursuant to Section 7.1(b) or (d), 9.20,
shall remain in full force and effect; provided, however, that nothing in this
Section 7.3 shall be deemed to release any party from liability for any Breach
of its obligations under this Agreement.
8. SURVIVAL AND INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) All representations and warranties contained in this Agreement
shall survive the Option Closing Date and shall expire at 11:59 p.m. (Pacific
Time) on the eighteenth-month anniversary of the Option Closing Date, and shall
thereafter be of no further force or effect, except (i) the representations and
warranties set forth in Sections 2.3, 2.6, 2.7, 2.8, 2.13, 3.3, and 3.13 shall
expire on the expiration of the relevant statute of limitations, and (ii) to the
extent required to enforce the parties' rights and obligations hereunder
following the
29
end of such period for any claims for which a Claim Notice (as defined below)
has properly been made prior to the expiration of such period. All of the
covenants, agreements and obligations of the parties contained in this Agreement
shall survive (i) until fully performed or fulfilled, unless non-compliance with
such covenants, agreements or obligations is waived in writing by the party or
parties entitled to such performance or (ii) if not fully performed or
fulfilled, until the expiration of the relevant statute of limitations.
Notwithstanding anything in this Agreement to the contrary, if this Agreement is
terminated pursuant to Section 7.1(c) or (d), the representations and warranties
contained in this Agreement shall thereafter be of no further force or effect.
(b) For purposes of this Agreement, a "Claim Notice" relating to a
particular representation or warranty or covenant shall be deemed to have been
given if any Indemnified Party, acting in good faith, delivers to the
Indemnifying Party a written notice stating that such Indemnified Party
reasonably believes that there is or has been a possible Breach of such
representation or warranty or covenant and containing (i) a brief description of
the circumstances supporting such Indemnified Party reasonable belief that there
is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct or indirect result of such possible
Breach.
(c) Notwithstanding that the accuracy and performance of only
certain representations, warranties and covenants are conditions to the
obligations of the parties hereto to consummate the transactions contemplated
hereby, any party may pursue claims for indemnification with respect to Damages
that arise from the Breach of any representation, warranty or covenant contained
in this Agreement, regardless of whether the party asserting a claim for
indemnification had knowledge of such Breach prior to the Option Closing.
8.2 INDEMNIFICATION BY MEDICIS.
(a) From and after the Effective Date, Medicis shall hold harmless
and indemnify each of the BioMarin Indemnitees from and against, and shall
compensate and reimburse each of the BioMarin Indemnitees for, any Damages
suffered or incurred by any of the BioMarin Indemnitees or to which any of the
BioMarin Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any Third Party Claim) and that arise
from:
(i) any Breach of any of the representations or warranties
made by Medicis in this Agreement;
(ii) any Breach of any covenant or obligation of Medicis or
Ascent contained in this Agreement;
(iii) any Liability of Ascent at the Option Closing, other
than any Liability for which BioMarin has indemnified Medicis pursuant to
Section 8.3(a)(iii) below; and
(iv) any Proceeding relating directly or indirectly to any
Breach or Liability of the type referred to in clauses "(i)" through "(iii)"
above (including any Proceeding commenced by any BioMarin Indemnitee for the
purpose of enforcing any of its rights under this Section 8.2).
30
(b) Subject to Section 8.2(d), Medicis shall not be required to make
any indemnification payment pursuant to Sections 8.2(a)(i) of this Agreement,
Section 9.2(a)(i) of the Asset Purchase Agreement and Section 12.2(a)(i) of the
License Agreement, until such time as and to the extent that the total amount of
all Damages (including the Damages arising from such Breach and all other
Damages arising from any other Breaches of any representations or warranties)
that have been directly or indirectly suffered or incurred by any one or more of
the BioMarin Indemnitees, or to which any one or more of the BioMarin
Indemnitees has or have otherwise become subject, exceeds, in the aggregate,
$250,000 and then only to the extent of such excess.
(c) Notwithstanding anything in this Agreement to the contrary, but
subject to Section 8.2(d), the aggregate liability for any indemnification
payments pursuant to Section 8.2(a)(i) of this Agreement, Section 9.2(a)(i) of
the Asset Purchase Agreement and Section 12.2(a)(i) of the License Agreement,
will be limited to, and shall not exceed, in the aggregate, $66.5 million (the
"MEDICIS CAP"); provided, however, that the Medicis Cap shall not apply to any
indemnification obligation of Medicis arising out of any Breach of Section 2.3,
2.6 or 2.7.
(d) The limitations on the indemnification obligations of Medicis
set forth in each of Section 8.2(b) and Section 8.2(c) shall not apply to any
willful Breach, intentional misrepresentation or fraud by Medicis or Ascent.
(e) The indemnification obligations of Medicis set forth in this
Section 8.2 shall be without any right of Medicis or any of its Affiliates to
any contribution from, or recourse against, Ascent. Medicis, on behalf of itself
and each of its Affiliates, hereby completely releases and covenants not to sue
Ascent and BioMarin and BioMarin Acquisition and their respective Affiliates, in
their capacity as direct or indirect owners of Ascent, from or with respect to
any and all Liabilities arising from or in connection with any Damages for which
Medicis is obligated to indemnify under this Section 8.2.
(f) To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the License Agreement and/or the Asset Purchase Agreement,
such party shall be entitled to only one recovery of Damages resulting from such
actions, failures to act or other circumstances giving rise to the right of
indemnification, regardless of whether the actions, failures to act or other
circumstances giving rise to the right of indemnification constitute a breach of
more than one agreement. The parties acknowledge that the purpose of this
provision is to prevent duplicative recovery for the same Damages, and not to
preclude the recovery of Damages for separate and independent indemnity claims
that may arise under the various agreements.
8.3 INDEMNIFICATION BY BIOMARIN.
(a) From and after the Effective Date, BioMarin shall hold harmless
and indemnify the Medicis Indemnitees from and against, and shall compensate and
reimburse the Medicis Indemnitees for, any Damages suffered or incurred by any
of the Medicis Indemnitees
31
or to which any of the Medicis Indemnitees may otherwise become subject at any
time (regardless of whether or not such Damages relate to any Third Party Claim)
and that arise from:
(i) any Breach of any representation or warranty made by
BioMarin or BioMarin Acquisition in this Agreement;
(ii) any Breach of any covenant or obligation of BioMarin or
BioMarin Acquisition contained in this Agreement;
(iii) any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing of the Products following the Effective Date, except
Damages suffered or incurred or arising from the Breach of Medicis, Ascent or
Medicis Manufacturing, as applicable, under the Supply Agreement, the Transition
Services Agreement or the License Agreement;
(iv) any Proceeding relating directly or indirectly to any
Breach, Liability or Third Party Claim of the type referred to in clauses "(i)"
through "(iii)" above (including any Proceeding commenced by any Medicis
Indemnitee for the purpose of enforcing its rights under this Section 8.3).
(b) Subject to Section 8.3(d), BioMarin shall not be required to
make any indemnification payment pursuant to Section 8.3(a)(i) of this
Agreement, Section 9.3(a)(i) of the Asset Purchase Agreement and Section
12.3(a)(i) of the License Agreement, until such time as and to the extent that
the total amount of all Damages (including the Damages arising from such Breach
and all other Damages arising from any other Breaches of any representations or
warranties) that have been directly or indirectly suffered or incurred by the
Medicis Indemnitees or Ascent, or to which the Medicis Indemnitees or Ascent
have otherwise become subject, exceeds, in the aggregate, $250,000 and then only
to the extent of such excess.
(c) Notwithstanding anything in this Agreement to the contrary, but
subject to Section 8.3(d), the aggregate liability for any indemnification
payments pursuant to Section 8.3(a)(i) of this Agreement, Section 9.3(a)(i) of
the Asset Purchase Agreement and Section 12.3(a)(i) of the License Agreement,
will be limited to, and shall not exceed, in the aggregate, $66.5 million (the
"BIOMARIN CAP"); provided, however, that the BioMarin Cap shall not apply to any
indemnification obligation of BioMarin arising out of any Breach of Section 3.3.
(d) The limitation on the indemnification obligations of BioMarin
that is set forth in Section 8.3(b) and Section 8.3(c) shall not apply to (i)
any failure by BioMarin Acquisition to make any payment pursuant to Section
1.4(b), or (ii) any willful Breach, intentional misrepresentation or fraud by
BioMarin or BioMarin Acquisition.
(e) To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the License Agreement and/or the Asset Purchase Agreement,
such party shall be entitled to only one recovery of Damages resulting from such
actions, failures to act or other circumstances giving rise to the right of
indemnification, regardless of whether the actions, failures to act or other
circumstances giving rise to the right of indemnification constitute a breach of
more than one agreement. The parties
32
acknowledge that the purpose of this provision is to prevent duplicative
recovery for the same Damages, and not to preclude the recovery of Damages for
separate and independent indemnity claims that may arise under the various
agreements.
8.4 PROCEDURES RELATING TO INDEMNIFICATION FOR THIRD PARTY CLAIMS.
(a) Within ten (10) Business Days after a BioMarin Indemnitee or
Medicis Indemnitee obtains Knowledge of the commencement of any third-party
claim, action, suit or proceeding (a "THIRD PARTY CLAIM") or the occurrence of
any fact which may become the basis of a Third Party Claim in respect of which
an Indemnified Party is entitled to indemnification under this Agreement, such
Indemnified Party shall notify in writing the Indemnifying Party of such 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 materially prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice). Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, within five (5) Business Days after the Indemnified Party's receipt
thereof, copies of all notices and non-privileged 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 at its expense in the
defense thereof and, if it so chooses within thirty (30) days after receipt of
notice of such claim to assume the defense thereof at the Indemnifying Party's
expense, with counsel selected by the Indemnifying Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall be permitted to participate in the defense thereof and to employ
counsel (not reasonably objected to by the Indemnifying Party), at its own
expense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnified Party (i) for any period during which the
Indemnifying Party has not assumed the defense thereof or is not using
commercially reasonable efforts to pursue the defense thereof (other than during
the period in which the Indemnified Party failed to give notice of the Third
Party Claim as provided above), or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the
Indemnifying Party and the Indemnified Party in defending such claim or action,
or (y) that there may be legal defenses available to the Indemnified Party
different from or in addition to those available to the Indemnifying Party.
(c) If the Indemnifying Party so elects to assume the defense of any
Third Party Claim, all of the Indemnified Parties shall reasonably cooperate
with the Indemnifying Party, at the expense of the Indemnifying Party, in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying Party
of non-privileged records and information which 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. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim,
33
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 shall have assumed the defense of a Third Party Claim, the
Indemnified Party shall agree to any settlement, compromise or discharge of a
Third Party Claim for monetary Damages which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay the
full amount of the monetary Damages in connection with such Third Party Claim
and which releases the Indemnifying Party and the Indemnified Party completely
in connection with such Third Party Claim and does not impose any covenant or
commitment on the Indemnified Party.
8.5 OTHER CLAIMS. In the event any Indemnified Party should have a claim
against any Indemnifying Party under Section 8.2 or 8.3 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 to the
Indemnifying Party of such claim within 15 Business Days of obtaining Knowledge
of the occurrence of such claim. The failure by any Indemnified Party so to
notify the Indemnifying Party within this time period shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party under Section 8.2 or 8.3, except to the extent that the Indemnifying Party
is materially prejudiced by such failure. If the Indemnifying Party does not
notify the Indemnified Party within 15 Business Days following its receipt of
such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under Section 8.2 or 8.3, such claim specified by the
Indemnified Party in such notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 8.2 or 8.3 and the Indemnifying Party shall pay
the amount of such liability to the Indemnified Party on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined by agreement between the Indemnifying Party
and the Indemnified Party or by judgment or decree of a court of competent
jurisdiction. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall attempt to resolve such claim in accordance with Section
9.9.
8.6 SETTLEMENTS. No party may settle any claim, action or proceeding
related to a liability to a third party without the consent of the other
parties, if such settlement would impose any monetary obligation on the other
parties or require the other parties to submit to an injunction or impose any
covenant or commitment on the other party or otherwise limit the other party's
rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.
8.7 NO CONSEQUENTIAL OR PUNITIVE DAMAGES. No party hereto (or its
Affiliates) shall, under any circumstance, be liable to any other party (or its
Affiliates) for any consequential, exemplary, special, incidental or punitive
Damages claimed by such other party under the terms of or due to any Breach of
this Agreement.
9. MISCELLANEOUS PROVISIONS.
9.1 FURTHER ASSURANCES. From and after the Effective Date, each party
hereto shall execute and deliver such documents and take such other actions, as
such other party may
34
reasonably request, for the purpose of carrying out or evidencing any of the
transactions contemplated hereby.
9.2 FEES AND EXPENSES; INVESTMENT BANKING FEES.
(a) Each party to this Agreement shall bear and pay all fees, costs
and expenses (including all legal fees and expenses, that have been incurred or
that are in the future incurred by, on behalf of or for the benefit of such
party in connection with: (i) the negotiation, preparation and review of any
letter of intent or similar document relating to any of the transactions
contemplated hereby; (ii) the investigation and review conducted by such party
and its Representatives with respect to the transactions contemplated hereby;
(iii) the negotiation, preparation and review of this Agreement or any of the
documents delivered in connection herewith; (iv) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated hereby, and the obtaining of any Consent required
to be obtained in connection with any of the transactions contemplated hereby;
and (v) the consummation and performance of the transactions contemplated
hereby.
(b) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, and regardless of whether or not the Option Closing takes place,
each party to this Agreement shall pay its own investment banking, broker or
finder fees, if any, incurred in connection with the transactions contemplated
hereby.
9.3 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any Transaction Agreement or the enforcement of any provision of any
Transaction Agreement is brought by one party against any other party to this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).
9.4 NOTICES. All notices, demands and other communications under or in
connection with this Agreement shall be in writing and shall be deemed properly
delivered, given and received (a) if delivered personally, upon delivery, (b) if
delivered by registered or certified mail (return receipt requested) from the
United States, upon the earlier of actual delivery or three Business Days after
being mailed, (c) if sent by overnight delivery by a recognized overnight
delivery service for overnight delivery, upon the earlier of actual delivery or
one Business Day after being sent, or (d) if given by facsimile, upon
confirmation of transmission by facsimile (or, if such confirmation does not
occur during normal business hours on a Business Day then on the next Business
Day), in each case to the parties at the following addresses or facsimile
numbers or to such other address or facsimile numbers as each party may
designate for itself by like notice to the other parties:
9.5 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
9.6 HEADINGS. The headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in several counterparts
(including by facsimile), each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.
9.8 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of New York (without
giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in New York, New
York in the Borough of Manhattan. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in New York, New York in
the Borough of Manhattan (and each appellate court located in the State of New
York) in connection with any such legal proceeding;
(ii) agrees that each state and federal court located in New
York, New York in the Borough of Manhattan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in New York, New
37
York in the Borough of Manhattan, any claim that such party is not subject
personally to the jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.
(c) The parties hereto agree that, if any Proceeding is commenced
against any Indemnified Party by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnified Party may proceed against
the Indemnifying Party in or before such court or other tribunal with respect to
any indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.
9.9 DISPUTE RESOLUTION PROCEDURES. In the event any dispute arises between
the parties with respect to the interpretation of this Agreement or with respect
to the performance of either party, the parties shall first seek to resolve such
dispute by negotiations between senior executives who have authority to settle
the dispute. When a party believes there is a dispute relating to the Agreement,
such party shall give written notice of the dispute to the other party or
parties subject to the dispute. The senior executives shall meet promptly after
the date of such notice and shall attempt in good faith within 45 days after the
date of such notice to resolve the dispute prior to initiating litigation with
respect to such matter. Notwithstanding the foregoing, if no such resolution is
reached within such 45 days, then any party may initiate any proceeding or
pursue any remedy it deems appropriate and that is not prohibited hereby.
9.10 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, the other Indemnified Parties, and the respective
successors and assigns (if any) of the foregoing. No Person (including any
creditor of Medicis or Ascent or any former or current employee of Ascent) who
is not a party to this Agreement shall have any rights hereunder as a
third-party beneficiary or otherwise.
(b) Neither this Agreement nor the rights and obligations of any
party hereunder shall be assigned without the prior written consent of the other
parties, which consent may be given or withheld in such party's sole discretion.
If Medicis or BioMarin or any of their respective successors (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
Medicis or BioMarin, as the case may be, shall assume the obligations set forth
in this Agreement.
9.11 EXCLUSIVE REMEDIES; SPECIFIC PERFORMANCE. Except as expressly
provided herein, from and after the Option Closing Date, the remedies provided
in Section 1.5, Article 8 and the Escrow Agreement shall constitute the sole and
exclusive remedy available to each party hereto for recovery against another
party for Breaches of the representations, warranties, covenants and agreements
in this Agreement. The parties hereto acknowledge that the material covenants,
obligations and other provisions to be performed under this Agreement are of a
special, unique and extraordinary character, and that irreparable injury will
result from any
38
violation or continuing violation of the provisions of this Agreement for which
money damages may not be an adequate remedy. Accordingly, the parties agree that
in the event of any Breach or threatened Breach by any party hereto of any
material covenant, obligation or other provision set forth in this Agreement,
the other party or parties shall be entitled (in addition to any other remedy
that may be available to it) to seek in accordance with applicable law, (i) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach.
9.12 WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.13 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of BioMarin, BioMarin Acquisition, Medicis and Ascent.
9.14 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
9.15 ENTIRE AGREEMENT. This Agreement, the Escrow Agreement and the other
documents executed in connection herewith, set forth the entire understanding of
the parties relating to the subject matter thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter thereof.
9.16 PERFORMANCE GUARANTEE.
(a) BioMarin hereby unconditionally, irrevocably and absolutely
guarantees to Medicis the due and punctual performance and discharge of all of
BioMarin Acquisition's obligations under this Agreement, including, without
limitation, the due and punctual payment of the Cash Option Payment and the
Additional Consideration, if any, any other amount that BioMarin Acquisition is
or may become obligated to pay pursuant to this Agreement, and delivery of the
BioMarin Payment Shares (collectively, the "OBLIGATIONS"). The guarantee under
this Section 9.16 is a guarantee of timely payment and performance of the
Obligations and not merely of collection.
39
(b) To the fullest extent permitted by applicable law, the
obligations of BioMarin hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of BioMarin Acquisition or the bankruptcy,
insolvency, reorganization, dissolution, liquidation, or other similar
proceeding relating to BioMarin Acquisition or any Affiliate or Subsidiary of
either BioMarin Acquisition or BioMarin or (ii) any neglect, delay, omission,
failure or refusal of BioMarin to take or prosecute any action in connection
with this Agreement or any other agreement delivered in connection herewith. In
connection with this Section 9.16, BioMarin unconditionally waives: (i) any
right to receive demands, protests, or other notices of any kind or character
whatsoever, provided that the same has been delivered to BioMarin Acquisition,
(ii) any right to require Medicis or Ascent to proceed first against BioMarin
Acquisition or to exhaust any security held by Medicis or Ascent or to pursue
any other remedy, (iii) any defense based upon an election of remedies by
Medicis or Ascent, (iv) any duty of Medicis or Ascent to advise BioMarin of any
information known to Medicis or Ascent regarding BioMarin Acquisition or its
ability to perform under this Agreement, and (v) all suretyship and other
defenses of every kind and nature.
(c) The obligations of BioMarin under this Section 9.16 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of BioMarin Acquisition in respect of the
Obligations are rescinded or must be otherwise restored, and BioMarin agrees
that it will indemnify Medicis and Ascent on demand for all costs and expenses
(including reasonable attorneys fees and expenses) incurred by Medicis and
Ascent in connection with such rescission or restoration. If in connection with
the foregoing, Medicis and Ascent is required to refund part or all of any
payment of BioMarin Acquisition, such payment by Medicis and Ascent shall not
constitute a release of BioMarin from any liability hereunder, and BioMarin's
liability hereunder shall be reinstated to the fullest extent allowed under
applicable law and shall not be construed to be diminished in any manner.
(d) This Section 9.16 shall survive the Option Closing and shall
remain in full force and effect, subject to the provisions of Section 9.16(c).
9.17 CONSTRUCTION.
(a) For purposes of this Agreement, including the Exhibits hereto,
whenever the context requires: the singular number shall include the plural, and
vice versa; the masculine gender shall include the feminine and neuter genders;
the feminine gender shall include the masculine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
40
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
9.18 CONSISTENCY. Each of the Parties hereto agrees to report the
transaction contemplated herein for all state and federal Tax purposes as a sale
and purchase of all of the outstanding capital stock of Ascent on the Option
Closing Date.
9.19 NO PROJECTION OR FINANCIAL FORECAST. MEDICIS IS NOT MAKING ANY
REPRESENTATION OR WARRANTY TO BIOMARIN AND BIOMARIN ACQUISITION WITH RESPECT TO
(I) ANY FINANCIAL PROJECTION OR FORECAST RELATING TO THE PEDIATRICS BUSINESS,
THE ACQUIRED ASSETS OR LIABILITIES OF MEDICIS OR ASCENT OR RELATED TO THE
PHARMACEUTICAL MARKET AS A WHOLE OR THE MARKET FOR ORAL LIQUID PREDNISOLONE
SOLUTION PRODUCTS OR ORAL DISSOLVING TABLET PREDNISOLONE PRODUCTS SPECIFICALLY,
INCLUDING BUT NOT LIMITED TO ANY PROJECTIONS INCLUDING FUTURE SALES OF SUCH
PRODUCTS, OR THE INTRODUCTION OF ANY COMPETITIVE PRODUCTS (WHETHER GENERIC OR
NAME BRAND).
9.20 NONCOMPETITION BY BIOMARIN. Each of BioMarin and BioMarin Acquisition
agree that, if this Agreement is terminated by Medicis pursuant to Section
7.1(b), by the parties hereto pursuant to Section 7.1(c), or by BioMarin
Acquisition pursuant to Section 7.1(d), it shall not and shall cause its
Subsidiaries not to, during the period from the termination date through the
fifth anniversary of the termination date, whether acting alone or as a member
of an Entity, and whether as an advisor, principal, consultant, independent
contractor, agent, partner, employee, officer, director, 5% or greater
equityholder or otherwise, anywhere in the world, (a) engage in, own, operate,
maintain or finance directly or indirectly any business or other enterprise
engaged in the development, distribution, sale or commercialization of an oral
liquid prednisolone sodium solution or oral dissolving tablet prednisolone
product, or (b) take any action that is designed or intended or would reasonably
be expected to have the effect of discouraging any customer, supplier, lessor,
licensor or other business associate of the business of BioMarin Acquisition or
its Affiliates related to the making, manufacturing, marketing, selling,
distributing, importing, exporting and developing of the Products from
maintaining a business relationship with Medicis or Ascent after the termination
date as it was maintained with the business of BioMarin Acquisition or its
Affiliates related to the making, manufacturing, marketing, selling,
distributing, importing, exporting and developing of the Products prior to the
termination date; provided, however, that, notwithstanding the foregoing, (a)
BioMarin may enter into a transaction or series of transactions that involves
the acquisition by BioMarin of another Entity whose activities, but for this
proviso would violate this Section 9.20 so long as such activities are not
primary but are merely ancillary to such Entity's activities and so long as
BioMarin terminates or divests such activities within a reasonable period of
time following such acquisition not to exceed 180 days, and (b) BioMarin may be
acquired by merger with another Entity, where the stockholders of BioMarin
immediately prior to the merger own less than 50% of the surviving entity, whose
activities, but for this proviso, would violate this Section 9.20. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 9.20 is invalid or unenforceable, the parties agree
that the court making such determination of invalidity or unenforceability shall
have the power to reduce the scope, duration
41
or area of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
The parties to this Agreement have caused this Agreement to be executed
and delivered by their duly authorized representatives as of May 18, 2004.
MEDICIS PHARMACEUTICAL CORPORATION,
a Delaware corporation
For purposes of the Agreement (including this EXHIBIT A):
"ACQUISITION TRANSACTION" shall mean any transaction or series of
transactions (other than the transactions contemplated hereby and in the
documents executed in connection herewith) involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, direct or indirect acquisition of securities,
recapitalization, tender offer, exchange offer or other similar transaction in
which (i) Ascent is a constituent corporation, (ii) a Person or "group" (as
defined in the Exchange Act and the rules promulgated thereunder) of Persons
directly or indirectly acquires any of the outstanding securities of any class
of Ascent (other than in connection with the acquisition of Medicis), or (iii)
Ascent issues any securities;
(b) any direct or indirect sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or of all or
substantially all of the assets or rights that are part of the Pediatrics
Business;
(c) any liquidation or dissolution of Medicis or Ascent; or
(d) any sale or other transfer of any of the Intellectual Property,
the Secondary ANDA, the Option Shares, or Medicis' or Ascent's obligations under
this Agreement.
"AFFILIATE" shall mean with respect to any Person, any other Person
controlling, controlled by or within common control with such Person. Without
limiting the foregoing, Ascent is an Affiliate of Medicis and Medicis is an
Affiliate of Ascent, and BioMarin is an Affiliate of BioMarin Acquisition and
BioMarin Acquisition is an Affiliate of BioMarin.
"AGREEMENT" shall mean the Securities Purchase Agreement to which this
EXHIBIT A is attached (including the Ascent Disclosure Schedule), as it may be
amended from time to time in accordance herewith.
"ASCENT DISCLOSURE SCHEDULE" shall mean the schedule (dated as of the date
of the Agreement) delivered to BioMarin Acquisition on behalf of Ascent, a copy
of which is attached to the Agreement and incorporated in the Agreement by
reference.
"ASCENT MERGER AGREEMENT" shall mean that certain Agreement and Plan of
Merger among Medicis, MPC Merger Corp. and Ascent, dated October 1, 2001.
"ASSET PURCHASE AGREEMENT" shall mean that certain asset purchase
agreement among BioMarin, BioMarin Acquisition, Ascent and Medicis dated as of
April 20, 2004.
"BIOMARIN INDEMNITEES" shall mean BioMarin Acquisition and BioMarin.
"BIOMARIN SHARE" shall mean a share of BioMarin Common Stock.
A-1
"BREACH" means an inaccuracy in or breach of, or any failure to comply
with or perform, a representation, warranty, covenant, obligation or other
provision.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any day
which shall be in the State of New York a legal holiday or a day on which
banking institutions are authorized by law to close.
"CODE" shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement by and among Medicis, Ascent, Medicis Manufacturing, BioMarin and
BioMarin Acquisition, dated as of the date hereof.
"CONSENT" shall mean any approval, consent, ratification, permission,
waiver, authorization, filing, registration or notification (including any
Governmental Authorization).
"CONTRACT" shall mean any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
deed, assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance or undertaking
of any nature.
"DAMAGES" shall include any loss, damage, injury, Liability, claim,
demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable legal fees, expert fees, accounting fees or advisory fees), charge,
cost (including reasonable costs of investigation) or expense of any nature.
"DEVELOPMENT KNOW HOW" shall mean technical, scientific and medical
information, knowledge, know-how, inventions and trade secrets, that are
necessary for the development, registration, manufacturing, packaging,
stability, bioavailability, formulation, sale, use or commercialization of the
products claimed in the Development Patents, owned by Ascent or its Affiliates,
as of the Effective Date.
"DEVELOPMENT PATENTS" shall mean all the United States and foreign patents
and utility models, invention registrations, supplementary protection
certificates and applications therefor listed in Part L-1.1(t) of the Ascent
Disclosure Schedule and all reissues, divisionals, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof.
"DEVELOPMENT TECHNOLOGY" shall mean the Development Patents and the
Development Know How.
"DOMAIN NAME AND WEB SITE LICENSE AGREEMENT" shall mean that certain
Domain Name and Web Site License Agreement among BioMarin, BioMarin Acquisition,
Ascent and Medicis dated as of May 18, 2004.
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"DUAL USE KNOW HOW" shall mean technical, scientific and medical
information, knowledge, know-how, inventions and trade secrets, which (a) (i) is
owned by Ascent or its Affiliates and pertain or relate to both oral liquid
prednisolone solution products and the Primsol product previously marketed by
Ascent under Abbreviated New Drug Application 74-973 or (ii) is controlled by or
licensed to Ascent or its Affiliates on a non-exclusive basis, and is
sublicensable to a third party by Ascent or its Affiliates but is not owned by
Ascent or its Affiliates and (b) is necessary for, used in or related to the
development, registration, manufacturing, formulation, sale, use and
commercialization of oral liquid prednisolone solution products.
"EMPLOYEE BENEFIT PLAN" shall have the meaning specified in Section 3(3)
of ERISA and each other employee benefit plan, program or arrangement at any
time maintained, sponsored or contributed to (or required to be contributed to)
by Medicis or any of its Affiliates or ERISA Affiliates or with respect to which
Medicis or any of its Affiliates has any liability or potential liability.
"ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, equitable interest, claim, preference,
right of possession, lease, license, covenant, infringement, Order, proxy,
option, right of first refusal, preemptive right, legend, defect, impediment,
exception, reservation, limitation, impairment, imperfection of title, condition
or restriction of any nature (including any restriction on the transfer of any
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
"ENTITY" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and any regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean any Person that is, was or would be treated
as a single employer with Medicis, Ascent or any of their Affiliates under
Section 414 of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and any regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles as applied in
the United States.
"GOVERNMENTAL AUTHORIZATION" shall mean any permit, license, certificate,
franchise, concession, approval, consent, ratification, permission, clearance,
confirmation, endorsement, waiver, certification, designation, rating,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
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"GOVERNMENTAL BODY" shall mean any United States federal, state or local
judicial, legislative, executive or other regulatory authority.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and any regulations promulgated thereunder.
"IMPROVEMENTS" means any and all inventions, improvements, discoveries,
enhancements, extensions, replacements, developments, refinements, or
modifications to the Technology or the Development Technology, or utilizing the
Technology or the Development Technology, or the respective use or the
manufacturing processes therefor, whether or not patentable, which may be
conceived, made, developed or otherwise controlled by BioMarin Acquisition or
its Affiliates during the term of the License Agreement including, without
limitation, modifications in size, package forms, dosage strength, methods for
administration, methods for delivering, or changes in the formulation including
the addition of actives to products.
"INDEMNIFIED PARTIES" shall mean the Medicis Indemnitees or the BioMarin
Indemnitees, as the case may be.
"INDEMNIFYING PARTIES" shall mean Medicis or BioMarin, as the case may be.
"INTELLECTUAL PROPERTY" shall mean the Trademarks and the Technology.
"INTELLECTUAL PROPERTY ASSETS" means the Technology, the Development
Technology, the Trademarks and the Improvements.
"KNOW HOW" shall mean technical, scientific and medical information,
knowledge, know-how, inventions and trade secrets, that are necessary for the
development, registration, manufacturing, packaging, stability, bioavailability,
formulation, sale, use or commercialization of ORAPRED(R) and the "Licensed
Products" (as defined in the Development, Commercialization and License
Agreement between Ascent Pediatrics Inc. and Cima Labs Inc.), as the case may
be, including, without limitation: (a) physiochemical data, specifications,
quality control information and procedures; (b) market research data solely to
the extent Ascent has the right to assign such data to BioMarin Acquisition; and
(c) information concerning the clinical, toxicological and pharmacological
properties with respect to all of the foregoing, owned by Ascent or its
Affiliates, as of the Effective Date; provided that Know How shall not include
Dual Use Know How.
"KNOWLEDGE" An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. Each of Ascent or Medicis shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or individual
identified on EXHIBIT F hereto has Knowledge of such fact or other matter. Each
of BioMarin Acquisition or BioMarin shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or individual identified on
EXHIBIT G hereto has Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" shall mean any applicable order, writ, injunction,
judgment, decree, statute, rule or regulation of any Governmental Body.
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"LIABILITY" shall mean any debt, obligation, liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation or liability is immediately due and payable.
"LICENSE AGREEMENT" shall mean that certain License Agreement by and among
BioMarin, BioMarin Acquisition, Medicis and Ascent, dated as of the date hereof.
"LITIGATION MATTERS" shall mean those matters set forth on EXHIBIT H
hereto.
"LYNE LICENSE" shall mean that certain License Agreement between Ascent
and Lyne Laboratories, Inc. dated May 21, 2001 (without regard to any amendment
or modification thereof subsequent to the date hereof).
