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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
November 4, 1999
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Date of Report (Date of earliest event reported)
ALLIANCE PHARMACEUTICAL CORP.
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(Exact name of registrant as specified in its charter)
NEW YORK 0-12950 14-1644018
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
3040 Science Park Road
San Diego, California 92121
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(Address of principal executive offices)
(858) 410-5200
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(Registrant's telephone number, including area code)
This document consists of 3 pages.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 4, 1999, Alliance Pharmaceutical Corp. ("Alliance")
announced that it completed the transfer to Inhale Therapeutic Systems, Inc.
("Inhale") of Alliance's PULMOSPHERES-Registered Trademark- particle and
particle processing technology and other related assets for use in
respiratory drug delivery, in accordance with an Asset Purchase Agreement
dated October 4, 1999. PULMOSPHERES technology is a particle formation method
designed to enhance the efficiency and reproducibility of drugs delivered in
propellant-based metered dose and in dry powder inhalers.
Under the terms of the agreement, Alliance received $15 million in cash
and $5 million of Inhale common stock. In exchange, Inhale received rights to
the PULMOSPHERES technology in the field of respiratory delivery, other related
assets and $5 million in Alliance common stock. The price for the common stock
received by both Inhale and Alliance was calculated as an average of the closing
price on the 15 trading days prior to issuance, and the common stock are
restricted securities as defined in the rules promulgated under the Securities
Act of 1933, as amended.
Among the assets acquired pursuant to the agreement is Alliance's
intellectual property portfolio for PULMOSPHERES, including several patent
applications, and the exclusive right to use the technology in the respiratory
field. Alliance retained the right to develop in the respiratory field up to two
products yet to be specified which will be formulated by Inhale using the
PULMOSPHERES technology, as well as all non-respiratory applications. In
addition, Inhale acquired certain equipment from Alliance consisting primarily
of powder processing equipment which has been utilized by Alliance in the
development of the PULMOSPHERES technology. In addition to the consideration
described above, Alliance will have the right to additional substantial payments
upon the achievement of certain milestones, as well as royalties on a defined
number of products commercialized using the technology.
Except for historical information, the matters set forth in this report
are forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those set forth herein.
Alliance refers you to cautionary information contained elsewhere herein, in
other documents Alliance files with the Securities and Exchange Commission from
time to time, and those risk factors set forth in Alliance's recent registration
statement on Form S-3 (Registration Number 333-76343).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements. None
(b) Pro Forma Financial Information. None
(c) Exhibits. The following exhibits are being filed herewith:
2(a) Asset Purchase Agreement between Alliance and Inhale
dated October 4, 1999;
2(b) Product Development Rights Agreement between Alliance
and Inhale dated November 4, 1999;
2(c) License Agreement (License to Inhale) between
Alliance and Inhale dated November 4, 1999;
2
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2(d) License Agreement (License to Alliance) between
Alliance and Inhale dated November 4, 1999;
2(e) Inhale Common Stock Purchase Agreement between
Alliance and Inhale dated November 4, 1999; and
2(f) Alliance Common Stock Purchase Agreement between
Alliance and Inhale dated November 4, 1999.
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.
Dated: November 18, 1999 By: /s/ Lloyd A. Rowland
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Lloyd A. Rowland
Vice President and General Counsel
3
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Exhibit 99.2(a)
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ASSET PURCHASE AGREEMENT
between:
ALLIANCE PHARMACEUTICAL CORP.,
a New York corporation;
and
INHALE THERAPEUTIC SYSTEMS, INC.,
a Delaware corporation
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Dated as of October 4, 1999
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* INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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TABLE OF CONTENTS
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1. PURCHASE AND SALE OF ASSETS; RELATED AGREEMENTS..........................................................1
1.1 ASSETS TO BE TRANSFERRED........................................................................1
1.2 CERTAIN EMPLOYEES OF SELLER.....................................................................2
1.3 PERFLUBRON DATA AND ANALYTICAL METHODOLOGY......................................................3
1.4 LIABILITIES NOT TO BE ASSUMED...................................................................3
1.5 PURCHASE PRICE; CASH PAYMENTS...................................................................3
1.6 MILESTONE PAYMENTS..............................................................................5
1.7 ROYALTY PAYMENTS................................................................................6
1.8 CONTINGENT PAYMENT IN THE EVENT OF THE SALE OF PURCHASED
PROPRIETARY ASSETS..............................................................................7
1.9 PRODUCT DEVELOPMENT RIGHTS AGREEMENT............................................................8
1.10 LICENSE AGREEMENTS..............................................................................8
1.11 ESCROW AGREEMENT................................................................................8
1.12 SECURITY AGREEMENT..............................................................................8
1.13 CLOSING.........................................................................................8
1.14 NOTICE TO ALLIANCE; REQUEST BY ALLIANCE.........................................................9
2. REPRESENTATIONS AND WARRANTIES OF SELLER.................................................................9
2.1 DUE ORGANIZATION................................................................................9
2.2 TITLE TO PURCHASED ASSETS......................................................................10
2.3 PROPRIETARY ASSETS.............................................................................10
1.4 PROCEEDINGS; ORDERS............................................................................11
1.5 AUTHORITY; BINDING NATURE OF AGREEMENTS........................................................11
1.6 NON-CONTRAVENTION; CONSENTS....................................................................12
1.7 BROKERS........................................................................................12
1.8 SOLVENCY.......................................................................................12
1.9 FULL DISCLOSURE................................................................................13
1.10 NO DEBARMENT...................................................................................13
1.11 DISCLAIMER OF WARRANTIES.......................................................................13
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................................................14
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.........................................................14
3.3 NON-CONTRAVENTION; CONSENTS....................................................................14
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3.4 PROCEEDINGS; ORDERS............................................................................15
3.5 BROKERS........................................................................................15
3.6 SOLVENCY.......................................................................................15
4. ADDITIONAL COVENANTS OF THE PARTIES.....................................................................16
4.1 FURTHER ASSURANCES.............................................................................16
4.2 SOLICITATION OF EMPLOYEES......................................................................16
5. PRE-CLOSING COVENANTS OF SELLER.........................................................................16
5.1 ACCESS AND INVESTIGATION.......................................................................16
5.2 OPERATION OF BUSINESS..........................................................................17
5.3 FILINGS AND CONSENTS...........................................................................17
5.4 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE...................................................18
5.5 NO NEGOTIATION.................................................................................18
5.6 BEST EFFORTS...................................................................................18
5.7 CONFIDENTIALITY................................................................................18
6. PRE-CLOSING COVENANTS OF PURCHASER......................................................................19
6.1 BEST EFFORTS...................................................................................19
6.2 EMPLOYMENT OFFERS..............................................................................19
6.3 FILINGS AND CONSENTS...........................................................................19
6.4 CONFIDENTIALITY................................................................................19
7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE.................................................19
7.1 ACCURACY OF REPRESENTATIONS....................................................................20
7.2 PERFORMANCE OF OBLIGATIONS.....................................................................20
7.3 CONSENTS.......................................................................................20
7.4 OPINION LETTER.................................................................................20
7.5 NO PROCEEDINGS.................................................................................20
7.6 NO MATERIAL ADVERSE CHANGE.....................................................................20
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE...................................................21
8.1 ACCURACY OF REPRESENTATIONS....................................................................21
8.2 PURCHASER'S PERFORMANCE........................................................................21
8.3 CONSENTS.......................................................................................21
8.4 OPINION LETTER.................................................................................21
ii.
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8.5 NO PROCEEDINGS.................................................................................22
9. INDEMNIFICATION, ETC....................................................................................22
9.1 SURVIVAL OF REPRESENTATIONS....................................................................22
9.2 INDEMNIFICATION BY SELLER......................................................................22
9.3 INDEMNIFICATION BY PURCHASER...................................................................23
9.4 KNOWLEDGE OF BREACH............................................................................23
9.5 INDEMNIFICATION PROCEDURES; DEFENSE OF THIRD PARTY CLAIMS......................................23
9.6 EXCLUDED AGREEMENTS............................................................................24
9.7 CEILING ON DAMAGES.............................................................................25
9.8 EXCLUSIVITY OF INDEMNIFICATION REMEDIES........................................................25
10. POST-CLOSING COVENANTS..................................................................................25
10.1 TECHNOLOGY TRANSFER............................................................................25
10.2 TECHNICAL SUPPORT FROM SELLER..................................................................26
10.3 TECHNICAL SUPPORT FROM PURCHASER...............................................................26
10.4 SELLER'S AUDIT RIGHTS..........................................................................27
10.5 OPTION TO LEASE................................................................................27
10.6 SUPPLY OF PERFLUBRON...........................................................................28
11. CONFIDENTIALITY.........................................................................................29
11.1 CONFIDENTIAL INFORMATION.......................................................................29
11.2 PERFLUBRON DATA................................................................................29
11.3 PERMITTED DISCLOSURES..........................................................................30
12. MISCELLANEOUS PROVISIONS................................................................................30
12.1 CLOSING DATE; HART-SCOTT-RODINO................................................................30
12.2 FURTHER ASSURANCES.............................................................................30
12.3 PAYMENT OF ALL FEDERAL AND STATE TAXES DUE ON SALE OF PURCHASED
ASSETS BY SELLER...............................................................................30
12.4 FEES AND EXPENSES..............................................................................30
12.5 NOTICES........................................................................................31
12.6 PUBLICITY......................................................................................32
12.7 TIME OF THE ESSENCE............................................................................32
12.8 HEADINGS.......................................................................................32
iii.
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12.9 COUNTERPARTS...................................................................................32
12.10 GOVERNING LAW; DISPUTE RESOLUTION..............................................................32
12.11 SUCCESSORS AND ASSIGNS; ASSIGNMENT.............................................................33
12.12 WAIVER.........................................................................................34
12.13 AMENDMENTS.....................................................................................34
12.14 SEVERABILITY...................................................................................34
12.15 PARTIES IN INTEREST............................................................................34
12.16 INDEPENDENT CONTRACTORS........................................................................34
12.17 ENTIRE AGREEMENT...............................................................................35
12.18 CONSTRUCTION...................................................................................36
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iv.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of October 4,
1999 (the "Effective Date"), by and between: ALLIANCE PHARMACEUTICAL CORP., a
New York corporation ("Seller"), and INHALE THERAPEUTIC SYSTEMS, INC., a
Delaware corporation ("Purchaser").
RECITALS
A. Seller is engaged and has been engaged in the development of its
PulmoSpheres-Registered Trademark- Technology and owns certain intellectual
property rights and other assets associated with the PulmoSpheres-Registered
Trademark- Technology. Certain capitalized terms used in this Agreement are
defined in Exhibit A.
B. Seller and Purchaser have entered into a Nondisclosure Agreement dated
April 18, 1999 and a Confidential Information Disclosure Agreement dated May 10,
1999, as amended and restated on May 10, 1999, pursuant to which they discussed
the terms under which Purchaser might acquire certain assets from Seller.
C. Seller wishes to sell to Purchaser, and Purchaser wishes to acquire from
Seller, the Purchased Assets on the terms set forth in this Agreement.
Concurrent with the purchase and sale of the Purchased Assets, Purchaser and
Seller will also execute certain ancillary agreements specified herein,
including without limitation the License Agreements attached hereto as Exhibits
B and C.
AGREEMENT
Purchaser and Seller, intending to be legally bound, agree as follows:
1. PURCHASE AND SALE OF ASSETS; RELATED AGREEMENTS
1.1 ASSETS TO BE TRANSFERRED. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, Seller shall sell, transfer, convey,
assign, grant and deliver to Purchaser, and Purchaser shall purchase, acquire
and receive, the following properties, rights, claims and assets used in
connection with the PulmoSpheres-Registered Trademark- Technology:
(a) PATENT RIGHTS; OTHER INTELLECTUAL PROPERTY. All of the
invention disclosures, patent applications, patents (collectively, the
"Assigned Patent Rights") and other Proprietary Assets listed in Part 1.1(a)
of the Disclosure Schedule, including without limitation the trademark
"PulmoSpheres-Registered Trademark-" (the "Purchased Proprietary Assets").
(b) EQUIPMENT. Certain equipment in its "as is" condition owned by
Seller and used by it in the development of PulmoSpheres-Registered
Trademark- Technology or the manufacture and testing of particles
manufactured using such PulmoSpheres-Registered Trademark- Technology,
together with related assets owned by Seller, which equipment and assets, as
well as any defects thereof known to Seller, are identified on Part 1.1(b) of
the Disclosure Schedule (the "Equipment").
1.
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(c) SUPPLIES AND MATERIALS. All research supplies and materials and
related assets used in connection with the PulmoSpheres-Registered Trademark-
Technology (other than the Equipment) in "as is" condition, which supplies
and materials and related assets, together with any material defects thereof
known to Seller are listed on Part 1.1(c) of the Disclosure Schedule (the
"Supplies and Materials").
(d) FILES AND RECORDS. The originals of all laboratory files, batch
records and other records listed in Part 1.1(d) of the Disclosure Schedule,
as well as copies of portions of laboratory notebooks, in each case relating
to the PulmoSpheres-Registered Trademark- Technology in the Inhale Field
listed on Part 1.1(d) of the Disclosure Schedule that will be placed in
escrow pursuant to Section 1.11 (the "Files and Records"). Seller shall not
itself retain copies (unless otherwise required by the applicable
governmental laws, rules and regulations) of such files and records other
than for portions of the laboratory notebooks, but if Seller requires access
thereto to comply with regulatory requirements for its products, it shall so
notify Purchaser and Purchaser shall provide Seller such access on a
reasonable basis during normal business hours as the parties shall mutually
agree.
(e) KNOW-HOW. All Know-How of Seller directly related to the
development or use of the PulmoSpheres-Registered Trademark- Technology in
the Inhale Field including that known to the Employees referred to in Section
1.2 or conveyed in the Files and Records. Purchaser may obtain access to
other know-how owned or controlled by Seller pursuant to the license under
Licensed Know-How provided in the License Agreement attached hereto as
Exhibit B.
All of the foregoing assets are hereinafter collectively referred to as the
"Purchased Assets."
All other assets of Seller including, without limitation, other proprietary
rights of Seller, equipment and other tangible and intangible personal property,
remain the property of Seller and are not subject to this Agreement. The parties
agree that the segregation of assets, including without limitation, proprietary
software, data, databases, and other proprietary or otherwise confidential
information, shall be the responsibility of Seller.
1.2 CERTAIN EMPLOYEES OF SELLER. Prior to the Effective Date, in connection
with Purchaser's acquisition of the Purchased Assets pursuant to this Agreement,
Purchaser has extended conditional employment offers to the employees of Seller
set forth on Exhibit D (the "Employees") for employment commencing on or after
the Closing. The parties shall cooperate to achieve a smooth transition for any
such Employees actually hired by Purchaser. Seller shall not take action to
terminate the employment of such Employees (other than for cause) until the
Closing, and shall use reasonable efforts to retain such Employees prior to any
transfer thereof to Purchaser.
1.3 PERFLUBRON DATA AND ANALYTICAL METHODOLOGY. If Purchaser, within the
twelve (12) month period following the Closing Date so requests, Seller shall
promptly place into an escrow account under the terms of the Escrow Agreement
to be entered into between the parties pursuant to Section 1.11, a copy of
all of Seller's preclinical toxicology and safety studies and human safety
studies directly related to or necessary for the use or development of the
PulmoSpheres-Registered Trademark- Technology in the Inhale Field, and in
particular the use of Perflubron to the extent such information exists as of
the Effective Date. Purchaser may request from time to time
2.
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that Seller provide additional data owned or controlled by Seller as of the
Closing Date directly related to or necessary for the use or development of
the PulmoSpheres-Registered Trademark- Technology in the Inhale Field, and in
particular the use of Perflubron, and if Seller then owns or controls any
such data and is then able to disclose such information without breaching any
obligation of confidentiality to a Third Party, then Seller shall place such
additional data into escrow along with the foregoing toxicology and safety
data. Purchaser shall bear all expenses of establishing and maintaining any
escrow account established pursuant to this Section 1.3. Purchaser and any
corporate partner with which Purchaser develops Products shall have a right
of reference to Seller's regulatory filings for products using or
incorporating PulmoSpheres-Registered Trademark- Technology as necessary or
useful in connection with the development of Products. Additionally, Seller
shall provide to Purchaser information regarding analytical testing
methodology for Perflubron sufficient to enable Purchaser to perform the
testing contemplated in Section 10.6.
1.4 LIABILITIES NOT TO BE ASSUMED. Purchaser is not assuming any
Liabilities or Contracts of Seller and all such Liabilities and Contracts shall
be and remain the responsibility of Seller.
1.5 PURCHASE PRICE; CASH PAYMENTS.
(a) The purchase price for the Purchased Assets is $20,000,000, plus
any future payments for which Purchaser may become obligated under Sections 1.6,
1.7 or 1.8. In addition, as further consideration for the Purchased Assets,
Purchaser is granting to Seller the right to designate future products for
development and license as set forth in the Product Development Rights Agreement
referred to in Section 1.9. Such $20,000,000 shall be paid in cash and stock as
follows:
(i) At the Closing (as defined in Section 1.13), Purchaser will
pay Seller (by wire transfer) the amount of $10,000,000 in partial consideration
for the purchase of the Purchased Assets.
(ii) On the first anniversary of the Closing, or earlier as
provided in this Section 1.5(a)(ii), Purchaser will pay Seller (by wire
transfer) an additional $5,000,000. If Purchaser or its Affiliates effects the
sale and issuance of equity securities (including for this purpose debt
securities which are convertible into capital stock of Purchaser) prior to the
first anniversary of the Closing, other than an "Exempt Transaction," Purchaser
shall pay Seller (by wire transfer within thirty (30) days after Purchaser
receives the proceeds of such financing but not earlier than the Closing
hereunder) one-half of the net proceeds of any such financing, up to an
aggregate payment of $5,000,000. Any amount paid to Seller as a result of such a
financing shall be credited against the $5,000,000 otherwise due on the first
anniversary of the Closing. For purposes of this Section 1.5(a)(ii), an "Exempt
Transaction" shall be any issuance of equity securities by Purchaser A) pursuant
to an employee equity plan; B) in conjunction with the purchase of the stock or
assets of another company or for any other non-cash consideration; or C) to a
corporate investor who has established or is establishing a product development,
licensing or manufacturing relationship with Purchaser, but any portion of the
consideration received by Purchaser for the purchase of such equity securities
that exceeds one hundred twenty five percent (125%) of the fair market value
thereof on the date of the transaction shall be an Exempt Transaction only if
such excess amount can be reasonably demonstrated by Purchaser to be paid
3.
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as funding for such research and development efforts, to reimburse patent costs,
or to purchase equipment or materials for development or commercialization of
products.
(iii) Concurrent with the cash payment to Seller pursuant to
clause (a)(ii) of this Section 1.5, Purchaser shall issue to Seller a number of
shares of Purchaser's unregistered common stock equal to the quotient of
$5,000,000 divided by the average closing price for Purchaser's common stock
quoted on the Nasdaq National Market for the fifteen (15) trading days preceding
the date of issuance. The issuance of Purchaser's common stock shall be
accomplished through a Common Stock Purchase Agreement entered into between
Purchaser and Seller on or before the Closing Date having customary purchaser
representations regarding accredited status and non-distributive intent.
Purchaser shall cause the common stock issued to Seller to be freely tradeable
on the first anniversary of the Closing Date.
(b) Promptly following the Effective Date, Purchaser and Seller shall
in good faith determine the appropriate allocation of the Purchase Price among
the Purchased Assets which shall be attached hereto as Exhibit E. The allocation
prescribed by such exhibit shall be conclusive and binding upon Seller and
Purchaser for all purposes, and Seller and Purchaser shall not file any Tax
Return or other document with, or make any statement or declaration to, any
Governmental Body that is inconsistent with such allocation; PROVIDED, HOWEVER
that if the U.S. Securities and Exchange Commission ("SEC") disagrees with such
allocation, then Purchaser may alter such allocation to conform with SEC
requirements.
(c) Seller shall bear and pay, and shall reimburse the Purchaser and
Purchaser's affiliates for, any sales taxes or use taxes that may become payable
in connection with the sale of the Purchased Assets to the Purchaser, but shall
not be responsible for transfer taxes, recording fees or other fees and
expenses.
1.6 MILESTONE PAYMENTS. From time to time following the Closing, it is
anticipated that Purchaser may receive cash payments (other than royalties based
on sales) from unaffiliated third parties with whom Purchaser has granted
licenses or entered into agreements with respect to the development and/or
commercialization of Products ("Partners"). With respect to each such Product,
Purchaser shall be obligated to pay to Seller a portion of such payments, as
described in Section 1.6(a), with a further contingent payment as described in
Section 1.6(b); provided, that it is understood and agreed that Purchaser shall
not be responsible for making any of the payments pursuant to this Section 1.6
for products developed by Purchaser on behalf of Seller pursuant to the Product
Development Rights Agreement. Any payment made under this Section 1.6 shall be
nonrefundable in the event that a patent claim which was the basis for such
payment later ceases to exist in the course of patent prosecution or litigation.
(a) Subject to Section 1.6(b), Purchaser shall pay Seller (by wire
transfer) ******** of any payments (other than royalties based on sales)
received from any Partner of a Product, within thirty (30) days following such
receipt by Purchaser. No amounts shall be due under this Section 1.6(a) by
reason of Purchaser's receipt of payments in connection with (i) the issuance of
equity securities by Purchaser to Partners, provided that payments shall be due
to Seller pursuant to this Section 1.6(a) with respect to any amount received in
consideration for
4.
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equity securities that exceeds one hundred twenty five percent (125%) of the
fair market value on the date of the transaction so long as such amount is not
paid as funding for such research and development efforts, to reimburse patent
costs or to purchase equipment or materials for development or commercialization
of products; (ii) as funding for research or development work performed by
Purchaser on Purchaser's customary terms (such as FTE rate-based support); (iii)
loans to Purchaser (except to the extent that any loan is forgiven, unless the
forgiven amount is less than or equal to the aggregate of Purchaser's costs of
conducting research and development activities, patent costs, or equipment costs
incurred in connection with work conducted by Purchaser on behalf of the Person
making such loan, less any amounts directly paid or reimbursed by such Person to
Purchaser for such costs; (iv) reimbursement for patent costs; (v) reimbursement
for the purchase of equipment); (vi) pre-paid royalties; or (vii) upfront
license or signing fees, to the extent such fees are paid to reimburse or
compensate Purchaser for Purchaser's investment in development of products for
such Person (e.g., for formulation work or pre-clinical or clinical studies of
products conducted by or on behalf of Purchaser).
(i) Subject to Section 1.6(b), if Purchaser or a Partner
commences Phase III Clinical Trials of a Product, and Seller has not already
received $********* of payments with respect to such Product pursuant to Section
1.6(a), then Purchaser shall pay Seller an amount (by wire transfer) sufficient
to cause Seller to have received an aggregate of $********* with respect to such
Product pursuant to all clauses of this Section 1.6 according to one of the
following payment schedules. Purchaser shall make such payment within thirty
(30) days after the dosing of the first patient in a Phase III Clinical Trial
for a Product.
(b) In no event shall (i) Purchaser be obligated to pay Seller more
than $********* pursuant to this Section 1.6 with respect to any one Product, or
(ii) the aggregate payments from Purchaser to Seller pursuant to this Section
1.6 exceed $**********.
1.7 ROYALTY PAYMENTS. In addition to payments made by Purchaser under
Sections 1.5 and 1.6, Purchaser shall pay Seller (i) a portion of the Net
Royalties as set forth in Section 1.7(a) and (ii) a royalty on Net Sales by
Purchaser or its Affiliates as set forth in Section 1.7(b), as the case may be,
from the sale of the ***** **** *** ******* commercially launched on a
nationwide basis in a Major Country, but in each case subject to the buy-out
options set forth in Section 1.7(c). For purposes of this Agreement, if
Purchaser elects to receive income or revenue on the manufacture of Products for
a Partner in lieu of, or in addition to, royalties and such income constitutes
"Special Manufacturing Income," such Special Manufacturing Income shall be
included within Net Royalties for purposes of this Section 1.7. Purchaser shall
not owe Seller any amounts under this Section 1.7 as a result of the manufacture
of any particular Product prior to the first commercial sale of such Product.
