-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A1GWIxTDUZnJtgt0Zbftle1a9ZreNjj9ISH0eWf+vesEiN2pV6u232Pj3NMH5LiJ ncFE4GKnxgqb0L0FH3G/Jw== 0000950170-00-001353.txt : 20000922 0000950170-00-001353.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950170-00-001353 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 DATE AS OF CHANGE: 20000906 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IVAX CORP /DE CENTRAL INDEX KEY: 0000772197 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 161003559 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09623 FILM NUMBER: 701931 BUSINESS ADDRESS: STREET 1: 4400 BISCAYNE BLVD CITY: MIAMI STATE: FL ZIP: 33137 BUSINESS PHONE: 3055756000 MAIL ADDRESS: STREET 1: 4400 BISCAYNE BOULEVARD CITY: MIAMI STATE: FL ZIP: 33137 FORMER COMPANY: FORMER CONFORMED NAME: IVAX CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IVACO INDUSTRIES INC DATE OF NAME CHANGE: 19871213 FORMER COMPANY: FORMER CONFORMED NAME: INLAND VACUUM INDUSTRIES INC DATE OF NAME CHANGE: 19870611 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 Commission File Number 1-09623 IVAX CORPORATION Florida 16-1003559 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4400 Biscayne Boulevard, Miami, Florida 33137 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (305) 575-6000 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 158,602,569 shares of Common Stock, $.10 par value, outstanding as of July 31, 2000. IVAX CORPORATION INDEX
PART I - FINANCIAL INFORMATION PAGE NO. -------- Item 1 - Financial Statements Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 2 Consolidated Statements of Operations for the three months and six months ended June 30, 2000 and 1999 3 Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and 1999 4 Notes to Consolidated Financial Statements 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3 - Quantitative and Qualitative Disclosures about Market Risk 16 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 17 Item 2 - Changes in Securities and Use of Proceeds 17 Item 4 - Submission of Matters to a Vote of Security Holders 17 Item 6 - Exhibits and Reports on Form 8-K 18
PART I - FINANCIAL INFORMATION Item 1 - Financial Statements IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
June 30, December 31, 2000 1999 --------- --------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 269,703 $ 41,408 Accounts receivable, net of allowance for doubtful accounts of $21,451 ($22,058 in 1999) 113,644 110,472 Inventories 172,774 146,624 Other current assets 34,992 36,265 --------- --------- Total current assets 591,113 334,769 Property, plant and equipment, net 225,439 226,198 Intangible assets, net 101,334 55,745 Other assets 25,392 17,802 --------- --------- Total assets $ 943,278 $ 634,514 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Loans payable $ 421 $ 746 Current portion of long-term debt 777 763 Accounts payable 46,149 48,675 Accrued income taxes payable 17,819 13,058 Accrued expenses and other current liabilities 141,675 147,154 --------- --------- Total current liabilities 206,841 210,396 Long-term debt, net of current portion 253,824 47,854 Note payable - related party, net -- 45,619 Other long-term liabilities 10,238 8,672 Minority interest 5,487 9,414 Put options -- 20,188 Shareholders' equity: Common stock, $.10 par value, authorized 350,000 shares, issued and outstanding 158,376 shares (152,235 in 1999) 15,838 15,224 Capital in excess of par value 374,384 232,318 Retained earnings 127,697 71,689 Accumulated other comprehensive loss (51,031) (26,860) --------- --------- Total shareholders' equity 466,888 292,371 --------- --------- Total liabilities and shareholders' equity $ 943,278 $ 634,514 ========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. 2 IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Period Ended June 30, Three Months Six Months (In thousands, except per share data) 2000 1999 2000 1999 --------- --------- --------- --------- NET REVENUES $ 184,654 $ 154,309 $ 366,543 $ 301,925 COST OF SALES 92,841 86,662 185,871 172,500 --------- --------- --------- --------- Gross profit 91,813 67,647 180,672 129,425 --------- --------- --------- --------- OPERATING EXPENSES: Selling 22,965 18,839 42,982 36,271 General and administrative 18,642 20,888 42,817 42,476 Research and development 17,152 13,434 32,662 24,778 Amortization of intangible assets 1,787 540 3,755 1,149 Reversal of restructuring reserve (3,144) -- (3,144) -- --------- --------- --------- --------- Total operating expenses 57,402 53,701 119,072 104,674 --------- --------- --------- --------- Income from operations 34,411 13,946 61,600 24,751 OTHER INCOME (EXPENSE): Interest income 3,635 1,712 4,689 4,167 Interest expense (5,203) (1,320) (7,245) (2,687) Other income, net 737 1,664 5,559 4,597 --------- --------- --------- --------- Total other income (expense), net (831) 2,056 3,003 6,077 --------- --------- --------- --------- Income from continuing operations before income taxes and minority interest 33,580 16,002 64,603 30,828 PROVISION FOR INCOME TAXES 1,142 2,394 6,186 6,485 --------- --------- --------- --------- Income from continuing operations before minority interest 32,438 13,608 58,417 24,343 MINORITY INTEREST (202) (488) (438) (1,506) --------- --------- --------- --------- Income from continuing operations 32,236 13,120 57,979 22,837 INCOME FROM DISCONTINUED OPERATIONS -- 290 -- 580 --------- --------- --------- --------- Income before extraordinary items 32,236 13,410 57,979 23,417 EXTRAORDINARY ITEMS - gain (loss) on extinguishment of debt, net of taxes in 1999 (2,254) 85 (2,254) 118 --------- --------- --------- --------- NET INCOME $ 29,982 $ 13,495 $ 55,725 $ 23,535 ========= ========= ========= ========= BASIC EARNINGS PER COMMON SHARE: Continuing operations $ .20 $ .08 $ .37 $ .14 Extraordinary items (.01) -- (.01) -- --------- --------- --------- --------- Net income $ .19 $ .08 $ .36 $ .14 ========= ========= ========= ========= DILUTED EARNINGS PER COMMON SHARE: Continuing operations $ .19 $ .08 $ .35 $ .14 Extraordinary items (.01) -- (.01) -- --------- --------- --------- --------- Net income $ .18 $ .08 $ .34 $ .14 ========= ========= ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 154,934 162,831 155,098 165,834 ========= ========= ========= ========= Diluted 162,657 165,134 162,209 168,176 ========= ========= ========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 3 IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six months Ended June 30, 2000 1999 --------- --------- (In thousands) Cash flows from operating activities: Net income $ 55,725 $ 23,535 Adjustments to reconcile net income to net cash flows from operating activities: Reversal of restructuring reserve established in prior years (3,144) -- Depreciation and amortization 14,904 12,942 Deferred tax benefit (2,889) (3,024) Provision for allowances for doubtful accounts 550 2,479 Minority interest 438 1,506 Equity in earnings of affiliates (377) 31 Loss (gain) on extinguishment of debt 2,254 (182) Gain on sale of product rights (1,813) (2,032) Net (gain) loss on disposal of assets (841) 402 Income from discontinued operations -- (580) Changes in assets and liabilities: (Increase) decrease in accounts receivable (3,827) 6,941 (Increase) decrease in inventories (25,348) 2,758 Decrease in other current assets 6,496 7,439 (Increase) decrease in other assets (4,925) 251 Decrease in accounts payable, accrued expenses and other current liabilities (985) (21,227) Decrease in other long-term liabilities (513) (1,913) --------- --------- Net cash flows from operating activities 35,705 29,326 --------- --------- Cash flows from investing activities: Proceeds from divestitures -- 580 Proceeds from sale of assets 29 737 Proceeds from sale of product rights 1,813 2,032 Capital expenditures (19,269) (16,555) Acquisitions of patents, trademarks, licenses and other intangibles (1,476) (418) Acquisition of businesses and other (4,531) (4,780) --------- --------- Net cash flows from investing activities (23,434) (18,404) --------- --------- Cash flows from financing activities: Borrowings on long-term debt and loans payable 251,386 2,055 Payments on long-term debt and loans payable (52,129) (8,705) Issuance of common stock 23,481 6,044 Repurchases of common stock -- (108,640) --------- --------- Net cash flows from financing activities 222,738 (109,246) --------- --------- Effect of exchange rate changes on cash (6,714) (2,712) --------- --------- Net increase (decrease) in cash and cash equivalents 228,295 (101,036) Cash and cash equivalents at the beginning of the year 41,408 208,593 --------- --------- Cash and cash equivalents at the end of the period $ 269,703 $ 107,557 ========= ========= Supplemental disclosures: Interest paid $ 3,176 $ 2,555 ========= ========= Income tax payments, net $ 8,390 $ 7,769 ========= =========
See Note 5, Acquisitions, for non-cash portion of acquisition of Laboratorios Elmor, S.A. and Note 6, Debt, for information regarding non-cash conversion of 6 1/2% Convertible Subordinated Notes to equity. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 4 IVAX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands, except per share data) (1) GENERAL: The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q and, therefore, do not include all information normally included in audited financial statements. However, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made. The results of operations and cash flows for the six months ended June 30, 2000 are not necessarily indicative of the results of operations and cash flows which may be reported for the remainder of 2000. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes to consolidated financial statements included in IVAX' Annual Report on Form 10-K for the year ended December 31, 1999. Certain prior period amounts presented in the consolidated financial statements have been reclassified to conform to the current period's presentation. (2) INVENTORIES: Inventories consist of the following: June 30, December 31, 2000 1999 ----------- ----------- Raw materials $ 65,098 $ 62,932 Work-in-process 27,819 10,773 Finished goods 79,857 72,919 ----------- ----------- Total $ 172,774 $ 146,624 =========== =========== (3) EARNINGS PER SHARE: A reconciliation of the denominator of the basic and diluted earnings per share computation is as follows (in thousands):
Period Ended June 30, Three Months Six Months 2000 1999 2000 1999 ------- ------- ------- ------- Basic weighted average number of shares outstanding 154,934 162,831 155,098 165,834 Effect of dilutive securities - stock options and warrants 7,723 2,303 7,111 2,342 ------- ------- ------- ------- Diluted weighted average number of shares outstanding 162,657 165,134 162,209 168,176 ======= ======= ======= ======= Not included in the calculation of diluted earnings per share because their impact is antidilutive: Stock options outstanding -- 4,592 -- 4,820 Convertible Notes/Warrants 3,624 3,261 1,812 3,261 Put options -- 2,250 -- 2,250
(4) REVENUES: Net revenues are comprised of gross revenues less provisions for expected customer returns, inventory credits, discounts, promotional allowances, volume rebates, chargebacks and other allowances. 5 The reserve balances related to these provisions are included in "Accounts receivable, net of allowances for doubtful accounts" and "Accrued expenses and other current liabilities" in the accompanying consolidated balance sheets in the amounts of $44,096 and $58,322, respectively, at June 30, 2000 and $38,065 and $61,241, respectively, at December 31, 1999. (5) ACQUISITIONS: During the first six months of 2000, IVAX, through its Netherlands subsidiary IVAX International B.V., purchased additional shares of Galena, a.s., its majority-owned subsidiary in the Czech Republic. The total cost of the shares acquired through open market transactions during the first six months of 2000 was $8,190. The net book value underlying the shares purchased was $5,324 resulting in goodwill of $2,866 being recorded in the accompanying consolidated balance sheet at June 30, 2000. Prior to these purchases, IVAX owned 86% of the outstanding shares of Galena, a.s. At June 30, 2000, IVAX owned 95% of the outstanding shares of Galena, a.s. On June 19, 2000, IVAX acquired, through the acquisition of two holding companies, Laboratorios Elmor, S.A. ("Elmor"), a company located in Caracas, Venezuela, for $60,000. Elmor manufactures, markets, and distributes pharmaceutical products in Venezuela. The purchase price of $60,000 was funded by the issuance of $55,000 in IVAX common stock (approximately 1,585 shares at an average fair market value of $34.70 per share) and $5,000 in cash, but reduced by $7,670 of cash acquired. Subsequent to June 30, 2000, IVAX acquired certain other assets utilized in the business of Elmor for additional cash, net of cash acquired, of approximately $2,275. The acquisition is accounted for as a purchase, accordingly, the purchase price will be allocated to the assets acquired and liabilities assumed once final information concerning asset and liability valuations is received. The operating results of the acquired business are included in the consolidated financial statements from the acquisition date. Pre-acquisition operating results were not material in relation to IVAX' consolidated results of operations. (6) RESTRUCTURING COSTS: The components of restructuring costs, spending and other activity, as well as the remaining reserve balances at June 30, 2000, which are included in "Accrued expenses and other current liabilities" in the accompanying consolidated balance sheets, are as follows:
Employee Termination Plant Benefits Closures Total --------- --------- --------- Balance at January 1, 2000 $ 1,560 $ 4,423 $ 5,983 Cash payments during 2000 (719) (267) (986) Reversal of restructuring reserve established in prior years 76 (3,220) (3,144) Non-cash activity (14) 98 84 --------- --------- --------- Balance at June 30, 2000 $ 903 $ 1,034 $ 1,937 ========= ========= =========