"MATERIAL ADVERSE EFFECT" With respect to Medicis and/or Ascent, an
"ASCENT MATERIAL ADVERSE EFFECT" means any event, circumstance, condition,
development or occurrence causing, resulting in or having a material adverse
effect on Ascent, the Intellectual Property, or the Pediatrics Business, taken
as a whole; provided that in no event shall any of the following be deemed to
constitute or be taken into account in determining an Ascent Material Adverse
Effect: any event, circumstance, change or effect that results from (A) changes
affecting the economy generally, (B) changes in the pharmaceutical industry as a
whole or in the market for oral liquid prednisolone solution products or oral
dissolving tablet prednisolone products, (C) the public announcement or pending
nature of the transactions contemplated hereby, or (D) any adverse judgment,
verdict or Order relating to the Litigation Matters (provided that this clause
(D) shall not restrict or modify the conditions set forth in Sections 5.1, 5.3
and 5.4). With respect to BioMarin and/or BioMarin Acquisition, a "BIOMARIN
MATERIAL ADVERSE EFFECT" means any event, circumstance, condition, development
or occurrence causing, resulting in or having a material adverse effect on the
business, condition, capitalization, assets, liabilities, operations or
financial performance of BioMarin, taken as a whole; provided that in no event
shall any of the following be deemed to constitute or be taken into account in
determining a BioMarin Material Adverse Effect: any event, circumstance, change
or effect that results from (x) changes affecting the economy generally, (y)
changes in the pharmaceutical industry as a whole, or (z) the public
announcement or pending nature of the transactions contemplated hereby.
"MEDICIS INDEMNITEES" shall mean Medicis.
"MEDICIS MANUFACTURING" shall mean Medicis Manufacturing Corporation, a
Delaware corporation.
"ORAPRED(R)" means a product having the approved prednisolone sodium
phosphate oral solution formulation, 15mg (base)/5ml as set forth under
Abbreviated New Drug Application 75-117.
"ORDER" shall mean any order, judgment, injunction, decree, ruling,
decision, opinion, verdict, sentence, writ or award issued, made, entered,
rendered or otherwise put into effect by or
A-5
under the authority of any court, administrative agency or other Governmental
Body or any arbitrator or arbitration panel.
"ORDINARY COURSE OF BUSINESS" An action taken by or on behalf of Ascent or
Medicis shall not be deemed to have been taken in the "Ordinary Course of
Business" unless such action is regularly recurring in nature and is consistent
with the past practices of Ascent or Medicis in the conduct of the Pediatrics
Business.
"OPTION TERM" shall mean the period commencing the Effective Date and
ending on the earlier to occur of (i) the Option Closing Date, or (ii) the
termination date of this Agreement.
"PEDIATRICS BUSINESS" means the business of making, manufacturing,
marketing, selling, distributing and/or developing ORAPRED(R), certain oral
liquid prednisolone solution products and oral dissolving tablet prednisolone
products.
"PERMITTED ENCUMBRANCES" shall mean the Lyne License, Permitted Liens and
the Security Agreement.
"PERMITTED LIENS" shall means liens for Taxes, assessments and other
governmental charges which are not due and payable or which my hereafter be paid
without penalty or which are being contested in good faith by appropriate
proceedings.
"PERSON" shall mean any individual, Entity or Governmental Body.
"PROCEEDING" shall mean any claim, action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), or investigation commenced, brought, conducted or heard
by or before, or otherwise involving, any Governmental Body or any arbitrator or
arbitration panel.
"PRODUCTS" shall mean any product or method made, used, imported, offered
for sale, distributed or sold which, if in the course of such manufacture, use,
importation, offer for sale, distribution or sale, would, in the absence of the
License Agreement, infringe or misappropriate one or more of the Intellectual
Property Assets.
"REPRESENTATIVES" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.
"SECONDARY ANDA" shall mean the Abbreviated New Drug Application numbered
75-250, together with all amendments, modifications, supplements and updates
thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the regulations promulgated thereunder.
"SECURITY AGREEMENT" shall mean that certain Trademark Security Agreement
by and between Ascent and BioMarin Acquisition, dated as of the date hereof.
"SUBSIDIARY" shall mean with respect to any Person, any other Person (a)
of which the initial Person directly or indirectly owns or controls more than
50% of the voting equity interests
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or has the power to elect or direct the election of a majority of the members of
the governing body of such Person or (b) which is required to be consolidated
with such Person under generally accepted accounting principles.
"SUPPLY AGREEMENT" shall mean that certain supply agreement by and between
BioMarin Acquisition and Medicis Manufacturing dated as of the date hereof,
including any subcontracts related thereto.
"TASTE MASKING RELATED PATENTS" shall mean all the United States and
foreign patents and utility models, invention registrations, supplementary
protection certificates and applications therefor listed in Part L-1.1(jjj) of
the Ascent Disclosure Schedule and all reissues, divisionals, renewals,
extensions, provisionals, continuations, and continuations-in-part thereof.
"TAX" shall mean any tax (including any income tax, franchise tax, capital
gains tax, estimated tax, gross receipts tax, value added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, occupation tax, inventory tax, occupancy tax, withholding tax or
payroll tax), levy, assessment, tariff, impost, imposition, toll, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), that is, has been or may in
the future be (a) imposed, assessed or collected by or under the authority of
any Governmental Body, or (b) payable pursuant to any tax sharing agreement or
similar Contract.
"TAX RETURN" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"TECHNOLOGY" shall mean the Taste Masking Related Patents and the Know
How.
"TRADEMARKS" shall mean all business names, trade names, logos, common law
trademarks and service trademarks, trademark and service mark registrations and
applications therefor as set forth on Part L-1.1 (oo) of the Ascent Disclosure
Schedule.
"TRANSACTION AGREEMENTS" shall mean this Agreement and the Escrow
Agreement.
"TRANSITION SERVICES AGREEMENT" shall mean that certain Transition
Services Agreement by and among Medicis, Ascent, BioMarin and BioMarin
Acquisition, dated as of the date hereof.
Other defined terms are located in the Agreement as follows:
DEFINED TERM PAGE NO.
------------ --------
ASCENT.................................................................... 1
ASCENT COMMON STOCK....................................................... 7
This LICENSE AGREEMENT ("AGREEMENT") is entered into as of May 18, 2004
(the "EFFECTIVE DATE") by and among BioMarin Pharmaceutical Inc., a Delaware
corporation ("BIOMARIN"), BioMarin Pediatrics Inc., a Delaware corporation and
wholly-owned subsidiary of BioMarin ("BIOMARIN ACQUISITION" or "LICENSEE"),
Medicis Pharmaceutical Corporation, a Delaware corporation ("MEDICIS"), and
Ascent Pediatrics, Inc., a Delaware corporation ("ASCENT" or "LICENSOR"), a
wholly-owned subsidiary of Medicis. Each is referred to herein as a "PARTY" and
collectively as the "PARTIES."
RECITALS
WHEREAS, Ascent is the sole and exclusive owner or has control of the
entire right, title, and interest, together with all goodwill connected
therewith, in and to the Licensed Technology, Licensed Trademarks and Licensed
Development Technology (each as defined below);
WHEREAS, Ascent wishes to grant to BioMarin Acquisition, and BioMarin
Acquisition wishes to receive, an exclusive, worldwide, license to such Licensed
Technology, Licensed Trademarks and Licensed Development Technology under the
terms and conditions set forth herein; and
WHEREAS, this Agreement is entered into as a condition to the consummation
of the transactions contemplated under the Asset Purchase Agreement (as defined
below) by and among BioMarin, BioMarin Acquisition, Medicis and Ascent.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and promises contained herein, the Parties hereby agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined in the text of this
Agreement, the following terms shall have the following respective definitions:
(a) "AFFILIATE" means with respect to any Person, any other Person
controlling, controlled by or within common control with such Person. Without
limiting the foregoing, Ascent is an Affiliate of Medicis and Medicis is an
Affiliate of Ascent, and BioMarin is an Affiliate of BioMarin Acquisition and
BioMarin Acquisition is an Affiliate of BioMarin.
(b) "ANDA" means Abbreviated New Drug Application 75-117 for
prednisolone sodium phosphate oral solution formulation, 15mg (base)/ 5ml,
together with all amendments, modifications, supplements and updates thereto.
(c) "ASCENT INDEMNITEES" means Ascent and Medicis.
(d) "ASCENT MERGER AGREEMENT" means that certain Agreement and
Plan of Merger among Medicis, MPC Merger Corp. and Ascent, dated October 1,
2001.
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(e) "ASCENT TECHNICAL ASSISTANCE" means the technical assistance
and training to be provided by Ascent hereunder that is reasonably necessary to
enable BioMarin Acquisition to utilize and in order to disclose fully the
Licensed Technology and Licensed Development Technology in connection with the
Pediatric Business as it was conducted by Ascent immediately prior to the
Effective Date.
(f) "ASSET PURCHASE AGREEMENT" means that certain asset purchase
agreement among BioMarin, BioMarin Acquisition, Ascent and Medicis dated as of
April 20, 2004.
(g) "BANKRUPTCY PROCEEDING" means any case or proceeding commenced
by or against any Person under any provision of the U.S. Bankruptcy Code (title
11 of the United States Code, as in effect from time to time) or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
(h) "BIOMARIN INDEMNITEES" means BioMarin Acquisition and
BioMarin.
(i) "BIOMARIN SHARE" means a share of BioMarin's common stock, par
value $.001 per share.
(j) "BREACH" means an inaccuracy in or breach of, or any failure
to comply with or perform, a representation, warranty, covenant, obligation or
other provision.
(k) "BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which shall be in the State of New York a legal holiday or a day on
which banking institutions are authorized by law to close.
(l) "CASH DEPOSIT" means $25 million.
(m) "CDA" means that certain Confidentiality Agreement by and
among the Parties and Medicis Manufacturing Corporation, a Delaware corporation,
dated as of the date hereof.
(n) "CLOSING" means the "Closing" as defined in the Asset Purchase
Agreement.
(o) "COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(p) "CONTINGENT PAYMENTS REIMBURSEMENT PAYMENTS" means the
Quarterly Contingent Payments Reimbursement Payments payable pursuant to Section
4.1(b).
(q) "CONTRACT" means any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, deed, assignment, power of attorney, certificate, purchase order,
work order, insurance policy, benefit plan, commitment, covenant, assurance or
undertaking of any nature.
-2-
(r) "DAMAGES" shall include any loss, damage, injury, Liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable legal fees, expert fees, accounting fees or advisory fees), charge,
cost (including reasonable costs of investigation) or expense of any nature.
(s) "DEVELOPMENT KNOW HOW" shall mean technical, scientific and
medical information, knowledge, know-how, inventions and trade secrets, that are
necessary for the development, registration, manufacturing, packaging,
stability, bioavailability, formulation, sale, use or commercialization of the
products claimed in the Development Licensed Patents, owned by Ascent or its
Affiliates, as of the Effective Date.
(t) "DEVELOPMENT LICENSED PATENTS" means all the United States and
foreign patents and utility models, invention registrations, supplementary
protection certificates and applications therefor listed in Schedule 1.1(t) and
all reissues, divisionals, renewals, extensions, provisionals, continuations,
and continuations-in-part thereof.
(u) "DUAL USE KNOW HOW" shall mean technical, scientific and
medical information, knowledge, know-how, inventions and trade secrets which (a)
(i) is owned by Ascent or its Affiliates and pertain or relate to both oral
liquid prednisolone solution products and the Primsol product previously
marketed by Ascent under Abbreviated New Drug Application 74-973 or (ii) is
controlled by or licensed to Ascent or its Affiliates on a non-exclusive basis,
and is sublicensable to a third party by Ascent or its Affiliates but is not
owned by Ascent or its Affiliates and (b) is necessary for, used in or related
to the development, registration, manufacturing, formulation, sale, use and
commercialization of oral liquid prednisolone solution products.
(v) "ENCUMBRANCE" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equitable interest, claim,
preference, right of possession, lease, license, covenant, infringement, Order,
proxy, option, right of first refusal, preemptive right, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
(w) "ENTITY" means any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.
(x) "ESCROW AGENT" means U.S. Bank, N.A., or such other escrow
agent as mutually agreed to by Medicis and BioMarin.
(y) "ESCROW AGREEMENT" means that certain Escrow Agreement entered
into by and among Medicis, Ascent and the Escrow Agent in substantially the form
attached hereto as EXHIBIT A.
-3-
(z) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and any regulations promulgated thereunder.
(aa) "FDA" shall mean the United States Food and Drug
Administration.
(bb) "GOVERNMENTAL BODY" means any United States federal, state or
local judicial, legislative, executive or other regulatory authority.
(cc) "IMPROVEMENTS" means any and all inventions, improvements,
discoveries, enhancements, extensions, replacements, developments, refinements,
or modifications to the Licensed Technology or the Licensed Development
Technology, or utilizing the Licensed Technology or the Licensed Development
Technology, or the respective use or the manufacturing processes therefor,
whether or not patentable, which may be conceived, made, developed or otherwise
controlled by Licensee or its Affiliates during the License Term including,
without limitation, modifications in size, package forms, dosage strength,
methods for administration, methods for delivering, or changes in the
formulation including the addition of actives to products.
(dd) "INDEMNIFIED PARTIES" means the Ascent Indemnitees or the
BioMarin Indemnitees, as the case may be.
(ee) "INDEMNIFYING PARTIES" means Ascent or BioMarin, as the case
may be.
(ff) "KNOWLEDGE" An individual shall be deemed to have "Knowledge"
of a particular fact or other matter if such individual is actually aware of
such fact or other matter. Each of Ascent or Medicis shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or individual
identified on EXHIBIT B hereto has Knowledge of such fact or other matter. Each
of BioMarin Acquisition or BioMarin shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or individual identified on
EXHIBIT C hereto has Knowledge of such fact or other matter.
(gg) "LEGAL REQUIREMENT" means any applicable order, writ,
injunction, judgment, decree, statute, rule or regulation of any Governmental
Body.
(hh) "LIABILITY" means any debt, obligation, liability of any
nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation or liability is immediately due and payable.
(ii) "LICENSE PAYMENTS" means the Closing License Payment, the
First Year Quarterly License Payments, the Second Year Quarterly License
Payments, the Third and Fourth Year Quarterly License Payments and the Fifth
Year Quarterly License Payments.
(jj) "LICENSE TERM" means the term defined in Section 11.1 of this
Agreement.
-4-
(kk) "LICENSED ASSETS" means the Licensed Technology, the Licensed
Development Technology, the Licensed Trademarks and the Improvements.
(ll) "LICENSED DEVELOPMENT TECHNOLOGY" means the Development
Licensed Patents and the Development Know How.
(mm) "LICENSED PRODUCTS" means any product or method made, used,
imported, offered for sale, distributed or sold which, if in the course of such
manufacture, use, importation, offer for sale, distribution or sale, would, in
the absence of this Agreement, infringe or misappropriate one or more of the
Licensed Assets.
(nn) "LICENSED TECHNOLOGY" means the Taste Masking Related Licensed
Patents and the Product Know How.
(oo) "LICENSED TRADEMARKS" means all business names, trade names,
logos, common law trademarks and service trademarks, trademark and service mark
registrations and applications therefor as set forth on Schedule 1.1(oo).
(pp) "LITIGATION MATTERS" means those matters set forth in EXHIBIT
D hereto.
(qq) "LYNE LICENSE" means that certain License Agreement by and
between Ascent and Lyne Laboratories, Inc., dated as of May 21, 2001, without
regard to any amendment or modification thereof subsequent to the date hereof.
(rr) "MATERIAL ADVERSE EFFECT" With respect to Medicis and/or
Ascent, an "ASCENT MATERIAL ADVERSE EFFECT" means any event, circumstance,
condition, development or occurrence causing, resulting in or having a material
adverse effect on the Licensed Assets, or the Pediatrics Business, taken as a
whole; provided that in no event shall any of the following be deemed to
constitute or be taken into account in determining an Ascent Material Adverse
Effect: any event, circumstance, change or effect that results from (A) changes
affecting the economy generally, (B) changes in the pharmaceutical industry as a
whole or in the market for oral liquid prednisolone solution products or oral
dissolving tablet prednisolone products, (C) the public announcement or pending
nature of the transactions contemplated hereby, or (D) any adverse judgment,
verdict or Order relating to the Litigation Matters. With respect to BioMarin
and/or BioMarin Acquisition, a "BIOMARIN MATERIAL ADVERSE EFFECT" means any
event, circumstance, condition, development or occurrence causing, resulting in
or having a material adverse effect on the business, condition, capitalization,
assets, liabilities, operations or financial performance of BioMarin, taken as a
whole; provided that in no event shall any of the following be deemed to
constitute or be taken into account in determining a BioMarin Material Adverse
Effect: any event, circumstance, change or effect that results from (x) changes
affecting the economy generally, (y) changes in the pharmaceutical industry as a
whole, or (z) the public announcement or pending nature of the transactions
contemplated hereby.
(ss) "MATERIALS" means all material files, documents (including
either electronic or paper copies), specimens, records and other documentation
maintained by or under the control of Ascent and/or any Ascent Affiliate(s)
embodying Product Know How or Development Know How including, without
limitation, all test results, clinical studies, data management, manufacturing
processes, formulas, specifications, process development and non-
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clinical research, market studies, correspondence (including, without
limitation, correspondence both to and from the Federal Drug Administration,
United States Copyright Office, United States Patent and Trademark Office or any
other Governmental Body), filings with the Food and Drug Administration, United
States Copyright Office, United States Patent and Trademark Office or any other
Governmental Body, customer and supplier records for the previous three years,
and field force records for the previous three years.
(tt) "ORAPRED(R)" means a product having the approved prednisolone
sodium phosphate oral solution formulation, 15mg (base)/5ml as set forth under
Abbreviated New Drug Application 75-117.
(uu) "ORDER" shall mean any order, judgment, injunction, decree,
ruling, decision, opinion, verdict, sentence, writ or award issued, made,
entered, rendered or otherwise put into effect by or under the authority of any
court, administrative agency or other Governmental Body or any arbitrator or
arbitration panel.
(vv) "PATENTS" means all United States and foreign patents and
utility models, invention registrations, supplementary protection certificates
and applications therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries.
(ww) "PEDIATRICS BUSINESS" means the business of making,
manufacturing, marketing, selling, distributing and developing ORAPRED(R) and
certain oral liquid prednisolone solution products and oral dissolving tablet
prednisolone products.
(xx) "PERMITTED LIENS" shall mean liens for Taxes, assessments and
other governmental charges which are not due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by
appropriate proceedings.
(yy) "PERSON" means any individual, Entity or Governmental Body.
(zz) "PROCEEDING" means any claim, action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), or investigation commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental Body
or any arbitrator or arbitration panel.
(aaa) "PRODUCT KNOW HOW" shall mean technical, scientific and
medical information, knowledge, know-how, inventions and trade secrets, that are
necessary for the development, registration, manufacturing, packaging,
stability, bioavailability, formulation, sale, use or commercialization of
ORAPRED(R) and the "Licensed Products" (as defined in the Development,
Commercialization and License Agreement between Ascent Pediatrics Inc. and Cima
Labs Inc.), as the case may be, including, without limitation: (a)
physiochemical data, specifications, quality control information and procedures;
(b) market research data solely to the extent Ascent has the right to assign
such data to BioMarin Acquisition; and (c) information concerning the clinical,
toxicological and pharmacological properties with respect to all of the
foregoing, owned by Ascent or its Affiliates, as of the Effective Date; provided
that Product Know How shall not include any Dual Use Know How.
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(bbb) "REPRESENTATIVES" means officers, directors, employees,
agents, attorneys, accountants, advisors and representatives.
(ccc) "SECONDARY ANDA" means the Abbreviated New Drug Application
numbered 75-250, together with all amendments, modifications, supplements and
updates thereto.
(ddd) "SECURITIES ACT" means the Securities Act of 1933, as amended,
and the regulations promulgated thereunder.
(eee) "SECURITIES PURCHASE AGREEMENT" means that certain Securities
Purchase Agreement among BioMarin, BioMarin Acquisition, Medicis and Ascent
dated as of the Effective Date.
(fff) "SHARE DEPOSIT" shall mean that number of BioMarin Shares with
an aggregate value, as of the Effective Date, of $25 million, as measured by the
average closing sales price per BioMarin Share over the twenty trading days
ending May 12, 2004.
(ggg) "SUBSEQUENT ANDA" shall mean any Abbreviated New Drug
Application filed by Ascent or BioMarin, in each case in Ascent's name,
following the Effective Date for which BioMarin Acquisition is the regulatory
agent other than the ANDA and the Secondary ANDA.
(hhh) "SUBSIDIARY" shall mean with respect to any Person, any other
Person (a) of which the initial Person directly or indirectly owns or controls
more than 50% of the voting equity interests or has the power to elect or direct
the election of a majority of the members of the governing body of such Person
or (b) which is required to be consolidated with such Person under generally
accepted accounting principles.
(iii) "SUPPLY AGREEMENT" means that certain Supply Agreement by and
between Medicis Manufacturing Corporation, a Delaware corporation, and BioMarin
Acquisition dated as of the date hereof, and any subcontracts related thereto.
(jjj) "TASTE MASKING RELATED LICENSED PATENTS" means all the United
States and foreign patents and utility models, invention registrations,
supplementary protection certificates and applications therefor listed in
Schedule 1.1(jjj) and all reissues, divisionals, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof.
(kkk) "TAX" means any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax sharing
agreement or similar Contract.
(lll) "TERRITORY" shall mean worldwide.
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(mmm) "TRANSACTION AGREEMENTS" means: (a) this Agreement; (b) the
Escrow Agreement; and (c) the Security Agreement.
(nnn) "TRANSITION SERVICES AGREEMENT" means that certain Transition
Services Agreement by and among the parties of even date herewith.
1.2 OTHER DEFINED TERMS.
Other defined terms are located in the Agreement as follows:
DEFINED TERM PAGE NO.
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AGREEMENT 1
ASCENT 1
ASCENT CAP 33
ASCENT OBLIGATIONS 42
ASCENT REGISTRATION INDEMNIFIED PARTIES 26
BIOMARIN 1
BIOMARIN ACQUISITION 1
BIOMARIN ACQUISITION OBLIGATIONS 42
BIOMARIN CAP 34
BIOMARIN REGISTRATION INDEMNIFIED PARTIES 26
CLAIM NOTICE 32
CLOSING LICENSE PAYMENT 16
CONTINGENT PAYMENTS 9
EFFECTIVE DATE 1
ENFORCEABILITY EXCEPTION 20
FIFTH YEAR QUARTERLY LICENSE PAYMENT 17
FIRST YEAR QUARTERLY LICENSE PAYMENT 17
FIRST YEAR QUARTERLY PAYMENT DATE 17
HOLDER 24
LICENSE 9
LICENSE TERM 30
LICENSEE 1
LICENSOR 1
MEDICIS 1
PARTIES 1
PARTY 1
QUARTERLY CONTINGENT PAYMENTS REIMBURSEMENT PAYMENT 17
REGISTRATION INDEMNIFIED PARTIES 26
REPORTING YEAR 9
RESTRICTED STOCK 23
SECOND YEAR QUARTERLY LICENSE PAYMENT 17
SECURITY AGREEMENT 10
SUSPENSION PERIOD 24
THIRD AND FOURTH YEAR QUARTERLY LICENSE PAYMENT 17
THIRD PARTY CLAIM 35
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2. LICENSE GRANT
2.1 LICENSE GRANT.
(a) Subject to the terms and conditions of this Agreement and the
Lyne License, Ascent hereby grants to BioMarin Acquisition during the License
Term, an exclusive, worldwide license (with the sole exception, for a period of
thirty (30) days following the Effective Date, of the Commonwealth of Puerto
Rico), with the right to sublicense, to and under the Licensed Assets to make,
manufacture, develop, use, market, offer for sale, sell, distribute, import and
export products, by itself and/or on its behalf, and to otherwise exploit the
Licensed Assets during the License Term (the "LICENSE"). For avoidance of doubt,
this License grant is for a limited term and shall not be considered an
assignment.
(b) Subject to the terms and conditions of this Agreement, Ascent
hereby grants to BioMarin Acquisition during the License Term, a non-exclusive,
worldwide license (with the sole exception, for a period of thirty (30) days
following the Effective Date, of the Commonwealth of Puerto Rico), with the
right to sublicense, to and under the Dual Use Know How to make, manufacture,
develop, use, market, offer for sale, sell, distribute, import and export
products, by itself and/or its behalf, and to otherwise exploit the Dual Use
Know How during the License Term. The term "LICENSE" shall not include the
license granted under this Section 2.1(b).
2.2 LICENSE SCOPE. The License shall be exclusive to BioMarin
Acquisition even as against Ascent and its Affiliates. Accordingly, neither
Ascent nor any of its Affiliates shall during the License Term exercise or
otherwise practice any of the rights granted to BioMarin Acquisition pursuant to
the License.
2.3 OTHER ACTIONS.
(a) To the extent any right, title or interest in or to any of the
Licensed Technology, Licensed Development Technology or Licensed Trademarks is
owned or controlled by an Affiliate of Ascent, Ascent covenants and agrees to
promptly take whatever action is necessary to carry out the intent and purpose
of the License.
(b) For so long as Medicis is obligated under the Ascent Merger
Agreement for "CONTINGENT PAYMENTS" (as that term is defined in the Ascent
Merger Agreement) to the former shareholders of Ascent, BioMarin Acquisition
shall, on or before December 10 in each calendar year, provide to Ascent a
report containing the following with respect to the twelve month period
beginning on December 1 of the previous year and ending on November 30 (each, a
"REPORTING YEAR"):
(i) the gross amount and unit quantities invoiced by
BioMarin Acquisition or its subsidiaries, Affiliates, or sublicensees from or on
account of sales of Licensed Products (as such term is defined in the Ascent
Merger Agreement);
(ii) the aggregate of any (A) normal, customary trade
discounts (including volume discounts) actually given or made, (B) credits,
chargebacks, reductions, rebates, allowances and adjustments for rejections,
recalls, outdated products and returns, (C)
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freight, shipping, insurance and other transportation charges, and (D) sales,
use, excise, value-added and similar taxes or duties imposed on the sale (other
than income taxes), in each case under clauses (A), (B), (C) and (D) with
respect to Licensed Products (as such term is defined in the Ascent Merger
Agreement); and
(iii) such other information reasonably necessary for Ascent
to fulfill its obligations under the Ascent Merger Agreement.
(c) For a period of not less than three (3) years after the
relevant calendar year in (b) above, BioMarin, BioMarin Acquisition and their
Subsidiaries, Affiliates, licensees and sublicensees shall keep full, true and
accurate books of account sufficient to determine the amounts pursuant to
Section 2.3(b). Ascent shall have the right, not more than once during any
calendar year and at its expense, to have the books and records of BioMarin,
BioMarin Acquisition and their Subsidiaries, Affiliates, licensees or
sublicensees audited by a qualified independent accounting firm of its choosing,
under appropriate confidentiality provisions, solely for the purpose of
ascertaining the accuracy of the reports under Section 2.3(b) and compliance by
BioMarin, BioMarin Acquisition and their Subsidiaries, Affiliates, licensees or
sublicensees with their obligations under this Agreement. In the event that
there is a dispute with regard to the accounting reports, Ascent shall have the
right to perform audits more frequently than once during a calendar year, and
the prevailing party in such dispute shall have its costs related to the audit
reimbursed by the other party. Any such audit shall be conducted upon at least
ten (10) days' advance notice to BioMarin Acquisition, during normal business
hours and in a manner that does not interfere unreasonably with the business of
the audited entity.
(d) Ascent shall not permit or allow any Licensed Assets to be
subject to any Encumbrance other than this Agreement, the Lyne License, the
Supply Agreement and the Security Agreement.
(e) BioMarin and BioMarin Acquisition shall not permit or allow
this License Agreement to be subject to any Encumbrance.
(f) As security for the obligations of Ascent under this
Agreement, pursuant to the terms of a Security Agreement in the form of EXHIBIT
E (the "SECURITY AGREEMENT") Ascent shall grant to BioMarin Acquisition a
security interest in the Licensed Trademarks.
2.4 LICENSEE'S EFFORTS. BioMarin Acquisition shall use commercially
reasonable efforts to market, promote and sell ORAPRED(R), which efforts shall
include the allocation of efforts and resources consistent with the resources
allocated by BioMarin Acquisition to the marketing, promotion and sale of other
commercially available products of BioMarin Acquisition with comparable
commercial opportunity in the marketplace. BioMarin Acquisition shall use
commercially reasonable efforts to develop, market commercialize and sell
Acetaminophen extended release sprinkles, Pediavent(R) albuterol extended
release suspension, and Non-refrigerated Orapred(R) prednisolone sodium
phosphate oral solution (15 mg prednisolone per 5 ml), which efforts shall
include the allocation of efforts and resources consistent with the resources
allocated by BioMarin Acquisition to the development, marketing,
commercialization and sale of other in development products of BioMarin
Acquisition with comparable commercial opportunity in the marketplace.
Notwithstanding the foregoing, if the
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total of (x) the actual amount under Section 2.3(b)(i) minus (y) the actual
amount under Section 2.3(b)(ii) exceeds $35,000,000 for each Reporting Year,
then BioMarin Acquisition shall be deemed to have satisfied all of its
obligations set forth in this Section 2.4.
2.5 RIGHT TO REFERENCE ANDA. Subject to the terms and conditions of this
Agreement and for the License Term, BioMarin Acquisition and its Affiliates and
their sublicensees shall have an unrestricted right of reference to the ANDA
listed on Schedule 2.5 and any Subsequent ANDA. Within ten (10) Business Days of
the Effective Date, BioMarin Acquisition and Ascent shall each notify the FDA
that BioMarin Acquisition shall act as regulatory agent for the ANDA. During the
License Term, BioMarin Acquisition shall act as regulatory agent for the ANDA
and Subsequent ANDAs, and during the License Term BioMarin Acquisition shall
timely comply with all requirements under 21 CFR Part 203 (Prescription Drug
Marketing Act), 21 CFR Part 314.70 (Supplements and Other Changes to an Approved
Application), 21 CFR Part 314.80 (Post-Marketing Reporting of Adverse Drug
Experiences) and 21 CFR Part 314.81 (Other Post-Marketing Reports). During the
License Term, BioMarin Acquisition shall comply in all material respects with
all Legal Requirements, including but not limited to 21 CFR Part 211 (Current
Good Manufacturing Practices). BioMarin Acquisition shall assume responsibility
for all FDA regulatory matters for products marketed under the ANDA and each
Subsequent ANDA and BioMarin Acquisition and Ascent shall each send a letter to
the FDA informing the FDA that BioMarin Acquisition has assumed such
responsibility. Ascent shall provide BioMarin with all assistance and data,
reports and other information reasonably requested by BioMarin Acquisition to
assume such responsibilities.
2.6 REGULATORY. During the License Term, BioMarin Acquisition shall
maintain, at a location in the United States, complete and accurate books and
records in sufficient detail as necessary for both BioMarin Acquisition and
Ascent to meet their respective filing and other obligations with the FDA and
any other applicable Governmental Body. BioMarin Acquisition shall provide to
Ascent timely copies of all submissions to the FDA, including but not limited
to, annual reports and adverse event reports. Not more than once per year and at
such additional times as may be reasonably required to respond to FDA
communications, upon not less than five (5) Business Days' written notice to
BioMarin Acquisition, Ascent shall have the right to review, at its expense,
inspect, audit and make copies of any such books and records for purposes of
verifying BioMarin Acquisition's compliance with Sections 2.5 through 2.7.
During the License Term, Ascent shall maintain, at a location in the United
States, complete and accurate books and records related to ORAPRED(R) in
existence as of the Effective Date and all other information related to
regulatory filings provided by BioMarin Acquisition to Ascent pursuant to this
Section 2.6.
2.7 ADVERSE REACTIONS. The parties' obligations relating to reporting
Adverse Events shall be as set forth in the Transition Services Agreement by and
among the parties hereto, dated as of the Effective Date.
3. TRANSFER AND TRANSFER SUPPORT
3.1 CHANGE OF PARTY NAMES AND PROMOTIONAL MATERIALS.
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(a) As soon as reasonably practicable following the Effective
Date, but no later than ten (10) Business Days following the Effective Date,
BioMarin Acquisition, at its own expense, shall: (i) with Ascent's reasonable
cooperation and assistance, notify the FDA that BioMarin Acquisition is the
marketer and distributor of ORAPRED(R); and (ii) use commercially reasonable
efforts to commence taking any and all action necessary to change the National
Drug Code number for ORAPRED(R).
(b) As soon as reasonably practicable, but no later than ten (10)
Business Days following the Effective Date, BioMarin Acquisition and Ascent
shall jointly notify the current manufacturers of ORAPRED(R), and any components
thereof, the contents of which notification shall be mutually agreed upon, that
all package inserts, labeling, and any components thereof, and packaging related
thereto to be manufactured or ordered after the Effective Date, must be changed
to identify BioMarin Acquisition as the marketer in the United States. BioMarin
Acquisition shall use commercially reasonable efforts to ensure that such change
takes effect for any new orders of ORAPRED(R), or components thereof, following
the date that is twenty (20) Business Days following the Effective Date.
(c) Notwithstanding the foregoing, except as may be required by
applicable law or the FDA, BioMarin Acquisition shall not be required by Ascent
to change the labeling on any Product Inventory purchased by BioMarin
Acquisition from Ascent or any components manufactured or being manufactured
pursuant to purchase orders placed within thirty (30) calendar days following
the Effective Date.
