Asset Purchase Agreement by and between Chartwell Carmel Assets, LLC, Chartwell Pharmaceuticals LLC, Silarx Pharmaceuticals, Inc., Lannett Company, Inc., and Lannett Holdings, Inc
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS AGREEMENT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of March 3, 2022, by and between CHARTWELL CARMEL ASSETS, LLC, a New York limited liability company (“Buyer”), solely for the purposes of Section 10.13, CHARTWELL PHARMACEUTICALS LLC, a Delaware limited liability company (“Chartwell Pharmaceuticals”), SILARX PHARMACEUTICALS, INC., a New York corporation (“Silarx”), LANNETT COMPANY, INC., a Delaware corporation (“Lannett”), and LANNETT HOLDINGS, INC., a Delaware corporation (“Lannett Holdings”) (Silarx, Lannett, and Lannett Holdings, each, a “Seller” and, collectively, the “Sellers”).
WHEREAS, Sellers are engaged in the business of the development, manufacturing, marketing and sale of certain pharmaceutical products, including those that are more particularly described and defined herein as the “Products”;
WHEREAS, subject to the terms and conditions of this Agreement, Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers, the Products, together with certain other tangible and intangible assets related to, or necessary for the continued development, manufacturing, marketing and sale of the Products; and
WHEREAS, in connection with the transactions contemplated by this Agreement, Silarx and Chartwell Carmel Realty, LLC shall enter into a certain Facility Purchase Agreement (hereinafter defined) with respect to the Facility (hereinafter defined), and Chartwell Pharmaceuticals (hereinafter defined) and Lannett shall enter into a certain Supply Agreement (hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties hereby agree as follows:
Section 1.1Defined Terms. As used in this Agreement, the following defined terms have the meanings described below:
Section 1.2Construction of Certain Terms and Phrases. Unless the context of this Agreement otherwise requires, when used in this Agreement: (a) words of any gender include each other gender; (b) the terms “hereof,” “herein,” “hereto,” “hereby” and derivative or similar words refer to this entire Agreement; (c) the terms “including,” “include” or “includes” shall be deemed to be followed by “without limitation”; (d) references to currency means U.S. Dollars; (e) words (including defined terms) using the singular or plural number also include the plural or singular number, respectively and (f) the word “or” shall be construed to mean “and/or” unless the context clearly prohibits that construction. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified. This Agreement shall be deemed to be drafted jointly by all the Parties and shall not be specifically construed against any Party hereto based on any claim that such Party or its counsel drafted this Agreement.
PURCHASE AND SALE OF ASSETS
Section 2.1Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, Sellers shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Sellers, free and clear of all Encumbrances, all of Sellers’ right, title and interest in, to and under the following assets, properties and rights of Sellers (collectively, the “Purchased Assets”):
|(i)||all ANDA Assets;|
|(ii)||all Tangible Personal Property;|
|(iii)||all Contracts set forth on Schedule 2.1(iii) (collectively, the “Assumed Contracts”);|
|(iv)||all of Sellers’ rights under warranties, indemnities and all similar rights against third parties to the extent related to any Purchased Assets; and|
|(v)||all goodwill associated with any of the assets described in the foregoing clauses.|
Section 2.2Excluded Assets. Other than the Purchased Assets described in Section 2.1, Buyer expressly understands and agrees that it is not purchasing or acquiring, and Sellers are not selling or assigning, any other assets or properties of Sellers, and all such other assets and properties shall be excluded from the Purchased Assets (the “Excluded Assets”). Excluded Assets include the following assets and properties of Sellers:
|(i)||all cash and cash equivalents, bank accounts and securities of Sellers;|
|(ii)||any accounts receivable and accounts payable associated with the operation of the Facility prior to Closing;|
|(iii)||all work-in-progress and finished Product inventory, whether or not located at the Facility as of the Closing Date;|
|(iv)||all Contracts that are not Assumed Contracts;|
|(v)||the corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of Sellers, all employee-related or employee benefit-|
|related files or records, other than personnel files of Transferred Employees, and any other books and records which Sellers are prohibited from disclosing or transferring to Buyer under applicable Law and is required by applicable Law to retain;|
|(vi)||any personal property at the Facility owned by Employees and not by Sellers;|
|(vii)||any personal property owned by third-party vendors and leased to Sellers for use in connection with the operations of the Facility;|
|(viii)||all insurance policies of Sellers and all rights to applicable claims and proceeds thereunder;|
|(ix)||all Benefit Plans and trusts or other assets attributable thereto;|
|(x)||all Tax assets (including duty and Tax refunds and prepayments);|
|(xi)||all rights to any action, suit or claim of any nature available to or being pursued by Sellers, whether arising by way of counterclaim or otherwise;|
|(xii)||all assets, properties and rights used by Sellers in their businesses other than the Business;|
|(xiii)||the rights which accrue or will accrue to Sellers under the Transaction Documents;|
|(xiv)||all Materials and other tangible personal property listed on Schedule 2.1(ii); and|
|(xv)||the name “Silarx Pharmaceuticals, Inc.”|
Section 2.3Liabilities and Obligations.
