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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
September 23, 1997
(Date of report - earliest event reported)
ALLIANCE PHARMACEUTICAL CORP.
(Exact name of registrant as specified in its charter)
Commission file number: 0-12900
NEW YORK 14-1644018
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3040 Science Park Road, San Diego, CA 92121
(Address of principal executive offices and Zip Code)
Registrant's Telephone Number: (619) 558-4300
This document
consists of 4
pages. The
Exhibit Index is
on page 4
Page 1 of 4 pages
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Item 2. Acquisition or Disposition of Assets
On September 23, 1997, Alliance Pharmaceutical Corp. (the "Company")
entered into a license agreement (the "Schering License Agreement") with
Schering AG, Germany ("Schering"), which provides Schering with worldwide
exclusive marketing and manufacturing rights to the Company's drug compounds,
drug compositions and medical devices and systems related to perfluorocarbon
ultrasound imaging products, including IMAGENT-Registered Trademark-US. The
product will be developed jointly by the Company and Schering. Under the
Schering License Agreement, Schering paid to the Company an initial license fee
of $4 million and agreed to pay further milestone payments and royalties on
product sales. Schering also agreed to provide funding to the Company for some
of its development expenses. In conjunction with the Schering License
Agreement, Schering Berlin Venture Corp., an affiliate of Schering, purchased
500,000 shares of the Company's convertible Series D Preferred Stock for $10
million.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
2(a)* License Agreement dated September 23, 1997, between the Company and
Schering AG, Germany.
2(b) Preferred Stock Purchase Agreement dated September 23, 1997,
between the Company and Schering Berlin Venture Corp.
2(c) Certificate of Amendment of Certificate of Incorporation of the
Company filed September 22, 1997 (Incorporated by reference to Exhibit 3(c) to
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1997.)
* Confidential treatment being requested
Page 2 of 4 pages
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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 hereunto duly authorized.
ALLIANCE PHARMACEUTICAL CORP.
Date: October 6, 1997 /s/ Theodore D. Roth
--------------------------------------------------
Theodore D. Roth
Executive Vice President, Chief Financial Officer
and Secretary
Page 3 of 4 pages
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ALLIANCE PHARMACEUTICAL CORP.
FORM 8-K
INDEX
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
2(a)* License Agreement dated
September 23, 1997, between the
Company and Schering AG, Germany.
2(b) Preferred Stock Purchase Agreement
dated September 23, 1997, between
the Company and Schering Berlin
Venture Corp.
2(c) Certificate of Amendment of Certificate
of Incorporation of the Company filed
September 22, 1997 (Incorporated by
reference to Exhibit 3(c) to the
Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1997.)
* Confidential Treatment being requested
Page 4 of 4 pages
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REDACTED COPY
LICENSE AGREEMENT
dated as of September 23, 1997
by and between
ALLIANCE PHARMACEUTICAL CORP.
and
SCHERING AKTIENGESELLSCHAFT
**INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................ 2
SECTION 1.01. DEFINITIONS.............................................. 2
ARTICLE II
DEVELOPMENT............................ 9
SECTION 2.01. FORMATION OF JDC......................................... 9
SECTION 2.02. RESPONSIBILITIES OF JDC.................................. 9
SECTION 2.03. DEVELOPMENT.............................................. 10
SECTION 2.04. **....................................................... 11
SECTION 2.05. DRUG APPROVAL APPLICATIONS............................... 12
SECTION 2.06. COSTS OF DEVELOPMENT..................................... 13
SECTION 2.07. USE OF FUNDS............................................. 13
SECTION 2.08. EXCLUSIVITY.............................................. 13
SECTION 2.09. RIGHT TO ENGAGE THIRD PARTIES............................ 13
SECTION 2.10. SCHERING PORTFOLIO....................................... 14
ARTICLE III
MANAGEMENT............................. 14
SECTION 3.01. STEERING COMMITTEE....................................... 14
SECTION 3.02. MEETINGS OF THE STEERING COMMITTEE....................... 14
SECTION 3.03. FUNCTIONS AND POWERS OF THE STEERING COMMITTEE........... 15
SECTION 3.04. STEERING COMMITTEE ACTIONS............................... 15
SECTION 3.05. OBLIGATIONS OF PARTIES................................... 16
SECTION 3.06. LIMITATIONS OF POWERS OF COMMITTEES...................... 16
ARTICLE IV
PAYMENTS............................. 16
SECTION 4.01. INITIAL PAYMENT.......................................... 16
SECTION 4.02. LV AND MP INDICATION FUTURE PAYMENTS..................... 16
SECTION 4.03. **....................................................... 17
SECTION 4.04. IMPROVEMENTS AND BACKUP PRODUCTS......................... 18
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ARTICLE V
INTELLECTUAL PROPERTY STRATEGY.................. 19
SECTION 5.01. JOINT PATENT COMMITTEE................................... 19
SECTION 5.02. FUNCTIONS AND POWERS OF THE JPC.......................... 19
SECTION 5.03. OBLIGATIONS OF THE PARTIES............................... 20
SECTION 5.04. LIMITATION OF POWERS..................................... 20
ARTICLE VI
LICENSES............................. 20
SECTION 6.01. PATENT AND TRADEMARK LICENSE TO SCHERING................. 20
SECTION 6.02. THIRD PARTY TECHNOLOGY................................... 21
ARTICLE VII
COMMERCIALIZATION......................... 22
SECTION 7.01. SCHERING AS SOLE MARKETING PARTY......................... 22
SECTION 7.02. COMMERCIALIZATION EFFORTS................................ 22
SECTION 7.03. TAX CONSIDERATIONS....................................... 22
ARTICLE VIII
ROYALTIES............................ 22
SECTION 8.01. ROYALTIES................................................ 22
SECTION 8.02. ROYALTY REPORTS AND PAYMENTS............................. 27
SECTION 8.03. PAYMENTS; INTEREST....................................... 27
SECTION 8.04. TAXES.................................................... 27
SECTION 8.05. PAYMENTS TO OR REPORTS BY AFFILIATES..................... 28
SECTION 8.06. PAYMENT CURRENCY......................................... 28
ARTICLE IX
MANUFACTURE AND SUPPLY...................... 28
SECTION 9.01. MANUFACTURE AND SUPPLY BY ALLIANCE....................... 28
SECTION 9.02. REGULATORY APPROVAL FOR MANUFACTURING.................... 28
SECTION 9.03. DMF...................................................... 29
SECTION 9.04. SPECIFICATIONS........................................... 29
SECTION 9.05. QUALITY TESTING.......................................... 29
SECTION 9.06. STABILITY; RECORDKEEPING; INSPECTION; ETC................ 29
SECTION 9.07. FORECASTS AND ORDERS..................................... 30
SECTION 9.08. DELIVERY AND SHIPMENT.................................... 30
SECTION 9.09. WARRANTIES............................................... 30
SECTION 9.10. MANUFACTURE AND SUPPLY OF THE PRODUCT BY SCHERING........ 31
SECTION 9.11. ACCEPTANCE AND PRICING................................... 31
SECTION 9.12. PACKAGING................................................ 31
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ARTICLE X
CONFIDENTIALITY.......................... 32
SECTION 10.01. CONFIDENTIALITY; EXCEPTIONS.............................. 32
SECTION 10.02. AUTHORIZED DISCLOSURE.................................... 32
SECTION 10.03. SURVIVAL................................................. 33
SECTION 10.04. TERMINATION OF PRIOR AGREEMENT........................... 33
SECTION 10.05. PUBLICATIONS............................................. 33
SECTION 10.06. PUBLICITY REVIEW......................................... 33
ARTICLE XI
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS........ 34
SECTION 11.01. OWNERSHIP................................................ 34
SECTION 11.02. DISCLOSURE OF JOINT INVENTIONS........................... 34
SECTION 11.03. PATENT FILINGS........................................... 34
SECTION 11.04. THIRD PARTY PATENT RIGHTS................................ 35
SECTION 11.05. ENFORCEMENT RIGHTS....................................... 35
SECTION 11.06. DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS............. 36
SECTION 11.07. LICENSES FOR THIRD PARTY PATENTS......................... 36
SECTION 11.08. PATENT EXPENSES.......................................... 36
SECTION 11.09. ASSIGNMENT OF JOINT PATENTS.............................. 36
SECTION 11.10. TRADEMARKS............................................... 37
ARTICLE XII
REPRESENTATIONS AND WARRANTIES.................. 37
SECTION 12.01. REPRESENTATIONS AND WARRANTIES........................... 37
SECTION 12.02. PERFORMANCE BY AFFILIATES................................ 38
ARTICLE XIII
INFORMATION AND REPORTS..................... 38
SECTION 13.01. INFORMATION AND REPORTS DURING DEVELOPMENT AND
COMMERCIALIZATION........................................ 38
SECTION 13.02. ADVERSE DRUG EXPERIENCES................................. 38
SECTION 13.03. RECORDS OF REVENUES AND EXPENSES......................... 39
SECTION 13.04. USE OF NAMES............................................. 40
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ARTICLE XIV
TERM AND TERMINATION....................... 41
SECTION 14.01. TERM..................................................... 41
SECTION 14.02. TERMINATION.............................................. 41
SECTION 14.03. SURVIVING RIGHTS......................................... 43
SECTION 14.04. REIMBURSEMENT............................................ 43
ARTICLE XV
INDEMNIFICATION......................... 44
SECTION 15.01. INDEMNIFICATION.......................................... 44
ARTICLE XVI
UNDUE PREFERENCE......................... 45
SECTION 16.01. COMPETITIVE PRODUCTS..................................... 45
ARTICLE XVII
MISCELLANEOUS.......................... 46
SECTION 17.01. ASSIGNMENT............................................... 46
SECTION 17.02. RETAINED RIGHTS.......................................... 46
SECTION 17.03. FORCE MAJEURE............................................ 46
SECTION 17.04. FURTHER ACTIONS.......................................... 46
SECTION 17.05. NO TRADEMARK RIGHTS...................................... 46
SECTION 17.06. NOTICES.................................................. 47
SECTION 17.07. WAIVER................................................... 47
SECTION 17.08. SEVERABILITY............................................. 48
SECTION 17.09. AMBIGUITIES.............................................. 48
SECTION 17.10. GOVERNING LAW............................................ 48
SECTION 17.11. HEADINGS................................................. 48
SECTION 17.12. COUNTERPARTS............................................. 48
SECTION 17.13. ENTIRE AGREEMENT; AMENDMENTS............................. 48
SECTION 17.14. EXPENSES................................................. 49
SECTION 17.15. INDEPENDENT CONTRACTORS.................................. 49
EXHIBITS
EXHIBIT A Determination of Certain Accounting Terms
EXHIBIT B ALLIANCE Patents
EXHIBIT C Initial Development Plan
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REDACTED COPY
LICENSE AGREEMENT
LICENSE AGREEMENT (the "AGREEMENT"), dated as of September 23, 1997
(the "EFFECTIVE DATE"), by and between ALLIANCE PHARMACEUTICAL CORP., a New York
corporation having its principal place of business at 3040 Science Park Road,
San Diego, California 92121 (hereinafter referred to as "ALLIANCE") and SCHERING
AKTIENGESELLSCHAFT, a German corporation having its principal place of business
at 13342 Berlin, Germany (hereinafter referred to as "SCHERING"). Alliance and
Schering are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, Schering is a leading multinational health care company;
WHEREAS, Alliance is developing through its research and development
activities certain technology for use in ultrasound imaging techniques, and has
the right to grant rights and licenses and/or sublicenses under the Alliance
Patents (hereinafter defined) and Alliance Know-How (hereinafter defined);
WHEREAS, Schering has, based on its evaluation, expressed to Alliance
its interest in obtaining from Alliance certain rights and licenses to the
Alliance Patents and Alliance Know-How;
WHEREAS, Alliance is willing to grant such rights and licenses to
Schering under the terms and conditions hereinafter set forth;
WHEREAS, pursuant to a Stock Purchase Agreement between Schering's
Affiliate Schering Berlin Venture Corp. ("SBVC") and Alliance of even date
herewith, Alliance has agreed to sell to SBVC, and SBVC has agreed to purchase,
$10 million of Alliance convertible preferred shares under the terms and
conditions set forth in the Stock Purchase Agreement;
WHEREAS, the Parties intend to record, characterize and report their
activities under this Agreement as separate activities of each of the Parties;
WHEREAS, it is the intent and desire of the Parties, through this
Agreement, to develop and market Products that are innovative and superior to
competitive products as they may exist from time to time, and, accordingly,
certain of the economic provisions hereof are designed to incentivize the
development and marketing of such innovative and superior Products by the
Parties;
**INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereto, intending
to be legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, when capitalized,
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined) as used in this
Agreement:
"ADDITIONAL INDICATION" means any Potential New Indication with
respect to which Schering has exercised its option pursuant to Sections 4.04 (a)
or (c).
"AFFILIATE" means any person, corporation, partnership, firm, joint
venture or other entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
Alliance or Schering, as the case may be. As used in this definition, "control"
means the possession of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of the
outstanding voting securities or by contract or otherwise.
"AF0150" means a white powder **
which, after reconstitution with
appropriate diluent, forms an aqueous suspension of perfluorohexane/
nitrogen-filled microbubbles with the formulation employed in Phase II clinical
trials under the United States IND 49,978.
"ALLIANCE KNOW-HOW" means Information which is within the Control of
Alliance and relates to the research, development, manufacture, use,
importation, sale or offer for sale of the Product. Notwithstanding anything
herein to the contrary, Alliance Know-how shall exclude Alliance Patents.
"ALLIANCE PATENT" means a Patent which covers the research,
development, manufacture, use, importation, sale or offer for sale of a Product,
which Patent is owned or Controlled (but for this Agreement) by Alliance,
including:
(a) any patent listed in Exhibit B hereto or added thereto by
written agreement of the Parties during the term of this Agreement;
(b) any patent application listed in Exhibit B hereto or added
thereto by written agreement of the Parties during the term of this Agreement;
and any division, continuation, or continuation-in-part of any such application;
and any patent which shall issue based on such application, division,
continuation or continuation-in-part;
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(c) any patent which is a reissue, reexamination or extension of
any patent described in (a) or (b) above;
(d) any foreign counterpart patent application or patent
corresponding to any patent identified in (a), (b), or (c), above which is filed
or issued in any country in the Territory;
(e) any patent or patent application related to or based on any
Alliance Know-How related to the Product or the manufacture thereof developed or
acquired by Alliance prior to or during the term of this Agreement and which is
necessary for the use, development, manufacture, market, sale or distribution of
any marketed Product and any division, continuation or continuation-in-part of
any such patent or patent application; and any patent which shall issue based on
such application, division, continuation or continuation-in-part; and any patent
which is a reissue, reexamination or extension of any such patent; and
(f) Alliance's interest in any Joint Patents.
"Patents" also includes a Supplementary Certificate of Protection of a member
state of the European Community and any other similar protective rights in any
other country.
"AUDIT DISAGREEMENT" shall have the meaning set forth in Section
13.03(b).
"BANKRUPTCY EVENT" shall have the meaning set forth in Section
14.02(c).
"CLINICAL WORK" means any work related to human trials to assess the
dosing, safety and/or efficacy of a Product and/or to assess a dose and
treatment plan employing such Product, including, but not limited to, Phase III
and Phase IV Clinical Trials (in the event such Phase IV Clinical Trials are
required by the FDA).
"COMMERCIALIZATION" and "COMMERCIALIZE" shall refer to all activities
undertaken relating to the manufacture, pre-marketing, marketing and sale of a
Product.
"COMPETITIVE PRODUCT" means a product which has obtained Regulatory
Approval for use as an ultrasound contrast agent and such use is included in the
labeling of such product.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
10.01.
"CONTROL" or "CONTROLLED" shall refer to possession of the ability to
grant a license or sublicense of patent rights, know-how or other intangible
rights as provided for herein without violating the terms of any agreement or
other arrangement with any Third Party.
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"COST OF GOODS SOLD" means the cost of Product inventory and other
manufacturing costs incurred with respect to the Product. Cost of Goods Sold
shall be calculated in the manner set forth in Exhibit A.
"DEVELOPMENT" and "DEVELOP" shall refer to all activities relating to
obtaining Regulatory Approval of a Product, and all activities relating to
developing the ability to manufacture the same. This includes preclinical
testing, toxicology, formulation, bulk production, fill/finish, manufacturing
process development, manufacturing, quality assurance and quality control
technical support, clinical studies, regulatory affairs and outside counsel
regulatory legal services.
"DEVELOPMENT AIM" means, at any time, Development of a Product that is
competitively superior to then existing Competitive Products or products under
development that may reasonably be expected to become Competitive Products.
"DEVELOPMENT EXPENSES" means the expenses incurred by Alliance in
connection with the Development of a Product. Development Expenses shall
include, but are not limited to, the cost of studies on the CMC, toxicological,
pharmacokinetic, metabolic or clinical aspects of a Product conducted internally
or by individual investigators, of design and manufacture of any required
prototype devices, of consultants necessary for the purpose of obtaining and/or
maintaining Regulatory Approval of a Product in the Territory, and costs (and
related fees) for preparing, submitting, reviewing or developing data or
information for the purpose of submission to a governmental authority to obtain
and/or maintain Regulatory Approval of a Product in the Territory.
"DEVELOPMENT PLAN" shall have the meaning set forth in Section
2.03(b).
"DRUG APPROVAL APPLICATION" means an application for Regulatory
Approval required to be approved before commercial sale or use of a Product as a
drug in a regulatory jurisdiction, including, for the purposes of Regulatory
Approval in the United States, a New Drug Application and all supplements filed
pursuant to the requirements of the FDA (including all documents, data and other
information concerning a Product which are necessary for, or included in, FDA
approval to market the Product, as more fully defined in 21 C.F.R. Sections
314.1 et seq.).
"EFFECTIVE DATE" shall have the meaning set forth in the Recitals to
this Agreement.
"EUROPE" means the countries which are members of the European Union
as such membership may change from time to time.
"FDA" means the United States Food and Drug Administration, or any
successor agency.
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**
"FIELD" means, at any date of determination, the development, use,
manufacture, distribution, marketing and sale of the Product as an ultrasound
contrast agent in all possible indications, in humans or animals.
"FIRST COMMERCIAL SALE" means the date Schering or its Affiliate or a
sublicensee of Schering first sells commercially, pursuant to a Regulatory
Approval, a Product in any country of the Territory, PROVIDED that where such a
first commercial sale has occurred in a country for which pricing or
reimbursement approval is necessary for widespread sale, then such sales shall
not be deemed a First Commercial Sale until such pricing or reimbursement
approval has been obtained.
"FLOOR" shall have the meaning set forth in Section 8.01(f).
"FUTURE PAYMENTS" shall have the meaning set forth in Section 4.02.
"GROSS MARGIN" means the difference between Net Sales (exclusive of
any reserves for bad debts) and Cost of Goods Sold, such difference divided by
Net Sales (exclusive of any reserves for bad debts), expressed as a percentage.