3.2 ADVERTISING AND PROMOTIONAL MATERIALS.
(a) As of the Effective Date: (i) BioMarin Acquisition shall be
responsible for development of all new advertising and promotional materials
related to the Licensed Products, all in compliance with all applicable
regulatory agencies and other rules and regulations; and (ii) neither BioMarin
Acquisition nor its Affiliates shall use any promotional and marketing materials
with the corporate identifiers or trade names of Medicis.
(b) Within ten (10) Business Days following the Effective Date,
BioMarin Acquisition and Ascent each shall submit a letter to the DDMAC division
of FDA informing them that BioMarin Acquisition will be the new distributor of
ORAPRED(R) in the United States under license from Ascent and designating
BioMarin Acquisition as the contact for review and discussion of all promotional
materials related to ORAPRED(R) in the United States, after which time BioMarin
Acquisition will timely file with the appropriate regulatory agency, in
accordance with all applicable laws and regulations, all promotional materials
for ORAPRED(R) required to be filed with such agency.
3.3 TECHNOLOGY TRANSFER. As of the Effective Date, Ascent shall deliver
copies of Materials embodying the Product Know How to BioMarin Acquisition. No
later than five (5) Business Days after the Effective Date, Ascent shall deliver
copies of Materials embodying the Development Know How to BioMarin Acquisition.
3.4 TECHNOLOGY TRANSFER SUPPORT. Ascent Technical Assistance shall be
provided as set forth in the Transition Services Agreement
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3.5 TRADEMARK USE AND QUALITY CONTROL. During the License Term, BioMarin
Acquisition agrees and acknowledges that: (a) neither Licensee nor its
Affiliates shall have any interest, right, or title in the Licensed Trademarks
other than the License; (b) neither Licensee nor its Affiliates shall obtain any
rights in or to the Licensed Trademarks through Licensee's or its Affiliate's
use in connection with the Licensed Products; (c) Ascent or its Affiliates, as
the case may be, is and will continue to be the sole and exclusive owner of all
right, title and interest in and to each Licensed Trademarks in any form or
embodiment thereof; (d) all goodwill associated with or attached to the Licensed
Trademarks arising out of the use thereof by Licensee and its Affiliates shall
inure to the benefit of Ascent or its Affiliate, as applicable; and (e) the
quality of the goods provided by Licensee under the Licensed Trademarks shall
conform to applicable FDA standards for the applicable goods and shall be
subject to a once a year independent third party inspection, upon reasonable
notice to Licensee, of such goods upon which Licensed Trademarks appear. During
the License Term, Licensee shall furnish at Licensee's expense samples of
packaging materials and other materials bearing the Licensed Trademarks for
inspection and analysis as Ascent may reasonably request.
3.6 NO CONTEST. During the License Term, Licensee agrees that neither
Licensee nor its Affiliates will: (i) contest, oppose or challenge, or assist
any party in contesting, opposing or challenging, Ascent's or its Affiliate's
ownership of the applicable Licensed Trademarks or the distinctiveness or
validity of the applicable Licensed Trademarks; (ii) at any time do or suffer to
be done any act or thing that will in any way impair Ascent's or its Affiliate's
ownership of or rights in and to the applicable Licensed Trademarks or any
registration thereof; (iii) register or attempt to register any applicable
Licensed Trademark in any jurisdiction; or (iv) oppose Ascent's or its
Affiliate's registration of any applicable Licensed Trademark, alone or with
other words or designs, in any jurisdiction. Upon the reasonable request of
Ascent or its Affiliate, Licensee shall give Ascent or its Affiliate or an
authorized Representative thereof all necessary information as to the use of the
applicable Licensed Trademarks pursuant to this Agreement which Ascent or its
Affiliate may reasonably require and will render any assistance reasonably
required by Ascent or its Affiliate in maintaining the registrations of the
applicable Licensed Trademarks.
3.7 USE OF THE LICENSED TRADEMARKS. Licensee agrees to comply in all
material respects with all applicable laws and regulations pertaining to the
proper use and designation of the Licensed Trademarks. Additionally, during the
License Term, Licensee shall use commercially reasonable efforts to:
(a) use the Licensed Trademarks upon or in relation to the
Licensed Products only in such manner that the distinctiveness, reputation, and
validity of the Licensed Trademarks shall not be impaired. Without prejudice to
the generality of the foregoing, Licensee shall ensure in particular that each
Licensed Trademark is accompanied by words accurately describing the nature of
the goods or services to which it relates, and ensure that each Licensed
Trademark is displayed in accordance with Ascent's guidelines, which are
attached hereto as Schedule 3.7(a);
(b) display the proper form of trademark and service mark notice
associated with the Licensed Trademarks; and
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(c) neither use nor display any of the Licensed Trademarks other
than the "ASCENT" mark or the Ascent "People Logo" (U.S. Registration No.
2,510,806) in such relation to any other mark or trademarks owned by any third
party or Licensee or its Affiliates as to suggest that the multiple Trademarks
constitute a single or composite trademark, service mark, or are under the same
proprietorship.
3.8 MAINTAINING REGISTRATIONS. Licensee shall reimburse Ascent for all
expenses reasonably incurred by Ascent or its Affiliate, during the License
Term, in connection with maintenance of those Licensed Trademarks which are
registered as of the Effective Date, including, but not limited to, filing all
necessary maintenance and use documents, applying for renewal, and payment of
any required periodic taxes or fees due in connection with such registrations.
Ascent and its Affiliates shall not allow such Licensed Trademark registrations
to lapse during the License Term, without the consent of Licensee. During the
License Term, Ascent or its Affiliate, as applicable, shall execute any required
documents, provide upon reasonable request any required records, and otherwise
reasonably cooperate fully with Licensee as may be necessary to accomplish the
recordation of the License in any jurisdiction within the Territory that
Licensee seeks such recordation. In such event, the expenses for recordation
will be borne by Licensee. At any time during the License Term Licensee shall
execute any documents as shall be reasonably required by Ascent or its Affiliate
to confirm Ascent's or its Affiliate's ownership of the Licensed Trademarks or
to otherwise give effect to the provisions of this Article 3. Licensee
acknowledges that the PEDIATUDE mark, Registration No. 2,153,138, will lapse
effective April 21, 2004, if the United States Patent and Trademark Office does
not accept specimens of use filed on or before such date.
3.9 FILING OF NEW REGISTRATIONS. At Licensee's expense, Ascent, its
Affiliate or outside trademark counsel selected by Ascent shall: (a) file
additional trademark registration applications and related documents relating to
the Licensed Trademarks at the written request of the Licensee; (b) promptly
inform Licensee of communications from applicable trademark agencies; and (c)
timely file Licensee's responses to the communications from such trademark
agencies. Ascent shall ensure that each filing described in clauses (a) and (c)
above is submitted to the relevant trademark agency within fifteen (15) Business
Days, or within ten (10) Business Days in the case of all submissions related to
new applications, after the receipt by Ascent, its Affiliate or outside
trademark counsel, as the case may be, of all information and documentation
sufficient to make such filing. Licensor acknowledges and permits Licensee's
expansion of the scope of goods covered by the Licensed Trademarks. All rights,
including goodwill, acquired in such expansion shall vest in Licensor and shall
be deemed part of the Licensed Trademarks.
3.10 ENFORCEMENT OF LICENSED TRADEMARKS.
(a) During the License Term, if either Party or its Affiliates
becomes aware of actual or threatened infringement of any Licensed Trademark or
of a mark or name confusingly similar to any Licensed Trademark, including
without limitation by publication of a mark for opposition, such Party or its
Affiliates shall promptly so notify the other Party in writing. BioMarin
Acquisition or its Affiliates shall have the first right, but not the
obligation, to enforce such Licensed Trademarks, including the right to bring
opposition, infringement or unfair competition actions involving a Licensed Mark
in the Territory at BioMarin Acquisition's expense, provided that Ascent shall
have the right to participate in such actions at Ascent's
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expense. If Ascent participates in any such action, BioMarin Acquisition or its
Affiliates shall have sole control of the conduct of any such action which it
brings, provided that Ascent shall have the right to provide ongoing comments
and advice regarding its position in such action, which comments shall be
considered in good faith by BioMarin Acquisition. Ascent or its Affiliates
shall, at the request and expense of BioMarin Acquisition or its Affiliates,
cooperate and provide reasonable assistance in any action described in this
Section and, if required by law, join such action. Any recovery or compensation
resulting from such proceeding, including without limitation non-monetary
rights, shall belong entirely to BioMarin Acquisition or its Affiliates less
reimbursement to Ascent by BioMarin Acquisition or its Affiliates of any
reasonable costs incurred by Ascent as a result of its participation in such
action regardless of whether Ascent participated on its own or was joined in the
action by BioMarin Acquisition. BioMarin Acquisition and its Affiliates shall
not settle or accept any settlement from any third party without the prior
written consent of Ascent, which consent shall not be unreasonably withheld or
delayed.
(b) During the License Term, if (i) BioMarin Acquisition or its
Affiliates fail to take action against such threatened or actual infringement
within a reasonable period of no longer than sixty (60) calendar days from the
date of receipt of written notice from Ascent or its Affiliates, and (ii) within
such period of time, and no later than five (5) Business Days prior to the
applicable deadline, BioMarin Acquisition or its Affiliates has not provided a
commercially reasonable position for failing to take such action, Ascent or its
Affiliates may thereafter take such action as it deems necessary to enforce its
rights in and to the Licensed Trademark, including, without limitation, the
right, but not the obligation, to bring, at its own expense, an infringement
action or file any other appropriate action or claim related to infringement of
the Licensed Trademark against any third party. BioMarin Acquisition or its
Affiliates shall, at the request and expense of Ascent or its Affiliates,
cooperate and provide reasonable assistance in any action described in this
Section and, if required by law, join such action. In such events, the expenses
for enforcement will be borne by Ascent or its Affiliates, and any recovery or
compensation resulting from such proceeding, including without limitation
non-monetary rights, shall belong entirely to Ascent or its Affiliates. Ascent
and its Affiliates shall not settle or accept any settlement from any third
party without the prior written consent of BioMarin Acquisition, which consent
shall not be unreasonably withheld or delayed.
3.11 THIRD PARTY TRADEMARK LITIGATION.
(a) During the License Term, in the event of (i) the initiation of
any suit by a third party against Ascent or BioMarin Acquisition for trademark
infringement involving the manufacture, use, sale, promotion or marketing of the
Licensed Products in the Territory, or (ii) the institution of a trademark
opposition, the Party sued or given notice of opposition shall promptly notify
the other Party in writing, and BioMarin Acquisition shall have the right to
defend such suit or opposition at its expense and BioMarin Acquisition shall
provide Ascent with notice of its intent to defend or not defend such suit or
opposition, provided that Ascent shall have the right to participate in such
action at Ascent's expense. If Ascent participates in such action, BioMarin
Acquisition or its Affiliate shall have sole control of the conduct of any such
action, provided that Ascent shall have the right to provide ongoing comments
and advice regarding its position in such action, which comments shall be
considered in good faith by BioMarin Acquisition. Ascent or its Affiliate shall,
at the request and expense of BioMarin
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Acquisition or its Affiliate, cooperate and provide reasonable assistance in any
action described in this Section and, if required by law, join such action. Any
recovery or compensation resulting from such proceeding, including without
limitation non-monetary rights, shall belong entirely to BioMarin Acquisition or
its Affiliate less reimbursement to Ascent or its Affiliates by BioMarin
Acquisition or its Affiliate of any reasonable costs incurred by Ascent or its
Affiliates as a result of its participation in such action regardless of whether
Ascent or its Affiliates participated on its own or was joined in the action.
BioMarin Acquisition and its Affiliates shall not settle or accept any
settlement from any third party without the prior written consent of Ascent,
which consent shall not be unreasonably withheld or delayed.
(b) During the License Term, if (i) BioMarin Acquisition or its
Affiliate fails to defend such suit or opposition within a reasonable period of
no longer than thirty (30) calendar days from the date of receipt of written
notice regarding the suit or opposition, or no later than five (5) Business Days
prior to the applicable deadline, and (ii) within such period of time, BioMarin
Acquisition or its Affiliate has not provided a commercially reasonable argument
for failing to defend such suit, Ascent or its Affiliate may thereafter take
such action as it deems necessary to defend and/or enforce its rights,
including, without limitation, the right, but not the obligation, to bring, at
its own expense, an infringement action or file any other appropriate action or
claim related to infringement against any third party and Ascent or its
Affiliate. BioMarin Acquisition or its Affiliate shall, at the request and
expense of Ascent or its Affiliate, cooperate and provide reasonable assistance
in any action described in this Section and, if required by law, join such
action. In such events, the expenses for enforcement will be borne by Ascent or
its Affiliate, and any recovery or compensation resulting from such proceeding,
including without limitation non-monetary rights, shall belong entirely to
Ascent or its Affiliate. Ascent and its Affiliates shall not settle or accept
any settlement from any third party without the prior written consent of
BioMarin Acquisition, which consent shall not be unreasonably withheld or
delayed.
4. CONSIDERATION
4.1 LICENSE PAYMENTS. Subject to the terms and conditions set forth
herein and in consideration for the grant of the License and the license granted
under Section 2.1(b), BioMarin Acquisition shall pay to Ascent the License
Payments and Contingent Payments Reimbursement Payments as set forth below. The
Contingent Payments Reimbursement Payments are intended to be a reimbursement to
Ascent for the contingent payments due to the former shareholders of Ascent
pursuant to the Ascent Merger Agreement. The parties agree that the prompt
payment of the License Payments are royalty payments as that term is used in
Section 365(n)(2)(B) of the U.S. Bankruptcy Code.
(a) The License Payments shall total, in the aggregate, $93
million, and shall be paid as royalties as follows:
(i) Ten Million Dollars ($10,000,000) (the "CLOSING LICENSE
PAYMENT"), payable at the Closing;
(ii) Fifty Million Dollars ($50,000,000) in four quarterly
installments of Twelve Million Five Hundred Thousand Dollars ($12,500,000) (each
a "FIRST YEAR QUARTERLY
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LICENSE PAYMENT"), with one such installment payable on each of August 16, 2004,
November 16, 2004, February 16, 2005 and May 16, 2005 (each, a "FIRST YEAR
QUARTERLY PAYMENT DATE");
(iii) Ten Million Dollars ($10,000,000) in four quarterly
installments of Two Million Five Hundred Thousand Dollars ($2,500,000) (each a
"SECOND YEAR QUARTERLY LICENSE PAYMENT"), with one such installment payable on
each of August 16, 2005, November 16, 2005, February 16, 2006 and May 16, 2006;
(iv) Sixteen Million Dollars ($16,000,000) in eight quarterly
installments of Two Million Dollars ($2,000,000) (each a "THIRD AND FOURTH YEAR
QUARTERLY LICENSE PAYMENT"), with one such installment payable on each of August
16, 2006, November 16, 2006, February 16, 2007, May 16, 2007, August 16, 2007,
November 16, 2007, February 18, 2008 and May 16, 2008; and
(v) Seven Million Dollars ($7,000,000) in four quarterly
installments of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
(each a "FIFTH YEAR QUARTERLY LICENSE PAYMENT"), with one such installment
payable on each of August 18, 2008, November 17, 2008, February 17, 2009 and May
18, 2009.
(b) The Contingent Payments Reimbursement Payments shall total, in
the aggregate, $15 million, and shall be paid as follows:
(i) Fifteen Million Dollars ($15,000,000) in six quarterly
installments of Two Million Five Hundred Thousand Dollars ($2,500,000) (each a
"QUARTERLY CONTINGENT PAYMENTS REIMBURSEMENT PAYMENT"), with one such
installment payable on each of August 16, 2004, November 16, 2004, February 16,
2005, May 16, 2005, August 16, 2005 and November 16, 2005.
(c) As security for the payment of the First Year Quarterly
License Payments, BioMarin Acquisition agrees to deposit the Cash Deposit and
BioMarin agrees to deposit the Share Deposit on the Effective Date with the
Escrow Agent pursuant to the terms and conditions of the Escrow Agreement.
Pursuant to the Escrow Agreement, BioMarin may be required to deposit additional
BioMarin Shares with the Escrow Agent. The Cash Deposit and the Share Deposit
(and such additional BioMarin Shares as BioMarin may be required to deposit with
the Escrow Agent in accordance with the Escrow Agreement) and all interest
thereon shall be released by the Escrow Agent in accordance with the Escrow
Agreement.
4.2 LOSS OF EXCLUSIVITY. In addition to the rights of Ascent pursuant to
Section 11.2(a), in the event that BioMarin Acquisition fails to timely make any
License Payment or Contingent Payments Reimbursement Payment, and such failure
to pay is not cured within fifteen (15) Business Days of the due date thereof,
the License granted herein shall automatically become non-exclusive as to
Medicis and its Affiliates or sublicensees and the noncompetition provision of
Section 6.2 hereof shall be of no further force and effect (except as shall be
waived by Ascent so long as all outstanding payments have been made by BioMarin
Acquisition, all interest has been paid thereon and Ascent has not licensed the
Licensed Assets to any third party). If BioMarin Acquisition fails to timely
make any payment due to Ascent under this Agreement, and such failure to pay is
not cured within three (3) Business Days of the due date
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thereof, then interest shall accrue on a daily basis at the lesser of: (a) an
annual rate equal to two percent (2%) above the reference rate of CitiBank,
N.A., San Francisco, California, for the date that such payment was due; and (b)
the maximum rate permitted by applicable law.
5. IMPROVEMENTS; DISCLOSURE OF IMPROVEMENTS
5.1 IMPROVEMENTS BY BIOMARIN ACQUISITION. Any and all Improvements
during the License Term shall be the responsibility (financial and otherwise) of
BioMarin Acquisition and shall be the property of Ascent and, to the extent
filed with the United States Patent and Trademark Office or other Governmental
Body, shall be filed in the name of Ascent; provided, however, that such
Improvements shall be included in the Licensed Technology or Licensed
Development Technology, as applicable, without additional charge to BioMarin
Acquisition. BioMarin Acquisition shall disclose such Improvements to Ascent
pursuant to Section 5.2 below.
5.2 DISCLOSURE. During the License Term, BioMarin Acquisition shall
promptly disclose to Ascent any Improvements. Regarding each such Improvement,
BioMarin Acquisition shall:
(a) Advise Ascent within sixty (60) days of BioMarin Acquisition's
receipt from an employee or third party of an invention disclosure for such
Improvement;
(b) Permit Ascent's or its Affiliates' employees (and/or technical
consultants who have signed a confidentiality agreement at least as restrictive
as the CDA) to make such inspections of such Improvement as are reasonably
acceptable to BioMarin Acquisition, at reasonable times and at Ascent's expense;
(c) Have BioMarin Acquisition's or BioMarin's employees
experienced in technical data relating to such Improvement impart to Ascent's
employees (and/or technical consultants) at reasonable times and at Ascent's
expense, information relative to such Improvement;
(d) Furnish Ascent with copies of drawings, schematics and other
available technical data relative to the raw materials and equipment developed
for or found suitable for use in such Improvement; and
(e) Furnish Ascent with copies of papers, documents and
correspondence filed in or received from, the United States Patent and Trademark
Office or other Governmental Body pertaining to those Patents or regulatory
approvals that cover any aspect of such Improvement.
6. CONFIDENTIALITY AND NONCOMPETITION
6.1 CONFIDENTIALITY. The CDA is hereby incorporated by reference.
6.2 NONCOMPETITION. Each of Medicis and Ascent agrees that, in
consideration of the consummation of the transactions by BioMarin Acquisition
hereunder, it shall not and shall cause its Subsidiaries not to, at any time
during the License Term, (whether acting alone or as a member of an Entity, and
whether as an advisor, principal, consultant, independent contractor, agent,
partner, employee, officer, director, 5% or greater equityholder or otherwise),
anywhere in
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the world, (a) engage in, own, operate, maintain or finance directly or
indirectly any business or other enterprise engaged in the development,
distribution, sale or commercialization of an oral liquid prednisolone sodium
solution or oral dissolving tablet prednisolone product other than the
ownership, operation and maintenance of the Licensed Assets or the Secondary
ANDA as contemplated under the Supply Agreement, provided, however, that neither
Ascent nor Medicis shall make, manufacture, market, sell, distribute, or develop
any product under the Secondary ANDA, or (b) other than the transactions
contemplated by this Agreement, the Securities Purchase Agreement, the Asset
Purchase Agreement, the Transition Services Agreement, the Supply Agreement or
the Lyne License, take any action that is designed or intended or would
reasonably be expected to have the effect of discouraging any customer,
supplier, lessor, licensor or other business associate of the Pediatrics
Business from maintaining a business relationship with BioMarin Acquisition
after the Effective Date as it maintained with the Pediatrics Business prior to
the Effective Date; provided, further, that Medicis may continue to own the
outstanding stock of Ascent and Ascent may continue to own the Licensed Assets
and all rights necessary to perform its obligations under the Lyne License, the
Transition Services Agreement and the Supply Agreement; provided further that,
notwithstanding the foregoing, (a) Medicis may enter into a transaction or
series of transactions that involves the acquisition by Medicis of another
Entity whose activities, but for this proviso would violate this Section 6.2 so
long as such activities are not primary but are merely ancillary to such
Entity's activities so long as Medicis terminates or divests such activities
within a reasonable period of time following such acquisition not to exceed 180
days, and (b) Medicis may be acquired by merger with another Entity, where the
stockholders of Medicis immediately prior to the merger own less than 50% of the
surviving entity, whose activities, but for this proviso, would violate this
Section 6.2. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section 6.2 is invalid or unenforceable, the
parties agree that the court making such determination of invalidity or
unenforceability shall have the power to reduce the scope, duration or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
7. REPRESENTATIONS AND WARRANTIES OF ASCENT.
Ascent hereby represents and warrants, to and for the benefit of BioMarin
Acquisition, that each of the following representations and warranties is true
and correct as of the Effective Date:
7.1 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of Ascent and Medicis
has all corporate power and authority to enter into and to perform its
obligations under this Agreement. The execution, delivery and performance by
each of Ascent and Medicis of this Agreement have been duly authorized by all
necessary action on the part of Ascent and Medicis and their stockholders,
boards of directors and officers. This Agreement, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of Ascent or Medicis, as applicable,
enforceable against Ascent or Medicis, as applicable, in accordance with its
terms, subject to the effect of any applicable bankruptcy,
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insolvency, reorganization, moratorium or similar laws now or hereinafter in
effect relating to creditors' rights generally or to general principles of
equity (the "ENFORCEABILITY EXCEPTION").
7.2 TITLE TO ASSETS.
(a) Ascent has good and valid title to all of the Licensed
Trademarks, Licensed Technology and Licensed Development Technology. Except as
identified in Schedule 7.2, none of the Licensed Technology, Licensed Trademarks
or Licensed Development Technology is subject to any Encumbrance (including any
tax-related Encumbrance), other than the Lyne License, the Supply Agreement, the
Security Agreement, and any Permitted Liens.
(b) Ascent and/or its Affiliates has good and valid title to the
Dual Use Know How.
7.3 REGULATORY MATTERS. Ascent has not been debarred and is not subject
to debarment and will not use in any capacity, in connection with the
obligations to be performed under this Agreement, any person who has been
debarred pursuant to section 306 of the FDCA, 21 U.S.C. 335a, or who is the
subject of a conviction described in such section or who undergoes any analogous
proceeding under foreign law.
7.4 INTELLECTUAL PROPERTY.
(a) Ascent is the sole and exclusive owner or has the authority to
license and/or sell the Licensed Technology, Licensed Development Technology,
and Licensed Trademarks;
(b) Except as identified in Schedule 7.2, Ascent has the right,
power and authority to grant licenses under the Licensed Trademarks, Licensed
Development Technology, and Licensed Technology to BioMarin Acquisition in
accordance with the terms and conditions of this Agreement, free and clear of
any Encumbrances, other than the Lyne License, the Supply Agreement, Permitted
Liens and the Security Agreement;
(c) Ascent has not specifically admitted that any claim of an
issued and unexpired patent or pending patent application included within the
Taste Masking Related Licensed Patents is invalid or unenforceable through
reissue or disclaimer (other than to the extent that any terminal disclaimer has
been filed);
(d) Except as identified in Schedule 7.4(d), (i) neither Ascent
nor its Affiliates have taken any action that materially and adversely affects
the rights and licenses granted to BioMarin Acquisition under this Agreement,
and (ii) neither Ascent nor its Affiliates have granted to any third party or
Affiliate any rights or licenses that conflict with or materially and adversely
affect the rights and licenses granted to BioMarin Acquisition under this
Agreement,
(e) to the Knowledge of Ascent and Medicis, the issued Taste
Masking Related Licensed Patents are valid and enforceable and the manufacture,
development, marketing, distribution, importation, sale, offer for sale,
disposition or use of ORAPRED(R) as carried out by Ascent or its Affiliates
immediately prior to the Effective Date does not and will not infringe any
patent rights, trade secrets or other industrial or intellectual property rights
of
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any third party or Affiliate of Ascent, excluding any Medicis corporate
identifier or mark used therewith;
(f) to the Knowledge of Ascent and Medicis, (i) no issued patent
or patent application within the Taste Masking Related Licensed Patents or (ii)
except as identified in Schedule 7.2, Licensed Trademark is involved in or is
threatened to be involved in, any court proceeding, arbitration, interference,
reissue, re-examination or opposition;
(g) except as identified in Schedule 7.2, there are no claims,
judgments or settlements, either actual or, to the Knowledge of Ascent and
Medicis, threatened, relating to the Taste Masking Related Licensed Patents,
Licensed Trademarks and/or the Product Know-How;
(h) except as identified in Schedule 7.2, since November 15, 2001,
to the Knowledge of Ascent and Medicis, no Person has infringed or
misappropriated, and no Person is currently infringing or misappropriating, any
Licensed Technology or Licensed Trademark;
(i) except as identified in Schedule 7.4(i), to the Knowledge of
Ascent and Medicis, all filings and registrations related to the Licensed
Trademarks are in good standing and all maintenance and renewal fees necessary
to preserve the rights of Ascent in respect of the Licensed Trademarks have been
paid;
(j) to the Knowledge of Ascent and Medicis, since November 15,
2001, (a) there has been no misappropriation of any material trade secrets used
in connection with the Pediatrics Business, (b) no current employee, independent
contractor or agent of Ascent or Medicis employed in the Pediatrics Business has
misappropriated any material trade secrets of any other Person in the course of
the performance of its duties as an employee, independent contractor or agent of
Ascent or Medicis employed in the Pediatrics Business, and (c) no current
employee, independent contractor or agent of Ascent or Medicis is in default or
breach of any non-disclosure agreement, assignment of invention agreement or
similar agreement or contract regarding the protection, ownership, development,
use or transfer of the Licensed Technology;
(k) Ascent has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of its material trade secrets
related to the Pediatrics Business; and
(l) Each current employee and current independent contractor of
Ascent or Medicis who contributed to the conception or development of the Taste
Masking Related Licensed Patents and Development Patents has executed a valid
and binding assignment to Ascent or Medicis of all rights they may hold therein.
7.5 INVESTMENT REPRESENTATIONS REGARDING ASCENT. To the extent that
Ascent acquires BioMarin Shares subject to the Share Deposit:
(a) Ascent will acquire such BioMarin Shares for investment
purposes, for its own account and not as nominee or agent for any other Person
and not with a view to or for resale in connection with any distribution thereof
within the meaning of the Securities Act.
-21-
(b) Ascent knows of no public solicitation or advertisement of an
offer in connection with such BioMarin Shares.
(c) Ascent has had the opportunity to ask questions of and receive
answers from BioMarin concerning the terms and conditions of the BioMarin Shares
subject to the Share Deposit. Ascent has received all information that it has
requested regarding BioMarin and believes that such information is sufficient to
make an informed decision with respect to the acquisition of the BioMarin
Shares.
(d) Ascent is able to bear the economic risk of its investment in
the BioMarin Shares and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of and
protecting its interests with respect to its investment in the BioMarin Shares.
Ascent is aware of the risk involved in its investment in the BioMarin Shares
and has determined that such investment is suitable for Ascent in light of its
financial circumstances and available investment opportunities.
(e) On the date hereof Ascent is, and on the date or dates that
Ascent acquires any BioMarin Shares subject to the Share Deposit, Ascent will be
an "accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.
(f) Ascent hereby further agrees with BioMarin that the
instruments or certificates evidencing such BioMarin Shares and each instrument
or certificate issued in transfer thereof will bear the following legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933 and have been taken for
investment purposes only and not with a view to the distribution
thereof, and, except as stated in an agreement between the holder of
this certificate or its predecessor in interest, and the issuer
corporation, such securities may not be sold or transferred unless
there is an effective registration statement under such Act covering
such securities or the issuer corporation receives an opinion, in
form and content reasonably satisfactory to the issuer corporation,
of counsel reasonably acceptable to the issuer corporation (which
may be counsel for the issuer corporation) stating that such sale or
transfer is exempt from the registration and prospectus delivery
requirements of such Act."
(g) The instruments or certificates representing the BioMarin
Shares and each instrument or certificate issued in transfer thereof will also
bear any legend required under any applicable state securities law.
(h) Prior to any proposed sale, assignment, transfer or pledge of
any of the BioMarin Shares by Ascent, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, Ascent shall
give written notice to BioMarin of Ascent's intention to effect such transfer,
sale, assignment or pledge. Each such notice shall describe the manner and
circumstances of the proposed transfer, sale, assignment or pledge in sufficient
detail and shall be accompanied, at Ascent's expense, by an unqualified written
opinion of legal
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counsel, who shall and whose legal opinion shall be reasonably satisfactory to
BioMarin (which may be counsel for BioMarin), addressed to BioMarin, to the
effect that the proposed transfer of the Share Deposit may be effected without
registration under the Securities Act, whereupon Ascent shall be entitled to
transfer such Share Deposit in accordance with the terms of the notice delivered
by Ascent to BioMarin.
(i) Ascent consents to BioMarin's making a notation on its records
or giving instructions to any transfer agent of the BioMarin Shares in order to
implement the restrictions on transfer of the Share Deposit.
(j) Ascent is aware that the Share Deposit Shares are being issued
and sold in reliance on an exemption from the registration requirements of the
Securities Act and that such exemption is expressly conditioned on the accuracy
of the representations and warranties contained in this Section 7.5.
(k) Ascent is not a company established solely to acquire the
BioMarin Shares.
8. REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION.
Each of BioMarin and BioMarin Acquisition represents and warrants jointly
and severally, to and for the benefit of Ascent, that each of the following
representations and warranties is true and correct as of the Effective Date.
8.1 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of BioMarin and
BioMarin Acquisition has the corporate power and authority to enter into and
perform its obligations under this Agreement, and the execution and delivery by
each of BioMarin and BioMarin Acquisition of this Agreement has been duly
authorized by all necessary action on the part of each of BioMarin and BioMarin
Acquisition and its stockholders, board of directors and officers. This
Agreement, assuming the due authorization, execution and delivery by the other
Parties hereto, constitutes the legal, valid and binding obligation of each of
BioMarin and BioMarin Acquisition, enforceable against it in accordance with its
terms, subject to the Enforceability Exception.
8.2 REGULATORY MATTERS. BioMarin has not been debarred and is not
subject to debarment and will not use in any capacity, in connection with the
obligations to be performed under this Agreement, any person who has been
debarred pursuant to section 306 of the FDCA, 21 U.S.C. 335a, or who is the
subject of a conviction described in such section or who undergoes any analogous
proceeding under foreign law.
9. REGISTRATION OF SHARES.
9.1 REGISTRATION. On or before the thirtieth day following the Effective
Date, BioMarin shall prepare and file a registration statement on Form S-3 under
the Securities Act, covering the Share Deposit (the "RESTRICTED STOCK") and
shall use its best efforts to cause such registration statement to become
effective as expeditiously as possible and to remain effective until the
earliest to occur of (i) the date the Restricted Stock covered thereby has been
sold (but
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in any event not before the expiration of any longer period required under the
Securities Act) or (ii) the date by which all Restricted Stock covered thereby
may be sold under Rule 144 without restriction as to volume.
9.2 SUSPENSION. Following the effectiveness of a registration statement
filed pursuant to this section, BioMarin may, at any time, suspend the
effectiveness of such registration for up to thirty (30) days, as appropriate (a
"SUSPENSION PERIOD"), by giving notice to Ascent (for the purposes of this
Article 9, the "HOLDER"), if BioMarin shall have determined that BioMarin may be
required to disclose any material corporate development. Notwithstanding the
foregoing, no more than two Suspension Periods may occur during any twelve-month
period. BioMarin shall use its best efforts to limit the duration and number of
any Suspension Periods. The Holder agrees that, upon receipt of any notice from
BioMarin of a Suspension Period, the Holder shall forthwith discontinue
disposition of Restricted Stock pursuant to such registration statement or
prospectus until the earlier of (A) the Holder (i) is advised in writing by
BioMarin that the use of the applicable prospectus may be resumed, (ii) has
received copies of a supplemental or amended prospectus, if applicable, and
(iii) has received copies of any additional or supplemental filings which are
incorporated or deemed to be incorporated by reference into such prospectus, and
(B) thirty (30) days after receipt of the notice concerning the Suspension
Period.