Section 2.4Consideration. The purchase price for the Purchased Assets (the “Purchase Price”) shall be $3,000,000. Buyer shall pay Sellers $1,500,000 of the Purchase Price
on the Closing Date. Buyer shall pay Sellers the remaining $1,500,000 of the Purchase Price in three equal installment payments of $500,000 on the dates that are: (i) six (6) months after the Closing Date; (ii) twelve (12) months after the Closing Date; and (iii) eighteen (18) months after the Closing Date. Buyer shall pay Sellers on the applicable due date, subject to an offset against any amounts then owing to Buyer or any of its Affiliates under this Agreement or otherwise.
Section 2.5Payment of Sales, Use and Other Taxes. Sellers shall be responsible for all sales, use, stamp duty, transfer, value added and other related or similar Taxes, if any, arising out of the sale by Sellers of the Purchased Assets to Buyer pursuant to this Agreement or payable in connection with the Contemplated Transactions; provided, however, Buyer shall provide Sellers with New York State Department of Taxation and Finance Form ST-121 – Exempt Use Certificate (the “Sales and Use Tax Exemption Certificate”) with respect to the Tangible Personal Property. Each of Buyer and Sellers shall cooperate in timely making all filings, returns, reports and forms as may be required in connection with Sellers’ payment of all Taxes. Sellers or Buyer, as applicable, shall execute and deliver all instruments and certificates necessary to enable the other to comply with any filing requirements relating to any such Taxes. Buyer agrees to retain all records relating to Taxes for all taxable periods ending on or prior to the Closing Date until the expiration of the statutes of limitation (including any extensions thereof) for the taxable period or periods to which such records relate. Buyer and Sellers agree to provide each other with such information and assistance as is reasonably necessary (at the expense of the requesting Party), including access to records and personnel, for the preparation of any Tax returns or claims for refund, or for the defense of any Tax claim or assessment, whether in connection with an audit or otherwise. Any information obtained under this Section 2.5 shall be kept confidential, except as may be otherwise necessary in connection with the filing of Tax returns or claims for refund or in conducting any audit, examination or other proceeding.
Section 2.6Additional ANDA Assets.
Section 2.7Materials. At any time during the first fifteen (15) days after the Closing Date, Buyer shall have the option to purchase the Materials. In the event Buyer elects to purchase the Materials, Buyer shall provide Sellers with written notice thereof not less than five (5) days prior to the proposed purchase date. The Materials and the purchase price for the Materials shall be set forth on Schedule 2.7. After the Closing Date, Buyer shall be responsible for maintaining and storing the Materials in useable condition and in a secure location or facility to protect against
theft and damage. If Buyer does not elect to purchase the Materials, Buyer shall provide access to and cooperate with Sellers to assist Sellers in removing the Materials.
Section 2.8Offsets. Sellers agree that with respect to (i) the purchases described in Section 2.6(a), Section 2.6(b) and Section 2.7, and (ii) [***], Buyer shall be permitted to apply any unpaid amounts owed to Chartwell Pharmaceuticals Carmel pursuant to the Supply Agreement against the purchase price of any such assets.
Section 3.1Closing. The purchase and sale provided for in this Agreement (the “Closing”) will take place at 10:00 a.m. on March 31, 2022 or such earlier date as mutually agreed upon in writing by the Parties, provided that the Closing shall not occur prior to the date that all conditions set forth in this Agreement are satisfied or otherwise waived. The Closing shall take place via electronic exchange of signatures by the Parties. Subject to the provisions of Article IX, failure to consummate the Contemplated Transactions on the date and time and at the place determined pursuant to this Section 3.1 will not result in the termination of this Agreement and will not relieve any Party of any obligation under this Agreement. In such a situation, the Closing will occur as soon as practicable, subject to Article IX.
Section 3.2Real Estate Acquisition. The Closing is expressly conditioned upon the simultaneous closing of the acquisition of the Facility by Buyer from Silarx, pursuant to the Facility Purchase Agreement (the “Real Estate Acquisition”).
Section 3.3Closing Deliveries.