The reversal, in the second quarter of 2000, of restructuring reserves established in prior years is a result of a change in strategy to keep the Northvale, New Jersey pharmaceutical facility operating as backup capacity in the event of hurricane damage at the Puerto Rico facility. (7) DEBT: On February 9, 2000, IVAX called the remaining $43,661 balance of its 6 1/2% Convertible Subordinated Notes for redemption. On March 10, 2000, IVAX redeemed $273 of the 6 1/2% Notes for cash. 6 The remaining balance of the 6 1/2% Notes were converted into 2,050 shares of IVAX' common stock in accordance with their terms. During the first six months of 2000, IVAX paid $3,074 of interest to Frost-Nevada, Limited Partnership ("FNLP"), an entity related to IVAX' Chairman and CEO pursuant to IVAX' outstanding loan from FNLP. The loan was due January 17, 2001 and bore interest at 10%, payable quarterly. In conjunction with the loan, FNLP was issued a warrant to purchase 750 shares of IVAX' common stock at an exercise price of $12 per share. The warrant is exercisable through November 2006. During the first six months of 2000, IVAX amortized to interest expense $2,128 of the value of the warrant issued to FNLP. On June 30, 2000, the $50,000 loan from FNLP was repaid resulting in the write-off of the remaining $2,254 of debt issue costs as an extraordinary item. During May 2000, IVAX consummated a private offering of $250,000 of its 5.5% Convertible Senior Subordinated Notes due 2007 pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and received net proceeds of approximately $243,750 therefrom. The 5.5% Notes were issued without registration under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The 5.5% Notes are convertible at any time prior to maturity, unless previously redeemed, into .0269 shares of IVAX' common stock per $1 of principal amount of the 5.5% Notes. This ratio results in a conversion price of approximately $37.15 per share. The 5.5% Notes are redeemable by IVAX on or after May 29, 2003. The net proceeds from the sale of the 5.5% Notes are expected to be used primarily to acquire technology, products or other businesses, to fund the research, development, testing and commercialization of pharmaceutical products, and for general corporate purposes. (8) INCOME TAXES: The provision for income taxes from continuing operations consists of the following:
Period Ended June 30, Three Months Six Months (In thousands) 2000 1999 2000 1999 ------------- ------------- ------------- ------------- Current: United States $ -- $ 863 $ 250 $ 1,881 Foreign, including Puerto Rico and U.S. Virgin Islands 4,397 4,659 8,825 7,628 Deferred (3,255) (3,128) (2,889) (3,024) ------------- ------------- ------------- ------------- Provision for income taxes $ 1,142 $ 2,394 $ 6,186 $ 6,485 ============= ============= ============= =============
The $250 tax provision recognized by domestic operations for the six months ended June 30, 2000 was favorably impacted by $75,114 utilization of net operating loss carryforwards, which had been previously reserved. During the second quarter of 2000, IVAX recognized a $45,000 U.S. taxable gain on the intercompany sale of certain assets. This taxable gain is not included in book income as it was eliminated in consolidation. Also, during the second quarter, $2,983 of the valuation allowance previously recorded against the domestic net deferred tax asset was reversed due to management's expectation of increased domestic taxable income. As of June 30, 2000, a domestic net deferred tax asset of $13,502 and a foreign net deferred tax asset of $10,105 are included in "Other current assets" and "Other assets" in the accompanying consolidated balance sheet. The domestic net deferred tax asset includes a valuation allowance of $68,203, or 83%, of the deferred tax asset balance. Approximately $19,118 of the valuation allowance relates to the tax benefit of stock options exercised which has not yet been credited to capital in excess of par value. Realization of the net deferred tax assets is dependent upon generating sufficient future 7 domestic and foreign taxable income. Although realization is not assured, management believes it is more likely than not that the net deferred tax assets will be realized. (9) SHAREHOLDERS' EQUITY: On January 14, 2000, IVAX' Board of Directors approved a 3-for-2 stock split effective February 22, 2000, in the form of a stock dividend. All weighted average share, outstanding share, per share earnings and price and stock plan data contained in the accompanying financial statements have been retroactively adjusted to give effect to the stock split. To reflect the split, common stock was increased and capital in excess of par value was decreased by $5,097. During 1999, IVAX issued 2,250 (post-split) freestanding put options for IVAX common stock in connection with its share repurchase program, as approved by the Board of Directors. These put options generated premiums totaling $2,079 which were credited to "Capital in excess of par value" in the accompanying consolidated balance sheets. As of June 30, the put options expired unexercised. At IVAX' June 15, 2000 Annual Meeting of Shareholders, an increase in the number of authorized shares of common stock from 250,000 to 350,000 was approved. (10) COMPREHENSIVE INCOME: The components of IVAX' comprehensive income (loss) are as follows:
Period Ended June 30, Three Months Six Months (In thousands) 2000 1999 2000 1999 ------------- ------------- ------------- ------------- Net income $ 29,982 $ 13,495 $ 55,725 $ 23,535 Unrealized gains (losses) on marketable securities, net of taxes (95) 67 184 25 Foreign currency translation adjustments (17,917) (4,462) (24,355) (22,128) ------------- ------------- ------------- ------------- Comprehensive income $ 11,970 $ 9,100 $ 31,554 $ 1,432 ============= ============= ============= =============
(11) BUSINESS SEGMENT INFORMATION: Other revenues included in "Net revenues" in the accompanying consolidated statements of operations consist of license fees, royalties and product development fees, received primarily from two companies, totaling $44,516 and $21,677 for the six months ended June 30, 2000 and 1999, respectively. (12) RECENTLY ISSUED ACCOUNTING STANDARDS: IVAX is required to adopt SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 137 and 138, in the first quarter of 2001. SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. Management believes that the adoption of SFAS No. 133, as amended, will not have a material impact on IVAX' consolidated financial statements. In December 1999, the SEC issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB No. 101"), which, as amended, requires implementation in the fourth quarter of 2000. As a result, IVAX commenced a review of its revenue recognition policies for 8 conformity with SAB No. 101. IVAX believes its revenue recognition policies comply with the guidance provided in SAB No. 101, except with respect to up-front and possibly milestone cash payments received under certain licensing arrangements. SAB No. 101 generally provides that up-front payments, whether or not they are refundable, should be deferred as revenue and recognized over the license period. IVAX' accounting policy is to immediately recognize as revenue such cash payments that are nonrefundable or where the probability of refund is remote. IVAX believes its accounting policy is in accordance with generally accepted accounting principles and practice in the pharmaceutical industry. SAB No. 101 will require IVAX to change its accounting method for such licensing payments. IVAX is reviewing recent contracts that involved the receipt of significant up-front payments, but is awaiting further implementation guidance from the SEC staff with respect to SAB No. 101 before completing this review. To date, IVAX has identified one licensing arrangement which may require a change in accounting method for payments received. This arrangement may result in a cumulative change in accounting principle charge of approximately $6,300, net of tax, when SAB No. 101 is implemented. The offsetting impact will result in deferred revenue which will be recognized in income through 2011. At this time, IVAX has not identified any other contracts that will be impacted by SAB No. 101, but its review is continuing. Although IVAX anticipates implementing SAB No. 101 in the fourth quarter of 2000, the cumulative effect of a change in accounting principle must be retroactively adopted as of the beginning of the first quarter of 2000. In May 2000, the EITF reached consensus on Issue No. 00-14, "Accounting for Coupons, Rebates, and Discounts", which prescribes the accounting for and classification of sales rebates and discounts. At its July 19-20 meeting the EITF delayed the transition date to correspond with implementation of SAB No. 101. Implementation of EITF No. 00-14 is not expected to have a significant impact on IVAX' results of operations. (13) LEGAL PROCEEDINGS: With respect to the case styled Alan M. Harris et al. v. IVAX Corporation, Phillip Frost, et al., previously reported in IVAX's Annual Report on Form 10-K for the year ended December 31, 1999, on April 20, 2000 the appellate court denied the plaintiffs' motion for rehearing. With respect to the case styled Malin, et al. v. IVAX Corporation, Phillip Frost, et al., previously reported in IVAX's Annual Report on Form 10-K for the year ended December 31, 1999, on July 6, 2000 the appellate court affirmed the dismissal of the complaint. Zenith Goldline has been named in four additional class action lawsuits containing allegations similar to those in the Louisiana Wholesale case, previously reported in IVAX's Annual Report on Form 10-K for the year ended December 31, 1999. (14) SUBSEQUENT EVENTS: On August 4, 2000, IVAX announced that it has entered into a definitive agreement to acquire privately held Wakefield Pharmaceuticals, Inc. Wakefield is engaged in the marketing and sale of respiratory products to allergists, otolaryngologists, pulmonologists and primary care physicians. The transaction is subject to approval by the shareholders of Wakefield Pharmaceuticals, a majority of which have agreed to vote in favor of the transaction. 9 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the consolidated financial statements, the related notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations included in IVAX' Annual Report on Form 10-K for the year ended December 31, 1999 and the unaudited interim consolidated financial statements and the related notes to unaudited interim consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. Except for historical information contained herein, the matters discussed below are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting IVAX' operations, markets, products and prices, the possible effect of IVAX' adoption of SAB No. 101 in its revenue recognition policies, the application and use of the proceeds of IVAX' offering of its 5.5% Notes in a manner that results in the acquisition or development of businesses or technologies that will contribute to its profitability, and other factors discussed elsewhere in this report and the documents filed by IVAX with the Securities and Exchange Commission ("SEC"). These factors may cause IVAX' results to differ materially from the forward looking statements made in this report or otherwise made by or on behalf of IVAX. Certain prior period amounts presented have been reclassified to conform to the current period's presentation. Results of Operations Six months ended June 30, 2000 compared to the six months ended June 30, 1999 Net income was $55.7 million, or $.34 per share (diluted), for the six months ended June 30, 2000, compared to $23.5 million, or $.14 per share, for the six months ended June 30, 1999. Income from continuing operations was $58.0 million, or $.35 per share (diluted), for the six months ended June 30, 2000, compared to $22.8 million, or $.14 per share, for the same period of the prior year. Net Revenues and Gross Profit Net revenues for the six months ended June 30, 2000 totaled $366.5 million, an increase of $64.6 million, or 21%, from the $301.9 million reported in the same period of the prior year. Net revenues from IVAX' domestic operations increased by $32.0 million while revenues from IVAX' international operations increased by $32.6 million. Domestic net revenues totaled $180.4 million for the six months ended June 30, 2000, compared to $148.4 million for the same period of 1999. The $32.0 million, or 22%, increase in domestic net revenues was primarily attributable to higher sales volume of certain generic pharmaceutical products partially offset by lower prices and higher sales returns and allowances. IVAX' international operations generated net revenues of $186.1 million for the six months ended June 30, 2000, compared to $153.5 million for the same period of the prior year. The $32.6 million, or 21%, increase in international net revenues was primarily due to increased license fees, royalties and product development fees, received primarily from two companies, and higher sales volume at IVAX' United Kingdom subsidiary. 10 Gross profit for the six months ended June 30, 2000 increased $51.2 million, or 39.6%, from the same period of the prior year. Gross profit was $180.7 million (49% of net revenues) for the six months ended June 30, 2000, compared to $129.4 million (43% of net revenues) for the six months ended June 30, 1999. The increase in gross profit percentage is primarily due to favorable product mix, and increased other revenues partially offset by increased sales returns and allowances. Operating Expenses Selling expenses totaled $43.0 million (12% of net revenues) for the six months ended June 30, 2000, compared to $36.3 million (12% of net revenues) for the six months ended June 30, 1999, an increase of $6.7 million, or 18.5%. The increase was primarily attributable to increased sales force and promotional costs at IVAX' domestic and international operations. General and administrative expenses totaled $42.8 million (11.7% of net revenues) for the six months ended June 30, 2000, compared to $42.5 million (14% of net revenues) for the six months ended June 30, 1999, an increase of $0.3 million, or 1%. Research and development expenses for the six months ended June 30, 2000 increased 31.8% to a total of $32.7 million (8.9% of net revenues), compared to the six months ended June 30, 1999. IVAX' future level of research and development expenditures will depend on, among other things, the outcome of clinical testing of products under development, delays or changes in government required testing and approval procedures, technological and competitive developments, strategic marketing decisions and liquidity. Other Income (Expense) Interest income increased $0.5 million and interest expense increased $4.6 million for the six months ended June 30, 2000, as compared to the six months ended June 30, 1999. Other income, net increased $1.0 million for the six months ended June 30, 2000, as compared to the six months ended June 30, 1999. Three months ended June 30, 2000 compared to the three months ended June 30, 1999 Net income was $30.0 million, or $.18 per share (diluted), for the three months ended June 30, 2000, compared to $13.5 million, or $.08 per share, for the three months ended June 30, 1999. Income from continuing operations was $32.2 million, or $.19 per share (diluted), for the three months ended June 30, 2000, compared to $13.1 million, or $.08 per share, for the same period of the prior year. Net Revenues and Gross Profit Net revenues for the three months ended June 30, 2000 totaled $184.7 million, an increase of $30.3 million, or 19.7%, from the $154.3 million reported in the same period of the prior year. Net revenues from IVAX' domestic operations increased by $12.7 million while revenues from IVAX' international operations increased by $17.6 million. Domestic net revenues totaled $90.0 million for the three months ended June 30, 2000, compared to $77.2 million for the same period of 1999. The $12.8 million, or 16.5%, increase in domestic net revenues was primarily attributable to increased other revenues and higher sales volume of certain generic pharmaceutical products partially offset by lower prices and higher sales returns and allowances. 