9.3 REGISTRATION PROCEDURES. When BioMarin effects the registration of
the Restricted Stock under the Securities Act pursuant to Section 9.1 hereof,
BioMarin will, at its expense, as expeditiously as possible:
(a) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file in accordance with Section 9.1,
with the Commission a registration statement with respect to the Restricted
Stock and use its best efforts to cause such registration statement to become
and remain effective for the period described herein, and prepare and file with
the Commission such amendments to such registration statement and supplements to
the prospectus contained therein as may be necessary to keep such registration
statement effective for such period and such registration statement and
prospectus accurate and complete for such period (provided that, before filing a
registration statement or prospectus or any amendments or supplements thereto,
BioMarin will furnish to the counsel selected by the Holder copies of the plan
of distribution section of such prospectus proposed to be filed);
(b) Furnish to the Holder participating in such registration such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus, each amendment and supplement thereto and such
other documents as the Holder may reasonably request in order to facilitate the
disposition of the Restricted Stock;
(c) Use its best efforts to register or qualify the Restricted
Stock covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as the Holder may reasonably request except that
BioMarin shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified;
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(d) Notify the Holder, promptly after it shall receive notice
thereof, of the date and time when such registration statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(e) Notify the Holder promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(f) Prepare and file with the Commission, promptly upon the
request of the Holder, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Holder, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Restricted Stock by the Holder;
(g) Prepare and promptly file with the Commission, and promptly
notify the Holder of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(h) Advise the Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(i) Cause all such Restricted Stock to be listed on each
securities exchange on which similar securities issued by BioMarin are then
listed and, if not so listed, to be listed on the Nasdaq National Market or any
United States national securities exchange;
(j) Provide a transfer agent and registrar for all such Restricted
Stock which shall be the transfer agent for the common stock of BioMarin not
later than the effective date of such registration statement; and
(k) Otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
BioMarin's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
With respect to any registration effected pursuant to Section 9.1 hereof,
all fees, costs and expenses of and incidental to such registration and the
public offering in connection therewith shall be borne by BioMarin; provided,
however, that the Holder shall bear its own legal fees, if any, and its pro rata
share of any underwriting discounts or commissions, if any.
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9.4 INDEMNIFICATION.
(a) BioMarin will indemnify and hold harmless the Holder, pursuant
to the provisions of this Section 9.4, and any underwriter (as defined in the
Securities Act) for the Holder, and any person who controls the Holder or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of the Holder (for purposes of
this Section 9.4, the "ASCENT REGISTRATION INDEMNIFIED PARTIES"), from and
against, and will reimburse each such Ascent Registration Indemnified Party with
respect to, any and all claims, actions, demands, losses, damages, liabilities,
costs and expenses to which such Ascent Registration Indemnified Party may
become subject under the Securities Act or otherwise, insofar as such claims,
actions, demands, losses, damages, liabilities, costs or expenses arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that BioMarin will not be liable in any such case to the
extent that any such claim, action, demand, loss, damage, liability, cost or
expense is caused by an untrue statement or alleged untrue statement or omission
or alleged omission so made in strict conformity with information furnished by
such Ascent Registration Indemnified Party in writing specifically for use in
the preparation thereof.
(b) The Holder will indemnify and hold harmless BioMarin pursuant
to the provisions of this Section 9.4, and any underwriter (as defined in the
Securities Act) for BioMarin and any person who controls BioMarin or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of BioMarin (for purposes of this
Section 9.4, the "BIOMARIN REGISTRATION INDEMNIFIED PARTIES", and together with
the Ascent Registration Indemnified Parties, the "REGISTRATION INDEMNIFIED
PARTIES"), from and against, and will reimburse each such BioMarin Registration
Indemnified Party, and such controlling Persons with respect to, any and all
claims, actions, demands, losses, damages, liabilities, costs or expenses to
which such BioMarin Registration Indemnified Party may become subject under the
Securities Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or expenses are caused by any untrue or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made solely in reliance
upon and in strict conformity with written information furnished by an Ascent
Registration Indemnified Party specifically for use in the preparation thereof;
provided, however, that the liability of the Holder shall be limited to an
amount not to exceed the net proceeds received by the Holder pursuant to the
registration statement which gives rise to such obligation to indemnify.
(c) Promptly after receipt by a party indemnified pursuant to the
provisions of clause (a) or (b) of this Section 9.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such Registration Indemnified Party will, if a claim
thereof is to be made against the indemnifying party pursuant to the provisions
of clause
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(a) or (b) of this Section 9.4, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to a Registration
Indemnified Party otherwise than under this Section 9.4 and shall not relieve
the indemnifying party from liability under this Section 9.4 unless such
indemnifying party is prejudiced by such omission. In case such action is
brought against any Registration Indemnified Party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Registration Indemnified
Party, and after notice from the indemnifying party to such Registration
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Registration Indemnified Party
pursuant to the provisions of such clause (a) or (b) for any legal or other
expense subsequently incurred by such Registration Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to a Registration
Indemnified Party for any settlement of any action or claim without the consent
of the indemnifying party. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Registration
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in clause (a) or (b) of
this Section 9.4 is held by a court of competent jurisdiction to be unavailable
to a party to be indemnified with respect to any claims, actions, demands,
losses, damages, liabilities, costs or expenses referred to therein, then each
indemnifying party under any such subsection, in lieu of indemnifying such
Registration Indemnified Party thereunder, hereby agrees to contribute to the
amount paid or payable by such Registration Indemnified Party as a result of
such claims, actions, demands, losses, damages, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the Registration Indemnified Party on
the other in connection with the statements or omissions which resulted in such
claims, actions, demands, losses, damages, liabilities, costs or expenses, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Registration Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the Registration Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount the Holder shall be obligated to contribute pursuant to
this clause (d) shall be limited to an amount not to exceed the net proceeds
received by the Holder pursuant to the registration statement which gives rise
to such obligation to contribute. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution hereunder from any person who was not guilty
of such fraudulent misrepresentation.
9.5 REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. BioMarin shall timely
file such information, documents and reports as the Commission may require or
prescribe under Section 13 of the Exchange Act. BioMarin acknowledges and agrees
that the purposes of the requirements contained in this Section 9.5 are to
enable the Holder to comply with the current public information requirement
contained in paragraph (c) of Rule 144 should the Holder ever
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wish to dispose of any of the Restricted Stock without registration under the
Securities Act in reliance upon Rule 144 (or any other similar exemptive
provision).
9.6 STOCKHOLDER INFORMATION. BioMarin may require the Holder to furnish
BioMarin such information with respect to the Holder and the distribution of its
Restricted Stock as BioMarin may from time to time reasonably request in writing
as shall be required by law or by the Commission in connection therewith.
10. PATENT PROSECUTION AND THIRD PARTY INFRINGEMENT
10.1 PATENT PROSECUTION.
(a) PROSECUTION. Commencing on the Effective Date and continuing
during the License Term, BioMarin Acquisition shall use commercially reasonable
efforts and diligence to file, prosecute, issue and maintain all registered
intellectual property rights in and to the Taste Masking Related Licensed
Patents and Development Licensed Patents in the name of Ascent and on behalf of
Ascent, and may, with the prior written consent of Ascent, file and prosecute
applications and otherwise pursue registration for any unregistered intellectual
property rights in and to the Licensed Technology, Licensed Development
Technology and Improvements and such new filings, applications, or the like
shall be made in the name of and on behalf of Ascent. For avoidance of doubt,
such new filings, applications, or the like shall be considered Taste Masking
Related Licensed Patents, Development Licensed Patents or Improvements, as
applicable, and shall be subject to the License and the terms and conditions of
this Agreement. In connection with BioMarin Acquisition's performance of its
obligations under this Section 10.1, it shall promptly provide written
notification and copies of all correspondence from Governmental Bodies or
agencies to Ascent as well as promptly provide drafts of all replies for review
by Ascent. In the event that BioMarin Acquisition elects not to file, prosecute
or maintain any Taste Masking Related Licensed Patents, Development Licensed
Patents and Improvements, it shall give reasonable written notice, not less than
thirty (30) days after such election, to allow Ascent to file, prosecute or
maintain such Taste Masking Related Licensed Patents, Development Licensed
Patents and Improvements unless BioMarin Acquisition has provided to Ascent a
commercially reasonable position for not taking such action. With regard to any
Taste Masking Related Licensed Patents, Development Licensed Patents or
Improvements that are subject to such written notice, upon the date of the
notice, the exclusive license thereto shall be terminated and all Materials
related thereto must be immediately returned to Ascent within ten (10) Business
Days.
(b) FURTHER ASSURANCES. Ascent and/or Medicis shall execute and/or
cause to be delivered to BioMarin Acquisition and shall take such other actions,
as BioMarin Acquisition may reasonably request, at or after the Effective Date,
at BioMarin Acquisition's expense, for the purpose of evidencing, prosecuting,
obtaining and maintaining all intellectual property rights in and to the
Licensed Technology, Licensed Development Technology and Licensed Trademarks in
any and all countries. Such acts may include, but are not limited to, execution
of documents and making inventors and employees available to BioMarin
Acquisition.
(c) POWER OF ATTORNEY. Ascent and Medicis each hereby designates
and appoints the officers of BioMarin Acquisition as their agents and
attorneys-in-fact, respectively,
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to act for and on behalf and instead of Ascent and Medicis to execute and file
any documents and to do all other lawfully permitted acts to further the
purposes set forth in Section 10.1(a) above with the same legal force and effect
as if executed by Ascent or Medicis, respectively; provided that such officers
shall not be authorized to act for or on their behalf with respect to Taste
Masking Related Licensed Patents, Development Licensed Patents or Improvements
which BioMarin Acquisition has elected not to file, prosecute or maintain
pursuant to Section 10.1(a). Each of Ascent and Medicis further acknowledge and
agree that such power of attorney is a power of attorney coupled with an
interest and is revocable only if (i) this Agreement expires, (ii) this
Agreement is terminated, or (iii) the License becomes non-exclusive pursuant to
Section 4.2.
10.2 THIRD PARTY INFRINGEMENT.
(a) NOTICE. In the event that Ascent or its Affiliates, on the one
hand, or BioMarin Acquisition or its Subsidiaries, or BioMarin, on the other
hand, becomes aware of any actual or threatened infringement of any Licensed
Technology or the Licensed Development Technology or has actual knowledge that
any Licensed Technology is being infringed or misappropriated by a third party,
or is subject to a declaratory judgment action arising from such infringement or
misappropriation, it shall promptly notify the other party of all available
details regarding such infringement or misappropriation with a written
description thereof.
(b) BIOMARIN ACQUISITION'S RIGHT TO CONTROL PROCEEDINGS. BioMarin
Acquisition shall have the first right, but not the obligation, during the
License Term, at its sole expense, to initiate and conduct legal proceedings to
enforce the Licensed Technology, Licensed Development Technology or Improvements
against infringement or misappropriation by third parties and to defend against
any declaratory judgment action relating thereto; provided, however, that during
the License Term: (i) Ascent shall receive prompt notice of such action and have
the right to actively participate in any such action at Ascent's expense; (ii)
Ascent shall have the right to provide ongoing comments and advice regarding its
position in such action, which comments shall be considered in good faith by
BioMarin Acquisition; and (iii) BioMarin Acquisition shall not make any
settlement or otherwise abandon any Licensed Technology, Licensed Development
Technology or Improvements without the prior written consent of Ascent, which
shall not be unreasonably withheld or delayed. Ascent shall timely execute all
necessary and proper documents and take all other reasonable and appropriate
action required for BioMarin Acquisition to initiate and prosecute such
proceedings. If Ascent is a legally indispensable party to such action, Ascent
shall join in such action at the request of BioMarin Acquisition. Ascent shall
reasonably cooperate with BioMarin Acquisition in such action upon written
request by BioMarin Acquisition. During the License Term, Ascent and its
Affiliates shall ensure that any personnel of Ascent or its Affiliates will be
available to cooperate with BioMarin Acquisition, as reasonably requested by
BioMarin Acquisition, at BioMarin Acquisition's expense. Any recovery received
in connection with a suit brought by BioMarin Acquisition pursuant to this
Section 10.2(b) shall be retained by BioMarin Acquisition, less reimbursement to
Ascent or its Affiliates by BioMarin Acquisition of any reasonable costs
incurred by Ascent or its Affiliates as a result of its participation in such
action regardless of whether Ascent or its Affiliates participated on its own or
was joined in the action. During the License Term, if BioMarin Acquisition (i)
fails to institute or defend, as applicable, such suit within a reasonable
period of no less than thirty (30) calendar days from the date of receipt of
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written notice regarding the suit or the basis for such suit, and (ii) within
such period of time, BioMarin Acquisition has not provided a commercially
reasonable position for failing to take such action, Ascent or its Affiliate may
thereafter take such action as it deems necessary to defend and/or enforce its
rights, including, without limitation, the right, but not the obligation, to
bring, at its own expense, an infringement action or file any other appropriate
action or claim related to infringement against any third party. BioMarin
Acquisition shall, at the request and expense of Ascent or its Affiliate,
cooperate and provide reasonable assistance in any action described in this
Section and, if required by law, join such action. In such events, the expenses
for enforcement will be borne by Ascent or its Affiliate, and any recovery or
compensation resulting from such proceeding, including without limitation
non-monetary rights, shall belong entirely to Ascent or its Affiliate. Ascent or
its Affiliate shall be entitled to any and all damages recovered. Ascent and its
Affiliates shall not settle or accept any settlement from any third party
without the prior written consent of BioMarin Acquisition, which consent shall
not be unreasonably withheld or delayed.
10.3 ASCENT'S RIGHT TO ASSUME OBLIGATIONS. In the event that BioMarin
Acquisition elects not to make any filing related to, prosecute, or maintain any
registered intellectual property rights in the Licensed Technology, Licensed
Development Technology or Improvements, Ascent shall have the right, but not the
obligation, to take such action as it deems appropriate, at its own expense, to
protect such Licensed Technology, Licensed Development Technology or
Improvements.
11. TERM AND TERMINATION
11.1 TERM. The term of this Agreement (the "LICENSE TERM") will commence
on the Effective Date and, unless sooner terminated as provided in this Section
11, shall continue until the earlier occurrence of (a) six (6) years from the
Effective Date, and (b) the date on which this Agreement terminates pursuant to
Section 11.2 below, at which time this Agreement shall terminate.
11.2 TERMINATION.
(a) In the event that BioMarin Acquisition fails to timely make
any License Payment or Contingent Payments Reimbursement Payment and such
failure is not cured within twenty (20) Business Days of the due date thereof,
then Medicis and Ascent shall have the right, until such failure is cured, in
their sole discretion, to terminate this Agreement and exercise the rights set
forth in Section 11.4. In the event that Medicis or Ascent terminates this
Agreement, such party may require BioMarin Acquisition to pay Ascent immediately
a sum equal to (x) the License Payments and the Contingent Reimbursements
Payment Reimbursements under this Agreement, less the sum of all amounts paid to
Ascent pursuant to Section 4.1 plus (y) all attorney's fees and other expenses
reasonably incurred by Ascent in connection with obtaining the sum described in
clause (x) above.
(b) If any Breach by Ascent or Medicis of Section 7.1, 7.2(a) or
10.1(c) results in an Ascent Material Adverse Effect and BioMarin Acquisition
gives Medicis written notice of such Breach, specifying in reasonable detail the
particulars of the alleged Breach, and such Breach has not been cured within
twenty (20) Business Days after Medicis' receipt of such
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notice, then BioMarin Acquisition shall have the right, in its sole discretion,
to terminate this Agreement.
(c) This Agreement may terminate by the mutual written consent of
the parties hereto.
11.3 TERMINATION PROCEDURES. If BioMarin Acquisition wishes to terminate
this Agreement pursuant to Section 11.2, BioMarin Acquisition shall deliver to
Ascent a written notice stating that BioMarin Acquisition is terminating this
Agreement and setting forth a brief description of the basis on which BioMarin
Acquisition is terminating this Agreement. If Ascent wishes to terminate this
Agreement pursuant to Section 11.2, Ascent shall deliver to BioMarin Acquisition
a written notice stating that Medicis is terminating this Agreement and setting
forth a brief description of the basis on which Medicis is terminating this
Agreement. Any termination pursuant to Section 11.2 shall be effective upon
receipt of notice to such effect by the non-terminating Party in accordance
herewith.
11.4 EFFECTS OF TERMINATION.
(a) In the event this Agreement is terminated pursuant to Section
11.2 above:
(i) the licenses and sublicenses set forth in Article 2 will
terminate and BioMarin and BioMarin Acquisition will no longer have the right to
market any Licensed Products;
(ii) BioMarin Acquisition shall destroy or return to Ascent,
upon request by Ascent, all packaging, labels, and promotional materials bearing
a Licensed Trademark;
(iii) Ascent, in its sole discretion, shall have the right to
elect to purchase all or any portion of Licensed Products remaining in inventory
or ordered by BioMarin Acquisition prior to the effective date of the
termination at the carrying cost for such Licensed Products;
(iv) BioMarin Acquisition shall provide to Ascent all test
data including pharmacological, biological, chemical, biochemical, toxicological
and clinical test data, analytical and quality control data, stability data,
studies and procedures, patent and other legal information or descriptions,
customer lists and, upon Ascent's request, all promotional and marketing
materials, in each case, related to the Licensed Products that were conceived,
made, developed or otherwise controlled by BioMarin Acquisition or its
Affiliates during the term of this Agreement;
(v) BioMarin Acquisition shall cooperate with Ascent to
transfer all applicable regulatory matters to Ascent; and
(vi) BioMarin Acquisition shall use commercially reasonable
efforts to assign to Ascent, to the extent assignable in whole or in part, as
applicable, any agreements of BioMarin Acquisition requested by Ascent to be
assigned to the extent related to the promotion, marketing, manufacture, supply
and/or distribution of any of the Licensed Products.
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(b) Upon the expiration or termination of this Agreement for
whatever reason, all rights and obligations of BioMarin and BioMarin Acquisition
hereunder shall terminate and BioMarin Acquisition shall promptly discontinue
the manufacture, marketing, sale and distribution of Licensed Products and any
other use or exploitation of the Licensed Technology, Licensed Trademarks, and
Licensed Development Technology; provided, however, that the obligation of
BioMarin to indemnify the Ascent Indemnitees shall survive termination of this
Agreement in accordance herewith.
12. SURVIVAL AND INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) All representations and warranties contained in this Agreement
are made as of the Effective Date and shall expire at 11:59 p.m. (Pacific Time)
on the eighteenth-month anniversary of the Effective Date and shall thereafter
be of no further force or effect, except (i) the representations and warranties
set forth in Sections 7.1, 7.2(a) and 8.1 shall expire on the expiration of the
relevant statute of limitations, and (ii) to the extent required to enforce the
parties' rights and obligations hereunder following the end of such period for
any claims for which a Claim Notice (as defined below) has properly been made
prior to the expiration of such period. All of the covenants, agreements and
obligations of the parties contained in this Agreement shall survive (i) until
fully performed or fulfilled, unless non-compliance with such covenants,
agreements or obligations is waived in writing by the party or parties entitled
to such performance or (ii) if not fully performed or fulfilled, until the
expiration of the relevant statute of limitations.
(b) For purposes of this Agreement, a "CLAIM NOTICE" relating to a
particular representation or warranty or covenant shall be deemed to have been
given if any Indemnified Party, acting in good faith, delivers to the
Indemnifying Party a written notice stating that such Indemnified Party
reasonably believes that there is or has been a possible Breach of such
representation or warranty or covenant and containing (i) a brief description of
the circumstances supporting such Indemnified Party's reasonable belief that
there is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct result of such possible Breach.
12.2 INDEMNIFICATION BY ASCENT.
(a) From and after the Effective Date, Ascent shall hold harmless
and indemnify each of the BioMarin Indemnitees from and against, and shall
compensate and reimburse each of the BioMarin Indemnitees for, any Damages that
are suffered or incurred by any of the BioMarin Indemnitees or to which any of
the BioMarin Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any Third Party Claim) and that arise
from:
(i) any Breach of any of the representations or warranties
made by Ascent in this Agreement;
(ii) any Breach of any covenant or obligation of Ascent or
Medicis contained in this Agreement;
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(iii) any Third Party Claim arising from the conduct or
operation of the Pediatrics Business prior to the Effective Date; or
(iv) any Proceeding relating directly or indirectly to any
Breach, Liability or Third Party Claim of the type referred to in clauses (i)
through (iii) above (including any Proceeding commenced by any BioMarin
Indemnitee for the purpose of enforcing any of its rights under this Section
12.2).
(b) Subject to Section 12.2(d), Ascent shall not be required to
make any indemnification payment pursuant to Section 12.2(a)(i) of this
Agreement, Section 9.2(a)(i) of the Asset Purchase Agreement, or Section
8.2(a)(i) of the Securities Purchase Agreement, until such time as and to the
extent that the total amount of all Damages (including the Damages arising from
such Breach and all other Damages arising from any other Breaches of any
representations or warranties) that have been directly or indirectly suffered or
incurred by any one or more of the BioMarin Indemnitees, or to which any one or
more of the BioMarin Indemnitees has or have otherwise become subject, exceeds,
in the aggregate, $250,000 and then only to the extent of such excess.
(c) Notwithstanding anything in this Agreement to the contrary,
but subject to Section 12.2(d), the aggregate liability for any indemnification
payments pursuant to Section 12.2(a)(i) of this Agreement, Section 9.2(a)(i) of
the Asset Purchase Agreement and Section 8.2(a)(i) of the Securities Purchase
Agreement will be limited to, and shall not exceed, in the aggregate, $66.5
million (the "ASCENT CAP"), provided, however, that the Ascent Cap shall not
apply to any indemnification obligation of Ascent arising out of any Breach of
Section 7.1 or 7.2.
(d) The limitations on the indemnification obligations of Ascent
set forth in each of Section 12.2(b) and Section 12.2(c) shall not apply to any
willful Breach, intentional misrepresentation or fraud by Medicis or Ascent.
(e) To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the Asset Purchase Agreement and/or the Securities
Purchase Agreement, such party shall be entitled to only one recovery of Damages
resulting from such actions, failures to act or other circumstances giving rise
to the right of indemnification, regardless of whether the actions, failures to
act or other circumstances giving rise to the right of indemnification
constitute a Breach of more than one agreement. The parties acknowledge that the
purpose of this provision is to prevent duplicative recovery for the same
Damages, and not to preclude the recovery of Damages for separate and
independent indemnity claims that may arise under the various agreements.
12.3 INDEMNIFICATION BY BIOMARIN.
(a) From and after the Effective Date, BioMarin shall hold
harmless and indemnify the Ascent Indemnitees from and against, and shall
compensate and reimburse each of the Ascent Indemnitees for, any Damages that
are suffered or incurred by the Ascent
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Indemnitees or to which the Ascent Indemnitees may otherwise become subject at
any time (regardless of whether or not such Damages relate to any Third Party
Claim) and that arise from:
(i) any Breach of any representation or warranty made by
BioMarin or BioMarin Acquisition in this Agreement;
(ii) any Breach of any covenant or obligation of BioMarin or
BioMarin Acquisition in this Agreement; and
(iii) any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing of the Licensed Products following the Effective Date,
except Damages suffered or incurred or arising from the Breach of Medicis,
Ascent or Medicis Manufacturing, as applicable, under this Agreement, the Supply
Agreement, or the Transition Services Agreement;
(iv) any Proceeding relating directly or indirectly to any
Breach, Liability or Third Party Claim of the type referred to in clauses "(i)"
through "(iii)" above (including any Proceeding commenced by any Ascent
Indemnitee for the purpose of enforcing its rights under this Section 12.3).
(b) Subject to Section 12.3(d), BioMarin shall not be required to
make any indemnification payment pursuant to Section 12.3(a)(i) of this
Agreement, Section 9.3(a)(i) of the Asset Purchase Agreement or Section
8.3(a)(i) of the Securities Purchase Agreement until such time as and to the
extent that the total amount of all Damages (including the Damages arising from
such Breach and all other Damages arising from any other Breaches of its
representations or warranties) that have been directly or indirectly suffered or
incurred by the Ascent Indemnitees, or to which the Ascent Indemnitees have
otherwise become subject, exceeds, in the aggregate, $250,000 and then only to
the extent of such excess.
(c) Notwithstanding anything in this Agreement to the contrary,
but subject to Section 12.3(d), the aggregate liability for any indemnification
payments pursuant to Section 12.3(a)(i) of this Agreement, Section 9.3(a)(i) of
the Asset Purchase Agreement and Section 8.3(a)(i) of the Securities Purchase
Agreement, will be limited to, and shall not exceed, in the aggregate, $66.5
million (the "BIOMARIN CAP"), provided, however, that the BioMarin Cap shall not
apply to any indemnification obligation of BioMarin arising out of any Breach of
Section 8.1.
(d) The limitation on the indemnification obligations of BioMarin
that is set forth in Section 12.3(b) and Section 12.3(c) shall not apply to (i)
any failure by BioMarin Acquisition to make any payment pursuant to Section 4.1,
or (ii) any willful Breach, intentional misrepresentation or fraud by BioMarin
or BioMarin Acquisition.
(e) To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the Asset Purchase Agreement and/or the Securities
Purchase Agreement, such party shall be entitled to only one recovery of the
Damages resulting from such actions, failures to act or other circumstances
giving rise to the right of indemnification, regardless of whether the actions,
failures to act or other circumstances giving
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rise to the right of indemnification constitute a breach of more than one
agreement. The parties acknowledge that the purpose of this provision is to
prevent duplicative recovery for the same Damages, and not to preclude the
recovery of Damages for separate and independent indemnity claims that may arise
under the various agreements.
12.4 PROCEDURES RELATING TO INDEMNIFICATION FOR THIRD PARTY CLAIMS
(a) Within ten (10) Business Days after a BioMarin Indemnitee or
Ascent Indemnitee obtains Knowledge of the commencement of any third-party
claim, action, suit or proceeding (a "THIRD PARTY CLAIM") or the occurrence of
any fact which may become the basis of a Third Party Claim in respect of which
an Indemnified Party is entitled to indemnification under this Agreement, such
Indemnified Party shall notify in writing the Indemnifying Party of such 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 materially prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice). Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, within five (5) Business Days after the Indemnified Party's receipt
thereof, copies of all notices and non-privileged 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 at its expense in the
defense thereof and, if it so chooses within thirty (30) days after receipt of
notice of such claim to assume the defense thereof at the Indemnifying Party's
expense, with counsel selected by the Indemnifying Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall be permitted to participate in the defense thereof and to employ
counsel (not reasonably objected to by the Indemnifying Party), at its own
expense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnified Party (i) for any period during which the
Indemnifying Party has not assumed the defense thereof or is not using
commercially reasonable efforts to pursue the defense thereof (other than during
the period in which the Indemnified Party failed to give notice of the Third
Party Claim as provided above), or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the
Indemnifying Party and the Indemnified Party in defending such claim or action,
or (y) that there may be legal defenses available to the Indemnified Party
different from or in addition to those available to the Indemnifying Party.
(c) If the Indemnifying Party so elects to assume the defense of
any Third Party Claim, all of the Indemnified Parties shall reasonably cooperate
with the Indemnifying Party, at the expense of the Indemnifying Party, in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying Party
of non-privileged records and information which 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. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim,
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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 shall have assumed the defense of a Third Party Claim, the
Indemnified Party shall agree to any settlement, compromise or discharge of a
Third Party Claim for monetary Damages which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay the
full amount of the monetary Damages in connection with such Third Party Claim
and which releases the Indemnifying Party and the Indemnified Party completely
in connection with such Third Party Claim and does not impose any covenant or
commitment on the Indemnified Party.
12.5 OTHER CLAIMS. In the event any Indemnified Party should have a claim
against any Indemnifying Party under Section 12.2 or 12.3 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 to the
Indemnifying Party of such claim within 15 Business Days of obtaining Knowledge
of the occurrence of such claim. The failure by any Indemnified Party so to
notify the Indemnifying Party within this time period shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party under Section 12.2 or 12.3, except to the extent that the Indemnifying
Party is materially prejudiced by such failure. If the Indemnifying Party does
not notify the Indemnified Party within 15 Business Days following its receipt
of such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under Section 12.2 or 12.3, such claim specified by the
Indemnified Party in such notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 12.2 or 12.3 and the Indemnifying Party shall
pay the amount of such liability to the Indemnified Party on demand or, in the
case of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined by agreement between the Indemnifying Party
and the Indemnified Party or by judgment or decree of a court of competent
jurisdiction. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall attempt to resolve such claim in accordance with Section
13.6.
12.6 SETTLEMENTS. No party may settle any claim, action or proceeding
related to a liability to a third party without the consent of the other
parties, if such settlement would impose any monetary obligation on the other
parties or require the other parties to submit to an injunction or impose any
covenant or commitment on the other party or otherwise limit the other party's
rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.
12.7 NO CONSEQUENTIAL OR PUNITIVE DAMAGES. No party hereto (or its
Affiliates) shall, under any circumstance, be liable to any other party (or its
Affiliates) for any consequential, exemplary, special, incidental or punitive
Damages claimed by such other party under the terms of or due to any Breach of
this Agreement.
13. MISCELLANEOUS
13.1 FURTHER ASSURANCES. From and after the Effective Time, each party
hereto shall execute and deliver such documents and take such other actions as
the other party may
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reasonably request, for the purpose of carrying out or evidencing any of the
transactions contemplated hereby.
13.2 RELATIONSHIP OF THE PARTIES. BioMarin Acquisition, on the one hand,
and Ascent, on the other hand, hereby acknowledge that each is an independent
entity and is not subject to the control of the other party hereto in any manner
except as specifically provided in this Agreement. Nothing contained in this
Agreement shall be construed in any way as creating any relationship of
partnership or joint venture, between the parties, or to render either party
liable for any of the debts or obligations of the other party hereto. Neither
party shall act or purport to act, or represent itself, directly or by
implication, as the agent, legal Representative, partner or joint venturer of
the other party, or in any manner assume or create or purport to assume or
create any obligation in the name or on behalf of the other party.
13.3 RIGHTS IN BANKRUPTCY.
(a) All rights and licenses granted under or pursuant to this
Agreement by Ascent and Medicis are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101 of the U.S. Bankruptcy
Code. The parties agree that BioMarin Acquisition shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code. The
parties further agree that, in the event of the commencement of a Bankruptcy
Proceeding by or against Ascent and/or Medicis under the U.S. Bankruptcy Code,
BioMarin Acquisition shall be entitled to a complete duplicate of (or complete
access to, as appropriate) all Licensed Assets and all embodiments of all
applicable intellectual property rights, and same, if not already in its
possession, shall be promptly delivered to it upon any such commencement of a
Bankruptcy Proceeding upon its written request therefor, unless Ascent or
Medicis, as applicable (or a trustee on behalf of each such applicable party)
elects to continue to perform all of their obligations under this Agreement.
(b) The parties agree and intend that, to the extent permitted by
law, the non-monetary provisions of this Agreement and the Securities Purchase
Agreement are material elements of such agreements and that the failure to
perform such non-monetary provisions would have a materially adverse impact on
the value of the Licensed Assets such that any provision of cure, compensation,
or adequate assurance of future performance under Section 365(b)(1) of the U.S.
Bankruptcy Code must include such non-monetary provisions except as specifically
excluded under Section 365(b)(2) of the U.S. Bankruptcy Code. The parties
further agree that the prompt payment of all License Payments and Contingent
Payment Reimbursement Payments becoming due on or after the commencement of a
Bankruptcy Proceeding by or against BioMarin Acquisition shall be a condition
precedent to the continued use of Licensed Assets under this Agreement.
13.4 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of New York (without
giving effect to principles of conflicts of laws).
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(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in New York, New
York in the Borough of Manhattan. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in New York, New York in
the Borough of Manhattan (and each appellate court located in the State of New
York) in connection with any such legal proceeding;
(ii) agrees that each state and federal court located in New
York, New York in the Borough of Manhattan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in New York, New York in the Borough of Manhattan, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
(c) The parties hereto agree that, if any Proceeding is commenced
against any Indemnified Party by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnified Party may proceed against
the Indemnifying Party in or before such court or other tribunal with respect to
any indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.