(a)At the Closing, Sellers shall deliver to Buyer the following:
|(i)||the Bill of Sale, duly executed by Sellers, transferring the Tangible Personal Property to Buyer;|
|(ii)||the Transition Services Agreement, duly executed by Lannett;|
|(iii)||the Powers of Attorney, duly executed by Sellers;|
|(iv)||all third-party consents, notices and approvals set forth on Schedule 4.3;|
|(v)||the Seller Closing Certificate; and|
|(vi)||such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement.|
(b)At the Closing, Buyer shall deliver to Sellers the following:
|(i)||the Purchase Price;|
|(ii)||the Transition Services Agreement, duly executed by Chartwell Pharmaceuticals Carmel LLC;|
|(iii)||the Buyer Closing Certificate;|
|(iv)||all third-party consents, notices and approvals set forth on Schedule 5.3;|
|(v)||the Sales and Use Tax Exemption Certificate; and|
|(vi)||such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement.|
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer, as follows:
Section 4.1Organization. Each Seller is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite power and authority to own and transfer its respective portion of the Purchased Assets.
Section 4.2Authority of Seller. Each Seller has all necessary power and authority to enter into this Agreement and to carry out the Contemplated Transactions. Each Seller has taken all action required by Law, such Seller’s certificate of incorporation, bylaws or otherwise to be taken by them to authorize the execution and delivery of this Agreement by such Seller and the consummation of the Contemplated Transactions. This Agreement has been duly and validly executed and delivered by each Seller and, when duly authorized, executed and delivered by Buyer, will constitute a legal, valid and binding obligation of such Seller enforceable against it in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws of general application affecting enforcement of creditors’ rights generally.
Section 4.3Consents and Approvals. No consents of, or registrations, declarations or filings with, any Governmental or Regulatory Authority, or by any customer, supplier or other third party, are required by or with respect to Sellers in connection with the execution and delivery of this Agreement by them or the performance of their obligations hereunder, except for such consents required from the Parties set forth on Schedule 4.3 attached hereto.
Section 4.4Non-Contravention. The execution and delivery by Sellers of this Agreement does not, and the performance by them of their obligations under this Agreement and the consummation of the Contemplated Transactions will not:
Section 4.5Litigation. Except as provided on Schedule 4.5, there are no Actions or Proceedings pending or, to the Knowledge of Sellers, threatened or reasonably anticipated against Sellers or their respective Affiliates that relate to (a) the Purchased Assets; (b) this Agreement; or (c) the Contemplated Transactions. No Seller is subject to any Order that could reasonably be expected to materially impair or delay such Seller’s ability to perform its obligations hereunder.
Section 4.6Compliance with Law; Permits.
(b)As identified in Schedule 4.6, each Seller possesses all federal, state, local and foreign permits, approvals, licenses, registrations, authorizations, certificates, rights, identification numbers, exemptions, product certifications and other governmental authorizations and orders from Governmental or Regulatory Authority (collectively, the “Permits”) that are material to the Business or such Seller and are necessary for the operation of the business of the Sellers as presently conducted or the Business, or that are necessary for the lawful ownership of their respective properties and assets. Sellers have delivered or made available to Buyer for inspection a true and correct copy of each such Permit. All such Permits are valid and have not
lapsed, been cancelled, terminated or withdrawn. Except as set forth on Schedule 4.6, to the Knowledge of the Sellers, Sellers are in compliance with all such Permits in all material respects. No proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit any such Permit is pending, or, to the Knowledge of the Sellers, threatened, and, to the Knowledge of the Sellers, there is no valid basis for such proceeding, including the transactions contemplated hereby. No administrative or governmental action or proceeding has been taken, or, to the Knowledge of the Sellers, threatened, in connection with the expiration, continuance or renewal of any such Permit, and, to the Knowledge of the Sellers, there is no valid basis for any such proceeding.
Section 4.7Purchased Assets.
(b)Each item of Tangible Personal Property is suitable for immediate use in the ordinary course of business and is free from latent and patent defects. No item of Tangible Personal Property is in need of repair or replacement other than as part of routine maintenance in the ordinary course of business.
Section 4.8ANDA Assets.
Section 4.9Brokers. Sellers have not retained any broker in connection with the Contemplated Transactions. Buyer has no, and will have no, obligation to pay any brokers, finders, investment bankers, financial advisors or similar fees in connection with this Agreement or the Contemplated Transactions by reason of any action taken by or on behalf of Sellers.
Section 4.10No Preferential Obligations. The Purchased Assets are not subject to any agreements granting preferential rights to purchase or license the Purchased Assets to, any third Persons.