(a) Purchaser shall pay Seller (by wire transfer), as and when
received by Purchaser or it Affiliates from a Partner, an amount equal to (i)
*** ******* ***** of the Net Royalties from the sale of each Product, with
respect to royalties up to and not exceeding the first *** ******* **** of the
Net Sales of such Product, and (ii) ****** ******* ***** of the Net Royalties
from the sale of each Product, with respect to such royalties in excess of ***
******* **** and less than or equal to ****** ******* ***** of the Net Sales of
such Product. Seller shall not participate in incremental royalties received by
Purchaser above ****** ****** ***** of the Net Sales of such Product. The
average royalty rate realized by Purchaser for this purpose
5.
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shall be determined on a blended, worldwide basis for each Product and shall be
determined on a calendar year basis. By way of example, if Purchaser receives
Net Royalties of $******** from worldwide Product Net Sales of $********** in a
calendar year, Purchaser's average royalty rate would be ***** ******* ***, and
Purchaser would owe Seller **** *** *** **** ******* ******* of the royalties
received by Purchaser with respect to such sales in such calendar year, or *****
** ** ** ************ * **** ** ** ** *************, or $*******.
(b) Purchaser shall pay Seller a royalty equal to *** *** *********
******* ****** of Net Sales of Products sold directly by Purchaser or its
Affiliates (but not by Partners). Purchaser shall make royalty payments to
Seller (by wire transfer) within thirty (30) days after the end of each calendar
quarter in which Net Sales occurred.
(c) Within thirty (30) days following the first acceptance of the
first NDA for a Product by the FDA in a Major Country, Purchaser may make a
payment of $********* to Seller, which shall terminate any further payment
obligation by Purchaser to Seller under Sections 1.7(a) and 1.7(b) with respect
to such Product. If under Purchaser's financial accounting procedures then in
effect, Purchaser would not be able to amortize such payment over the
anticipated life of the Product, Purchaser may instead make such payment by
means of four (4) equal quarterly installments with the first payment due within
thirty (30) days following the acceptance of the NDA in such country.
(d) In no event shall Purchaser be obligated to make payments to
Seller under this Section 1.7 with respect to more than ****** Products, except
as provided in Section 1.7(f).
(e) Purchaser shall deliver or cause to be delivered to Seller, a
report summarizing the Net Sales of Products on a country-by-country basis and
such other relevant information reasonably requested by Seller within sixty (60)
days following the end of each calendar quarter for which royalties are due or
paid pursuant to this Section 1.7.
(f) Notwithstanding the foregoing provisions of this Section 1.7, the
following modifications to Purchaser's obligations hereunder will apply in the
event the a Product is not covered by a Valid Claim: If a Product is not covered
by a Valid Claim in the country in which it is sold, then the royalty rate
provided in Section 1.7(b) with respect to sales of such Product in such country
shall be reduced to *********** ** *** ******* ******. If a Product is not
covered by a Valid Claim anywhere in the world at the time Inhale exercises its
rights with respect to such Product pursuant to Section 1.7(c), then the amount
due to Seller pursuant to Section 1.7(c) with respect to such Product shall be
reduced to $*** *******; provided, however, that for each Product for which
Purchaser makes a payment pursuant to Section 1.7(c) equal to $*** *******
rather than $* *******, then the number of Products upon which payments shall be
due to Seller pursuant to this Section 1.7 shall be increased by *** ***
******** *******. In no event shall Purchaser owe Seller any amounts pursuant to
this Section 1.7 with respect to more than **** *** *****, or amounts in excess
of $******* to buy out entirely Purchaser's royalty sharing obligations to
Seller pursuant to Section 1.7(c) above, provided that such $** ****** *** shall
be reduced proportionately in the event Inhale exercises a buy-out right for one
or more Products not covered by a Valid Claim. For example, if Inhale has
exercised its rights to buy out its royalty obligations under Section 1.7(c) for
**** ******** covered by a Valid Claim for a total of $** ******, and Inhale
elects to pay royalties on a *****
6.
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****** that is not covered by a Valid Claim pursuant to Section 1.7(b) (which
would otherwise have required a $*** ******, rather than a $* *******, buy-out
payment), then the $** ******* cap shall be reduced by $*** ******* and Inhale
would be entitled to exercise its right under Section 1.7(b) for a fifth Product
for $*** ******, whether or not such Product is covered by a Valid Claim (i.e.,
if such Product were covered by a Valid Claim, then Inhale would have the right
to buy out its royalty obligation therefor for $* ******, but the new $****
******* ceiling would apply to require a payment of only $*** ******* for such
Product, and if such Product were not covered by a Valid Claim, Inhale would
have the right to buy out its royalty obligation therefor for $*** *******, and
in either case Inhale would have no further obligations under Section 1.7(c).
1.8 CONTINGENT PAYMENT IN THE EVENT OF THE SALE OF PURCHASED PROPRIETARY
ASSETS. If within *** *** **** after the Closing Date, Purchaser executes an
agreement to assign, sell or otherwise transfer any of the patent rights
included within the Purchased Proprietary Assets to any third party other
than an Affiliate of Purchaser in any transaction which is not an Excluded
Transaction for purposes of this Section 1.8, Purchaser shall pay to Seller
*** *** *** of all proceeds realized by Purchaser from such assignment, sale
or transfer of such patent rights in excess of $**********. ***** *******
***** of any amounts paid to Seller under this Section 1.8 shall be credited
against the remaining obligations under Sections 1.5, 1.6 and 1.7, with such
credit to be applied dollar-for-dollar against the first payments becoming
due under such Sections. For purposes of this Section 1.8, an "Excluded
Transaction" shall be, and no payment shall be due to Seller in respect of,
(a) any sale of patent rights by Purchaser in conjunction with the sale of
all or substantially all of the outstanding capital stock of, or the assets
of Purchaser, (b) a transaction in which Purchaser licenses or grants rights
in the Purchased Proprietary Assets but retains significant rights to
practice the patent rights included within the Purchased Proprietary Assets
and to participate actively in the development of Products to be manufactured
by means of the processes described within the Assigned Patent Rights, as
contemplated under Section 1.7, or (c) a sale of Purchased Proprietary Assets
by Purchaser in conjunction with the sale of other technology rights owned by
Purchaser, where the value of the Purchased Proprietary Assets is less than
******* **** ******* ***** of the total value of the package of rights sold
by Purchaser in such transaction. Any dispute regarding the relative value of
the technology sold in a transaction described in Section 1.8(c) shall be
submitted for resolution as provided in Section 12.10.
1.9 PRODUCT DEVELOPMENT RIGHTS AGREEMENT. At the Closing, Purchaser and
Seller shall enter into the Product Development Rights Agreement in
substantially the form attached hereto as Exhibit F.
1.10 LICENSE AGREEMENTS. At the Closing, Purchaser and Seller shall enter
into the License Agreements in substantially the form attached hereto as
Exhibits B and C.
1.11 ESCROW AGREEMENT. Promptly after the Effective Date, Purchaser and
Seller and Escrow Agent shall enter into the data, files and records Escrow
Agreement in substantially the form attached hereto as Exhibit G.
1.12 SECURITY AGREEMENT. At the Closing, Purchaser shall enter into the
Security Agreement for the benefit of Seller in substantially the form attached
hereto as Exhibit H.
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1.13 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Cooley Godward LLP,
3000 El Camino Real, Palo Alto, California on the date set forth in Section 12.1
(or at such other place as Purchaser and Seller shall designate), at 9:00 a.m.
(California time). For purposes of this Agreement, "Closing Date" shall mean the
time and date as of which the Closing actually takes place. Purchaser shall
receive such other documents as Purchaser may reasonably request for the purpose
of evidencing or effecting the transactions contemplated by this Agreement, each
of which shall be in full force and effect.
1.14 NOTICE TO ALLIANCE; REQUEST BY ALLIANCE. Purchaser shall notify Seller
if Purchaser enters into an agreement with a Partner that will trigger payment
obligations pursuant to Section 1.6 or 1.7. Up to two (2) times per year, for
planning purposes, Seller may request that Purchaser provide a good faith
estimate of amounts that may accrue to Seller pursuant to Sections 1.6 or 1.7
during the following calendar year. Purchaser shall provide a general estimate
of total amounts that Purchaser may reasonably believe will become due to Seller
pursuant to Sections 1.6 and 1.7, subject to any confidentiality obligations
that may restrict Purchaser's ability to disclose such information to Seller.
Inhale shall not be required to disclose detailed information regarding payments
that may accrue pursuant to Sections 1.6 or 1.7, and any good faith estimate
provided hereunder shall not be deemed to be a commitment to make any such
payments to Seller unless required under Sections 1.6 or 1.7.
1.15 At the Closing Seller shall issue to Purchaser in consideration for
the license granted to Seller pursuant to the License Agreement attached hereto
as Exhibit C, shares of the Seller's unregistered common stock equal to the
quotient of $5,000,000 divided by the average closing price for Seller's common
stock as quoted on the Nasdaq National Market for the fifteen (15) trading days
preceding the Closing. The purchase and sale of Seller's common stock shall be
accomplished through a Common Stock Purchase Agreement to be entered between
Purchaser and Seller on or before the Closing having terms substantially the
same as the terms of the Common Stock Purchase Agreement to be entered into
between Purchaser and Seller pursuant to Section 1.5(a)(iii).
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants as follows:
2.1 DUE ORGANIZATION.
(a) Seller is a corporation duly organized under the laws of the State
of New York, and has all necessary power and authority:
(i) to conduct its business in the manner in which it is
currently being conducted; and
(ii) to own and use its assets in the manner in which its assets
are currently owned and used.
(b) Seller has never approved, or commenced any proceeding or made any
election contemplating, the winding up or cessation of Seller's business or
affairs.
8.
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2.2 TITLE TO PURCHASED ASSETS. Except as set forth in Part 2.2 of the
Disclosure Schedule, all of the Purchased Assets are owned by Seller free and
clear of any Encumbrances, and Seller has good, valid and freely transferable
title to all equipment, supplies and materials included in the Purchased Assets
and is the sole owner of all Purchased Proprietary Assets.
2.3 PROPRIETARY ASSETS.
(a) Part 1.1(a) of the Disclosure Schedule identifies and provides a
brief description of all of the Purchased Proprietary Assets. Except as set
forth in Part 2.3 of the Disclosure Schedule, to Seller's Knowledge, Seller has
the right to grant to Purchaser rights to all Licensed Patent Rights and
Licensed Know-How that Seller purports to grant pursuant to the License
Agreement attached hereto as Exhibit B, free and clear of any Encumbrances. To
the Knowledge of Seller, there are no defects in the filing or prosecution of
the Assigned Patent Rights that could reasonably be expected to cause either the
invalidity of any patent that may issue from the Assigned Patent Rights or cause
a patent not to issue from the Assigned Patent Rights. Except as set forth in
Part 2.3 of the Disclosure Schedule, Seller is not obligated to make any payment
to any Person for the use or other exploitation of any of the Purchased
Proprietary Assets, Know-How, Licensed Patent Rights or Licensed Know-How.
(b) Seller has taken commercially reasonable measures and precautions,
consistent with its customary practices, appropriate to protect and maintain the
confidentiality and secrecy of all Purchased Proprietary Assets, Know-How,
Licensed Patent Rights and Licensed Know-How (except to the extent that public
disclosure was necessary as part of the process of filing patent applications
for Purchased Proprietary Assets and Licensed Patent Rights whose value would be
unimpaired by public disclosure).
(c) Except as set forth in Part 2.3 of the Disclosure Schedule, all
issued patents and trademarks that are registered with any Governmental Body and
held by Seller and included within the Purchased Proprietary Assets or Licensed
Patent Rights are subsisting and to the Knowledge of Seller are valid. To the
Knowledge of Seller (without performing any special inquiry and recognizing that
Seller's primary area of expertise is outside the Inhale Field), except as
provided in Section 2.3 of the Disclosure Schedule, the use of the Purchased
Proprietary Assets or Licensed Patent Rights within the Inhale Field does not
infringe or constitute a misappropriation of any Proprietary Asset owned or used
by any other Person. Seller has not received any written notice or other
communication from any Person of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by such Person. To the Knowledge of Seller, no other Person is
infringing, misappropriating or making any unlawful use of any Purchased
Proprietary Asset, Know-How, Licensed Patent Rights or Licensed Know-How, and to
the Knowledge of Seller no Proprietary Asset owned or used by any other Person
infringes or constitutes a misappropriation of any Purchased Proprietary Asset,
Know-How, Licensed Patent Rights or Licensed Know-How.
(d) The Purchased Proprietary Assets, Know-How, Licensed Patent
Rights and Licensed Know-How constitute all the Proprietary Assets of Seller
that are necessary to enable Seller to utilize the PulmoSpheres-Registered
Trademark- Technology in the manner in which the PulmoSpheres-Registered
Trademark- Technology is being utilized by Seller in the Inhale Field. Except
as set forth in Part 2.3 of the Disclosure Schedules, Seller has not licensed
any of Purchased Proprietary Assets,
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Know-How, Licensed Patent Rights, or Licensed Know-How to any Person and has
not granted any right to any Third Party in or to the Purchased Proprietary
Assets, Know-How, Licensed Patent Rights or Licensed Know-How which would
conflict with the rights transferred to Purchaser pursuant to this Agreement
or the License Agreement. Seller has not entered into any covenant not to
compete or Contract restricting its right to use or practice any of the
Purchased Proprietary Assets, Know-How, Licensed Patent Rights or Licensed
Know-How or to transact business regarding the Purchased Proprietary Assets,
Know- How, Licensed Patent Rights or Licensed Know-How in any market or
geographical area or with any Person. Seller has, and the Purchaser will
acquire at the Closing, the exclusive right to use the trademarks
PulmoSpheres-Registered Trademark- and Homodispersion-TM- subject to the
nonexclusive license granted to Seller to use such marks for Designated
Products provided in the License Agreement attached as Exhibit C.
2.4 PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding, and to the Knowledge of Seller, no
Person has threatened by written notice or other communication to commence any
Proceeding:
(i) that involves Seller or that otherwise relates to or might
adversely affect the Purchased Assets, the Transactional Agreements or the
ability of Seller to perform the Transactions; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
To the Knowledge of Seller, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that might give rise to or serve as a
basis for the commencement of any such Proceeding.
(b) There is no Order to which Seller, or any of the Purchased Assets,
Licensed Patent Rights or Licensed Know-How is subject.
2.5 AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a) Seller has the right, power and authority to enter into and to
perform its obligations under this Agreement.
(b) The execution, delivery and performance by Seller of this
Agreement have been duly authorized by all necessary action on the part of
Seller and its Board of Directors and stockholders.
(c) This Agreement constitutes the legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.6 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.6 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the
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consummation or performance of any of the Transactions, will (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Seller's articles or bylaws, or (ii) any resolution adopted by
Seller's Board of Directors (or any committee thereof) or stockholders;
(b) to the Knowledge of Seller contravene, conflict with or result in
a violation of, or give any Governmental Body or other Person the right to
challenge any of the Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which Seller, or any of the assets
owned or used by Seller, is subject; or
(c) result in the imposition or creation of any Encumbrance upon or
with respect to the Purchased Assets, Licensed Patent Rights or Licensed
Know-How.
Except as set forth in Part 2.6 of the Disclosure Schedule, Seller was not, is
not or will not be required to make any filing with or give any notice to, or to
obtain any Consent from, any Person in connection with the execution and
delivery of any of the Transactional Agreements or the consummation or
performance of any of the Transactions.
2.7 BROKERS. Seller has not agreed or become obligated to pay, or has taken
any action that might result in any Person claiming to be entitled to receive,
any brokerage commission, finder's fee or similar commission or fee in
connection with any of the Transactions. Purchaser has agreed to and will pay
the fees owed by Seller to Lehman Brothers for services rendered pertaining to
the Transactions through August 13, 1999.
2.8 SOLVENCY. Seller is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (a) Seller will be able to pay its
debts as they become due, (b) Seller will not have unreasonably small assets
with which to conduct its present or proposed business and (c) taking into
account all contingent pending and threatened litigation, final judgments
against Seller in actions for money damages are not reasonably anticipated to be
rendered at a time when, or in amounts such that, Seller will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum probable amount of such judgments in any such actions might
be rendered) as well as all other obligations of Seller. The cash available to
the Seller, taking into account all other anticipated uses of the cash, will be
sufficient to pay all such judgments promptly in accordance with their terms. As
used in this Section, (i) "insolvent" means that the sum of the present fair
saleable value of Seller's assets does not and will not exceed its debts and
other probable liabilities, and (ii) "debts" includes any legal liability,
whether matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent, disputed or undisputed or secured or unsecured.
2.9 FULL DISCLOSURE.
(a) No representation or warranty of Seller in this Agreement and no
information in the Disclosure Schedule with respect to Seller or the Purchased
Assets, Licensed Patent Rights or Licensed Know-How fails to state any material
fact necessary in order to make
11.
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the representations, warranties and information of or with respect to Seller or
the Purchased Assets, Know-How, Licensed Patent Rights or Licensed Know-How
contained and to be contained herein and therein (in the light of circumstances
under which such representations, warranties and information were or will be
made or provided) not false or misleading.
(b) Except as provided in Part 2.9(b) of the Disclosure Schedule,
Seller has provided Purchaser and Purchaser's Representatives with full and
complete access to all of Seller's material records, documents and data with
respect to the Purchased Assets, but excluding any Know-How documents to be
retained by Seller pursuant to Section 1.3 and any documents being deposited
into escrow pursuant to the Escrow Agreement, including, without limitation, all
records, documents or other data requested in writing by Purchaser as part its
of its pre-acquisition review and diligence.
2.10 NO DEBARMENT. Seller hereby certifies that (i) it has not been
debarred, (ii) has not been convicted of a crime which could lead to
debarment and (iii) to its Knowledge, it has not utilized the services of any
individual or entity in the performance of services in connection with the
PulmoSpheres-Registered Trademark- Technology that has been debarred or that
has been convicted of a crime which could lead to debarment under the Generic
Drug Enforcement Act of 1992, 21 United States Code Section 306(a) and (b),
as amended.
2.11 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS SECTION 2, NOTHING IN THE AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION
MADE, OR WARRANTY GIVEN, BY SELLER THAT ANY PATENT WILL ISSUE BASED UPON ANY
PENDING PATENT APPLICATION WITHIN THE ASSIGNED PATENT RIGHTS, THAT ANY PATENT
WITHIN THE ASSIGNED PATENT RIGHTS WHICH ISSUES WILL BE VALID, OR THAT THE USE OF
ANY LICENSE GRANTED UNDER THE LICENSED PATENT RIGHTS OR THE USE OF ANY LICENSED
PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR OTHER PROPRIETARY RIGHTS OF ANY
OTHER PERSON. FURTHERMORE, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
SECTION 2, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PURCHASED ASSETS OR THE LICENSED PATENT RIGHTS, INCLUDING
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as follows:
(a) DUE ORGANIZATION. Purchaser is a corporation duly organized under
the laws of the State of Delaware, and has all necessary power and authority:
(i) to conduct its business in the manner in which it is
currently being conducted; and
(ii) to own and use its assets in the manner in which its assets
are currently owned and used.
12.
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(b) Purchaser has never approved, or commenced any proceeding or made
any election contemplating, the winding up or cessation of Purchaser's business
or affairs.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) Purchaser has the corporate right, power and authority to enter
into and perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary action on the part of
Purchaser and its Board of Directors.
(c) This Agreement constitutes the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtor, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.3 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of any
of the Transactional Agreements, nor the consummation or performance of any of
the Transactions, will (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Purchaser's Articles of Incorporation or bylaws or (ii) any
resolution adopted by Purchaser's Board of Directors (or any committee thereof)
or stockholders; or
(b) to the Knowledge of Purchaser, contravene, conflict with or result
in a violation of, or give any Governmental Body or other Person the right to
challenge any of the Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which Purchaser or any of the
assets owned or used by Purchaser is subject.
Except as contemplated by Section 8.3, Purchaser was not, is not and will not be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with the execution and delivery of any of the
Transactional Agreements or the consummation or performance of any of the
Transactions.
3.4 PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding, and to the Knowledge of Purchaser,
Purchaser has not received written notice or other communication threatening to
commence any Proceeding:
(i) that involves Purchaser or that otherwise relates to or might
affect the Transactional Agreements or the ability of Purchaser to perform the
Transactions; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
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To the Knowledge of Purchaser, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that might directly or indirectly give
rise to or serve as a basis for the commencement of any such Proceeding.
(b) There is no Order to which Purchaser, or any of the assets owned
or used by Seller, is subject.
3.5 BROKERS. Purchaser has not agreed or become obligated to pay, or taken
any action that might result in any Person claiming to be entitled to receive,
any brokerage commission, finder's fee or similar commission or fee in
connection with any of the Transactions. Purchaser has agreed to and will pay
the fees owed by Seller to Lehman Brothers for services rendered through August
13, 1999 pertaining to the Transaction.
3.6 SOLVENCY. Purchaser is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (a) Purchaser will be able to pay
its debts as they become due, (b) Purchaser will not have unreasonably small
assets with which to conduct its present or proposed business and (c) taking
into account all contingent pending and threatened litigation, final judgments
against Purchaser in actions for money damages are not reasonably anticipated to
be rendered at a time when, or in amounts such that, Purchaser will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum probable amount of such judgments in any such actions might
be rendered) as well as all other obligations of Purchaser. The cash available
to the Purchaser, taking into account all other anticipated uses of the cash,
will be sufficient to pay all such judgments promptly in accordance with their
terms. As used in this Section, (i) "insolvent" means that the sum of the
present fair saleable value of Purchaser's assets does not and will not exceed
its debts and other probable liabilities, and (ii) "debts" includes any legal
liability, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent, disputed or undisputed or secured or unsecured.
4. ADDITIONAL COVENANTS OF THE PARTIES
4.1 FURTHER ASSURANCES. After Closing, Seller and Purchaser each agree to
execute and/or file with the appropriate Governmental Body such additional
documents as are determined by Purchaser or Seller to be reasonably necessary or
desirable to carry out the purposes of this Agreement.
4.2 SOLICITATION OF EMPLOYEES.
(a) Seller agrees not to solicit or induce, or attempt to solicit or
induce, directly or indirectly, any person listed on Exhibit E who accepts
employment with Purchaser, to terminate his or her employment or relationship
with Purchaser. Seller further agrees not to engage such persons as a consultant
to Seller, without the consent of Purchaser, except as expressly set forth
herein.
(b) Until the second anniversary of the Closing, Purchaser agrees not
to solicit or induce, or attempt to solicit or induce, directly or indirectly,
any employee or consultant of Seller, to terminate his or her employment or
relationship with Seller, except as provided in
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Section 1.2. Purchaser further agrees not to engage such persons as a consultant
to Purchaser, without the consent of Seller until the second anniversary of the
Closing, except as expressly set forth herein.
5. PRE-CLOSING COVENANTS OF SELLER.
5.1 ACCESS AND INVESTIGATION. Seller shall ensure that, at all times
during the Pre-Closing Period: Seller and its Representatives provide
Purchaser and its Representatives with reasonable access to Seller's
Representatives, personnel and assets and to all existing books, records,
work papers and other documents and information relating to the use of
PulmoSpheres-Registered Trademark- Technology in the Inhale Field, the
Purchased Assets, the Licensed Patent Rights, or the Transactions.
5.2 OPERATION OF BUSINESS. Seller shall ensure that, during the Pre-Closing
Period:
(a) Seller promptly repairs, restores or replaces any Equipment that
is destroyed or damaged;
(b) Seller uses reasonable efforts to preserve intact its business
relating to the Purchased Assets, the Licensed Patents and the Licensed
Know-how;
(c) Seller does not commence or settle any Proceeding relating to the
Purchased Assets, the Licensed Patent Rights, the Licensed Know-How or the
Transactions;
(d) Purchaser has reasonable access to the officers of Seller and the
Employees in order to confer with Purchaser concerning operational matters to
the extent related to the Purchased Assets, the Licensed Patent Rights, the
Licensed Know-How or the Transactions;
(e) Seller does not enter into any transaction or take any other
action outside the Ordinary Course of Business with respect to the Purchased
Assets, the Licensed Patent Rights, the Licensed Know-How or the Transactions;
(f) Seller does not enter into any transaction or take any other
action that might cause or constitute a Breach of any representation or warranty
made by Seller in this Agreement; and
(g) Seller does not enter into or permit any of the Purchased Assets,
Licensed Patent Rights or Licensed Know-How to become bound by any Contract
(except as expressly provided for in Section 1).