13.5 EXCLUSIVE REMEDIES; SPECIFIC PERFORMANCE. Except as expressly
provided herein or in any Transaction Agreement, the remedies provided in
Article 12 shall constitute the sole and exclusive remedy available to each
party hereto for recovery against another party for Breaches of the
representations, warranties, covenants and agreements in this Agreement. The
parties hereto acknowledge that the material covenants, obligations and other
provisions to be performed under this Agreement are of a special, unique and
extraordinary character, and that irreparable injury will result from any
violation or continuing violation of the provisions of this Agreement for which
money damages may not be an adequate remedy. Accordingly, the parties agree that
in the event of any Breach or threatened Breach by any party hereto of any
material covenant, obligation or other provision set forth in this Agreement,
the other party or parties shall be entitled (in addition to any other remedy
that may be available to it) to seek in accordance with applicable law, (i) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach.
13.6 DISPUTE RESOLUTION PROCEDURES. In the event any dispute arises
between the parties with respect to the interpretation of this Agreement or with
respect to the performance of either party, the parties shall first seek to
resolve such dispute by negotiations between senior executives who have
authority to settle the dispute. When a party believes there is a dispute
relating to the Agreement, such party shall give written notice of the dispute
to the other party or
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parties subject to the dispute. The senior executives shall meet promptly after
the date of such notice and shall attempt in good faith within 45 days after the
date of such notice to resolve the dispute prior to initiating litigation with
respect to such matter. Notwithstanding the foregoing, if no such resolution is
reached within such 45 days, then any party may initiate any proceeding or
pursue any remedy it deems appropriate and that is not prohibited hereby.
13.7 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, the other Indemnified Parties, and the respective
successors and assigns (if any) of the foregoing. No Person (including any
creditor of Medicis or Ascent or any former or current employee of Ascent) who
is not a party to this Agreement shall have any rights hereunder as a
third-party beneficiary or otherwise.
(b) Neither this Agreement nor the rights and obligations of any
party hereunder shall be assigned without the prior written consent of the other
parties, which consent may be given or withheld in such party's sole discretion.
If Medicis or BioMarin or any of their respective successors (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
Medicis or BioMarin, as the case may be, shall assume the obligations set forth
in this Agreement.
13.8 NOTICES. All notices, demands and other communications under or in
connection with this Agreement shall be in writing and shall be deemed properly
delivered, given and received (a) if delivered personally, upon delivery, (b) if
delivered by registered or certified mail (return receipt requested) from the
United States, upon the earlier of actual delivery or three Business Days after
being mailed, (c) if sent by overnight delivery by a recognized overnight
delivery service for overnight delivery, upon the earlier of actual delivery or
one Business Day after being sent, or (d) if given by facsimile, upon
confirmation of transmission by facsimile (or, if such confirmation does not
occur during normal business hours on a Business Day then on the next Business
Day), in each case to the parties at the following addresses or facsimile
numbers or to such other address or facsimile numbers as each party may
designate for itself by like notice to the other parties:
13.9 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
13.10 COUNTERPARTS. This Agreement may be executed in several counterparts
(including by facsimile), each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.
13.11 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
13.12 WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
13.13 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of BioMarin Acquisition, BioMarin, Medicis and Ascent.
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13.14 MEDICIS PERFORMANCE GUARANTEE.
(a) Medicis hereby unconditionally, irrevocably and absolutely
guarantees to BioMarin and BioMarin Acquisition the due and punctual performance
and discharge of all of Ascent's obligations under this Agreement (collectively,
the "ASCENT OBLIGATIONS"). The guarantee under this Section 13.14 is a guarantee
of performance of the Ascent Obligations and not merely of collection.
(b) To the fullest extent permitted by applicable law, the
obligations of Medicis hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of Ascent or the bankruptcy, insolvency,
reorganization, dissolution, liquidation, or other similar proceeding relating
to Ascent or any Affiliate or Subsidiary of either Ascent or Medicis or (ii) any
neglect, delay, omission, failure or refusal of Medicis to take or prosecute any
action in connection with this Agreement or any other agreement, delivered in
connection herewith. In connection with this Section 13.14, Medicis
unconditionally waives: (i) any right to receive demands, protests, or other
notices of any kind or character whatsoever provided that the same has been
delivered to Ascent, (ii) any right to require BioMarin or BioMarin Acquisition
to proceed first against Ascent or to exhaust any security held by BioMarin or
BioMarin Acquisition or to pursue any other remedy, (iii) any defense based upon
an election of remedies by BioMarin or BioMarin Acquisition, (iv) any duty of
BioMarin or BioMarin Acquisition to advise Medicis of any information known to
BioMarin or BioMarin Acquisition regarding Ascent or its ability to perform
under this Agreement, and (v) all suretyship and other defenses of every kind
and nature.
(c) The obligations of Medicis under this Section 13.14 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of Ascent in respect of the Ascent Obligations
are rescinded or must be otherwise restored, and Medicis agrees that it will
indemnify BioMarin and BioMarin Acquisition on demand for all costs and expenses
(including reasonable attorneys fees and expenses) incurred by BioMarin or
BioMarin Acquisition in connection with such rescission or restoration. If in
connection with the foregoing, BioMarin or BioMarin Acquisition is required to
refund part or all of any payment of Ascent, such payment by BioMarin or
BioMarin Acquisition shall not constitute a release of Medicis from any
liability hereunder, and Medicis' liability hereunder shall be reinstated to the
fullest extent allowed under applicable law and shall not be construed to be
diminished in any manner.
13.15 BIOMARIN PERFORMANCE GUARANTEE.
(a) BioMarin hereby unconditionally, irrevocably and absolutely
guarantees to Medicis and Ascent the due and punctual performance and discharge
of all of BioMarin Acquisition's obligations under this Agreement, including,
without limitation, the due and punctual payment of the Licensed Payments and
the Contingent Payments Reimbursement Payments and any other amount that
BioMarin Acquisition is or may become obligated to pay pursuant to this
Agreement (collectively, the "BIOMARIN ACQUISITION OBLIGATIONS"). The guarantee
under this Section 13.15 is a guarantee of timely payment and performance of the
BioMarin Acquisition Obligations and not merely of collection.
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(b) To the fullest extent permitted by applicable law, the
obligations of BioMarin hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of BioMarin Acquisition or the bankruptcy,
insolvency, reorganization, dissolution, liquidation, or other similar
proceeding relating to BioMarin Acquisition or any Affiliate or Subsidiary of
either BioMarin Acquisition or BioMarin or (ii) any neglect, delay, omission,
failure or refusal of BioMarin to take or prosecute any action in connection
with this Agreement or any other agreement, delivered in connection herewith. In
connection with this Section 13.15, BioMarin unconditionally waives: (i) any
right to receive demands, protests, or other notices of any kind or character
whatsoever, provided that the same has been delivered to BioMarin Acquisition,
(ii) any right to require Medicis or Ascent to proceed first against BioMarin
Acquisition or to exhaust any security held by Medicis or Ascent or to pursue
any other remedy, (iii) any defense based upon an election of remedies by
Medicis or Ascent, (iv) any duty of Medicis or Ascent to advise BioMarin of any
information known to Medicis or Ascent regarding BioMarin Acquisition or its
ability to perform under this Agreement, and (v) all suretyship and other
defenses of every kind and nature.
(c) The obligations of BioMarin under this Section 13.15 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of BioMarin Acquisition in respect of the
BioMarin Acquisition Obligations are rescinded or must be otherwise restored,
and BioMarin agrees that it will indemnify Medicis and Ascent on demand for all
costs and expenses (including reasonable attorneys fees and expenses) incurred
by Medicis or Ascent in connection with such rescission or restoration. If in
connection with the foregoing, Medicis or Ascent is required to refund part or
all of any payment of BioMarin Acquisition, such payment by Medicis or Ascent
shall not constitute a release of BioMarin from any liability hereunder, and
BioMarin's liability hereunder shall be reinstated to the fullest extent allowed
under applicable law and shall not be construed to be diminished in any manner.
13.16 ENTIRE AGREEMENT. The Transaction Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
13.17 CONSISTENCY. Each of the parties hereto agrees to report the
transaction contemplated herein for all state and federal Tax purposes as a
license and to treat the payments made by BioMarin Acquisition pursuant to
Section 4 as a payment for the use of the assets subject to the License and the
license granted under Section 2.1(b).
13.18 NO PROJECTION OR FINANCIAL FORECAST. ASCENT IS NOT MAKING ANY
REPRESENTATION OR WARRANTY TO BIOMARIN AND BIOMARIN ACQUISITION WITH RESPECT TO
(I) ANY FINANCIAL PROJECTION OR FORECAST RELATING TO THE PEDIATRICS BUSINESS,
THE ACQUIRED ASSETS OR LIABILITIES OF MEDICIS OR ASCENT OR RELATED TO THE
PHARMACEUTICAL MARKET AS A WHOLE OR THE MARKET FOR ORAL LIQUID PREDNISOLONE
SOLUTION PRODUCTS OR ORAL DISSOLVING TABLET PREDNISOLONE PRODUCTS SPECIFICALLY,
INCLUDING BUT NOT LIMITED TO ANY PROJECTIONS INCLUDING
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FUTURE SALES OF SUCH PRODUCTS, OR THE INTRODUCTION OF ANY COMPETITIVE PRODUCTS
(WHETHER GENERIC OR NAME BRAND).
13.19 RELEASE. In the event that Ascent becomes a wholly-owned Subsidiary
of Licensee or any of its Affiliates, without any action of any party, on the
date Ascent becomes such a Subsidiary, Medicis shall no longer be deemed a party
to this Agreement and all rights and obligations of Medicis hereunder shall be
deemed extinguished; provided, however, that the obligation of Medicis to
guarantee indemnification of the BioMarin Indemnitees shall survive termination
of this Agreement in accordance herewith.
13.20 FEES AND EXPENSES; INVESTMENT BANKING FEES.
(a) Each party to this Agreement shall bear and pay all fees,
costs and expenses (including all legal fees and expenses, that have been
incurred or that are in the future incurred by, on behalf of or for the benefit
of such party in connection with: (i) the negotiation, preparation and review of
any letter of intent or similar document relating to any of the transactions
contemplated hereby; (ii) the investigation and review conducted by such party
and its Representatives with respect to the transactions contemplated hereby;
(iii) the negotiation, preparation and review of this Agreement or any of the
documents delivered in connection herewith; (iv) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated hereby, and the obtaining of any consent required
to be obtained in connection with any of the transactions contemplated hereby;
and (v) the consummation and performance of the transactions contemplated
hereby.
(b) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, each party to this Agreement shall pay its own investment
banking, broker or finder fees, if any, incurred in connection with the
transactions contemplated hereby.
13.21 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to the Transaction Agreements or the enforcement of any provision of
any of the Transaction Agreements is brought by one party against any other
party to this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the day
and year first above written.
ASCENT PEDIATRICS, INC. BIOMARIN PEDIATRICS INC.
By:________________________________ By:______________________________
Its:_______________________________ Its:_____________________________
MEDICIS PHARMACEUTICAL CORPORATION BIOMARIN PHARMACEUTICAL INC.
By:________________________________ By:______________________________
Its:_______________________________ Its:_____________________________
45
EXHIBIT 10.72(f)
FIFTH AMENDMENT TO
CREDIT & SECURITY AGREEMENT
DATED NOVEMBER 22, 2002
NORWEST BANK ARIZONA, NATIONAL ASSOCIATION (as Successor
in interest to Norwest Business Credit, Inc. - "Lender")
MEDICIS PHARMACEUTICAL CORPORATION ("Borrower")
FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the "Amendment") is
made as of the 22nd day of November, 2002 by and between MEDICIS PHARMACEUTICAL,
CORPORATION, a Delaware corporation ("Borrower"), and WELLS FARGO BANK ARIZONA,
NATIONAL ASSOCIATION, a national banking association, formerly known as NORWEST
BANK ARIZONA, NATIONAL ASSOCIATION, a national banking association ("Lender"),
as succcssor-in-interest to NORWEST BUSINESS CREDIT, INC., a Minnesota
corporation.
R E C I T A L S:
WHEREAS, Borrower and Lender are parties to that certain Credit and
Security Agreement dated as of August 3, 1995, as modified by letter agreements
dated March 6, 1996 and April 11, 1996, First Amendment to Credit and Security
Agreement dated as of May 29, 1996 among Borrower, Norwest Business Credit, Inc.
("NBCI") and Lender, Second Amendment to Credit and Security Agreement dated as
of November 22, 1996 between Borrower and Lender, Third Amendment to Credit and
Security Agreement dated as of November 22, 1998 between Borrower and Lender,
and Fourth Amendment to Credit and Security Agreement dated as of November 22,
2000 between Borrower and Lender (collectively, the "Credit Agreement"),
pursuant to which Lender agreed to make available to Borrower a $25,000,000
revolving credit facility (the "Acquisitions Credit Facility") to finance
acquisitions of complementary businesses, brand product lines, brand purchase
contracts, licensing agreements, and internal product research and development
costs, which Acquisitions Credit Facility is evidenced by that certain
Replacement Acquisitions Revolving Note from Borrower payable to the order of
Lender in the principal amount of $25,000,000;
WHEREAS, Borrower has requested that Lender extend the term of the Credit
Agreement and Acquisitions Credit Facility for an additional two (2) years and
Lender is willing to do so on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender, intending to
be legally bound, agree as follows:
1. INTERPRETATION. Except as otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed thereto in the Credit
Agreement.
2. RECITALS. The recitals set forth above are true and accurate in every
respect.
3. OUTSTANDING INDEBTEDNESS. As of November 22, 2002: the outstanding
principal balance of the Revolving Loan is $0.00 and the accrued and unpaid
interest on the Revolving Loan is $0.00; the outstanding principal balance of
the Term Credit Facility is $0.00 and the accrued and unpaid interest on the
Term Credit Facility is $0.00; and the outstanding principal balance of the
Acquisitions Credit Facility is $0.00 and the accrued and unpaid interest on the
Acquisitions Credit Facility is $0.00.
4. NO OFFSETS. Borrower acknowledges with respect to the amounts owing to
Lender that, as of the date of execution of this Amendment (which may be after
the effective date of this Agreement), Borrower has no offset, defense or
counterclaim with respect thereto, no claim or defense in the abatement or
reduction thereof, or any other claim against Lender or with respect to any
document forming part of the transaction in respect of which the Acquisitions
Credit Facility was made or forming part of any other transaction under which
Borrower is indebted to Lender. Borrower acknowledges that all interest imposed
under the Acquisitions Credit Facility through the date of execution hereof, and
all fees and other charges that have been collected from or known by Borrower to
have been imposed upon Borrower with respect to the Acquisitions Credit Facility
evidenced by the Acquisitions Revolving Note were and are agreed to, and were
properly computed and collected, and that Lender has fully performed all
obligations that it may have had or now have to Borrower, and Lender has no
obligation to make any additional loan or extension of credit to or for the
benefit of Borrower, except as provided in the Credit Agreement, as amended by
this Amendment.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER. To induce Lender to enter
into this Amendment and the arrangement contemplated by this Amendment, Borrower
represents and warrants to Lender as follows:
(a) This Amendment and all other instruments executed and delivered
to Lender concurrently herewith, were executed in accordance with the
requirements of law and in accordance with any requirements of Borrower's
certificate of incorporation and bylaws and any amendments thereto.
(b) The execution and delivery of this Amendment and any other
instruments executed and delivered to Lender concurrently herewith, and the full
and complete performance of the provisions hereof will not result in any breach
of, or constitute a default under, or result in the creation of any lien, charge
or encumbrance upon any property or assets of Borrower under any indenture,
mortgage, deed of trust, bank loan or credit agreement or other instrument to
which Borrower is a party or by which Borrower is bound.
(c) The Loan Documents executed by Borrower and this Amendment are
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their terms.
(d) Except as previously disclosed to Lender in writing, there are
no actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting Borrower or any of its Subsidiaries or the
properties of Borrower or any of its Subsidiaries before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower or any of
its Subsidiaries, would reasonably be expected to have a material adverse effect
on the financial condition, properties or operations of the Borrower or any
Subsidiaries and where such claim(s) exceed $200,000 individually, or
$500,000 in the aggregate.
(e) Except for the sale of TRIAZ under an Applicable License,
Borrower has not derived ten percent (10%) or more of Borrower's Net Sales in
any Fiscal Year from any Applicable License as described in Section 6.14 of the
Credit Agreement.
(f) Except as disclosed by Borrower to Lender in writing
contemporaneously with the execution and delivery of this Amendment, Borrower
does not have any patent applications pending before the PTO Office.
(g) There are no oral agreements, understandings or course of
conduct that would modify, amend, rearrange, vary, diminish or impair the Loan
Documents or the obligation of Borrower to pay the indebtedness evidenced
thereby or to perform fully the obligations of Borrower in strict accordance
with the Loan Documents, or which would permit Borrower to void or avoid its
obligations in whole or in part.
(h) All of the respective representations and warranties made by
Borrower in the Loan Documents remain true, complete and correct as of the date
hereof, including, without limitation, the representations and warranties in
Section 5 of the Credit Agreement, except to the extent of any changes to such
representations and warranties previously disclosed in writing to Lender.
No representation or warranty made by Borrower and contained herein or in the
other Loan Documents, and no certificate, information or report furnished or to
be furnished by Borrower in connection with any of the Loan Documents or any of
the transactions contemplated hereby or thereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein not misleading in the light of the circumstances under which such
statements were made.
6. CONTINUED ENFORCEABILITY OF LOAN DOCUMENTS. Except as modified herein,
all of the terms and provisions of the Loan Documents remain in full force and
effect. In the event of any conflict between the terms and provisions of this
Amendment and the terms and provisions of the Loan Documents, the terms and
provisions of this Amendment shall govern and prevail. Borrower acknowledges,
confirms and ratifies the enforceability of the Credit Agreement, the
Acquisitions Revolving Note and the Loan Documents, as modified pursuant to this
Amendment, and the continuing validity, enforceability and priority of the liens
and security interests granted in the Loan Documents.
7. RELEASE OF CLAIMS.
(a) Borrower hereby releases Lender and its officers, employees and
agents from all claims and demands (known and unknown) it may have on the date
hereof arising out of or in any way relating to the extension or denial of
credit by Lender to Borrower or other matters relating to the indebtedness, any
collateral securing payment and performance of such indebtedness, or any matter
preliminary to the execution and delivery by Borrower and Lender of this
Amendment. The release set forth above shall not extend to any claim arising
after the date of execution hereof (which may be after the effective date of
this Agreement) to the extent based on acts or omissions of Lender occurring
after such date, except that such release is specifically intended by the
parties to include the transactions leading up to the execution of this
Amendment. This Amendment and the release provisions contained in this Section 7
are contractual, and not a mere recital.
(b) Borrower acknowledges and agrees that Lender is not, and shall
not be, obligated in any way to continue or undertake any loan, financing or
other credit arrangement with Borrower, including, without limitation, any
renewal of the indebtedness evidenced by the Loan Documents, except on the terms
and subject to the conditions set forth in the Loan Documents as hereby amended
and modified.
(c) Borrower understands and acknowledges that Lender and Account
Holder are separate and distinct corporate entities, as well as affiliate
corporations, and Borrower has knowingly and consciously made the determination
to proceed with the credit arrangements with Lender as provided in this Credit
Agreement and to maintain the investment advisor and custodian relationship with
Account Holder as provided in the Investment Agreement. Borrower (i) knowingly
waives and releases Lender for, from and against any claim, demand, cause of
action, liability, damages and expenses incurred by Borrower and (ii) covenants
and agrees that it will not claim, or attempt to claim, rights of setoff,
off-set, recoupment or the like against Lender, in the case of both clauses (i)
and (ii), arising out of, based upon, relating to, or otherwise occurring as a
result of, any acts or omissions of, or any breach of contract or tort or any
other theory of liability by, Account Holder. This provision is not intended to
affect any rights or remedies of Borrower against Lender pursuant to the Credit
Agreement.
8. CONDITIONS OF CLOSING. Lender's obligation to enter into this Amendment
and the other documents and instruments required hereunder shall be subject to
the satisfaction of all of the following conditions on or before February 14,
2003 (the "Closing" or the "Closing Date") in a manner, form and substance
satisfactory to Lender, which conditions may be waived by Lender in writing in
its sole and absolute discretion.
(a) On the Closing Date, the representations and warranties of
Borrower set forth in the Loan Documents shall be true and correct in all
material respects when made and at and as of the time of the Closing.
(b) The following shall have been delivered to Lender, each duly
authorized, executed and acknowledged, where applicable, and in form and
substance satisfactory to Lender:
(i) This Amendment;
(ii) First Amendment to Amended and Restated Patent Collateral
Assignment and Security Agreement;
(iii) First Amendment to Amended and Restated Trademark,
Tradename and Service Mark Collateral Assignment and Security Agreement;
(iv) A certificate of the Secretary or an Assistant Secretary
of the Borrower, certifying as to the resolutions of the directors and, if
required, the shareholders of the Borrower, authorizing the execution, delivery
and performance of the Fifth Amendment and all other documents and instruments
incident thereto and to the transactions contemplated by the Fifth Amendment,
reasonably satisfactory to Lender and its counsel.
(c) Borrower shall have performed and complied in all material
respects with all agreements and conditions contained in the Loan Documents to
be performed by or complied
with by Borrower prior to or at the Closing, and no Event of Default or Default
shall have occurred and be continuing or would occur by Borrower entering into
this Amendment and each condition precedent to the effectiveness of each of the
Loan Documents shall have been satisfied.
(d) Lender shall have received such documents as Lender shall
require to establish the proper organization and good standing of Borrower, the
authority of Borrower to execute this Amendment and any other documents or
instruments required hereunder, and evidence that all approvals and/or consents
of, or other action by, any shareholder, governmental agency or other Person
whose approval or consent is necessary or required to enable Borrower to (a)
enter into and perform its obligations under the Loan Documents and (b) grant to
Lender the Security Interests, have been obtained.
(e) All filings of Uniform Commercial Code financing statements and
other filings and actions necessary to perfect and maintain the Security
Interests as first, valid and perfected security interest in the Collateral
shall have been filed or taken (or such filings delivered for filing immediately
following the Closing, to Lender or a third party acceptable to Lender) and
confirmation thereof shall have been received by Lender.
(f) Lender shall have determined to its satisfaction that, as of the
Closing Date, there has been no material adverse change in the financial
condition of Borrower from the financial statements dated as of_______________,
2002 and other documents submitted by Borrower to Lender prior to the Closing
Date.
(g) Borrower shall have paid to Lender an extension fee of $32,500,
which shall be fully earned and non-refundable upon Lender's execution and
delivery of this Amendment, and, when invoiced, Lender's reasonable attorneys'
fees and costs incurred in connection with this Amendment.
(h) Lender shall be satisfied that (a) Borrower has good and
indefeasible title to all of the Collateral and (b) Borrower at all times shall
be entitled to the use and quiet enjoyment of all assets necessary and desirable
for the continued ownership and operation of Borrower's business, including,
without limitation, the use of equipment, licenses, fixtures and warehouses.
9. DEFINITIONS. (a) The definition of "Maturity Date" in Section 1.1 of
the Credit Agreement is hereby deleted in its entirety and the following
inserted therefor:
"Maturity Date" means November 22, 2004.
and (a) Section 1.1 of the Credit Agreement is hereby amended to add the
following definitions in proper alphabetical order:
"Fifth Amendment" means that certain Fifth Amendment to Credit
and Security Agreement dated as of November 22, 2002 between
Borrower and Lender.
"Fourth Amendment" means that certain Fourth Amendment to
Credit and Security Agreement dated as of November 22, 2000 between
Borrower and Lender.
10. FEES. Section 2.11 of the Credit Agreement is hereby amended to add
the following:
(g) Upon execution and delivery of the Fifth Amendment, Borrower
agrees to pay to Lender an extension fee of $32,500, which shall be fully
earned and non-refundable upon Lender's execution and delivery of the
Fifth Amendment, and, when invoiced, Lender's reasonable attorneys' fees
and costs incurred in connection with the Fifth Amendment.
11. SECURITY INTEREST. Article 3 of the Credit Agreement is hereby amended
to add the following:
3.6 Authorization to File Financing Statements. Borrower hereby
irrevocably authorizes Lender at any time and from time to time to file a
record in any filing office in any Uniform Commercial Code jurisdiction to
perfect the lien on, and security interest in, the Collateral and to
provide any information required by Article 9 of the Uniform Commercial
Code of any jurisdiction for the sufficiency or filing office acceptance
of any record. The Borrower agrees to furnish any such information to the
Lender promptly upon the Lender's request. Borrower also ratifies its
authorization for the Lender to have filed in any Uniform Commercial Code
jurisdiction any record perfecting the lien on, and security interest in,
the Collateral filed before the date of the Fifth Amendment.
12. FINANCIAL CONDITION; NO ADVERSE CHANGE. Section 5.5 of the Credit
Agreement is hereby deleted in its entirety and the following inserted therefor:
Section 5.5 Financial Condition; No Adverse Change. The Borrower has
heretofore furnished to the Lender audited financial statements of the
Borrower for its Fiscal Year ended June 30, 2002 and such statements
fairly present the financial condition of the Borrower on the dates
thereof and the results of its operations and cash flows for the period
then ended and were prepared in accordance with generally accepted
accounting principles applied in a consistent manner. Since the date of
such financial statements of the Borrower, there has been no material
adverse change in the business, properties or condition (financial or
otherwise) of the Borrower.
13. TOTAL LIABILITIES TO TANGIBLE NET WORTH. Section 6.16 of the Credit
Agreement is hereby deleted in its entirety and the following inserted therefor:
Section 6.16 Total Liabilities to Tangible Net Worth. Borrower shall
maintain on a consolidated basis, measured quarterly as of the last day of
March, June, September and December, a ratio of total liabilities under
GAAP to Tangible Net Worth of no more
than 3.0:1.0 from and including September 30, 2002 through the
remaining term of this Agreement.
14. MISCELLANEOUS.
(a) Arbitration Agreement; Waiver of Right to Jury Trial. The
Agreement contains an arbitration provision, governing law provision and waiver
of right to jury trial. In the event of any dispute arising out of or related to
this Amendment, the provisions of Section 9.12 of the Agreement shall apply.
(b) Voluntary Agreement. Borrower represents and warrants to Lender
that (i) it is, or has had the opportunity to be, represented by legal counsel
of its choice in regard to the transaction provided for by this Amendment and
that such counsel (if engaged) has explained the significance of the terms, and
the meaning and effect of this Amendment; (ii) it is fully aware and clearly
understands all of the terms and provisions contained in this Amendment; (iii)
it has voluntarily, with full knowledge and without coercion or duress of any
kind, entered into this Amendment and the documents executed in connection with
this Amendment; (iv) it is not relying on any representations, either written or
oral, express or implied, made to it by Lender other than as set forth in this
Amendment; and (v) the consideration received by Borrower to enter into this
Amendment and the arrangement contemplated by this Amendment has been actual and
adequate.
(c) Entire Agreement. This Amendment and the Loan Documents
constitute the entire agreement among the parties as to the agreements and
understandings contemplated by this Amendment. All parties to this Amendment
acknowledge that there are no agreements, understandings, warranties or
representations among the parties except as set forth in the Loan Documents and
this Amendment.
(d) Counterpart Execution. This Amendment may be executed in
counterparts, each of which shall be deemed an original document, and all of
which combined shall constitute a single document.
(e) Waiver. Neither this Amendment nor any of the provisions hereof
may be changed, waived, discharged or terminated, except by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
(f) Headings. Paragraph or other headings contained in this
Amendment are for reference purposes only and are not intended to affect in any
way the meaning or interpretation of this Amendment.
(g) Severability. If any clause or provision of this Amendment is
determined to be illegal, invalid, or unenforceable under any present or future
law by the final judgment of a court of competent jurisdiction, such clause or
provision shall be ineffective, but the remainder of this Amendment will not be
affected thereby.
(h) Binding Effect. All of the provisions of this Amendment shall be
binding upon and shall inure to the benefit of Borrower and Lender and their
permitted successors and
assigns, including, without limitation, any successor holder of any Note and any
successor mortgagee/beneficiary under any security document.
(i) Time of the Essence. Time is of the essence of each and every
provision under this Amendment.
(j) Amendment. Except as specifically set forth herein, the
Agreement and the other Loan Documents shall remain in full force and effect. In
the event of a conflict between the terms and provisions of this Amendment and
the terms and provisions of the Agreement, the terms and provisions of this
Amendment shall govern and control. Nothing contained in this Amendment is
intended to or shall be construed as relieving any person or entity, whether a
party to this Amendment or not, of any of such person's or entity's obligations
to Lender.
[THE REMAINDER OF THIS PAGE
IS LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, this Amendment is executed to be effective as of the
date first above written.
BORROWER:
MEDICIS PHARMACEUTICAL CORPORATION,
a Delaware corporation
By: /s/ Mark A. Prygocki, Sr.
-------------------------------------------
Name: Mark A. Prygocki, Sr.
Title: Executive Vice President and Chief
Financial Officer
Execution Date: MARCH 6, 2003
LENDER:
WELLS FARGO BANK ARIZONA, NATIONAL
ASSOCIATION, a national banking association
By: /s/ Tim Billings
-------------------------------------------
Name: Tim Billings
Title: Vice president
Execution Date: February, 2003
EXHIBIT 10.102
[THE OMITTED PORTIONS INDICATED BY AN ASTERISK HAVE BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.]
SUPPLY AGREEMENT
This Supply Agreement (this "AGREEMENT") is entered into this 15th
day of July, 2004 between Medicis Aesthetics Holdings Inc., a corporation
organized under the laws of the State of Delaware ("MEDICIS"), and a
wholly-owned subsidiary of Medicis Pharmaceutical Corporation, a corporation
organized under the laws of the State of Delaware ("MEDICIS PHARMACEUTICAL"),
and Q-Med AB, a company organized under the laws of the Kingdom of Sweden with
corporate registration number 556258-6882 ("Q-MED").
RECITALS
WHEREAS, Medicis has been granted, pursuant to the License Agreement
(as defined herein), a license under the Licensed Rights (as defined herein)
without a right to manufacture or have manufactured, the Licensed Products in
the Territory (as defined herein);
WHEREAS, in connection with entering into such License Agreement,
Q-Med has agreed to supply Medicis and its Affiliates (as defined herein) with
the Licensed Products and Medicis has the right to sublicense immediately to
Medicis' Permitted Transferees (as defined in the License Agreement) its rights
under the Licensed Rights pursuant to the License Agreement; and
WHEREAS, Q-Med and Medicis desire to define their respective rights
and obligations with regard to the supply of the Licensed Products in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
"ACTION" shall mean any action, claim, suit, litigation,
arbitration, investigation, notification, audit or other proceeding brought in
law or at equity by a Governmental Authority or other Person.
"ACTUAL ASP" shall have the meaning given to such term in Section
4.1(b).
"ADVERTISING" shall mean printed or descriptive matter not
classified by the FDA as labeling (e.g., promotional material airing on
television and radio or appearing in journals, magazines and newspapers).
"ADVERTISING IN CANADA" shall mean printed or descriptive matter not
classified by the TPD as labeling (e.g., promotional material airing on
television and radio or appearing in journals, magazines and newspapers).
"AESTHETIC ENHANCEMENT" shall mean the alteration of the visual
appearance, visual form, visual size, or visual shape of the naked human body or
any of its components; provided, that Aesthetic Enhancement shall not be deemed
to include modification of the functions, restoration of the functions,
adjustment of the functions or correction of the functions of the human body or
any of its component parts.
"AFFILIATE" of a Person shall mean, with respect to any Person, any
other Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. As
used in this definition, the term "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract, or otherwise.
"AGREEMENT" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"AMENDED MEDICAL DEVICE LICENSE" shall mean a license issued by the
TPD approving an Amended Medical Device License Application and allowing
Commercial Distribution of a Licensed Product in Canada.
"AMENDED MEDICAL DEVICE LICENSE APPLICATION" shall mean an
application amending an approved Medical Device License and requesting TPD's
approval to Commercially Distribute a Licensed Product reflecting any change or
supplement to the Medical Device License which is required or permitted to be
made pursuant to Canada's FDA and/or regulations made thereunder or other TPD
policies or guidelines, including all information submitted with or incorporated
by reference therein.
"AMENDED MEDICAL DEVICE LICENSE APPROVAL" shall mean TPD's approval
of an Amended Medical Device License.
"AVERAGE SELLING PRICE" shall mean in U.S. dollars the Net Revenues
for a given period divided by the number of units sold of a Licensed Product for
such given period.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banks in Sweden or New York are authorized or obligated by Law or
executive order to remain closed.
"CANADA'S FDA" shall mean Canada's Food and Drugs Act, R.S.C. 1985,
c. F-27, as amended.