Section 4.11Product Liability. Except as set forth in Schedule 4.11, the Sellers do not have any Liability (and there is no basis for any present or future Action or Proceeding against such Seller giving rise to any Liability) arising out of any injury to individuals or property as a result of the ownership, possession, storage, manufacturing, distribution or marketing of any of the Products.
Section 4.12Absence of Certain Liabilities. Except for current year ad valorem taxes not yet due and payable, Sellers have no liabilities or obligations, whether accrued, absolute, contingent or otherwise, due or to become due, including Liabilities for federal, state, local or foreign taxes that, following consummation of the Contemplated Transactions, would be binding upon Buyer or the Purchased Assets.
(a) Sellers, and all predecessors of Sellers, since June 1, 2015, have complied with and are currently in compliance with all Environmental Laws (including all permits and authorizations required under Environmental Laws) pertaining to any of the properties and assets of Sellers, including the Purchased Assets and the Facility, or to the use or ownership thereof, except as would not have a material adverse effect on Sellers, the Purchased Assets or the Facility. No violation of any Environmental Law is being alleged or threatened or has at any time been alleged or threatened relating to any of the properties and assets of Sellers, the Purchased Assets or the Facility, and to the use or ownership thereof.
(b) Sellers have disclosed and made available to the Buyer all information, including all studies, analysis and test results, in their possession, custody or control or otherwise known to Sellers relating to (i) the environmental conditions on, under or about any of the Purchased Assets or the Facility, and (ii) any Hazardous Materials used, handled, treated, generated, stored or Released by Sellers or any other Person (including third parties) on, under, about or from any of the Purchased Assets or the Facility.
Section 4.16Foreign Assets Control Regulations.
Section 4.17Anti-Money Laundering; Patriot Act. To the Knowledge of the Sellers, none of the Sellers, any Seller Party, or any Person receiving all or any portion of the Purchase Price: (i) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist related activities, any crimes that in the United States would be predicate crimes to money laundering, or any violation of any Anti Money Laundering Laws; (ii) has been assessed civil or criminal penalties under any Anti-Money Laundering Laws (as defined herein); or (iii) has had any of its funds seized or forfeited in any action under any Anti Money Laundering Laws. For purposes of this Section 4.17 and Section 5.7, the term “Anti-Money Laundering Laws” means laws, regulations and sanctions, state and federal, criminal and civil, that (1) limit the use of and/or seek the forfeiture of proceeds from illegal transactions; (2) limit commercial transactions with designated countries or individuals believed to be terrorists, narcotics dealers or otherwise engaged in activities contrary to the interests of the United States; (3) require identification and documentation of the Parties with whom a Financial Institution conducts business; or (4) are designed to disrupt the flow of funds to terrorist organizations. Such laws, regulations and sanctions shall be deemed to include the USA PATRIOT Act of 2001, Pub. L. No. 107-56, the Bank Secrecy Act, 31 U.S.C. Section 5311 et. seq., the Trading with the Enemy Act, 50 U.S.C. App. Section 1 et. seq., the International Emergency Economic Powers Act, 50 U.S.C. Section 1701 et. seq., and the sanction regulations promulgated pursuant thereto by the OFAC, as well as laws relating to prevention and detection of money laundering in 18 U.S.C. Sections 1956 and 1957, as such laws may hereafter be modified amended, extended or supplemented.
Section 4.18Survival of Representations and Warranties. The representations, warranties and agreements of Sellers set forth in this Agreement are made as of the date of this Agreement and shall be true, correct, complete and accurate on and as of the Closing Date and at all times between the date of this Agreement and the Closing Date. The representations and warranties of Sellers set forth in this Agreement shall survive the Closing for a period of eighteen (18) months, except for the representations and warranties in Sections 4.1, 4.2, 4.3, 4.4, and 4.7, which shall survive for the applicable statute of limitations plus 90 days.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
Section 5.1Organization. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and has all requisite power and authority to own its assets and carry on its business as currently conducted by it.
Section 5.2Authority of Buyer. Buyer has all necessary power and authority to enter into this Agreement and to carry out the Contemplated Transactions. Buyer has taken all action required by Law, its organizational documents, or otherwise to be taken by it to authorize the execution and delivery of this Agreement by Buyer and the consummation of the Contemplated Transactions. This Agreement has been duly and validly executed and delivered by Buyer and, when duly authorized, executed and delivered by Sellers, will constitute a legal, valid and binding obligation of Buyer enforceable against it in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other Laws of general application affecting enforcement of creditors’ rights generally.