(h) Seller does not agree, comment or offer (in writing or otherwise)
to take any of the actions described in (e) through (g) of this Section 5.2.
5.3 FILINGS AND CONSENTS. Seller shall ensure that: (a) all filings,
notices and Consents required to be made, given and obtained in order to
consummate the Transactions are made, given and obtained on a timely basis; and
(b) during the Pre-Closing Period, Seller and its Representatives cooperate with
Purchaser and with Purchaser's Representatives, and prepare and
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make available such documents and take such other actions as Purchaser may
request in good faith, in connection with any filing, notice or Consent that
Purchaser is required or elects to make, give or obtain.
5.4 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE. During the Pre-Closing
Period, Seller shall promptly notify Purchaser in writing of: (a) the discovery
by Seller of any event, condition, fact or circumstance that occurred or existed
on or prior to the date of this Agreement and that caused or constitutes a
Breach of any representation or warranty made by Seller in this Agreement; (b)
any event, condition, fact or circumstance that occurs, arises or exists after
the date of this Agreement and that would cause or constitute a Breach of any
representation or warranty made by Seller in this Agreement if (i) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (ii)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (c) any Breach of any covenant or
obligation of Seller; and (d) any event, condition, fact or circumstance that
may make the timely satisfaction of any of the conditions set forth in Section 7
impossible or unlikely. If any event, condition, fact or circumstance that is
required to be disclosed pursuant to this Section 5.4 requires any change in the
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Disclosure Schedule were dated as of the date
of the occurrence, existence or discovery of such event, condition, fact or
circumstance, then Seller shall promptly deliver to Purchaser an update to the
Disclosure Schedule specifying such change. No such update shall be deemed to
supplement or amend the Disclosure Schedule for the purpose of determining
whether any of the conditions set forth in Section 7 has been satisfied.
5.5 NO NEGOTIATION. Seller shall ensure that, during the Pre-Closing
Period, neither Seller, nor any Representative of Seller, directly or
indirectly: (a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Purchaser) relating to a
transaction to sell or transfer the PulmoSpheres-Registered Trademark-
Technology in the Inhale Field; (b) participates in any discussions or
negotiations with, or provides any non-public information to, any Person
(other than Purchaser) relating to a transaction to sell or transfer the
PulmoSpheres-Registered Trademark- Technology in the Inhale Field; or (c)
actively pursue any unsolicited inquiry, proposal or offer from any Person
(other than Purchaser) relating to a transaction to sell or transfer the
PulmoSpheres-Registered Trademark- Technology in the Inhale Field.
5.6 BEST EFFORTS. During the Pre-Closing Period, Seller shall use its Best
Efforts to cause the conditions set forth in Section 7 to be satisfied on a
timely basis.
5.7 CONFIDENTIALITY. Seller shall ensure that, during the Pre-Closing
Period: (a) neither Seller, nor any Representative of Seller, issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature to any other Person regarding any of the Transactions
or the existence or terms of this Agreement, except to the extent that Seller is
required by law to make any such disclosure; and (b) if Seller is required by
law to make any such disclosure, Seller advises Purchaser, at least two (2)
business days before making such disclosure, of the nature and content of the
intended disclosure.
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6. PRE-CLOSING COVENANTS OF PURCHASER.
6.1 BEST EFFORTS. During the Pre-Closing Period, Purchaser shall use its
Best Efforts to cause the conditions set forth in Section 8 to be satisfied.
6.2 EMPLOYMENT OFFERS. At Purchaser's sole discretion, Purchaser may extend
offers of employment to the individuals listed on Exhibit D, such employment to
become effective as of the Closing.
6.3 FILINGS AND CONSENTS. Purchaser shall ensure that: (a) all filings,
notices and Consents required to be made, given and obtained in order to
consummate the Transactions are made, given and obtained on a timely basis; and
(b) during the Pre-Closing Period, Purchaser and its Representatives cooperate
with Seller and with Seller's Representatives, and prepare and make available
such documents and take such other actions as Seller may request in good faith,
in connection with any filing, notice or Consent that Seller is required or
elects to make, give or obtain.
6.4 CONFIDENTIALITY. Purchaser shall ensure that, during the Pre-Closing
Period: (a) neither Purchaser, nor any Representative of Purchaser, issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature to any other Person regarding any of the Transactions
or the existence or terms of this Agreement, except to the extent that Purchaser
is required by law to make any such disclosure; and (b) if Purchaser is required
by law to make any such disclosure, Purchaser advises Seller, at least two (2)
business days before making such disclosure, of the nature and content of the
intended disclosure.
7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE.
The Purchaser's obligation to purchase the Purchased Assets and to take the
other actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Purchaser, in whole or in part, in writing);
7.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties
made by Seller in this Agreement (considered collectively), and each of said
representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement, and shall be
accurate in all material respects to the extent relating to Purchaser's ability
to exploit the Purchased Assets in the Inhale Field in a commercially reasonably
manner as of the Closing Date, without giving effect to any update to the
Disclosure Schedule.
7.2 PERFORMANCE OF OBLIGATIONS.
(a) The License Agreements and Escrow Agreement, described in Sections
1.10 and 1.11, respectively, shall have been executed by Seller and delivered to
Purchaser.
(b) All of the covenants and obligations that Seller is required to
comply with or to perform at or prior to the Closing (considered collectively),
and each of said covenants and
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obligations (considered individually), shall have been duly complied with
and performed in all material respects.
7.3 CONSENTS. Each of the Consents identified in Part 7.3 of the Disclosure
Schedule, including without limitation the termination of the Hart-Scott-Rodino
waiting period, shall have been obtained and shall be in full force and effect.
7.4 OPINION LETTER. Purchaser shall have received an opinion letter from
counsel to Seller, dated the Closing Date, as described in Exhibit I.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there shall not have
been commenced against Purchaser, or against any Person affiliated with
Purchaser, any Proceeding (a) involving any material challenge to, or seeking
material damages or other material relief in connection with, any of the
Transactions, or (b) that may have the effect of preventing or making illegal or
otherwise materially interfering with any of the Transactions.
7.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the assets, liabilities, or business of Seller relating to the
Purchased Assets (including without limitation the practice of the Purchased
Proprietary Assets) that may interfere materially with Purchaser's ability to
exploit the Purchased Assets in the Inhale Field in a commercially reasonable
manner, and no event shall have occurred and no condition or circumstance shall
exist that would be expected to give rise to any such material adverse change.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligation to sell the Purchased Assets and to take the other
actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller's Representative, in whole or in part, in
writing):
8.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties
made by Purchaser in this Agreement (considered collectively), and each of said
representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement.
8.2 PURCHASER'S PERFORMANCE.
(a) Purchaser shall have executed and delivered the Security
Agreement.
(b) The Product Development Rights Agreement described in Section 1.9
shall have been executed by Purchaser and delivered to Seller.
(c) The License Agreements described in Section 1.10 shall have been
executed by Purchaser and delivered to Seller.
(d) All of the other covenants and obligations that Purchaser is
required to comply with or to perform pursuant to this Agreement at or prior to
the Closing (considered
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collectively), and each of said covenants and obligations (considered
individually), shall have been complied with and performed in all material
respects.
8.3 CONSENTS. Each of the Consents identified in Part 8.3 of the Disclosure
Schedule, including without limitation the termination of the Hart-Scott-Rodino
waiting period, shall have been obtained and shall be in full force and effect.
8.4 OPINION LETTER. Seller shall have received an opinion letter from
counsel to Purchaser, dated the Closing Date, as described in Exhibit J.
8.5 NO PROCEEDINGS. Since the date of this Agreement, there shall not have
been commenced against Seller, or against any Person affiliated with Seller, any
Proceeding (a) involving any material challenge to, or seeking material damages
or other material relief in connection with, any of the Transactions, or (b)
that may have the effect of preventing or making illegal or otherwise materially
interfering with any of the Transactions.
9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS.
(a) The representations and warranties made by Seller in this
Agreement (including without limitation the representations and warranties set
forth in Section 2) shall survive the Closing and shall expire two (2) years
after the Closing Date (the "Expiration Date") and any Liability of Seller (for
indemnification or otherwise) with respect to such representations and
warranties shall thereupon cease; provided, however, that if, at any time prior
to the Expiration Date, any Indemnitee (acting in good faith) delivers to Seller
a written notice alleging the existence of an inaccuracy in or other Breach of
any of such representations and warranties and asserting a claim for recovery
under Section 9.2 based on such alleged inaccuracy or other Breach, then the
claim asserted in such notice shall survive the Expiration Date until such time
as such claim is fully and finally resolved.
(b) The representations and warranties made by Purchaser in this
Agreement (including without limitation the representations and warranties set
forth in Section 3) shall survive the Closing and shall expire two (2) years
after the Closing Date, and any Liability of Purchaser (for indemnification or
otherwise) with respect to such representations and warranties shall thereupon
cease; provided, however, that if, at any time prior to the Expiration Date, any
Seller Indemnitee (acting in good faith) delivers to Purchaser a written notice
alleging the existence of an inaccuracy in or other Breach of any of such
representations and warranties and asserting a claim for recovery under Section
9.4 based on such alleged inaccuracy or other Breach, then the claim asserted in
such notice shall survive the Expiration Date until such time as such claim is
fully and finally resolved.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
Seller in this Agreement.
9.2 INDEMNIFICATION BY SELLER. Subject to Sections 9.4 and 9.5, from and
after the Closing Date, Seller shall hold harmless and indemnify each of the
Purchaser Indemnitees from
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and against, and shall reimburse each of the Purchaser Indemnitees for, any
Damages which are suffered or incurred by any of the Purchaser Indemnitees or to
which any of the Purchaser Indemnitees may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third party claim) and
which arise from or as a result of:
(a) Any Breach of any representation or warranty made by Seller in
Section 2 of this Agreement;
(b) Breach of any representation, warranty, statement, information or
provision contained in the Disclosure Schedule or any supplement to the
Disclosure Schedule; or
(c) Seller's use of the Purchased Assets, Licensed Patent Rights,
Licensed Know-How and employment of the individuals set forth on Exhibit D prior
to the Closing Date.
(d) Seller's failure to deliver any necessary conveyance instrument or
any other certificate to be delivered by Seller in connection with this
Agreement.
9.3 INDEMNIFICATION BY PURCHASER. Subject to Sections 9.4 and 9.5,
Purchaser shall hold harmless and indemnify each of the Seller Indemnitees from
and against, and shall reimburse each of the Seller Indemnitees for, any Damages
which are suffered or incurred by any of the Seller Indemnitees or to which any
of the Seller Indemnitees may otherwise become subject at any time (regardless
of whether or not such Damages relate to any third party claim) and which arise
from or as a result of:
(a) any Breach of any representation or warranty made by Purchaser in
Section 3 of this Agreement;
(b) any failure by Purchaser to perform any covenants or commitments
in this Agreement; or
(c) the development, use, manufacture, promotion, sale or other
disposition of Products or the Purchased Assets by Purchaser, its Affiliates,
licensees or Partners after the Closing Date.
9.4 KNOWLEDGE OF BREACH. Neither Purchaser nor Seller may bring a claim for
indemnification pursuant to this Section 9 if such party (i) had actual
Knowledge of such Breach of a representation or warranty by the other party as
of the Effective Date or (ii) could have established actual Knowledge based upon
review of written documentation that the other party provided to such party
prior to the Effective Date, except that (ii) shall not apply with respect to
claims for indemnification brought within sixty (60) days after the Closing
Date.
9.5 INDEMNIFICATION PROCEDURES; DEFENSE OF THIRD PARTY CLAIMS. Promptly
after receipt by an Indemnitee under Section 9.2 or 9.3 of notice of any claim
or the commencement of any Proceeding against it, such Indemnitee will, if a
claim is to be made against an Indemnitee under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any Indemnitee (except to the extent that such failure
materially prejudices the defense of such claim or Proceeding). The Indemnitee
shall have the right at its
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election to conduct and control the defense of such claim or Proceeding. If the
Indemnitee so elects, it shall notify the indemnifying party of such election
and with respect to any such claim brought against an Indemnitee:
(a) The indemnifying party shall make available to the Indemnitee any
non-privileged documents and materials in its possession that may be necessary
or useful to the defense of such claim or Proceeding;
(b) The indemnifying party shall have the right to participate in the
defense of such claim or Proceeding at its own expense;
(c) The Indemnitee shall keep the indemnifying party informed of all
material developments and events relating to such claim or Proceeding and, if
requested by the indemnifying party, shall confer with the indemnifying party
regarding defense strategy; and
(d) The Indemnitee shall not settle, adjust or compromise such claim
or Proceeding in a manner that may reasonably give rise to any liability of the
indemnifying party (including by reasons of claims that may be asserted under
this Article 9) without the prior written consent of the indemnifying party (not
to be unreasonably withheld).
Indemnitee shall have the right, at its election, to designate the
indemnifying party to assume the defense of such claim or Proceeding. If an
Indemnitee elects to designate the indemnifying party to assume the defense of
any claim or Proceeding:
(w) Indemnitee shall make available to indemnifying party any
non-privileged documents and materials in possession of Indemnitee that may be
necessary to the defense of such claim or Proceeding;
(x) Indemnifying party shall keep Indemnitee informed of all material
developments and events relating to such claim or Proceeding;
(y) Indemnifying party shall have the right to participate in the
defense of such claim or Proceeding; and
(z) Indemnifying party shall not settle, adjust or compromise such
claim or Proceeding without prior written consent of Indemnitee not to be
unreasonably withheld.
9.6 EXCLUDED AGREEMENTS. This Article 9 shall not apply to any alleged
breach by Purchaser or Seller of the License Agreements, the Product Development
Rights Agreement, the Security Agreement, the Lease Agreement or the Escrow
Agreement. In the event of any such alleged breach, the non-breaching party
shall retain all available remedies under contract or other applicable law, but
excluding this Article 9.
9.7 CEILING ON DAMAGES. The total amount of the payments that Seller can be
required to make with respect to indemnification payments required to be made to
Purchaser pursuant to this Section 9 shall not exceed in the aggregate the total
amounts that Purchaser is obligated to pay to Seller hereunder. For clarity,
Seller shall not be obligated to make any cash payments to Purchaser pursuant to
this Section 9 until Seller has received from Purchaser
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pursuant to Section 1 of this Agreement an amount equal to that for which
Seller is obligated to indemnify Purchaser hereunder, provided that the
Purchaser or any of the Purchaser Indemnitees shall have the right to
withhold and deduct any sum that may be owed to any Indemnitee under this
Section 9 from any amount otherwise payable to the Seller hereunder. To the
extent that any such offsets are taken prior to final resolution of a claim
for indemnification, then Purchaser shall deposit, at its sole expense, such
offset amounts into an interest-bearing escrow account pending final
resolution of such claim for the benefit of the party that, in view of the
determination made in such final resolution, shall be entitled to the
principal so deposited. The withholding and deduction of any such sum shall
operate for all purposes as a complete discharge (to the extent of such sum)
of the obligation to pay the amount from which such sum was withheld and
deducted. If the amount for which Seller has indemnified or becomes obligated
to indemnify Purchaser or the Purchaser Indemnitees hereunder exceeds at any
time $** ******, then Seller's Call Rights provided in the Product
Development Rights Agreement shall terminate immediately.
9.8 EXCLUSIVITY OF INDEMNIFICATION REMEDIES. The indemnification and other
remedies provided in this Section 9 shall be exclusive; provided, however, that
each party reserves its rights to seek equitable relief that may be available to
it, including without limitation specific performance.
10. POST-CLOSING COVENANTS
10.1 TECHNOLOGY TRANSFER. Following the Closing, Seller and Purchaser
shall take all steps reasonable to effect the transfer of all Purchased
Assets relating to the PulmoSpheres-Registered Trademark- Technology to
Purchaser in such a manner as to enable Purchaser to practice the
PulmoSpheres-Registered Trademark- Technology with the same proficiency as
such technology is practiced by Seller as of the Closing Date. During the six
(6) months following the Closing Date, Purchaser may request that Seller
provide up to thirty (30) man days of effort by Seller's employees and
consultants in connection with such technology transfer. Seller shall provide
all such technology transfer assistance requested by Purchaser at Seller's
expense promptly after any such request by Purchaser. To the extent Purchaser
desires technical support by Seller beyond that provided for in this Section
10.1, such technical support shall be provided by Seller under Section 10.2.
Purchaser shall provide Seller reasonable advance notice for requests for
technical support made pursuant to this Section 10.1, to allow Seller to plan
such employees' work schedules to accommodate such request.
10.2 TECHNICAL SUPPORT FROM SELLER.
(a) In addition to the technical support by Seller provided in
Section 10.1, Seller shall make available to Purchaser its technical
personnel who are familiar with the PulmoSpheres-Registered Trademark-
Technology to provide technical support requested by Purchaser. Such
technical support shall not exceed, for any single employee or consultant of
Seller, more than (i) five (5) days per month during the first through the
sixth month following the Closing Date, (ii) four (4) days per month during
the seventh through the twelfth month following the Closing Date, (iii) three
(3) days per month during the thirteenth through the eighteenth month
following the Closing Date, and (iv) two (2) days per month during the
nineteenth through the twenty fourth month following the Closing Date. For
any such additional technology transfer assistance provided by Seller,
Purchaser shall pay Seller at the rate of $***** *** *** of effort, plus any
out-of-pocket costs reasonably incurred by Seller in providing such support.
Seller's obligations
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under this Section 10.2 shall expire twenty four (24) months following the
Closing Date. Purchaser shall provide Seller reasonable advance notice for
requests for technical support made pursuant to this Section 10.2, to allow
Seller to plan such employees' work schedules to accommodate such request.
(b) In the event Seller's employees or consultants make any inventions
which relate to the Inhale Field in the course of providing technical support to
Purchaser pursuant to this Section 10.2, whether patentable or not, such
inventions shall be the property of Purchaser and Seller hereby assigns to
Purchaser all of its right, title and interest in any to any such inventions.
Seller shall have in place agreements with each of its employees and consultants
who provide such technical support which provide for an assignment or license of
proprietary rights consistent with this Section 10.2(b). In the course of
providing such technical support, Seller shall not communicate to Purchaser any
Third Party technology which Purchaser does not have the right to use without
obligation.
10.3 TECHNICAL SUPPORT FROM PURCHASER.
(a) Purchaser shall continue to make available to Seller the employees
listed on Exhibit D who accept employment with Purchaser to provide technical
support requested by Seller outside of the Inhale Field. Such technical support
shall not exceed more than a total of eighteen (18) person days. Seller shall
pay Purchaser for such technical support at the rate of $***** *** *** **
******, plus any out-of-pocket costs reasonably incurred by Purchaser in
providing such support. Seller shall provide to Purchaser reasonable advance
notice for requests for technical support made pursuant to this Section 10.3(a),
to allow Purchaser to plan such employees' work schedules to accommodate such
request. Purchaser's obligations under this Section 10.3 shall expire twenty
four (24) months following the Closing Date.
(b) In the event Purchaser's employees or consultants make any
inventions in the course of providing technical support to Seller pursuant to
this Section 10.3, whether patentable or not, such inventions that are solely
applicable outside of the Inhale Field shall be the property of Seller and
Purchaser hereby assigns to Seller all of its right, title and interest in any
to any such inventions. Seller shall have in place agreements with each of its
employees and consultants who provide such technical support which provide for
an assignment of proprietary rights consistent with this Section 10.3(b). In the
course of providing such technical support, Purchaser shall not communicate to
Seller any Third Party technology which Seller does not have the right to use
without obligation.
10.4 SELLER'S AUDIT RIGHTS. Purchaser shall keep accurate books and
accounts of record in connection with its Product sales, receipt of Product
related milestones and manufacture, use and/or sale by or for it of the
applicable Products hereunder in sufficient detail to permit accurate
determination of all figures necessary for verification of its payment
obligations set forth in Sections 1.5, 1.6 and 1.7. Such records shall be
maintained for a period of five (5) years from the end of each year in which
sales occurred. Seller, at its expense, through a nationally recognized
certified public accountant reasonably acceptable to the Purchaser, shall have
the right to access such books and records for the sole purpose of verifying
payments to Seller; such access shall be conducted after reasonable prior notice
by the Seller to Purchaser during the Purchaser's ordinary business hours and
shall not be more frequent than
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once during each calendar year. Said accountant shall execute a confidentiality
agreement with the Purchaser in customary form and shall not disclose to Seller
or any other party any information except that which should properly be
contained in a royalty report required under this Agreement. If such accounting
determines that the Purchaser paid Seller less than the amount properly due in
respect of any quarter, then the Purchaser will reimburse Seller such amount
plus interest at one percent (1%) per month since the date such amount was due,
and if the amount underpaid exceeds five percent (5%) of the amount actually
due, the Purchaser will also reimburse Seller for the costs of such accounting
(including the fees and expenses of the certified public accountant). In the
event such accounting determines that the Purchaser paid Seller more than the
amount properly due in respect of any quarter, then any excess payments made by
Seller shall be credited against future amounts due to Seller from Purchaser, or
if no such future amounts are due to Seller, then Seller shall reimburse
Purchaser for any overpayment by Purchaser.
10.5 OPTION TO LEASE. Purchaser shall have an option exercisable within
thirty (30) days of the Closing Date to negotiate a sublease of a portion of
Seller's facility at 3030 and 3040 Science Park Road, San Diego, California.
Such sublease, including the amount and location of the subleased premises,
shall be subject to terms mutually acceptable to both parties and the prior
consent of the Landlord; provided, however, the rent and other costs to be paid
by Purchaser shall not exceed amounts to be paid by Seller for the subleased
premises. During the thirty (30) day option period Purchaser may use without
charge the facilities of Seller currently utilized by the Employees.
10.6 SUPPLY OF PERFLUBRON.
(a) Purchaser shall have an option, exercisable within thirty (30)
days following the Closing, to purchase from Seller up to five (5) metric tons,
in units of not less than five hundred (500) kilograms, of Perflubron on the
terms and at the price described in Section 10.6(b). In the event Purchaser
exercises the option but does not purchase all five (5) metric tons of
Perflubron in a single purchase, Purchaser may purchase any portion of the
remaining balance of the five (5) metric tons, in units of approximately five
hundred (500) kilograms, at any time prior to the expiration of the eighteen
(18) month period following the Closing. Prior to the first anniversary of the
Closing, Purchaser shall provide to Seller a good faith estimate of the amount
of Perflubron that Purchaser intends to purchase from Seller pursuant to this
Section 10.6 to assist Seller in forecasting its requirements for Perflubron,
which estimate shall not be binding upon Purchaser.
(b) Any Perflubron supplied hereunder shall be received by Purchaser
subject to inspection and testing to determine whether such Perflubron complies
with the specifications therefor to be provided by Seller to Purchaser, which
specifications shall be the same as those agreed upon between Seller and its
Third Party supplier (the "Specifications"). For any Perflubron supplied to
Purchaser pursuant to this Section 10.6, Seller shall test random samples of
such Perflubron according to Seller's typical practice upon receipt thereof from
Seller's Third Party supplier to confirm that such shipment complies with the
Specifications before shipping samples of such Perflubron to Purchaser. If
Purchaser tests such samples and confirms conformance thereof to the
Specifications, then Purchaser shall so notify Seller and Seller shall ship to
Purchaser the amount of Perflubron ordered by Purchaser within thirty (30) days
after
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Seller's receipt of Purchaser's confirmation of conformance. Purchaser shall
notify Seller in writing within sixty (60) days of Purchaser's receipt of a
shipment of Perflubron that such shipment fails to comply with the
Specifications, and shall provide samples of such shipment to Seller upon
request to allow Seller to confirm whether such shipment met the Specifications
therefor. Seller shall promptly test such samples and if Seller determines that
such shipment conformed to the Specifications, then the parties shall submit
samples of the relevant shipment of Perflubron to a mutually acceptable
independent Third Party laboratory for final determination of whether such
shipment conformed to Specifications. If Seller or such independent third party
laboratory confirms nonconformance of such shipment of Perflubron, Seller shall
either replace such shipment at no further cost to Purchaser or reimburse to
Purchaser any amounts paid by Purchaser therefor.