11 IVAX' international operations generated net revenues of $94.7 million for the three months ended June 30, 2000, compared to $77.1 million for the same period of the prior year. The $17.6 million, or 23%, increase in international net revenues was primarily due to increased license fees, royalties and product development fees, received primarily from two companies. Gross profit for the three months ended June 30, 2000 increased $24.2 million, or 36%, from the same period of the prior year. Gross profit was $91.8 million (49.7% of net revenues) for the three months ended June 30, 2000, compared to $67.6 million (44% of net revenues) for the three months ended June 30, 1999. The increase in gross profit percentage is primarily due to favorable product mix, and increased other revenues partially offset by increased sales returns and allowances. Operating Expenses Selling expenses totaled $23.0 million (12.4% of net revenues) for the three months ended June 30, 2000, compared to $18.8 million (12.2% of net revenues) for the three months ended June 30, 1999, an increase of $4.1 million, or 22%. The increase was primarily attributable to increased sales force and promotional costs at IVAX' domestic and international operations. General and administrative expenses totaled $18.6 million (10.1% of net revenues) for the three months ended June 30, 2000, compared to $20.9 million (13.5% of net revenues) for the three months ended June 30, 1999, a decrease of $2.2 million, or 10.8%. The decrease is a combination of Year 2000 expenses incurred at the United Kingdom operations in 1999 and lower costs at Far East operations. Research and development expenses for the three months ended June 30, 2000 increased 27.7% to a total of $17.2 million (9.3% of net revenues), compared to the three months ended June 30, 1999. IVAX' future level of research and development expenditures will depend on, among other things, the outcome of clinical testing of products under development, delays or changes in government required testing and approval procedures, technological and competitive developments, strategic marketing decisions and liquidity. The reversal, in the second quarter of 2000, of restructuring reserves established in prior years is a result of a change in strategy to keep the Northvale, New Jersey pharmaceutical facility operating as backup capacity in the event of hurricane damage at the Puerto Rico facility. Other Income (Expense) Interest income increased $1.9 million and interest expense increased $3.9 million for the three months ended June 30, 2000, as compared to the three months ended June 30, 1999. Other income, net decreased $0.9 million for the three months ended June 30, 2000, as compared to the three months ended June 30, 1999. Recently Issued Accounting Standards In December 1999, the SEC issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, ("SAB No. 101") which, as amended, requires implementation in the fourth quarter of 2000. As a result, IVAX commenced a review of its revenue recognition policies for conformity with SAB No. 101. IVAX believes its revenue recognition policies generally comply with the guidance provided in SAB No. 101, except with respect to up-front and possibly milestone cash payments received under certain licensing arrangements. SAB No. 101 generally provides that up-front payments, whether or not they are refundable, should be deferred as revenue and recognized over the license period. IVAX' accounting policy is to immediately recognize as revenue such cash payments that are nonrefundable or where the probability of refund is remote. IVAX believes its accounting policy is in accordance with generally accepted accounting principles and practice in the pharmaceutical industry. 12 SAB No. 101 will require IVAX to change its accounting method for such licensing payments. IVAX is reviewing recent contracts that involved the receipt of significant up-front payments, but is awaiting further implementation guidance from the SEC staff with respect to SAB No. 101 before completing this review. To date, IVAX has identified one licensing arrangement that may require a change in accounting method for payments received. This arrangement may result in a cumulative change in accounting principle charge of approximately $6.3 million, net of tax, when SAB No. 101 is implemented. The offsetting impact will result in deferred revenue that will be recognized in income through 2011. At this time, IVAX has not identified any other contracts that will be impacted by SAB No. 101, but its review is continuing. Although IVAX anticipates implementing SAB No. 101 in the fourth quarter of 2000, the cumulative effect of a change in accounting principle must be retroactively adopted as of the beginning of the first quarter of 2000. In May 2000, the EITF reached consensus on Issue No. 00-14, "Accounting for Coupons, Rebates, and Discounts", which prescribes the accounting for and classification of sales rebates and discounts. At its July 19-20 meeting the EITF delayed the transition date to correspond with implementation of SAB No. 101. Implementation of EITF No. 00-14 is not expected to have a significant impact on IVAX' results of operations. Liquidity and Capital Resources At June 30, 2000, IVAX' working capital was $384.3 million, compared to $124.4 million at December 31, 1999. Cash and cash equivalents totaled $269.7 million at June 30, 2000, as compared to $41.4 million at December 31, 1999. Net cash of $35.7 million was provided by operating activities during the first six months of 2000, compared to $29.3 million during the same period of 1999. The increase in cash provided by operating activities was primarily the result of improved operating earnings. Net cash of $23.4 million used for investing activities during the first six months of 2000 is primarily attributable to $19.3 million for capital expenditures, $4.5 million, net, in the acquisition of the additional common stock of Galena, a.s., the Czech Republic subsidiary, increasing IVAX' ownership from 86% to 95%, the cash portion of the acquisition price of Laboratorios Elmor, S.A., and $1.5 million for the acquisitions of patents and licenses. During the second quarter of 2000, IVAX issued approximately 1.6 million shares of common stock to acquire Elmor. Net cash of $222.7 million provided from financing activities during the first six months of 2000 is primarily attributable to $243.8 million, net proceeds, from the issuance of convertible debentures in May, payment of $52.1 million of short-term loans and $23.5 million from the issuance of common stock. The use in 1999 is primarily attributable to the repurchases of common stock during the first two quarters. IVAX plans to spend substantial amounts of capital in 2000 to continue the research and development of pharmaceutical products. Expenditures will depend on, among other things, IVAX' actual earnings and cash position, the outcome of clinical testing of products under development, delays or changes in government required testing and approval procedures, technological and competitive developments, strategic marketing decisions and liquidity. In addition, IVAX plans to make significant expenditures to improve and expand its pharmaceutical and other related facilities. IVAX' principal sources of short-term liquidity are existing cash and internally generated funds, which IVAX believes will be sufficient to meet its operating needs and anticipated capital expenditures over the short term. For the long term, IVAX intends to utilize the proceeds of the 5.5% Notes issued May 12, 2000 and internally generated funds, which are anticipated to be derived primarily from the sale of existing pharmaceutical products and pharmaceutical products currently under development. There can be no assurance that IVAX will successfully complete the development of products under development, that IVAX will be able to obtain regulatory approval for any such product, or that any approved product may be produced in commercial quantities, at reasonable costs, and be successfully 13 marketed. IVAX may consider issuing additional debt or equity securities in the future to fund potential acquisitions and growth. Currency Fluctuations For the six months ended June 30, 2000 and 1999, approximately 51%, of IVAX' net revenues were attributable to operations which principally generated revenues in currencies other than the United States dollar. Fluctuations in the value of foreign currencies relative to the United States dollar affect the reported results of operations for IVAX. If the United States dollar weakens relative to the foreign currency, the earnings generated in the foreign currency will, in effect, increase when converted into United States dollars and vice versa. Although IVAX does not speculate in the foreign exchange market, it does, from time to time, manage exposures that arise in the normal course of business related to fluctuations in foreign currency exchange rates by entering into offsetting positions through the use of foreign exchange forward contracts. As a result of exchange rate differences, net revenues decreased by approximately $8.6 million for the six months ended June 30, 2000, as compared to the same period of the prior year. Income Taxes IVAX recognized a $6.2 million tax provision for the six months ended June 30, 2000, of which $8.8 million related to foreign operations. The $0.3 million tax provision recognized by domestic operations was favorably impacted by $75.1 million utilization of net operating loss carryforwards, which had been previously reserved. During the second quarter of 2000, IVAX recognized a $45.0 million U.S. taxable gain on the intercompany sale of certain assets. This taxable gain is not included in book income as it was eliminated in consolidation. Also, during the second quarter, $3.0 million of the valuation allowance previously recorded against the domestic net deferred tax asset was reversed due to management's expectation of increased domestic taxable income. As of June 30, 2000, domestic and foreign net deferred tax assets totaled $13.5 million and $10.1 million, respectively. The domestic net deferred tax asset includes a valuation allowance of $68.2 million, or 83%, of the deferred tax asset balance. Approximately $19.1 million of the valuation allowance relates to the tax benefit of stock options exercised which has not yet been credited to capital in excess of par value. Realization of the net deferred tax assets is dependent upon generating sufficient future domestic and foreign taxable income. Although realization is not assured, management believes it is more likely than not that the net deferred tax assets will be realized. Management's estimates of future taxable income are subject to revision due to, among other things, regulatory and competitive factors affecting the pharmaceutical industries in the markets in which IVAX operates. Such factors are further discussed in management's discussion and analysis of financial condition and results of operations included in IVAX' Annual Report on Form 10-K for the year ended December 31, 1999. Sales Returns and Allowances IVAX' pharmaceutical revenues may be affected by the level of provisions for estimated returns and inventory credits, as well as other sales returns and allowances established by IVAX. The custom in the pharmaceutical industry is generally to grant customers the right to return purchased goods. In the generic pharmaceutical industry, this custom has resulted in a practice of suppliers issuing inventory credits (also known as shelf-stock adjustments) to customers based on the customers' existing inventory following decreases in the market price of the related generic pharmaceutical product. The determination to grant a credit to a customer following a price decrease is generally at the discretion of IVAX, and generally not pursuant to contractual agreements with customers. These credits allow 14 customers with established inventories to compete with those buying product at the current market price, and allow IVAX to maintain shelf space, market share and customer loyalty. Provisions for estimated returns, inventory credits and other sales allowances are established by IVAX concurrently with the recognition of revenue. The provisions are established in accordance with generally accepted accounting principles based upon consideration of a variety of factors, including actual return and inventory credit experience for products during the past several years by product type, the number and timing of regulatory approvals for the product by competitors of IVAX, both historical and projected, the market for the product, estimated customer inventory levels by product, changes in net sales prices by product and projected economic conditions. Actual product returns and inventory credits incurred are, however, dependent upon future events, including price competition and the level of customer inventories at the time of any price decreases. IVAX continually monitors the factors that influence the pricing of its products and customer inventory levels and makes adjustments to these provisions when management believes that actual product returns and inventory credits may differ from established reserves. Risk of Product Liability Claims Testing, manufacturing and marketing pharmaceutical products subjects IVAX to the risk of product liability claims. IVAX is a defendant in a number of product liability cases, none of which IVAX believes will have a material adverse effect on IVAX' financial condition or results of operations. IVAX believes that it maintains an adequate amount of product liability insurance, but there can be no assurance that its insurance will cover all existing and future claims or that IVAX will be able to maintain existing coverage or obtain additional coverage at reasonable rates. There can be no assurance that claims arising under any pending or future product liability cases, whether or not covered by insurance, will not have a material adverse effect on IVAX' financial condition or results of operations. 15 Item 3 - Quantitative and Qualitative Disclosures About Market Risk Market risk represents the risk of loss that may impact the consolidated financial position, results of operations or cash flows of IVAX. IVAX, in the normal course of doing business, is exposed to the risks associated with foreign currency exchange rates and changes in interest rates. Foreign Currency Exchange Rate Risk - IVAX is exposed to exchange rate risk when its U.S. and non-U.S. subsidiaries enter into transactions denominated in currencies other than their functional currency. Certain firmly committed transactions are hedged with forward foreign exchange contracts. As exchange rates change, gains and losses on the exposed transactions are partially offset by gains and losses related to the hedging contracts. Both the exposed transactions and the hedging contracts are translated at current spot rates, with gains and losses included in earnings. IVAX' derivative activities, which primarily consist of forward foreign exchange contracts, are initiated primarily to hedge third-party transactions. The forward foreign exchange contracts generally require IVAX to exchange local currencies for foreign currencies based on pre-established exchange rates at the contracts' maturity dates. If the counterparties to the exchange contracts do not fulfill their obligations to deliver the contracted currencies, IVAX could be at risk for currency related fluctuations. IVAX enters into these contracts with counterparties that it believes to be credit worthy and does not enter into any leveraged derivative transactions. Interest Rate Risk - IVAX' only material debt obligation is its 5.5% Convertible Senior Subordinated Notes, which bear a fixed rate of interest. IVAX believes that its exposure to market risk relating to interest rate risk is not material. Commodity Price Risk - IVAX does not believe it is subject to any material risk associated with commodity prices. 