Section 5.3Consents and Approvals. No consents or authorizations of, or registrations, declarations or filings with, any Governmental or Regulatory Authority, or by any customer, supplier or other third party, are required by Buyer in connection with the execution and delivery of this Agreement by Buyer or the performance of its obligations hereunder, except as set forth on Schedule 5.3.
Section 5.4Non-Contravention. The execution and delivery by Buyer of this Agreement does not, and the performance by it of its obligations under this Agreement, and the consummation of the Contemplated Transactions will not:
Section 5.5Litigation. There are no Actions or Proceedings pending or, to the Knowledge of Buyer, threatened or reasonably anticipated against Buyer which if adversely determined would delay the ability of Buyer to perform its obligations hereunder. Buyer is not subject to any Order that could reasonably be expected to materially impair or delay Buyer’s ability to perform its obligations hereunder.
Section 5.6Brokers. Buyer has not retained any broker in connection with the Contemplated Transactions. Sellers have no, and will have no, obligation to pay any brokers, finders, investment bankers, financial advisors or similar fees in connection with this Agreement or the Contemplated Transactions by reason of any action taken by or on behalf of Buyer.
Section 5.7Anti-Money Laundering; Patriot Act. To the Knowledge of Buyer, neither Buyer nor any Buyer Party, nor any Person receiving all or any portion of the Purchase
Price: (i) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist related activities, any crimes that in the United States would be predicate crimes to money laundering, or any violation of any Anti Money Laundering Laws; (ii) has been assessed civil or criminal penalties under any Anti-Money Laundering Laws (as defined herein); or (iii) has had any of its funds seized or forfeited in any action under any Anti Money Laundering Laws.
Section 5.8Survival of Representations and Warranties. The representations, warranties and agreements of Buyer set forth in this Agreement are made as of the date of this Agreement and shall be true, correct, complete and accurate on and as of the Closing Date and at all times between the date of this Agreement and the Closing Date. The representations and warranties of Buyer set forth in this Agreement shall survive the Closing for a period of eighteen (18) months, except for the representations and warranties in Sections 5.1, 5.2, 5.3 and 5.4, which shall survive for the applicable statute of limitations plus 90 days.
COVENANTS OF THE PARTIES
Section 6.1Conduct of the Business. Pending the Closing, in order to maintain the current status quo, and except as contemplated by this Agreement, as set forth on Schedule 6.1, or as otherwise expressly consented to or approved in writing by Buyer, Sellers covenant and agree with Buyer as follows:
(a) Sellers shall not: (i) effect any material change to the Business; (ii) enter into, terminate, modify or waive any agreement, understanding, commitment, relationship or transaction with respect to the Business except in the ordinary course of the Business consistent with past practices; (iii) amend, terminate, modify or waive any terms of the Assumed Contracts; (iv) sell, lease, grant a license with respect to or otherwise encumber or dispose of any of the Purchased Assets except in the ordinary course of the Business consistent with past practices; (v) grant, create or suffer an Encumbrance upon any of the Purchased Assets; (vi) make or enter into any employment agreement with any Employee, (vii) increase the cash compensation payable to any Employee other than in the ordinary course of business; (viii) incur any obligation or liability, contingent or otherwise, except in the ordinary course of the operation of the Business; or (x) defer the payment of any liability or expense, or satisfy any other obligation in respect of the Business or the Purchased Assets, other than in the ordinary course of the operation of the Business.
(b) Sellers shall operate the Business diligently, in good faith and in the ordinary course of the Business, consistent with past practices. Sellers shall use their reasonable efforts to preserve the Business, its goodwill and business relationships, including its current relationships with the Employees.
Section 6.3Access. From and after the date of this Agreement, Sellers shall provide Buyer with reasonable access to the Facility and the Employees and to books and records, contracts and other information relating to the Purchased Assets and the operations at the Facility, including, without limitation, permitting Buyer to conduct a physical inventory of the Facility prior to the Closing Date.
Section 6.4Regulatory Transfers.
Sellers’ FDA Letter with the FDA and shall provide notice to Buyer of such filing. Within five (5) Business Days of filing the Sellers’ FDA Letter, Sellers shall deliver the Regulatory Documentation to Buyer and Buyer shall confirm receipt thereof. Within five (5) Business Days after receiving Regulatory Documentation, Buyer shall file the Buyer FDA Letter with the FDA. Sellers and Buyer shall take all other actions reasonably necessary to notify the FDA that the Regulatory Approvals have been transferred from Sellers to Buyer and to effect the transfer of such Regulatory Approvals from Sellers to Buyer.
connection with any regulatory reporting obligations of Buyer applicable to the Products following the Closing for a period of (i) up to twelve (12) months following the Closing (in the case of (A) Buyer’s first annual reporting requirements in respect of the Products after the Closing, (B) Buyer’s first periodic adverse drug experience reports for the Products after the Closing, (C) Buyer’s first annual product reviews for the Products after the Closing, and (D) Buyer’s first production of customer complaints in respect of the Products after the Closing) and (ii) 180 days following the Closing (in the case of all other reporting obligations). Sellers shall continue to provide required stability data for all studies initiated prior to the Closing until the last testing time period applicable thereto is completed. Buyer and Sellers shall use mutually agreed upon methods of communication in furtherance of the assistance described above, which shall at a minimum include phone and email support for transmitting questions, responses and data.