(c) The purchase price of the Perflubron supplied by Seller shall be
$*** *** ******** *** ******** *** ****** ***), payable within fifteen (15) days
of receipt of invoice. The Perflubron shall be shipped F.C.A. (INCOTERMS 1990)
place of shipping. Title and risk of loss and damages shall pass to Purchaser
upon release to Purchaser's designated carrier. If requested by Purchaser,
Seller will insure the shipments against damage to or loss of Perflubron
supplied hereunder and will subsequently bill Purchaser for such shipping
insurance. Any federal, state or local sales or use tax, or similar charges,
assessed or charged on the sale of Perflubron to Purchaser, shall be paid by
Purchaser. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 10.6, SELLER MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PERFLUBRON, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
(d) If requested by Purchaser within ninety (90) days following the
Closing, Seller shall undertake commercially reasonable efforts to cause
******** *****, or other supplier of Perflubron with which Seller has entered
into a supply agreement, to negotiate with Purchaser and to provide Purchaser up
to *** **** ***** of such supplier's then current capacity. Purchaser shall be
responsible for negotiating a separate supply agreement with such supplier. In
the event Purchaser requests a percentage of Seller's supply commitments,
Purchaser shall pay Seller within fifteen (15) days of receipt of invoice a
portion (based on the proportional share of the capacity requested by Purchaser)
of any amount paid after the Closing to ***** **** or other supplier of
Perflubron for such supplier's ongoing commitment to make Perflubron available
in the future. Purchaser shall not be obligated to continue to make any payments
to Seller pursuant to the immediately preceding sentence after any agreement
that Purchaser may enter into with *** *** for the supply of Perflubron
terminates or Purchaser no longer requires supply of Perflubron from **** ****
(e) Seller shall cooperate reasonably to assist Purchaser in obtaining
a right of access or reference to any Drug Master File maintained by any third
party manufacturer of Perflubron with which Seller has a contractual
relationship for the supply thereof in connection with Purchaser's development
of products in the Inhale Field.
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11. CONFIDENTIALITY.
11.1 CONFIDENTIAL INFORMATION. For a period of seven (7) years following
the Effective Date, each party shall maintain in confidence all Confidential
Information disclosed by the other party, and shall not use, disclose or grant
the use of the Confidential Information for any purpose other than those
permitted hereunder, except on a need-to-know basis to its Affiliates' and
actual or potential business or sublicensees, directors, officers, employees,
agents, consultants, clinical investigators, contractors, distributors or
permitted assignees, to the extent such disclosure is reasonably necessary in
connection with such party's activities in connection with its performance under
and exercise of rights expressly provided in this Agreement. To the extent that
disclosure is authorized by this Agreement, prior to disclosure, a party hereto
shall obtain agreement of any such person to hold in confidence and not make use
of the Confidential Information of the other party for any purpose other than
those permitted by this Agreement.
11.2 PERFLUBRON DATA. The Perflubron data provided to Purchaser pursuant to
Section 11.2 shall be Confidential Information of Seller, provided that
Purchaser may use such data in connection with its development and
commercialization of Products and may only provide such data to its actual or
potential licensees or sublicensees with which it may develop Products with
Seller's prior written consent, not to be unreasonably withheld. Purchaser may
grant to its licensees or sublicensees a right of reference to any of
Purchaser's regulatory filings containing Perflubron data provided to Purchaser
pursuant to Section 11.3.
11.3 PERMITTED DISCLOSURES. The confidentiality obligations contained in
this Section 11 shall not apply to the extent that the receiving party (the
"Recipient") is required (a) to disclose information by law, order or regulation
of a governmental agency or a court of competent jurisdiction, or (b) to
disclose information to any governmental agency for purposes of obtaining
approval to test or market a product, provided in either case that the Recipient
shall provide written notice thereof to the other party and sufficient
opportunity to object to any such disclosure or to request confidential
treatment thereof, and shall use reasonable efforts to secure confidential
treatment of or a protective order for the information so required to be
disclosed.
12. MISCELLANEOUS PROVISIONS
12.1 CLOSING DATE; HART-SCOTT-RODINO. The Closing Date shall be five (5)
days after the later to occur of (i) the expiration or termination of the
Hart-Scott-Rodino waiting period, or (ii) the satisfaction of each of the
closing conditions identified in Sections 7.2, 7.3 and 7.4 and Sections 8.2, 8.3
and 8.4 hereof, or the waiver by the party which is the beneficiary of any such
condition. Purchaser and Seller shall cooperate to satisfy the Hart-Scott-Rodino
notice requirements (including responses to any requests for additional
information) and waiting periods.
12.2 FURTHER ASSURANCES. Each party hereto shall execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the Transactions.
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12.3 PAYMENT OF ALL FEDERAL AND STATE TAXES DUE ON SALE OF PURCHASED ASSETS
BY SELLER. Seller shall pay in a timely manner all Taxes resulting from the sale
of the Purchased Assets pursuant to this Agreement.
12.4 FEES AND EXPENSES. Subject to Section 3.5, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the transactions contemplated by this
Agreement, including all fees, costs and expenses incurred by such party in
connection with or by virtue of:
(a) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule), the other Transactional Agreements and all
certificates, opinions and other instruments and documents delivered or to be
delivered in connection with the Transactions; and
(b) the consummation and performance of the Transactions.
12.5 NOTICES. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by fax) to the
address or fax number set forth beneath the name of such party below (or to such
other address or fax number as such party shall have specified in a written
notice given to the other parties hereto):
if to Seller:
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Attention: Legal Department
Facsimile: (858) 410-5343
WITH A COPY TO:
Pillsbury, Madison & Sutro LLP
101 West Broadway, Suite 1800
San Diego, CA 92101-8219
Attention: John M. Dunn, Esq.
Facsimile: (619) 236-1995
if to Purchaser:
Inhale Therapeutic Systems
150 Industrial Way
San Carlos, CA 94070
Attention: General Counsel
Facsimile: (650) 631-3190
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WITH A COPY TO:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
Facsimile: (650) 857-0663
12.6 PUBLICITY. On and at all times after the Closing Date, except for any
press release or publicity approved in advance in writing by Purchaser and
Seller, no press release or other publicity concerning any of the Transactions
shall be issued or otherwise disseminated by or on behalf of Seller or Purchaser
or any of their Representatives. Seller and Purchaser shall continue to keep the
existence and terms of this Agreement, the other Transactional Agreements, and
any non-public document or other information in their possession strictly
confidential; provided, that either party may (i) disclose the terms of this
Agreement insofar as required to comply with applicable securities laws,
provided that in the case of such securities disclosures each party notifies the
other reasonably in advance of such disclosure and cooperates to minimize the
scope and content of such disclosure, and (iii) disclose the terms of the
Agreement in confidence to each party's professional advisors, acquirers, or
merger candidates.
12.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
12.8 HEADINGS. The headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
12.10 GOVERNING LAW; DISPUTE RESOLUTION.
(a) GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
California (without giving effect to principles of conflicts of laws).
(b) ARBITRATION. Any dispute, controversy or claim initiated by either
Purchaser or Seller arising out of, resulting from or relating to this
Agreement, or the performance by either party of its obligations under this
Agreement (other than bona fide third party actions or Proceedings filed or
instituted in an action or Proceeding by a Third Party against Purchaser or
Seller, shall be finally resolved by binding arbitration. Whenever Purchaser or
Seller shall decide to institute arbitration proceedings, it shall give written
notice to that effect to the other. Either party may, notwithstanding this
Agreement, seek from any judicial authority pre-award interim, provisional or
conservatory relief that may be necessary to protect the rights of that party
pending the arbitrator's determination of the merits of the controversy.
Discovery in any arbitration proceeding under this Section 12.10 shall be
permitted as set forth in the
28.
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Federal Rules of Civil Procedure with respect to the performance by the parties
of their obligations under this Agreement and such other matters as the
arbitrator may determine (it being the intent of the parties that full discovery
occur with respect to the salient facts). The parties shall apply the Rules of
Federal Evidence to the hearing. Any such arbitration shall be conducted under
the Comprehensive Rules for Commercial, Real Estate and Construction Cases of
the Judicial Arbitration & Mediation Services by a single arbitrator chosen by
mutual consent of Purchaser and Seller. Should the Purchaser and Seller fail to
agree on the selection of an arbitrator, Purchaser and Seller shall each appoint
one arbitrator and the two arbitrators shall agree upon a neutral third
arbitrator to serve as the sole arbitrator. Any such arbitration shall be held
in San Carlos if initiated by Seller, and in San Diego if initiated by
Purchaser. The arbitrator shall render his or her decision within thirty (30)
days of the completion of the arbitration. The arbitrator shall have the
authority to allocate between the parties the costs of arbitration in such
equitable manner as he or she determines. Judgment upon the award so rendered
may be entered in any court having jurisdiction or application may be made to
such court for judicial acceptance of any award and an order of enforcement, as
the case may be. In no event shall a demand for arbitration be made after the
date when institution of a legal or equitable proceeding based upon such claim,
dispute or other manner in question would be barred by the applicable statute of
limitations or the provisions of this Agreement. The parties hereby waive their
right to a jury trial in connection with any matter submitted for resolution by
arbitration hereunder, except as provided in the last sentence hereof.
Notwithstanding the foregoing, disputes regarding the validity, scope or
enforceability of patents shall be submitted to a court of competent
jurisdiction in the country where such patent has issued.
12.11 SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise expressly
provided under this Agreement neither this Agreement nor any right or obligation
hereunder may be assigned or otherwise transferred (whether voluntarily, by
operation of law or otherwise), without the prior express written consent of the
other party; provided, however, that either party may, without such consent,
assign this Agreement and its rights and obligations hereunder in connection
with the transfer or sale of all or substantially all of its business to which
this Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction, and further, provided, in no event shall Inhale
assign its rights under this Agreement to an entity that has fewer than two
hundred (200) employees without Alliance's prior written consent, not to be
unreasonably withheld. Notwithstanding the foregoing, Inhale may only assign its
rights and obligations under this Agreement to a third party in conjunction with
an assignment of the Product Development Rights Agreement. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. Any
purported assignment or transfer in violation of this Section 12.11 shall be
void.
12.12 WAIVER.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
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(b) No Person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
12.13 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Purchaser and the Agent.
12.14 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstance other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12.15 PARTIES IN INTEREST. Except for the provisions of Section 9 hereof,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
12.16 INDEPENDENT CONTRACTORS. The parties hereto are independent
contractors and nothing contained in this Agreement shall be construed to place
them in the relationship of partners, principal and agent, employer/employee or
joint venturer. Both parties agree that they shall neither have the power or
right to bind or obligate the other, nor shall either hold itself out as having
such authority.
12.17 ENTIRE AGREEMENT. The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter hereof.
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12.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of October 4, 1999.
"PURCHASER": INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/ Brigid A. Makes
--------------------------------------------------
Name: Brigid A. Makes
-----------------------------------------------
Title: Vice President & Chief Financial Officer
----------------------------------------------
"SELLER": ALLIANCE PHARMACEUTICAL CORP.
By: /s/ Hal W. DeLong
--------------------------------------------------
Name: Hal W. Delong
-----------------------------------------------
Title: Executive Vice President, Business Development
----------------------------------------------
31.
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EXHIBITS
Exhibit A: Certain Definitions
Exhibit B: License Agreement [Alliance to Inhale]
Exhibit C: License Agreement [Inhale to Alliance]
Exhibit D: Employees
Exhibit E: Allocation of Purchase Price
Exhibit F: Product Development Rights Agreement
Exhibit G: Escrow Agreement
Exhibit H: Security Agreement
Exhibit I: Form of Opinion of Seller's Counsel
Exhibit J: Form of Opinion of Purchaser's Counsel
32.
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
AFFILIATE. "Affiliate" shall mean and include any officer or director
of Purchaser or Seller or any Person which controls, is controlled by, or is
under common control with Purchaser or Seller;
AGREEMENT. "Agreement" shall mean the Asset Purchase Agreement to which
this Exhibit A is attached (including without limitation the Disclosure Schedule
and any other exhibits, schedules or attachments thereto), as it may be amended
from time to time.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible; PROVIDED, HOWEVER, that an
obligation to use Best Efforts under this Agreement does not require the Person
subject to that obligation to take actions that would result in a materially
adverse change in the benefits of such Person under this Agreement.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been any
material inaccuracy in or breach of, or any material failure to comply with or
perform, such representation, warranty, covenant, obligation or other provision,
and the term "Breach" shall be deemed to refer to any such inaccuracy, breach,
failure, claim or circumstance.
CLAIMS. "Claims" shall mean and include all past, present and future
disputes, claims, controversies, demands, rights, obligations, liabilities,
actions and causes of action of every kind and nature.
CLOSING. "Closing" shall have the meaning specified in Section 1.13 of
the Agreement.
CLOSING CERTIFICATE. "Closing Certificate" shall mean the certificate
executed upon the Closing for the purpose of evidencing the transaction.
CLOSING DATE. "Closing Date" shall have the meaning specified in
Section 1.13 of the Agreement.
CONFIDENTIAL INFORMATION. Shall mean, with respect to a party, all
information of any kind whatsoever, and all tangible and intangible embodiments
thereof of any kind whatsoever, which is disclosed by such party to the other
party and is marked, identified as or otherwise acknowledged to be confidential
at the time of disclosure to the other party. Notwithstanding the foregoing,
Confidential Information of a party shall not include information which the
other party can establish by written documentation (a) to have been publicly
known prior to disclosure to such information by the disclosing party to the
other party, (b) to have become publicly known, without fault on the part of the
other party, subsequent to disclosure of such information by the disclosing
party to the other party, (c) to have been received by the other party at any
time from a source, other than the disclosing party, rightfully having
possession of and the right to
1.
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disclose such information, (d) to have been otherwise known by the other party
prior to disclosure of such information by the disclosing party to the other
party, or (e) to have been independently developed by persons on behalf of the
other party without access to or use of such information disclosed by the
disclosing party to the other party. For purposes of this Agreement, the
Purchased Assets shall constitute Confidential Information of Inhale subject to
the provisions of clauses (a) and (b) of the immediately preceding sentence.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, supply agreement, sourcing agreement, warranty, deed,
assignment, power of attorney, certificate, purchase order, sales order, work
order, insurance policy, benefit plan, commitment, covenant, assurance or
undertaking of any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, Liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
any reasonable legal fee, expert fee, accounting fee or advisory fee), cost
(including any reasonable cost of investigation), reasonable related third party
expenses or consequential damages (but not lost profits on sales of products).
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Purchaser on behalf of
Seller, a copy of which is attached to the Agreement and incorporated in the
Agreement by reference.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
mortgage, security interest, encumbrance, equitable interest, preference, right
of possession, lease, tenancy, license, proxy, covenant, Order, option, right of
first refusal or preemptive right.
ENTITY. "Entity" means any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ESCROW AGENT. "Escrow Agent" shall have the meaning set forth in
Section 1.11.
EXCLUDED TRANSACTION. "Excluded Transaction" shall have the meaning set
forth in Section 1.8 of the Agreement.
EXPIRATION DATE. "Expiration Date" shall have the meaning set forth in
Section 9.1(a) of the Agreement.
FDA. "FDA" shall mean the United States Food & Drug Administration and,
where appropriate, shall also mean any corresponding regulatory agency in any
other country.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any:
2.
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(a) permit, license, certificate, franchise, concession,
approval, consent, ratification, permission, clearance, confirmation,
endorsement, waiver, certification, designation, rating, registration,
qualification or authorization that is, has been or may in the future be issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal);
(d) multi-national organization or body; or
(e) individual, Entity or body exercising, or entitled to
exercise, any executive, legislative, judicial, administrative, regulatory,
police, military or taxing authority or power of any nature.
INHALE FIELD. "Inhale Field" shall mean uses of perforated
microstructures within the respiratory tract, including without limitation the
nasal passage; provided, however, the Inhale Field shall not include the use of
perforated microstructures in connection with the direct intratracheal or direct
pulmonary administration (e.g., via bronchoscope or endotracheal tube) of
fluorochemicals or other liquids. For clarity, the Inhale Field includes the
administration of perforated microstructures containing compounds by means of
metered dose inhaler, dry powder inhaler, nasal spray, or by nebulization of
perforated microstructures formulated with fluorochemicals as suspending agents,
provided that the quantities of fluorochemicals so included in such formulation
for nebulization do not exceed that which is commercially reasonably necessary
to provide effective delivery of the active agent. It is presently anticipated
that the quantities of fluorochemicals to be used for nebulization of an active
agent by or on behalf of Purchaser will not exceed * ** *** ****.
KNOW-HOW. "Know-How" shall mean any knowledge, data, information which
is not generally known and is reasonably necessary or useful to make, use, sell
or otherwise utilize the Purchased Assets as of the Closing Date, excluding any
patent rights and the Licensed Know-How.
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. An Entity shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer of such entity has Knowledge of
such fact or other matter.
3.
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LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is, has been or may in the future be issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental Body.
LICENSED KNOW-HOW. "Licensed Know-How" shall have the meaning set forth
in the License Agreement attached hereto as Exhibit B.
LICENSED PATENT RIGHTS. "Licensed Patent Rights" shall have the meaning
set forth in the License Agreement attached hereto as Exhibit B.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature regardless of whether such debt, obligation, duty or
liability would be required to be disclosed on a balance sheet prepared in
accordance with GAAP and regardless of whether such debt, obligation, duty or
liability is immediately due and payable.
MAJOR COUNTRY. "Major Country" shall mean any of the following
countries: the United States, the United Kingdom, Japan, Italy, Germany, France,
and Spain.
NDA. "NDA" shall mean a New Drug Application filed or other regulatory
filings made pursuant to the requirements of the FDA for approval to market a
Product, as well as equivalent submissions to the appropriate authorities in
other countries.
NET ROYALTIES. "Net Royalties" shall mean the royalty income received
by Purchaser or its Affiliates from Partners in connection with the sale of
Products minus any royalty amounts owed by Purchaser to third parties for the
sale of Products or other direct costs incurred by Purchaser as a result of such
sales.
NET SALES. "Net Sales" shall mean, with respect to any Product, the
invoiced sales price of such Product billed to independent customers who are not
Affiliates, less to the extent included in the invoiced sales price, (a)
credits, allowances, discounts and rebates to, and chargebacks from the account
of, such independent customers for spoiled, damaged, out-dated, rejected or
returned Product; (b) actual freight and insurance costs incurred in
transporting such Product in final form to such customers; (c) cash, quantity
and trade discounts; and (d) sales, use, value-added and other taxes or
governmental charges incurred in connection with the exportation or importation
of such Product in final form. If Purchaser has defined Net Sales in a different
manner in its agreement with a Partner, then any payments due to Seller pursuant
to Section 1.7 on payments received by Purchaser from such Partner shall be
calculated using a Net Sales definition provided in Purchaser's agreement with
such Partner, provided that such definition is substantially similar to the
foregoing definition.
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, verdict, sentence, subpoena,
writ or award that is, has been or
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may in the future be issued, made, entered, rendered or otherwise put into
effect by or under the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel; or
(b) Contract with any Governmental Body that is, has been or
may in the future be entered into in connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of an
Entity shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, is consistent with an
Entity's past practices and is taken in the ordinary course of such Entity's
normal day-to-day operations;
(b) such action is taken in accordance with sound and prudent
business practices; and
(c) such action is not required by applicable law or governing
documents to be authorized by an Entity's stockholders, members, board of
directors or similar body, or committee of such Entity's board of directors or
similar body and does not require any other separate or special authorization of
any nature.
PARTNER. "Partner" shall have the meaning set forth in Section 1.6.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PHASE III CLINICAL TRIAL. "Phase III Clinical Trial" shall mean one or
a series of controlled pivotal studies of a specific Product by administration
of such Product to human beings where the principal purpose of such trial is to
provide safety and efficacy data to support an application for regulatory
approval of a Product.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period from the
date of the Agreement through the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation that is,
has been commenced, brought, conducted or heard by or before, or that otherwise
has involved or may involve, any Governmental Body or any arbitrator or
arbitration panel.
PRODUCT. "Product" shall mean a human pharmaceutical the making, using
or selling of which (i) is then covered by a Valid Claim or (ii) which embodies
or incorporates PulmoSpheres-Registered Trademark- Technology and uses,
incorporates or is based on the Know-How or any Licensed Know-How.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any (a) patent,
patent application, copyright (whether registered or unregistered and whether or
not relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or
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unregistered), trademark service mark application, trade secret, know-how,
franchise, system, computer software, invention, design, blueprint, proprietary
product, technology, proprietary right or other intellectual property right or
intangible asset; or (b) right to use or exploit any of the foregoing.
PULMOSPHERES-Registered Trademark- TECHNOLOGY. "PulmoSpheres-Registered
Trademark- Technology" shall mean (i) the method of manufacturing hollow and
porous spray dried particles using a perfluorocarbon emulsion or other
blowing agents described in the Assigned Patent Rights, and (ii) the
particles manufactured by such method, both as further described in all of
the Assigned Patent Rights and Purchased Proprietary Assets.
PURCHASED ASSETS. "Purchased Assets" shall have the meaning set forth
in Section 1.1 to the Agreement.
PURCHASED PROPRIETARY ASSETS. "Purchased Proprietary Assets" shall have
the meaning set forth in Section 1.1(a) of the Agreement.
PURCHASER. "Purchaser" shall have the meaning set forth in the
introductory paragraph to the Agreement.
PURCHASER INDEMNITEES. "Purchaser Indemnitees" shall mean the following
Persons:
(a) Purchaser;
(b) Purchaser's current and future affiliates;
(c) The respective Representatives of the Persons referred to
in clauses "(a)" and "(b)" above; and
(d) The respective successors and assigns of the Persons
referred to in clauses "(a)", "(b)" and "(c)" above.
REPRESENTATIVES. "Representatives" shall mean officers and directors,
employees, agents, attorneys, accountants, advisors and representatives.
SECURITY AGREEMENT. "Security Agreement" shall have the meaning set
forth in Section 1.2.
SELLER. "Seller" shall have the meaning specified in the introductory
paragraph of the Agreement.
SELLER CONTRACT. "Seller Contract" shall mean any Contract:
(a) to which Seller is a party;
(b) by which Seller or any of its assets are or may become
bound or under which Seller has, or may become subject to, any obligation; or
(c) under which Seller has or is likely to acquire any right
or interest.
6.
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SELLER INDEMNITEES. "Seller Indemnitees" shall mean the following
Persons:
(d) Seller;
(e) Seller's current and future affiliates;
(f) The respective Representatives of the Persons referred to
in clauses "(a)" and "(b)" above; and
(g) The respective successors and assigns of the Persons
referred to in clauses "(a)", "(b)" and "(c)" above.
SPECIAL MANUFACTURING INCOME. "Special Manufacturing Income" shall mean
any amounts realized by Purchaser from the on-going commercial manufacture of
Products in excess of **** of Purchaser's fully-allocated cost of manufacturing
such Products, determined in accordance with Purchaser's customary cost
accounting procedures consistently applied by Purchaser across its manufacturing
operations, which procedures shall be reasonable. Special Manufacturing Income
shall exclude any and all reasonable amounts received by Purchaser for the
purchase of capital equipment or for lease or purchase of facilities.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax sharing
agreement or similar Contract.
THIRD PARTY. "Third Party" means any person or entity other than
Purchaser, Seller or an Affiliate of either of them.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean the
Agreement and all other documents or agreements contemplated by Section 1.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements.
VALID CLAIM. "Valid Claim" shall mean a claim in a pending patent
application contained within the Assigned Patent Rights or Licensed Patent
Rights, or an unexpired, issued claim contained within a patent which issued
therefrom and has not been found to be unpatentable, invalid or unenforceable by
a court or other authority in the subject country from which decision and appeal
is taken or can be taken.
7.
<PAGE>
EXHIBIT B
LICENSE AGREEMENT
FROM ALLIANCE TO INHALE
See Exhibit 2(c) to the Form 8-K dated November 4, 1999
1.
<PAGE>
EXHIBIT C
LICENSE AGREEMENT
FROM INHALE TO ALLIANCE
See Exhibit 2(d) to the Form 8-K dated November 4, 1999
1.
<PAGE>
EXHIBIT D
EMPLOYEES
*
1.