"INDICATIONS" shall have the meaning set forth in Section 8.01(a)(i).
"INFORMATION" means (i) techniques and data within the Field relating
to the Product, including, but not limited to, inventions, practices, methods,
knowledge, know-how, skill, trade secrets, experience, test data including
pharmacological, toxicological, preclinical and clinical test data, regulatory
submissions, adverse reactions, analytical and quality control data, marketing,
pricing, distribution, cost, sales and manufacturing data or descriptions and
(ii) compounds, compositions of matter, assays and biological materials within
the Field relating to the Product.
"INITIAL DEVELOPMENT PLAN" means the initial Development Plan
concerning the Development of AF0150 for the Indications as set forth in more
detail on Exhibit C hereto.
"JPC" shall have the meaning set forth in Section 5.01.
"JOINT DEVELOPMENT COMMITTEE" or "JDC" means the committee established
pursuant to Section 2.01 below.
"JOINT PATENT" shall have the meaning set forth in Section 11.03(a).
"LOSSES" shall have the meaning set forth in Section 15.01(a).
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"LV INDICATION" means **
"MANUFACTURING PARTY" means the Party who is from time to time
responsible for the (i) manufacturing and supply of the Product for use during
Development or (ii) commercial manufacture and supply of the Product.
"MATERIALS" shall have the meaning set forth in Section 9.09.
"MATERIAL GOAL" means any "Material Goal" specified as such in the
Development Plan.
"MP INDICATION" means **
"NET SALES" means the amount invoiced by a Party, its Affiliates or
its sublicensees from sales of the Product to Third Parties in the Territory,
less reasonable and customary deductions applicable to the Product for (i)
transportation charges and charges such as insurance, relating thereto paid by
the selling party; (ii) sales and excise taxes or customs duties paid by the
selling party and any other governmental charges imposed upon the sale of the
Product and paid by the selling party; (iii) distributors' fees, rebates or
allowances actually granted, allowed or incurred; (iv) quantity discounts, cash
discounts or chargebacks actually granted, allowed or incurred in the ordinary
course of business in connection with the sale of the Product; (v) allowances or
credits to customers, not in excess of the selling price of the Product, on
account of governmental requirements, rejection, outdating, recalls or return of
the Product; (vi) costs of customer programs such as cost effectiveness or
patient assistance programs designed to aid in patient compliance to maintain
medication schedules; and (vii) a one percent (1%) deduction for bad debts. For
the purpose of calculating a Party's Net Sales, the Parties recognize that (a) a
Party's customers may include persons in the chain of commerce who enter into
agreements with a Party as to price even though title to the Product does not
pass directly from a Party to such customers, and even though payment for such
Product is not made by such customers directly to a Party and (b) in such cases
chargebacks paid by a Party to or through a Third Party (such as a wholesaler)
can be deducted by a Party from gross revenue in order to calculate a Party's
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Net Sales. Any deductions listed above which involve a payment by a Party shall
be taken as a deduction against aggregate sales for the period in which the
payment is made. Sales of the Product between a Party and its Affiliates or
sublicensees solely for research or clinical testing purposes shall be excluded
from the computation of Net Sales. Net Sales will be accounted for in
accordance with international accounting standards consistently applied.
"NON-MANUFACTURING PARTY" shall be any Party that is not a
Manufacturing Party.
"PATENT" means (i) valid United States and foreign patents,
re-examinations, reissues, renewals, extensions, term restorations, divisionals,
continuations and continuations-in-part thereof, and foreign counterparts
thereof, and (ii) pending applications for United States and foreign patents and
foreign counterparts thereof.
"PATENT EXPENSES" means the fees, expenses and disbursements and
outside counsel fees, and payments to Third Party agents incurred in connection
with the preparation, filing, prosecution and maintenance of Alliance Patents
covering the Product within the Field, including Alliance's costs of patent
interference and opposition proceedings and actions at law and equity for patent
infringement and any sums paid to Third Parties on account of judgments or
settlements arising out of Third Party patent claims (other than such judgments
or settlements resulting in the payment of royalties).
"PHASE III CLINICAL TRIALS" has the meaning ascribed thereto in 21
C.F.R. Section 312.21(c), as amended from time to time.
"PHASE IV CLINICAL TRIALS" means product support clinical trials of a
Product commenced after receipt of Regulatory Approval in the United States for
such Product. These trials shall be considered a part of Clinical Work.
"POTENTIAL NEW INDICATION" shall have the meaning set forth in Section
4.04(a).
"PRECLINICAL WORK" means any nonclinical IN VIVO or IN VITRO
biological work to assess the safety or efficacy of a Product.
"PRODUCT" means AF0150 and any drug compounds, drug compositions and
medical devices and systems related to perfluorocarbon containing ultrasound
imaging products and developed jointly by Alliance and Schering pursuant to this
Agreement which, in the absence of this Agreement, the use, development,
manufacture, marketing, sale or distribution of which would result in the
infringement of one or more claims in an Alliance Patent or Joint Patent, or
which utilize the Alliance Know-How. For ease of reference, "Product" is
generally expressed in the singular in this Agreement, but multiple Products may
be Developed or marketed hereunder.
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"PRODUCTION WORK" shall mean any work to investigate methods to
manufacture on a commercial scale a Product, to validate reproducibility,
safety, cost effectiveness, and potential for scale-up of a method to
manufacture on a commercial scale a Product, or to transfer Alliance Know-How
related to manufacturing a Product to Schering (including, without limitation,
all chemistry, manufacturing and control information, data or processes required
for the production and quality control release of a Product).
"R&D WORK" shall mean any work to identify and develop a Product, to
characterize and qualify the properties or parameters of a Product, to
investigate methods to use a Product, or to modify or improve an existing
Product.
"REGULATORY APPROVAL" means any approvals, product and/or
establishment licenses, registrations or authorizations of any federal, state or
local regulatory agency, department, bureau or other governmental entity,
necessary for the manufacture, use, storage, importation, export, transport or
sale of Product in a regulatory jurisdiction.
"ROYALTY PERCENTAGE" shall have the meaning set forth in Section 8.01.
"REGULATORY WORK" shall mean any work related to obtaining or
maintaining Regulatory Approval, including post Regulatory Approval work, in any
country of the Territory for the sale of a Product.
"SIGNIFICANT CHANGE" means any change requiring prior approval by the
FDA or contemporaneous submission to the FDA of a supplement pursuant to 21
C.F.R. Sections 314.70(b) or (c), as amended from time to time, if such change
is made subsequent to FDA approval of the Drug Approval Application in the
United States.
"STEERING COMMITTEE" means the committee described in Section 3.01.
"SUPERIOR" means, **
"TERRITORY" means all the countries of the world.
"THIRD PARTY" means any entity other than Alliance or Schering and
their respective Affiliates and sublicensees.
**
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"UNDUE PREFERENCE" shall have the meaning set forth in Section 16.01.
"WRITTEN DISCLOSURE" shall have the meaning set forth in Section
10.06.
ARTICLE II
DEVELOPMENT
SECTION 2.01. FORMATION OF JDC. Within thirty (30) days after the
Effective Date (or such later time as may be mutually agreed to by the Parties),
the Parties shall establish the JDC. The JDC shall consist of an equal number
of representatives of Alliance and Schering to be agreed upon by the Parties
from time to time. Either Party may designate a substitute for a member unable
to be present at a meeting. One member of the JDC, chosen at the sole
discretion of Alliance, shall serve as Chairman of the JDC. Regardless of the
number of representatives from each Party on the JDC, each Party shall have one
vote on any issue. Meetings of the JDC shall be held at least quarterly and may
be called by either Party with not less than ten (10) business days notice to
the other unless such notice is waived, and meetings shall be held at the office
of Schering's Affiliate, Berlex Laboratories, Inc., in New Jersey, unless
otherwise agreed. The JDC may be convened, polled or consulted from time to
time by means of telecommunication or correspondence. Each Party will disclose
to the other proposed agenda items reasonably in advance of each meeting of the
JDC. Each Party shall bear its own costs for participation in the JDC.
SECTION 2.02. RESPONSIBILITIES OF JDC.
(a) The JDC shall, unless otherwise agreed to by the Parties:
(i) assume responsibility for the Development Plans as
established in Section 2.03;
(ii) establish, update yearly and seek approval from the Steering
Committee for the Development Plans so long as appropriate which plans will
specify a reasonable level of detail by which Alliance and Schering will
conduct R&D Work, Preclinical Work, Clinical Work, Production Work and
Regulatory Work;
(iii) meet and review progress of R&D Work, Preclinical Work,
Clinical Work, Production Work and Regulatory Work at least quarterly
unless
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Alliance and Schering otherwise agree, and direct changes or modifications
to the Development Plans;
(iv) decide on a publication strategy as set forth in Section
10.05; and
(v) present a report with a reasonable level of detail at least
every three (3) months to the Steering Committee on all activities of the
JDC, including progress by the Parties under the current Development Plans
and progress by the JDC on developing Development Plans for the next year.
(b) Actions taken by the JDC pursuant to this Agreement shall be
taken only following unanimous agreement of the Parties or at the direction of
the Steering Committee.
(c) The JDC will have the power to form subcommittees with
appropriate representation from Alliance and Schering.
(d) Notwithstanding any other provision of this Agreement, the JDC
shall not have power over any Development of the Product as such Development
relates to Commercialization of the Product outside the United States and
Europe.
SECTION 2.03. DEVELOPMENT.
(a) Alliance and Schering each agree to co-operate in the development
of the Product and to use commercially reasonable efforts to develop and bring
the Product to market. Alliance agrees to use commercial reasonable efforts to
execute and substantially perform the obligations assumed by it under the
Development Plan, which includes all Development work for the Product in the
United States. Schering agrees to use commercially reasonable efforts,
consistent with the terms of this Agreement and Alliance's obligations under the
Development Plan, to Develop the Product as soon as practicable outside the
United States and bring the Product to market as soon as practicable in the
Territory in accordance with the terms of Section 16.01.
(b) The Development of each Product for each of the Indications and
Additional Indications, if any, shall be governed by a development plan
("DEVELOPMENT PLAN"), which shall provide for Development of the Product for
Indications and Additional Indications, if any, and, together with updates,
shall be prepared by the JDC for approval by the Steering Committee. The
Parties have agreed upon and approved the Initial Development Plan which is
attached hereto as Exhibit C.
(c) With respect to the Development of Additional Indications, the
Initial Development Plan for each such Additional Indication shall be agreed
between the Parties,
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and each subsequent Development Plan for each such Additional Indication shall
be proposed by the JDC and submitted to the Steering Committee for review and
approval.
(d) Each Development Plan shall provide a detailed time-line for each
step to be achieved by Alliance with respect to the Development and Regulatory
Approval of the Product in the Indications. Without limiting the generality of
the foregoing, Alliance shall be responsible for executing, and paying all
Development Expenses associated with, all R&D Work, Preclinical Work, Clinical
Work, Production Work and Regulatory Work associated with the Product and
Indications with a view towards Developing the Product for Commercialization in
the United States as promptly as is practical; PROVIDED, HOWEVER, without
limiting its obligations set forth in Section 2.03, Alliance shall not be
obligated to conduct clinical trials outside of the United States. Schering
may, but shall not be obligated to, conduct clinical trials in the Territory
based on Alliance's Preclinical Work, Clinical Work and Production Work.
Schering shall be responsible for executing and paying all development expenses
associated with all R&D Work, Preclinical Work, Production Work and Regulatory
Work associated with the Product and Indications outside the United States with
a view to Commercialization outside the United States as soon as practicable;
PROVIDED, HOWEVER, that Alliance shall be responsible for executing and paying
for all Preclinical Work and Production Work for the United States and Europe.
Each Development Plan shall describe the proposed overall program of Development
for the Product for the particular Indication or Additional Indication, as the
case may be, in the Territory, including preclinical studies, toxicology,
formulation, process development, clinical studies and regulatory plans and
other elements of obtaining Regulatory Approval in each applicable country.
(e) Each Development Plan shall be updated annually by the JDC, and
submitted by October 1 of each calendar year to the Steering Committee for
review and approval. The Steering Committee shall provide comments on each such
updated Development Plan within thirty (30) days following its submission to it
and within ninety (90) days following such original submission the Steering
Committee shall either approve the Development Plan submitted by the JDC or
approve a modified Development Plan prepared by the Steering Committee
consistent with the objectives for the Product.
SECTION 2.04. **
(a) **
(b) **
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SECTION 2.05. DRUG APPROVAL APPLICATIONS.
(a) UNITED STATES. Consistent with the Development Plan but subject
to the remainder of this Section 2.05, Alliance shall be responsible for
preparing and filing Drug Approval Applications and seeking Regulatory Approvals
for the Product in the United States, including preparing all reports necessary
as part of a Drug Approval Application. All such Drug Approval Applications
shall be filed in the name of Alliance, and a copy of each such Drug Approval
Application shall be simultaneously provided to Schering. Alliance shall be
responsible for prosecuting such Drug Approval Applications and Schering shall
have the right of cross-reference for purposes of obtaining Regulatory Approval
of the Product. In connection with all Drug Approval Applications being
prosecuted by Alliance under this Section 2.05(a), Alliance agrees to provide
Schering with a copy (which may be wholly or partly in electronic form) of all
filings to regulatory agencies that it makes hereunder. The Parties shall
consult and cooperate in the preparation of each Drug Approval Application and
in obtaining and maintaining Regulatory Approvals within the Territory.
Alliance shall provide Schering with reasonable advance notice of any scheduled
meeting with any regulatory agency relating to any Drug Approval Application,
and Schering shall have the right to participate in any such meeting. Alliance
shall promptly furnish Schering with copies of all material correspondence
Alliance has had with any regulatory agency, and contact reports concerning
material conversations or material meetings with any regulatory agency, in each
case relating to any such Drug Approval Application. In the event that any
regulatory agency threatens or initiates any action to remove a Product from the
market, Alliance shall notify Schering of such communication within one business
day of receipt by Alliance.
As between Parties, Alliance shall be the legal and beneficial owner
of all Drug Approval Applications and related approvals in the United States
until Regulatory Approval. Promptly following receipt of Regulatory Approval of
each Drug Approval Application with respect to a Product, legal and beneficial
ownership thereof shall be transferred to Schering. Within thirty (30) days of
the date of the FDA's letter granting Regulatory Approval of each Drug Approval
Application with respect to a Product, Alliance shall transmit to FDA a letter
in compliance with 21 CFR 314.72 (as it may be amended from time to time)
transferring legal and beneficial ownership of such Drug Approval
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Application to Schering's designated Affiliate. Schering shall have the right
to incorporate by reference in the Drug Approval Application any regulatory
filings so incorporated at the time of FDA approval of the Drug Approval
Application.
(b) TERRITORY EXCLUDING THE UNITED STATES. Schering, at its own
expense, shall be responsible for preparing and filing Drug Approval
Applications and seeking Regulatory Approvals for the Product in all countries
in the Territory wherein Schering determines it is commercially reasonable to do
so, excluding the United States, including preparing all reports necessary as
part of a Drug Approval Application. In the event that any regulatory agency
threatens or initiates any action to remove a Product from the market in any
country in the Territory, Schering shall notify Alliance of such communication
within two business days of receipt by Schering.
SECTION 2.06. COSTS OF DEVELOPMENT. Unless otherwise agreed and
except as is otherwise provided in Section 2.03(d), all Development Expenses
incurred for a Product shall be borne by Alliance; PROVIDED, HOWEVER, that in
the event either Schering, in its sole determination, or the Steering Committee
determines that additional Development of the Product beyond the scope described
in this Agreement and in the Development Plan is necessary and such decision
causes a material increase in Development Expenses, then such additional
Development Expenses shall be borne by Schering.
SECTION 2.07. USE OF FUNDS. Subject to the provisions of this
Agreement, Alliance agrees to utilize the Future Payments payable pursuant to
Sections 4.02(a), (d) and (e) and Section 4.03 for Development Expenses as such
relate to the Product, as further detailed in the Development Plan. Alliance
shall demonstrate the use of funds in accordance with this Section 2.07 in
reasonably detailed reports to be provided to Schering at the end of each
calendar quarter.
SECTION 2.08. EXCLUSIVITY. Neither Alliance nor any of its
Affiliates shall use, develop, manufacture, have manufactured, market, sell, or
distribute directly or indirectly any Competitive Product in the Territory, nor
aid in any of the aforementioned activities, including through the licensing of
any Alliance Patents or Alliance Know-How, with any of their respective
licensees or sublicensees. If Alliance or any of its Affiliates makes, uses, or
sells a Competitive Product in a country, or aids in any such activities with
any of their respective licensees or sublicensees, and after written notice of
breach from Schering, Alliance or its Affiliates fails to cease such making,
using, or selling, Schering shall not be obligated to pay royalties on the sale
of the Product in such country, and may seek damages for Alliance's breach
hereof
SECTION 2.09. RIGHT TO ENGAGE THIRD PARTIES.
(a) In the course of its business, Alliance regularly uses Third
Parties to perform certain Development activities. Alliance may continue to do
so during the course of
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this Agreement; PROVIDED, HOWEVER that any expenses relating to such Third Party
Development will be incurred and borne by Alliance at its sole expense.
(b) Alliance shall notify Schering in writing fifteen (15) days prior
to entering into a material contract with a Third Party to perform any
Development activities, unless such contract may be cancelled or terminated by
Alliance without penalty on less than sixty (60) days notice. During the
fifteen (15) day period following such notice from Alliance, Schering shall have
the right to offer to perform itself such Development activities that Alliance
proposed to contract to a Third Party. If Schering decides to offer to perform
such Development activities, it shall notify Alliance in writing during such
fifteen (15) day period and shall include with such notice the terms of its
offer to perform such Development activities. Alliance shall have no obligation
to accept such offer, but shall consider such offer in good faith and negotiate
towards entering into an agreement with Schering if Schering's offer and
capabilities are economically and operationally equivalent to those of such
Third Party. All other things being equal, Alliance shall accept Schering's
offer if it is less expensive than such Third Party's offer.
SECTION 2.10. SCHERING PORTFOLIO. Alliance is aware of the fact that
Schering is, as of the Effective Date, manufacturing and selling Competitive
Products in certain countries of the Territory and will continue to do so in any
country of the Territory suitable, in Schering's view, for such marketing.
Alliance agrees that nothing in this Agreement is intended to prevent or
prevents Schering from such marketing at its sole discretion.
ARTICLE III
MANAGEMENT
SECTION 3.01. STEERING COMMITTEE. Alliance and Schering shall
create, within thirty (30) days after the Effective Date (or such later time as
may be mutually agreed to by the Parties), a Steering Committee. The Steering
Committee shall have an equal number of representatives from each Party and the
size of the Steering Committee shall not exceed a total of four (4) members.
Members of the Steering Committee shall be composed of senior personnel of the
Parties. Members of the Steering Committee shall serve on such terms and
conditions as shall be determined by the Party selecting such person for
membership on the Steering Committee. An alternate member designated by a Party
may serve temporarily in the absence of a permanent member designated by such
Party.