Agreement (the “Pharmacovigilance Agreement”), outlining the transition of pharmacovigilance activities for the Products, which shall be completed and signed at the Closing as attached hereto as Exhibit F. Pursuant to the terms of the Pharmacovigilance Agreement, Buyer shall bear all costs and fees related to such transition.
Section 6.5Other Governmental Filings. Each Party will prepare and file whatever filings, requests or applications that are required to be filed with any Governmental or Regulatory Authority in connection with the consummation of the Contemplated Transactions. Each Party will provide the other a reasonable opportunity to review and comment upon any such filings, requests or applications prior to filing.
Section 6.6Employees. Buyer covenants to provide employment as of the Closing Date to all Employees, except those set forth on Schedule 6.6, with compensation and benefits that are substantially similar to those in effect immediately prior to the Closing Date. Notwithstanding the foregoing, Sellers shall continue to provide health care coverage for all Employees up to and including on the Closing Date. Within thirty (30) days after the Closing Date, Sellers shall process and pay all applicable wages, salaries, eligible bonuses and 2021 vacation payments for the Employees with respect to the time period prior to the Closing Date. Sellers shall retain responsibility for any severance or other benefits owed to any Employees up to the Closing Date. Sellers shall comply with any WARN Act, COBRA or other obligations with respect to any Employees who elect not to be employed by the Buyer. If the Closing does not occur on the last day of the calendar month, Buyer shall reimburse Sellers for all COBRA related costs and expenses in order for the Employees, excluding those set forth on Schedule 6.6, to have continued health care coverage.
Section 6.7Notifications. Sellers shall notify DEA, BNE, BOP and any other required Governmental or Regulatory Authority of the Contemplated Transactions prior to the Closing, but in no event later than fourteen (14) days prior to the anticipated Closing Date.
Section 6.8 [***]
Section 6.9Right to Commercialize Products. Sellers acknowledge and agree that, notwithstanding Buyer’s agreement to manufacture certain Products for Sellers pursuant to the Supply Agreement, Buyer and its Affiliates shall not be prohibited from manufacturing, marketing, selling and distributing similar or identical products for their own label or for any third party.
Section 6.10Audit Rights. Each Party will keep accurate and complete books and records of all transactions related to the calculation and payment of [***]. On reasonable notice and during business hours, each Party and its representatives will have the right to audit the books and records of the other Party and its Affiliates to determine the accuracy of the amounts paid to Sellers with respect to [***]. With respect to Buyer’s books and records, such audit right shall be limited to that information necessary to verify the gross sales of the Products.
Section 6.11Tax Covenants. Buyer and Sellers shall make all filings, returns, reports and forms as may be required in connection with Sellers’ payment of transfer Taxes. Buyer or Sellers, as applicable, shall execute and deliver all instruments and certificates necessary to enable the other Party to comply with any filing requirements relating to any such transfer Taxes.
Section 6.12Data Room Content. Sellers shall provide Buyer with a USB thumb drive that includes all of the contents in the data room as of the Closing within two (2) weeks following the Closing Date.
Section 6.13Further Assurances. On and after the Closing Date, Sellers shall from time to time, at the request of Buyer, execute and deliver, or cause to be executed and delivered, such other instruments of conveyance and transfer and take such other actions as Buyer may reasonably request, in order to more effectively consummate the Contemplated Transactions and to vest in Buyer good and marketable title to the Purchased Assets.
Section 7.2Calculation of Indemnity Payments.
this Article VII shall be net of any amounts recovered or recoverable by the indemnified party (including under insurance policies) with respect to such Damages.
Damages that are the subject of indemnification hereunder after all or a portion of such Damages have been paid by an indemnifying party pursuant to this Article VII, then the indemnified party shall promptly remit to the indemnifying party the excess (if any) of (i) (A) the amount paid by the indemnifying party in respect of such Damages plus (B) the amount received by the indemnified party from such third party in respect thereof over (ii) the full amount of the Damages. In the event that an indemnified party has any rights against a third party with respect to any Damages that result in a payment by an indemnifying party under this Article VII, such indemnifying party shall be subrogated to such rights to the extent of such payment. Without limiting the generality of any other provision hereof, each indemnified party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the subrogation and subordination rights detailed herein, and otherwise cooperate in the prosecution of such claims.