<PAGE>
EXHIBIT E
ALLOCATION OF PURCHASE PRICE
*
1.
<PAGE>
EXHIBIT F
PRODUCT DEVELOPMENT RIGHTS AGREEMENT
See Exhibit 2(b) to the Form 8-K dated November 4, 1999
1.
<PAGE>
EXHIBIT G
ESCROW AGREEMENT
1.
<PAGE>
EXHIBIT H
SECURITY AGREEMENT
This agreement was intentionally not used.
1.
<PAGE>
EXHIBIT I
FORM OF OPINION OF SELLER'S COUNSEL
See attached.
1.
<PAGE>
EXHIBIT I
FORM OF SELLER'S COUNSEL OPINION
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the law of New York, and is duly qualified and in good
standing to do business as a foreign corporation in California.
2. The company has full corporate power and authority to enter into and
perform its obligations under the Transaction Agreements.
3. The Transaction Agreements have been duly authorized by all
necessary corporate action on the part of the Company, and have been duly
executed and delivered by the Company.
4. The Asset Purchase Agreement and the Product Development Rights
Agreement are valid and binding obligations of the Company, enforceable in
accordance with their terms.
5. Execution and delivery of the Transaction Agreements and performance
by the Company of its obligations thereunder do not conflict with or violate its
charter or by-laws, or any applicable law or regulation (other than ordinances
and regulations of countries and political subdivisions thereof) or any order of
court or arbitrator known to us.
6. No approval, authorization or other action by any governmental
authority or filing (other than filings solely for information purposes or to
obtain action which is not the subject of governmental discretion) with any such
authority which has not been obtained or accomplished is required in connection
with the execution and delivery of the Transaction Agreements and performance by
the Company of its obligations thereunder which if not obtained or made, would
have a material adverse effect on the Company's performance of its obligations
thereunder.
2.
<PAGE>
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
See attached.
1.
<PAGE>
EXHIBIT J
FORM OF PURCHASER'S COUNSEL OPINION
[Such opinion may be in standard Cooley Godward LLP form, and may contain
exclusions and assumptions similar to those in the Pillsbury, Madison & Sutro
form of opinion, as well as an exclusion with respect to FDA matters. The
opinion in paragraph 5 as to material agreements may be given by in-house
counsel for Purchaser.]
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware, and is duly qualified and in good
standing to do business as a foreign corporation in California.
2. The Company has full corporate power and authority to execute,
deliver and perform its obligations under the Transaction Agreements, to own its
property and to carry on its business in the manner currently conducted.
3. The Transaction Agreements have been duly authorized by all
necessary corporate action on the part of the Company, and have been duly
executed and delivered by the Company.
4. The Asset Purchase Agreement and the Product Development Rights
Agreement are valid and binding obligations of the Company, enforceable in
accordance with their terms.
5. Execution and delivery of the Transaction Agreements and performance
by the Company of its obligations thereunder do not conflict with or violate its
certificate of incorporation or by-laws, or any applicable law or regulation
(other than ordinances and regulations of counties or political subdivisions
thereof), or any order of court or arbitrator known to us, and do not conflict
with and will not constitute a material breach of the provisions of any material
contract known to us by which the Company or the Purchased Assets is bound.
6. No approval, authorization or other action by any governmental
authority or filing (other than filings solely for information purposes or to
obtain action which is not the subject of governmental discretion) with any such
authority which has not been obtained or accomplished is required in connection
with the execution and delivery of the Transaction Agreements and performance by
the Company or its obligations thereunder.
7. To our knowledge, there are not actions, suits or proceedings
pending or overtly threatened against the Company before any court or
administrative agency which may have the effect of preventing, delaying, making
illegal or otherwise interfering with Company's obligations under the
Transaction Agreements.
2.
<PAGE>
DISCLOSURE SCHEDULE - PART 1.1(a)
PATENT RIGHTS
1. Engineered Particulates and Method of Use (USSN 09/219,736;
PCT 98/20602)
2. Stabilized Preparations for Use in Nebulizers (USSN
09/218,213; PCT US 98/20603)
3. Stabilized Preparations for Use in Metered Dose Inhalers (USSN
09/218,212; PCT US 98/20615)
4. Stabilized Bioactive Preparations and Methods of Use (USSN
09/218,209; PCT US 98/20613)
5. Particulate Delivery Systems and Methods of Use (PCT US
99/06855)
TRADEMARKS
1. PulmoSpheres-Registered Trademark- US 75/372, 296
2. Homodispersion-TM-
<PAGE>
DISCLOSURE SCHEDULE - PART 1.1(b)
EQUIPMENT
*
2.
<PAGE>
DISCLOSURE SCHEDULE - PART 1.1(c)
SUPPLIES AND MATERIALS
See Attached
<PAGE>
DISCLOSURE SCHEDULE - PART 1.1(c)
SUPPLIES AND MATERIALS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
* * * * * * * * *
</TABLE>
<PAGE>
DISCLOSURE SCHEDULE - PART 1.1(d)
FILES AND RECORDS
*
See attached.
<PAGE>
LABORATORY NOTEBOOKS - *
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
Assignee Notebook Number Issue Date
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
* * *
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
2.
<PAGE>
LABORATORY NOTEBOOKS: *
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Assignee Notebook Number Issue Date Subject
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
* * * *
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
LABORATORY NOTEBOOKS: *
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Assignee Notebook Number Issue Date Subject
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
* * * *
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
3.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
REPORT TITLE PRINCIPAL INVESTIGATOR STATUS FILENAME(S)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
* * * *
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
4.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
LIST OF PULMOSPHERES RELATED PROJECTS 9/17/99
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* * * *
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
5.
<PAGE>
EXPERIMENTAL BIOLOGY PULMOSPHERES STUDIES
*
6.
<PAGE>
DISCLOSURE SCHEDULE - PART 2.2 AND PART 2.3
ENCUMBRANCES, OBLIGATIONS ETC.
EFFECTING TITLE TO PURCHASED ASSETS
Seller has an outstanding loan with Imperial Bank which is secured by
all assets of Seller. Seller will deliver a release of the security interests to
Purchaser on the Effective Date.
Seller entered into a Royalty Rights Agreement dated as of August 13,
1998 with certain preferred shareholders. The agreement provides for a royalty
on the first commercial drug compound arising out of Seller's technologies (one
of which could be a product containing or made using PulmoSpheres-Registered
Trademark- Technology such as a Product). Subsequently, Seller entered into
an Agreement to Establish Royalty dated as of August 13, 1998 with one of the
preferred shareholders to establish the royalty due pursuant to the Royalty
Rights Agreement. Seller shall have no obligation to make any payments due to
any such preferred shareholders pursuant to such agreement.
The purchased proprietary assets which consist of patents or patent
applications are subject to potential standard prosecution and third party
challenge issues with the U.S. Patent and Trademark Office and foreign
equivalents. Reference is made to information filed in connection with each of
the patent applications and further correspondence sent to and received from the
U.S. Patent and Trademark Office and foreign equivalents.
7.
<PAGE>
DISCLOSURE SCHEDULE - PART 2.6
CONSENTS AND NONCONTRAVENTION
Imperial Bank consent & waiver of lien
Hart Scott Rodino Act waiver or approval
8.
<PAGE>
DISCLOSURE SCHEDULE - PART 2.9(b)
*
9.
<PAGE>
DISCLOSURE SCHEDULE - PART 7.3
Imperial Bank consent or waiver
Hart-Scott Rodino Act waiver or approval
10.
<PAGE>
DISCLOSURE SCHEDULE - PART 8.3
Imperial Bank waiver or consent
Hart-Scott Rodino Act waiver or approval
11.
<PAGE>
Exhibit 99.2(b)
PRODUCT DEVELOPMENT RIGHTS AGREEMENT
THIS PRODUCT DEVELOPMENT RIGHTS AGREEMENT (this "Agreement") dated as
of November 4, 1999 (the "Effective Date"), is entered into between ALLIANCE
PHARMACEUTICAL CORP., a New York corporation ("Alliance"), having a place of
business at 3040 Science Park Road, San Diego, California 92121, and INHALE
THERAPEUTIC SYSTEMS, INC., a Delaware corporation ("Inhale"), having a place of
business at 150 Industrial Road, San Carlos, California 94070.
RECITALS:
WHEREAS, Alliance and Inhale have entered an Asset Purchase
Agreement dated as of the Effective Date (as amended or restated from time to
time, the "Asset Purchase Agreement"), pursuant to which Alliance assigned
and sold to Inhale certain patent rights and know-how relating the
PulmoSpheres-Registered Trademark-Technology as required in the Asset
Purchase Agreement.
WHEREAS, in connection with the execution of the Asset Purchase
Agreement, Inhale has agreed to enter into this Agreement to perform certain
product formulation and development work for Alliance within the Inhale Field
(as defined below) using the PulmoSpheres-Registered Trademark- Technology.
WHEREAS, Alliance and Inhale have also entered into a License Agreement
(License to Alliance) dated as of the Effective Date (as amended or restated
from time to time, the "License to Alliance") pursuant to which Inhale has
granted to Alliance a license to use and sell, and under certain circumstances
manufacture, products designated for development under this Agreement, and a
License Agreement (License to Inhale) as of the Effective Date (as amended or
restated from time to time, the "License to Inhale"), pursuant to which Alliance
has granted to Inhale certain rights under Alliance's proprietary technology for
use within the Inhale Field.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. Without limitation, a Person shall be regarded
as in control of another Person if it owns, or directly or indirectly controls,
at least fifty percent (50%) of the voting stock or other ownership interest of
* INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
- 1 -
<PAGE>
the other Person, or if it directly or indirectly possesses the power to direct
or cause the direction of the management and policies of the other Person by any
means whatsoever.
1.2 "Asset Purchase Agreement" shall have the meaning set forth in the
Recitals.
1.3 "Call Right" shall have the meaning set forth in Section 3.1.
1.4 "Competitor of Inhale" *
1.5 "Confidential Information" shall mean, with respect to a party, all
information of any kind whatsoever, and all tangible and intangible embodiments
thereof of any kind whatsoever, which is disclosed by such party to the other
party and is marked, identified as or otherwise acknowledged to be confidential
at the time of disclosure to the other party. Notwithstanding the foregoing,
Confidential Information of a party shall not include information which the
other party can establish by written documentation (a) to have been publicly
known prior to disclosure of such information by the disclosing party to the
other party, (b) to have become publicly known, without fault on the part of the
other party, subsequent to disclosure of such information by the disclosing
party to the other party, (c) to have been received by the other party at any
time from a source, other than the disclosing party, rightfully having
possession of and the right to disclose such information, (d) to have been
otherwise known by the other party prior to disclosure of such information by
the disclosing party to the other party, or (e) to have been independently
developed by persons on behalf of the other party without access to or use of
such information disclosed by the disclosing party to the other party.
1.6 "Designated Product" shall have the meaning set forth in Section
3.2(e).
1.7 "Inhale Field" shall mean uses of perforated microstructures within
the respiratory tract, including without limitation the nasal passage; provided,
however, the Inhale Field shall
- 2 -
<PAGE>
not include the use of perforated microstructures in connection with the direct
intratracheal or direct pulmonary administration (e.g., via bronchoscope or
endotracheal tube) of fluorochemicals or other liquids. For clarity, the Inhale
Field includes the administration of perforated microstructures containing
compounds by means of metered dose inhaler, dry powder inhaler, nasal spray, or
by nebulization of perforated microstructures formulated with fluorochemicals as
suspending agents, provided that the quantities of fluorochemicals so included
in such formulation for nebulization do not exceed that which is commercially
reasonably necessary to provide effective delivery of the active agent. It is
presently anticipated that the quantities of fluorochemicals to be used for
nebulization of an active agent by or on behalf of Purchaser will not exceed 5
ml per dose.
1.8 "IMMUNE MODULATORS" shall mean *
1.9 "IMMUNOGENS" shall mean *
1.10 "LICENSE TO ALLIANCE" shall have the meaning set forth in the
Recitals.
1.11 "LICENSE TO INHALE" shall have the meaning set forth in the
Recitals.
1.12 "MAJOR COUNTRY" means any of the following countries: The United
States, the United Kingdom, France, Germany, Italy, Spain or Japan.
1.13 "MAJOR PHARMACEUTICAL COMPANY" means *
1.14 "MULTI-SOURCE COMPOUND" shall mean *
1.15 "PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.16 "PRODUCT DESIGNATION PERIOD" shall mean, subject to the following
sentence, the period within which Alliance may exercise a Call Right to
designate such compound as a potential Designated Product, and shall be equal
to, as the case may be, either (i) with respect to a Single-Source Compound, the
*************** commencing on the Effective Date or (ii) with respect to a
Multi-Source Compound, a *************** commencing on the Effective Date,
provided that if during such ************* Inhale rejects a proposed Designated
Product which is a Multi-Source Compound for the reasons set forth in
- 3 -
<PAGE>
Section 3.2(a)(i), or in Section 3.2(a)(ii) or Section 3.2(a)(iii) with
respect to Allowed Candidates (as defined below), the Product Designation Period
for Multi-Source Compounds shall be extended for an additional ****************.
In no event shall such Product Designation Period expire for both Single-Source
Compounds and Multi-Source Compounds later than the first to occur of (A) the
*********************of the Effective Date or (B) the date upon which Alliance
commercially launches a second Designated Product. An "Allowed Candidate" is *
and with respect to which, prior to its exercise of a Call Right,
Alliance allocated significant resources in researching the feasibility of a
Designated Product based thereon, as evidenced by the information supplied to
Inhale relating to such compound pursuant to Section 3.2.
1.17 "PULMONARY DRUG DELIVERY COMPANY" shall mean *
1.18 "PULMOSPHERES-Registered Trademark- TECHNOLOGY" shall mean (i)
the method of manufacturing hollow and porous spray dried particles using a
perfluorocarbon emulsion or other blowing agents described in the Assigned
Patent Rights (as defined in the Asset Purchase Agreement), and (ii) the
particles manufactured by such method, both as further described in all of
the Assigned Patent Rights and Proprietary Purchased Assets (as defined in
the Asset Purchase Agreement).
1.19 "SINGLE-SOURCE COMPOUND" shall mean any compound other than a
Multi-Source Compound.
1.20 "THIRD PARTY" shall mean any Person other than Alliance, Inhale
and their respective Affiliates.
1.21 "TOLEROGENS" shall mean *
1.22 "VACCINES" shall mean *
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each party hereby represents and warrants to the other party as
follows:
2.1 CORPORATE EXISTENCE. Such party is a corporation duly organized,
validly existing and in good standing under the laws of the state in which it
is incorporated.
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its
- 4 -
<PAGE>
obligations hereunder, and (b) has taken all necessary corporate action on
its part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly
executed and delivered on behalf of such party, and constitutes a legal,
valid, binding obligation, enforceable against such party in accordance with
its terms.
2.3 NO CONFLICT. The execution and delivery of this Agreement and
the performance of such party's obligations hereunder (a) do not conflict
with or violate any requirement of applicable laws or regulations, and (b) do
not conflict with, or constitute a default under, any contractual obligation
of it.
ARTICLE 3
CALL RIGHTS
3.1 CALL RIGHTS.
(a) Subject to the last sentence of this Section 3.1(a), during
the Product Designation Period, Alliance shall have the right to select two
(2) products in the Inhale Field which are manufactured by means of or
incorporate Pulmospheres-Registered Trademark- Technology for development and
commercialization by Alliance. Subject to the limitations in Section 3.1(b)
and the exclusions of and the mechanisms set forth in Section 3.2, Alliance
shall have the right (each, a "Call Right") to cause Inhale to develop a
powder formulation of active drug substance for up to three (3) such products
to obtain rights to develop and commercialize up to two (2) products,
provided that Inhale shall not be obligated to perform development work on
more than two (2) such products at any given time. Inhale may also, in its
sole discretion, accept a request of Alliance to develop a product outside of
the Inhale Field which is manufactured by means of or incorporates
Pulmospheres-Registered Trademark- Technology as the exercise of one of its
Call Rights. Alliance's Call Rights are subject to termination as provided in
Section 9.7 of the Asset Purchase Agreement.
(b) Alliance's Call Right shall apply to products which are
manufactured by means of or incorporate PulmoSpheres-Registered Trademark-
Technology comprising compounds or agents which are neither proteins nor
peptides, except that Alliance may exercise a Call Right for one or more
Immunogens (comprising Vaccines or Tolerogens), together with any Immune
Modulator that can be included in such Designated Product (a "Combination") *
. In the event Alliance exercises a Call Right for a
Combination, Inhale shall be free to develop and commercialize, either itself
or with a third party, products containing as an active agent, only either
such Immune Modulator or such Immunogen; provided, however, that nothing in
this sentence shall be deemed to grant to Inhale any implied license under
Alliance's proprietary technologies. Furthermore, Alliance may exercise a
Call Right for a product only if *
- 5 -
<PAGE>
3.2 NOTICE MECHANISM: EXCLUDED PRODUCTS.
(a) In order to exercise a Call Right with respect to a product,
Alliance shall give written notice to Inhale of such exercise with a
description of such product and other information in Alliance's possession
and control that is reasonably sufficient for Inhale to decide whether to
accept or reject such product under this Section 3.2(a). Within forty-five
(45) days after Inhale's receipt of such notice and information, Inhale shall
either confirm its acceptance of the product designation or notify Alliance
that it is rejecting the proposed product. Inhale may reject the proposed
product if Inhale reasonably and in good faith makes one of the following
determinations: (i) Inhale has already begun development of the product prior
to the date of receipt of the Alliance notice; (ii) development of the
product for Alliance would constitute a breach by Inhale of a then existing
agreement to which Inhale is bound; (iii) Inhale began negotiating prior to
the date of receipt of the Alliance notice an agreement with a prospective
customer and believes that the principal terms of such an agreement will be
agreed upon within ninety (90) days following receipt of the Alliance notice
and development of a product would constitute a breach of such agreement if
consummated; (iv) development of the product would pose a medical or safety
risk to Inhale employees or prospective patients; (v) Inhale lacks the
expertise and/or resources to carry out such work; (vi) development of the
product would result in significant delays or disruptions to Inhale's other
research or contractual activities; or (vii) development of the product by
Inhale would infringe an issued patent or a claim of a published patent
application. If Inhale accepts a Call Right notwithstanding its reasonable
belief that subsection (vi) would apply to its development of such product,
Inhale may elect to postpone for up to two (2) calendar quarters from the
date of the Collaboration Agreement to be entered into pursuant to Section
3.2(b) its obligations to develop such product as a Designated Product
pursuant to this Article 3. In making its determination with respect to
clause (vi), Inhale shall treat the Alliance exercise in the same manner as
Inhale would treat a request by a prospective customer at that time to
develop a different product that would require the same type and amount of
resources as would be required to develop the proposed Call Right product. If
Inhale rejects an Alliance exercise of a Call Right based on a determination
covered by clause (iii), Inhale shall diligently pursue the conclusion of
such negotiations with the prospective customer and Inhale shall notify
Alliance promptly if Inhale concludes that it is not going to execute a
definitive agreement for such product with such prospective customer.
(b) Inhale's acceptance of Alliance's exercise of a Call Right
shall remain subject to the parties' successful negotiation of a
collaboration agreement for development of such product including a work
plan, the terms set forth in Sections 3.3 through 3.7, and any other
commercial terms customary for agreements for the development of similar
products (subject to Section 3.8) (each such agreement, a "Collaboration
Agreement").
(c) If either (i) Inhale rejects an Alliance exercise of a Call
Right based upon a determination described in clauses (iv), (v) or (vi), or
(ii) Inhale and Alliance are unable to agree upon the terms of a
Collaboration Agreement pursuant to Section 3.2(b) within ninety (90) days
after Inhale accepts Alliance's designation of the relevant product, then
Alliance shall have the right to conduct development of the product by itself
or through a Third Party.
(d) If either Inhale rejects Alliance's exercise of a Call Right
pursuant to subsection (a) or the parties are unable to agree on the terms of
a Collaboration Agreement with
- 6 -
<PAGE>
respect to a product within ninety (90) days after Inhale accepts Alliance's
designation of the product as provided in subsection (b), and Alliance does
not proceed to develop such product either itself or with a Third Party as
provided in subsection (c) within ninety (90) days after expiration of such
ninety (90) day period within which the parties may negotiate a Collaboration
Agreement, then Alliance shall not be deemed to have exercised a Call Right.
(e) If (i) Inhale accepts the exercise of a Call Right and the
parties agree on the terms of a Collaboration Agreement with respect thereto
as provided in subsection (b), or (ii) Alliance itself or through a Third
Party conducts development work on a product for which it exercises a Call
Right as provided in Section 3.2(c), then Alliance shall be deemed to have
exercised one of its Call Rights even if such development work is later
terminated for any reason other than Inhale's breach of any Collaboration
Agreement relating thereto, and such product shall be a "Designated Product";
provided, however, that if Alliance terminates development of such product
prior to commercial launch thereof, then it shall so notify Inhale and such
product shall thereafter no longer be a Designated Product.
(f) Alliance may exercise up to three (3) Call Rights in order
to obtain rights to develop and commercialize up to two (2) Designated
Products.
3.3 WORK TO BE PERFORMED. Inhale shall use commercially reasonable
efforts in the performance of any work it performs for Alliance with respect
to development of a powder formulation of the active drug substance ("Active
Substance") for a Designated Product for which it accepts a Call Right. Any
such formulation work performed by Inhale with respect to a Designated
Product for Alliance shall be consistent with Inhale's practices for its
customers, and shall include but not be limited to: (a) developing a powder
formulation of the active drug substance (a "Powder Formulation") and
providing sufficient amounts of such Powder Formulation to Alliance for use
in such preclinical in vitro and in vivo models as Alliance reasonably
decides to perform; (b) providing sufficient amounts of such Powder
Formulation for Alliance to conduct clinical trials (including relevant
documentation with respect to such Designated Product and its manufacture as
required by regulatory authorities to be filed prior to commencement of any
clinical trial); (c) making such alterations and improvements to a previously
developed Powder Formulation of the Active Substance for a Designated Product
as may be reasonably indicated by any test or study conducted by Alliance or
Inhale; and (d) satisfying the manufacturing requirements of Section 3.5
below.
3.4 COST REIMBURSEMENT; SUPPLY OF BULK ACTIVE SUBSTANCE. Alliance
shall reimburse Inhale for Inhale's fully burdened costs incurred in
performing development work pursuant to a Collaboration Agreement for a
Designated Product, determined in a manner consistent with the method used by
Inhale for its other customers. Such costs shall include reimbursement for
full time equivalent ("FTE") effort at standard Inhale FTE rates,
reimbursement of direct costs not included in the FTE rate, and reimbursement
for the cost of any capital equipment or facilities or other assets acquired
for such formulation work. Alliance shall be responsible at its own expense
for the supply of the bulk Active Substance that it desires Inhale to
formulate into a Powder Formulation for Designated Products.
- 7 -
<PAGE>
3.5 COMMERCIAL MANUFACTURE.
(a) Except as provided in Section 3.5(c), Inhale shall have a
first option to negotiate a commercial supply agreement for the manufacture
and supply of a Powder Formulation of Designated Products. Any such agreement
shall provide that Alliance shall supply bulk Active Substance to Inhale for
commercial manufacture at no cost, and pay to Inhale a purchase price for
such Powder Formulation equal to ***********************
together with other reasonable terms and conditions customary in
the industry for the supply of similar products. Any such agreement shall
also provide that Inhale shall deliver to Alliance bulk Powder Formulation in
containers mutually agreeable to both parties. For each Designated Product,
Alliance shall notify Inhale when Alliance determines in good faith that it
has sufficient information to define the manufacturing process and is able to
provide reasonable data regarding anticipated volume requirements for the
Designated Product. If Inhale reasonably and in good faith agrees that the
information provided by Alliance is sufficient to commence negotiation of a
commercial supply agreement for a Powder Formulation of a Designated Product,
Inhale shall so notify Alliance and within thirty (30) days thereafter Inhale
shall notify Alliance whether Inhale desires to negotiate the terms of an
agreement pursuant to which Inhale shall manufacture and supply a Powder
Formulation of such Designated Product.