16 PART II - OTHER INFORMATION Item 1 - Legal Proceedings With respect to the case styled Alan M. Harris et al. v. IVAX Corporation, Phillip Frost, et al., previously reported in IVAX's Annual Report on Form 10-K for the year ended December 31, 1999, on April 20, 2000 the appellate court denied the plaintiffs' motion for rehearing. With respect to the case styled Malin, et al. v. IVAX Corporation, Phillip Frost, et al., previously reported in IVAX's Annual Report on Form 10-K for the year ended December 31, 1999, on July 6, 2000 the appellate court affirmed the dismissal of the complaint. Zenith Goldline has been named in four additional class action lawsuits containing allegations similar to those in the Louisiana Wholesale case, previously reported in IVAX's Annual Report on Form 10-K for the year ended December 31, 1999. Item 2 - Changes in Securities and Use of Proceeds During May 2000, IVAX sold $250.0 million of its 5.5% Convertible Senior Subordinated Notes due 2007. The 5.5% Notes were sold to Qualified Institutional Buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. The aggregate offering price of the 5.5% Notes was $250.0 million and the aggregate underwriting discounts and commissions were $6.25 million. The 5.5% Notes are convertible at any time prior to maturity, unless previously redeemed, into .0269 shares of IVAX' common stock per $1 of principal amount of the 5.5% Notes. This ratio results in a conversion price of approximately $37.15 per share. The 5.5% Notes are redeemable by IVAX on or after May 29, 2003. The net proceeds from the sale of the 5.5% Notes are expected to be used primarily to acquire technology, products or other businesses, to fund the research, development, testing and commercialization of pharmaceutical products, and for general corporate purposes. On June 19, 2000, in connection with the acquisition of Elmor, IVAX issued 850,144 shares of common stock to the corporate shareholder. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. Item 4 - Submission of Matters to a Vote of Security Holders IVAX' annual meeting of shareholders was held on June 15, 2000. The following is a summary of the matters voted on at that meeting: (a) The shareholders elected the entire Board of Directors. The persons elected to IVAX' Board of Directors and the number of votes cast for and withheld for each nominee for director were as follows: Director For Withheld -------- --- -------- Mark Andrews 142,969,267 2,942,636 Ernst Biekert, Ph.D. 142,928,313 2,983,590 Charles M. Fernandez 141,894,683 4,017,220 Jack Fishman, Ph.D. 142,965,450 2,946,453 Neil Flanzraich 127,629,781 18,282,122 Phillip Frost, M.D. 127,385,409 18,526,494 Jane Hsiao, Ph.D. 126,309,650 19,602,253 Isaac Kaye 127,400,983 18,510,920 (b) The shareholders approved an increase in the number of authorized shares of common stock from 250 million to 350 million. The number of votes cast for, against, abstained and broker non-votes for 17 the increase in authorized shares were as follows: For Against Abstain Broker Non-Votes --- ------- ------- ---------------- 142,491,528 3,196,064 224,311 - Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 10.17 Stock Purchase Agreement dated June 19, 2000 between Filed herewith. IVAX Corporation and Alpha Centura Holdings N.V. 10.18 Stock Purchase Agreement dated June 19, 2000 between Filed herewith. IVAX Corporation and Mountainrise Trading Limited 27 Financial Data Schedule Filed herewith. (b) Reports on Form 8-K On May 8, 2000, IVAX filed a report dated April 27, 2000 under Item 5 - Other Events on Form 8-K reporting the announcement of its intention to make a private offering of up to $200 million of Convertible Senior Subordinated Notes. 18 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IVAX Corporation Date: August 14, 2000 By: /s/ Thomas E. Beier ------------------- Thomas E. Beier Senior Vice President-Finance Chief Financial Officer 19 EXHIBIT INDEX Exhibit 10.17 Stock Purchase Agreement dated June 19, 2000 between IVAX Corporation and Alpha Centura Holdings N.V. 10.18 Stock Purchase Agreement dated June 19, 2000 between IVAX Corporation and Mountainrise Trading Limited 27 Financial Data Schedule 20 EX-10.17 2 0002.txt EXHIBIT 10.17 STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (the "Agreement") is entered into as of the 19th day of June, 2000 (the "Closing Date"), by and between Mountainrise Trading Limited, a British Virgin Islands corporation (the "Seller") and IVAX Corporation, a Florida corporation (the "Buyer"). Preliminary Statements WHEREAS, Seller owns all of the issued and outstanding shares of Common Stock (the "Common Stock") of Eagle Invest Limited, a British Virgin Islands corporation (the "Company"); WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the shares of Common Stock owned by Seller (the "Shares") upon the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the terms, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the meanings indicated below: "Affiliate" means any Person which controls, is controlled by or is under common control with the Company. Except as otherwise indicated, "control" means the direct or indirect ownership of fifty percent (50%) or more of the voting or income interest in such Person, or such other relationship as, in fact, constitutes actual control. "Intellectual Property" means any or all of the following owned, used or controlled by the Company: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof; (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith; (d) all trade secrets and confidential business information (including databases, ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, and business and marketing plans and proposals); (e) all computer programs and software (including data and source and object codes and related documentation); (f) all other property rights and all licenses and sublicenses granted by or to the Company that relate to any of the foregoing; and (g) all copies and tangible embodiments thereof (in whatever form or medium). "Investment" means, with respect to any Person, advances, loans or extensions of credit to any other Person, any purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any other investment in any other Person, including partnerships, joint ventures or other similar arrangements with any Person. "Liabilities" means any liabilities, claims, obligations or indebtedness of any nature whatsoever (whether accrued, absolute, contingent or otherwise). "Liens" means any liens, claims, charges, rights, pledges, security interests, mortgages, options, title defects or other encumbrances, restrictions or limitations of any nature whatsoever. "Person" means any natural person, corporation, unincorporated organization, partnership, association, joint stock company, joint venture, trust or government, or any agency or political subdivision of any government, or any other entity. "Securities" means the common stock of Buyer, par value $.10 per share. "Securities Act" means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Taxes" means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax or governmental charge, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing; the foregoing shall include any transferee or secondary liability for a Tax and any liability assumed by agreement or arising as a result of being (or ceasing to be) a member of any affiliated group (or being included (or required to be included) in any tax return relating thereto). ARTICLE II PURCHASE AND SALE OF SHARES; PURCHASE PRICE 2.1 Purchase and Sale of Shares. Subject to the terms and conditions set forth herein, Seller hereby sells, assigns, transfers and delivers to Buyer and Buyer hereby purchases from Seller all of Seller's right, title and interest in and to the Shares, free and clear of all Liens. 2 2.2 Purchase Price. In consideration of the sale, assignment, transfer and delivery of the Shares by Seller to Buyer, Buyer hereby pays the purchase price of Thirty Million United States Dollars (US$30,000,000) by delivery to the Seller (i) of a number of Securities equal to Twenty-Nine Million Five Hundred Thousand United States Dollars (US$29,500,000) (the "Exchange Securities") divided by the average of the closing prices per share of the Securities, as reported by Bloomberg, for the 5 trading days immediately preceding the Closing Date (the "Average Price"), and (ii) Five Hundred Thousand United States Dollars (US $500,000) in immediately available funds. 2.3 Fractional Shares. In lieu of fractional shares, Buyer shall deliver to Seller cash or a company check in the amount of the fractional share otherwise issuable to the Seller multiplied by the Average Price. ARTICLE III CLOSING 3.1 Closing Date. The Closing Date is the day of execution of this Agreement. 3.2. Deliveries of the Seller and the Company. The Seller and the Company hereby deliver the following to the Buyer: (a) stock certificates representing all of the Shares, duly endorsed or accompanied by duly executed instruments of transfer; as provided by the Laws of the British Virgin Islands; (b) resignations, dated as of the Closing Date, of all directors of the Company; (c) an opinion of Farara George-Creque & Kerins, British Virgin Islands counsel to the Seller and the Company, in the form of Schedule 3.2(c); and (d) books of account, the minute books, stock books and stock records of the Company. 3.3. Deliveries of the Buyer. The Buyer will deliver to the Seller within ten (10) business days after the Closing Date the Purchase Price for the Shares as established in Section 2.2. 3 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer makes the representations and warranties set forth below to Seller as of the date of this Agreement. 4.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. Buyer has all requisite right, power and authority to execute, deliver and perform this Agreement. 4.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by all requisite corporate action on part of Buyer. This Agreement has been duly executed and delivered by Buyer, and constitutes the legal, valid and binding obligation of Buyer, enforceable in accordance with its terms. 4.3 No Violation or Conflict. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby (a) do not and will not violate or conflict with any provision of law or regulation, or any rule, ruling, interpretation, writ, order, judgment or decree of any court or governmental or regulatory authority, or any provision of Buyer's Articles of Incorporation or Bylaws; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, cause the acceleration of performance, or require any consent under, or result in the creation of any Lien upon any property or assets of Buyer pursuant to any material instrument or agreement to which Buyer is a party or by which Buyer or its properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing Date. 4.4 Brokers. Buyer has not employed any financial advisor, broker or finder and has not incurred and will not incur any broker's, finder's, investment banking or similar fees, commissions or expenses, in connection with the transactions contemplated by this Agreement which would be payable by Seller. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER The Seller makes the representations and warranties set forth below to Buyer as of the date of this Agreement. 5.1 Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the British Virgin Islands. The Company is duly qualified to transact business in all jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification; each jurisdiction in which the Company 4 is so qualified and each location where the Company has an office or place of business is listed on Schedule 5.1. The Company has all requisite right, power and authority to own or lease and operate its properties, and to conduct its business as presently conducted. 5.2 Capacity; Enforceability. Seller is a corporation duly organized, validly existing and in good standing under the laws of the British Virgin Islands. Seller has the capacity and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Seller. This Agreement and all other documents to be executed and delivered by the Seller and the Company pursuant to this Agreement have been duly executed and delivered by the Seller and the Company, and constitute the legal, valid and binding obligations of the Seller and the Company, enforceable against the Seller and the Company in accordance with their terms. 5.3 No Violation or Conflict. The execution, delivery and performance of this Agreement by the Seller and the Company and the consummation by the Seller and the Company of the transactions contemplated hereby (a) do not and will not violate or conflict with any provision of law or regulation, or any rule, ruling, interpretation, writ, order, judgment or decree of any court or governmental or regulatory authority, or any provision of the Articles of Incorporation or Bylaws of the Company; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, or cause the acceleration of performance or the termination for change of control or give the right of termination for change of control or require any consent under, or result in the creation of any Lien upon any property or assets of Seller (including, without limitation, the Shares) or the Company pursuant to any instrument or agreement to which Seller or the Comp is a party or by which Seller or the Company or any of their respective properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing Date, each of which instruments or agreements is listed on Schedule 5.3 hereto. 5.4 Consent of Governmental Authorities. No consent, approval or authorization of, or registration, qualification or filing with any governmental or regulatory authority of the British Virgin Islands or Venezuela, is required to be made by the Company or Seller in connection with the execution, delivery or performance of this Agreement by Seller or the Company, or the consummation by Seller or the Company of the transactions contemplated hereby. 5.5 Brokers. Seller has not employed any financial advisor, broker or finder and has not incurred and will not incur any broker's, finder's, investment banking or similar fees, commissions or expenses, in connection with the transactions contemplated by this Agreement which would be payable by Buyer. 