"CHANGE IN CONTROL" shall mean (a) the disposition of all or
substantially all of the outstanding shares, assets or business of a Party or
Medicis Pharmaceutical on a consolidated basis; or (b) any transaction or event
(or series of transactions or events) as a result of which any Person (other
than an Affiliate of such Party or Medicis Pharmaceutical), acting singly or as
a
2
part of a "partnership, limited partnership, syndicate or group" (within the
meaning of Section 13(d)(3) of the United States Securities Exchange Act of
1934, as amended): (i) acquires (by purchase, merger, consolidation or
otherwise) or for the first time controls or is able to vote (directly or
through nominees, beneficial ownership, proxy or contract) fifty percent (50%)
or more of the aggregate of all outstanding equity securities of a Party or
Medicis Pharmaceutical; or (ii) acquires (by purchase, merger, consolidation or
otherwise) equity securities of a Party or Medicis Pharmaceutical with the right
to or for the first time is otherwise able to, nominate or designate (directly
or through nominees, beneficial ownership, proxy or contract) at least fifty
percent (50%) of the nominees to the board of directors of such Party or Medicis
Pharmaceutical, in each of (a) or (b), in the event that Q-Med, Medicis or
Medicis Pharmaceutical, as the case may be, was not a party to the applicable
transaction and/or such transaction was not approved by the Board of Directors
of Q-Med, Medicis or Medicis Pharmaceutical, as the case may be.
"CLOSING" shall have the meaning set forth in the License Agreement.
"CLOSING DATE" shall mean the date of the Closing of the
transactions contemplated by the License Agreement.
"COMMERCIAL DISTRIBUTION" shall mean a distribution in accordance
with the terms and conditions of the Transaction Agreements for all purposes
other than Investigational Distribution.
"CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality
Undertaking, dated as of March 29, 2004 between Q-Med and Medicis
Pharmaceutical, as the same may be amended from time to time in accordance with
its terms, which shall supercede and replace in its entirety any and all
confidentiality agreements or arrangements entered into prior to the date hereof
by the Parties or their respective officers, directors, employees, agents,
consultants or representatives with respect to the transactions contemplated by
the Transaction Agreements other than the Mutual Disclosure and Confidentiality
Agreement, dated September 15, 1999, between Medicis Pharmaceutical and Q-Med,
which shall continue in full force and effect in accordance with its terms.
"COST OF PRODUCTION" shall mean the production cost for producing
one unit, the calculation done once a year, calculations based on an Activity
Based Costing (ABC) model, using the information in the budget of Q-Med. Such
amount excludes the allocation of administrative costs not related to the
production. Related production variances will be determined by Q-Med subsequent
to the end of the calendar year and will be billed or credited to future orders
placed by Medicis.
"DIRECT COSTS" shall mean Cost of Production and Overhead plus any
additional direct costs applicable to providing Licensed Products for
Investigational Distribution.
"FCA" shall mean FCA as defined in the International Chamber of
Commerce Incoterms 2000.
"FDA" shall mean the United States Food and Drug Administration.
3
"FDCA" shall mean the United States Federal Food, Drug, and Cosmetic
Act of 1938, as amended (21 U.S.C. Sections 301 et. seq.).
"FIELD" shall mean Aesthetic Enhancement.
"FIRM ORDER" shall mean a written irrevocable firm purchase order
for the Licensed Products, which order shall set forth (i) the Licensed Product
requirement on a monthly basis for a three (3) month period and (ii) shall
include a delivery schedule specifying the monthly delivery date for each
Licensed Product ordered and the location to which shipment of such Licensed
Product is to be delivered by Q-Med.
"GOVERNMENTAL AUTHORITY" shall mean any supranational, national,
federal, state, provincial or local judicial, legislative, executive or
regulatory authority.
"GUARANTEE" shall mean the guarantee dated as of the Closing Date
from Medicis Pharmaceutical to Q-Med.
"IDE APPLICATION" shall mean an investigational device exemption
application requesting FDA or TPD approval to distribute an investigational
device for clinical study, pursuant to the requirements of 21 C.F.R. Part 812
and Part 3 of the Canadian Medical Device Regulations SOR/98-282 as amended.
"IDE APPROVAL" shall mean FDA's approval of an IDE Application or an
IDE deemed approved pursuant to the requirements set forth in 21 C.F.R. Part 812
permitting distribution of an investigational product.
"IDE CANADA APPROVAL" shall mean TPD permission to distribute an
investigational device for clinical study, pursuant to the provisions of Part 3
of the Canadian Medical Device Regulations SOR/98-282, as amended.
"IDE SUPPLEMENT" shall mean an IDE supplement application requesting
approval for changes in the investigational plan, clinical protocol, or
developmental or manufacturing changes pursuant to the requirements of 21 C.F.R.
Part 812.
"IDE SUPPLEMENT APPROVAL" shall mean FDA's approval of an IDE
Supplement.
"IMPROVEMENTS" shall mean any replacements, improvements or
modifications, including without limitation, new indications or new uses, in
each case in the Field.
"INVESTIGATIONAL DISTRIBUTION" shall mean distribution in accordance
with the terms and conditions of the Transaction Agreements pursuant to the
requirements of 21 C.F.R. Part 812 in the United States and Part 3 of the
Canadian Medical Device Regulations SOR/98-282 in Canada.
"LABELING" shall mean all labels and other written, printed or
graphic material upon any Licensed Product or any of its containers or wrappers
accompanying such Licensed Product (e.g., instructions sheets, package inserts).
4
"LAUNCH" of a Licensed Product shall mean the first offer for sale
of the Licensed Product to the trade.
"LAWS" shall mean all applicable laws, statutes, rules, regulations,
ordinances and other pronouncements of law of any Governmental Authority.
"LICENSE AGREEMENT" shall mean the Intellectual Property License
Agreement, dated as of the date hereof, between Medicis and Q-Med.
"LICENSED KNOW-HOW" shall have the meaning given to such term in the
License Agreement.
* * *
"LICENSED REGULATORY DATA" shall have the meaning given to such term
in the License Agreement.
"LICENSED RIGHTS" shall have the meaning set forth in the License
Agreement.
"LICENSEE REGULATORY MATERIALS" shall have the meaning given to such
term in the License Agreement.
"LOSS" or "LOSSES" shall mean any and all damages, fines, fees,
penalties, deficiencies, losses and expenses, including reasonable legal fees
and expenses, but excluding loss of profits or other special, punitive or
consequential damages (except as set forth in Sections 9.1(c) and 9.2(b)).
"MACROLANE SIDE LETTER" shall mean that certain letter from Medicis
to Q-Med, dated as of the Closing Date.
"MANUFACTURE", "MANUFACTURED" or "MANUFACTURING" shall mean
manufacture, process, test, assemble, fill, label and package and shall also
include the performance of any activity that would render an entity a
"manufacturer" under 21 C.F.R. Sections 803.3(o) and 820.3(o).
"MANUFACTURING DIRECT COSTS" shall mean Cost of Production, Overhead
and Profit.
"MEDICAL DEVICE DIRECTIVE" shall mean the European Council Directive
concerning Medical Devices, 93/42/EEC (OJ No L 169/1, July 12, 1993), as
amended.
"MEDICAL DEVICE LICENSE" shall mean a medical device license issued
by the TPD and approving the Commercial Distribution of a Licensed Product.
"MEDICAL DEVICE LICENSE APPLICATION" shall mean a medical device
license application requesting TPD's approval to commercially distribute a
Licensed Product, including all information submitted with or incorporated by
reference therein.
5
"MEDICAL DEVICE LICENSE APPROVAL" shall mean TPD's approval of a
Medical Device License Application.
"MILESTONE PAYMENTS" shall have the meaning given to such term in
the License Agreement.
"NET REVENUES" shall mean, with respect to any Licensed Product, the
gross sales of such Licensed Product invoiced by Medicis and/or its Affiliates
to Medicis' and/or its Affiliates' customers who are not Affiliates, less, to
the extent actually paid or accrued net of payments by Medicis and/or its
Affiliates (as applicable), (a) normal and customary credits, allowances,
discounts and rebates to, and chargebacks from the account of, such customers
for spoiled, damaged, out-dated and returned Licensed Product; (b) normal and
customary freight and insurance costs incurred in transporting such Licensed
Product to and from such customers; (c) normal and customary cash, quantity and
trade discounts, rebates and other price reductions or special programs for such
Licensed Product; and (d) excise, sales, use, value-added and other direct taxes
(but not income taxes of any kind) imposed upon the sale of such Licensed
Product to such customers. For avoidance of doubt, Medicis shall calculate Net
Revenues for purposes of this Agreement according to U.S. generally accepted
accounting principles applied on a consistent basis and in a manner consistent
with Medicis Pharmaceutical's calculations of consolidated net revenues and
consistent with the numbers used to consolidate net revenues reported in Medicis
Pharmaceutical's periodic reports with the United States Securities and Exchange
Commission.
"NOTIFIED BODY" shall mean the certification organization designated
by the relevant national authority of any member of the European Union,
authorized to conduct conformity assessments in accordance with the procedures
listed in the Medical Device Directive.
"ONE TIME PAYMENTS" shall have the meaning given to such term in the
License Agreement.
"ORDERED PRODUCTS" shall mean the Licensed Products ordered pursuant
to a Firm Order.
"OVERHEAD" shall mean as to the Licensed Product in the Territory
allocated, yearly sum, including the costs for maintenance of the quality
system, interest if any, related solely to loans on production facilities,
process development and production development, such yearly sum based on the
budget of Q-Med, and allocated to the number of units of Licensed Products.
"PARTY" shall mean Q-Med or Medicis and, when used in the plural,
means both Q-Med and Medicis or their respective Permitted Transferees or Third
Party transferees, in each case upon the consummation of a Transfer in
accordance with the terms and conditions herein.
"PERSON" shall mean any individual, firm, corporation, partnership,
limited liability company, trust, joint venture or other entity or organization.
6
"PMA APPLICATION" shall mean a premarket approval application under
section 515(c) of the FDCA requesting FDA's approval to commercially sell and
distribute a Licensed Product in the United States and its territories and
possessions, including all information submitted with or incorporated by
reference therein.
"PMA APPROVAL" shall mean approval from the FDA of a PMA
Application.
"PMA SUPPLEMENT" shall mean a supplemental application to an
approved PMA Application requesting FDA's approval of a Licensed Product or
relating to the Manufacture or Labeling thereof, including all information
submitted with or incorporated by reference therein.
"PMA SUPPLEMENT APPROVAL" shall mean FDA's approval of a PMA
Supplement allowing Commercial Distribution of a Licensed Product.
"PPI" shall mean the Producer Price Index as published by the
Statistical Central Bureau of Sweden.
"PREVIOUS LICENSE LETTER AGREEMENT" shall mean that certain letter
from Medicis Pharmaceutical to Q-Med, dated as of the Closing Date, relating to
the Previous License Agreement (as such term is defined in the License
Agreement).
"PRIOR SUPPLY AGREEMENT" shall mean that certain Supply Agreement
dated March 7, 2003, between Medicis Pharmaceutical and Q-Med, as the same may
be amended from time to time in accordance with its terms.
"PRODUCT CLAIM" shall mean an Action by a Third Party in respect of
potential or actual injury, harm or death whether based in strict tort
liability, strict products liability, negligence, misrepresentation, or breach
of express or implied warranty, allegedly due and owing as a result of the
manufacture, use, application or defective condition of any of the Licensed
Products or the Labeling of any of the Licensed Products.
"PROFIT" shall mean an amount per unit of a Licensed Product equal
to the amount of Cost of Production per unit.
"PROMOTIONAL LABELING" shall mean a subset of Labeling that is
intended as marketing material that is intended to promote Licensed Products
(e.g., customer presentations, detailing pieces, press kits, brochures, trade
show presentations, flyers, booklets, mailing pieces, and "Dear Doctor"
letters); provided, however, that excluded from this definition are written
materials or communications intended for a non-customer audience (e.g., United
States Securities Exchange Commission filings and press releases for the
financial community), price sheets and reminder labeling that sets forth the
product name but not the indications or other use information as defined in 21
C.F.R. Section 801.109(d).
"QUALITY SYSTEM REGULATION" or "QSR" shall mean the quality system
requirements applicable to manufacturers of finished medical devices
commercially distributed in the United States and its territories and
possessions, codified at 21 C.F.R. Part 820.
7
"QUALITY SYSTEM REGULATION CANADA" or "QSRC" shall mean the quality
system requirements applicable to manufacturers of medical devices commercially
distributed in Canada, as set forth in Canada's Medical Devices Regulations,
SOR/98-282, as amended.
"REGULATORY APPROVAL" shall mean a PMA Approval, PMA Supplement
Approval, IDE Approval, IDE Canada Approval, Medical Device License Approval
and/or Amended Medical Device License Approval.
"SEK" shall mean Swedish Krona, the currency currently used in
Sweden or the Euro if the Euro is adopted as the official currency used in
Sweden at the official exchange rate.
"SPECIFICATIONS" shall mean the specifications for each of the
Licensed Products as set forth on Schedule A; provided that all amendments
thereof shall be agreed to in a writing signed by both of the Parties.
"STEERING COMMITTEE" shall mean the Steering Committee already
established pursuant to the Prior Supply Agreement. It shall have all the same
membership, voting, delegation, and deadlock resolution procedures and
requirements, except that it shall not use the "most interested party" procedure
in connection with this Agreement. For convenience, a copy of these provisions
are attached in Schedule B to this Agreement. In the event of a conflict between
the provisions of Article VI hereof and Schedule B, Article VI shall control.
"SUBQ" shall mean the first Licensed Product.
"TERM" shall have the meaning set forth in Section 8.1.
"TERRITORY" shall mean the United States, including its territories
and possessions, and Canada.
"TERRITORY SPECIFIC MATERIALS" shall have the meaning given to such
term in the License Agreement.
"THIRD PARTY" shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.
"TPD" shall mean Canada's Therapeutic Products Directorate.
"TRANSACTION AGREEMENTS" shall mean this Agreement, the License
Agreement, the Macrolane Side Letter, the Previous License Letter Agreement, the
Guarantee and the Confidentiality Agreement.
"TRANSFER" shall mean any Change in Control or Volitional Change in
Control of a Party or Medicis Pharmaceutical or a transfer or assignment by a
Party of its rights and obligations under this Agreement.
"VOLITIONAL CHANGE IN CONTROL" shall mean (a) the disposition of all
or substantially all of the outstanding shares, assets or business of a Party or
Medicis Pharmaceutical on a consolidated basis; or (b) any transaction or event
(or series of transactions
8
or events) as a result of which any Person (other than an Affiliate of such
Party or Medicis Pharmaceutical), acting singly or as a part of a "partnership,
limited partnership, syndicate or group" (within the meaning of Section 13(d)(3)
of the United States Securities Exchange Act of 1934, as amended): (i) acquires
(by purchase, merger, consolidation or otherwise) or for the first time controls
or is able to vote (directly or through nominees, beneficial ownership, proxy or
contract) fifty percent (50%) or more of the aggregate of all outstanding equity
securities of a Party or Medicis Pharmaceutical; or (ii) acquires (by purchase,
merger, consolidation or otherwise) equity securities of a Party or Medicis
Pharmaceutical with the right to or for the first time is otherwise able to,
nominate or designate (directly or through nominees, beneficial ownership, proxy
or contract) at least fifty percent (50%) of the nominees to the board of
directors of such Party or Medicis Pharmaceutical, in each of (a) or (b),in the
event that Q-Med, Medicis or Medicis Pharmaceutical, as the case may be, was a
party to the applicable transaction or of which the Board of Directors of Q-Med,
Medicis or Medicis Pharmaceutical, as the case may be, shall have approved.
1.2 Other Definitional Provisions.
(a) The words "HEREOF", "HEREIN", "HERETO" and "HEREUNDER" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement unless otherwise
indicated.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The term "INCLUDING" shall mean "INCLUDING, WITHOUT LIMITATION".
(d) When a reference is made in this Agreement to an Article, a
Section or Schedule, such reference shall be to an Article of, a Section of or a
Schedule to, this Agreement unless otherwise indicated.
ARTICLE II
SUPPLY OF LICENSED PRODUCTS; FORECASTS AND PURCHASE ORDERS
2.1 Licensed Products to be Supplied. Medicis shall, and shall cause
its Affiliates to, purchase from Q-Med or any manufacturer designated by Q-Med
as permitted by the terms of this Agreement, and Q-Med shall sell, and shall
cause to have sold, to Medicis and its Affiliates, except as otherwise provided
herein, all of Medicis' and its Affiliates' requirements for the Licensed
Products during the Term as provided herein for marketing, use, import, offer
for sale, commercializing or otherwise disposing of and sale for Commercial
Distribution and Investigational Distribution in the Territory in accordance
with the terms of the Transaction Agreements. Medicis shall, and agrees to cause
its Affiliates to, solely and exclusively purchase the Licensed Products from
Q-Med or any manufacturer designated by Q-Med, and neither Medicis nor any of
its Affiliates shall have the right to purchase any Licensed Product or any
generic version thereof from, directly or indirectly, any other Person.
2.2 Forecasts. (a) With respect to all Licensed Products to be
supplied for Commercial Distribution and Investigational Distribution in the
Territory, including any
9
portion thereof, Medicis shall provide Q-Med with a forecast of Medicis' and its
Affiliate's estimated monthly requirements of the applicable Licensed Products
(with Licensed Products required for Commercial Distribution and Licensed
Products required for Investigational Distribution being reported as separate
line items) for the twelve (12) month period commencing on the date hereof in
substantially the form attached hereto as Schedule C, which forecast shall be
delivered by Medicis to Q-Med within fourteen (14) calendar days of the date
hereof. Medicis shall update such forecast on a monthly basis until such time as
Medicis is providing forecasts and placing Firm Orders pursuant to Section
2.2(b). Such updates shall be delivered to Q-Med on the fifth (5th) Business Day
prior to the commencement of the subsequent month. In addition, until such time
as Medicis is providing forecasts and placing Firm Orders pursuant to Section
2.2(b), Medicis may provide Q-Med with three (3) separate initial Firm Orders
for Licensed Products (one for Investigational Distribution in the Territory,
one for Commercial Distribution in Canada and one for Commercial Distribution in
the United States) at any time; provided that (i) Q-Med shall not be obligated
to supply Licensed Products in accordance with each such initial Firm Order
prior to the later of ten (10) weeks after (A) the date on which Medicis
provides Q-Med with such initial Firm Order or (B) the date that Medicis
provides the approved Labeling with respect to such initial Firm Order,
provided, that Q-Med shall use commercially reasonable efforts to supply such
Licensed Products in less than ten (10) weeks; (ii) Q-Med shall not be obligated
to supply Licensed Products in accordance with each such initial Firm Order
unless Medicis has made all applicable One Time Payments and Milestone Payments
then due under the terms of the License Agreement, including Section 8.5
thereof; (iii) if Medicis, by placing an initial Firm Order prior to receipt of
the applicable Regulatory Approval for such Licensed Products, requests that
Q-Med commence the Manufacture of any Licensed Products prior to the receipt of
the applicable Regulatory Approval for such Licensed Products, Medicis shall
bear any risks, including without limitation additional direct (which shall be
deemed to include labor) costs and expenses, of any changes required, including,
without limitation, any changes in Labeling, to comply with such Regulatory
Approvals subsequently received and in such event, Q-Med shall then commence
such Manufacture as so requested; (iv) with respect to SubQ, Q-Med shall not be
obligated to supply, in excess of * * * pursuant to each such initial Firm
Order; and (v) with respect to all other Licensed Products, Q-Med shall advise
Medicis of the maximum number of syringes that it may be obligated to deliver
pursuant to the applicable initial Firm Order within five (5) Business Days of
the date of such Initial Firm Order.
(b) Except as provided in Section 2.2(a), on or before the fifth
(5th) Business Day prior to the first day of each calendar month, Medicis shall
give to Q-Med a forecast of Medicis' and its Affiliates' estimated monthly
requirements of the Licensed Products for the twelve (12) month period
commencing with the next succeeding calendar month (for example, a forecast
delivered on May 25 shall estimate the monthly requirements of Licensed Products
for the twelve (12) month period commencing July 1). The twelve (12) month
forecast delivered to Q-Med pursuant to the preceding sentence shall represent
Medicis' reasonable estimates of the quantity of the Licensed Products that
Medicis and its Affiliates will require during such twelve (12) month period to
which such forecast applies, and the forecast of its monthly requirements of the
Licensed Products during the first three (3) months of such twelve (12) month
period shall be reflected in a Firm Order accompanying such forecast.
(c) Notwithstanding the foregoing, any Firm Order for any Licensed
Product placed for a one (1) month period in accordance with Section 2.2(b)
shall be between 80% and
10
120% of the most recent forecast estimated quantity for such Licensed Product
for such one (1) month period provided by Medicis to Q-Med in accordance with
this Section 2.2 prior to the Firm Order being placed by Medicis. In the event
that Medicis shall submit a Firm Order that is below 80% of the applicable
forecast estimated quantity, Q-Med shall deliver to Medicis and Medicis shall be
required to purchase an amount equal to 80% of such applicable forecast
estimated quantity. To the extent that the Firm Order is for more than 120% of
the most recent forecast estimated quantity for a Licensed Product, Q-Med shall
not be obligated with respect to the excess over 120% to supply a greater
quantity than it is able to supply using its commercially reasonable efforts.
(d) In addition to the foregoing forecast requirements, commencing
on the date hereof, on or before the fifth (5th) Business Day prior to the first
day of each calendar quarter, Medicis shall give to Q-Med a forecast of Medicis'
and its Affiliate's estimated quarterly requirements of the Licensed Products
for an additional thirty-six (36) month period beyond the twelve (12) month
periods in Section 2.2(a) and (b). The thirty-six (36) month forecast delivered
to Q-Med pursuant to this clause (d) shall represent Medicis' reasonable
estimates of the quantity of the Licensed Products that Medicis and its
Affiliates will require during such period to which such forecast applies,
provided that such forecast shall be for planning purposes of Q-Med only and
shall not constitute a Firm Order.
(e) All forecasts to be provided or delivered by Medicis to Q-Med
pursuant to this Section 2.2 shall be in writing, which may be electronic.
2.3 Capacity. (a) Q-Med shall use its commercially reasonable
efforts to obtain and maintain capacity or inventory sufficient to meet Medicis'
requirements as indicated in the combined forty-eight (48) month forecast
provided to Q-Med in accordance with Section 2.2(b) and (d). If at any time
Q-Med reasonably believes that Q-Med may not have sufficient capacity or
inventory to fulfill the requirements so forecasted by Medicis (a "CAPACITY
SHORTAGE"), whether due to insufficient manufacturing capacity or otherwise,
then Q-Med shall request written confirmation from Medicis' Chief Executive
Officer of Medicis' forecasted requirements for such forty-eight (48) month
period that give rise to such possible Capacity Shortage (the "CERTIFIED MEDICIS
REQUIREMENTS").
(b) (i) If Q-Med reasonably determines after further consideration
in light of such Certified Medicis Requirements that there will be a
Capacity Shortage within the first twenty-four (24) month period covered
by such Certified Medicis Requirements, Q-Med shall provide Medicis with
notice thereof within five (5) Business Days of receipt of the Certified
Medicis Requirements. If Q-Med has a plan of action with respect to such
Capacity Shortage when it delivers such notice, Q-Med shall provide
Medicis with a written outline of such plan and its reasonably supported
conclusions relating thereto. Q-Med may take prompt action with respect to
such plan or, if Q-Med desires, Q-Med may promptly convene a meeting
between Medicis and Q-Med to discuss such plan. If Q-Med has not developed
a plan of action at the time of its notice to Medicis of the Capacity
Shortage, Q-Med shall promptly convene a meeting between Medicis and Q-Med
to develop in mutual consultation a course of action with respect to such
Capacity Shortage, such course of action to be reasonable. As soon as
practicable after such meeting, Q-Med shall take commercially reasonable
steps to carry out such mutually
11
determined plan of action. Q-Med shall be entitled to call a meeting at
any time to discuss the amendment or revision of such mutually agreed plan
of action. If Q-Med has not taken reasonably sufficient steps towards
implementing the plan within one (1) month of the meeting, then Q-Med
shall promptly furnish to an alternate manufacturer identified by Medicis
with capacity sufficient to fulfill that portion of the Certified Medicis
Requirements that Q-Med is unable to fulfill or, if the Certified Medicis
Requirements are no longer applicable, the then current forecast provided
under Section 2.2(b), all information and assistance necessary to qualify
and operate such alternate manufacturer so proposed by Medicis, the
selection of which shall be subject to Q-Med's prior consent, which
consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, promptly upon notice by Q-Med that such Capacity Shortage has
been remedied such that Q-Med has capacity sufficient to meet that portion
of the Certified Medicis Requirements that Q-Med was unable to fulfill or
if the Certified Medicis Requirements are no longer applicable, the then
current forecast provided under Section 2.2(b), Medicis shall resume, as
promptly as is commercially reasonable, the use of Q-Med as the exclusive
supplier of Medicis and its Affiliates.
(ii) If Q-Med determines after further consideration in light of
such Certified Medicis Requirements that there will be a Capacity Shortage
between the twenty-fifth (25th) and thirty-sixth (36th) months of the
period covered by such Certified Medicis Requirements, Q-Med shall provide
Medicis with notice thereof within ten (10) Business Days of its receipt
of the Certified Medicis Requirements and shall further consider such
Capacity Shortage and shall develop a plan of action with respect thereto.
If, within three (3) months after delivery of such Certified Medicis
Requirements, Q-Med believes that there is no Capacity Shortage, Q-Med
shall so inform Medicis in writing. If, within three (3) months after
delivery of such Certified Medicis Requirements, Q-Med believes that there
is a Capacity Shortage and Q-Med has developed a plan of action with
respect thereto, Q-Med shall inform Medicis in writing of such plan of
action. If, within three (3) months after delivery of such Certified
Medicis Requirements, Q-Med has not developed a plan of action and/or
taken action with respect to such Capacity Shortage, Q-Med shall convene a
meeting between representatives of Q-Med and Medicis to consider the
Capacity Shortage and to develop in mutual consultation an appropriate
plan of action with respect thereto, such course of action to be
reasonable. As soon as practicable after Q-Med and Medicis have developed
a plan of action with respect to the Capacity Shortage, Q-Med shall take
commercially reasonable steps to carry out such mutually determined plan
of action. Q-Med shall be entitled to call a meeting at any time to
discuss the amendment or revision of such mutually agreed plan of action.
If Q-Med has not taken reasonably sufficient steps in accordance with such
mutually determined plan of action, Medicis shall deliver a written notice
thereof. Within ten (10) Business Days of its receipt of such notice,
Q-Med shall provide reasonably sufficient evidence demonstrating its
reasonable compliance with such plan. If Q-Med does not provide reasonably
sufficient evidence within such period, then Q-Med shall promptly furnish
to an alternate manufacturer identified by Medicis with capacity
sufficient to fulfill that portion of the Certified Medicis Requirements
that Q-Med is unable to fulfill or, if the Certified Medicis Requirements
are no longer applicable, the then current forecast provided under Section
2.2(b), all information and assistance necessary to qualify and operate
such alternate manufacturer so proposed by Medicis, the selection of which
shall
12
be subject to Q-Med's prior consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, promptly
upon notice by Q-Med that such Capacity Shortage has been remedied such
that Q-Med has capacity sufficient to meet that portion of the Certified
Medicis Requirements that Q-Med was unable to fulfill or, if the Certified
Medicis Requirements are no longer applicable, the then current forecast
provided under Section 2.2(b), Medicis shall resume, as promptly as is
commercially reasonable, the use of Q-Med as the exclusive supplier of
Medicis and its Affiliates.
(iii) If Q-Med determines after further consideration in light of
such Certified Medicis Requirements that there will be a Capacity Shortage
after the thirty-seventh (37th) month of the period covered by such
Certified Medicis Requirements, Q-Med shall provide Medicis with notice
thereof within ten (10) Business Days of its receipt of the Certified
Medicis Requirements and shall further consider such Capacity Shortage and
shall develop a plan of action with respect thereto. If, within six (6)
months after delivery of such Certified Medicis Requirements, Q-Med
believes that there is no Capacity Shortage, Q-Med shall so inform Medicis
in writing. If, within six (6) months after delivery of such Certified
Medicis Requirements, Q-Med believes that there is a Capacity Shortage and
Q-Med has developed a plan of action with respect thereto during such
period, Q-Med shall inform Medicis in writing of such plan of action. If,
within six (6) months after delivery of such Certified Medicis
Requirements, Q-Med has not developed a plan of action and/or taken action
with respect to such Capacity Shortage, Q-Med shall convene a meeting
between representatives of Q-Med and Medicis to consider the Capacity
Shortage and to develop in mutual consultation an appropriate plan of
action with respect thereto, such course of action to be reasonable. As
soon as practicable after Q-Med and Medicis have developed a plan of
action with respect to the Capacity Shortage, Q-Med shall take
commercially reasonable steps to carry out such mutually determined plan
of action. Q-Med shall be entitled to call a meeting at any time to
discuss the amendment or revision of such mutually agreed plan of action.
If Q-Med has not taken reasonably sufficient steps in accordance with such
mutually determined plan of action, Medicis shall deliver a written notice
thereof. Within ten (10) Business Days of its receipt of such notice,
Q-Med shall provide reasonably sufficient evidence demonstrating its
reasonable compliance with such plan. If Q-Med does not provide reasonably
sufficient evidence within such period, then Q-Med shall promptly furnish
to an alternate manufacturer identified by Medicis with capacity
sufficient to fulfill that portion of the Certified Medicis Requirements
that Q-Med is unable to fulfill or, if the Certified Medicis Requirements
are no longer applicable, the then current forecast provided under Section
2.2(b), all information and assistance necessary to qualify and operate
such alternate manufacturer so proposed by Medicis, the selection of which
shall be subject to Q-Med's prior consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, promptly
upon notice by Q-Med that such Capacity Shortage has been remedied such
that Q-Med has capacity sufficient to meet that portion of the Certified
Medicis Requirements that Q-Med was unable to fulfill or, if the Certified
Medicis Requirements are no longer applicable, the then current forecast
provided under Section 2.2(b), Medicis shall resume, as promptly as is
commercially reasonable, the use of Q-Med as the exclusive supplier of
Medicis and its Affiliates.
13
(c) In addition to the requirements set forth in clauses (a) and (b)
above, in the event of a Capacity Shortage, Q-Med shall allocate to Medicis
capacity for each stock keeping unit ("SKU") of each Licensed Product based on
the forty-eight (48) month forecast referenced in the first sentence of clause
(a) above based on a fraction, the numerator of which shall be the Certified
Medicis Requirements for such SKU of Licensed Product for the period in question
and the denominator of which shall be the total forecasted requirements for
Q-Med's manufacturing facilities for all SKUs of such Licensed Product for the
period in question.
(d) If Medicis receives a shipment of Licensed Products that
contains less than 90% of the monthly requirement of Licensed Product to be
delivered pursuant to the applicable Firm Order and Q-Med does not deliver such
missing Licensed Product within one (1) month of Q-Med's receipt of a written
notice from Medicis of such shortage, then Medicis shall be entitled to deliver
written notice to Q-Med of a Capacity Shortage. Upon deliver of such notice of a
Capacity Shortage, Section 2.3(b)(i) shall govern.
2.4 Acceptance of Firm Order. Q-Med shall accept all Firm Orders
submitted in accordance with and on the terms set forth in this Agreement. No
terms and conditions contained in any Firm Order, acknowledgment, invoice, bill
of lading, acceptance or other preprinted form issued by either Party shall be
effective to the extent they are inconsistent with or modify the terms and
conditions contained herein.
2.5 Delivery. All Licensed Products sold pursuant to this Agreement
shall be delivered to not more than ten (10) distribution centers in the
Territory by the means designated by Medicis and shall be delivered FCA Q-Med's
place of manufacture or such other manufacturing facility as permitted under
this Agreement. For the avoidance of doubt, Q-Med shall be responsible for
coordinating the transportation with the carriers designated by Medicis for the
delivery of the Licensed Products and for providing all export and import
documentation with respect to such Licensed Products.
ARTICLE III
SUPPLY AND SERVICES CRITERIA
3.1 Certain Q-Med Obligations. All Licensed Products supplied
hereunder shall (i) be in finished form for Commercial Distribution or (ii) be
in an appropriate form for Investigational Distribution, and with respect to
each of sub-clauses (i) and (ii), shall be Manufactured by Q-Med in conformity
with the terms and conditions of this Agreement, the Specifications and the
applicable Regulatory Approval.
3.2 Shelf Life. (a) Unless otherwise agreed by the Parties in
writing and except as set forth in clause (b) below, Q-Med shall deliver to
Medicis Ordered Products with a remaining shelf life of not less than * * * from
the date of delivery to Medicis for Licensed Products having a Regulatory
Approval for shelf life (a "REGULATORY SHELF LIFE") equal to * * *; provided,
however, that in the event a Regulatory Shelf Life of any Licensed Product is
obtained which is greater than * * *, Q-Med shall deliver to Medicis Ordered
Products with a remaining shelf life not less than * * *. For example, if a
Licensed Product has a Regulatory Shelf Life of
14
* * *, then Q-Med shall deliver Ordered Products with a remaining shelf life of
not less than * * *.