SECTION 3.02. MEETINGS OF THE STEERING COMMITTEE. The Steering
Committee:
(a) shall hold meetings at such times and places as shall be
determined by a majority of the entire membership of the Steering Committee, but
in no event shall such meetings be held less frequently than once every six (6)
months;
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(b) may conduct meetings in person or by telephone conference,
PROVIDED that, any decision made during a telephone conference meeting is
evidenced in a conformed writing signed by one of the members of the Steering
Committee from each of the Parties;
(c) shall keep minutes reflecting actions taken at meetings;
(d) may act without a meeting if prior to such action a written
consent thereto is signed by all members of the Steering Committee; and
(e) may expand upon the foregoing procedures for its internal
operation by unanimous written consent.
SECTION 3.03. FUNCTIONS AND POWERS OF THE STEERING COMMITTEE. The
activities of the Parties under this Agreement shall be managed by the Steering
Committee to the extent set forth herein. The Steering Committee shall perform
the following functions:
(a) determine the long-range strategy and planning for the
Development of the Product in the United States and Europe for any and all
indications in the manner contemplated by this Agreement;
(b) review, modify and approve the Development Plan and any other
decision submitted to it by the JDC pursuant to Article II;
(c) review and approve a proposal by either Party to stop a clinical
trial other than in accordance with its protocol;
(d) determine the patent strategy for any Patents relevant to the
Product; and
(e) perform such other functions as appropriate to further the
purposes of this Agreement as determined by the Parties.
SECTION 3.04. STEERING COMMITTEE ACTIONS. Actions to be taken by the
Steering Committee pursuant to the terms of this Agreement shall be taken only
following the unanimous vote of the members of the Steering Committee. The
Steering Committee shall attempt to have all decisions approved by all members
of the Steering Committee. If the members of the Steering Committee cannot
reach a unanimous decision with respect to items (a) through (e) above or
matters referred to it for approval within sixty (60) days following such
referral, then, subject to Section 16.01 hereof, the final decision on such
matters shall be made by Schering; PROVIDED, HOWEVER, that prior to the
implementation of such decision the Chief Executive Officer of Alliance shall be
given the opportunity to meet and consult with the head of Schering's Strategic
Business Unit "Diagnostics" in a timely manner.
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SECTION 3.05. OBLIGATIONS OF PARTIES. Alliance and Schering shall
provide the Steering Committee and its authorized representatives with
reasonable access during regular business hours to all records and documents
(excluding attorney-client privileged documents) relating to this Agreement
which it may reasonably require in order to perform its obligations hereunder.
SECTION 3.06. LIMITATIONS OF POWERS OF COMMITTEES.
(a) The Steering Committee shall have only such powers as are
specifically delegated to it hereunder. Except as set forth in Section 3.03,
the Steering Committee shall not be involved with the day-to-day management of
the collaboration under this Agreement.
(b) Notwithstanding the creation of the Steering Committee, the JDC,
or any subcommittees thereof, each Party to this Agreement shall retain the
rights, powers, and discretion granted to it hereunder, and such committees and
subcommittees shall not be delegated or vested with any such rights, powers, or
discretion unless such delegation or vesting is expressly provided for herein or
the Parties expressly so agree in writing. Such committees or subcommittees
shall not have the power to amend or modify this Agreement, which may be amended
or modified only as provided in Section 17.13.
ARTICLE IV
PAYMENTS
SECTION 4.01. INITIAL PAYMENT. Schering shall pay to Alliance an
amount equal to four million dollars ($4,000,000) upon execution of this
Agreement. This amount is intended to reimburse Alliance partially for R&D Work
to be performed on the Product. This amount shall be noncreditable against any
future obligations of Schering under this Agreement.
SECTION 4.02. LV AND MP INDICATION FUTURE PAYMENTS. Schering shall
continue to make payments (together with the payments provided for in Section
4.03, the "FUTURE PAYMENTS") to Alliance within thirty (30) business days after
the first achievement of the following events (or, in the event that any such
targeted event is achieved by Alliance, within thirty (30) business days after
Alliance shall have given Schering notice that such targeted event has been
achieved):
(a) the sum of **
the first such installment being accrued and
earned on December 31, 1997 and payable on March 30, 1998, and subsequent
installments accrued and earned on the last day of March, June, September and
December, respectively, and payable each on the last
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day of each subsequent June, September, December and March,
respectively, to cover future research;
(b) the sum of **
for the 365 day period commencing on the day of the
First Commercial Sale of a Product in the Territory;
(c) the sum of **
for the 365 day period commencing on the first
anniversary of the First Commercial Sale of a Product in the
Territory;
(d) a sum, the amount of which is to be mutually agreed by the
Parties, payable in one single installment of up to **
; and
(e) the sum of **
; PROVIDED, THAT, the FDA
does not object to commencement of a Phase III Clinical Trial at
such end of Phase II meeting.
In addition to Schering's right to terminate this Agreement pursuant
to Article XIV, Schering may elect, at its sole option, in the event that a
Material Goal has not been achieved as scheduled under the Development Plan, to
defer payment of any Future Payment provided for under Section 4.02(a) until
such Material Goal has been achieved.
SECTION 4.03. **
(a) **
(b) **
(c) **
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(d) **
(e) **
The payments specified in this Section 4.03 and Section 4.02(a) are
intended to cover future R&D Expenses associated with the Product.
SECTION 4.04. IMPROVEMENTS AND BACKUP PRODUCTS.
(a) INITIAL OFFER. In the event that Alliance wishes to conduct
Development activities for any improvements to a Product, new indications for
the Product or with respect to back-up and/or replacement products related to
the Field (collectively, a "POTENTIAL NEW INDICATION"), Alliance shall make a
written proposal to Schering setting forth in reasonable detail the scope of the
Development activities proposed by Alliance, together with all material data
available to Alliance relating thereto. Such presentation shall be accompanied
by a draft development plan and development budget. Schering shall have the
right with respect to each such proposal, exercisable upon delivery of written
notice to Alliance not later than ninety (90) days following the date that such
Potential New Indication is presented to Schering, to include such Potential New
Indication as an Additional Indication hereunder. With respect to each such
Additional Indication as to which Schering makes such election, it shall pay to
Alliance ** as contained in the Development Plan
approved by the JDC.
(b) UNFUNDED DEVELOPMENT. In the event that Schering shall have
failed to exercise its option under Section 4.04(a) with respect to any
Potential New Indication, Alliance shall be free to conduct Development
activities for such Potential New Indication at its own expense. Alliance may
not Commercialize, sell, sublicense or otherwise convey to any Third Party any
rights in such Potential New Indication without Schering's prior written
consent, which may be withheld or granted in Schering's sole discretion.
(c) OPTION EXERCISE. Schering shall have the right with respect to
each Potential New Indication with respect to which Schering shall have failed
to exercise its option under Section 4.04(a), exercisable upon delivery of
written notice to Alliance at any time, to include such Potential New Indication
as an Additional Indication; PROVIDED, HOWEVER, that in the event Schering
exercises such option as it relates to any Potential New Indication and the
exercise of such option is subsequent to the expiration of the ninety (90)
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day period set forth in Section 4.04(a), then Schering shall reimburse Alliance
at a rate of ** incurred in
connection with such Potential New Indication prior to the date of such
determination, and shall thereafter pay Alliance **
as contained in the Development Plan
approved by the JDC. Payment of any such Development Expenses shall be subject
to the provisions of Section 13.03 hereof.
(d) DEVELOPMENT PLAN. If Schering exercises an option pursuant to
Section 4.04(c) the Parties shall, within the next thirty (30) days, agree upon
a definitive development plan and development budget in respect of such
Additional Indication, such plan and budget to be consistent in scope with the
initial Development Plan attached hereto as Exhibit C. Upon exercise of such
option, the Potential New Indication as to which such option shall have been
exercised shall constitute an "Additional Indication" hereunder.
ARTICLE V
INTELLECTUAL PROPERTY STRATEGY
SECTION 5.01. JOINT PATENT COMMITTEE.Alliance and Schering shall
create, within thirty (30) days after the Effective Date (or such later time as
may be mutually agreed to by the Parties), the Joint Patent Committee ("JPC").
The JPC shall consist of an equal number of representatives of Alliance and
Schering to be agreed upon by the Parties from time to time. Members of the JPC
shall be composed of senior personnel of the Parties with expertise and
responsibilities in the areas of patent prosecution and defense. Either Party
may designate a substitute for a member unable to be present at a meeting. One
member of the JPC, chosen at the sole discretion of Schering, shall serve as
Chairman of the JPC. Regardless of the number of representatives from each
Party on the JPC, each Party shall have one vote on any issue. Meetings of the
JPC shall be held at least quarterly and may be called by either Party with not
less than ten (10) business days notice to the other unless such notice is
waived, and meetings shall be held at the office of Schering's Affiliate, Berlex
Laboratories, Inc., in New Jersey, unless otherwise agreed. The JPC may be
convened, polled or consulted from time to time by means of telecommunication or
correspondence. Each Party will disclose to the other proposed agenda items
reasonably in advance of each meeting of the JPC. Each Party shall bear its own
costs for participation in the JPC. The JPC shall cease operations and have no
further function hereunder on the date on which royalties shall no longer be
payable to Alliance pursuant to Section 8.01(f) hereof.
SECTION 5.02. FUNCTIONS AND POWERS OF THE JPC. The JPC shall, unless
otherwise agreed to by the Parties, perform the following functions:
(a) provide recommendations to the Steering Committee regarding the
long-range patent strategy for the all Patents related to the Product,
including, but not limited to, the recommendations regarding the necessity for
the attacking or licensing of any Third
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Party Patents and the necessity of, and strategy for, the prosecution or defense
of any Alliance Patents or Joint Patents;
(b) inform the Steering Committee, including any dissent if
applicable, within thirty (30) days of the determination of a recommendation to
the Steering Committee regarding the long-range patent strategy for Patents
related to the Product;
(c) inform the Steering Committee at least every three (3) months of
all activities of the JPC; and
(d) perform such other functions as appropriate to assist the
Steering Committee in determining the patent strategy for Patents related to the
Product.
SECTION 5.03. OBLIGATIONS OF THE PARTIES. Alliance and Schering shall
provide the JPC and its authorized representatives with reasonable access during
regular business hours to all records and documents (excluding attorney-client
privileged documents)relating to this Article V which it may reasonably require
in order to perform its obligations hereunder.
SECTION 5.04. LIMITATION OF POWERS. Notwithstanding any other
provision of this Agreement, the JPC shall not have any power under this
Agreement to make or provide binding decisions or recommendations regarding any
matter, or on any Party, hereunder. Information provided by the JPC to the
Steering Committee is for informational purposes only and intended solely for
the consideration by the Steering Committee.
ARTICLE VI
LICENSES
SECTION 6.01. PATENT AND TRADEMARK LICENSE TO SCHERING. Alliance
grants to Schering an exclusive worldwide license, with a right to sublicense,
under the Alliance Patents and the Alliance Know-How to use, develop,
manufacture, have manufactured, market, sell, and distribute the Product in the
Territory for all indications in the Field. Such license shall be exclusive
(even as to Alliance) in the Territory, except that Alliance shall retain the
right to conduct Development and related activities to the extent specifically
provided for in this Agreement.
A list of the Alliance Patents identified as of the Effective Date is
attached hereto as Exhibit B. Such list shall be modified from time to time to
reflect any changes to Alliance Patents and shall be expanded from time to time
to include any Patents owned or Controlled by Alliance relevant to the
Development or Commercialization of the Product.
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At Schering's election, Alliance shall (i) grant to Schering a royalty
free, perpetual license for the use of the trademark "Imagent" to be used in
connection with the purposes of this Agreement, such license to terminate as of
such time as Schering shall maintain an exclusive trademark for the Product or
(ii) assign such trademark to Schering.
SECTION 6.02. THIRD PARTY TECHNOLOGY.
(a) EXISTING LICENSES. The licenses granted under Section 6.01
include sublicenses of Third Party technology existing on the Effective Date and
licensed to Alliance to the extent that such sublicenses can be so granted. Any
royalties payable to Third Parties pertaining to technology discussed in the
previous sentence shall be paid by Alliance, and, if not so paid, may be offset
or deducted from royalty payments as provided under Section 8.01.
(b) SUBJECT TO TERMS. The licenses granted under Section 6.01, to
the extent they include sublicenses of Third Party technology, shall be subject
to the terms and conditions of the license agreement pursuant to which the
sublicense is granted. As of the Effective Date hereof there are no such
agreements in place.
(c) FUTURE THIRD PARTY ROYALTIES.
(i) **
(ii) **
If the Parties cannot agree on the Value within thirty (30) days of
Schering notice to Alliance of its determination thereof, each Party shall
select an internationally-recognized investment banking firm to determine the
Value, and such firms shall jointly
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select a third internationally-recognized investment banking firm without any
significant relation to either Party (the "INDEPENDENT APPRAISER"). The fees
and expenses of each Party's investment banking firm shall be borne by such
Party, and 50% of the fees and expenses of the Independent Appraiser shall be
borne by each Party.
Within forty-five (45) days of the date of selection of the
Independent Appraiser, each investment banking firm shall submit to the
Independent Appraiser its determination of the Value, setting forth in
reasonable detail, the basis for such determination. If the Value as determined
by one investment banking firm is not more than 120% of the Value as determined
by the other investment banking firm, the Value shall be the average of the two
amounts. In all other cases, the Independent Appraiser shall, within fifteen
(15) days of its receipt of the submission from such investment banking firms,
choose one of the investment banking firm's Value as the Value and shall not
choose any other amount as the Value. Such Value, as so determined, shall then
be utilized for the purposes of Section 6.02(c)(i) and 8.01(e) hereof.
ARTICLE VII
COMMERCIALIZATION
SECTION 7.01. SCHERING AS SOLE MARKETING PARTY. Schering will be the
sole marketing Party with respect to the Product in the Territory, and as a
result, shall be responsible for carrying out Commercialization in the
Territory.
SECTION 7.02. COMMERCIALIZATION EFFORTS. Schering agrees to use
commercially reasonable efforts with respect to the Commercialization of the
Product throughout the Territory provided for hereunder. Such commercially
reasonable efforts shall be consistent with the efforts used by Schering in
preparing commercialization plans and budgets and commercializing its own
pharmaceutical products. Schering shall not grant any Undue Preference, as
provided for in Section 16.01, in the course of performance of its obligations
under this Section 7.02.
SECTION 7.03. TAX CONSIDERATIONS. Either Party may take advantage of
tax considerations which benefit it and not the other Party. In the event that
a Party takes advantage of a tax consideration in connection with a Product
which benefits it and not the other Party, no compensation to the other Party
shall be required, PROVIDED that no negative tax implication for the other Party
may be an element of such tax benefit.
ARTICLE VIII
ROYALTIES
SECTION 8.01. ROYALTIES. In further consideration of the rights and
licenses granted to Schering under Article VI of this Agreement, Schering shall
pay to
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Alliance the following royalties based on the Net Sales of the Product in the
Territory (the "ROYALTY PERCENTAGE"):
(a) **
(i) **
(ii) **
(iii) **
(iv) **
(v) **
(vi) **
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**
(b) **
(i) **
(ii) **
(iii) **
(c) **
(i) **
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(ii) **
(iii) **
(iv) **
(v) **
**
25
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(d) **
(e) **
(f) **
(i) **
(ii) **
**
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(g) ROYALTY TERM. Except where expressly provided otherwise in this
Agreement, all royalties to a Party shall be paid, on a country-by-country
basis, from the date of the First Commercial Sale of each Product in a
particular country until the later of (i) ten (10) years from the First
Commercial Sale in such country and (ii) the last to expire of any valid
Alliance Patents which covers the use or sale of the Product in such country.
(h) DISCONTINUANCE. Subject to the provisions of Article XIV,
Schering may discontinue Commercialization of a Product at any time.
(i) LICENSE FOLLOWING EXPIRATION. Upon expiration of the royalty
term for a Product in the country as described above, Schering shall thereafter
have an exclusive (even as to Alliance), paid-up license to Alliance Know-How to
make, have made, use, sell, offer for sale, have sold and import that Product in
that country. In such event, Schering shall retain responsibility for, and
indemnify Alliance from, the payment of all applicable royalties and other
obligations owed to a Third Party with respect to the Product.
SECTION 8.02. ROYALTY REPORTS AND PAYMENTS. Schering shall make
royalty payments to Alliance within sixty (60) days after the end of each
calendar quarter in which Net Sales occurred. A report summarizing the Net Sales
of the Products during the relevant quarter on a country-by-country basis shall
be delivered to Alliance within sixty (60) days following the end of each
calendar quarter for which royalties are due.
SECTION 8.03. PAYMENTS; INTEREST. Any payments due under this
Agreement shall be due on such date as specified in this Agreement and, in the
event such date is a day on which commercial banks are not authorized to conduct
business in either San Diego, California or Berlin, Germany, then the next
succeeding business day, and shall be made by wire transfer to a designated bank
account of the receiving Party.
Any failure by a Party to make a payment within five days after the
date when due shall obligate such Party to pay interest to the receiving Party
at a rate per annum equal to the prime rate as quoted in the Eastern edition of
the Wall Street Journal as of the date such payment is due and, in the event
such a rate is not quoted on such date then on the immediately preceding date
such rate is quoted, such interest due and payable upon the payment of principal
otherwise due and payable.
SECTION 8.04. TAXES. The Party receiving royalties shall pay any and
all taxes levied on account of royalties it receives under this Agreement. If
laws or regulations require that taxes be withheld, the selling Party will (i)
deduct those taxes from the remittable royalty, (ii) timely pay the taxes to the
proper taxing authority, and (iii) send proof of payment to the other Party
within thirty (30) days of receipt of confirmation of payment from the relevant
taxing authority. The selling Party agrees to take all lawful and reasonable
efforts to minimize such taxes to the other Party.
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SECTION 8.05. PAYMENTS TO OR REPORTS BY AFFILIATES. Any payment
required under any provision of this Agreement to be made to either Party or any
report required to be made by any Party shall be made to or by an Affiliate of
that Party if designated by that Party as the appropriate recipient or reporting
entity without relieving such party from responsibility for such payment or
report.
SECTION 8.06. PAYMENT CURRENCY. Payments by Schering under this
Agreement shall be paid to Alliance in U.S. dollars by wire transfer of
immediately available funds to an account at a commercial bank designated by
Alliance pursuant to this Article VIII at least ten (10) business days before
payment is due. Where payments are based on Net Sales in countries other than
the United States, the amount of such Net Sales expressed in the currency of
each country shall be converted first into Deutsche Marks, or the then
applicable European currency, and then into U.S. dollars at the average exchange
rate (calculated at the average of the "bid" and "asked" exchange rate) for the
applicable quarter; PROVIDED, HOWEVER, that the conversion of the currency in
question into Deutsche Marks or the then applicable European currency, prior to
conversion into U.S. dollars shall be for calculation purposes only, and no
additional fee or commission will be incurred as a consequence of the multiple
currency conversions. In determining the average exchange rate for any quarter,
the standard shall be fifty percent (50%) of the sum of (i) the rate quoted by
Reuters (or a different independent wire service providing international spot
exchange rates as agreed to by the Parties) in Frankfurt at 1:00 p.m. on the
last business day of the applicable quarter; plus (ii) the rate quoted by
Reuters (or the approved successor service) in Frankfurt at 1:00 p.m. on the
last business day of the quarter immediately preceding the applicable quarter.