5.6 Corporate Records. The stock records and minute books of the Company (true, correct and complete copies of which Seller has heretofore provided to Buyer) fully reflect all issuances, transfers and redemptions of the Company's Common Stock, correctly show the total number of shares of the Company's Common Stock issued and outstanding on the date 5 hereof, contain true, correct and complete copies of the Company's Articles of Incorporation and Bylaws or other similar organization documents, in each case as amended and currently in force. Such minute books also contain complete and accurate records of all meetings and other corporate actions of the board of directors, committees of the board of directors, incorporators and shareholders of the Company from its date of incorporation to the date hereof. All matters requiring the authorization or approval of the board of directors, a committee of the board of directors, the incorporators, or the shareholders of the Company have been duly an validly authorized and approved by them. 5.7 Capitalization. The authorized capital stock of the Company consists of Fifty Thousand (50,000) shares of Common Stock, of which One Thousand (1,000) shares are issued and outstanding. No class of equity securities of the Company exists other than the Common Stock. All voting rights with respect to the Company are vested solely in the Common Stock. The Company has no treasury shares. All outstanding shares of the Company's Common Stock have been duly authorized, are validly issued and outstanding, and are fully paid and nonassessable. No securities issued by the Company from its date of incorporation to the date hereof were issued in violation of the securities laws of any jurisdiction or the preemptive rights of any Person. There are no dividends which have accrued or been declared but are unpaid on the Common Stock of the Company. All Taxes of any nature or kind required to be paid in connection with the issuance and any transfers of the Company's Common Stock have been paid. authorizations required to be obtained from or registrations required to be effected with any Person in connection with the issuances of securities of the Company from the date of its incorporation to the date hereof have been obtained or effected and all securities of the Company have been issued and are held in accordance with the provisions of all applicable securities and other laws. The Shares constitute one hundred percent (100%) of the issued and outstanding capital stock of the Company and are legally and beneficially owned in their entirety by Seller. 5.8 Rights, Warrants, Options. There are no outstanding (a) securities or instruments convertible into or exercisable for any of the Common Stock or other equity interests of the Company; (b) options, warrants, subscriptions or other rights to acquire Common Stock or other equity interests of the Company; (c) debt securities with any voting rights or convertible into securities with voting rights; or (d) commitments, agreements or understandings of any kind, including, without limitation, shareholders' agreement, rights of first refusal, voting agreements, voting trusts, registration rights agreements, preemptive rights, employee benefit arrangements or other similar agreements, relating to any Common Stock or other equity interests of the Company, or the issuance or repurchase by the Company of (1) any Common Stock or other equity interests of the Company or (2) an such securities or instruments convertible into or exercisable for Common Stock or other equity interests of the Company. The Company has no outstanding stock appreciation , phantom stock rights or any similar rights. 5.9 Title to Shares. Seller is the record and beneficial owners of the Shares and owns the Shares free and clear of any Liens, including, without limitation, claims or rights under any voting trust agreements, shareholder agreements or other agreements. At the Closing, Seller transfers and conveys, and Buyer acquires, good and valid title to the Shares, free and clear of all Liens, encumbrances, pledges, security interests and claims whatsoever. 6 5.10 Investments. Except as set forth on Schedule 5.10, the Company has no Investments. 5.11 No operations. Since its incorporation, the Company has not engaged in any operations, bought or sold any assets, incurred any liabilities, entered into any agreements or otherwise engaged in any business activities. 5.12 Absence of Undisclosed Liabilities. The Company has no Liabilities or any unrealized or anticipated losses, and there is no basis for assertion against the Company of any such Liability or loss. 5.13 Bank Accounts; Powers of Attorney. The Company has no bank accounts. Schedule 5.13 is a complete and accurate list of the names of all persons, if any, holding powers of attorney from the Company. 5.14 Tax Matters. No tax returns and other documents are required to be filed and no taxes were due with respect to the Company, its business, operations or assets or the Shares. No taxing authority has audited the records of the Company or notified the Company of its intention to audit such records since its incorporation. No claims or deficiencies have been asserted or are pending against the Company with respect to any Taxes or other governmental charges or levies of any nature or kind which have not been paid or otherwise satisfied or for which accruals or reserves have not been made in the Balance Sheet. There exists no reasonable basis for the making of any such claims, and no such claims have been threatened. No Taxes are owed by the Company relating to its organizational structure. The Company has not waived any restrictions on assessment or collection of Taxes of any nature or kind or consented to the extension of any statute of limitations relating to taxation. Neither the Seller nor the Company has any tax Liability of any nature or kind that could result in any Lien being imposed on the Shares. Seller has paid all Taxes due with respect to the Shares. No tax, assessment, imposition, charge, penalty or interest of any kind will arise, become due or be accelerated that Buyer or the Company will be liable or responsible for payment as a result of the sale of the Shares to Buyer or any of the other transactions contemplated hereby. 5.15 Compliance with Laws. The Company is in compliance with all applicable laws, rules, regulations, rulings, interpretations, orders and decrees of the British Virgin Islands and any other country where it conducts its business or operations and has not been charged with any alleged violation or nonconformity with local or foreign laws, rules, regulations, rulings, interpretations, orders or decrees. 5.16 Licenses and Permits. The Company has all permits, licenses, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, all local or foreign governmental or regulatory bodies that are required to be obtained, maintained or made in order to permit the Company to own its assets and to carry on its business as presently conducted (the "Permits"). All such Permits are current and in full force and effect, and, there is no proceeding pending or threatened. 7 5.17 Related Parties. Neither Seller nor any director, officer, employee, consultant, agent or attorney of the Company nor any Affiliate of Seller or the Company (individually a "Related Party" and collectively the "Related Parties") nor any Affiliate of any Related Party (a) owns, directly or indirectly, any interest or has made any Investment in any Person which is a competitor, potential competitor, supplier or customer of the Company; (b) owns, directly or indirectly, in whole or in part, any property, asset or right, real, personal or mixed, tangible or intangible (including, but not limited to, any of the Intellectual Property) which is utilized in the operation of the business of the Company or necessary or desirable to the business of the Company as presently conducted or as contemplated to be conducted; or (c) has an interest or Investment in or is, directly or indirectly, a party to any commitment or other arrangement or relationship (whether or not in writing) pertaining or relating to the business, operations or assets of the Company. 5.18 Full Disclosure. No representation or warranty of Seller contained in this Agreement, and none of the statements or information concerning Seller or the Company contained in this Agreement or the exhibits and the schedules hereto, contains any untrue statement of a material fact nor will such representations, warranties, covenants or statements taken as a whole omit 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. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 General Release. Seller hereby unconditionally and irrevocably releases and forever discharges, effective as of the Closing Date, the Company, and its officers, directors, employees and agents, from any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or unaccrued, asserted or unasserted, and whether known or unknown, relating to the Company which ever existed, now exist, or may hereafter exist, by reason of any tort, breach of contract, violation of law or other act or failure to act which shall have occurred at or prior to the Closing Date, or in relation to any other liabilities of the Company to the Seller. The Seller expressly intend that the foregoing release shall be effective regardless of whether the basis for any claim or right hereby released shall have been known to or anticipated by the Seller. 6.2 Confidentiality. Seller and the Company acknowledge that the Intellectual Property and all other confidential or proprietary information with respect to the business and operations of the Company and its subsidiaries is valuable, special and unique. Seller and the Company shall not at any time after the Closing Date disclose, directly or indirectly, to any Person, or use or purport to authorize any Person to use, any confidential or proprietary information with respect to the Company or its subsidiaries, whether or not for Seller's or the Company's benefit, without the prior written consent of Buyer. Seller and the Company acknowledge that Buyer would not enter into this Agreement without the assurance that all such confidential and proprietary information will be used for the exclusive benefit of the Company and its subsidiaries. 8 6.3 Indemnification. The Seller agrees to indemnify and hold harmless Buyer, and its directors, officers, shareholders, employees, agents and subsidiaries and their respective assigns from, against and in respect of, the full amount of any and all Liabilities, damages, claims, deficiencies, fines, assessments, losses, taxes, penalties, interest, costs and expenses, including, without limitation, reasonable fees and disbursements of counsel (collectively, the "Indemnified Losses") arising from, in connection with, or incident to (i) any breach or violation of any of the Sellers' representations, warranties, covenants or agreements contained in this Agreement; (ii) the business or operations of the Company or Sellers before the Closing Date; and (iii) any and all actions, suits, proceedings, demands, assessments or judgments, incidental to any of the foregoing. 6.4 Exchange Securities not Registered; Held for Investment. Seller understands and acknowledges that the Exchange Securities are not registered under the Securities Act. Each Seller represents that it is acquiring the Exchange Securities for investment for its own account and not as a nominee or agent and not with a view to the sale or distribution of any of the Exchange Securities. Seller has no intention of selling, granting any participation in or otherwise distributing any of the Exchange Securities within the meaning of the Securities Act, except pursuant to a registration statement or unless otherwise permitted by the Securities Act. Seller has no contracts, understandings, agreements or arrangements to sell, transfer or otherwise grant participations in any of the Exchange Securities to any other Person. 6.5 Risk of Investment; Restrictions on Resale. Seller acknowledges that it can bear the economic risk of its investment in the Exchange Securities for an indefinite period of time and has such knowledge and experience in financial and business matters as to be capable of evaluating the risks of an investment in the Exchange Securities. Seller understands that the Exchange Securities are "restricted securities" under the Securities Act, which may be resold without registration under the Securities Act in only limited circumstances. Seller understands the resale limitations on the Exchange Securities imposed by the Securities Act. Buyer may, unless a registration statement is in effect covering such shares, place stop transfer orders with its transfer agents with respect to such certificates in accordance with Federal securities laws of the United States. 6.6 Legending of Certificates. Seller understands that the certificates evidencing the Exchange Securities will bear the following restrictive legend evidencing the restricted nature of such Exchange Securities and indicating that no transfer of any interest in such Exchange Securities may be made unless such Exchange Securities are registered under the Securities Act or an exemption from registration is available: "The securities represented hereby have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be sold, transferred or otherwise disposed of by the holder except pursuant to an effective registration statement filed under the Securities Act, and in compliance with applicable securities laws of any state with respect thereto, or in accordance with an opinion of counsel in form and substance satisfactory to the issuer that an exemption from such registration is available." 