(b) Unless otherwise agreed in writing by the Parties, for any
Licensed Product with a Regulatory Shelf Life that is less than * * *, Q-Med
shall deliver to Medicis Ordered Products with a minimum remaining shelf life
equal to the applicable * * *.
ARTICLE IV
CONSIDERATION
4.1 * * *. (a) * * *
(b) * * *
(c) The Parties agree that the SubQ Unit Price and each Other
Licensed Product Price for purposes of investigational supplies thereof during
the Term shall be the Direct Costs therefor.
4.2 Procedures for the Determination of A New SubQ Unit Price or New
Other Licensed Product Price. (a) * * * Fifteen (15) days following the date of
receipt of the Proposed Price Change Notice, the Party delivering the Proposed
Price Change Notice shall permit an independent certified public accounting firm
of nationally recognized standing, selected by the Party receiving the Proposed
Price Change Notice and reasonably acceptable to the other Party, at the expense
of the Party receiving the Proposed Price Change Notice, to have access during
normal business hours to such of the personnel and of the books and records of
Q-Med or Medicis, as the case may be, as may be reasonably necessary to verify
the accuracy of the information described in the Proposed Price Change Notice
and the compliance of the Proposed Price Change Notice to the requirements of
this Agreement including the definition of Manufacturing Direct Cost and the
other defined terms included therein. For the avoidance of doubt the accounting
firm shall have at least five (5) Business Days of such access. The accounting
firm shall disclose to Medicis or Q-Med, as the case may be, only whether the
information described in the Proposed Price Change Notice is accurate and the
specific details concerning discrepancies, if any. Each Party shall treat all
financial information subject to review under this Section 4.2 as Confidential
Supplier Information or Confidential Medicis Information, as the case may be,
and shall cause its accounting firm to retain all such financial information in
confidence. Thereafter, the Parties agree to negotiate a new SubQ Unit Price or
new Other Licensed Product Price, as the case may be, in accordance with Section
4.1 hereof, in good faith, such negotiations to commence within thirty (30) days
after the receipt of the Proposed Price Change Notice. If the Parties reach
agreement with respect to the applicable pricing within sixty (60) days after
receipt of the Proposed Price Change Notice, based on such agreement Medicis
shall receive a credit from or owe additional amounts to Q-Med retroactive to
the date of receipt of the Proposed Price Change Notice pursuant to this Section
4.2(a). * * *
(b) If the Parties are unable to reach agreement with respect to the
applicable pricing pursuant to Section 4.2(a) within sixty (60) days after
receipt of the Proposed Price Change Notice, an independent arbitrator mutually
appointed by the Parties and expert in
15
marketing and sales in the Territory shall be retained to determine the new SubQ
Unit Price or new Other Licensed Product Price, as the case may be, which shall
be determined on the basis of the Parties' Proposed Price Change Notice and
proposals submitted pursuant to this Section 4.2(b). The Parties shall each
submit one (1) proposal to the arbitrator who shall be required to select one
(1) of the submitted proposals, and the arbitrator shall not be entitled to
compromise between such proposals. The arbitrator's determination shall be made
within thirty (30) days of submission and shall be conclusive and binding upon
the Parties. With its proposal, each Party shall provide copies of those
portions of its books and records, any work papers, supporting documentation and
any other documentation supporting its proposal pursuant to this Section 4.2, as
it may determine; provided that such information and documentation shall be
provided to the other Party, except that the information and documentation
provided to the accounting firm pursuant to Section 4.2(a) hereof shall be
provided to the arbitrator, but shall not be provided to the other Party. The
arbitrator shall maintain the confidentiality of any information or
documentation it may receive pursuant to this Section 4.2(b) and shall not
disclose to the other Party the information and documentation provided to the
accounting firm pursuant to Section 4.2(a) hereof. All fees and expenses of the
arbitrator shall be paid by the Party whose proposal is not selected. Based on
the proposal which is selected, Medicis shall either receive a credit from or
owe additional amounts to Q-Med retroactive to the date of receipt of the
Proposed Price Change Notice.
(c) * * *
4.3 Payment Obligations. Invoices for Licensed Products accepted by
Medicis in accordance with Section 5.1(a) shall be submitted to Medicis upon
delivery by Q-Med of the Ordered Products and such invoices shall be payable in
SEK in full within thirty (30) days from the acceptance of the applicable
delivery in accordance with Section 5.1(a). Payment shall be made by Medicis by
wire transfer to an account designated in writing by Q-Med at least three (3)
Business Days prior to the date such payment is due or as specified in such
invoice; provided that Q-Med shall provide Medicis with a credit against the
next invoice for Licensed Products to be delivered to Medicis to the extent the
prior invoice includes a charge for Ordered Products not actually delivered. Any
required payment hereunder not made by Medicis on or before the date specified
in this Section 4.3 shall bear interest from the date such payment is due until
the date it is actually received by Q-Med at an annual rate equal to the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank
as its prime rate in effect on the date such payment is due at its principal
office in New York City plus one percent (1%). Notwithstanding the foregoing, if
at any time Medicis has failed to make a payment in full when due in accordance
with the first and second sentence of this Section 4.3 (a "DELINQUENT PAYMENT")
and the aggregate amount of such Delinquent Payments exceeds 80% of the value of
the most recently placed Firm Order, Q-Med shall automatically be entitled to
pre-payment for all subsequent deliveries until such Delinquent Payment has been
paid in full with interest from and including the date such Delinquent Payment
was due (such interest to be determined in accordance with the immediately
preceding sentence) to but excluding the date of payment.
16
ARTICLE V
ACCEPTANCE OF Licensed PRODUCTS BY MEDICIS
5.1 Receipt of Licensed Product; Acceptance; Licensed Product
Returns.
(a) At least ten (10) Business Days prior to each shipment of
Licensed Products, Q-Med shall deliver either electronically (if possible), by
facsimile, provided that the receipt of such facsimile is promptly confirmed by
telephone, e-mail, or by overnight courier to Medicis (if requested by Medicis,
the expense of any such courier to be borne by Medicis), the following documents
and information with respect to each batch in such shipment (the "ORDER
INFORMATION"): (i) Certificate of Analysis (such Certificate of Analysis to
include, among other things, batch numbers, expiry date information and a
statement of conformance), (ii) such copies of all Labeling that will physically
accompany the Licensed Products (e.g., Package Insert), as are agreed upon by
the Parties from time to time, (iii) quantity of syringes to be delivered in
such shipment and (iv) reports of significant deviations and investigations into
such significant deviations. If Medicis determines to reject any batch, Medicis
shall notify Q-Med of Medicis' rejection of a batch within five (5) Business
Days following Medicis' receipt of the Order Information; provided that the
Order Information shall be the sole basis for such rejection. If no notice is
provided by Medicis within such time period, then Medicis shall be deemed to
have accepted the shipment. Any notice of rejection by Medicis shall be
accompanied by a reasonably detailed statement of its reasons for rejection.
(b) Medicis shall be entitled to reject all or any portion of a
shipment of Licensed Products within ten (10) Business Days of Medicis' receipt
in the Territory of such shipment of Licensed Products based solely on obvious
physical, packaging or Labeling damage or defect that is evident upon visual
inspection of the packaged Licensed Products as shipped by Q-Med (unless such
obvious physical, packaging or Labeling damage or defect was attributable to an
act or omission of Medicis or any of its Affiliates or the carrier once the
shipment was received by such carrier). Without in any way limiting Q-Med's
replacement obligation as set forth in clause (d) below, if no notice is
provided by Medicis within such time period, then Medicis shall be deemed to
have accepted the entire shipment. Medicis shall provide Q-Med with written
notice of any such rejection within the period set forth above together with a
reasonably detailed statement to support any such rejection. Q-Med shall notify
Medicis as promptly as reasonably possible, but in any event within ten (10)
Business Days after receipt of such written notice, whether it agrees with
Medicis' assertions with respect thereto. If Q-Med agrees with such assertions,
all such rejected Licensed Products shall be returned to Q-Med together with the
notice of rejection, a copy of the delivery receipt and the reasonably detailed
statement of Medicis' reasons for rejection and Q-Med shall replace such
Licensed Products in accordance with Section 5.1(c) and shall reimburse Medicis
for the cost of shipping (including insurance). If Q-Med does not agree with
Medicis' assertions and Medicis accepts Q-Med's determination, then Medicis
shall be responsible for the price of the Licensed Product (including the
shipping cost and insurance). If Q-Med does not agree with Medicis' assertions
and Medicis does not accept Q-Med's determination, then the Parties shall refer
the dispute to an arbitrator pursuant to and in accordance with the provisions
set forth in Section 12.6. If the final arbitral award is in favor of Q-Med,
then Medicis shall be responsible for the price of the Ordered Products that are
the subject of such award (including the shipping cost and insurance) and any
17
interest that has accrued from the date that is thirty (30) days after the
delivery by Q-Med of the Ordered Products FCA Q-Med's place of manufacture or
such other manufacturing facility as permitted under this Agreement (such
interest to be determined in accordance with Section 4.3). If the final arbitral
award is in favor of Medicis, then all Ordered Products that are the subject of
such award shall be returned to Q-Med and Q-Med shall replace such Ordered
Products in accordance with Section 5.1(c) below and shall reimburse Medicis for
the cost of shipping (including insurance). All replacement shipments provided
pursuant to this Section 5.1(b) shall also be subject to the procedures
contained in Section 5.1(a).
(c) As soon as practicable upon receipt of a notice of rejection,
unless otherwise specified by Medicis, Q-Med shall use commercially reasonable
efforts to provide replacement Licensed Products for those rejected by Medicis
in the proposed original shipment pursuant to Section 5.1(a) or in the original
shipment pursuant to Section 5.1(b). Q-Med shall bear all expenses for such
replacement Licensed Product to the extent Medicis previously paid for any
corresponding nonconforming Licensed Product. Replacement shipments shall also
be subject to the procedures contained in Sections 5.1(a) and (b).
(d) If it comes to Q-Med's attention that any Licensed Product
previously accepted by Medicis in accordance with Section 5.1(a) is
non-conforming with its Specifications, Q-Med shall provide prompt notice
thereof to Medicis and Medicis shall, at Q-Med's expense, return any such
non-conforming inventory to Q-Med. Q-Med shall use commercially reasonable
efforts to provide within thirty (30) days replacement Licensed Products for
such non-conforming Licensed Products and shall bear all expenses (including for
shipping and insurance) for such replacement Licensed Products. Such replacement
shipments shall also be subject to the procedures contained in Sections 5.1(a)
and (b).
(e) All Licensed Products provided in replacement shipments pursuant
to Sections 5.1(c) or (d) above shall have a minimum remaining shelf life equal
to the remaining shelf life of the Licensed Product replaced thereby; provided
that remaining shelf life of the replacement Licensed Product shall be measured
from the date of the receipt in the Territory by Medicis of such replacement
Licensed Product and shall be compared to the remaining shelf life of the
Licensed Product to be replaced, measured from the date of the notice of the
need to replace such Licensed Product, whether delivered by Medicis pursuant to
Section 5.1(b) above, or Q-Med pursuant to Section 5.1(d) above.
ARTICLE VI
PRODUCT DEVELOPMENT AND REGULATORY MATTERS
6.1 Compliance with Law.
(a) General. Q-Med and Medicis shall each comply in all material
respects with all applicable Laws that pertain to the activities for which Q-Med
and Medicis are each responsible under this Agreement. The termination or
expiration of this Agreement shall not relieve either Party of its
responsibility to comply in all material respects with any regulatory
requirements associated with Licensed Products.
18
(b) Manufacture of Licensed Products. Q-Med and Medicis shall each
operate in substantial compliance with QSR requirements and the QSRC
requirements applicable to its activities with respect to Licensed Products.
Each Party shall bear its own costs and expenses related to such QSR/QSRC
compliance. Q-Med shall inform Medicis of any material issues raised by the FDA,
the TPD, a Governmental Authority in Sweden or a Notified Body, in each case in
connection with Manufacturing compliance for the Licensed Product, and shall
provide Medicis with copies of any correspondence (including, but not limited
to, e-mails) related thereto.
(c) Supply of Licensed Products. Q-Med shall supply Licensed
Products for Commercial Distribution that conform to the conditions of the
applicable Regulatory Approvals. Q-Med shall maintain appropriate establishment
registration with the FDA and TPD when Manufacturing Licensed Products supplied
under this Agreement. Q-Med shall supply Licensed Products for Investigational
Distribution that conform to the conditions of the applicable Regulatory
Approval, including but not limited to, the quality controls described therein
(or appropriate quality controls for an IDE Application deemed approved pursuant
to the requirements set forth in 21 C.F.R. Part 812 or Part 3 of the Canadian
Medical Device Regulations, where appropriate).
(d) Maintenance of Regulatory Approvals. After obtaining Regulatory
Approvals for the Licensed Products, Medicis shall use commercially reasonable
efforts to maintain such Regulatory Approvals in good standing in order to
ensure the continued lawful Commercial Distribution of the Licensed Products and
in the event that the Regulatory Approvals may be transferred to Q-Med or that
Q-Med may obtain duplicate PMA Approvals in good standing as contemplated in
Section 3.1 or 6.3 of the License Agreement.
(e) Notification to Q-Med. Medicis shall inform Q-Med of any
material issues raised by the FDA, the TPD or Environmental Protection Agency in
the Territory, in each case in connection with non-financial regulatory
compliance and shall provide Q-Med with copies of any correspondence (including,
but not limited to, e-mails) related thereto.
6.2 Steering Committee. The Parties recognize that the development
and marketing of the Licensed Products in the Territory and regulatory
compliance with respect thereto will require significant good faith, mutual
cooperation and joint decision-making. The Parties shall use the existing
Steering Committee to serve as the primary vehicle for such mutual cooperation
and joint decision-making. By way of clarification, the Steering Committee is
intended to have maximum flexibility to delegate its activities in order to
enable the Parties to cooperate, make decisions and implement them in a manner
that is timely, efficient and expeditious.
6.3 Steering Committee Jurisdiction. Except as otherwise provided
for herein, all significant decisions with respect to the development of the
Licensed Products and Improvements thereof within the Territory shall be vested
in the Steering Committee as set forth below. The Steering Committee shall also
be responsible for supervising and coordinating cooperative regulatory
compliance activity; provided that, nothing in this Section 6.3 is intended to
relieve either Party of its obligation to ensure that its own activities comply
in all material
19
respects with the FDCA and FDA's regulations thereunder and/or Canada's FDA
and/or regulations thereunder (e.g. QSR/QSRC requirements).
(a) * * *(i) * * *
(ii) * * *
(iii) * * *
(iv) * * *
(v) At either Party's request, the Steering Committee may revisit
any decision in light of experience, market conditions or other
developments.
(b) * * * (i) * * *
(ii) * * *
(iii) * * *
(c) * * *
(i) * * *. * * *
(ii) * * *
(iii) * * *. * * *
(iv) * * *. * * *
(v) Corrections and Removals. (1) The Parties shall establish a
coordinated tracking system and appropriate distribution records for all
Licensed Products so as to permit successful tracking in the event of a
correction or removal (i.e., field action); (2) if either Party becomes
aware of any defect, problem or adverse condition in any Licensed Product,
whether inside or outside the Territory, that Party shall promptly notify
the other Party; (3) Medicis shall determine whether a correction or
removal involving a Licensed Product in the Territory is warranted and
shall supervise and coordinate any such action, appropriate record keeping
and the reporting thereof to the FDA or the TPD, if required; and (4) to
the extent a Party is responsible for the underlying cause of a correction
or removal such Party shall bear the cost and expenses of the same
(including out-of-pocket expenses incurred by the other Party in
cooperating with such correction or removal).
(vi) * * *. * * *
(vii) * * *
6.4 Audits and Inspections. (a) Q-Med shall provide Medicis or
Medicis's representatives reasonable access upon reasonable prior notice to
inspect, review and audit the premises where the Licensed Products are being
tested, handled, stored, designed, distributed
20
and/or Manufactured for the sole purpose of confirming that all Licensed
Products for the Territory tested, handled, stored, designed, distributed and/or
Manufactured at such facility are tested, handled, stored, designed, distributed
and/or Manufactured in accordance with the FDCA and FDA's regulations thereunder
and with Canada's FDA and/or regulations thereunder. To the extent that in
connection with such inspection any confidential Manufacturing information will
be inspected, reviewed or audited, a Third Party representative of Medicis bound
by the confidentiality obligations described in Section 11.2 hereof shall review
and inspect the applicable facility and records and to meet with Q-Med's
personnel solely for the purpose of confirming that Q-Med's Manufacturing and
record-keeping is compliant with the FDCA and FDA's regulations thereunder and
with Canada's FDA and/or regulations thereunder; provided that either Party has
the option to delete or redact information not relating to the Licensed
Products. Such inspections, reviews and audits shall occur upon not less than
thirty (30) days' prior written notice to Q-Med, shall only be conducted during
normal business hours and shall not unreasonably disrupt the normal operations
of Q-Med; provided that Q-Med shall be entitled to instruct Medicis to conduct
such inspection at an alternate date if Q-Med is currently undergoing an
inspection. Such inspections may be conducted only once every six (6) months,
except that Medicis may conduct follow-up inspections on less than thirty (30)
days' notice directed at significant or critical quality issues observed during
the initial inspection or brought to Medicis's attention through customer
complaints or FDA or TPD communications or enforcement actions or otherwise.
(b) Medicis will cause such Third Party representatives to enter
into agreements with Q-Med with respect to the proprietary and confidential
nature of such information, which agreements shall, among other things, prohibit
the disclosure of such information to Medicis. Such representatives will be
bound by such obligations and will follow such security and facility access
procedures as are designated by Q-Med. Q-Med may require that at all times
Medicis representatives be accompanied by a Q-Med representative and that
Medicis representatives not enter areas of the facility used in the production
of the Licensed Products at times other than when the production of the Licensed
Products are occurring.
(c) Medicis shall provide Q-Med or Q-Med's representatives
reasonable access upon reasonable prior notice to inspect, review and audit the
premises where the Licensed Products are being tested, handled, stored, or
distributed for the purpose of confirming that all Licensed Products tested,
handled, stored, or distributed at such facility are tested, handled, stored,
and/or distributed in accordance with the FDCA and FDA's regulations thereunder
and with Canada's FDA and/or regulations thereunder. In connection with such
inspection, review or audit, Medicis shall allow Q-Med or its representatives to
review and inspect the applicable facility and records and to meet with
Medicis's personnel solely for the purpose of confirming that Medicis's
procedures and record-keeping are compliant with the FDCA and FDA's regulations
thereunder and with Canada's FDA and/or regulations thereunder. Such
inspections, reviews and audits shall occur upon not less than thirty (30) days'
prior written notice to Medicis, shall only be conducted during normal business
hours and shall not unreasonably disrupt the normal operations of Medicis. Such
inspections may be conducted only once every six (6) months, except that Q-Med
may conduct follow-up inspections directed at significant or critical quality
issues observed during the initial inspection or brought to Q-Med's attention
through customer complaints or FDA or TPD communications or enforcement actions
or otherwise.
21
(d) Each Party shall promptly notify the other Party when an FDA or
a TPD inspection of its facilities (or an inspection by Third Parties in
accordance with the FDA regulations or Canada's FDA or regulations, as
applicable, where such inspection pertains to the Licensed Products, is expected
or underway, and will promptly provide such other Party with copies of all
regulatory correspondence, Establishment Inspection Reports, Form 483s, and
Warning Letters issued by FDA or the TPD (or the Third Party inspector) in
connection with any such inspection and pertaining to Licensed Products.
(e) Each Party shall bear its own costs and expenses in connection
with audits and FDA or TPD inspections of its facilities.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS
7.1 Q-Med Representations. Q-Med hereby represents and warrants to
Medicis that:
(a) Corporate Organization and Authority. Q-Med is a company duly
organized, validly existing and in good standing under the laws of the Kingdom
of Sweden and has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by Q-Med of this Agreement, the performance by Q-Med of its obligations
hereunder, and the consummation by Q-Med of the transactions contemplated hereby
have been duly authorized by all requisite corporate action. This Agreement has
been duly executed and delivered by Q-Med and, assuming the due authorization,
execution and delivery thereof by Medicis, constitutes a legal, valid and
binding obligation of Q-Med, enforceable against Q-Med in accordance with its
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws of general
application relating to or affecting enforcement of creditors' rights and Laws
concerning equitable remedies.
(b) No Conflict. As of the date of this Agreement, the execution,
delivery and performance by Q-Med of this Agreement and the performance by Q-Med
of the transactions contemplated hereby does not, with or without the giving of
notice or the passage of time or both, violate, conflict with or cause a breach
or termination of or constitute a default under (i) the provisions of any Law
applicable to Q-Med or its properties or assets; (ii) the provisions of the
constituent organizational documents or other governing instruments of Q-Med;
(iii) any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Q-Med is a party or by which it is bound or
subject; or (iv) any judgment, decree, order or award of any court or
Governmental Authority applicable to Q-Med or its properties or assets.
(c) Q-Med possesses and has continuously maintained all permits,
authorizations and licenses issued by Governmental Authorities (other than the
FDA and the TPD) necessary for the conduct of Q-Med's business as currently
conducted, except where the failure to possess or maintain such permits,
authorizations and licenses would not, individually
22
or in the aggregate, have a material adverse effect on the ability of Q-Med to
perform its obligations hereunder.
7.2 Medicis Representations. Medicis hereby represents and warrants
to Q-Med that it is a corporation duly organized, validly existing and in good
standing under the laws of jurisdiction of its organization and has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by Medicis of this
Agreement, the performance by Medicis of its obligations hereunder, and the
consummation by Medicis of the transactions contemplated hereby have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Medicis and, assuming the due authorization, execution
and delivery thereof by Q-Med, constitutes a legal, valid and binding obligation
of Medicis, enforceable against Medicis in accordance with its terms, except to
the extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws of general application
relating to or affecting enforcement of creditors' rights and Laws concerning
equitable remedies.
7.3 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY
PROVIDED HEREIN OR IN THE OTHER TRANSACTION AGREEMENTS, (I) Q-MED MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER AT LAW OR IN EQUITY,
RELATED TO THE LICENSED PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR ANY OTHER MATTER, (II) Q-MED
MAKES NO, AND HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE REGARDING THE LICENSED PRODUCTS AND (III) THE LICENSED PRODUCTS ARE
CONVEYED ON AN "AS IS" "WHERE IS" BASIS AND MEDICIS SHALL RELY UPON ITS OWN
EXAMINATION THEREOF. Without limiting the foregoing, Medicis acknowledges that
it has not and is not relying upon any implied warranty of merchantability or
fitness for a particular purpose, or upon any representation or warranty
whatsoever as to the prospects (financial, regulatory or otherwise) or the
reliability, suitability, ability to produce a particular result, or the
likelihood of commercial success of the Licensed Products after the date of this
Agreement, except that Medicis may rely on the representations and warranties
contained herein and in the other Transaction Agreements. This provision shall
not affect the rights or obligations of either Party hereto with respect to any
other Transaction Agreement.
7.4 Non-Compete. (a) Except as otherwise provided in this Section
7.4(a), commencing on the date hereof and ending upon the termination of this
Agreement pursuant to Section 8.2(d) or 8.2(e), Q-Med shall not, and shall cause
its subsidiaries and any of its Affiliates who have agreed to be bound by any
provision of this Agreement pursuant to Section 12.21 not to, directly or
indirectly, engage in business in direct competition in the Territory with the
Licensed Products for use in the Field; provided that any non-approved use (or
other use not in accordance with the Labeling) by any Third Party shall not be
deemed to be a violation of Q-Med's duty not to compete. Notwithstanding the
immediately preceding sentence, Q-Med, its subsidiaries and Affiliates may,
directly or indirectly, engage in business in direct competition in the
Territory and in the Field with only such Licensed Products as to which the
exclusive license
23
rights have been terminated pursuant to and in accordance with Section 3.1 of
the License Agreement from and after the date of such termination.
(b) Commencing on the Closing Date and ending upon the expiration of
the License Agreement, Medicis shall not, and shall cause its subsidiaries and
any of its Affiliates who have agreed to be bound by any provision of this
Agreement pursuant to Section 12.21 not to, directly or indirectly * * *.
Notwithstanding the foregoing, in the event of a Third Party Transfer effected
in accordance with the terms and conditions of Section 12.2, the business of
such Third Party transferee as conducted as of the date of such Third Party
Transfer shall not be deemed to constitute a violation of this Section 7.4(b).
7.5 Licensed Products. Q-Med shall convey good title to the Licensed
Products upon delivery of the Licensed Products to Medicis in accordance with
this Agreement and such Licensed Products shall be free and clear of any
security interest, claim, lien or encumbrance.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term. Except as provided in Section 8.4, and unless earlier
terminated in accordance with Sections 8.2 or Section 8.3, this Agreement shall
have a term ("TERM") beginning on the date hereof and ending on the later to
occur of (a) the ten (10) year anniversary of the date of Launch in the United
States of the first Licensed Product and (b) expiration, abandonment or final
adjudication of invalidity of the last Licensed Patent in the Licensed Rights;
provided, however, that Medicis may, upon at least twelve (12) months' written
notice prior to the expiration of the Term to Q-Med, extend the Term for an
additional four (4) year period following the otherwise applicable expiration
date.
8.2 Termination by Q-Med. This Agreement may be terminated by Q-Med,
at its option:
(a) if Medicis breaches its obligations to pay any material amounts
owing to Q-Med under this Agreement, including, without limitation, its
obligation to make any Delinquent Payments with interest as provided in Section
4.3, and such breach continues for ten (10) Business Days after written notice
of such breach was provided to Medicis by Q-Med;
(b) if Medicis commits a material breach of any of its other
obligations under this Agreement, and fails to (i) cure such breach within
thirty (30) days of receipt of written notice of such breach; or (ii) commence
cure of such breach and make substantial progress towards cure within thirty
(30) days of receipt of such notice, and cure such breach within thirty (30)
additional days thereafter, such thirty (30) day period to apply only to the
extent such breach in either of (i) or (ii) is curable;
(c) upon the insolvency of Medicis; an assignment by Medicis for the
benefit of its creditors; the commencement against Medicis of a voluntary or
involuntary proceeding under any bankruptcy, insolvency, liquidation or similar
Law, upon the appointment with respect
24
to Medicis of a successor, trustee, custodian, sequestrator or similar official
or upon the dissolution of Medicis;
(d) if the License Agreement is terminated pursuant to Section
6.2(a) thereof (the termination right set forth in this clause (d), the "SPECIAL
TERMINATION PROVISION"); provided, that this Special Termination Provision is
the sole remedy under this Agreement in the event of such a termination; or
(e) if there shall have been a Transfer by Medicis pursuant to a
Change in Control (other than a Volitional Change in Control) in violation of
Section 12.2.
8.3 Termination by Medicis. This Agreement may be terminated by
Medicis, at its option:
(a) if Q-Med commits a material breach of its obligations under this
Agreement, and fails to (i) cure such breach within thirty (30) days of receipt
of written notice of such breach; or (ii) commence cure of such breach and make
substantial progress towards cure within thirty (30) days of receipt of such
notice, and cure such breach within thirty (30) additional days thereafter, such
thirty (30) day period to apply only to the extent such breach in either of (i)
or (ii) is curable;
(b) upon the insolvency of Q-Med; an assignment by Q-Med for the
benefit of its creditors; the commencement against the Q-Med of a voluntary or
involuntary proceeding under any bankruptcy, insolvency, liquidation or similar
Law, upon the appointment with respect to Q-Med of a successor, trustee,
custodian, sequestrator or similar official or upon the dissolution of Q-Med; or
(c) if there shall have been a Transfer by Q-Med pursuant to a
Change in Control (other than a Volitional Change in Control) in violation of
Section 12.2.
8.4 Effect of Termination or Expiration. (a) Upon termination of
this Agreement pursuant to Section 8.2(b) or (c) or 8.3(a), (b) or (c), Q-Med
will furnish to Medicis a complete inventory of all work-in-progress for the
Manufacture of the Licensed Product and an inventory of all finished Licensed
Product. Unless otherwise agreed to between the Parties, all stock on hand as of
the termination of this Agreement will be dealt with promptly as follows:
(i) Licensed Products Manufactured pursuant to Firm Orders accepted
by Q-Med will be delivered by Q-Med to Medicis, whereupon Medicis will pay
Q-Med therefor in accordance with the terms of this Agreement; and
(ii) Work-in-progress commenced by Q-Med against accepted Firm
Orders accepted by Q-Med or work-in-progress or finished Licensed Product
commenced or finished in reliance on the quantity of Licensed Product
forecasted for the current calendar month and the immediately succeeding
three (3) calendar months in the forecast delivered to Q-Med on or before
the first day of the current calendar month will be completed by Q-Med and
delivered to Medicis, whereupon Medicis will pay Q-Med therefor in
accordance with the terms of this Agreement.
25
(b) Upon termination of this Agreement by Q-Med pursuant to Section
8.2(a) or (d), Medicis shall immediately return to Q-Med all finished Licensed
Product then held by Medicis. Medicis shall bear all expenses for transportation
of such Licensed Products and Medicis shall pay to Q-Med an amount equal to
Q-Med's cost for all Licensed Products Manufactured pursuant to Firm Orders from
Medicis, work-in-progress commenced by Q-Med against accepted Firm Orders from
Medicis and work-in-progress or finished Licensed Product commenced or finished
in reliance on the quantity of Licensed Product forecasted for the current
calendar month and the immediately succeeding three (3) calendar months in the
forecast delivered to Q-Med on or before the first day of the current calendar
month.
(c) Upon termination of this Agreement pursuant to Section 8.2 or
8.3, each of Medicis and Q-Med will immediately at its expense return to the
other Party all proprietary and confidential documents, work papers and other
material of the other Party and its Affiliates relating to the transactions
contemplated hereby obtained from that other Party or its Affiliates pursuant to
this Agreement, whether so obtained before or after the execution hereof, and
all copies, extracts or other reproductions, in whole or in part thereof which
may have been made by or on behalf of Medicis or Q-Med or their respective
representatives, as the case may be, and shall deliver to the other Party or
destroy all notes or memorandum or other stored information of any kind
containing, reflecting or derived from such documents, work papers and other
material, except that one archival copy may be retained by each Party's outside
counsel or in-house counsel. The return or destruction, as applicable, of such
documents, work papers and other material (and all copies, extracts or other
reproductions in whole or in part thereof) pursuant to this Section 8.4(c) shall
be certified in writing by an authorized officer supervising the same. This
Section 8.4(c) shall not apply to information obtained pursuant to any other
Transaction Agreement. Notwithstanding such return or destruction, each Party
will continue to be bound by its obligations of confidentiality under Article XI
herein. Each Party shall not use or disclose to any Person any information
derived from such confidential and proprietary documents, work papers and other
material of the other Party and shall be responsible for preventing the
disclosure of any such information as provided in Article XI.
(d) (i) Upon termination of this Agreement by reason of Section 8.2
or 8.3, all obligations of the Parties hereunder shall terminate, except
for Article XI [Confidentiality], Sections 7.4 [Non-Compete], 8.4 [Effect
of Termination or Expiration], 12.6 [Arbitration], 12.12 [Expenses] and
12.20 [Publicity], and the continuing regulatory compliance obligations of
the Parties set forth in Section 6.1(a) and the indemnity obligations of
the Parties set forth in Article IX; provided, however, that termination
pursuant to Section 8.2 or 8.3 will not relieve a defaulting or breaching
Party from any liability to the other Party hereto, including the
obligation to pay invoiced amounts when due; provided, further, that upon
termination of this Agreement by reason of Section 8.2(d) or (e), all
obligations pursuant to Section 7.4(a) [Non-Compete] shall immediately
terminate and six (6) months after the termination of this Agreement, all
obligations pursuant to Section 7.4(b) [Non-Compete] shall terminate.
(ii) Upon termination of this Agreement by reason of Section 8.1,
all obligations of the Parties hereunder shall terminate, except for
Article XI [Confidentiality], Sections 7.4(a) [Non-Compete], 8.4 [Effect
of Termination or Expiration], 12.6 [Arbitration], 12.12 [Expenses] and
12.20 [Publicity], and the
26
continuing regulatory compliance obligations of the Parties set forth in
Section 6.1(a) and the indemnity obligations of the Parties set forth in
Article IX; provided, however, that termination pursuant to Section 8.1
will not relieve a defaulting or breaching Party from any liability to the
other Party hereto, including the obligation to pay invoiced amounts when
due.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Q-Med. (a) Q-Med shall indemnify, defend and
hold harmless Medicis, its Affiliates and their respective directors, officers,
stockholders, employees, agents and representatives (the "MEDICIS INDEMNIFIED
PARTIES"), from and against any Losses that they may incur resulting from any
Action to the extent arising out of or due to (i) any breach of any
representation, warranty, covenant or other agreement under this Agreement by
Q-Med or any of its Affiliates to the extent such Affiliate is bound hereunder
(other than the breach of Sections 3.1, 3.2 and 6.1(b) and (c) for which the
sole remedy shall be the remedy set forth in Section 5.1(c)) (provided, that for
purposes of this Section 9.1(a), Section 7.1(c) shall be read without regard to
qualification with respect to material adverse effect), (ii) any Product Claim
by a patient to the extent such injury or harm was solely and directly caused by
the use of any Licensed Product; provided that such Licensed Product shall have
at all times been handled, stored, used and otherwise managed in accordance with
the Labeling or clinical protocols, as applicable; and (iii) the marketing,
import, sale, offer for sale, use, storage or possession of Licensed Products
outside of the Territory by Q-Med or its Affiliates, or their respective
licensees, successors and assigns or their respective customers or end-users.