(b) If the parties do not enter into a commercial supply
agreement for the Powder Formulation of a particular Designated Product
within ********************** after Inhale notifies Alliance of its interest
in negotiating such an agreement, or if Inhale does not notify Alliance of
its interest in manufacturing a Powder Formulation of a Designated Product
within the thirty (30) day period provided in subsection (a), then Alliance
may manufacture a Powder Formulation of the Active Substance itself or enter
into a manufacturing agreement therefor with a Third Party that is not a
Competitor of Inhale, in which case Inhale shall provide to Alliance
technical assistance as described in Section 3.5(c).
(c) If Alliance acquires the right to develop a Designated
Product pursuant to Section 3.2(c), Alliance may request that Inhale provide
reasonable advice regarding whether Alliance's proposed formulation for the
relevant Designated Product is compatible with Inhale's proprietary
technology for manufacturing a Powder Formulation of such Designated Product,
and other reasonable technical assistance as may be relevant to the
manufacture of such product. Any technology transfer to Alliance or
Alliance's Third Party manufacturer in connection with such advice or
assistance shall be governed by a written agreement between Inhale, Alliance
and any such Third Party manufacturer in customary form imposing upon
Alliance and such Third Party manufacturer obligations of confidentiality and
limitations on use of Inhale's proprietary technology for the relevant
Designated Product, which agreement shall be negotiated and entered into
prior to the transfer of such technology pursuant to this Section 3.5. If
Alliance develops a Designated Product either itself or through a Third Party
pursuant to Section 3.2(c), and if Alliance does not request that Inhale
provide technical assistance in the development of such product as provided
in this Section 3.5(c), then Alliance shall be solely responsible for the
development and manufacture of such Designated Product and Inhale shall have
no further right of first option to manufacture a Powder Formulation of such
Designated Product under this Section 3.5 or any obligations in connection
therewith.
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3.6 DEVICE SUPPLY; OTHER TECHNOLOGY. If Alliance desires to utilize
other Inhale proprietary technology, such as a delivery device or processes
for packaging powders that is covered by intellectual property rights owned
or controlled by Inhale in connection with the development of a Designated
Product, the parties will negotiate in good faith a license or supply
agreement containing commercially reasonable terms under which Inhale shall
supply to Alliance such delivery device(s) in connection with the development
and commercialization of Designated Products.
3.7 SUBLICENSES. The Call Rights and other rights described herein
shall not be transferable by Alliance to any other person or entity, except
(i) as provided in Section 7.8 and (ii) that Alliance shall have the right at
any time after commencement of Phase IIa clinical trials for such Designated
Product to grant sublicenses under the license granted to Alliance for the
relevant Designated Product to Third Parties other than Competitors of
Inhale. Any such right to sublicense includes the right to grant a sublicense
to use, sell, offer for sale or import the relevant Designated Product, and
shall include the right to manufacture a Powder Formulation of the Active
Substance of such Designated Product only if Alliance obtains such right
pursuant to Section 3.2 or 3.5. Any sublicensee of Alliance that manufactures
a Powder Formulation of the Active Substance shall be subject to
confidentiality obligations and use limitations with respect to the Inhale
Technology substantially similar to those provided in the second sentence of
Section 3.5(c).
3.8 NO FURTHER PAYMENTS. The purpose of the payments provided for in
Sections 3.4 and 3.5 is to provide Inhale customary, arm's-length
compensation related to powder processing work performed by Inhale with
respect to Designated Products, but not to provide Inhale compensation for
its ownership of intellectual property covering the manufacture of a Powder
Formulation of an Active Substance of a Designated Product ("Other Inhale
Technology"). Other than the payments referred to in Sections 3.4, 3.5 and
3.6, Alliance shall have no obligation to pay Inhale any amounts, by way of
royalties or otherwise, in connection with the development, manufacture, sale
or use of Designated Products developed pursuant to the exercise of Call
Rights in connection with Inhale's manufacture of a Powder Formulation of an
Active Substance. However, if the Parties enter into an agreement pursuant to
this Article 3 under which Inhale agrees to perform final container filling
or packaging of a Powder Formulation, or to supply devices to Alliance as
provided in Section 3.6, then such agreement shall provide for additional
payments to Inhale as the parties may mutually agree that will provide to
Inhale reasonable and customary compensation for a license under Inhale's
proprietary technology covering or including such Other Inhale Technology.
3.9 LICENSE. Effective as of the first to occur of (i) the effective
date of any Collaboration Agreement between the parties that may be entered
into pursuant to Section 3.2 (b) or (ii) Alliance's provision of notice to
Inhale that Alliance has elected to proceed with development of a product
with respect to which Inhale rejected a Call Right for reasons set forth in
Sections 3.2(a) (iv), (v), or (vi), as permitted under the last sentence of
Section 3.2(a), or following the failure of the parties to agree on a
Collaboration Agreement, as permitted under Section 3.2 (the "Notice Date"),
the license granted to Alliance pursuant to Section 3.3 of the License to
Alliance shall become effective with respect to such Designated Product on a
worldwide basis. Notwithstanding the foregoing, if as of the second
anniversary of the Notice Date for such Designated Product, Alliance does not
own or acquire rights to any patent applications or patents
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covering such Designated Product and the use thereof in the Inhale Field in
the United States and four (4) of the remaining Major Countries (other than
pursuant to the License to Alliance), then effective as of such date, such
license granted to Alliance for such Designated Product shall revert to
Inhale with respect to those Major Countries in which Inhale has Designated
Product Patent Rights covering such Designated Products and the use thereof
in the Inhale Field and in which Alliance does not own or possess rights
under patent applications or patents covering such Designated Product in such
countries (other than pursuant to License to Alliance), without otherwise
affecting such license granted to Alliance for such Designated Product with
respect to all other countries.
3.10 AVAILABILITY OF THE LICENSED KNOW-HOW. If Alliance obtains the
right to manufacture or have manufactured a Powder Formulation of an Active
Substance pursuant to Section 3.5, upon Alliance's request, which request
shall not be made more than four (4) times a year, Inhale shall provide
Alliance with all information regarding the Designated Product Know-How (as
defined in the License to Alliance) necessary or useful for the manufacture
of such Designated Product.
3.11 USE OF PULMOSPHERES-Registered Trademark- TRADEMARK. Inhale
shall grant to Alliance a license under the trademarks
PulmoSpheres-Registered Trademark- and Homodispersion-Registered Trademark-
for use in connection with the commercialization of Designated Products as
provided in Section 3.4 of the License to Alliance.
ARTICLE 4
CONFIDENTIALITY
4.1 CONFIDENTIAL INFORMATION. For a period of seven (7) years
following the Effective Date, each party shall maintain in confidence all
Confidential Information disclosed by the other party, and shall not use,
disclose or grant the use of the Confidential Information except on a
need-to-know basis to its Affiliates' and actual or potential sublicensees,
directors, officers, employees, agents, consultants, clinical investigators,
contractors, distributors or permitted assignees, to the extent such
disclosure is reasonably necessary in connection with such party's activities
in connection with its performance under and exercise of rights expressly
provided in this Agreement. To the extent that disclosure is authorized by
this Agreement, prior to disclosure, a party hereto shall obtain agreement of
any such Person to hold in confidence and not make use of the Confidential
Information of the other party for any purpose other than those permitted by
this Agreement.
4.2 PERMITTED DISCLOSURES. The confidentiality obligations contained
in this Article 4 shall not apply to the extent that the receiving party (the
"Recipient") is required (a) to disclose information by law, order or
regulation of a governmental agency or a court of competent jurisdiction, or
(b) to disclose information to any governmental agency for purposes of
obtaining approval to test or market a product, provided in either case that
the Recipient shall provide written notice thereof to the other party and
sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof, and shall use reasonable efforts to secure
confidential treatment of, or a protective order for, the information so
required to be disclosed.
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ARTICLE 5
INDEMNIFICATION
5.1 INDEMNIFICATION. Each party shall defend, indemnify and hold the
other party and any successor and assign, director, officer, employee,
Affiliate and agent thereof harmless from all losses, liabilities, damages
and expenses including attorneys' fees and costs (all "Liabilities") incurred
as a result of any claim, demand, action or proceeding by any Third Party to
the extent arising out of the negligence, recklessness or intentional acts or
omissions of the indemnifying party or its Affiliates in connection with the
development of the Designated Products. Any agreements entered into by the
parties pursuant to Article 3 shall contain an obligation of Alliance to
indemnify Inhale for claims arising from Alliance's manufacture, use, sale,
offer for sale or import of Designated Products.
5.2 PROCEDURE. A party and any successor and assign, director,
officer, employee, Affiliate and Agent thereof (each an "Indemnitee") that
intends to claim indemnification under this Article 5, shall promptly notify
the other party (the "Indemnitor") of any claim demand, action or proceeding
relating to a Liability in respect of which the Indemnitee may seek such
indemnification. The Indemnitor shall have the right to participate in, and,
to the extent the Indemnitor so desires, jointly with any other indemnitor
similarly noticed, to assume the defense thereof with counsel selected by the
Indemnitor; provided, however, that the Indemnitee shall have the right to
retain separate counsel, together with all Indemnitees similarly situated, at
Indemnitor's expense, if representation of the Indemnitee by the counsel
retained by the Indemnitor would be inappropriate due to actual or potential
conflicts of interests between the Indemnitee and any other party represented
by such counsel therein. The indemnity obligation in this Article 5 shall not
apply to amounts paid in settlement of any claim, demand, action or
proceeding relating to a Liability subject to the indemnification obligation
set forth in Section 5.1 if such settlement is effected without the consent
of the Indemnitor, which consent shall not be unreasonably withheld or
delayed. The failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action or proceeding, if prejudicial
to its ability to defend such action or proceeding, shall relieve Indemnitor
of any liability to the Indemnitee under this Article 5, but the omission to
deliver such notice to Indemnitor shall not relieve it of any liability that
it may have to the Indemnitee other than under this Article 5. The Indemnitor
may not settle the action or otherwise consent to an adverse judgment in such
action that diminishes the rights or interests of the Indemnitee without the
express written consent of the Indemnitee. The Indemnitee, its employees and
agents, shall reasonably cooperate with Indemnitor and its legal
representatives in the investigation and defense of any claim, demand, action
or proceeding covered by this indemnification.
ARTICLE 6
ARBITRATION
6.1 ARBITRATION. Any dispute, controversy or claim initiated by
either Inhale or Alliance arising out of, resulting from or relating to this
Agreement, or the performance by either party of its obligations under this
Agreement (other than bona fide third party actions or proceedings filed or
instituted in an action or proceeding by a Third Party against Inhale or
Alliance), shall be finally resolved by binding arbitration. Whenever Inhale
or Alliance shall decide to institute
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arbitration proceedings, it shall give written notice to that effect to the
other. Either party may, notwithstanding this Agreement, seek from any
judicial authority pre-award interim, provisional or conservatory relief that
may be necessary to protect the rights of that party pending the arbitrator's
determination of the merits of the controversy. Discovery in any arbitration
proceeding under this Section 6.1 shall be permitted as set forth in the
Federal Rules of Civil Procedure with respect to the performance by the
parties of their obligations under this Agreement and such other matters as
the arbitrator may determine (it being the intent of the parties that full
discovery occur with respect to the salient facts). The parties shall apply
the Rules of Federal Evidence to the hearing. Any such arbitration shall be
conducted under the Comprehensive Rules for Commercial, Real Estate and
Construction Cases of the Judicial Arbitration & Mediation Services by a
single arbitrator chosen by mutual consent of Inhale and Alliance. Should
Inhale and Alliance fail to agree on the selection of an arbitrator, Inhale
and Alliance shall each appoint one arbitrator and the two arbitrators shall
agree upon a neutral third arbitrator to serve as the sole arbitrator. Any
such arbitration shall be held in San Carlos if initiated by Alliance, and in
San Diego if initiated by Inhale. The arbitrator shall render his or her
decision within thirty (30) days of the completion of the arbitration. The
arbitrator shall have the authority to allocate between the parties the costs
of arbitration in such equitable manner as he or she determines. Judgment
upon the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award
and an order of enforcement, as the case may be. In no event shall a demand
for arbitration be made after the date when institution of a legal or
equitable proceeding based upon such claim, dispute or other matter in
question would be barred by the applicable statute of limitations or the
provisions of this Agreement. The parties hereby waive their right to a jury
trial in connection with any matter submitted for resolution by arbitration
hereunder, except as provided in the last sentence hereof. Notwithstanding
the foregoing, disputes regarding the validity, scope or enforceability of
patents shall be submitted to a court of competent jurisdiction in the
country where such patent has issued.
ARTICLE 7
MISCELLANEOUS
7.1 NOTICES. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties to the other
shall be in writing and delivered to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor, and shall be effective upon receipt by
the addressee.
If to Alliance: Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, California 92121
Attention: President
With copies to: Lloyd A. Rowland
Vice-President and General Counsel
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, California 92121
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<PAGE>
If to Inhale: Inhale Therapeutic Systems
150 Industrial Road
San Carlos, California 94070
Attention: Legal Department
With copies to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attention: Robert L. Jones, Esq.
7.2 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
7.3 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstance other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
7.4 WAIVER. No failure or delay on the part of any party to exercise
any right under this Agreement, operate as a waiver of such right; and no single
or partial exercise of any such right shall preclude any other or further
exercise thereof or of any other right. No party shall be deemed to have waived
any claim arising out of this Agreement, or any right under this Agreement,
unless the waiver of such right is expressly set forth in a written instrument
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
7.5 ENTIRE AGREEMENT. This Agreement, together with the Asset Purchase
Agreement, License to Alliance and the License to Inhale, contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied representations, agreements and understandings, either oral
or written, heretofore made are expressly superseded by this Agreement. This
Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by both parties.
7.6 INDEPENDENT CONTRACTORS. Each party hereby acknowledges that the
parties shall be independent contractors and that the relationship between the
parties shall not constitute a partnership, joint venture or agency. Neither
party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other party, without the prior consent of the other party to do so.
7.7 ASSIGNMENT. Except as otherwise expressly provided under this
Agreement neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred (whether voluntarily, by operation of law or
otherwise), without the prior express written consent of the other party;
PROVIDED, HOWEVER, that either party may, without such consent, assign this
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Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction; and further provided that in no event shall
Alliance assign this Agreement or its rights and obligations hereunder to a
Competitor of Inhale or shall Inhale assign its rights under this Agreement
to an entity that has fewer than two hundred (200) employees without
Alliance's prior written consent, not to be unreasonably withheld.
Notwithstanding the foregoing, Inhale may only assign its obligations under
this Agreement to a third party in conjunction with an assignment of
sufficient rights under the Pulmospheres-Registered Trademark- Technology
necessary for the performance of its obligations hereunder. Any permitted
assignee shall assume all obligations of its assignor under this Agreement.
Any purported assignment or transfer in violation of this Section 7.7 shall
be void.
7.8 NO FURTHER RIGHTS. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a party, as a result of this Agreement,
obtain any ownership interest, license or other right in any invention,
discovery, composition or other technology, or in any patent right or other
intellectual property right, of the other party. No rights other than those
expressly provided in this Agreement are granted to either party hereunder, and
no additional rights shall be deemed granted, by implication, estoppel or
otherwise.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall for all purposes be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ALLIANCE PHARMACEUTICAL CORP.
By: /s/
-------------------------------------------
Name: Theodore D. Roth
----------------------------------------
Title: President and Chief Operating Officer
---------------------------------------
INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/
--------------------------------------------
Name: Brigid A. Makes
-----------------------------------------
Title: Vice President & Chief Financial Officer
----------------------------------------
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SCHEDULE A
LIST OF COMPETITORS
*
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<PAGE>
Exhibit 99.2(c)
LICENSE AGREEMENT
(License to Inhale)
THIS LICENSE AGREEMENT (this "Agreement") dated as of November 4, 1999
(the "Effective Date"), is entered into between ALLIANCE PHARMACEUTICAL CORP., a
New York corporation ("Alliance"), having a place of business at 3040 Science
Park Road, San Diego, California 92121, and INHALE THERAPEUTIC SYSTEMS, INC., a
Delaware corporation ("Inhale"), having a place of business at 150 Industrial
Road, San Carlos, California 94070.
R E C I T A L S :
WHEREAS, Alliance and Inhale have entered an Asset Purchase
Agreement dated as of the Effective Date (as amended or restated from time to
time, the "Asset Purchase Agreement"), pursuant to which Alliance assigned
and sold to Inhale certain patent rights and know-how relating to the
PulmoSpheres-Registered Trademark- Technology (as defined below).
WHEREAS, pursuant to the Asset Purchase Agreement, Alliance has agreed
to grant to Inhale a license under certain patent rights and know-how for use in
the Inhale Field (as defined below) on the terms set forth herein, and Inhale
has agreed to grant to Alliance certain rights under the License Agreement
(License to Alliance) and the Product Development Rights Agreement, in each case
between the parties and of even date herewith (respectively, the "License to
Alliance" and the "Product Development Rights Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. Without limitation, a Person shall be regarded
as in control of another Person if it owns, or directly or indirectly controls,
at least fifty percent (50%) of the voting stock or other ownership interest of
the other Person, or if it directly or indirectly possesses the power to direct
or cause the direction of the management and policies of the other Person by any
means whatsoever.
1.2 "CONFIDENTIAL INFORMATION" shall mean, with respect to a party, all
information of any kind whatsoever, and all tangible and intangible embodiments
thereof of any kind
* INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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whatsoever, which is disclosed by such party to the other party and is marked,
identified as or otherwise acknowledged to be confidential at the time of
disclosure to the other party. Notwithstanding the foregoing, Confidential
Information of a party shall not include information which the other party can
establish by written documentation (a) to have been publicly known prior to
disclosure of such information by the disclosing party to the other party, (b)
to have become publicly known, without fault on the part of the other party,
subsequent to disclosure of such information by the disclosing party to the
other party, (c) to have been received by the other party at any time from a
source, other than the disclosing party, rightfully having possession of and the
right to disclose such information, (d) to have been otherwise known by the
other party prior to disclosure of such information by the disclosing party to
the other party, or (e) to have been independently developed by persons on
behalf of the other party without access to or use of such information disclosed
by the disclosing party to the other party. For purposes of this Agreement, the
Purchased Assets (as defined in the Asset Purchase Agreement) shall constitute
Confidential Information of Inhale subject to the provisions of clauses (a) and
(b) of the immediately preceding sentence.
1.3 "IMPROVEMENTS" shall mean all discoveries and inventions regarding
PulmoSpheres Technology in the Inhale Field, which are conceived and reduced to
practice by or on behalf of Alliance (a) in the course of Alliance's practice of
the license granted to Alliance under Sections 3.2 and 3.3 of the License to
Alliance relating solely to Inhale's core technologies ("Core Technology") of
powder processing, preparation and delivery; the formulation of powders for
aerosol delivery; filling and packaging of powder formulations; and devices and
methods for aerosol delivery of powder formulations ("Assignable Improvements"),
or (b) either in the course of Alliance's practice of the license granted to
Alliance under Sections 3.2 and 3.3 of the License to Alliance (other than Core
Technology), or outside the scope of activities conducted pursuant to Alliance's
practice of the license granted to Alliance pursuant to Sections 3.2 and 3.3 of
the License to Alliance during the ************ **** ****** following the
Effective Date ("Licensable Improvements"), in each case whether or not such
Improvements are claimed in a pending patent application or an issued patent.
1.4 "INHALE FIELD" shall mean uses of perforated microstructures within
the respiratory tract, including without limitation the nasal passage; provided,
however, the Inhale Field shall not include the use of perforated
microstructures in connection with the direct intratracheal or direct pulmonary
administration (e.g., via bronchoscope or endotracheal tube) of fluorochemicals
or other liquids. For clarity, the Inhale Field includes the administration of
perforated microstructures containing compounds by means of metered dose
inhaler, dry powder inhaler, nasal spray, or by nebulization of perforated
microstructures formulated with fluorochemicals as suspending agents, provided
that the quantities of fluorochemicals so included in such formulation for
nebulization do not exceed that which is commercially reasonably necessary to
provide effective delivery of the active agent. It is presently anticipated that
the quantities of fluorochemicals to be used for nebulization of an active agent
by or on behalf of Inhale will not exceed *************.
1.5 "LICENSE TO ALLIANCE" shall have the meaning set forth in the
Recitals.
1.6 "LICENSED KNOW-HOW" shall mean (a) all information, inventions,
technology and data regarding the PulmoSpheres-Registered Trademark-
Technology in the Inhale Field relating to the preparation of
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emulsions or suspensions for medical use, the incorporation of active drug
substances into emulsion or suspension preparations, and the spray drying
technique for making powders, including specifications for the nozzle and bulk
powder collection device, which is not generally known and which is necessary or
useful for Inhale to develop, manufacture, commercialize or use Products in the
Inhale Field, in which Alliance now has an ownership or licensable interest, and
(b) all information and data regarding Licensable Improvements which is not
generally known and which is necessary or useful for Inhale to develop,
manufacture, commercialize or use Products in the Inhale Field, in which
Alliance acquires an ownership or licensable interest.
1.7 "LICENSED PATENT RIGHTS" shall mean (a) those certain patents
listed on Schedule A and all foreign counterpart patent applications and patents
claiming priority of such patent applications and patents; (b) all patents and
patent applications in any country that claim Licensable Improvements; (c) all
patents that have issued or in the future issue from any of the foregoing patent
applications, including utility, model and design patents and certificates of
invention; and (d) all divisionals, continuations, continuations-in-part,
reissues, renewals, extensions or additions to any of the foregoing patent
applications and patents; in each case in which Alliance now has or hereafter
acquires an ownership or licensable interest.
1.8 "PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.9 "PRODUCT" shall mean a human pharmaceutical, the making, using
or selling of which (i) is then covered by a Valid Claim of the Assigned
Patent Rights (as defined in the Asset Purchase Agreement) or (ii) which
embodies or incorporates PulmoSpheres-Registered Trademark- Technology and
uses, incorporates or is based on the Know-How (as defined in the Asset
Purchase Agreement) or any Licensed Know-How.
1.10 "PRODUCT DESIGNATION PERIOD" shall have the meaning set forth in
the Product Development Rights Agreement.
1.11 "PRODUCT DEVELOPMENT RIGHTS AGREEMENT" shall have the meaning set
forth in the Recitals.
1.12 "PULMOSPHERES-Registered Trademark- TECHNOLOGY" shall mean (i)
the method of manufacturing hollow and porous spray dried particles using a
perfluorocarbon emulsion or other blowing agents described in the Assigned
Patent Rights (as defined in the Asset Purchase Agreement), and (ii) the
particles manufactured by such method, both as further described in all of
the Assigned Patent Rights and Proprietary Purchased Assets (as defined in
the Asset Purchase Agreement).
1.13 "THIRD PARTY" shall mean any Person other than Alliance, Inhale
and their respective Affiliates.
1.14 "VALID CLAIM" shall mean a claim in a pending patent application
or an unexpired, issued claim contained within a patent which issued therefrom
and has not been found to be
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<PAGE>
unpatentable, invalid or unenforceable by a court or other authority in the
subject country from which decision an appeal is taken or can be taken.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each party hereby represents and warrants to the other party as
follows:
2.1 CORPORATE EXISTENCE. Such party is a corporation duly organized,
validly existing and in good standing under the laws of the state in which it is
incorporated.
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
2.3 NO CONFLICT. The execution and delivery of this Agreement and the
performance of such party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.
ARTICLE 3
LICENSE GRANTS; ASSIGNABLE IMPROVEMENTS
3.1 LICENSED PATENT RIGHTS. Alliance hereby grants to Inhale an
irrevocable, nonexclusive, worldwide, royalty-free (except as provided in the
Asset Purchase Agreement) license (including the nonexclusive right to grant
sublicenses) under the Licensed Patent Rights for use in the Inhale Field,
including without limitation the right to make, use, offer for sale, sell and
import Products for use in the Inhale Field.
3.2 LICENSED KNOW-HOW. Alliance hereby grants to Inhale an irrevocable,
exclusive, worldwide, royalty-free (except as provided in the Asset Purchase
Agreement) license (including the exclusive right to grant sublicenses) under
Licensed Know-How described in Section 1.6(a) for use in the Inhale Field,
including without limitation the right to make, use, offer for sale, sell and
import Products for use in the Inhale Field. Alliance hereby grants to Inhale an
irrevocable, nonexclusive, worldwide, royalty-free license (including the
nonexclusive right to grant sublicenses) under Licensed Know-How described in
Section 1.6(b) for use in the Inhale Field, including without limitation the
right to make, use, sell, offer for sale and import Products for use in the
Inhale Field.