9 6.7. Additional Tax Agreements. Seller will file an election via certified mail with the Internal Revenue Service Center, Philadelphia, PA 19255 prior to the Closing Date to be a foreign entity with a single owner electing to be disregarded as a separate entity from its date of incorporation on Internal Revenue Service Form 8832 (the "Entity Classification Election"). In addition, prior to the Closing Date, Seller shall cause its shareholder to file an Internal Revenue Service Form SS-4 (Application for Employer Identification Number) via certified mail with the Internal Revenue Service Center, Attn: Entity Control, Philadelphia PA 19255. A copy of all the executed Internal Revenue Service Form 8832 and Form SS-4 filing along with a copy of the certified mail receipts is required to be provided to IVAX Corporation prior to or at closing. Furthermore, Seller agrees to provide the Buyer a copy of each of the Internal Revenue Service approvals and/or notifications relating to the Entity Classification Election. If Seller has not received approval from the Internal Revenue Service within 120 days of filing the Entity Classification Election, then the Seller is required to contact the Internal Revenue Service to inquire about the status of the Entity Classification Election and notify the Buyer of the results of the inquiry regarding such status. ARTICLE VII MISCELLANEOUS 7.1 Notices. Any notice, request, demand or other communication required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the names and addresses set forth below (or at such other addresses as shall be specified by the parties by like notice). If to Seller, then to: Mountainrise Trading Limited c/o Trident Chambers Wickhams Cay, P.O. Box 146 Road Town, Tortola British Virgin Islands Phone: (284) 494-2434 Fax: (284) 494-3754 If to Buyer, then to: IVAX Corporation 4400 Biscayne Boulevard Miami, Florida 33137 Attn: President Phone: (305) 575-6008 Fax: (305) 575-6016 10 With a copy to: IVAX Corporation 4400 Biscayne Boulevard Miami, Florida 33137 Attn: General Counsel Phone: (305) 575-6037 Fax: (305) 575-6049 Such notices, demands, claims and other communications shall be deemed given when actually received, or (a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery, (b) in the case of certified mail, ten (10) days after deposit in the mail, or (c) in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise. 7.2 Further Assurances. The parties shall deliver any and all other instruments or documents required to be delivered pursuant to, or necessary or proper in order to give effect to, the provisions of this Agreement, including without limitation, all necessary stock powers and such other instruments of transfer as may be necessary or desirable to transfer ownership of the Shares and to consummate the transactions contemplated by this Agreement. 7.3 Entire Agreement. This Agreement and the exhibits and schedules to this Agreement contain every obligation and understanding between the parties relating to the subject matter hereof and merge all prior discussions, negotiations and agreements, if any, between them, and none of the parties shall be bound by any representations, warranties, covenants, or other understandings, other than as expressly provided or referred to herein. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. 7.4 Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors and permitted assigns. No party hereto may assign this Agreement or any rights hereunder, in whole or in part without the written consent of the other party, except that Buyer may assign this Agreement to any of its Affiliates. 7.5 Waiver. No waiver by any party hereto of its rights under any provision of this Agreement shall constitute a waiver of such party's rights under such provisions at any other time or a waiver of such party's rights under any other provision of this Agreement. No failure by any party hereto to take any action against any breach of this Agreement or default by another party shall constitute a waiver of the former party's right to enforce any provision of this Agreement or to take action against such breach or default or any subsequent breach or default by such other party. 11 7.6 No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 7.7 Severability. In the event that any one or more of the provisions contained in this Agreement shall be declared invalid, void or unenforceable, the remainder of the provisions of this Agreement shall remain in full force and effect, and such invalid, void or unenforceable provision shall be interpreted as closely as possible to the manner in which it was written. 7.8 Expenses. All expenses (including, without limitation, financial advisory fees, legal fees and expenses, broker and finder fees, fees and expenses of accountants) incurred by each party in connection with the transactions contemplated hereby (hereunder referred to as "Expenses") will be borne by the party incurring such Expenses, provided that any Expenses incurred by Seller or the Company prior to the Closing Date shall be borne solely by Seller. 7.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 7.10 Consent to Jurisdiction; Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of Miami-Dade County, Florida. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in the State of Florida, and further irrevocably waive any claim that any suit, action or proceeding brought in Miami-Dade County, Florida has been brought in an inconvenient forum. 7.11 Injunctive Relief. It is possible that remedies at law may be inadequate and, therefore, the parties hereto shall be entitled to equitable relief including, without limitation, injunctive relief, specific performance or other equitable remedies in addition to all other remedies provided hereunder or available to the parties hereto at law or in equity. 7.12 Governing Law. This Agreement has been entered into and shall be construed and enforced in accordance with the laws of the State of Florida, without giving effect to conflict of law principles. 7.13 Jurisdiction; Venue. Any suit, action or proceeding against any party with respect to this Agreement or any judgment entered by any court in respect of this Agreement shall be brought in the courts of the State of Florida in Miami-Dade County, Florida, or in the U.S. District Court for the Southern District of Florida, and the parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. In addition, the parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect 12 hereof brought in Miami-Dade County, Florida, and further irrevocably waive any claim that any suit, action or proceeding brought in Miami-Dade County, Florida was brought in an inconvenient forum. 7.14 English Version. In the event that this Agreement is translated into a language other than English, the English version of this Agreement shall control all questions of interpretation with respect thereto. 13 IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and year first above written. Buyer: IVAX Corporation By: /s/ Neil Flanzraich -------------------------------- Name: Neil Flanzraich Title: Vice Chairman and President SELLER: Mountainrise Trading Limited By: /s/ Jose Domingo Paoli -------------------------------- Name: Jose Domingo Paoli Title: Director 14 EX-10.18 3 0003.txt EXHIBIT 10.18 STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (the "Agreement") is entered into as of the 19th day of June, 2000 (the "Closing Date"), by and between Alfa Centura Holdings NV, a Netherlands Antilles corporation (the "Seller") and IVAX Corporation, a Florida corporation (the "Buyer"). Preliminary Statements WHEREAS, Seller owns all of the issued and outstanding shares of Common Stock (the "Common Stock") of Kilburn B.V., a Netherlands corporation (the "Company"); WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the shares of Common Stock owned by Seller (the "Shares") upon the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the terms, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the meanings indicated below: "Affiliate" means any Person which controls, is controlled by or is under common control with the Company. Except as otherwise indicated, "control" means the direct or indirect ownership of fifty percent (50%) or more of the voting or income interest in such Person, or such other relationship as, in fact, constitutes actual control. "Assignment Agreement" means the Assignment and Guarantee Agreement, dated as of the Closing Date, by and between the Buyer and the Seller whereby the Seller assigns all of its all of its right, title and interest under Indemnification Agreement, dated as of the Closing Date, by and among Laboratorios LAFAR, C.A., a Venezuelan corporation, Roberto Prego Novo, Oly Prego, Roberto Prego Pineda, and Carmen Eugenia Prego Pineda and to guarantee the obligations due thereunder. "Escrow Agreement" means the Escrow Agreement, dated as of the Closing Date, by and among the Seller, the Buyer and Akerman, Senterfitt & Eidson, P.A. as escrow agent. "GAAP" means the U.S. Generally Accepted Accounting Principles. "Intellectual Property" means any or all of the following owned, used or controlled by the Company or its subsidiaries: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof; (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith; (d) all trade secrets and confidential business information (including databases, ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals); (e) all computer programs and software (including data and source and object codes and related documentation); (f) all other property rights and all licenses and sublicenses granted by or to the Company or its subsidiaries that relate to any of the foregoing; and (g) all copies and tangible embodiments thereof (in whatever form or medium). "Investment" means, with respect to any Person, advances, loans or extensions of credit to any other Person, any purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any other investment in any other Person, including partnerships, joint ventures or other similar arrangements with any Person. "Liabilities" means any liabilities, claims, obligations or indebtedness of any nature whatsoever (whether accrued, absolute, contingent or otherwise). "Liens" means any liens, claims, charges, rights, pledges, security interests, mortgages, options, title defects or other encumbrances, restrictions or limitations of any nature whatsoever. "Person" means any natural person, corporation, unincorporated organization, partnership, association, joint stock company, joint venture, trust or government, or any agency or political subdivision of any government, or any other entity. "Securities" means the common stock of Buyer, par value $.10 per share. "Securities Act" means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Taxes" means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax or governmental charge, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing; the foregoing shall include any transferee or secondary liability for a Tax and any liability assumed by agreement or arising as a result of being (or ceasing to be) 2 a member of any affiliated group (or being included (or required to be included) in any tax return relating thereto). "Working Capital" means the current assets minus the current liabilities, as reflected on the balance sheet of the Company, calculated in accordance with GAAP. ARTICLE II PURCHASE AND SALE OF SHARES; PURCHASE PRICE 2.1 Purchase and Sale of Shares. Subject to the terms and conditions set forth herein, Seller hereby sells, assigns, transfers and delivers to Buyer and Buyer hereby purchases from Seller all of Seller's right, title and interest in and to the Shares, free and clear of all Liens. 2.2 Purchase Price. In consideration of the sale, assignment, transfer and delivery of the Shares by Seller to Buyer, Buyer hereby pays the purchase price of Thirty Million United States Dollars (US$30,000,000) (the "Purchase Price") by delivery to (i) the Seller of a number of Securities equal to Twenty-Two Million United States Dollars (US$22,000,000) (the "Exchange Securities") divided by the average of the closing prices per share of the Securities, as reported by Bloomberg, for the 5 trading days immediately preceding the Closing Date (the "Average Price"), (ii) the Seller of Four Million Five Hundred Thousand United States Dollars (US$4,500,000) in immediately available funds, and (iii) Akerman Senterfitt & Eidson, P.A., as escrow agent, (the "Escrow Agent") of a number of Exchange Securities (the "Escrow Property") equal to Three Million Five Hundred Thousand United States Dollars (US$3,500,000) divided by the Average Price to be held in escrow for security of the obligations due hereunder and under the Assignment Agreement pursuant to the terms of the Escrow Agreement. 2.3 Fractional Shares. In lieu of fractional shares, Buyer shall deliver to Seller cash or a company check in the amount of the fractional share otherwise issuable to the Seller multiplied by the Average Price. ARTICLE III CLOSING 3.1 Closing Date. The Closing Date is the day of execution of this Agreement. 3.2. Deliveries of the Seller and the Company. The Seller and the Company hereby deliver the following to the Buyer: (a) stock certificates representing all of the Shares, duly endorsed or accompanied by duly executed instruments of transfer; as provided by the Laws of The Netherlands; 3 (b) resignations, dated as of the Closing Date, of all directors of the Company; (c) an opinion of Adele P. Van der Pluijm-Vrede, Netherlands Antilles counsel to the Seller, in the form of Schedule 3.2(c); (d) an opinion of Wouters Advocaten & Notarissen Dutch counsel to the Seller and the Company, in the form of Schedule 3.2(d); and (e) an executed copy of the Escrow Agreement. 3.3. Deliveries of the Buyer. The Buyer will deliver to the Seller within ten (10) business days after the Closing Date the Purchase Price for the Shares as established in Section 2.2. 3.4. Preparation of Closing Balance Sheet. Within sixty (60) days of the Closing, the Buyer shall prepare, in accordance with GAAP, (i) a closing balance sheet of the Company, on a consolidated basis, as of the Closing Date (the "Closing Balance Sheet") and (ii) a calculation of the Working Capital of the Company, on a consolidated basis, as of the Closing Date and shall deliver such documents to the Seller. If the aggregate amount of Working Capital as of the Closing Date is less than $12,000,000 or if aggregate amount of cash is less than $6,976,000, then, subject to Section 3.5, commencing ten (10) business days after delivery of the Closing Balance Sheet, the aggregate Purchase Price shall be adjusted downward dollar-for-dollar in the amount of the greater of (i) $6,976,000 minus the aggregate amount of cash reflected on the Closing Balance Sheet and (ii) $12,000,000 minus the aggregate amount of Working Capital reflected on the Closing Balance Sheet (the "Working Capital Deficiency" and the Seller shall pay to Buyer by wire transfer of immediately available funds an amount equal to the Working Capital Deficiency. At its option, and at any time of from time to time after the determination of any Working Capital Deficiency, Buyer shall be entitled to recover from the Escrow Property pursuant to the terms of the Escrow Agreement all or any portion of the Working Capital Deficiency not theretofore paid by the Seller. 3.5. Disputes. Notwithstanding anything in this Article 3 to the contrary, if there is any Working Capital Deficiency and the Seller disputes any item contained on the Closing Date Balance Sheet, then the Seller shall notify Buyer in writing of each disputed item (collectively, the "Disputed Amounts") and specify the amount thereof in dispute within ten (10) business days after the delivery of the Closing Date Balance Sheet. If Buyer and Seller cannot resolve any such dispute, then such dispute shall be resolved by an independent nationally recognized accounting firm which is reasonably acceptable to the Buyer and the Seller (the "Independent Accounting Firm"). The determination of the Independent Accounting Firm shall be made as promptly as practicable and shall be final and binding on the parties, absent manifest error which error may only be corrected by such Independent Accounting Firm. Any expenses relating to the engagement of the Independent Accounting Firm shall be allocated between the Buyer and the Seller so that the Seller's aggregate share of such costs shall bear the same proportion to the total costs that the Disputed Amounts unsuccessfully contested by the Seller (as finally determined by the Independent Accounting Firm) bear to the total of the Disputed Amounts so submitted to the Independent Accounting Firm. Pending resolution of any such dispute by the Independent Accounting Firm, no such Disputed 4 Amount shall be due to Buyer. Once any such Disputed Amount is finally determined to be due to Buyer, Buyer may proceed to recover such amount in the manner set forth in Section 3.4. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer makes the representations and warranties set forth below to Seller as of the date of this Agreement. 4.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. Buyer has all requisite right, power and authority to execute, deliver and perform this Agreement. 4.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by all requisite corporate action on part of Buyer. This Agreement has been duly executed and delivered by Buyer, and constitutes the legal, valid and binding obligation of Buyer, enforceable in accordance with its terms. 4.3 No Violation or Conflict. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby (a) do not and will not violate or conflict with any provision of law or regulation, or any rule, ruling, interpretation, writ, order, judgment or decree of any court or governmental or regulatory authority, or any provision of Buyer's Articles of Incorporation or Bylaws; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, cause the acceleration of performance, or require any consent under, or result in the creation of any Lien upon any property or assets of Buyer pursuant to any material instrument or agreement to which Buyer is a party or by which Buyer or its properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing Date. 4.4 Registration Statement. The Exchange Securities will be issued pursuant to Buyer's Registration Statement on Form S-4, No. 33-60847 (the "Registration Statement"). Buyer has delivered to the Seller a copy of the prospectus, dated January 19, 2000, included in the Registration Statement, and has made available to the Seller a true and complete copy of all documents incorporated by reference therein. As of the respective dates they were filed with the Commission, none of such documents (including the Registration Statement) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Buyer has filed, and will timely file, all requisite amendments to the Registration Statement which may be required through the Closing Date and will promptly provide the Seller with a copy of any such amendments. 5 4.5 Validity of Exchange Securities; Listing. When issued and delivered in accordance with this Agreement, the Exchange Securities shall be duly and validly authorized, issued and outstanding, fully paid and non-assessable, shall not have been issued in violation of the preemptive rights of any Person, and shall be registered under the Securities Act and listed for trading on the American Stock Exchange. 4.6 Brokers. Buyer has not employed any financial advisor, broker or finder and has not incurred and will not incur any broker's, finder's, investment banking or similar fees, commissions or expenses, in connection with the transactions contemplated by this Agreement which would be payable by Seller. ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER Seller makes the representations and warranties set forth below to Buyer as of the date of this Agreement. 5.1 Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of The Netherlands. The Company is duly qualified to transact business in all jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification; each jurisdiction in which the Company is so qualified and each location where the Company has an office or place of business is listed on Schedule 5.1. The Company has all requisite right, power and authority to own or lease and operate its properties, and to conduct its business as presently conducted. 5.2 Capacity; Enforceability. Seller is a corporation duly organized, validly existing and in good standing under the laws of the Netherlands Antilles. Seller has the capacity and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Seller. This Agreement and all other documents to be executed and delivered by the Seller and the Company pursuant to this Agreement have been duly executed and delivered by the Seller and the Company, and constitute the legal, valid and binding obligations of the Seller and the Company, enforceable against the Seller and the Company in accordance with their terms. 5.3 No Violation or Conflict. The execution, delivery and performance of this Agreement by the Seller and the Company and the consummation of the transactions contemplated hereby (a) do not and will not violate or conflict with any provision of law or regulation, or any rule, ruling, interpretation, writ, order, judgment or decree of any court or governmental or regulatory authority, or any provision of the Articles of Incorporation or Bylaws of the Company or its subsidiaries; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, or cause the 6 acceleration of performance or the termination for change of control or give the right of termination for change of control or require any consent under, or result in the creation of any Lien upon any property or assets of Seller (including, without limitation, the Shares), the Company or its subsidiaries pursuant to any instrument or agreement to which Seller, the Company or its subsidiaries is a party or by which Seller, the Company or its subsidiaries or any of their respective properties may be bound or affected. 5.4 Consent of Governmental Authorities. No consent, approval or authorization of, or registration, qualification or filing with any governmental or regulatory authority of The Netherlands, Netherlands Antilles or Venezuela, is required to be made by Seller, the Company or its subsidiaries in connection with the execution, delivery or performance of this Agreement by Seller or the Company, or the consummation by Seller or the Company of the transactions contemplated hereby. 5.5 Brokers. Seller has not employed any financial advisor, broker or finder and has not incurred and will not incur any broker's, finder's, investment banking or similar fees, commissions or expenses, in connection with the transactions contemplated by this Agreement which would be payable by Buyer. 5.6 Corporate Records. The stock records and minute books of the Company and the Subsidiaries (true, correct and complete copies of which Seller has heretofore provided to Seller or its Assignee) fully reflect all issuances, transfers and redemptions of the Company's Common Stock and each of the Subsidiaries common stock, correctly show the total number of shares of the Company's Common Stock and each of the Subsidiary's common stock issued and outstanding on the date hereof, contain true, correct and complete copies of the Company's and each of the Subsidiary's Articles of Incorporation and Bylaws or other similar organization documents, in each case as amended and currently in force. Such minute books also contain complete and accurate records of all meetings and other corporate actions of the board of directors, committees of the board of directors, incorporators and shareholders of the Company and each of the Subsidiaries from their respective dates of incorporation to the date hereof All matters requiring the authorization or approval of the board of directors, a committee of the board of directors, the incorporators, or the shareholders of the Company and each of the Subsidiaries have been duly and validly authorized and approved by them. 5.7 Capitalization. The authorized capital stock of the Company consists of two hundred (200) shares of Common Stock, of which forty (40) shares are issued and outstanding. No class of equity securities of the Company exists other than the Common Stock. All voting rights with respect to the Company are vested solely in the Common Stock. The Company has no treasury shares. All outstanding shares of the Company's Common Stock have been duly authorized, are validly issued and outstanding, and are fully paid and nonassessable. No securities issued by the Company from its date of incorporation to the date hereof were issued in violation of the securities laws of any jurisdiction or the preemptive rights of any Person. There are no dividends which have accrued or been declared but are unpaid on the Common Stock of the Company. All Taxes of any nature or kind required to be paid in connection with the issuance and any transfers of the Company's Common Stock have been paid. All authorizations required to be obtained from or registrations required to be effected with any 7 Person in connection with the issuances of securities of the Company from the date of its incorporation to the date hereof have been obtained or effected and all securities of the Company have been issued and are held in accordance with the provisions of all applicable securities and other laws. The Shares constitute one hundred percent (100%) of the issued and outstanding capital stock of the Company and are legally and beneficially owned in their entirety by Seller. 5.8 Rights, Warrants, Options. There are no outstanding (a) securities or instruments convertible into or exercisable for any of the Common Stock or other equity interests of the Company; (b) options, warrants, subscriptions or other rights to acquire Common Stock or other equity interests of the Company; (c) debt securities with any voting rights or convertible into securities with voting rights; or (d) commitments, agreements or understandings of any kind, including, without limitation, shareholders' agreement, rights of first refusal, voting agreements, voting trusts, registration rights agreements, preemptive rights, employee benefit arrangements or other similar agreements, relating to any Common Stock or other equity interests of the Company, or the issuance or repurchase by the Company of (1) any Common Stock or other equity interests of the Company or (2) an such securities or instruments convertible into or exercisable for Common Stock or other equity interests of the Company. The Company has not outstanding stock appreciation , phantom stock rights or any similar rights. 5.9 Title to Shares. Seller is the record and beneficial owners of the Shares and owns the Shares free and clear of any Liens, including, without limitation, claims or rights under any voting trust agreements, shareholder agreements or other agreements. At the Closing, Seller transfers and conveys, and Buyer acquires, good and valid title to the Shares, free and clear of all Liens, encumbrances, pledges, security interests and claims whatsoever. 5.10 Investments. Except as set forth on Schedule 5.10, the Company has no Investments. 5.11 No operations. Since its incorporation, the Company has not engaged in any operations, bought or sold any assets, incurred any Liabilities, entered into any agreements or otherwise engaged in any business activities. 5.12 Absence of Undisclosed Liabilities. The Company has no Liabilities or any unrealized or anticipated losses, and there is no basis for assertion against the Company of any such Liability or loss. 5.13 Working Capital. As of the Closing Date, the Company and its subsidiaries will have Working Capital in the amount of at least Twelve Million United States Dollars (US$12,000,000), of which at least Six Million Nine Hundred Seventy-Six Thousand United States Dollars (US$6,976,000) must be in cash. 5.14 Bank Accounts; Powers of Attorney. The Company has no bank accounts. Schedule 5.14 is a complete and accurate list of the names of all persons, if any, holding powers of attorney from the Company. 8 5.15 Tax Matters. Seller has delivered to Buyer true, correct and complete copies of each of the tax returns filed by the Company since 1995. All tax returns and other documents required to be filed with respect to the Company, its business, operations or assets or the Shares have been timely filed in the manner prescribed by law in all jurisdictions in which such returns and documents are required to be filed. All of the foregoing as filed are true, correct and complete and reflect accurately all Liability for Taxes of any nature or kind of the Company for the periods to which such returns and documents relate, and all amounts shown as owing thereon have been fully paid or adequately disclosed and fully reserved against in the Financial Statements and the books and records of the Company. All Taxes of any nature or kind, if any, collectible or payable by the Company or relating to or chargeable against any of its assets, revenues or income through December 31, 1999, were fully collected and paid by such date or provided for by adequate reserves in the Balance Sheet, and all similar items due through the Closing Date will have been fully paid by that date. No taxing authority has audited the records of the Company or notified the Company of its intention to audit such records in the past five (5) years. No claims or deficiencies have been asserted or are pending against the Company with respect to any Taxes or other governmental charges or levies of any nature or kind which have not been paid or otherwise satisfied or for which accruals or reserves have not been made in the Balance Sheet. There exists no reasonable basis for the making of any such claims, and no such claims have been threatened. No Taxes are owed by the Company relating to its organizational structure. The Company has not waived any restrictions on assessment or collection of Taxes of any nature or kind or consented to the extension of any statute of limitations relating to taxation. Neither the Seller nor the Company has any tax Liability of any nature or kind that could result in any Lien being imposed on the Shares. Seller has paid all Taxes due with respect to the Shares. No tax, assessment, imposition, charge, penalty or interest of any kind will arise, become due or be accelerated that Buyer or the Company will be liable or responsible for payment as a result of the sale of the Shares to Buyer or any of the other transactions contemplated hereby. 5.16 Compliance with Laws. The Company is in compliance with all applicable laws, rules, regulations, rulings, interpretations, orders and decrees of The Netherlands and any other country where it conducts its business or operations and has not been charged with any alleged violation or nonconformity with local or foreign laws, rules, regulations, rulings, interpretations, orders or decrees. 5.17 Licenses and Permits. The Company has all permits, licenses, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, all local or foreign governmental or regulatory bodies that are required to be obtained, maintained or made in order to permit the Company to own its assets and to carry on its business as presently conducted (the "Permits"). All such Permits are current and in full force and effect, and, there is no proceeding pending or threatened. 