ARTICLE IX
MANUFACTURE AND SUPPLY
SECTION 9.01. MANUFACTURE AND SUPPLY BY ALLIANCE. From the Effective
Date of this Agreement until Schering becomes the Manufacturing Party (as
provided for in Section 9.10 hereof), Alliance will use commercially reasonable
efforts, subject to the greater of the capacity of Alliance's San Diego
manufacturing facility as of the date hereof or the date of filing of the Drug
Approval Application for the United States, to manufacture, or arrange for
manufacture of, the Product and supply to Schering for use in connection with
Development outside the United States and for the Commercialization of the
Product in each applicable country of the Territory under Article VII hereof.
SECTION 9.02. REGULATORY APPROVAL FOR MANUFACTURING. Alliance will
use commercially reasonable efforts to make necessary filings to obtain, or to
cause a Third Party manufacturer to make necessary filings to obtain, Regulatory
Approval for the manufacture of the Product as part of the approval of a Drug
Approval Application for each Product. Once such filings are made, no
Significant Changes to the process for the manufacture of the Product or its
drug substance shall be made without the prior written approval of Schering
which will not be unreasonably withheld. Alliance shall notify
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Schering without delay of all such changes, whether such changes are Significant
Changes or not.
SECTION 9.03. DMF. Alliance shall be responsible for all testing and
document generation (including without limitation all facilities information and
related documentation; chemistry, manufacturing, and control information;
regulatory methods and controls; assays and reference standards) necessary for
filing a drug master file ("DMF") with the FDA for the production of the drug
substance from which each Product is formulated. Alliance shall also be
responsible for filing such DMF with the FDA for the production of the drug
substance from which each Product is formulated. Alliance shall use reasonable
efforts to defend the DMF information as required by the FDA in order to permit
Schering to maintain approval of the Drug Approval Application in which such DMF
is incorporated by reference.
SECTION 9.04. SPECIFICATIONS. Schering and Alliance will jointly
establish release specifications and an expiration date for each Product to be
manufactured by Alliance and distributed by Schering.
SECTION 9.05. QUALITY TESTING. Alliance shall perform quality
control tests and assays on the Product manufactured by it pursuant to Section
9.01 in accordance with the requirements of the applicable Drug Approval
Application. Alliance shall provide Schering with a copy of the batch record, a
certificate of analysis and a certificate of compliance for each batch of
Product delivered to Schering either in advance of or contemporaneous with the
delivery of each batch of Product to Schering. The certificate of compliance
shall certify that each batch was reviewed and meets all regulatory
requirements. The certificate of analysis shall certify that each batch was
tested and meets all specifications.
SECTION 9.06. STABILITY; RECORDKEEPING; INSPECTION; ETC. Alliance
will conduct a stability program for each Product to be supplied to Schering (in
compliance with pharmaceutical industry standards and requirements of the FDA)
agreed upon between the Parties. Alliance will initiate and maintain all
manufacturing-related documents and records required by applicable law and
regulations. Alliance will also: (a) furnish copies of such records to
Schering at Schering's request; (b) conduct, at Schering's expense, additional
testing requested by any relevant regulatory authority in the Territory and/or
reasonably requested by Schering (relating to returned or suspect Products); (c)
during and prior to the commencement of manufacturing activities by Alliance
allow Schering or its agents to inspect, for quality control purposes, the
manufacturing and testing facilities, including the actual process of
manufacture and testing of the drug substance and Product; (d) promptly inform
Schering of any inspection, seizure, or other actual or threatened legal or
regulatory action by any governmental authority relating to the process of
manufacture of any Product or its drug substance, and promptly provide Schering
with any documentation relating thereto; (e) except for manufacturing changes
requiring the prior written approval of Schering pursuant to Section 9.02,
provide reasonable advance notice to Schering and consult with Schering prior to
amending any governmental filing; and (f) comply in all material
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respects with all laws relating to the generation, storage and disposal of waste
resulting from the manufacture of drug substance or Product.
SECTION 9.07. FORECASTS AND ORDERS. At least six (6) months prior to
the first commercial launch of the Product Schering shall consult with Alliance
regarding expected manufacture of the Product by Alliance. If not previously
provided, then promptly following receipt of an "approvable" letter from the FDA
for a Product, Schering shall deliver to Alliance a non-binding forecast of
Schering's requirements for the first eighteen (18) months of commercial
marketing. Schering shall submit binding purchase orders on a calendar quarter
basis, the first such purchase order to be submitted at least sixty (60) days
prior to the first delivery date set forth therein, and subsequent binding
purchase orders to be submitted one (1) calendar quarter in advance of the
calendar quarter to which they apply. Each purchase order shall be accompanied
by a revised non-binding forecast for the following four (4) calendar quarters.
Schering shall order its requirements of the Product for the Development work
performed outside the United States through binding purchase orders to be
submitted to Alliance in writing ninety (90) days prior to the expected shipment
of such Product to Schering accompanied by nonbinding forecasts for the
following three (3) calendar quarters.
SECTION 9.08. DELIVERY AND SHIPMENT. Alliance shall make deliveries
as specified in Schering's purchase orders FOB San Diego. Legal title and risk
of loss will pass from Alliance to Schering upon delivery to the common carrier
designated in Schering's purchase order.
SECTION 9.09. WARRANTIES. Each Party with respect to the Product,
drug substance and components ("MATERIALS") it manufactures and/or ships hereby
represents and warrants that (a) Materials manufactured and supplied hereunder
will, on the date of shipment, comply with the agreed-upon specifications as
then in effect; (b) it shall manufacture, store and ship Materials in compliance
with all applicable Federal, state and local laws and governmental regulations,
including, without limitation, the current good manufacturing practices
regulations of the relevant regulatory authority; and (c) when shipped,
Materials will not be adulterated or misbranded within the meaning of the
Federal Food, Drug & Cosmetic Act and the regulations promulgated thereunder.
Upon receipt of a shipment of Materials, the receiving Party shall have sixty
(60) days to determine whether such shipment meets the specifications and
applicable regulatory requirements. The receiving Party shall notify the other
Party in writing promptly if any Materials fail to meet said specifications and
requirements. If the supplying Party has not received such written notice
within sixty (60) days after any Material has been received, then such Material
shall be deemed to have met the specifications. Upon receipt of any such
written notice of non-conformance, the supplying Party shall either acknowledge
that the subject Material does not meet the specifications or resample the lot
or batch in question and have said samples tested by an independent laboratory
reasonably agreeable to the receiving Party. If such samples fail to meet the
specifications, then the supplying Party shall at the receiving Party's option
either replace the non-conforming Material at no additional cost as soon as
reasonably
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possible or refund the receiving Party's payments for said nonconforming
Materials, subject to Section 9.11 this being the exclusive and sole remedy of
the receiving party for a breach of such warranties. In no event shall the
manufacturing or shipping party be liable to the receiving party for any direct,
indirect, incidental or consequential damages or other losses, including lost
profits.
SECTION 9.10. MANUFACTURE AND SUPPLY OF THE PRODUCT BY SCHERING. As
soon as is reasonably practicable following Regulatory Approval of the LV
Indication for the Product, Schering shall become the sole Party responsible for
the manufacture and supply of the Product and shall use commercially reasonable
efforts to manufacture and supply the Product (or arrange for such manufacture
and supply) to meet reasonable demand for the Product throughout the Territory.
Alliance shall provide reasonable assistance to Schering with respect to the
transfer of all manufacturing capabilities from Alliance (or its subcontractors)
to Schering. Schering agrees to reimburse Alliance for all direct costs
incurred by Alliance specifically attributable to the transfer of the
manufacturing capabilities.
In the event that Schering has not become the Manufacturing Party by
September 30, 2002, and Schering requests Alliance to continue to be
Manufacturing Party, Schering will reimburse Alliance for lease renewal and rent
associated with renewing the Lease, dated as of March 28, 1989, by and between
Hartford Accident and Indemnity Company and Alliance Pharmaceutical Corporation,
as amended (or such other lease for a different facility entered into by
Alliance as a substitute facility) to September 30, 2005 and, if applicable,
thereafter, PROVIDED, THAT, the landlord consents to Schering as a lessee or
sublessee thereof and, if applicable, that the financial obligations of Alliance
under any substitute lease are no greater than the lease existing as of the date
hereof.
SECTION 9.11. ACCEPTANCE AND PRICING. With respect to Product it
supplies to Schering for sale or use in the Territory, **
. Schering shall have the right to
test Products upon delivery at its expense for compliance with specifications
and legal and regulatory requirements. Products rejected by Schering shall be
returned to Alliance at Alliance's expense. Schering shall make payments for
Products within thirty (30) days of receipt by Schering of Alliance's invoice or
of the Product, whichever is later. In the event that the Products do not
comply with the specifications and such default could not be detected by
Schering in the testing of the Products due to the nature of such default,
Alliance shall replace such Products free of charge upon Schering's
demonstration that such a hidden defect has later been detected.
SECTION 9.12. PACKAGING. Products manufactured by Alliance prior to
assumption of such manufacturing duties by Schering shall be supplied to
Schering in packaged form as Schering reasonably directs after consultation with
Alliance. Packaging and labelling costs incurred by Alliance and/or Schering
shall be included in Costs of Goods Sold.
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ARTICLE X
CONFIDENTIALITY
SECTION 10.01. CONFIDENTIALITY; EXCEPTIONS. Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing, the
Parties agree that the receiving Party shall keep confidential and shall not
publish or otherwise disclose or use for any purpose other than as provided for
in this Agreement any Information and other information and materials furnished
to it by the other Party pursuant to this Agreement or any Information developed
during the course of the collaboration hereunder, or any provisions of this
Agreement that are the subject of an effective order of the Securities Exchange
Commission granting confidential treatment pursuant to the Securities Act of
1934, as amended (collectively, "CONFIDENTIAL INFORMATION"), except to the
extent that it can be established by the receiving Party that such Confidential
Information:
(a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving Party in breach of this Agreement;
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others; or
(e) was independently discovered and/or developed by the receiving
Party as documented in its corporate records.
SECTION 10.02. AUTHORIZED DISCLOSURE. Each Party may disclose
Confidential Information hereunder to the extent such disclosure is reasonably
necessary in filing or prosecuting patent applications, prosecuting or defending
litigation, filing or updating any Drug Approval Application, complying with
applicable governmental regulations or conducting pre-clinical or clinical
trials, provided that if a Party is required by law or regulation to make any
such disclosures of the other Party's Confidential Information it will, except
where impracticable for necessary disclosures, for example in the event of
medical emergency, give reasonable advance notice to the other Party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, will use its reasonable efforts to secure confidential
treatment of such Confidential Information required to be disclosed. In
addition, and with prior notice to the other Party of each Third Party with whom
a confidential disclosure agreement is being entered into, each Party shall be
entitled to disclose, under a binder of confidentiality, Confidential
Information to any
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Third Party for the purpose of carrying out the purposes of this Agreement.
Nothing in this Article X shall restrict any Party from using for any purpose
any Confidential Information independently developed by it during the course of
the collaboration hereunder, or from using Confidential Information that is
specifically derived from pre-clinical or clinical trials to carry out
Regulatory Approval, marketing, sales or professional services support functions
as is customary in the pharmaceutical industry.
SECTION 10.03. SURVIVAL. This Article X shall survive the termination
or expiration of this Agreement.
SECTION 10.04. TERMINATION OF PRIOR AGREEMENT. This Agreement
supersedes the Secrecy Agreement between Alliance and Schering dated as of
January 14, 1997. All Information exchanged between the Parties under that
Agreement shall be deemed Confidential Information and shall be subject to the
terms of this Article X, and shall be included within the definitions of
Alliance Know-how.
SECTION 10.05. PUBLICATIONS. Prior to the launch of Product in the
Territory, the JDC will determine the overall strategy for publication in
support of the Product in the Territory. Notwithstanding any term of Section
10.06 below, the Parties recognize the need for scientific publications
pertaining to development of the Product and the Parties will cooperate to
provide for such publications as directed by the JDC; PROVIDED HOWEVER, that the
right of any Party to withhold or delay consent to publish or delay publication
shall be subject to any contractual publication rights of Third Parties involved
in research or clinical trials for the Product. The Parties will use reasonable
efforts to obtain the voluntary consent of any Third Party granted publication
rights related to the Product prior to the Effective Date to comply with
reasonable notice and timing requests and will promptly review any publications
delivered for review.
SECTION 10.06. PUBLICITY REVIEW. Subject to the further provisions of
this Section and Section 13.04, no Party shall originate any written publicity,
news release, or other announcement or statement relating to this Agreement or
to performance hereunder or the existence of an arrangement between the Parties
(collectively, "WRITTEN DISCLOSURE"), without the prior prompt review and
written approval of the other, which approval shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing provisions of this Section 10.06, any
Party may make any public Written Disclosure it believes in good faith based
upon the advice of counsel is required by applicable law or any listing or
trading agreement concerning its publicly traded securities, provided that prior
to making such Written Disclosure, the disclosing Party shall provide the other
Party with a copy of the materials proposed to be disclosed and provide the
receiving Party with an opportunity to promptly review the proposed Written
Disclosure. To the extent that the receiving Party reasonably requests that any
information in the materials proposed to be disclosed be deleted, the disclosing
Party shall request confidential treatment of such information pursuant to Rule
406 of the Securities Act of 1933 or Rule 26b-2 of the Securities Exchange Act
of 1934, as applicable (or any other applicable regulation relating to the
confidential treatment of
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information), so that there be omitted from the materials that are publicly
filed any information that the receiving Party reasonably requests to be
deleted. The terms of this Agreement may also be disclosed to (i) government
agencies where required by law, or (ii) Third Parties with the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed, so long as such disclosure is made under a binder of confidentiality
and so long as highly sensitive terms and conditions such as financial terms are
extracted from the Agreement or not disclosed upon the request of the other
Party. All Written Disclosures shall be factual and as brief as is reasonable
under the circumstances. Upon request by either Party, the Parties agree to
prepare a mutually agreed press release and question and answer document with
respect to this Agreement. Each Party agrees that it will use reasonable
efforts to cause all Written Disclosures and oral statements relating hereto to
be consistent with the answers specified in such question and answer document.
ARTICLE XI
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
SECTION 11.01. OWNERSHIP. Each Party shall solely own, and it alone
shall have the right to apply for, Patents within and outside of the United
States for any inventions made solely by that Party's employees or consultants
in the course of performing work under this Agreement. Inventions made jointly
by employees or consultants of Alliance and Schering shall be owned jointly by
Alliance and Schering, and each Party shall retain full joint ownership under
any Patents resulting therefrom, with full joint ownership rights in any field
subject to the licenses granted to Schering pursuant to the Article VI.
SECTION 11.02. DISCLOSURE OF JOINT INVENTIONS. Any such patent
application disclosing inventions made jointly by the Parties shall be provided
by one Party to the other reasonably in advance of the intended date for
submission of such application to a governmental patent authority.
SECTION 11.03. PATENT FILINGS.
(a) Each Party, at its sole discretion and responsibility, shall
prepare, file, prosecute and maintain Patents to cover discoveries and
inventions made solely by its own employees or consultants relating to any
Product and use reasonable efforts to file initially all such applications in
the United States or the appropriate forum under the circumstances at its own
cost. The Parties will reasonably agree on which Party shall file, prosecute
and maintain Patents to cover inventions relating to the discovery, evaluation,
manufacture, use or sale of the Product that are made jointly by personnel of
Alliance and Schering in the course of the collaboration (herein referred to as
"JOINT PATENTS"). The determination of the countries in the Territory in which
to file Joint Patents shall be made by Schering. Schering shall have the right
to direct and control all material actions relating to the prosecution or
maintenance of Joint Patents in the Territory, including interference
proceedings, reexaminations, reissue opposition and revocation proceedings.
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(b) The Parties agree to use reasonable efforts to ensure that any
Patent filed outside of the United States prior to a filing in the United States
will be in a form sufficient to establish the date of original filing as a
priority date for the purposes of a subsequent filing in the United States.
Alliance shall bear all costs related to the filing of Joint Patents in the
United States, Europe and Japan, and Schering shall bear all such costs in the
remainder of the Territory. The Parties agree to use reasonable efforts to
ensure that any Patent filed in the United States prior to filings outside of
the United States will be in a form sufficient to establish the date of original
filing as a priority date for the purpose of a subsequent filing in any
contracting state of the Paris Convention.
SECTION 11.04. THIRD PARTY PATENT RIGHTS. Each Party agrees to bring
to the attention of the other Party any Third Party Patent it discovers, or has
discovered, and which relates to the subject matter of this Agreement.
SECTION 11.05. ENFORCEMENT RIGHTS.
(a) NOTIFICATION OF INFRINGEMENT. If either Party learns of any
infringement or threatened infringement by a Third Party of the Alliance
Patents, or Joint Patents, such Party shall promptly notify the other Party and
shall provide such other Party with all available evidence of such infringement.
(b) ENFORCEMENT IN THE TERRITORY. Alliance shall be obligated, at
its own expense, to defend Alliance Patents and Joint Patents in the Territory.
Schering shall have the right, but not the obligation, to institute, prosecute
and control at its own expense any action or proceeding with respect to
infringement of any Alliance Patents, or Joint Patents covering the manufacture,
use, importation, sale or offer for sale of the Product being developed or
marketed in the Territory, by counsel of its own choice. Alliance shall have
the right, at its own expense, to be represented in any action by counsel of its
own choice. If Schering fails to bring an action or proceeding or otherwise
take appropriate action to abate such infringement within a period of one
hundred eighty (180) days of notice by Alliance to Schering requesting action,
Alliance will have the right to bring and control any such action or proceeding
relating to Alliance Patents by counsel of its own choice and Schering will have
the right to be represented in any such action by counsel of its own choice and
at its own expense. If one Party brings any such action or proceeding, the
other Party agrees to be joined as a party plaintiff if necessary to prosecute
the action or proceeding and to give the first Party reasonable assistance and
authority to file and prosecute the suit. Any damages or other monetary awards
recovered pursuant to this Section 11.05(b) shall be allocated first to the
costs and expenses of the Party bringing suit, then to the costs and expenses,
if any, of the other Party. **
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(c) SETTLEMENT WITH A THIRD PARTY. The Party that controls the
prosecution of a given action shall also have the right to control settlement of
such action; PROVIDED, HOWEVER, that if one Party controls, no settlement shall
be entered into without the written consent of the other Party (which consent
shall not be unreasonably withheld) if such settlement would materially and
adversely affect the interests of such other Party.