3.3 ASSIGNABLE IMPROVEMENTS. Alliance shall, and hereby does, grant to
Inhale all right, title and interest in and to all Assignable Improvements (as
defined in Section 1.3(a)), together with all intellectual property rights
relating thereto (including without limitation all
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<PAGE>
patent applications or patents claiming such Assignable Improvements). Alliance
agrees promptly to disclose to Inhale any such Assignable Improvements and to
execute such documents and perform such other acts as Inhale may reasonably
request to obtain, perfect and enforce such rights to the Assignable
Improvements and the assignment thereof.
3.4 INHALE COVENANT. Inhale shall not knowingly use or sell products or
compounds claimed in the Licensed Patent Rights or incorporating or made using
the Licensed Know-How outside of the Inhale Field.
ARTICLE 4
CONFIDENTIALITY
4.1 CONFIDENTIAL INFORMATION. For a period of seven (7) years following
the Effective Date, each party shall maintain in confidence all Confidential
Information disclosed by the other party, and shall not use, disclose or grant
the use of the Confidential Information except on a need-to-know basis to its
Affiliates' and actual or potential sublicensees, directors, officers,
employees, agents, consultants, clinical investigators, contractors,
distributors or permitted assignees, to the extent such disclosure is reasonably
necessary in connection with such party's activities in connection with its
performance under and exercise of rights expressly provided in this Agreement.
To the extent that disclosure is authorized by this Agreement, prior to
disclosure, a party hereto shall obtain agreement of any such Person to hold in
confidence and not make use of the Confidential Information of the other party
for any purpose other than those permitted by this Agreement.
4.2 TERMS OF THIS AGREEMENT. Except as otherwise provided in this
Article 4, neither party shall disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the other party.
Notwithstanding the foregoing, prior to execution of this Agreement, the parties
shall have agreed upon the substance of information that can be used to describe
the terms of this transaction, and each party may disclose such information, as
modified by mutual agreement from time to time, without the other party's
consent.
4.3 PERMITTED DISCLOSURES. The confidentiality obligations contained in
this Article 4 shall not apply to the extent that the receiving party (the
"Recipient") is required (a) to disclose information by law, order or regulation
of a governmental agency or a court of competent jurisdiction, or (b) to
disclose information to any governmental agency for purposes of obtaining
approval to test or market a product, provided in either case that the Recipient
shall provide written notice thereof to the other party and sufficient
opportunity to object to any such disclosure or to request confidential
treatment thereof, and shall use reasonable efforts to secure confidential
treatment of, or a protective order for, the information so required to be
disclosed.
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ARTICLE 5
LICENSED PATENT RIGHTS
5.1 PROSECUTION AND MAINTENANCE.
5.1.1 Subject to the provisions of Section 5.1.2 below, Alliance
shall be responsible for and shall control, at its sole cost, the preparation,
filing, prosecution (including oppositions) and maintenance of the Licensed
Patent Rights. Alliance shall consider in good faith the interests of Inhale in
so doing. Alliance (a) shall supply Inhale with a copy of each patent
application within the Licensed Patent Rights as filed, together with notice of
its filing date and serial number; (b) shall consult with Inhale regarding the
prosecution and maintenance of claims of the Licensed Patent Rights with
application in the Inhale Field, and shall implement all reasonable requests of
Inhale regarding claims of the Licensed Patent Rights with application in the
Inhale Field; and (c) shall inform Inhale promptly of the allowance and issuance
of each patent within the Licensed Patent Rights, together with the date and
patent number thereof, and shall provide Inhale with a copy of such patent as
issued.
5.1.2 If requested by Inhale *
in the Inhale Field. With respect to each patent application and
patent within the Licensed Patent Rights *
of such patent application or patent. Inhale (a) shall *
and (b) shall *
prior to any proposed action. Notwithstanding the foregoing, if
*
5.1.3 Each party shall cooperate with the other party, execute all
lawful papers and instruments and make all rightful oaths and declarations as
may be necessary in the preparation, filing, prosecution and maintenance of the
Licensed Patent Rights.
5.2 ENFORCEMENT OF PATENT RIGHTS.
5.2.1 Each party shall notify the other party of any infringement
known to such party of any Licensed Patent Rights and shall provide the other
party with the available evidence, if any, of such infringement.
5.2.2 Alliance shall have the right, at its sole cost and in its
sole discretion, to determine the appropriate course of action to enforce the
Licensed Patent Rights or otherwise abate the infringement thereof, to take (or
refrain from taking) appropriate action to enforce the
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Licensed Patent Rights, to control any litigation or other enforcement action
and to enter into, or permit, the settlement of any such litigation or other
enforcement action with respect to the Licensed Patent Rights, and shall
consider, in good faith, the interests of Inhale in so doing.
5.2.3 Alliance shall *
. All monies recovered upon the final judgment or settlement
of any such action to enforce the Licensed Patent Rights shall be retained,
after reimbursement of expenses, by Alliance.
5.2.4 Notwithstanding the foregoing, Inhale shall reasonably
cooperate with Alliance, at the expense of Alliance, in the planning and
prosecution of any action to enforce the Licensed Patent Rights as set forth
above.
5.2.5 Alliance shall keep Inhale and its counsel reasonably
informed as to the status of any such action.
5.3 REPRESENTATION BY ALLIANCE. Alliance hereby represents and
warrants to Inhale that, except as set forth on Schedule A, as of the
Effective Date, Alliance does not own or control any patents or patent
applications that would be infringed by the use of the
PulmoSpheres-Registered Trademark- Technology in the Inhale Field, as
described in the Assigned Patent Rights as of the Effective Date (as defined
in the Asset Purchase Agreement).
5.4 ENFORCEMENT OF KNOW-HOW RIGHTS. Each party shall notify the other
party of any misappropriation of the Licensed Know-How in the Inhale Field known
to such party and shall provide to the other party all available evidence
thereof in the notifying party's possession and control. Inhale may request that
Alliance enforce the Licensed Know-How against Third Party misappropriation
thereof in the Inhale Field. If Alliance elects to bring an action against such
Third Party, then Inhale may elect to participate at its own cost in such
action, and Alliance may not enter into or permit settlement of any such action
without Inhale's prior consent, not to be unreasonably withheld. In any suit
brought by both parties, the parties shall share any recovery or award remaining
after reimbursement of expenses equally. If Alliance does not institute an
action against such Third Party to enforce the Licensed Know-How within thirty
(30) days after Inhale makes such a request, then Inhale may, at its sole cost
and discretion, enforce the Licensed Know-How against such Third Party
misappropriation in the Inhale Field, and Alliance shall cooperate as reasonably
requested by Inhale in any suit Inhale brings against such Third Party,
including without limitation being joined as a party plaintiff. Inhale shall
reasonably consider the interests of Alliance in any suit brought pursuant to
this Section 5.4, and shall control any such enforcement action. Inhale may
enter into or permit the settlement of any such action, and shall retain all
monies recovered upon the final judgment or settlement of any such action, after
reimbursement of expenses. Inhale shall keep Alliance reasonably informed as to
the status of any such action brought solely by Inhale.
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ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION. Inhale shall defend, indemnify and hold Alliance
harmless from all losses, liabilities, damages and expenses (including
attorneys' fees and costs) incurred as a result of any claim, demand, action or
proceeding by any Third Party to the extent arising from the research,
development, manufacture and sale of Products by Inhale, its Affiliates and
sublicensees or the use of Products (without regard to culpable conduct), except
to the extent arising from Alliance's development or commercialization of
Designated Products pursuant to the License to Alliance or the gross negligence
or willful misconduct of Alliance, its Affiliates or (sub)licensees (other than
Inhale).
6.2 PROCEDURE. Alliance promptly shall notify Inhale of any claim,
demand, action or proceeding for which Alliance intends to claim such
indemnification. Inhale shall have the right to participate in, and, to the
extent Inhale so desires, jointly with any other indemnitor similarly noticed,
to assume the defense thereof with a separate counsel selected by Inhale. At any
time, if representation of Alliance by the counsel retained by Inhale would be
inappropriate due to actual or potential conflicts of interests between Alliance
and any other party represented by such counsel therein, Alliance shall have the
right to retain separate counsel together with all indemnitees similarly
situated, at Inhale's sole expense. The indemnity agreement in this Article 6
shall not apply to amounts paid in settlement of any claim, demand, action or
proceeding if such settlement is effected without the consent of Inhale, which
consent shall not be unreasonably withheld or delayed. The failure to deliver
notice to Inhale within a reasonable time after the commencement of any such
action or proceeding, if prejudicial to its ability to defend such action or
proceeding, shall relieve Inhale of any liability to Alliance under this Article
6, but the omission to deliver such notice to Inhale shall not relieve it of any
liability that it may have to Alliance other than under this Article 6.
Alliance, its employees and agents, shall reasonably cooperate with Inhale and
its legal representatives in the investigation and defense of any claim, demand,
action or proceeding covered by this indemnification.
6.3 INSURANCE. Inhale shall maintain liability insurance (including
product liability insurance) with respect to the research, development,
manufacture and sale of Products by Inhale, its Affiliates and sublicensees in
such amount as Inhale customarily maintains with respect to the research,
development, manufacture and sales of its similar products. Inhale shall
maintain such insurance for so long as it or its Affiliates or sublicensees
continues to research, develop, manufacture or sell Products, and thereafter for
so long as Inhale customarily maintains such insurance covering the research,
development, manufacture or sale of its similar products.
ARTICLE 7
ARBITRATION
Any dispute, controversy or claim initiated by either Inhale or
Alliance arising out of, resulting from or relating to this Agreement, or the
performance by either party of its obligations under this Agreement (other than
bona fide third party actions or proceedings filed or instituted in an action or
proceeding by a Third Party against Inhale or Alliance), shall be finally
resolved
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by binding arbitration. Whenever Inhale or Alliance shall decide to institute
arbitration proceedings, it shall give written notice to that effect to the
other. Either party may, notwithstanding this Agreement, seek from any judicial
authority pre-award interim, provisional or conservatory relief that may be
necessary to protect the rights of that party pending the arbitrator's
determination of the merits of the controversy. Discovery in any arbitration
proceeding under this Article 7 shall be permitted as set forth in the Federal
Rules of Civil Procedure with respect to the performance by the parties of their
obligations under this Agreement and such other matters as the arbitrator may
determine (it being the intent of the parties that full discovery occur with
respect to the salient facts). The parties shall apply the Rules of Federal
Evidence to the hearing. Any such arbitration shall be conducted under the
Comprehensive Rules for Commercial, Real Estate and Construction Cases of the
Judicial Arbitration & Mediation Services by a single arbitrator chosen by
mutual consent of Inhale and Alliance. Should Inhale and Alliance fail to agree
on the selection of an arbitrator, Inhale and Alliance shall each appoint one
arbitrator and the two arbitrators shall agree upon a neutral third arbitrator
to serve as the sole arbitrator. Any such arbitration shall be held in San
Carlos if initiated by Alliance, and in San Diego if initiated by Inhale. The
arbitrator shall render his or her decision within thirty (30) days of the
completion of the arbitration. The arbitrator shall have the authority to
allocate between the parties the costs of arbitration in such equitable manner
as he or she determines. Judgment upon the award so rendered may be entered in
any court having jurisdiction or application may be made to such court for
judicial acceptance of any award and an order of enforcement, as the case may
be. In no event shall a demand for arbitration be made after the date when
institution of a legal or equitable proceeding based upon such claim, dispute or
other matter in question would be barred by the applicable statute of
limitations or the provisions of this Agreement. The parties hereby waive their
right to a jury trial in connection with any matter submitted for resolution by
arbitration hereunder, except as provided in the last sentence hereof.
Notwithstanding the foregoing, disputes regarding the validity, scope or
enforceability of patents shall be submitted to a court of competent
jurisdiction in the country where such patent has issued.
ARTICLE 8
MISCELLANEOUS
8.1 NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties to the other shall be
in writing and delivered to such other party at its address indicated below, or
to such other address as the addressee shall have last furnished in writing to
the addressor, and shall be effective upon receipt by the addressee.
If to Alliance: Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, California 92121
Attention: President
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With copies to: Lloyd A. Rowland
Vice-President and General Counsel
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, California 92121
If to Inhale: Inhale Therapeutic Systems
150 Industrial Road
San Carlos, California 94070
Attention: Legal Department
With copies to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attention: Robert L. Jones, Esq.
8.2 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstance other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
8.3 WAIVER. No failure or delay on the part of any party to exercise
any right under this Agreement, operate as a waiver of such right; and no single
or partial exercise of any such right shall preclude any other or further
exercise thereof or of any other right. No party shall be deemed to have waived
any claim arising out of this Agreement, or any right under this Agreement,
unless the waiver of such right is expressly set forth in a written instrument
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
8.4 ASSIGNMENT. Except as otherwise expressly provided under this
Agreement neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred (whether voluntarily, by operation of law or
otherwise), without the prior express written consent of the other party;
PROVIDED, HOWEVER, that either party may, without such consent, assign this
Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction and further provided that Inhale may not assign
its rights under this Agreement to an entity that has fewer than two hundred
(200) employees without Alliance's prior written consent, not to be unreasonably
withheld and Alliance may not assign its rights and obligations under this
Agreement unless it concurrently assigns its rights and obligations under the
Product Development Rights Agreement and the License to Alliance. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. Any
purported assignment or transfer in violation of this Section 8.4 shall be void.
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<PAGE>
8.5 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
8.6 ENTIRE AGREEMENT. This Agreement, together with the Asset Purchase
Agreement, License to Alliance and the Product Development Rights Agreement
between the parties of even date herewith, contains the entire understanding of
the parties with respect to the subject matter hereof. All express or implied
representations, agreements and understandings, either oral or written,
heretofore made are expressly superseded by this Agreement. This Agreement may
be amended, or any term hereof modified, only by a written instrument duly
executed by both parties.
8.7 INDEPENDENT CONTRACTORS. Each party hereby acknowledges that the
parties shall be independent contractors and that the relationship between the
parties shall not constitute a partnership, joint venture or agency. Neither
party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other party, without the prior consent of the other party to do so.
8.8 NO FURTHER RIGHTS. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a party, as a result of this Agreement,
obtain any ownership interest, license or other right in any invention,
discovery, composition or other technology, or in any patent right or other
intellectual property right, of the other party. No rights other than those
expressly provided in this Agreement are granted to either party hereunder, and
no additional rights shall be deemed granted, by implication, estoppel or
otherwise.
8.9 LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE SET FORTH IN ARTICLE 6
ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THE PERFORMANCE OF
THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall for all purposes be deemed an original.
8.11 LICENSE ON EARLY TERMINATION OR BANKRUPTCY. All rights or licenses
granted under or pursuant to this Agreement by Alliance to Inhale hereunder are,
and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101 of the U.S. Bankruptcy Code. Alliance agrees that Inhale, as a
licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code with
respect to the licenses granted to Inhale under such intellectual property.
Alliance further agrees that, in the event of the commencement of a bankruptcy
proceeding by or against Alliance under the U.S. Bankruptcy Code, Inhale shall
be entitled to a complete duplicate of (or complete access to, as appropriate)
any such intellectual property and all embodiments of such intellectual
property, and same, if not already in its possession, shall be promptly
delivered to Inhale (i) upon any such commencement of a bankruptcy proceeding
upon Inhale' written request therefor, unless Alliance elects to continue to
perform all of its obligations under this Agreement or (ii) if not delivered
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under (i) above, following the rejection of this Agreement by or on behalf of
Alliance upon written request therefore by Inhale.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ALLIANCE PHARMACEUTICAL CORP.
By: /s/
------------------------------------------------
Name: Theodore D. Roth
---------------------------------------------
Title: President and Chief Operating Officer
---------------------------------------------
INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/
------------------------------------------------
Name: Brigid A. Makes
----------------------------------------------
Title: Vice President and Chief Financial Officer
---------------------------------------------
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SCHEDULE A
LICENSED PATENT RIGHTS
U.S. Patent No. 5,770,181
U.S. Patent No. 5,496,535
U.S. Patent No. 5,531,219
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Exhibit 99.2(d)
LICENSE AGREEMENT
(License to Alliance)
THIS LICENSE AGREEMENT (this "Agreement") dated as of November 4th,
1999 (the "Effective Date"), is entered into between INHALE THERAPEUTIC SYSTEMS,
INC., a Delaware corporation ("Inhale"), having a place of business at 150
Industrial Road, San Carlos, California 94070, and ALLIANCE PHARMACEUTICAL
CORP., a New York corporation ("Alliance"), having a place of business at 3040
Science Park Road, San Diego, California 92121.
R E C I T A L S :
WHEREAS, Alliance and Inhale have entered an Asset Purchase
Agreement dated as of the Effective Date (as amended or restated from time to
time, the "Asset Purchase Agreement"), pursuant to which Alliance assigned
and sold to Inhale certain patent rights and know-how relating to
PulmoSpheres-Registered Trademark- Technology (as defined in the Asset
Purchase Agreement).
WHEREAS, pursuant to the Asset Purchase Agreement, Inhale has agreed
to grant to Alliance a license under the assigned patent rights and know-how,
together with other intellectual property rights, relating to the
PulmoSpheres-Registered Trademark- Technology for all applications outside of
the Inhale Field (as defined below), and for certain products within the
Inhale Field as to which Alliance exercises its rights under the Product
Development Rights Agreement of even date herewith, as amended from time to
time (the "Product Development Rights Agreement").
WHEREAS, pursuant to the Asset Purchase Agreement, Alliance has agreed
to grant to Inhale rights under certain intellectual property rights for use in
the Inhale Field, as set forth in the License Agreement (License to Inhale)
between the parties of even date herewith, as amended from time to time (the
"License to Inhale").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. A Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, at least fifty
percent (50%) of the voting stock or other ownership interest of the other
Person, or if it directly or indirectly possesses the power to direct or cause
the direction of the management and policies of the other Person by any means
whatsoever.
* INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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1.2 "ALLIANCE PRODUCT" shall mean any product for use outside the
Inhale Field which if made, used or sold absent the license granted hereby would
infringe one or more Valid Claims of the Assigned Patent Rights, or which in
material part uses, incorporates or is based on the Assigned Know-How.
1.3 "ASSIGNED KNOW-HOW" shall mean all information and data within the
Purchased Assets (as defined in the Asset Purchase Agreement) other than the
Assigned Patent Rights which is necessary or useful for Alliance to develop,
manufacture, commercialize or use products outside the Inhale Field.
1.4 "ASSIGNED PATENT RIGHTS" shall mean (a) those certain patent
applications listed on Schedule A and all foreign counterpart patent
applications and patents claiming priority of such patent applications and
patents; (b) all patents that in the future issue from the foregoing patent
applications, including utility, model and design patents and certificates of
invention; (c) all divisionals, continuations, continuations-in-part, reissues,
renewals, extensions or additions to any of the foregoing patent applications
and patents; and (d) all patent applications filed, and patents that may issue
therefrom (including all divisionals, continuations, continuations-in-part,
reissues, renewals, extensions or additions to any of such applications or
patents), in any country that claim an Assignable Improvement, as defined in
Section 1.3(a) of the License to Inhale. Such patent applications and patents
shall include only those in which, in the case of (a) through (c), Inhale has
acquired an ownership or licensable interest during the term of this Agreement,
and in the case of (d), Inhale has acquired an ownership interest pursuant to
Section 3.3 of the License to Inhale.
1.5 "COMPETITOR OF INHALE" shall mean *
1.6 "CONFIDENTIAL INFORMATION" shall mean, with respect to a party, all
information of any kind whatsoever, and all tangible and intangible embodiments
thereof of any kind
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whatsoever, which is disclosed by such party to the other party and is marked,
identified as or otherwise acknowledged to be confidential at the time of
disclosure to the other party. Notwithstanding the foregoing, Confidential
Information of a party shall not include information which the other party can
establish by written documentation (a) to have been publicly known prior to
disclosure of such information by the disclosing party to the other party, (b)
to have become publicly known, without fault on the part of the other party,
subsequent to disclosure of such information by the disclosing party to the
other party, (c) to have been received by the other party at any time from a
source, other than the disclosing party, rightfully having possession of and the
right to disclose such information, (d) to have been otherwise known by the
other party prior to disclosure of such information by the disclosing party to
the other party, or (e) to have been independently developed by persons on
behalf of the other party without access to or use of such information disclosed
by the disclosing party to the other party. For purposes of this Agreement, the
Purchased Assets (as defined in the Asset Purchase Agreement) shall constitute
Confidential Information of Inhale subject to the provisions of clauses (a) and
(b) of the immediately preceding sentence.
1.7 "DESIGNATED PRODUCT" shall have the meaning set forth in the
Product Development Rights Agreement.
1.8 "DESIGNATED PRODUCT KNOW-HOW" shall mean all information and data,
including but not limited to the toxicological, pharmacological, clinical and
chemical data, specifications, regulatory submissions, medical uses, adverse
reactions, formulations and quality control methods, which is not generally
known, and which is necessary or useful for Alliance to develop, manufacture,
commercialize or use Designated Products, in which Inhale now has or hereafter
acquires an ownership or licensable interest.
1.9 "DESIGNATED PRODUCT PATENT RIGHTS" shall mean (a) all patents and
patent applications in any country that claim the Designated Products or the use
thereof, or any process reasonably necessary or useful in the development or
manufacture of the Designated Products; (b) all patents that in the future issue
from such patent applications, including utility, model and design patents and
certificates of invention; and (c) all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions or additions to any such
patent applications and patents; in each case in which Inhale now has or
hereafter acquires an ownership or licensable interest. The Designated Product
Patent Rights may include without limitation the Assigned Patent Rights.
1.10 "INHALE FIELD" shall mean uses of perforated microstructures
within the respiratory tract, including without limitation the nasal passage;
provided, however, the Inhale Field shall not include the use of perforated
microstructures in connection with the direct intratracheal or direct pulmonary
administration (e.g., via bronchoscope or endotracheal tube) of fluorochemicals
or other liquids. For clarity, the Inhale Field includes the administration of
perforated microstructures containing compounds by means of metered dose
inhaler, dry powder inhaler, nasal spray, or by nebulization of perforated
microstructures formulated with fluorochemicals as suspending agents, provided
that the quantities of fluorochemicals so included in such formulation for
nebulization do not exceed that which is commercially reasonably necessary to
provide effective delivery of the active agent. It is presently anticipated that
the quantities of
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fluorochemicals to be used for nebulization of an active agent by or on behalf
of Purchaser will not exceed 5 ml per dose.
1.11 "LICENSE TO INHALE" shall have the meaning set forth in the
Recitals.
1.12 "LICENSED KNOW-HOW" shall mean, collectively, the Assigned
Know-How and the Designated Product Know-How
1.13 "LICENSED PATENT RIGHTS" shall mean, collectively, the Assigned
Patent Rights and the Designated Product Patent Rights.
1.14 "MAJOR PHARMACEUTICAL COMPANY" means *
1.15 "PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.16 "PRODUCT" shall mean either an Alliance Product or a Designated
Product, and "Products" shall mean, collectively, all Alliance Products and
Designated Products.
1.17 "PRODUCT DESIGNATION PERIOD" shall have the meaning set forth in
the Product Development Rights Agreement.
1.18 "PRODUCT DEVELOPMENT RIGHTS AGREEMENT" shall have the meaning set
forth in the Recitals.
1.19 "PULMONARY DRUG DELIVERY COMPANY" shall mean *
1.20 "THIRD PARTY" shall mean any Person other than Inhale, Alliance
and their respective Affiliates.
1.21 "VALID CLAIMS" shall mean a claim in a pending patent application,
or an unexpired, issued claim contained within a patent which issued therefrom
and has not been found to be unpatentable, invalid or unenforceable by a court
or other authority in the subject country from which decision an appeal is taken
or can be taken.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each party hereby represents and warrants to the other party as
follows:
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2.1 CORPORATE EXISTENCE. Such party is a corporation duly organized,
validly existing and in good standing under the laws of the state in which it is
incorporated.
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
2.3 NO CONFLICT. The execution and delivery of this Agreement and the
performance of such party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.