5.18 Related Parties. Neither Seller nor any director, officer, employee, consultant, agent or attorney of the Company nor any Affiliate of Seller or the Company (individually a "Related Party" and collectively the "Related Parties") nor any Affiliate of any Related Party (a) owns, directly or indirectly, any interest or has made any Investment in any Person which is a competitor, potential competitor, supplier or customer of the Company; (b) owns, directly or indirectly, in whole or in part, any property, asset or right, real, personal or 9 mixed, tangible or intangible (including, but not limited to, any of the Intellectual Property) which is utilized in the operation of the business of the Company or necessary or desirable to the business of the Company as presently conducted or as contemplated to be conducted; or (c) has an interest or Investment in or is, directly or indirectly, a party to any commitment or other arrangement or relationship (whether or not in writing) pertaining or relating to the business, operations or assets of the Company. 5.19 Full Disclosure. No representation or warranty of Seller or the Company contained in this Agreement, and none of the statements or information concerning Seller or the Company contained in this Agreement or the exhibits and the schedules hereto, contains any untrue statement of a material fact nor will such representations, warranties, covenants or statements taken as a whole omit 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. 5.20 Financial Statements. Seller has previously delivered to Buyer true and complete copies of (a) the balance sheets of Laboratorios Elmor, S.A. (Caracas) and its subsidiaries ("Elmor") for the fiscal years ended December 31, 1999, 1998, 1997, 1996 and 1995 and the related statements of income, cash flows and changes in shareholders' equity of the Elmor for the years ended December 31, 1999, 1998, 1997, 1996 and 1995 including any related notes, certified by the Company's or independent certified public accountants pursuant to their audit of the financial records of the Elmor, and (b) the balance sheet of Elmor as of May 31, 2000 (the "May 2000 Balance Sheet") and the statements of income, cash flows and changes in shareholders' equity for the five month period ended May 31, 2000, certified by the Seller and the Company's or Subsidiaries' chief financial officer (collectively, the "Financial Statements"). All such financial statements, including the Financial Statements (a) have been prepared in accordance with the books of account and records of Elmor; (b) fairly present, and are, true, correct and complete statements in all material respects of the financial condition and the results of operations of Elmor at the dates and for the periods specified in those statements; and (c) have been prepared in accordance with generally accepted accounting principles consistently applied with prior periods. Elmor has maintained their respective accounting books and supporting documentation for the last 10 years. 5.21 Guaranties. The Company is not a party to any Guaranty, and no Person is a party to any Guaranty for the benefit of the Company. 5.22 Investigations; Litigation. There is no pending or threatened investigation, inquiry or hearing by any governmental agency against or adversely and there is no action, demand, suit, proceeding or claim, pending or, threatened, against or affecting the Company or the Seller's ability to execute this Agreement or consummate the actions contemplated hereby. Neither the Company, its Affiliates nor any of their directors, officers, employees or agents, in their respective capacities as such, is a party to any, and there are no pending or threatened, legal, administrative, arbitral or other proceedings, claims, suits, or actions of any nature against the Company or its Affiliates or any of their directors, officers, employees or agents, in their respective capacities as such, or involving any property or assets of the Company or its Affiliates. 10 There is no outstanding order, writ, injunction or decree of any court, government or governmental agency against, or affecting the Company or its assets or business. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 General Release. Seller hereby unconditionally and irrevocably releases and forever discharges, effective as of the Closing Date, the Company, and its officers, directors, employees and agents, from any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or unaccrued, asserted or unasserted, and whether known or unknown, relating to the Company which ever existed, now exist, or may hereafter exist, by reason of any tort, breach of contract, violation of law or other act or failure to act which shall have occurred at or prior to the Closing Date, or in relation to any other liabilities of the Company to the Seller. The Seller expressly intends that the foregoing release shall be effective regardless of whether the basis for any claim or right hereby released shall have been known to or anticipated by the Seller. 6.2 Seller Restrictions on Sale. Seller understands and acknowledges that the Exchange Securities will be registered with the Securities and Exchange Commission ("SEC") under the Securities Act on a Registration Statement on Form S-4. However, Seller further understands and acknowledges that any sale, transfer or disposition by them of any of the Exchange Securities may, under current law, be made only (i) in accordance with the provisions of paragraph (d) of Rule 145 under the Securities Act, (ii) pursuant to an effective registration statement under the Securities Act or (iii) upon receipt by Buyer of an opinion of counsel reasonably acceptable to Buyer, or a "no-action" letter obtained by it from the SEC, to the effect that such sale, transfer or disposition is otherwise exempt from registration under the Securities Act. 6.3 Confidentiality. Seller and the Company acknowledge that the Intellectual Property and all other confidential or proprietary information with respect to the business and operations of the Company and its subsidiaries is valuable, special and unique. Seller and the Company shall not at any time after the Closing Date disclose, directly or indirectly, to any Person, or use or purport to authorize any Person to use, any confidential or proprietary information with respect to the Company or its subsidiaries, whether or not for Seller's or the Company's benefit, without the prior written consent of Buyer. Seller and the Company acknowledge that Buyer would not enter into this Agreement without the assurance that all such confidential and proprietary information will be used for the exclusive benefit of the Company and its subsidiaries. 6.4 Indemnification. The Seller agrees to indemnify and hold harmless Buyer, and its directors, officers, shareholders, employees, agents and subsidiaries and their respective assigns from, against and in respect of, the full amount of any and all Liabilities, damages, claims, deficiencies, fines, assessments, losses, taxes, penalties, interest, costs and expenses, including, without limitation, reasonable fees and disbursements of counsel (collectively, the 11 "Indemnified Losses") arising from, in connection with, or incident to (i) any breach or violation of any of the Sellers' representations, warranties, covenants or agreements contained in this Agreement; (ii) the business or operations of the Company or Sellers before the Closing Date; (iii) any and all actions, suits, proceedings, demands, assessments or judgments, incidental to any of the foregoing and (iv) any Working Capital Deficiency. 6.5 Additional Tax Agreements. Seller will file an election via certified mail with the Internal Revenue Service Center, Philadelphia, PA 19255 prior to or at Closing to be a foreign entity with a single owner electing to be disregarded as a separate entity from its date of incorporation on Internal Revenue Service Form 8832 (the "Entity Classification Election"). In addition, prior to or at closing, Seller shall cause its shareholder as sole shareholder of Seller to file Internal Revenue Service Form SS-4 (Application for Employer Identification Number) via certified mail with the Internal Revenue Service Center, Attn: Entity Control, Philadelphia PA 19255. A copy of all the executed Internal Revenue Service Form 8832 and Form SS-4 filing along with a copy of the certified mail receipts is required to be provided to Buyer prior to or at Closing. Furthermore, Seller agrees to provide Buyer with a copy of each of the Internal Revenue Service approvals and/or notifications relating to Entity Classification Election. If Seller has not received approval from the Internal Revenue Service within 120 days of filing the Entity Classification Election, then the Seller is required to contact the Internal Revenue Service to inquire about the status of the Entity Classification Election and notify Buyer of the results of the inquiry regarding such status. ARTICLE VII MISCELLANEOUS 7.1 Notices. Any notice, request, demand or other communication required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the names and addresses set forth below (or at such other addresses as shall be specified by the parties by like notice). If to Seller, then to: Alfa Centura Holdings NV 24 Kaya Wilson Papa Godett Curacao, Netherlands Antilles Attn: Vivian Ersilia Phone: (5999) 465-8177 Fax: (5999) 465-7449 12 If to Buyer, then to: IVAX Corporation 4400 Biscayne Boulevard Miami, Florida 33137 Attn: President Phone: (305) 575-6008 Fax: (305) 575-6016 With a copy to: IVAX Corporation 4400 Biscayne Boulevard Miami, Florida 33137 Attn: General Counsel Phone: (305) 575-6037 Fax: (305) 575-6049 Such notices, demands, claims and other communications shall be deemed given when actually received, or (a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery, (b) in the case of certified mail, ten (10) days after deposit in the mail, or (c) in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise. 7.2 Further Assurances. The parties shall deliver any and all other instruments or documents required to be delivered pursuant to, or necessary or proper in order to give effect to, the provisions of this Agreement, including without limitation, all necessary stock powers and such other instruments of transfer as may be necessary or desirable to transfer ownership of the Shares and to consummate the transactions contemplated by this Agreement. 7.3 Entire Agreement. This Agreement and the exhibits and schedules to this Agreement contain every obligation and understanding between the parties relating to the subject matter hereof and merge all prior discussions, negotiations and agreements, if any, between them, and none of the parties shall be bound by any representations, warranties, covenants, or other understandings, other than as expressly provided or referred to herein. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. 7.4 Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors and permitted assigns. No party hereto may assign this Agreement or any rights hereunder, in whole or in part without the written consent of the other party, except that Buyer may assign this Agreement to any of its Affiliates. 7.5 Waiver. No waiver by any party hereto of its rights under any provision of this Agreement shall constitute a waiver of such party's rights under such provisions at any other time or a waiver of such party's rights under any other provision of this Agreement. No failure 13 by any party hereto to take any action against any breach of this Agreement or default by another party shall constitute a waiver of the former party's right to enforce any provision of this Agreement or to take action against such breach or default or any subsequent breach or default by such other party. 7.6 No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 7.7 Severability. In the event that any one or more of the provisions contained in this Agreement shall be declared invalid, void or unenforceable, the remainder of the provisions of this Agreement shall remain in full force and effect, and such invalid, void or unenforceable provision shall be interpreted as closely as possible to the manner in which it was written. 7.8 Expenses. All expenses (including, without limitation, financial advisory fees, legal fees and expenses, broker and finder fees, fees and expenses of accountants) incurred by each party in connection with the transactions contemplated hereby (hereunder referred to as "Expenses") will be borne by the party incurring such Expenses, provided that any Expenses incurred by Seller or the Company prior to the Closing Date shall be borne solely by Seller. 7.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 7.10 Consent to Jurisdiction; Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of Miami-Dade County, Florida. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in the State of Florida, and further irrevocably waive any claim that any suit, action or proceeding brought in Miami-Dade County, Florida has been brought in an inconvenient forum. 7.11 Injunctive Relief. It is possible that remedies at law may be inadequate and, therefore, the parties hereto shall be entitled to equitable relief including, without limitation, injunctive relief, specific performance or other equitable remedies in addition to all other remedies provided hereunder or available to the parties hereto at law or in equity. 7.12 Governing Law. This Agreement has been entered into and shall be construed and enforced in accordance with the laws of the State of Florida, without giving effect to conflict of law principles. 7.13 Jurisdiction; Venue. Any suit, action or proceeding against any party with respect to this Agreement or any judgment entered by any court in respect of this Agreement shall be brought in the courts of the State of Florida in Miami-Dade County, Florida, or in the 14 U.S. District Court for the Southern District of Florida, and the parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. In addition, the parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in Miami-Dade County, Florida, and further irrevocably waive any claim that any suit, action or proceeding brought in Miami-Dade County, Florida was brought in an inconvenient forum. 7.14 English Version. In the event that this Agreement is translated into a language other than English, the English version of this Agreement shall control all questions of interpretation with respect thereto. 15 IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and year first above written. Buyer: IVAX Corporation By: /s/ Neil Flanzraich -------------------------------- Name: Neil Flanzraich Title: Vice Chairman and President SELLER: Alfa Centura Holdings NV By: /s/ Jose Domingo Paoli -------------------------------- Name: Jose Domingo Paoli Title: Attorney-in-Fact 16 EX-27 4 0004.txt FDS --
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM IVAX CORPORATION'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1999 JAN-01-2000 JUN-30-2000 269,703 0 135,095 21,451 172,774 591,113 384,073 158,634 943,278 206,841 0 0 0 15,838 451,050 943,278 322,027 366,543 185,871 185,871 0 550 7,245 64,603 6,186 57,979 0 (2,254) 0 55,725 .36 .34
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