SECTION 11.06. DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS. If a
Third Party asserts that a patent, trademark or other intangible right owned by
it is infringed by any Product in the Territory, Alliance will be solely
responsible for defending against any such assertions at its cost and expense
(subject to the provisions of Section 11.05(b)), but no settlement may be
entered into without the written consent of Schering, which shall not be
unreasonably withheld. **
SECTION 11.07. LICENSES FOR THIRD PARTY PATENTS.
(a) DETERMINATION. In the event that the Steering Committee
determines that it is necessary for the Parties to license or otherwise obtain
or invalidate certain Third Party Patents covering the Product and Alliance
objects to such determination within thirty days after such determination is
made, the Steering Committee shall suspend its determination for a period of
four (4) months (the "DEFERRAL PERIOD").
(b) RESOLUTION. Alliance may present such facts, findings,
conclusions and other information as it deems necessary to the Steering
Committee during the Deferral Period. Upon the earlier of the end of the
Deferral Period or Alliance's presentation of all of its information, the
Steering Committee shall evaluate such information and make a final
determination, in its reasonable judgment, as to the necessity for obtaining
such Third Party Patents in accordance with the provisions of Section 3.04. The
decision reached by the Steering Committee shall thereafter be final and binding
on the Parties.
(c) LICENSING. In the event of final determination by the Steering
Committee of the necessity to license any Third Party Patents, Alliance will
proceed to obtain and, if Alliance does not promptly proceed and obtain within
six (6) months of the date upon which the FDA accepts for filing the first Drug
Approval Application for the Product, Schering may proceed with a sublicense,
settlement or other arrangement, with the cost thereof being deducted from, or
offset against, payments provided for in Section 8.01.
SECTION 11.08. PATENT EXPENSES. All worldwide Patent Expenses shall
be borne by Alliance, subject to the terms of this Agreement.
SECTION 11.09. ASSIGNMENT OF JOINT PATENTS. Neither Party may assign
or license its rights under any Joint Patent except with the prior written
consent of the other
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Party; PROVIDED, HOWEVER, that either Party may assign or license such rights
without consent to an Affiliate under this Agreement and in connection with a
merger or similar reorganization or the sale of all or substantially all of its
assets, as provided for in Section 17.01(b).
SECTION 11.10. TRADEMARKS. Schering shall be responsible for the
selection, registration and maintenance of all trademarks which it employs in
connection with the Product and shall own and control such trademarks (and pay
any costs in connection therewith). Alliance recognizes the exclusive ownership
by Schering of any proprietary Schering name, logotype or trademark furnished by
Schering (including Schering's Affiliates) for use in connection with the
Product. Alliance shall not, either while this Agreement is in effect, or at
any time thereafter, register, use or attempt to obtain any right in or to any
such name, logotype or trademark or in and to any name, logotype or trademark
confusingly similar thereto.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
SECTION 12.01. REPRESENTATIONS AND WARRANTIES.
(a) Each of the Parties hereby represents and warrants to the other
Party as follows:
(i) This Agreement is a legal and valid obligation binding upon
such Party and enforceable in accordance with its terms. The execution,
delivery and performance of the Agreement by such Party does not conflict
with any agreement, instrument or understanding, oral or written, to which
it is a party or by which it is bound, nor violate any law or regulation of
any court, governmental body or administrative or other agency having
jurisdiction over it.
(ii) Alliance has not, and during the term of the Agreement
neither Party will, (x) grant any right to any Third Party relating to the
Alliance Patents and to Alliance Know-How in the Field which would conflict
with the rights granted to either Party hereunder, and (y) to the best of
its knowledge neither Party is employing (as an employee or consultant) any
person that has been debarred by the FDA.
(iii) To the best of its knowledge Alliance is not obligated
under any agreement as of the Effective Date to pay any Third Party
royalties with respect to the Product. As of the Effective Date there are
no such agreements in place.
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(b) Alliance hereby represents and warrants to Schering as follows:
(i) It has given Schering access to all its pre-clinical and
clinical records regarding the Product in existence as of the Effective
Date.
(ii) As of the Effective Date, except as it may have previously
disclosed to Schering in writing or otherwise, it has not received any
notices of infringement or any written communications relating in any way
to a possible infringement with respect to any Alliance Patent.
SECTION 12.02. PERFORMANCE BY AFFILIATES. The Parties recognize that
each Party may perform some or all of its obligations under this Agreement
through Affiliates, PROVIDED, HOWEVER, that each Party shall remain responsible
for and be a guarantor of the performance by its Affiliates and shall cause its
Affiliates to comply with the provisions of this Agreement in connection with
such performance.
ARTICLE XIII
INFORMATION AND REPORTS
SECTION 13.01. INFORMATION AND REPORTS DURING DEVELOPMENT AND
COMMERCIALIZATION. Schering and Alliance will disclose and make available
(subject to any confidentiality agreements or requirements of law) to each other
without charge all preclinical, clinical, regulatory, pricing, sales and other
Information, including copies of all preclinical and clinical reports, known by
Schering or Alliance directly concerning the Product within the Field at any
time during the term of this Agreement. Each Party shall own and maintain its
own database of clinical trial data accumulated from all clinical trials of the
Product for which it was responsible and of adverse drug event information for
the Product. At the option of the requesting Party, such data shall be provided
in a computer readable format by the providing Party, to the extent available,
which shall also assist in the transfer and validation of such data to the
receiving Party. Without limitation of the foregoing, each Party shall supply
to the other the Information required by the other Party and requested by it
(either as a routine practice or as a specific request) for purposes of
compliance with regulatory requirements.
SECTION 13.02. ADVERSE DRUG EXPERIENCES.
(a) Alliance agrees to provide to Schering for initial and/or
periodic submission to government agencies significant information on the
Product from preclinical laboratory, animal toxicology and pharmacology studies,
as well as adverse drug experience reports from clinical trials and commercial
experiences with the Product;
(b) Each Party agrees to, in connection with investigational Products
and Potential New Indications, report to the other Party as soon as possible
(and, in any event,
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within three (3) days) the receipt of a report of any unexpected or serious
experience, if required for the other Party to comply with regulatory
requirements;
(c) Each Party agrees to, in connection with marketed Products,
report to the other Party within three (3) business days of the receipt of a
report of any adverse experience that is serious and unexpected or sooner if
required for the other Party to comply with regulatory requirements. Serious
adverse experience means any experience that suggests a significant hazard,
contraindication, side effect or precaution, or any experience that is fatal or
life threatening, is permanently disabling, requires or prolongs inpatient
hospitalization, or is a congenital anomaly, cancer, or overdose. An unexpected
adverse experience is one not identified in nature, specificity, severity or
frequency in the current investigator brochure or the U.S. labeling for the
drug; and
(d) If requested by Schering, Alliance agrees to enter into a
standard operating procedure by and between the Parties to govern the exchange
of Information relating to adverse drug experiences and product quality.
SECTION 13.03. RECORDS OF REVENUES AND EXPENSES.
(a) Each Party will maintain complete and accurate records which are
relevant to revenues, costs, expenses and payments on a country-by-country basis
under this Agreement and such records shall be open during reasonable business
hours for a period of two (2) years from creation of individual records for
examination at the other Party's expense and not more often than once each year
by a certified public accountant selected by the other Party, or the other
Party's internal accountants unless the first Party objects to the use of such
internal accountants, for the sole purpose of verifying for the inspecting Party
the correctness of calculations and classifications of such revenues, costs,
expenses or payments made under this Agreement. Each Party shall bear its own
costs related to such audit; PROVIDED that, for any underpayments greater than
five (5) percent by Schering, Schering shall pay Alliance the amount of
underpayment, interest as provided for in Section 8.03 from the time the amount
was due and Alliance's out-of-pocket expenses. For any underpayments less than
five (5) percent by Schering found under this Section, Schering shall pay
Alliance the amount of underpayment. Any overpayments by Schering will be
refunded to Schering or credited to future royalties, at Schering's election.
Any records or accounting information received from the other Party shall be
Confidential Information for purposes of Article X. Results of any such audit
shall be provided to both Parties, subject to Article X.
(b) If there is a dispute between the Parties following any audit
performed pursuant to Section 13.03(a), either Party may refer the issue (an
"AUDIT DISAGREEMENT") to an independent certified public accountant for
resolution. In the event an Audit Disagreement is submitted for resolution by
either Party, the Parties shall comply with the following procedures:
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(i) The Party submitting the Audit Disagreement for resolution
shall provide written notice to the other Party that it is invoking the
procedures of this Section 13.03(b).
(ii) Within thirty (30) business days of the giving of such
notice, the Parties shall jointly select a recognized international
accounting firm to act as an independent expert to resolve such Audit
Disagreement.
(iii) The Audit Disagreement submitted for resolution shall
be described by the Parties to the independent expert, which description
may be in written or oral form, within ten (10) business days of the
selection of such independent expert.
(iv) The independent expert shall render a decision on the matter
as soon as practicable.
(v) The decision of the independent expert shall be final and
binding unless such Audit Disagreement involves alleged fraud, breach of
this Agreement or construction or interpretation of any of the terms and
conditions hereof.
(vi) All fees and expenses of the independent expert, including
any third party support staff or other costs incurred with respect to
carrying out the procedures specified at the direction of the independent
expert in connection with such Audit Disagreement, shall be borne by
Schering in the event that a discrepancy of more than two (2%) percent
results from such decision, and by each Party in inverse proportion to the
disputed amounts awarded to the Party by the independent expert through
such decision (e.g. Alliance disputes $100, the independent expert awards
Alliance $50, then each Party pays 1/2 of the independent expert's costs)
in all other cases.
SECTION 13.04. USE OF NAMES. Neither Party shall use the name of the
other Party in relation to this transaction in any public announcement, press
release or other public document without the written consent of such other
Party, which consent shall not be unreasonably withheld or delayed; PROVIDED,
HOWEVER, that either Party may use the name of the other Party in any document
filed with any regulatory agency or authority, including the FDA and the
Securities and Exchange Commission, in which case Schering shall be referred to
as "Schering AG, Germany". Alliance agrees not to use the name "Schering" in
relation to this transaction in any press release, public announcement or other
public document without the approval of Schering, which approval shall not be
unreasonably withheld or delayed.
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ARTICLE XIV
TERM AND TERMINATION
SECTION 14.01. TERM. This Agreement shall commence as of the
Effective Date and, unless sooner terminated as provided herein shall continue
in effect until no royalties are payable under Article VIII hereunder to
Alliance.
SECTION 14.02. TERMINATION.
(a) Notwithstanding any other provision herein, Schering may, prior
to Regulatory Approval of a Product, terminate this Agreement on a country by
country basis or in its entirety upon one (1) month written notice to Alliance.
After receipt of Regulatory Approval of a Product and prior to the First
Commercial Sale of said Product in the applicable country, Schering may
terminate this Agreement on a country by country basis upon two (2) months
written notice to Alliance. After the First Commercial Sale of a Product,
Schering may terminate this Agreement on a country by country basis upon three
(3) months written notice to Alliance.
(b) Failure by Schering or Alliance to comply with any of the
respective material obligations and conditions contained in this Agreement shall
entitle the other Party to give the Party in default notice requiring it to cure
such default. If such default is not cured within ninety (90) days after
receipt of such notice, the notifying Party shall be entitled (without prejudice
to any of its other rights conferred on it by this Agreement) to terminate this
Agreement or in the event of an uncured material breach by Alliance, effect the
rights of Schering set forth in Section 14.02(e) by giving a notice to take
effect immediately. Notwithstanding the foregoing, in the event of a
non-monetary default, if the default is not reasonably capable of being cured
within the ninety (90) day cure period by the defaulting Party and such
defaulting Party is making a good faith effort to cure such default, the
notifying Party may not terminate this Agreement, provided however, that the
notifying Party may terminate this Agreement if such default is not cured within
one hundred eighty (180) days of such original notice of default. The right of
either Party to terminate this Agreement as hereinabove provided shall not be
affected in any way by its waiver of, or failure to take action with respect to
any previous default.
(c) In the event that one of the Parties hereto shall go into
liquidation, a receiver or a trustee be appointed for the property or estate of
that Party and said receiver or trustee is not removed within sixty (60) days,
or the Party makes an assignment for the benefit of creditors (collectively, a
"BANKRUPTCY EVENT"), and whether any of the aforesaid Bankruptcy Events be the
outcome of the voluntary act of that Party, or otherwise, the other Party shall
be entitled to terminate this Agreement (or in the event Alliance suffers such a
Bankruptcy Event, Schering may effect its rights described in Section 14.02(e)
forthwith by giving a written notice to Alliance.
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(d) In the event that this Agreement is terminated by Schering in one
or more countries or in its entirety, and in the event that the Agreement is
terminated by either Party in its entirety in accordance with Sections 14.02(a),
(b) or (c) hereof, Schering will with respect to each country for which the
termination applies entirely:
(i) deliver to Alliance the Alliance Know-How and assign to
Alliance its rights in said Alliance Know-How and Alliance Patents if any,
in either case relating solely to the country that is the subject of the
termination;
(ii) not use the Alliance Know-How as long as it has to be kept
confidential pursuant to Article X hereof in such country;
(iii) not infringe any of the Alliance Patents in such
country;
(iv) make all payments accrued under this Agreement with respect
to such country prior to the effective termination date;
(v) transfer all regulatory filings and approvals related to the
Product in such country to Alliance upon Alliance's written request for
same;
(vi) transfer to Alliance responsibility for and control of
ongoing work of Schering related to the Product, Affiliates and Third
Parties in an expeditious and orderly manner with the costs for such work
assumed by Alliance as of the date of notice;
(vii) reconvey to Alliance all rights to the trademark for
"Imagent" granted pursuant to Section 6.01; and
(viii) sell to Alliance, at any time within ninety (90) days
of such termination, at Alliance's election, all or any portion of the
inventory of the Product owned by Schering or its Affiliates which are
intended for sale in such country at a price equal to Schering's or its
Affiliate's cost for such inventory. Such election shall be made by
Alliance in writing and within thirty (30) days of such election, Schering
shall ship at Alliance's cost and direction such inventory to Alliance.
Alliance shall pay for such inventory within forty-five (45) days of
receipt of such inventory.
(e) In the event of a Bankruptcy Event or a material default
described in Sections 14.02(b) and (c) by Alliance (which default is not cured
as provided therein), Schering may elect in lieu of terminating this Agreement
to declare the license granted pursuant to this Agreement to be irrevocable.
From the date of receipt of notice of such election, Alliance shall have no
further rights or obligations under this Agreement, except that Alliance may
enforce any financial obligations of Schering, including those arising under
Articles IV and VIII herein before or after such election, and Schering may
enforce any manufacturing and supply obligations of Alliance, including those
arising under
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Section 14.02(f); PROVIDED that if such election occurs prior to the First
Commercial Sale of the Product, any additional Development Expenses and
reasonable costs incurred by Schering to Commercialize the Product as a result
of such election shall be credited against amounts payable by Schering to
Alliance.
(f) In the event of termination of this Agreement pursuant to this
Section 14.02 where the Party terminating this Agreement is the Manufacturing
Party, the Manufacturing Party shall continue to provide for manufacture of the
Product to the extent provided prior to notice of such termination, from the
effective date of such termination until such time as the Non-Manufacturing
Party is able to secure an equivalent alternative commercial manufacturing
source, as requested by the Non-Manufacturing Party.
(g) Except where expressly provided for otherwise in this Agreement,
termination of this Agreement shall not relieve the Parties hereto of any
liability, including any obligation to make payments hereunder, which accrued
hereunder prior to the effective date of such termination, nor preclude any
Party from pursuing all rights and remedies it may have hereunder or at law or
in equity with respect to any breach of this Agreement nor prejudice any Party's
right to obtain performance of any obligation.
SECTION 14.03. SURVIVING RIGHTS. The rights and obligations set forth
in this Agreement shall extend beyond the term or termination of the Agreement
only to the extent expressly provided for herein, or the extent that the
survival of such rights or obligations are necessary to permit their complete
fulfillment or discharge.
SECTION 14.04. REIMBURSEMENT. **
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Notwithstanding the provisions of this Section 14.04 providing for
reimbursement, in no case shall Alliance be obligated to reimburse Schering for
any amounts payable pursuant to this Agreement in the event that Schering
terminates this Agreement pursuant to this Article XIV and, at the time of
termination has under development, or has achieved a commercial sale, of a
perflurocarbon-based ultrasound imaging agent within the Field.
ARTICLE XV
INDEMNIFICATION
SECTION 15.01. INDEMNIFICATION. With respect to the Product
(determined on a country by country basis):
(a) Except as provided in Article 15.01(b), Schering hereby agrees to
save, defend and hold Alliance and its agents and employees harmless from and
against any and all suits, claims, actions, demands, liabilities, expenses
and/or losses, including reasonable legal expenses and attorneys' fees
(collectively, "LOSSES"), resulting from the commercial sale of the Product
except to the extent such Losses result from the negligence or willful
misconduct of Alliance, in which case Alliance hereby agrees to save, defend and
hold Schering and its agents and employees harmless from any and all such
Losses.
(b) Except as provided in Article 15.01(a), Schering and Alliance
hereby agree to save, defend and hold the other Party and its agents and
employees harmless from and against any and all Losses resulting directly from
the Development of the Product to the extent such Development was performed by
such Party except to the extent such Losses result from the negligence or
willful misconduct of the other Party, in which case such Party hereby agrees to
save, defend and hold the other Party and its agents and employees harmless from
any and all such Losses.
(c) Each indemnified Party agrees to give the indemnifying Party
prompt written notice of any Loss or discovery of fact upon which such
indemnified Party intends to base a request for indemnification under Sections
15.01(a) or (b). Each Party shall furnish promptly to the other copies of all
papers and official documents received in respect of any Loss. With respect to
any Loss relating solely to the payment of money damages and which will not
result in the indemnified Party becoming subject to injunctive or other relief
or otherwise adversely affecting the business of the indemnified Party in any
manner, and as to which the indemnifying Party shall have acknowledged in
writing the obligation to indemnify the indemnified Party hereunder, the
indemnifying Party shall have the sole right to defend, settle or otherwise
dispose of such Loss, on such terms as the indemnifying Party, in its sole
discretion, shall deem appropriate. The indemnifying Party shall obtain the
written consent of the indemnified Party, which shall not be unreasonably
withheld or delayed, prior to ceasing to defend, settling or otherwise disposing
of any Loss if as a result thereof the indemnified Party would become subject to
injunctive or other equitable relief or any remedy
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other than the payment of money, which payment would be the responsibility of
the indemnifying Party. The indemnifying Party shall not be liable for any
settlement or other disposition of a Loss by the indemnified Party which is
reached without the written consent of the indemnifying Party. The reasonable
costs and expenses, including reasonable fees and disbursements of counsel
incurred by any indemnified Party in connection with any Loss, shall be
reimbursed on a quarterly basis by the indemnifying Party, without prejudice to
the indemnifying Party's right to contest the indemnified Party's right to
indemnification and subject to refund in the event the indemnifying Party is
ultimately held not to be obligated to indemnify the indemnified Party.