(b) In addition to the remedies set forth in clause (a) hereof, in
the event of a final arbitral award pursuant to Section 12.6 that a material
breach (other than a willful material breach which is addressed by Section
10.1(b)) by Q-Med of its obligations to supply the Licensed Products to Medicis
in accordance with Article II of this Agreement for a six (6) month period has
occurred, Q-Med shall obtain and qualify an alternate manufacturer able to
fulfill Medicis' requirements as forecasted by Medicis in accordance with
Sections 2.2(b) and (d). If Q-Med has not taken reasonably sufficient action to
qualify such an alternate manufacturer within one (1) month of such final
arbitral award, then Q-Med shall promptly furnish to an alternate manufacturer
as identified by Medicis all information and assistance necessary to qualify and
operate such alternate manufacturer. Notwithstanding the foregoing, promptly
upon notice by Q-Med that such material breach has been cured, Medicis shall use
its commercially reasonable efforts to resume the use of Q-Med as exclusive
supplier.
(c) Notwithstanding anything to the contrary contained herein, (i)
Losses shall not include loss of profits or consequential damages unless a final
arbitral award is issued pursuant to Section 12.6 determining that the breach by
Q-Med giving rise to such Losses was an intentional and willful breach of a
material obligation under this Agreement and (ii) after the consummation of a
Transfer to a Third Party, with respect to any final arbitral award pursuant to
Section 12.6 that determines that such Third Party has intentionally and
willfully breached any of its material obligations under this Agreement, Losses
arising out of or due to such intentional and willful breach of a material
obligation under this Agreement shall be deemed to include loss of
27
profits, consequential damages and such other damages, fees, penalties,
deficiencies, losses and expenses as the arbitral tribunal making such award may
determine.
(d) Q-Med and its Affiliates shall have no liability under this
Section 9.1 to the extent that a Medicis Indemnified Party has been paid
pursuant to the License Agreement for an indemnifiable claim involving the
identical substantive issue.
9.2 Indemnification by Medicis. (a) Medicis shall indemnify, defend
and hold harmless Q-Med, its Affiliates and their respective directors,
officers, stockholders, employees, agents and representatives (the "Q-MED
INDEMNIFIED PARTIES"), from and against any Losses that they may incur resulting
from any Action to the extent arising out of or due to (i) any breach of any
representation, warranty, covenant or other agreement under this Agreement by
Medicis or any of its Affiliates to the extent such Affiliate is bound under
this Agreement or (ii) with respect to obtaining Regulatory Approvals for the
first of the Licensed Products in accordance with Section 6.3(b)(iii) hereof,
clinical trials conducted by or on behalf of Medicis or other services performed
by or on behalf of Q-Med in accordance with Section 6.3(b)(iii) hereof, except
(x) as otherwise provided in Section 9.1(a) hereof, and (y) to the extent
arising from Q-Med's own negligence or willful misconduct.
(b) Notwithstanding anything to the contrary contained herein, (i)
Losses shall not include loss of profits or consequential damages unless a final
arbitral award is issued pursuant to Section 12.6 determining that the breach by
Medicis giving rise to such Losses was an intentional and willful breach of a
material obligation under this Agreement and (ii) after the consummation of a
Transfer to a Third Party in accordance with Section 12.2, with respect to any
final arbitral award pursuant to Section 12.6 that determines that such Third
Party has intentionally and willfully breached any of its material obligations
under this Agreement, Losses arising out of or due to such intentional and
willful breach of a material obligation under this Agreement shall be deemed to
include loss of profits, consequential damages and such other damages, fees,
penalties, deficiencies, losses and expenses as the arbitral tribunal making
such award may determine.
(c) Medicis and its Affiliates shall have no liability under this
Section 9.2 to the extent that a Q-Med Indemnified Party has been paid pursuant
to the License Agreement for an indemnifiable claim involving the identical
substantive issue.
9.3 Notice of Claims. If there occurs an event which any of the
Persons to be indemnified under this Article IX asserts is indemnifiable
pursuant to Section 9.1 or 9.2 (the "INDEMNIFIED PARTY"), the Party or Parties
seeking indemnification shall so notify the Party from whom indemnification is
sought (the "INDEMNIFYING PARTY") promptly in writing describing such Loss, the
amount or estimated amount thereof, if known or reasonably capable of
estimation, and the method of computation of such Loss, all with reasonable
particularity and containing a reference to the provisions of this Agreement or
any other agreement or instrument delivered pursuant hereto in respect of which
such Loss shall have occurred. If any Action is instituted by or against a Third
Party with respect to which the Indemnified Party intends to claim any liability
as a Loss under this Article IX, the Indemnified Party shall promptly notify the
Indemnifying Party of such Action and tender to the Indemnifying Party the
defense of such Action. A failure by the Indemnified Party to give notice and to
tender the defense of the Action
28
in a timely manner pursuant to this Section 9.3 shall not limit the obligation
of the Indemnifying Party under this Article IX, except to the extent such
Indemnifying Party is materially prejudiced thereby.
9.4 Control of Claims. The Indemnifying Party under this Article IX
shall have the right, but not the obligation, to conduct and control, through
counsel of its choosing, any Action for which indemnification is sought pursuant
to this Article IX with respect to a Third Party claim (a "THIRD PARTY
INDEMNIFIABLE CLAIM"), and if the Indemnifying Party elects to assume the
defense thereof, the Indemnifying Party shall not be liable to the Party or
Parties seeking indemnification hereunder for any legal expenses of other
counsel or any other expenses subsequently incurred by such Party or Parties in
connection with the defense thereof; provided that, if the Indemnified Party has
been advised in writing by outside counsel that there is a potential conflict
between the interests of the Indemnifying Party and the Indemnified Party, the
reasonable out-of-pocket fees and expenses of one separate counsel for the
Indemnified Party shall be paid by the Indemnifying Party and such separate
counsel shall be selected by the Indemnified Party in its sole discretion.
Notwithstanding the foregoing, the reasonable legal fees and expenses of counsel
selected by the Indemnified Party in its sole discretion in connection with a
Third Party Indemnifiable Claim as to which the Indemnifying Party does not
assume the defense or is not entitled to assume the defense shall be considered
Losses for purposes of this Article IX. The Indemnifying Party may compromise or
settle such Action; provided that the Indemnifying Party shall give the
Indemnified Party advance notice of any proposed compromise or settlement;
provided, further, that the Indemnifying Party shall not compromise or settle
any Third Party Indemnifiable Claim without the prior written approval of the
Indemnified Party, such approval not to be unreasonably withheld or delayed,
unless all relief provided is paid or satisfied in full by the Indemnifying
Party. No Indemnified Party may compromise or settle any Third Party
Indemnifiable Claim without the prior written consent of the Indemnifying Party.
If the Indemnifying Party elects not to control or conduct the defense or
prosecution of a Third Party Indemnifiable Claim, the Indemnifying Party
nevertheless shall have the right to participate in the defense or prosecution
of any Third Party Indemnifiable Claim and, at its own expense, to employ
counsel of its own choosing for such purpose. The Parties hereto shall cooperate
with each other and their respective counsel in the defense, settlement,
negotiation or prosecution of a Third Party Indemnifiable Claim.
9.5 Indemnification Calculations. The amount of any Losses for which
indemnification is provided under this Article IX shall be computed net of any
insurance proceeds received by the Indemnified Party in connection with such
Losses. If an Indemnified Party receives insurance proceeds in connection with
Losses for which it has received indemnification, such Party shall refund to the
Indemnifying Party the amount of such insurance proceeds when received, up to
the amount of indemnification received. An Indemnified Party shall use its
commercially reasonable efforts to pursue insurance claims with respect to any
Losses.
9.6 Exclusive Remedies. Except as otherwise set forth herein and for
any available equitable remedies, the remedies set forth in this Article IX will
be the exclusive remedies available to the Parties hereto with respect to any
Losses or any other damages, costs or expenses of any kind or nature or any
other claim or remedy directly or indirectly resulting from, arising out of or
relating to any of this Agreement (including alleged breaches of representation,
29
warranty, covenant or any other term or provision or for any alleged
misrepresentation), and the transactions contemplated hereby; provided that
nothing herein shall limit in any way any Party's remedies in respect of fraud
by the other Party in connection herewith or in connection with the transactions
contemplated hereby. Notwithstanding anything to the contrary in this Agreement,
the Parties hereby agree that any and all Actions resulting from, arising out of
or based upon the provisions of this Agreement may be asserted or brought solely
under and in accordance with the terms of this Agreement.
9.7 Survival. The representations and warranties of the Parties
contained in this Agreement shall survive until the eighteen (18) month
anniversary of termination or expiration of this Agreement pursuant to Section
8.1, 8.2 or 8.3 and the covenants to be performed hereunder shall survive until
the date that is six (6) months after the end of the applicable period for
performance thereof.
ARTICLE X
CERTAIN COVENANTS
10.1 Manufacturing Option.
(a) Q-Med hereby grants to Medicis an option (the "OPTION") to
obtain a license commencing on the date that is * * * from the expiration date
of the Term without giving effect to any extensions thereof, to make and have
made, develop and improve by itself or on its behalf in the Territory, the
Licensed Products. Such license (the "MANUFACTURING LICENSE") shall be granted
by Q-Med within * * * of the date of Q-Med's receipt from Medicis of an exercise
notice (the "EXERCISE NOTICE"), and shall include the terms set forth on
Schedule D hereto and any other terms and conditions negotiated in good faith
and agreed to by the Parties during such * * * period. The Parties hereby agree
that this Section 10.1 imposes an enforceable obligation to grant the
Manufacturing License based on the terms set forth in Schedule D and to
negotiate in good faith such additional terms as may be agreed to by the
Parties. Medicis shall deliver the Exercise Notice no less than * * * prior to
the date on which Medicis intends to commence to make or to have made, develop
and improve the Licensed Products pursuant to the Option; provided that Medicis
shall not deliver the Exercise Notice earlier than the later to occur of * * *.
Medicis may deliver the Exercise Notice at any time from and after the date
referred to in the immediately preceding sentence and before the expiration of
the Term without giving effect to any extensions thereof. Medicis and Q-Med will
fully cooperate in obtaining all required Regulatory Approvals in connection
with Medicis' lawful manufacture of the Licensed Products for Commercial
Distribution and Investigational Distribution; provided that Medicis will pay
the cost and expenses of obtaining such approvals.
(b) Notwithstanding the foregoing, Medicis shall have * * * the
Exercise Notice and Q-Med shall grant the Manufacturing License on the terms set
forth in Schedule D within ninety (90) days of receipt of such notice in the
event of (i) a final arbitral award pursuant to Section 12.6 determining that
Q-Med has intentionally and willfully breached a material obligation related to
the Manufacture or supply of Licensed Products under this Agreement; provided
that Medicis shall bear the burden of proof with respect to the determination
that any such breach was intentional, willful and material or (ii) upon Q-Med
entering into a liquidation
30
process due to bankruptcy. In the event that Medicis has the right to
immediately deliver the Exercise Notice in accordance with clause (i) of this
Section 10.1(b), Medicis shall also concurrently have the right to deliver a
notice to Q-Med and/or its Affiliates which shall immediately terminate any and
all licenses granted by Medicis to Q-Med and/or its Affiliates pursuant to the
terms hereof or of the License Agreement.
10.2 Back-up Facility. The Parties acknowledge and agree that
Q-Med's efforts to date to construct a back-up facility to Manufacture Licensed
Products (the "NEW FACILITY") and to obtain the necessary Regulatory Approvals
from the FDA and the TPD for such New Facility are satisfactory for purposes of
this Agreement as of the date hereof. * * *
10.3 Third Party Contractors. Q-Med shall have the right in
connection with its obligations hereunder to contract with its Affiliates and/or
one or more Third Parties for the Manufacture and supply of the Licensed
Products in finished form to Medicis; provided, however, that: (i) Q-Med shall
cause such contractor to comply fully with the terms and conditions set forth in
this Agreement with respect to the Manufacture and supply of such Licensed
Products; (ii) Q-Med shall remain fully responsible for the Manufacture and
supply of such Licensed Products to Medicis; and (iii) the use of such
contractor shall not increase the cost of the Licensed Products to Medicis in
excess of a cost increase otherwise permitted by this Agreement. Q-Med shall
bear the costs and expense of any required Regulatory Approvals due to the
contracting with any Affiliate and/or Third Party for the Manufacture and supply
of the Licensed Products. Prior to supplying Medicis with Licensed Products
Manufactured by a non-Affiliate Third Party, Q-Med must submit the contractor's
name to Medicis for reasonable approval, such approval not to be unreasonably
withheld or delayed. If Medicis reasonably objects to Q-Med's use of any
non-Affiliate Third Party for the Manufacture and supply of Licensed Products,
Medicis shall have no obligation to accept any Licensed Products Manufactured by
such non-Affiliated Third Party. The foregoing shall not affect, apply to,
prevent or otherwise limit Q-Med's right to select and employ Third Party
suppliers and subcontractors to provide ingredients, components, parts, and
processing activities to aid Q-Med's manufacturing process.
ARTICLE XI
CONFIDENTIALITY
11.1 Q-Med's Obligation. Except for the proper exercise of any
rights granted or reserved under other provisions of this Agreement, Q-Med
agrees that it shall keep confidential, and shall cause its officers, employees,
directors and counsel to keep confidential and shall not publish or otherwise
divulge to a Third Party, other than any agents or representatives of Q-Med
(provided that such agents and representatives are informed of the confidential
and proprietary nature of such information and agree in writing to the
conditions set forth in this Article XI; and provided, further, that Q-Med shall
be responsible for any breach of this Section 11.1 by such representatives and
agents), or use for itself, unless Medicis shall have given its prior written
approval, any information (and all tangible and intangible embodiments thereof)
of a confidential and proprietary nature relating to Medicis' and its
Affiliates' business
31
or operations, including non-public information concerning Medicis' products,
processes, customers and suppliers and the products and processes of Medicis'
customers and suppliers furnished to Q-Med by Medicis in connection with this
Agreement (any of the foregoing, "CONFIDENTIAL MEDICIS INFORMATION"); provided,
however, that Q-Med shall have the right to disclose any Confidential Medicis
Information provided hereunder if such disclosure is necessary (a) in connection
with the securing of any Regulatory Approvals or other governmental approval
necessary for the performance by Q-Med of any of its obligations hereunder or
under any other agreement with Medicis, (b) for the purpose of complying with
applicable Laws and governmental regulations or (c) by Law or legal process.
Q-Med shall promptly notify Medicis of Q-Med's intent to make any disclosure of
Confidential Medicis Information prior to making such disclosure so as to allow
Medicis adequate time to take whatever action Medicis may deem to be appropriate
to protect the confidentiality of the Confidential Medicis Information and Q-Med
will cooperate and provide any assistance that Medicis may reasonably request in
connection with the foregoing. For the avoidance of confusion, all information
provided by Medicis to Q-Med in connection with this Agreement shall be deemed
Confidential Medicis Information unless Q-Med can demonstrate that such
information is available to it from sources other than Medicis that are not
under a duty of confidentiality with respect thereto. Q-Med shall use
Confidential Medicis Information only in connection with and for the purposes
reflected in this Agreement and the other Transaction Agreements and for no
other purpose. The confidentiality obligations set forth in this Section 11.1
shall continue in effect during the Term and for a period of ten (10) years
after the end of the Term except that the confidentiality obligations with
respect to any Confidential Medicis Information that constitutes a trade secret
shall continue in effect for so long as such information remains a trade secret.
11.2 Medicis' Obligation. Except for the proper exercise of any
rights granted or reserved under other provisions of this Agreement and except
for the information referenced in Section 11.3 which shall be subject to Section
11.3, Medicis agrees that it shall keep confidential, and shall cause its
officers, employees, directors and counsel to keep confidential and shall not
publish or otherwise divulge to a Third Party, other than any agents or
representatives of Medicis (provided that such agents and representatives are
informed of the confidential and proprietary nature of such information and
agree in writing to the conditions set forth in this Article XI; and provided,
further, that Medicis shall be responsible for any breach of this Section by
such representatives and agents), or use for itself, unless Q-Med shall have
given its prior written approval, any information (and all tangible and
intangible embodiments thereof) of a confidential and proprietary nature
relating to Q-Med's and its Affiliates' business or operations, including
non-public information concerning the Licensed Rights, the Licensed Products or
other products of Q-Med and its Affiliates, processes of Q-Med and its
Affiliates, customers and suppliers and the products and processes of Q-Med's
customers and suppliers, furnished to Medicis by Q-Med in connection with this
Agreement (any of the foregoing, "CONFIDENTIAL SUPPLIER INFORMATION"); provided,
however, that Medicis shall have the right to disclose any Confidential Supplier
Information provided hereunder if such disclosure is necessary (a) in connection
with the securing of any Regulatory Approvals or other governmental approval
necessary for the performance by Medicis of any of its obligations hereunder or
under any other agreement with Q-Med, (b) for the purpose of complying with
applicable Laws and governmental regulations or (c) by Law or legal process.
Medicis shall promptly notify Q-Med of Medicis' intent to make any disclosure of
Confidential Supplier
32
Information prior to making such disclosure so as to allow Q-Med adequate time
to take whatever action Q-Med may deem to be appropriate to protect the
confidentiality of Confidential Supplier Information and Medicis will cooperate
and provide any assistance that Q-Med may reasonably request in connection with
the foregoing. For the avoidance of confusion, all information provided by Q-Med
to Medicis in connection with this Agreement (included information subject to
Section 11.3) shall be deemed Confidential Supplier Information unless Medicis
can demonstrate that such information is available to it from sources other than
Q-Med that are not under a duty of confidentiality with respect thereto. Medicis
shall use Confidential Supplier Information only in connection with and for the
purposes reflected in this Agreement and the other Transaction Agreements and
for no other purpose. The confidentiality obligations set forth in this Section
11.2 shall continue in effect during the Term and for a period of ten (10) years
after the end of the Term except that the confidentiality obligations with
respect to any Confidential Supplier Information that constitutes a trade secret
shall continue in effect for so long as such information remains a trade secret.
11.3 Manufacturing Data and other Information. In addition to any of
the foregoing confidentiality obligations, Medicis agrees that it shall keep
confidential and shall not use or disclose, and shall cause its officers,
employees, directors and counsel to keep confidential and to not use or
disclose, any information or data (and all tangible and intangible embodiments
thereof) of a confidential and proprietary nature relating to the Manufacture of
the Licensed Products, or any other information or data related to the
manufacture of any other products by Q-Med and/or its Affiliates of a
confidential and proprietary nature, including any such information to which
Medicis has access by virtue of the Regulatory Approvals for the Licensed
Products. Notwithstanding the foregoing, Medicis shall have the right to use,
and, to the extent required to have Licensed Products made in accordance with
the Manufacturing License, disclose (provided that the Person to whom such
disclosure is made is informed of the confidential and proprietary nature of
such information and agrees in writing to be bound by the conditions set forth
in this Section 11.3; provided, further, that Medicis agrees in writing to be
responsible for any breach of these provisions by such Person) such information
or data related to the Manufacture of Licensed Products that it may have access
to by virtue of the Regulatory Approvals related to the Licensed Products (i) in
the event that Q-Med has failed to comply with its obligation to provide an
alternate manufacturer with the information required pursuant to Section 9.1(b)
within the time period set forth in Section 9.1(b) or (ii) Medicis has exercised
the Option in accordance with Section 10.1(b) herein. Notwithstanding the
foregoing, Medicis shall have the right to disclose any such information or data
provided hereunder if such disclosure is necessary (a) in connection with the
securing of any Regulatory Approval or other governmental approval necessary for
the performance by Medicis of any of its obligations hereunder or under any
other agreement with Q-Med or its Affiliates, (b) for the purpose of complying
with applicable Laws and governmental regulations or (c) by Law or legal
process. Medicis shall promptly notify Q-Med of Medicis' intent to make such
disclosure prior to making such disclosure so as to allow Q-Med adequate time to
take whatever action Q-Med may deem to be appropriate to protect the
confidentiality of such information and Medicis will cooperate and provide any
assistance that Q-Med may reasonably request in connection with the foregoing.
Medicis shall not be prohibited from using or disclosing any such information
that (a) is or has become known to the public other than through a breach of
this Agreement or (b) lawfully was disclosed to Medicis on a non-confidential
basis by a Third Party not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation. Within the limits set forth in this
Section 11.3, Medicis
33
shall be entitled to use such information to the extent necessary to perform its
obligations under this Agreement and the other Transaction Agreements.
11.4 Permitted Disclosure Or Use Of Information. Nothing in this
Article XI shall prevent the disclosure or use of Confidential Medicis
Information or Confidential Supplier Information, as the case may be, that (a)
is or has become known to the public other than through a breach of this
Agreement or (b) lawfully was disclosed to the disclosing Party on a
non-confidential basis by a Third Party not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation.
11.5 Use Of Information to Perform Obligations under this Agreement.
Within the limits set forth in this Article XI, each Party shall be entitled at
all times to use all Confidential Medicis Information or Confidential Supplier
Information, as the case may be, provided by the other Party to the extent
necessary to perform its obligations under this Agreement or any other
Transaction Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Force Majeure. No Party shall be liable to another for its
failure to perform any of its obligations hereunder if such failure is caused by
contingencies beyond such Party's control, including, but not limited to, acts
of God, fire, flood, wars, acts of terrorism, sabotage, strike and government
actions. Any Party asserting its inability to perform any obligation hereunder
as a result of any such contingency shall promptly notify the other Party of the
existence of any such contingency that prevents performance and the extent of
such Party's inability to perform. The non-performing Party shall use its
reasonable best efforts to avoid or remove such causes of non-performance
obligation as soon as commercially practicable.
12.2 Assignment. Except as expressly otherwise provided herein, the
Parties may only Transfer their respective rights and obligations hereunder in
accordance with this Section 12.2.
(a) Each of Q-Med and Medicis shall be entitled to Transfer its
rights or obligations under this Agreement without the written consent of
Medicis or Q-Med, as the case may be, to an Affiliate of Medicis Pharmaceutical
or Q-Med, as the case may be, provided that Q-Med or Medicis Pharmaceutical, as
the case may be, directly or indirectly, through one or more intermediaries,
owns or controls greater than fifty percent (50%) of the voting securities or
economic interest in such Affiliate and such Affiliate is able to provide and at
all times update a valid Form W-8BEN in accordance with U.S. Treasury Regulation
1.1441-1(e)(4)(ii) (a "PERMITTED TRANSFEREE") for so long as such Affiliate
continues to be a Permitted Transferee; provided, further, that such Transfer
shall be null and void ab initio and of no further force and effect unless (i)
such Transfer was affected in accordance with the terms and conditions of this
Agreement, (ii) in connection with such Transfer, Q-Med executes and delivers to
Medicis a guarantee substantially in the form attached hereto as Exhibit A, and
(iii) the Permitted Transferee, if not already a Party hereto, shall have
executed and delivered to Medicis or Q-Med, as the case may be, as a condition
precedent to such Transfer, an instrument or instruments
34
reasonably satisfactory to Q-Med or Medicis, as the case may be, confirming that
the Permitted Transferee shall be bound by the terms of this Agreement to the
same extent applicable to the transferring Party, as if such Permitted
Transferee was originally a Party hereto. Any such Permitted Transferee shall,
and Q-Med or Medicis, as the case may be, shall cause such Permitted Transferee
to, assign or transfer back to (or to another Permitted Transferee of the
transferred Party) its rights and obligations hereunder prior to such Permitted
Transferee ceasing to be a Permitted Transferee of Q-Med or Medicis, as the case
may be. Upon such Permitted Transferee ceasing to be a Permitted Transferee
hereunder, any Transfer of rights and obligations hereunder shall be null and
void from inception and of no further force or effect. A transferring party
shall remain directly liable for the performance by its Permitted Transferee of
all obligations of such transferring Party under this Agreement. No Transfer to
a Permitted Transferee hereunder shall relieve Q-Med or Medicis of its
obligations pursuant to this Agreement.
(b) Commencing on the date on which all of the One Time Payments
(other than the * * * Payment (as such term is defined in the License
Agreement), which * * * Payment shall only be required to be paid and received
as a condition to Transfer if as of the date of Transfer, such * * * Payment is
then due and payable under the terms of the License Agreement) and the First
Milestone Payment to be paid pursuant to the License Agreement have been paid to
and received by Q-Med or its Affiliates (provided that all such payments may be
prepaid at any time, regardless of whether such payments are then due under such
agreements), Medicis or its Permitted Transferees shall be entitled, in
accordance with this clause (b) to Transfer its rights and obligations under
this Agreement to a Third Party, subject to the prior written consent of Q-Med;
provided, further, that (i) in the event of a Volitional Change in Control such
Transfer shall be null and void ab initio and of no further force and effect
unless (A) such Transfer was effected in accordance with the terms and
conditions of this Agreement and (B) the Third Party shall have executed and
delivered to Q-Med as a condition precedent to such Transfer, an instrument or
instruments reasonably satisfactory to Q-Med confirming that the Third Party
shall be bound by the terms of this Agreement to the same extent applicable to
Medicis or its Permitted Transferee as if such Third Party was originally a
Party hereto and that such Third Party is, or as of the date of the proposed
Transfer will be, a party to the License Agreement and (ii) in the event of a
Change in Control (other than a Volitional Change in Control) such Transfer
shall give rise to a right of termination pursuant to Section 8.2(d) herein
unless such Transfer was effected in accordance with the terms and conditions of
this Agreement. The Parties agree that Q-Med may only withhold its consent in
the event that Q-Med reasonably determines (such determination to be made
without unreasonable delay, and such consent, or the withholding thereof, to be
promptly communicated once determined) that the proposed Third Party transferee
* * *, (iv) does not have financial condition at least comparable to that of
Medicis as of the Closing Date or (v) has been or is currently debarred under
the authority of the FDCA or Canada's FDA and/or regulations thereunder.
(c) Q-Med or its Permitted Transferee shall be entitled to Transfer
its rights and obligations under this Agreement to a Third Party, subject to the
prior written consent of Medicis; provided that (i) in the event of a Volitional
Change in Control such Transfer shall be null and void ab initio and of no
further force and effect unless (A) such Transfer was effected in accordance
with the terms and conditions of this Agreement and (B) the Third Party shall
have executed and delivered to Medicis as a condition precedent to such
Transfer, an instrument or
35
instruments reasonably satisfactory to Medicis confirming that the Third Party
shall be bound by the terms of this Agreement to the same extent applicable to
Q-Med or its Permitted Transferee as if such Third Party was originally a Party
hereto and that such Third Party has, or as of the date of the proposed Transfer
will have, the know-how and patents necessary to fulfill its obligations under
and in accordance with this Agreement and (ii) in the event of a Change in
Control (other than a Volitional Change in Control) such Transfer shall give
rise to a right of termination pursuant to Section 8.3(c) herein unless such
Transfer was effected in accordance with the terms and conditions of this
Agreement. The Parties agree that Medicis may only withhold its consent in the
event that Medicis reasonably determines (such determination to be made without
unreasonable delay, and such consent, or the withholding thereof, to be promptly
communicated once determined) that (i) the proposed Third Party transferee does
not have the financial condition to perform Q-Med's obligations under this
Agreement, (ii) if Q-Med is not to be the surviving entity upon the consummation
of such proposed Transfer, upon the consummation of such proposed Transfer the
successor entity will not have a manufacturing capacity at least comparable to
Q-Med's and its Affiliates' manufacturing capacity immediately prior to such
proposed Transfer, (iii) such Transfer has not received all required Regulatory
Approvals, or, if Q-Med and/or one of its Affiliates is not to be the surviving
entity upon the consummation of such proposed Transfer, upon the consummation of
such proposed Transfer, the proposed Third Party transferee will not have all
Regulatory Approvals required for its performance of this Agreement or (iv) such
proposed Third Party transferee has been or is currently debarred under the
authority of the FDCA or under Canada's FDA and/or regulations thereunder.
(d) Subject to the provisions of this Section 12.2, this Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
each of the Parties.
(e) Notwithstanding anything to the contrary contained elsewhere
herein, Q-Med shall be entitled to engage a Third Party as provided in Sections
2.3, 9.1(b) and 10.3 herein to supply Medicis with Licensed Products for use in
accordance with the terms and conditions of this Agreement and such action shall
not be deemed a violation of this Section 12.2; provided that in such event
Q-Med not be released from its obligations hereunder.
(f) Other than as set forth in clause (e) above, Q-Med and Medicis,
as the case may be, and each of their respective present and former officers,
directors, employees and Affiliates shall be released and discharged of its
respective rights and obligations pursuant to this Agreement and from any and
all claims, rights, causes of actions or suits and recoveries related thereto
upon the consummation of a Transfer to a Third Party in accordance with the
terms and conditions set forth herein.
12.3 Independent Contractor. The Parties shall each be an
independent contractor in the performance of their respective obligations
hereunder, and, the provisions hereof are not intended to create any
partnership, joint venture, agency or employment relationship between the
Parties. Each Party shall be responsible for and shall comply with all state,
local, federal and foreign laws pertaining to employment taxes, income
withholding and other employment related statutes applicable to that Party.
Except as is expressly set forth herein, neither Party will have any right by
virtue of this Agreement to bind the other Party in any manner whatsoever.
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12.4 Notices. All notices or other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the Party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service, or
if sent by facsimile; provided that the facsimile is promptly confirmed by
telephone confirmation thereof, to the Person at the address set forth below, or
such other address as may be designated in writing hereafter, in the same
manner, by such Person.
with a copy to (which shall not constitute notice):
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Richard A. Miller
Telephone No.: (212) 455-7150
Facsimile No.: (212) 455-2502
If to Medicis:
Medicis Aesthetics Holdings Inc.
8125 N. Hayden Road
Scottsdale, Arizona 85258-2463
with a copy to (which shall not constitute notice):
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, New York 10022
Attention: Susan Cohen
Telephone No.: (212) 872-1000
Facsimile No.: (212) 872-1002
12.5 Governing Law. This Agreement shall in all respects be governed
by and construed in accordance with the Laws of the State of New York, excluding
any Law that would result in the application of the Laws of any jurisdiction
other than the State of New York and the
37
application of the 1980 United Nations Convention on Contracts for the
International Sale of Goods.
12.6 Arbitration. The Parties agree that any dispute arising out of
or in connection with this Agreement, or the breach, termination, or invalidity
hereof, shall be resolved as follows. In the event of a dispute between the
Parties, either Party may initiate the dispute resolution procedures of this
Section 12.6 by providing written notice (the "NOTICE OF CLAIM") to the other
Party identifying the dispute and stating the desire to resolve the dispute.
After receiving the Notice of Claim, respondent will respond in writing by
stating its position and setting forth a proposed resolution of the dispute. If
claimant and respondent are not able to resolve the dispute within twenty (20)
days thereafter, the matter in dispute shall be settled by arbitration in
accordance with the Rules of Arbitration of the International Chamber of
Commerce (the "ICC"). The arbitral tribunal shall be comprised of three
arbitrators; the Party nominated arbitrators shall be appointed in accordance
with the Rules of the ICC. The Party nominated arbitrators will have thirty (30)
days to appoint a chair who shall have relevant expertise in the subject matter
of the dispute and the applicable laws of the Territory. If they are unable to
make such appointment within that time, then the chair shall be appointed in
accordance with the Rules of the ICC, provided that the chair appointed by the
ICC shall have relevant expertise in the subject matter of the dispute and the
applicable laws of the Territory. The place of arbitration shall be Stockholm,
Sweden. The language to be used in the arbitral proceedings shall be English.
The Parties agree that the losing Party shall bear the cost of the arbitration
filing and hearing fees, the cost of the arbitrators and the ICC administrative
expenses and the attorney's fees and reasonable associated costs and expenses of
each Party. The Parties agree to reasonable document discovery, provided the
requesting Party makes a showing of relevance and need to the tribunal.
Notwithstanding the foregoing, either Party may seek an immediate injunction
from a court of competent jurisdiction (i) to prevent the disclosure of
Confidential Medicis Information or Confidential Supplier Information, as
applicable, in violation of Article XI herein or (ii) to prevent an assignment
of this Agreement in violation of Section 12.2 herein.
12.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an origina
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