Section 7.3Indemnification; Limitation on Damages. Notwithstanding anything to the contrary contained in this Agreement, in no event shall any Party be liable for, and “Damages” shall not include, special, indirect, incidental, exemplary, punitive or consequential damages of any other Party or for lost or anticipated profits, revenues or opportunities or business interruption of any other Party, whether or not caused by or resulting from the actions of such Party or the breach of its covenants, agreements, representations or warranties hereunder and whether or not based on or in warranty, contract, tort (including negligence or strict liability) or otherwise; provided, however, that nothing in this Section 7.3 shall preclude any recovery by an indemnified party against an indemnifying party for a third party claim.
CONDITIONS TO CLOSING
Section 8.1Conditions to Obligations of All Parties. The obligations of each Party to consummate the Contemplated Transactions shall be subject to the fulfillment, at or prior to the Closing, of the following condition:
Section 8.2Conditions to Obligations of Buyer. The obligations of Buyer to consummate the Contemplated Transactions shall be subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:
Section 8.3Conditions to Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Sellers’ waiver, at or prior to the Closing, of each of the following conditions:
Section 9.1Termination. This Agreement may be terminated at any time prior to the Closing:
by the mutual written consent of Sellers and Buyer;
|(i)||Buyer is not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Sellers pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VIII and such breach, inaccuracy or failure cannot be cured by Sellers by April 1, 2022 (the “Outside Closing Date”); or|
|(ii)||any of the conditions set forth in Section 8.1 or Section 8.2 shall not have been fulfilled by the Outside Closing Date, unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;|
Section 9.2Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any Party hereto except:
Section 10.1Notices. Any notice, demand, approval, or other communication required or permitted to be given hereunder shall be in writing and be deemed to have been sufficiently given for all purposes hereunder if hand delivered with written proof of delivery, or sent via a reputable commercial overnight delivery service with shipment prepaid and written proof of delivery, in both instances with a copy of such notice simultaneously sent by email to the attorney for the Party, and addressed to the Parties at the addresses for each of them that are specified below, which addresses may be changed by the giving of notice as provided in this Section. Attorneys shall be permitted to deliver notices on behalf of their respective clients.
If to Sellers, at:Lannett Company, Inc.
1150 Northbrook Boulevard
Trevose, PA 19053
Attn: Samuel Israel, General Counsel
With a copy to:Fox Rothschild LLP
2000 Market St., 20th Floor
Philadelphia, PA 19103-3222
Attn: Bradley Rodos, Esq.
If to Buyer, at:c/o Chartwell Pharmaceuticals LLC
77 Brenner Drive
Congers, NY 10920
Attn: Jack Goldenberg
With a copy to: Warshaw Burstein, LLP
575 Lexington Avenue
New York, NY 10022
Attention: Steve Semian, Esq.
Any Party from time to time may change its address, email address, facsimile number or other information for the purpose of notices to that Party by giving notice specifying such change to the other Party hereto in accordance with the terms of this Section.
Section 10.2Entire Agreement. This Agreement (and all Exhibits and Schedules attached hereto and all other documents delivered in connection herewith) and the Confidentiality Agreement supersede all prior discussions and agreements, both written and oral, among the Parties with respect to the subject matter hereof and contain the sole and entire agreement among the Parties with respect to the subject matter hereof.
Section 10.3Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.
Section 10.4Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by each Party.
Section 10.5Third Party Beneficiaries. Except as otherwise expressly set forth herein, the terms and provisions of this Agreement (and all Exhibits and Schedules attached hereto and all other documents delivered in connection herewith) are intended solely for the benefit of each Party and their respective successors or permitted assigns and it is not the intention of the Parties to confer third-party beneficiary rights or remedies hereunder or thereunder upon any other Person.
Section 10.6Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any Party without the prior written Consent of the other Party; provided, however, that any Party may assign its rights and obligations under
this Agreement, without the prior written Consent of the other Parties, to an Affiliate provided that such Affiliate agrees in writing to be bound by this Agreement. Any required consent shall not be unreasonably withheld or delayed. Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve a Party of its responsibility for the performance of any obligation.
Section 10.7Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
Section 10.8Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future Laws effective while this Agreement remains in effect, the legality, validity and enforceability of the remaining provisions will not be affected thereby.