ARTICLE XVI
UNDUE PREFERENCE
SECTION 16.01. COMPETITIVE PRODUCTS.
**
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ARTICLE XVII
MISCELLANEOUS
SECTION 17.01. ASSIGNMENT.
(a) Schering may assign any of its rights or obligations under this
Agreement in any country to any of its Affiliates or to any sublicensee as
provided in Section 6.01; PROVIDED, HOWEVER, that such assignment shall not
relieve Schering of its responsibilities for performance of its obligations
under this Agreement.
(b) Either Party may assign its rights or obligations under this
Agreement or its ownership interest in Joint Patents in connection with a merger
or similar reorganization or the sale of all or substantially all of its assets,
or otherwise with the prior written consent of the other Party. This Agreement
shall survive any such merger or reorganization of either Party with or into, or
such sale of assets to, another party and no consent for such merger,
reorganization or sale shall be required hereunder; provided, that in the event
of such merger, reorganization or sale, no intellectual property rights of the
acquiring corporation shall be included in the technology licensed hereunder.
(c) This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.
SECTION 17.02. RETAINED RIGHTS. Nothing in this Agreement shall limit
in any respect the right of either Party to conduct research and development and
to market products using such Party's technology other than as herein expressly
provided.
SECTION 17.03. FORCE MAJEURE. Neither Party shall lose any rights
hereunder or be liable to the other Party for damages or losses on account of
failure of performance by the defaulting Party if the failure is occasioned by
government action, war, fire, explosion, flood, strike, lockout, embargo, act of
God, or any other cause beyond the control of the defaulting Party, PROVIDED
that the Party claiming force majeure has extended all reasonable efforts to
avoid or remedy such force majeure, continues to employ such efforts and
promptly notifies the other Party of such force majeure event.
SECTION 17.04. FURTHER ACTIONS. Each Party agrees to execute,
acknowledge and deliver such further instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
SECTION 17.05. NO TRADEMARK RIGHTS. Except as otherwise provided
herein, no right, express or implied, is granted by the Agreement to use in any
manner the name "Schering," or any other trade name or trademark of the other
Party or its Affiliates in connection with the performance of the Agreement.
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SECTION 17.06. NOTICES. All notices hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile transmission
(receipt confirmed in writing by the receiving Party), telexed, mailed by
registered or certified mail (return receipt requested), postage prepaid, or
sent by express courier service, to the Parties at the following addresses (or
at such other address for a Party as shall be specified by like notice; PROVIDED
that notices of a change of address shall be effective only upon receipt
thereof).
(a) If to Alliance:
President
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Telecopy: (619) 558-5161
With a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038-4982
Attention: Melvin Epstein
Telecopy: (212) 806-6006
(b) If to Schering:
Schering AG
13342 Berlin
Germany
Attention: Legal Department
Telecopy: 011-49-30-4681 4086
With a copy to:
Brobeck, Phleger & Harrison LLP
One Market
Spear Street Tower
San Francisco, CA 94105
Attention: Michael J. Kennedy
Telecopy: (415) 442-1010
SECTION 17.07. WAIVER. Except as specifically provided for herein,
the waiver from time to time by either of the Parties of any of their rights or
their failure to
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exercise any remedy shall not operate or be construed as a continuing waiver of
same or any other of such Party's rights or remedies provided in this Agreement.
SECTION 17.08. SEVERABILITY. If any term, covenant or condition of
this Agreement or the application thereof to any Party or circumstances shall,
to any extent or in any country, be held to be invalid or unenforceable, then
(i) the remainder of this Agreement, or the application of such term, covenant
or condition to Parties or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term, covenant
or condition of this Agreement shall be valid and be enforced to the fullest
extent permitted by law; and (ii) the Parties hereto covenant and agree to
renegotiate any such term, covenant or application thereof in good faith in
order to provide a reasonably acceptable alternative to the term, covenant or
condition of this Agreement or the application thereof that is invalid or
unenforceable, it being the intent of the Parties that the basic purposes of
this Agreement are to be effectuated.
SECTION 17.09. AMBIGUITIES. Ambiguities, if any, in this Agreement
shall not be construed against any Party, irrespective of which Party may be
deemed to have authored the ambiguous provision.
SECTION 17.10. GOVERNING LAW. This Agreement shall be governed by and
interpreted under the laws of the State of New York as applied to contracts
entered into and performed entirely in New York by New York residents.
SECTION 17.11. HEADINGS. The sections and paragraph headings
contained herein are for the purposes of convenience only and are not intended
to define or limit the contents of said sections or paragraphs.
SECTION 17.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (and by facsimile), each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
SECTION 17.13. ENTIRE AGREEMENT; AMENDMENTS. This Agreement,
including all Exhibits attached hereto and thereto, and all documents delivered
concurrently herewith and therewith, set forth all the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto and supersede and terminate all prior agreements and
understandings between the Parties. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings, either
oral or written, between the Parties other than as set forth herein and therein.
No subsequent alteration, amendment, change or addition to this Agreement shall
be binding upon the Parties hereto unless reduced to writing and signed by the
respective authorized officers of the Parties. This Agreement, including
without limitation the exhibits, schedules and attachments thereto, are intended
to define the full extent of the legally enforceable undertakings of the Parties
hereto, and no promise or representation, written or oral, which is not set
forth explicitly is intended by either party to be legally binding. Both
Parties
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acknowledge that in deciding to enter into the Agreement and to consummate the
transaction contemplated thereby neither has relied upon any statement or
representations, written or oral, other than those explicitly set forth therein.
SECTION 17.14. EXPENSES. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 17.15. INDEPENDENT CONTRACTORS. The status of the Parties
under this Agreement shall be that of independent contractors. Neither Party
shall have the right to enter into any agreements on behalf of the other Party,
nor shall it represent to any person that it has any such right or authority.
Nothing in this Agreement shall be construed as establishing a partnership or
joint venture relationship between the Parties.
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IN WITNESS WHEREOF, Alliance and Schering have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ALLIANCE PHARMACEUTICAL CORP
By:
Name:
Title:
SCHERING AKTIENGESELLSCHAFT
By:
Name:
Title:
By:
Name:
Title:
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EXHIBIT A
DETERMINATION OF CERTAIN ACCOUNTING TERMS
As a supplement to the definitions provided in Article I of the
License Agreement (this "AGREEMENT"), dated as of September 23, 1997, between
ALLIANCE PHARMACEUTICAL CORP. ("ALLIANCE") and SCHERING AKTIENGESELLSCHAFT
("SCHERING"), the following accounting terms shall be further specified as
follows, with the intent that the following terms are to be interpreted in
accordance with their reasonable and customary meaning within the industry and
consistently applied by a Party on a company-wide basis:
1. COST OF GOODS SOLD
Cost of Goods Sold shall be equal to the sum of Material Costs, Direct
Labor costs and Indirect Costs.
A. "MATERIAL COSTS" shall mean the prices paid for raw
material components and purchased finished goods, including any packaging
necessary for the shipment of products, which are purchased from outside
vendors as well as any freight and duty where applicable.
B. "DIRECT LABOR COSTS" shall mean the labor hours required for
an operation for such a Product multiplied by the direct labor rate for
work centers within the relevant manufacturing operating unit (including
salaries, wages and benefits).
C. "INDIRECT COSTS" shall mean other costs associated with the
operating unit(s) manufacturing a Product; PROVIDED, HOWEVER, overhead
attributable to unrelated facilities, or parts thereof, shall be excluded
and that such Indirect Costs shall exclude costs associated with unused
manufacturing capacity. Indirect Costs shall include expenses associated
with quality assurance, manufacturing and engineering associated with the
operating unit(s) manufacturing a Product and shall include straight line
depreciation and property taxes specifically associated with the plant(s)
manufacturing a Product.
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EXHIBIT B
ALLIANCE PATENTS
**
A2
<PAGE>
EXHIBIT C
DEVELOPMENT PLAN
**
A3
<PAGE>
PREFERRED STOCK PURCHASE AGREEMENT
This PREFERRED STOCK PURCHASE AGREEMENT (the "Purchase Agreement" or the
"Agreement") is made as of this 23rd day of September, 1997 by and between
Alliance Pharmaceutical Corp., a New York corporation (the "Company"), and
Schering Berlin Venture Corp. ("SBVC"), a Delaware corporation ("SBVC").
THE PARTIES AGREE AS FOLLOWS:
1. AUTHORIZATION OF PURCHASE AND SALE OF PREFERRED STOCK.
1.1 AUTHORIZATION OF PREFERRED STOCK. The Company has authorized the
issuance and sale of up to 500,000 shares of its Series D Preferred Stock, $.01
par value (such Series D Preferred Stock being hereinafter referred to as the "D
Stock") to be issued under the Purchase Agreement. The rights, privileges, and
preferences of the D Stock are as set forth in the Company's Certificate of
Amendment of Certificate of Incorporation (the "Certificate of Amendment") in
the form attached to this Purchase Agreement as Exhibit "A".
1.2 PURCHASE AND SALE OF THE PREFERRED STOCK. Subject to the terms and
conditions of this Purchase Agreement and on the basis of the representations
and warranties set forth herein, the Company agrees to sell to SBVC, and SBVC
agrees to purchase from the Company, 500,000 shares of D Stock (the "D Shares")
at a purchase price of $20.00 per share.
1.3 THE CLOSING. The purchase and sale of the D Shares will take place at
the offices of Brobeck, Phleger & Harrision LLP, One Market, Spear Street Tower,
San Francisco, CA 94105, at 10:00 a.m. Eastern time on September 23, 1997 or at
such other time and place as the parties shall mutually agree (the "Closing").
At the Closing, the Company will deliver to SBVC a certificate, registered in
SBVC's name, representing the D Shares to be purchased by SBVC against payment
of the purchase price thereof in lawful money of the United States of America by
wire transfer or check payable to the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to SBVC that:
2.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and is qualified to do business as a foreign corporation in each
jurisdiction where failure to qualify would have a materially adverse effect on
the business or properties of the Company. The Company has full power and
authority to own its property, to carry on its business as presently conducted
and to carry out the transactions contemplated hereby. The copies of the
Certificate of Incorporation, Certificate of Amendment and Bylaws of the
Company, as amended to date, which have been furnished to SBVC by the Company,
are correct and complete.
2.2 AUTHORIZATION. The Company has full power to execute, deliver and
perform this Purchase Agreement, the License Agreement between the Company and
Schering Aktiengesellschaft ("Schering") attached hereto as Exhibit "B" (the
"License Agreement") and
<PAGE>
each other agreement entered into by the Company in connection with this
Purchase Agreement, and each such agreement has been duly executed and delivered
by the Company and is the legal, valid and, assuming due execution by the other
parties hereto and thereto, binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally, and to general equitable principles. The execution, delivery and
performance of this Purchase Agreement, including the sale, issuance and
delivery of the D Stock, and the License Agreement, and each other agreement
entered into by the Company in connection with this Purchase Agreement, has been
duly authorized by all necessary corporate action of the Company.
2.3 CAPITALIZATION. The entire authorized capital stock of the Company
consists of 50,000,000 shares of common stock, $0.01 par value per share (the
"Common Stock"), of which 31,432,314 shares are issued and outstanding on August
30, 1996, and 5,000,000 shares of preferred stock, $.01 par value, of which (i)
500,000 have been designated as Series D Preferred Stock, all of which are to be
issued at the Closing, and (ii) 1,500,000 have been designated Series A
Preferred Stock and are not issued or outstanding. None of the remaining
3,000,000 shares of such preferred stock are issued or outstanding. The shares
of Common Stock outstanding are duly authorized, validly issued, fully paid and
nonassessable. No shares of Common Stock or preferred stock are held in the
Company's treasury. The Company has authorized and reserved 500,000 shares of D
Stock for issuance hereunder. When issued in accordance with the terms of this
Purchase Agreement, the D Shares will be duly authorized, validly issued and
outstanding, fully paid and nonassessable, and the certificates representing the
same will be duly and validly authorized, executed and delivered by the Company.
The Company has authorized and reserved for issuance upon conversion of the D
Stock 500,000 shares of its Common Stock or such other number as may be
necessary to be issued upon such conversion (such shares, until sold to the
public generally pursuant to a registration statement or Rule 144(k) promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), are referred to
herein as "Conversion Shares"). The Conversion Shares and any shares of Common
Stock issued upon the exercise of an Option (as hereinafter defined) (such
shares being referred to herein as the "Option Shares") will, upon such issuance
in accordance with the terms of the Company's Certificate of Incorporation, as
amended, be duly authorized, validly issued and outstanding, fully paid and
nonassessable, and the certificates representing the same will be duly and
validly authorized, executed and delivered by the Company. There are no
outstanding warrants, rights of first refusal, options or other rights to
purchase or acquire, or exchangeable for or convertible into, any shares of
Common Stock or Preferred Stock, except as disclosed on Schedule 2.3 or as
otherwise disclosed in writing. The Company has reserved Common Stock for
issuance upon exercise of outstanding options and warrants as set forth in
Section 2.3 of the Disclosure Schedule. Except as provided herein, there are no
preemptive rights with respect to the issuance or sale by the Company of any of
its securities. Except as provided in this Purchase Agreement or as imposed by
applicable securities laws, there are no restrictions on the transfer or voting
of any shares of the Common Stock or D Stock. There are no existing rights with
respect to registration under the 1933 Act of any of the Company's securities
except as set forth herein or as disclosed on Schedule 2.3. Upon consummation of
the transactions contemplated hereby, good and valid title to the D Shares will
pass to SBVC, free and clear of any encumbrances, liens, claims, charges or
assessments of any nature whatsoever. Upon their issuance in accordance with the
Company's Certificate of Incorporation, as amended, and, with respect to the
Option Shares, this Agreement, good and
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valid title to the Conversion Shares and the Option Shares will pass to SBVC,
free and clear of any encumbrances, liens, claims, charges or assessments of any
nature whatsoever.
2.4 FINANCIAL STATEMENTS. The Company has delivered to SBVC a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996
(the "1996 10-K"), containing audited consolidated balance sheets for the fiscal
years ended June 30, 1995 and June 30, 1996 and statements of operations and
cash flow for the Company for the fiscal years ending June 30, 1994, June 30,
1995, and June 30, 1996 and a copy of the Company's draft 10-K for the fiscal
year ended June 30, 1997 ("Draft 10-K), Quarterly Report on Form 10-Q for the
quarters ended September 30, 1996, December 31, 1996 and March 30, 1997 (the
"Forms 10 Q" and the financial statements therein and in the 1996 10-K,
collectively, are referred to as the "Financial Statements"). The Financial
Statements are in accordance with the books and records of the Company, have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly present, in all material respects, the
financial position, results of operations and cash flows of the Company as of
each such date and for each of the periods covered thereby, except that such
interim statements are subject to normal year-end adjustments.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or stated in the Financial Statements, the Company has no debts,
liabilities or obligations of any nature, whether accrued, absolute, assigned or
otherwise, whether due or to become due, other than incurred in the ordinary
course of business.
2.6 ABSENCE OF CERTAIN DEVELOPMENTS. Since June 30, 1996, except as
disclosed in the Draft 10-K, Financial Statements or the Disclosure Schedules or
as otherwise expressly contemplated therein or by this Agreement or the License
Agreement, and except for continuing operating losses, Alliance has not:
(a) changed or amended its Articles of Incorporation or By-Laws (or
similar governing documents);
(b) incurred any obligation or liability (fixed or contingent), except
normal trade or business obligations incurred in the ordinary course of business
and consistent with past practice, none of which individually or in the
aggregate is materially adverse;
(c) discharged or satisfied any material lien, security interest, charge
or other encumbrance or paid any material obligation or liability (fixed or
contingent), other than in the ordinary course of business and consistent with
past practice;
(d) mortgaged, pledged or subjected to any lien, security interest, charge
or other encumbrance any of its material assets or properties (other than liens
permitted pursuant to Section 2.7 below);
(e) transferred, leased or otherwise disposed of any of its material
assets or properties, except for fair consideration in the ordinary course of
business and consistent with past practice, or acquired any material assets or
properties, except in the ordinary course of business and consistent with past
practice;
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(f) declared, set aside or paid any distribution (whether in cash, stock
or property or any combination thereof) in respect of its capital stock or
redeemed or otherwise acquired any of its capital stock or split, combined or
otherwise similarly changed its capital stock or authorized the creation or
issuance of or issued or sold any capital stock or any securities or obligations
convertible into or exchangeable therefor, or gave any person any right to
acquire any capital stock from Alliance, or agreed to take any such action
(other than (i) upon the exercise of outstanding warrants or stock options, and
(ii) the issuance of 248,879 shares of common stock issued in August 1997 to
former shareholders of MDV Technologies, Inc. pursuant to the merger described
in the Financial Statements);
(g) made any investment of a capital nature, whether by purchase of stock
or securities, contributions to capital, property transfers or otherwise, in any
other partnership, corporation or any other entity, or purchase any material
property or assets;
(h) canceled or compromised any debt or claim other than in the ordinary
course of business;
(i) waived or released any rights of material value, including, without
limitation, any patents, trademarks and trade names, trademark and trade name
registrations, logos, servicemark registrations, copyright registrations,
applications pending the date hereof for patent or for trademark, trade name,
servicemark or copyright registrations, and other material proprietary
intellectual property rights (including, but not limited to, know-how,
information, proprietary rights and information) ("Intangible Rights");
(j) transferred or granted any material rights under or with respect to
any Intangible Rights other than on reasonable business terms, or permitted any
license, permit or other form of authorization relating to a material Intangible
Right to lapse; or
(k) suffered any casualty loss or damage (whether or not such loss or
damage shall have been covered by insurance) which affects in any material
respect its ability to conduct business; or
(l) made or granted any wage or salary increase applicable to any group or
classification of employees generally, entered into any employment contract with
or made any loan to, or entered into any material transaction of any other
nature with, any officer, or employee of Alliance, except in the ordinary course
of business; or
(m) suffered a Material Adverse Effect.
2.7 TITLE TO PROPERTIES. Except as stated in the 1996 10-K, to the best of
the Company's knowledge, the Company has good and marketable title to all
material properties and assets necessary to its business as presently conducted
and as proposed to be conducted, and to all of its properties and assets, free
and clear of all mortgages, security interests, liens, restrictions or
encumbrances other than (i) those disclosed on Schedule 2.7, (ii) the lien of
current taxes not yet due and payable and (iii) possible minor liens and
encumbrances which do not in any case, individually or in the aggregate,
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and would not result in the occurrence of
a
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Material Adverse Change, and which have not arisen otherwise than in the
ordinary course of business.
2.8 TAX MATTERS. All taxes, including, without limitation, income, excise,
property, sales, transfer, use, franchise, payroll, employees' income
withholding and social security taxes imposed or assessed by the United States
or by any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, which are due or payable by the Company, and all interest,
penalties and additions thereon, whether disputed or not, have been paid in
full, and all tax returns or other documents required to be filed in connection
therewith have been accurately prepared and duly and timely filed. The Company
has not been delinquent in the payment of any foreign or domestic tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, assessed or, to the best of its knowledge, proposed against it. The
provisions for taxes in the Financial Statements are sufficient for the payment
of all accrued and unpaid federal, state, county and local taxes of the Company.
