Item 1.01.
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Entry into a Material Definitive Agreement.
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Stock and Asset Purchase Agreement
On December 19, 2017, Impax Laboratories, Inc., a Delaware corporation (the Company), entered into a Stock and Asset Purchase Agreement (the
Purchase Agreement) with Bora Pharmaceuticals Co., Ltd., a corporation organized under the laws of the Republic of China (Bora), pursuant to which Bora agrees to purchase (i) all of the issued share capital (the
Shares) of Impax Laboratories (Taiwan), Inc., a corporation organized under the laws of the Republic of China and a wholly owned subsidiary of the Company (Impax Taiwan), and (ii) certain loans outstanding between the
Company and Impax Taiwan (the Transferred Loans). The aggregate purchase price of the Shares and the Transferred Loans is $18,500,000 in cash. The purchase price is subject to a working capital adjustment.
The closing of the transaction is subject to customary closing conditions, including the absence of any law, order or injunction prohibiting the closing of
the transaction, the accuracy of the representations and warranties, the performance of the covenants, and certain net working capital thresholds. Subject to certain limitations, including time limitations and a minimum per claim amount, the Company
and Bora have agreed to indemnify the other for the failure of any representation or warranty to be true and accurate and breaches of covenants.
There is
no financing condition to the consummation of the transactions contemplated by the Purchase Agreement. Pursuant to the Purchase Agreement, the Company has agreed to provide reasonable cooperation to Bora in Boras efforts to obtain debt
financing to fund part of the purchase price to be paid to the Company.
The Purchase Agreement also contains customary provisions governing circumstances
under which the Company or Bora may terminate the Purchase Agreement. Either the Company or Bora may terminate the Purchase Agreement by (i) mutual written agreement, (ii) if the closing does not occur by June 19, 2018, or
(iii) if the other party breaches certain representations, warranties or covenants.
The Purchase Agreement also contemplates that, at the closing of
the transaction: (a) a license agreement entered into by and among Impax Laboratories Ireland Limited, a private company limited by shares incorporated in Ireland (Impax Ireland), and Bora on December 19, 2017, pursuant to
which Impax Ireland will grant to Bora an exclusive license to manufacture and commercialize a certain pharmaceutical product in the Republic of China, will become effective, and (b) the Company will provide certain transition services to Impax
Taiwan for a period of time after the closing of the transaction, pursuant to a transition services agreement.
The Purchase Agreement contains customary
representations, warranties and covenants made by the Company and Bora. The Company and Bora have also agreed to customary covenants, including covenants regarding the operation of Impax Taiwan in the ordinary course during the period between the
signing of the Purchase Agreement and the closing of the transaction; and a covenant prohibiting the Company from soliciting or hiring employees of Impax Taiwan for a period of three years after the closing of the transactions, subject to certain
exceptions.
The representations, warranties and covenants of the Company contained in the Purchase Agreement have been made solely for the benefit of
Bora. In addition, such representations, warranties and covenants (a) have been made only for purposes of the Purchase Agreement, (b) have been qualified by confidential disclosures made to Bora in connection with the Purchase Agreement,
(c) are subject to materiality qualifications contained in the Purchase Agreement which may differ from what may be viewed as material by investors, (d) were made as of the date of the Purchase Agreement, the closing date or such other
date as is specified in the Purchase Agreement and (e) have been included in the Purchase Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts. Accordingly, the Purchase
Agreement is included with this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with any other factual information regarding the Company, Impax Taiwan or their respective
businesses. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates (including
Impax Taiwan). Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the
Companys public disclosures. The Purchase Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company that is or will be
contained in, or incorporated by reference into, the Forms
10-K,
Forms
10-Q
and other documents that the Company files with the SEC.
Supply Agreement
On December 19, 2017, the Company
entered into a Master Supply Agreement (the Supply Agreement) with Bora and Impax Taiwan (collectively, the Manufacturer), pursuant to which, the Manufacturer will manufacture and supply certain pharmaceutical products (the
Products) for a term of three years following the closing of the transaction (the Initial Term), unless earlier terminated. The Supply Agreement will become effective upon the closing of the transaction under the Purchase
Agreement. After the Initial Term, the Supply Agreement will automatically renew for successive one year terms until the Supply Agreement is terminated. Either the Company or the Manufacturer may terminate the Supply Agreement
if the other party (i) fails to cure a material breach following a notice and cure period or (ii) is declared insolvent or bankrupt by a court of competent jurisdiction. The Company may terminate the Supply Agreement with respect to a
Product (i) upon written notice if a governmental agency takes any action, not attributable to the Company, that hinders the Company from importing, exporting, purchasing or selling the Product for at least six (6) months or (ii) in
its sole discretion after the first anniversary of the Supply Agreement.
The Company will provide monthly updates to a specified rolling forecast with
respect to each Product to be supplied. The Company will pay the Manufacturer based on a fixed schedule of fees for each Product. The Manufacturer may increase the price for each Product by a certain specified percentage on an annual basis, by
providing written notice to the Company. Any price increase will take effect on January 1st of the applicable calendar year.
The
Supply Agreement contains customary representations, warranties and covenants, including representations and warranties relating to compliance of the Products with specifications and applicable governmental rules and covenants with respect to the
rejection of delivered Products and
non-conforming
Products, product recalls and regulatory communications.
The
foregoing descriptions of the Purchase Agreement and the Supply Agreement do not purport to be complete and are qualified in their entirety by reference to the full texts of the Purchase Agreement and the Supply Agreement, copies of which will be
filed as exhibits to the Companys Annual Report on Form
10-K
for the year ended December 31, 2017. All summaries and descriptions of the Purchase Agreement and the Supply Agreement set forth above
are qualified in their entirety by the actual documents.