Section 10.9Governing Law, Jurisdiction and Venue. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of New York without giving effect to the conflict of laws principles thereof that would require the application of any other laws. Each of the Parties hereto irrevocably (a) consents to the exclusive jurisdiction and venue of any Federal or state court situated in New York County, New York in connection with any matter arising out of this Agreement, (b) waives any objection to such jurisdiction or venue, (c) agrees not to commence any legal proceedings related hereto except in such court, (d) consents to and agrees to accept service of process to vest personal jurisdiction over it and (e) waives any right to trial by jury in any action in connection with this Agreement.
Section 10.10Expenses. Except as otherwise provided in this Agreement, each Party shall pay its own expenses and costs incidental to the preparation of this Agreement and to the consummation of the Contemplated Transactions. In the event of any Action or Proceeding by a Party to enforce its rights hereunder, the prevailing Party in such Action or Proceeding shall be entitled to recover its reasonable attorneys’ fees and costs from the other Party, which shall be in addition to any other amounts to which such Party is entitled in connection with such Action or Proceeding.
Section 10.11Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission (including by means of email transmission or in .pdf or similar format, in each case, complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com)) shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
Section 10.12Confidentiality. Unless required by Law or expressly contemplated by this Agreement, Sellers and Buyer each agree to keep this Agreement, the other Transaction Documents, and the terms hereof and thereof confidential and not to make or authorize any public announcements or disclosures with respect to the subject matter hereof without the prior written consent of the other Party; provided, however, that Sellers and Buyer may disclose this Agreement, the other Transaction Documents, and the terms hereof and thereof to their respective and potential directors, officers, shareholders, members, employees, agents, advisors, mortgage brokers, lenders
and partners (including, without limitation, financial advisors, attorneys and accountants) and controlling persons who are actively and directly participating in negotiating and/or consummating the transactions contemplated by this contract or any person who otherwise need to know such information for the purpose of negotiating and/or consummating such transactions. Notwithstanding the foregoing, Lannett shall be freely permitted to publicly disclose this Agreement, the terms and conditions set forth herein and other information regarding the Contemplated Transactions in connection with its status as a public company, pursuant to applicable rules and regulations of the Securities and Exchange Commission. The provisions of this Section 10.12 shall survive the Closing or termination of this Agreement.
Section 10.13 Chartwell Pharmaceuticals Guaranty. Chartwell Pharmaceuticals hereby guarantees to Sellers the full and complete performance by Buyer of all obligations of Buyer under this Agreement and shall be liable for any breach of representation, warranty, covenant or obligation hereunder.
[Signature page follows.]
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto all as of the date first above written.
SILARX PHARMACEUTICALS, INC.
By: /s/ John Abt______________________
Name: John Abt
LANNETT COMPANY, INC.
By: /s/ Timothy Crew___________________
Name: Timothy Crew
LANNETT HOLDINGS, INC.
By: /s/ Bobby Lau_______________________
Name: Bobby Lau
/s/ Jack Goldenberg__________________
Name: Jack Goldenberg
Solely For the Purposes of Section 10.13:
CHARTWELL PHARMACEUTICALS LLC
/s/ Jack Goldenberg__________________
Name: Jack Goldenberg
LIST OF EXHIBITS
Exhibit A+Bill of Sale
Exhibit B-1+BNE Power of Attorney
Exhibit B-2+Board of Pharmacy Power of Attorney
Exhibit B-3+DEA Power of Attorney
Exhibit C*Seller’s ANDAs
Exhibit D*Seller’s ANDAs – Optional Products
Exhibit E*Seller’s ANDAs – Additional Products
Exhibit F+Pharmacovigilance Transition Services Agreement
Exhibit G**Facility Purchase Agreement
Exhibit H**Manufacture and Supply Agreement
This Exhibit has been redacted to preserve confidentiality. The registrant hereby undertakes to provide further information regarding such redacted information to the Commission upon request.
** Portions of this Exhibit have been redacted to preserve confidentiality. The registrant hereby undertakes to provide further information regarding such redacted information to the Commission upon request.
This Exhibit has been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to provide further information regarding such omitted materials to the Commission upon request.
Refer to the Contract of Sale-Office, Commercial and Multi-Family Residential Premises between Silarx Pharmaceuticals, Inc. and Chartwell Carmel Realty, LLC incorporated by reference to Exhibit 10.97 on Form 10-Q dated May 10, 2022.
Refer to the Manufacture and Supply Agreement by and between Chartwell Pharmaceuticals Carmel, LLC, Chartwell Pharmaceuticals LLC, and Lannett Company, Inc. incorporated by reference to Exhibit 10.99 on Form 10-Q dated May 10, 2022.