2.9 NO DEFAULTS. The Company is not in violation, nor will the execution
of this Agreement or the License Agreement cause a violation, of any term or
provision of (a) its Certificate of Incorporation or Bylaws or any material
note, indenture, mortgage, lease, agreement, contract, purchase order or other
material instrument, document or agreement to which the Company is a party or by
which it or any of its properties or assets is bound or affected or (b) any
order, writ, injunction or decree of any court or any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
2.10 INTELLECTUAL PROPERTY. Except as previously disclosed to SBVC, to the
best of the Company's knowledge;
(a) The Company has good title to and ownership of or licensed rights
to, free and clear of all liens, claims and encumbrances of any nature,
Intangible Rights licensed by the Company to Schering under the License
Agreement, and the conduct by the Company of its business in connection with the
Intangible Rights neither conflicts with or constitutes, or is expected to
conflict with or constitute, an infringement of the rights of others.
(b) The Company has sufficient title to and ownership of, or license
rights to, or has applied for, all Intangible Rights necessary to the proper
conduct of its business as described in the Financial Statements. The
consummation of the transactions contemplated hereby will not alter or impair
any such Intangible Rights.
(c) The Company has not received any communications alleging that,
and has no knowledge that the Company has violated or, by conducting its
business, would violate any of the Intangible Rights of any other person or
entity.
2.11 EFFECT OF TRANSACTIONS. Assuming this transaction is not subject to
compliance with the applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), the execution, delivery and
performance of this Purchase Agreement and the transactions contemplated hereby,
and compliance with the provisions hereof by the Company, (a)
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do not and will not, with or without the passage of time or the giving of notice
or both, (i) violate any current ruling, writ, injunction, order, judgment or
decree of any court, administrative agency or other governmental body or (ii)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company under the Certificate of Incorporation or Bylaws of the
Company or any material note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which the Company
is a party or by which it or any of its properties or assets is bound or
affected and (b) do not and will not, with or without the passage of time or the
giving of notice, violate any provision of any current law, statute, rule or
regulation.
2.12 NO GOVERNMENTAL CONSENT OR APPROVAL REQUIRED. Based in part on the
representations made by SBVC in Section 3 of this Purchase Agreement, and except
as contemplated herein and assuming compliance with the HSR Act, no
authorization, consent, approval or other order of, declaration to, or
registration, qualification, designation or (other than the Certificate of
Amendment) filing with any federal, state or local governmental agency or body
is required for or in connection with the valid and lawful authorization,
execution and delivery by the Company of this Purchase Agreement or any other
agreement entered into by the Company in connection with this Purchase
Agreement, and consummation of the transactions contemplated hereby or thereby,
or for or in connection with the valid and lawful authorization, issuance, sale
and delivery of the D Shares or for or in connection with the valid and lawful
authorization, reservation, issuance, sale and delivery of the Conversion Shares
other than the qualification (or taking of such action as may be necessary to
secure an exemption from qualification if available) of the offer and sale of
the D Shares under the California Corporate Securities Law of 1968, as amended,
and other applicable state securities laws, which filings and qualifications, if
required, will be accomplished in a timely manner so as to comply with such
qualification or exemption from qualification requirements.
2.13 LITIGATION. There is no claim, arbitration, action, suit, proceeding
or investigation pending, or to the best knowledge of the Company, threatened
against the Company, which questions the validity of this Purchase Agreement or
any other agreement entered into by the Company in connection with this Purchase
Agreement or the right of the Company to enter into any such agreements or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse effect
on the condition of the Company or its assets, liabilities, properties,
business, operations or prospects generally (a "Material Adverse Effect"), or
any change in the current equity ownership of the Company. The Company is not a
party to, or subject to the provisions of, any order, writ, injunction, judgment
or decree of any court or governmental agency or instrumentality which would
have a Material Adverse Effect.
2.14 SECURITIES LAWS. Assuming that SBVC's representations and warranties
contained in Section 3 of this Purchase Agreement are and continue to be true
and correct, the offer, issuance and sale to SBVC of the D Shares, the
Conversion Shares and the Option Shares are and will be exempt from the
registration and prospectus delivery requirements of the 1933 Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. No person
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authorized by Alliance as agent, broker, dealer or otherwise in connection with
the offering or sale of the D Shares, the Conversion Shares or the Option
Shares, or any similar securities, has taken or will take any action (including,
without limitation, any offer or sale of any securities under circumstances
which would require the integration of such securities with the D Shares being
sold hereunder under the 1933 Act or the rules and regulations of the Securities
and Exchange Commission which would subject such offer and sale to the
registration provisions of the 1933 Act.
2.15 BROKERAGE. Other than claims of Oppenheimer and Co., Inc., there are
no claims for brokerage commissions or finder's fees or similar compensation in
connection with the transactions contemplated by this Purchase Agreement based
on any arrangement made by or on behalf of the Company. The Company agrees to
indemnify and hold SBVC harmless against any damages incurred as a result of any
such claim, including any claims of Oppenheimer and Co., Inc..
2.16 INSURANCE. The Company maintains in full force such types and amounts
of insurance issued by issuers of recognized responsibility insuring the
Company, with respect to its liability, workers' compensation, business and
properties, in such amounts and against such losses and risks as are sufficient
for compliance with all requirements of law and are deemed appropriate by the
Company under its present circumstances.
2.17 COMPLIANCE WITH LAWS. The Company is in compliance in all material
respects with every statute, law or regulation applicable to the Company's
business or operations, including (without limitation) statutes, laws and
regulations relating to the environment or occupational health and safety,
laboratory and manufacturing practices (including current Good Manufacturing
Practices prescribed by the U.S. Food and Drug Administration), the experimental
use of animals and the use and disposal of hazardous or potentially hazardous
substances (including, with limitation, radioactive compounds and solvents),
and, to the best of the Company's knowledge, no material expenditures are
required or currently anticipated in order to comply with any such existing
statute, law or regulation. Alliance has not received any notice from any third
party of any alleged material violation of any of the foregoing.
2.18 RETIREMENT OBLIGATIONS, ETC. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974,
other than as disclosed in the 1996 10-K. The Company does not have any
employees that are represented by a union. The Company is not a party to any
collective bargaining agreement and, to the best of the Company's knowledge, no
organizational efforts are presently being made with respect to any of its
employees. SBVC will not incur through consummation of any of the transactions
contemplated by the Purchase Agreement any liability in respect of employees of
the Company or any of its employee benefit plans.
2.19 INVESTMENT COMPANY. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and will not, as
a result of the transactions contemplated hereby, become an "investment
company."
2.20 DISCLOSURE. The Company has fully provided SBVC with all the
information that SBVC has requested for deciding whether to purchase the D
Shares. The 1996 10-K, the Forms
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10-Q, this Purchase Agreement, and the other exhibits or schedules delivered in
connection herewith or therewith, taken together, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein or therein in view of the circumstances under which they
were made not misleading.
3. REPRESENTATIONS AND WARRANTIES AND OTHER AGREEMENTS OF SBVC.
3.1 REPRESENTATIONS AND WARRANTIES. SBVC hereby represents and warrants
that:
a. AUTHORIZATION. SBVC is a Delaware corporation and has full power
and authority to execute, deliver and perform this Purchase Agreement and to
purchase the D Shares. Assuming due execution by the Company hereof and thereof,
this Purchase Agreement and each other agreement entered into by SBVC in
connection with this Purchase Agreement constitute the valid and legally binding
obligation of SBVC, enforceable against SBVC in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting creditors' rights generally, and to general equitable
principles.
b. PURCHASE ENTIRELY FOR OWN ACCOUNT. It is SBVC's intention to
acquire the D Shares, the Conversion Shares and the Option Shares (collectively,
the "Securities") for investment for SBVC's own account, not as a nominee or
agent and not with a view to the sale or other disposition of any part thereof
in violation of the 1933 Act. SBVC has no present intention of selling, granting
any participation in, or otherwise disposing of the same in violation of the
1933 Act. SBVC does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer, or grant participation to such person or to
any third person, with respect to any of the Securities.
c. RESTRICTIONS ON DISPOSITION. SBVC covenants that in no event will
it dispose of any of the Securities (other than pursuant to Rule 144 promulgated
under the 1933 Act ("Rule 144") or pursuant to a registration statement filed
with the Securities and Exchange Commission (the "SEC") pursuant to the 1933
Act) unless and until (i) SBVC shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances setting forth the number of shares and price it proposes to sell
at, excluding the name of the transferee and other information unless otherwise
required in the written opinion of Company counsel to comply with the 1933 Act;
and (ii) SBVC shall have furnished the Company with an opinion of SBVC's counsel
reasonably satisfactory in form and substance to the Company and the Company's
counsel to the effect that (a) such disposition will not require registration
under the 1933 Act or compliance with any applicable state, local or foreign
law, or (b) appropriate action necessary for compliance with the 1933 Act and
any applicable state, local or foreign law has been taken. The restrictions on
transfer imposed by this Section 3.1(c) shall cease and terminate as to the
Securities when: (i) such securities shall have been effectively registered
under the 1933 Act and sold by the owner thereof in accordance with such
registration; or (ii) an opinion of the kind described in the preceding sentence
states that all future transfers of such securities by the holder thereof would
be exempt from registration under the 1933 Act and compliance with any
applicable state, local or foreign law. Each certificate evidencing the
Securities shall bear an appropriate restrictive legend as set forth in Section
3.3 below, except that such certificate shall not be required to bear such
legend after a transfer thereof if the transfer was made in compliance with Rule
144 or pursuant to a registration statement or, if the opinion of
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counsel referred to above is issued and provides that such legend is not
required in order to establish compliance with any provisions of the 1933 Act.
d. RECEIPT OF INFORMATION. SBVC has been furnished access to such
information and documents as SBVC has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of this Purchase Agreement and the
purchase of the D Shares.
e. BROKERAGE. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Purchase Agreement based on any arrangement or agreement
made by or on behalf of SBVC, and SBVC agrees to indemnify and hold the Company
harmless against any damages incurred as a result of any such claims.
3.2 FURTHER PROVISIONS REGARDING DISPOSITION.
a. TRANSFER TO AFFILIATES. Notwithstanding the provisions of Section
3.1(c) above, no registration statement or opinion of counsel shall be necessary
for a transfer by SBVC to a subsidiary or affiliate (as defined pursuant to the
1933 Act) of SBVC which is an accredited investor, if the transferee makes the
warranties set forth in Sections 3.1 (b) and (c) and agrees in writing to be
subject to the terms hereof regarding the transfer of the Securities, to the
same extent as if such transferee were SBVC hereunder.
b. NEW CERTIFICATES. Whenever the restrictions imposed by Section
3.1(c) above shall terminate as herein provided, the holder of the securities as
to which such restrictions have terminated shall be entitled to receive from the
Company, without expense, one or more new certificates not bearing restrictive
legends and not containing any reference to the restrictions imposed by this
Purchase Agreement.
3.3 LEGENDS. It is understood that, subject to Sections 3.1(c) and 3.2(b),
the certificates evidencing the D Shares, the Option Shares and the Conversion
Shares shall bear the following legend:
a. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
b. Any legend required by the laws of any other applicable
jurisdiction.
3.4 NOTICE OF CERTAIN EVENTS. SBVC hereby covenants and agrees that
during the term of the License Agreement (including any extension thereof),
unless notice has been provided in accordance with Section 3.1 (c), it will
provide written notice to the Company of any sale or disposition, on the open
market or in private transactions, by SBVC or any of its affiliates (including
subsidiaries or other entities controlled by SBVC) of any shares of the Common
Stock
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or other equity securities of the Company (or if SBVC or such affiliates shall
direct any third party to take any such actions on behalf of SBVC or such
affiliates), provided that, no such notice need be given if the relevant
transaction related to 1% or less of the outstanding common stock (on a
consolidated or as converted basis) of the Company. Such notice shall be
transmitted to the Company by facsimile (with telephonic notice) within ten (10)
days after any such transaction, and shall specify the person or entity
effecting the transaction, the date of such transaction, and the number of
securities with respect to such transaction.
3.5 LIMITATION ON NOTICE OF CERTAIN EVENTS. SBVC shall not be required to
comply with the provisions of Section 3.4 if, in connection with any transaction
referred to in Section 3.4, SBVC or its affiliate files with the SEC and sends
to the Company a statement on Schedule 13D or Schedule 13G in connection with
such transaction and in compliance with Rule 13d-1 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
4. CONDITIONS TO SBVC'S OBLIGATIONS AT CLOSING. The obligations of SBVC
under Section 1.2 of this Purchase Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true in all material respects on and
as of the date of such Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations, and conditions contained in this Purchase Agreement
that are required to be performed or complied with by it on or before the
Closing.
4.3 COMPLIANCE CERTIFICATE. The Chief Executive Officer of the Company
shall deliver to SBVC at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4.2, 4.4, 4.5 and 4.7 have been fulfilled
and stating that there has been no Material Adverse Effect since March 30, 1997.
4.4 CERTIFICATE OF AMENDMENT. The Company shall have filed with the
Secretary of State of New York the Certificate of Amendment in substantially the
form attached hereto as Exhibit "A" and the Secretary of State shall have
accepted such form for filing.
4.5 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any other country that are required in connection with the lawful
issuance and sale of the D Shares to SBVC pursuant to this Purchase Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
4.6 [INTENTIONALLY OMITTED]
4.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to SBVC
and SBVC's counsel, and they shall have
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received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
4.8 LICENSE AGREEMENT. The License Agreement, in substantially the form
attached hereto as Exhibit "B", shall have been executed and delivered by the
Company.
4.9 OPINION OF COMPANY COUNSEL. SBVC shall have received from counsel for
the Company an opinion, dated as of the Closing and addressed to SBVC, covering
the matters set forth in Sections 2.1, 2.2, 2.3 (as to the due authorization,
valid issuance, full payment and non-assessability of the D Shares, Conversion
Shares and Option Shares), 2.11, 2.12 and 2.14.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
the Company under Section 1.2 of this Purchase Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
SBVC contained in Section 3 shall be true in all material respects on and as of
the date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
5.2 PERFORMANCE. SBVC shall have performed and complied with all
agreements, obligations and conditions contained in this Purchase Agreement that
are required to be performed or complied with by it on or before such Closing.
5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any other country that are required in connection with the lawful
issuance and sale of the D Shares to SBVC pursuant to this Purchase Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
5.4 [Intentionally omitted]
5.5 LICENSE AGREEMENT. The License Agreement, in substantially the form
attached hereto as Exhibit "B", shall have been executed and delivered by
Schering.
6. AFFIRMATIVE COVENANTS OF THE COMPANY.
6.1 BOARD RIGHTS. So long as SBVC owns at least 500,000 shares of
the D Stock or 500,000 shares of the Common Stock into which the D Stock shall
have been converted, the Company shall allow SBVC the rights set forth in either
(a) or (b) below, at SBVC's election:
(a) The Company shall give SBVC or its designated representative
notice of each meeting of its Board of Directors at the same time and in the
same manner as notice is given to the members of the Board of Directors, and the
Company shall permit such representative to attend and observe all meetings of
the Company's Board of Directors and to listen to all such meetings held
telephonically. The Company shall provide SBVC's representative with copies of
written materials and other information given to directors in connection with
such
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meetings at the same time and in the same manner such materials and information
are given to the directors. If the Company takes any action by written consent
in lieu of a meeting of its Board of Directors, the Company shall give notice
thereof to SBVC's representative at the same time and in the same manner in
which such consent is requested of directors. SBVC's representative must be
reasonably acceptable to the Company and shall be knowledgeable and experienced
in the operations of the pharmaceutical industry. SBVC's representative shall
not be entitled to written materials or other information and shall agree to
excuse himself or herself from meetings or portions thereof at the request of
the Company or the Chairman of the Board of Directors where such information or
his or her attendance or continued presence, at the discretion of the Company,
might jeopardize the confidentiality of proprietary information of the Company
or of any competitor of SBVC or otherwise create a conflict of interest. SBVC's
representative will execute a confidentiality agreement in form and substance
similar to the Company's standard form of confidentiality agreement with
consultants and other third parties.
(b) SBVC shall be entitled to designate a person of its choice to
become, and the Company will select, nominate and use reasonable efforts to have
elected, a member of the Company's Board of Directors.
6.2 REPORTS UNDER THE EXCHANGE ACT. With a view to making available
to SBVC the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a permitted holder of
Securities to sell securities of the Company to the public without registration,
and with a view to making it possible for any such holder to register the
Securities pursuant to a registration on Form S-3, the Company agrees to
(subject to Section 8 in the case of Section 6.1(b)):
(a) make available adequate current public information as
contemplated by Rule 144 (c)(1) or (2);
(b) take such action as is necessary to enable a holder to utilize
Form S-3 for the sale of Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the Exchange Act; and
(d) furnish to a holder owning any Securities upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the Exchange Act, or that it
qualifies as a registrant whose Securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably required in
availing any holder of Securities of any rule or regulation of the SEC which
permits the selling of any such Securities without registration or pursuant to
such form.
7. ANTI-DILUTION PROVISIONS.
7.1. OPTION. If, on or before the date of conversion of all of the D
Shares, the Company shall issue additional shares of its Common Stock in any
private placement or public offering (excluding issuance or sale as a result of
exercise or conversion of (i) outstanding options,
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warrants or other convertible or exchangeable securities on the date hereof, or
(ii) stock options granted to employees, directors or consultants whenever
granted under the Company's stock option programs or incentive stock option
plan) (an "Issuance"), the Company hereby grants to SBVC the right (an "Option")
following any such Issuance, to purchase a number of shares of Common Stock as
set forth below. The consideration for shares issued pursuant to an Issuance
(the "Consideration") shall be deemed to be the per share amount of cash and any
other form of consideration received by the Company, meaning, in the case of a
public offering, the public offering price. The amount of any non-cash
Consideration shall be deemed to be the fair value of such non-cash
Consideration determined in good faith by the Company's Board of Directors.
Pursuant to the Option, SBVC shall have the right to purchase the number of
additional shares of Common Stock (the "Option Number") determined by the
following formula:
NO = N(I) (0.0159)
where N(O) is the Option Number and NI is the number of shares issued in the
Issuance. If the Option Number would include a fractional share, it shall be
rounded to the nearest whole share.
7.2. NOTICE OF ISSUANCE. Within ten (10) days after any Issuance, the
Company shall give written notice thereof to SBVC of the terms thereof,
including the Issuance Number, the Consideration and the Option Number of shares
related to such Issuance.
7.3. PURCHASE PRICE. The price for each share purchased pursuant to the
Option shall be an amount (payable in cash) equal to the Consideration for a
share purchased under the Issuance.
7.4. EXERCISE OF OPTION. The Option shall be exercised by written notice to
the Company, given within thirty (30) days following receipt of written notice
of an Issuance pursuant to Section 7.2 above stating that it is SBVC's intent to
exercise the Option. The notice shall specify the number of shares for which the
Option is being exercised (up to the Option Number) and shall be accompanied by
payment in full of the exercise price for such shares.
7.5. DELIVERY OF CERTIFICATES: REGISTRATION. Promptly after each exercise
of the Option, the Company shall cause to be delivered to SBVC a certificate or
certificates evidencing the shares purchased pursuant to the exercise of the
Option; provided, however, that SBVC shall be deemed to be the holder of record
of such shares as of the date of exercise of the Option with respect to such
shares. The Company may postpone the issuance and delivery of such shares upon
any exercise of the Option until (a) the admission of such shares to listing on
any stock exchange on which shares of the same class are then listed and (b) the
completion of such registration or other qualification of such shares under any
state or federal law, rule or regulation as the Company, in the reasonable
opinion of its counsel, shall determine to be necessary or advisable. Nothing in
this Section 7.5 shall be deemed to require that the Company file or amend a
registration statement under the 1933 Act.
7.6. DIVIDENDS AND RECLASSIFICATION. If, following an Issuance but prior to
the exercise of, or expiration of the right to exercise, the Option relating to
such Issuance, there shall be declared payable to holders of record of the
Common Stock on a date prior to such exercise or expiration, or paid, a stock
dividend upon the Common Stock of the Company or if such stock shall be
split-up, combined, converted, exchanged (including by way of merger),
reclassified, or in
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any way substituted for (collectively, a "Dividend or Reclassification"), the
Option shall entitle SBVC upon the future exercise of the Option relating to
such Issuance to such number and kind of securities or other property, subject
to the terms of the Option, to which SBVC would have been entitled had SBVC
actually owned the Common Stock as to which the Option is then exercised at the
time of such Dividend or Reclassification; and the aggregate purchase price upon
the exercise of the Option relating to such Issuance shall be the same as if the
shares of Common Stock originally optioned were being purchased as provided
herein; provided that no fractions of shares shall be issued, the aggregate
purchase price shall be appropriately reduced on account of any fractions not so
issued and the purchase price shall in no event be less than the par value of
the Common Stock.
7.7. RESERVATION OF COMMON STOCK. The Company hereby represents and
covenants with SBVC that it shall at all times reserve for issuance to SBVC such
number of shares of its Common Stock as will be sufficient to satisfy the
requirements of any Option.
7.8. SUCCESSORS TO OPTION. The Option and all rights hereunder shall be
non-assignable and nontransferable, are intended solely for the benefit of SBVC,
and shall in no way inure to the benefit of its assignees or transferees.
Notwithstanding the foregoing, SBVC may assign or transfer the Option to any
corporation with which SBVC is merged or combined or to any corporation which is
a successor to or an affiliate of SBVC. The Company shall have the right to
require, as a condition precedent to such assignment or transfer, that the
assignee or transferee furnish such information as may in the opinion of counsel
for the Company be appropriate to permit such assignment or transfer in light of
the then applicable federal or state securities laws. As used in this Agreement,
the term "affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act, and the term "person" or "entity" shall mean any individual,
company, partnership, joint venture, association, corporation, trust, government
or agency thereof, or any other entity.
7.9. INFORMATION FROM SBVC. The Company shall have the right to require, as
a condition precedent to the exercise of the Option, that SBVC furnish such
information (and representations comparable to those in Section 3.1) as may in
the reasonable opinion of counsel for the Company be appropriate to permit the
Company, in light of the then existence or non-existence of an effective
registration statement under the 1933 Act with respect to such shares, to issue
the shares in compliance with the provisions of that or any comparable act.
8. REGISTRATION OF COMMON STOCK.
8.1 REGISTRATION.
(a) The Company will use its best efforts to cause to become
effective, on or prior to the date on which the D Shares shall first be
convertible, a registration statement under the 1933 Act on Form S-3 or such
other registration form as counsel to the Company deems appropriate, covering
the issuance by the Company of all of the Conversion Shares and Option Shares,
or any shares issued pursuant to stock dividends, stock splits or similar
distributions upon such Common Stock, Conversion Shares and Option Shares
("Registrable Stock"); provided, however, that the Company shall not be required
to proceed with such registration statement if the staff of the SEC, following
reasonable efforts by the Company (in which SBVC, if it wishes
14
<PAGE>
and at its expense, may participate or have its counsel participate), advises
the Company that the offering or issuance of Registrable Stock by the Company
pursuant to such registration statement would constitute a violation of Section
5 of the 1933 Act. For purposes of this Purchase Agreement, a "Holder" of any
security means the record or beneficial owner of such security or any permitted
successor or assignee thereof.
(b) If the Company does not proceed with the registration statement
contemplated in section 8.1(a) for the reason stated therein, the Company, upon
conversion of the D Stock, will use its best efforts to effect within ninety
(90) days of conversion the registration under the 1933 Act of all of the
Registrable Stock, such registration to be on Form S-3 or such other
registration form as counsel to the Company deems appropriate.
8.2 REGISTRATION EXPENSES. The Company shall pay all expenses incurred in
effecting the registration of Registrable Stock pursuant to Section 8.1
including, without limitation, all federal and state registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration, but not including underwriting
discounts, commissions and expenses and fees of counsel to the participating
Holders.
8.3 REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 8.1 to effect the registration of the Registrable
Stock under the 1933 Act, the Company will, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement which
includes the Registrable Stock and use its best efforts to cause such
registration statement to become and remain effective until the distribution
described in the registration statement has been completed or until the
participating Holders can sell all such Registrable Stock pursuant to Rule 144;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the 1933 Act with respect to the sale or other
disposition of Registrable Stock covered by such registration statement whenever
a Holder shall desire to sell or otherwise dispose of the same, but only to the
extent provided in this Section 8;
(c) furnish to each participating Holder (and to each underwriter, if
any, of Registrable Stock) such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the 1933 Act, and
such other documents, as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Stock;
(d) use its best efforts to register or qualify the Registrable Stock
covered by such registration statement under such state securities or blue sky
laws of such jurisdiction as each participating Holder shall reasonably request
and do any and all other acts and things which may be necessary under such
securities or blue sky laws to enable such Holder to consummate the public sale
or other disposition in such jurisdictions of the Registrable Stock, except that
the
15
<PAGE>
Company shall not for any purpose be required to consent generally to service of
process or qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(e) before filing the registration statement prospectus or amendments
or supplements thereto, furnish to counsel selected by the participating Holders
copies of such documents proposed to be filed which shall be subject to the
reasonable approval of such counsel;
(f) enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offer;
(g) notify the participating Holders at any time when a prospectus
relating to any Registrable Stock covered by such registration statement is
required to be delivered under the 1933 Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and promptly
file such amendments and supplements as may be necessary so that, as thereafter
delivered to such Holders, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing and use its best efforts to cause each such
amendment and supplement to become effective;
(h) furnish at the request of the participating Holders on the date
that such Registrable Stock is delivered to the underwriters for sale in
connection with a registration pursuant to this Section 8 an opinion, dated such
date, of the counsel representing the Company, for purposes of such
registration, in form and substance as is customarily given by company counsel
to the underwriters in an underwritten public offer addressed to the
underwriters, if any, and to such Holders, and (ii) a letter dated such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offer, addressed to the underwriters and
to such Holders;
(i) notify the Holders of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement of the initiation of
any proceedings for that purpose. The Company will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest time; and
(j) use its best efforts to cause all such Registrable Stock to be
listed on the securities exchange or the Nasdaq National Market, if any, on
which the Company's Common Stock is then listed.
Upon receipt of any notice from the Company of the happening of any event
of the kind described in paragraph (g), the Holder will forthwith discontinue
disposition of such Registrable Stock covered by such registration statement or
prospectus until receipt of the copies of the supplemented or amended
prospectus, or until it is advised in writing by the Company that the use of the
applicable prospectus may be resumed, and has received copies of an additional
or supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by
16
<PAGE>
the Company, the Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in the Holder's possession, of
the prospectus covering such Registrable Stock current at the time of receipt of
such notice.
8.4 INDEMNIFICATION. In the event Registrable Stock is registered pursuant
to this Section 8:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder of Registrable Stock which is included in a
registration statement filed pursuant to the provisions of this Agreement and
any underwriter (within the meaning of the 1933 Act) with respect to the
Registrable Stock, and each officer, director, employee and agent thereof and
each person, if any, who otherwise controls such Holder or underwriter (within
the meaning of the 1933 Act), against any losses or claims, damages, expenses or
liabilities, joint or several, to which they may become subject under the 1933
Act, the Exchange Act or other federal or state law, or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or allegedly untrue statement
of any material fact contained in the registration statement for the Registrable
Stock, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or any document incident to
the registration or qualification of any Registrable Stock, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or allegedly necessary to make the statements
therein not misleading or arise out of any violation or alleged violation by the
Company of the 1933 Act, the Exchange Act, any state securities law or any rule
or regulation promulgated under the 1933 Act, the Exchange Act or any state
securities law; and will reimburse such Holder, any underwriter, officer,
director, employee, agent or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 8.4(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, expense, liability or action
if such settlement is effected without the written consent of the Company, which
shall not be unreasonably withheld, nor shall the Company be liable under this
Section 8.4(a) to such Holder, such underwriter, officer, director, employee,
agent or controlling person for any such loss, claim, damage, expense, liability
or action to the extent that it arises out of, or is based upon, an untrue
statement or allegedly untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing expressly for use in connection
with such registration by such Holder, such underwriter, officer, director,
employee, agent or such controlling person.
(b) To the extent permitted by law, each Holder of Registrable Stock
which is included in a registration statement filed pursuant to the provisions
of this Agreement will indemnify and hold harmless the Company, each of its
employees, agents, directors and officers, each person, if any, who controls the
Company within the meaning of the 1933 Act, and any underwriter (within the
meaning of the 1933 Act) against any losses, claims, damages, expenses or
liabilities to which the Company or any such person or underwriter may become
subject, under the 1933 Act, the Exchange Act or other federal or state law or
otherwise, insofar as such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) arise out of, or are based upon any untrue or
allegedly untrue statement of any material fact contained in a registration
17
<PAGE>
statement for the Registrable Stock, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, or
any document incident to the registration or qualification of any Registrable
Stock, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or allegedly
necessary to make the statements therein not misleading; in each case to the
extent that such untrue statement or allegedly untrue statement or omission or
alleged omission was made in such registration statement, preliminary
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing by such Holder expressly for
use in connection with such registration; provided, however, that the indemnity
agreement contained in this Section 8.4(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, expense, liability or action if such
settlement is effected without the written consent of such Holder, which shall
not be unreasonably withheld; and such Holder will reimburse the Company or any
such person or underwriter for any legal or other expenses reasonably incurred
by the Company or any such person or underwriter in connection with
investigating or defending such loss, claim, damage, liability, expense or
action.
(c) Promptly after receipt by an indemnified party under this Section
8.4 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 8.4, notify the indemnifying party in writing of the commencement
thereof and generally summarize such action. The indemnifying party shall have
the right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties. An indemnifying party shall not have the
right to direct the defense of such an action on behalf of an indemnified party
if such indemnified party has reasonably concluded that there may be defenses
available to it that are different from or additional to those available to the
indemnifying party; provided, however, that in such event, the indemnifying
party shall bear the fees and expenses of only one (1) separate counsel for all
indemnified parties, such separate counsel to be reasonably satisfactory to the
indemnifying party. The failure to notify an indemnifying party promptly of the
commencement of any such action if prejudicial to the ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 8.4, but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise than under this Section.
(d) To the extent permitted by law, the indemnification provided for
under this Section 8.4 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person (within the meaning of the 1933 Act) of such
indemnified party and will survive the transfer of securities.
(e) If for any reason the foregoing indemnity is unavailable to, or
is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of the
indemnifying party and the
18
<PAGE>
indemnified party as well as any other relevant equitable considerations.
Notwithstanding the foregoing, no underwriter, if any, shall be required to
contribute any amount in excess of the amount by which the total price at which
the securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligation of any underwriters to contribute pursuant to
this Section 8.4(e) shall be several in proportion to their respective
underwriting commitments and not joint.
8.5 INFORMATION FROM SBVC. SBVC shall furnish to the Company in writing
any information regarding SBVC which the Company may reasonably request in
writing in connection with registration pursuant to this Section 8.
8.6 TRANSFERABILITY. The right to have Alliance register Registrable
Stock granted by the Company to the Holders under this Agreement may be assigned
by a Holder to a permitted transferee or assignee of at least one-half of the
Registrable Stock (subject to appropriate adjustment for stock splits, stock
dividends, reclassification and consolidations), provided that the Company must
receive written notice prior to or at the time of said transfer, stating the
name and address of said transferee or assignee. The limitations set forth in
this Article 8 with respect to registration rights shall apply to all
transferees or assignees of Registrable Stock.
9. MISCELLANEOUS.
9.1 INCORPORATION BY REFERENCE. All exhibits and schedules appended to
this Purchase Agreement are herein incorporated by reference and made a part
hereof.
9.2 PARTIES IN INTEREST. All terms, covenants, agreements,
representations, warranties and undertakings in this Purchase Agreement made by
and on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not.
9.3 [Intentionally omitted]
9.4 GOVERNING LAW. This Purchase Agreement shall be deemed a contract made
under the laws of the State of New York and, together with the rights or
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State.
9.5 NOTICES. All notices, requests, consents and demands shall be in
writing and shall be deemed given when (i) personally delivered, (ii) mailed in
a registered or certified envelope, postage prepaid (iii) sent by Federal
Express or another nationally recognized overnight delivery service (paid by
sender), or (iv) sent by telex, facsimile, or telecopier upon receipt of the
correct answerback.
To the Company at:
19
<PAGE>
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Attention: Theodore D. Roth
Executive Vice President
FAX #: (619) 558-5306
with a copy to:
Stroock & Stroock & Lavan
180 Maiden Lane
New York, NY 10038
Attention: Melvin Epstein, Esq.
FAX #: (212) 806-6006
or to SBVC at:
Berlex Laboratories
300 Fairfield Road
Wayne, NJ 07470
Attention: John Nicholson
FAX #:
with a copy to:
Brobeck, Phleger & Harrision LLP
One Market, Spear Street Tower
San Francisco, CA 94105
Attention: Michael J. Kennedy
FAX #: (415)442-1010
or such other address as may be furnished in writing to the other parties
hereto.
9.6 COUNTERPARTS. This Purchase Agreement may be executed in counterparts,
all of which together shall constitute one and the same instrument.
9.7 EFFECT OF HEADINGS. The section and paragraph headings herein are for
convenience only and shall not affect the construction hereof.
9.8 ENTIRE PURCHASE AGREEMENT. This Purchase Agreement, the License
Agreement and the Exhibits and Schedules hereto and thereto constitute the
entire agreement among the Company and the SBVC with respect to the subject
matter hereof. There are no representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Purchase Agreement supersedes all prior
agreements between the parties with respect to the shares purchased hereunder
and the subject matter hereof.
20
<PAGE>
9.9 PUBLICITY. Neither party shall originate any publicity, news release,
or other announcement, written or oral, relating to this Purchase Agreement, or
to performance hereunder or the existence of an arrangement between the parties
without the prior written approval of the other.
9.10 SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
9.11 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.
9.12 AMENDMENT AND WAIVER. Except as otherwise provided herein, any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or an a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and SBVC. Any amendment
or waiver effected in accordance with this Section 9.12 shall be binding upon
any holder of any securities purchased under this Agreement (including
securities into which such securities have been converted), each future holder
of all such securities (so long as such securities are restricted securities)
and the Company.
9.13 FEES AND EXPENSES. The Company and SBVC shall bear their own expenses
and legal fees incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby, except for any expenses incurred in connection
with the registration of any of the securities sold pursuant to this Agreement
which shall be borne exclusively by Alliance; except as otherwise provided in
this Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Purchase Agreement has been executed as of the
date first above written, by the parties hereto.
ALLIANCE PHARMACEUTICAL CORP.
By:
-----------------------------
Name: Duane J. Roth
Title: President
SCHERING BERLIN VENTURE CORP.
By:
-----------------------------
Name:
---------------------------
Title:
-----------------------------
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<PAGE>
Exhibit and Schedule List
Exhibit A Certificate of Amendment
Exhibit B License Agreement
Schedule 2.3 Outstanding Warrants
Outstanding Options
Rights of First Refusal
Rights to Purchase
Registration Rights
Schedule 2.7 Liens & Encumbrances
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<PAGE>
EXHIBIT A
Certificate of Amendment
of
Certificate of Incorporation
of
Alliance Pharmaceutical Corp.
See Exhibit 3(c) to Alliance Pharmaceutical Corp.'s 1997 Annual Report as
filed on Form 10-K on September 25, 1997.
<PAGE>
EXHIBIT B
License Agreement
Between
Alliance Pharmaceutical Corp.
and
Schering Aktiengesellschaft
See Exhibit 2(a) to Alliance Pharmaceutical Corp.'s Form 8-K filed on
October 7, 1997.
<PAGE>
SCHEDULE 2.3
TO
PREFERRED STOCK PURCHASE AGREEMENT
Outstanding Options (as of June 30, 1997) 3,798,604
Outstanding Warrants 576,414
Johnson & Johnson Development Corp. ("J&JDC") has the right and/or obligation
to purchase a number of shares of common stock upon the occurrence of certain
events (the "Deferred Purchase"), such number to be determined by a formula.
Registration Rights
468,102 Warrants with demand and/or piggyback registration rights
The Company has obligations to register the common stock obtained by J&JDC
pursuant to exercise of the Deferred Purchase.
Hoechst Marion Roussel, Inc. received 345,327 shares of common stock upon
conversion in June 1997 of preferred stock of Alliance. The Company has
obligations to register such shares.
The Board of Directors has authorized an increase of 1,500,000 shares in its
1991 Stock Option Plan. If such shares are approved by the shareholders at
the November 1997 annual meeting, the shares will be registered under an S-8
registration statement.
<PAGE>
SCHEDULE 2.7
TO
PREFERRED STOCK PURCHASE AGREEMENT
The Company has a $1.5 million Line of Credit Agreement with Wells Fargo Bank
which is secured by deposit accounts and investments held by the bank.
In connection with the purchase of land in June 1983, the Company entered
into a land use agreement with the New York City Public Development
Corporation, the provision of which are "covenants running with the land"
binding upon the Company and subsequent owners for a substantial period of
time.
The Company entered into a loan and security agreement in August 1995 under
which the Company received $2.2 million. Amounts borrowed under the agreement
are secured by fixed assets, and will be repaid over three years commencing
September 1995.
The Company entered into a loan and security agreement in January 1997 under
which the Company received $3.5 million. Amounts borrowed under the agreement
are secured by all personal property, excluding (i) intangible assets,
including intellectual property and patents or patent applications, and (ii)
certain equipment and will be payable over four years commencing as of
January 30, 1997.