ARTICLE 3
LICENSE GRANTS/LICENSE FEES
3.1 OUTSIDE THE INHALE FIELD. Inhale hereby grants to Alliance an
irrevocable, exclusive, worldwide, royalty-free license (including the exclusive
right to grant sublicenses) under the Assigned Patent Rights and Assigned
Know-How for use outside the Inhale Field, including without limitation the
right to make, use, offer for sale, sell and import Alliance Products for use
outside the Inhale Field.
3.2 RESEARCH USES. Inhale hereby grants to Alliance a non-exclusive,
worldwide, royalty-free license (without the right to grant sublicenses, other
than to its Affiliates) under the Assigned Patent Rights and Assigned Know-How
to perform research and development activities to identify products with respect
to which Alliance may desire to exercise a Call Right therefor under the Product
Development Rights Agreement. Such license shall be effective until the first to
occur of (i) any date on which an Improvement made by Alliance would not be
automatically assigned to Inhale under Section 3.3 of the License to Inhale, or
(ii) expiration or termination of the Product Designation Period.
3.3 DESIGNATED PRODUCTS. Inhale hereby grants to Alliance an
irrevocable, exclusive, worldwide (subject to Section 3.9 of the Product
Development Rights Agreement), royalty-free license (including the exclusive
right to grant sublicenses to Third Parties that are not Competitors of Inhale,
subject to Section 3.7 of the Product Development Rights Agreement) under the
Designated Product Patent Rights and Designated Product Know-How to use, offer
for sale, sell and import Designated Products for all purposes. If Alliance
obtains the right to manufacture or have manufactured a powder formulation of
the active substance included in a Designated Product pursuant to Section 3.5 of
the Product Development Rights Agreement, then the foregoing license shall be
expanded to include the right to manufacture or have manufactured a powder
formulation of such active substance of such Designated Product.
3.4 TRADEMARKS. Subject to this Section 3.4, Inhale grants to Alliance
a worldwide, nonexclusive, royalty-free license to use the trademarks
PulmoSpheres-Registered Trademark- and Homodispersion-TM-
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<PAGE>
(the "Marks") solely in connection with the commercialization of Designated
Products. Alliance shall not use the Marks in connection with any other goods or
services without Inhale's prior written consent. Alliance shall use the Marks
only in a manner consistent with commercially reasonable written guidelines to
be established by Inhale and shall indicate on any materials on which the Marks
appear that Inhale is the owner of the Marks. Alliance shall comply with all
applicable laws and regulations pertaining to the proper use and designation of
trademarks in each country in which Alliance uses the Marks, and shall provide
all materials on which it intends to use the Marks to Inhale for prior review
and approval of the manner in which the Marks are used.
3.5 ALLIANCE COVENANT. Except in the case of Designated Products,
Alliance shall not use or sell knowingly products or compounds for use in the
Inhale Field that are made using or that incorporate PulmoSpheres-Registered
Trademark- Technology.
3.6 LICENSE FEE. As provided in section 1.15 of the Asset Purchase
Agreement, in partial consideration of the license, Alliance shall issue to
Inhale on the Effective Date shares of Alliance's common stock in a number equal
to the quotient of $5,000,000 divided by the average closing price of Alliance's
common stock for the fifteen (15) trading days preceding the Effective Date. The
shares of Alliance's common stock are being issued pursuant to Common Stock
Purchase Agreement dated the Effective Date between Alliance and Inhale.
ARTICLE 4
CONFIDENTIALITY
4.1 CONFIDENTIAL INFORMATION. For a period of seven (7) years following
the Effective Date, each party shall maintain in confidence all Confidential
Information disclosed by the other party, and shall not use, disclose or grant
the use of the Confidential Information except on a need-to-know basis to its
Affiliates' and actual or potential sublicensees, directors, officers,
employees, agents, consultants, clinical investigators, contractors,
distributors or permitted assignees, to the extent such disclosure is reasonably
necessary in connection with such party's activities in connection with its
performance under and exercise of rights expressly provided in this Agreement.
To the extent that disclosure is authorized by this Agreement, prior to
disclosure, a party hereto shall obtain agreement of any such Person to hold in
confidence and not make use of the Confidential Information of the other party
for any purpose other than those permitted by this Agreement.
4.2 TERMS OF THIS AGREEMENT. Except as otherwise provided in this
Article 4, neither party shall disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the other party.
Notwithstanding the foregoing, prior to execution of this Agreement, the parties
shall have agreed upon the substance of information that can be used to describe
the terms of this transaction, and each party may disclose such information, as
modified by mutual agreement from time to time, without the other party's
consent.
4.3 PERMITTED DISCLOSURES. The confidentiality obligations contained in
this Article 4 shall not apply to the extent that the receiving party (the
"Recipient") is required (a) to disclose information by law, order or regulation
of a governmental agency or a court of competent
6
<PAGE>
jurisdiction, or (b) to disclose information to any governmental agency for
purposes of obtaining approval to test or market a product, provided in either
case that the Recipient shall provide written notice thereof to the other party
and sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof, and shall use reasonable efforts to secure
confidential treatment of, or a protective order for, the information so
required to be disclosed.
ARTICLE 5
LICENSED PATENT RIGHTS
5.1 PROSECUTION AND MAINTENANCE.
5.1.1 Subject to the provisions of this Section 5.1, Inhale shall
be responsible for and shall control, at its sole cost, the preparation, filing,
prosecution (including oppositions) and maintenance of the Licensed Patent
Rights. Inhale shall consider in good faith the interests of Alliance in so
doing. Inhale (a) shall supply Alliance with a copy of each patent application
within the Licensed Patent Rights as filed, together with notice of its filing
date and serial number; (b) shall consult with Alliance regarding the
prosecution and maintenance of the Licensed Patent Rights, and shall implement
all reasonable requests of Alliance regarding claims with application outside
the Inhale Field or claims to the Designated Products or their use; and (c)
shall inform Alliance promptly of the allowance and issuance of each patent
within the Licensed Patent Rights, together with the date and patent number
thereof, and shall provide Alliance with a copy of such patent as issued.
5.1.2 Inhale shall *
the Inhale Field. Inhale (a) shall *
relating to such applications; (b) shall *
(c) shall *
and (d) shall *
5.1.3 If requested by Alliance *
the Inhale Field. With respect to each such patent application and
patent issuing therefrom *
. For any patent application or patent *
Alliance (a) shall *
7
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* and (b) shall *
prior
to any proposed action. Notwithstanding the foregoing, if *
5.1.4 If Inhale elects to *
Alliance shall *
5.1.5 Each party shall cooperate with the other, execute all lawful
papers and instruments and make all rightful oaths and declarations as may be
necessary in the preparation, filing, prosecution and maintenance of the
Licensed Patent Rights.
5.2 ENFORCEMENT OF PATENT RIGHTS. Each party shall notify the other
party of any infringement known to such party of any Licensed Patent Rights and
shall provide the other party with the available evidence, if any, of such
infringement.
5.2.1 Subject to the provisions of Sections 5.2.2 and 5.2.3 below,
Inhale shall have the right, at its sole cost and in its sole discretion, to
determine the appropriate course of action to enforce the Licensed Patent Rights
or otherwise abate the infringement thereof, to take (or refrain from taking)
appropriate action to enforce the Licensed Patent Rights, to control any
litigation or other enforcement action and to enter into, or permit, the
settlement of any such litigation or other enforcement action with respect to
the Licensed Patent Rights, and shall consider, in good faith, the interests of
Alliance in so doing.
5.2.2 Except as provided in the last sentence of this Section
5.2.2, *
8
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*
All monies recovered upon final judgment or settlement of any such suit to
enforce the Licensed Patent Rights as permitted under this Section 5.2.2 shall
first be allocated to reimburse each party's expenses incurred in conducting
such action and then allocated between the parties in proportion to their
respective damages incurred by reason of such infringement, as determined in
such suit, or as agreed upon in such settlement.
5.2.3 If Alliance learns that a Third Party is infringing the
Designated Product Patent Rights by making and selling a product competitive
with a Designated Product, *
All monies recovered upon final judgment or settlement of any such suit to
enforce the Designated Product Patent Rights as permitted under this Section
5.2.3 shall first be allocated to reimburse each party's expenses incurred in
conducting such action and then allocated between the parties in proportion to
their respective damages incurred by reason of such infringement, as determined
in such suit, or as agreed upon in such settlement.
5.2.4 Notwithstanding the foregoing, the non-controlling party
shall reasonably cooperate with the controlling party, at the expense of the
controlling party, in the planning and prosecution of any action to enforce the
Licensed Patent Rights as set forth above. Each party shall keep the other party
and its counsel reasonably informed as to the status of any such action.
9
<PAGE>
ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION. Alliance shall defend, indemnify and hold Inhale
harmless from all losses, liabilities, damages and expenses (including
attorneys' fees and costs) incurred as a result of any claim, demand, action or
proceeding by any Third Party to the extent arising from the research,
development, manufacture and sale of Products by Alliance, its Affiliates and
sublicensees or the use of Products or the Marks (without regard to culpable
conduct), except to the extent arising from the gross negligence or willful
misconduct of Inhale, its Affiliates or (sub)licensees (other than Alliance).
6.2 PROCEDURE. Inhale promptly shall notify Alliance of any claim,
demand, action or proceeding for which Inhale intends to claim such
indemnification. Alliance shall have the right to participate in, and, to the
extent Alliance so desires, jointly with any other indemnitor similarly noticed,
to assume the defense thereof with a separate counsel selected by Alliance for
all indemnitees similarly situated. At any time, if representation of Inhale by
the counsel retained by Alliance would be inappropriate due to actual or
potential conflicts of interests between Inhale and any other party represented
by such counsel therein, Inhale shall have the right to retain separate counsel,
for all Indemnitees similarly situated, at Alliance's sole expense. The
indemnity agreement in this Article 6 shall not apply to amounts paid in
settlement of any claim, demand, action or proceeding if such settlement is
effected without the consent of Alliance, which consent shall not be
unreasonably withheld or delayed. The failure to deliver notice to Alliance
within a reasonable time after the commencement of any such action or
proceeding, if prejudicial to its ability to defend such action or proceeding,
shall relieve Alliance of any liability to Inhale under this Article 6, but the
omission to deliver such notice to Alliance shall not relieve it of any
liability that it may have to Inhale other than under this Article 6. Inhale,
its employees and agents, shall reasonably cooperate with Alliance and its legal
representatives in the investigation and defense of any claim, demand, action or
proceeding covered by this indemnification.
6.3 INSURANCE. Alliance shall maintain liability insurance (including
product liability insurance) with respect to the research, development,
manufacture and sale of Products by Alliance, its Affiliates and (sub)licensees
(other than Inhale) in such amount as Alliance customarily maintains with
respect to the research, development, manufacture and sales of its similar
products. Alliance shall maintain such insurance for so long as it or such
Affiliates or (sub)licensees continues to research, develop, manufacture or sell
Products, and thereafter for so long as Alliance customarily maintains such
insurance covering the research, development, manufacture or sale of its similar
products.
ARTICLE 7
ARBITRATION
Any dispute, controversy or claim initiated by either Inhale or
Alliance arising out of, resulting from or relating to this Agreement, or the
performance by either party of its obligations under this Agreement (other than
bona fide third party actions or Proceedings filed or instituted
10
<PAGE>
in an action or Proceeding by a Third Party against Inhale or Alliance), shall
be finally resolved by binding arbitration. Whenever Inhale or Alliance shall
decide to institute arbitration proceedings, it shall give written notice to
that effect to the other. Either party may, notwithstanding this Agreement, seek
from any judicial authority pre-award interim, provisional or conservatory
relief that may be necessary to protect the rights of that party pending the
arbitrator's determination of the merits of the controversy. Discovery in any
arbitration proceeding under this Article 7 shall be permitted as set forth in
the Federal Rules of Civil Procedure with respect to the performance by the
parties of their obligations under this Agreement and such other matters as the
arbitrator may determine (it being the intent of the parties that full discovery
occur with respect to the salient facts). The parties shall apply the Rules of
Federal Evidence to the hearing. Any such arbitration shall be conducted under
the Comprehensive Rules for Commercial, Real Estate and Construction Cases of
the Judicial Arbitration & Mediation Services by a single arbitrator chosen by
mutual consent of Inhale and Alliance. Should Inhale and Alliance fail to agree
on the selection of an arbitrator, Inhale and Alliance shall each appoint one
arbitrator and the two arbitrators shall agree upon a neutral third arbitrator
to serve as the sole arbitrator. Any such arbitration shall be held in San
Carlos if initiated by Alliance, and in San Diego if initiated by Inhale. The
arbitrator shall render his or her decision within thirty (30) days of the
completion of the arbitration. The arbitrator shall have the authority to
allocate between the parties the costs of arbitration in such equitable manner
as he or she determines. Judgment upon the award so rendered may be entered in
any court having jurisdiction or application may be made to such court for
judicial acceptance of any award and an order of enforcement, as the case may
be. In no event shall a demand for arbitration be made after the date when
institution of a legal or equitable proceeding based upon such claim, dispute or
other matter in question would be barred by the applicable statute of
limitations or the provisions of this Agreement. The parties hereby waive their
right to a jury trial in connection with any matter submitted for resolution by
arbitration hereunder, except as provided in the last sentence hereof.
Notwithstanding the foregoing, disputes regarding the validity, scope or
enforceability of patents shall be submitted to a court of competent
jurisdiction in the country where such patent has issued.
ARTICLE 8
MISCELLANEOUS
8.1 NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties to the other shall be
in writing and delivered to such other party at its address indicated below, or
to such other address as the addressee shall have last furnished in writing to
the addressor, and shall be effective upon receipt by the addressee.
If to Inhale: Inhale Therapeutic Systems
150 Industrial Road
San Carlos, California 94070
Attention: Legal Department
With copies to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
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<PAGE>
Palo Alto, California 94306
Attention: Robert L. Jones, Esq.
If to Alliance: Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, California 92121
Attention: President
With copies to: Lloyd A. Rowland
Vice-President and General Counsel
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, California 92121
8.2 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstance other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
8.3 WAIVER. No failure or delay on the part of any party to exercise
any right under this Agreement, operate as a waiver of such right; and no single
or partial exercise of any such right shall preclude any other or further
exercise thereof or of any other right. No party shall be deemed to have waived
any claim arising out of this Agreement, or any right under this Agreement,
unless the waiver of such right is expressly set forth in a written instrument
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
8.4 ASSIGNMENT. Except as otherwise expressly provided under this
Agreement neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred (whether voluntarily, by operation of law or
otherwise), without the prior express written consent of the other party;
provided, however, that either party may, without such consent, assign this
Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction, except that in no event shall Alliance assign
its rights or delegate its obligations under this Agreement to a Competitor of
Inhale, and in no event shall Inhale assign its rights under this Agreement to
an entity that has fewer than two hundred (200) employees without Alliance's
prior written consent, not to be unreasonably withheld. Any permitted assignee
shall assume all obligations of its assignor under this Agreement. Any purported
assignment or transfer in violation of this Section 8.4 shall be void.
8.5 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
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<PAGE>
8.6 INDEPENDENT CONTRACTORS. Each party hereby acknowledges that the
parties shall be independent contractors and that the relationship between the
parties shall not constitute a partnership, joint venture or agency. Neither
party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other party, without the prior consent of the other party to do so.
8.7 ENTIRE AGREEMENT. This Agreement, together with the Asset Purchase
Agreement, License to Inhale and the Product Development Rights Agreement,
contains the entire understanding of the parties with respect to the subject
matter hereof. All express or implied representations, agreements and
understandings, either oral or written, heretofore made are expressly superseded
by this Agreement. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both parties.
8.8 INDEPENDENT CONTRACTORS. Each party hereby acknowledges that the
parties shall be independent contractors and that the relationship between the
parties shall not constitute a partnership, joint venture or agency. Neither
party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other party, without the prior consent of the other party to do so.
8.9 NO FURTHER RIGHTS. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a party, as a result of this Agreement,
obtain any ownership interest, license or other right in any invention,
discovery, composition or other technology, or in any patent right or other
intellectual property right, of the other party. No rights other than those
expressly provided in this Agreement are granted to either party hereunder, and
no additional rights shall be deemed granted, by implication, estoppel or
otherwise.
8.10 LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE SET FORTH IN ARTICLE
6 ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THE PERFORMANCE OF
THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
8.11 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall for all purposes be deemed an original.
8.12 LICENSE ON EARLY TERMINATION OR BANKRUPTCY. All rights or licenses
granted under or pursuant to this Agreement by Inhale to Alliance hereunder are,
and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101 of the U.S. Bankruptcy Code. Inhale agrees that Alliance, as a
licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code with
respect to the licenses granted to Alliance under such intellectual property.
Inhale further agrees that, in the event of the commencement of a bankruptcy
proceeding by or against Inhale under the U.S. Bankruptcy Code, Alliance shall
be entitled to a complete duplicate of (or complete access to, as appropriate)
any such intellectual property and all embodiments of such intellectual
property, and same, if not already in its possession, shall be promptly
delivered to Alliance (i) upon any such commencement of a bankruptcy proceeding
upon Alliance's written request therefor, unless
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<PAGE>
Inhale elects to continue to perform all of its obligations under this Agreement
or (ii) if not delivered under (i) above, following the rejection of this
Agreement by or on behalf of Inhale upon written request therefore by Alliance.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/
---------------------------------------------
Name: Brigid A. Makes
------------------------------------------
Title: Vice President & Chief Financial Officer
-----------------------------------------
ALLIANCE PHARMACEUTICAL CORP.
By: /s/
---------------------------------------------
Name: Theodore D. Roth
------------------------------------------
Title: President and Chief Operating Officer
-----------------------------------------
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SCHEDULE A
ASSIGNED PATENT RIGHTS
Engineered Particulates and Method of Use (USSN 09/219,736; PCT 98/20602)
Stabilized Preparations for Use in Nebulizers (USSN 09/218,213; PCT US 98/20603)
Stabilized Preparations for Use in Metered Dose Inhalers (USSN 09/218,212;
PCT US 98/20615)
Stabilized Bioactive Preparations and Methods of Use (USSN 09/218,209; PCT US
98/20613)
Particulate Delivery Systems and Methods of Use (PCT US 99/06855)
15
<PAGE>
SCHEDULE B
COMPETITORS OF INHALE
*
16
<PAGE>
Exhibit 99.2(e)
ALLIANCE PHARMACEUTICALS CORP.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as
of the 4th day of November, 1999 (the "EFFECTIVE DATE"), by and between
Alliance Pharmaceuticals Corp., a New York corporation (the "COMPANY"), and
Inhale Therapeutic Systems, Inc., a Delaware corporation ("INHALE").
RECITALS
WHEREAS, the Company and Inhale have entered into an Asset Purchase
Agreement dated as October 4, 1999 (as amended or restated from time-to-time)
(the "ASSET PURCHASE AGREEMENT") pursuant to which the Company assigned and
sold to Inhale certain assets relating to the PulmoSpheres-Registered
Trademark- Technology (the "PURCHASED ASSETs") as more particularly set forth
in the Asset Purchase Agreement. Capitalized terms not otherwise defined
herein have the meanings assigned to them in the Asset Purchase Agreement.
WHEREAS, in connection with the execution of the Asset Purchase
Agreement, the Company and Inhale have also entered into a License Agreement
dated the Effective Date pursuant to which Inhale granted to the Company
certain rights under the PulmoSpheres-Registered Trademark- Technology for
all applications outside the Inhale Field (as defined in the License
Agreement) and for certain products within the Inhale Field (the "LICENSE").
WHEREAS, in consideration for the grant of the License to the
Company, the Company has agreed to issue to Inhale shares of the Company's
unregistered common stock as provided herein.
AGREEMENT
The Company and Inhale agree as follows:
1. ISSUANCE OF STOCK.
1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms
and conditions of this Agreement, in consideration for the License, and in
reliance on the representations and warranties contained herein, the Company
agrees to issue to Inhale at the Closing (as hereinafter defined) 180,099 shares
of the Company's Common Stock(1), $.01 par value per share (the "COMMON STOCK").
1.2 CLOSING; DELIVERY.
- --------
(1) The number of shares of common stock shall equal the quotient of $5
million divided by the average closing price for the Company's Common Stock
as quoted on the Nasdaq National Market for the fifteen (15) trading days
preceding the Closing Date (as defined in the Asset Purchase Agreement).
<PAGE>
(a) The issuance of the Common Stock shall take
place at the offices of Cooley Godward LLP, 3000 El Camino Real, Palo Alto,
California, at 9:00 A.M. on the Closing Date (as defined in the Asset
Purchase Agreement), or at such other time and place as the Company and
Inhale shall mutually agree, either orally or in writing (which time and
place are designated as the "CLOSING").
(b) At the Closing, the Company shall deliver to
Inhale a certificate representing the shares of Common Stock to be issued to
Inhale in consideration of the License and upon the satisfaction or waiver of
all conditions to Closing set forth in the Asset Purchase Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Inhale that:
2.1 ORGANIZATION; GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the state of which it is incorporated.
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. The
Company (i) has the corporate power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder, and (ii)
has taken all necessary corporate action on its part to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder and the authorization, issuance, and delivery of the Common Stock
issuable hereunder. This Agreement has been duly executed and delivered on
behalf of the Company, and upon due execution and delivery by Inhale, this
Agreement will be a valid and binding obligation of the Company except as
enforceability may be limited to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally or by
equitable principles..
3. REPRESENTATIONS AND WARRANTIES OF INHALE. INHALE HEREBY
REPRESENTS AND WARRANTS TO THE COMPANY THAT:
3.1 ORGANIZATION; GOOD STANDING. Inhale is a corporation
duly organized, validly existing and in good standing under the laws of the
state of which it is incorporated.
3.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Inhale
(i)has the corporate power and authority and the legal right to enter into
this Agreement and to perform its obligations hereunder, and (ii) has taken
all necessary corporate action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered on behalf of Inhale, and
upon due execution and delivery by the Company, this Agreement will be a
valid and binding obligation of Inhale except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors rights generally or by equitable principles.
3.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is
made with Inhale in reliance upon Inhale's representation to the Company,
which by Inhale's execution of this Agreement Inhale hereby confirms, that
the Common Stock to be purchased by Inhale will be acquired for investment
for Inhale's own account, not as a nominee or agent, and not with a view
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<PAGE>
to the resale or distribution of any part thereof, and that Inhale has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Inhale further represents
that Inhale does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or
to any third person with respect to any of the Common Stock.
3.4 INVESTMENT EXPERIENCE. Inhale, taking into account the
personnel and resources it can practically bring to bear on the purchase of
the Common Stock contemplated hereby, is knowledge, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investment in shares representing an investment decision like that involved
in the purchase of the Common Stock, including the evaluation and investment
in securities of companies such as the Company. Inhale acknowledges that it
is able to fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks the investment in the Common
Stock. Inhale also represents that it has not been organized for the purpose
of acquiring the Common Stock. In addition, Inhale has been given access to
such information of the Company which Inhale has desired to review and
analyze in connection with Inhale's purchase of the Common Stock
3.5 ACCREDITED INVESTOR. Inhale is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), as presently in
effect.
3.6 RESTRICTED SECURITIES. Inhale understands that the
Common Stock may not be sold, transferred or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering the Common Stock
or an available exemption from registration under the Securities Act, the
Common Stock must be held indefinitely. In particular, Inhale is aware that
the Common Stock may not be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of that Rule are met.
3.7 LEGENDS. It is understood that the certificates
evidencing the Common Stock may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. 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 the State
of California or any other jurisdiction.
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<PAGE>
4. REGISTRATION RIGHTS.
(a) On or after January 7, 2000, if the Company
shall determine to register any of its Common Stock either for its own
account or the account of a security holder or holders, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, or a registration on any
registration form that does not permit secondary sales, the Company will (i)
promptly give to Inhale written notice thereof; and (ii) use its best efforts
to include in such registration (and any related qualification under blue sky
laws or other compliance), except as set forth in subsection (c) below, and
in any underwriting involved therein, all of such Inhale's Common Stock
specified in a written request or requests within fifteen (15) days after the
written notice from the Company described in clause (i) above is given. Such
written request may specify all or a part of Inhale's Common Stock.
(b) If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise Inhale as a part of the written notice given pursuant
to subsection (a)(i). In such event, the right of Inhale to registration
pursuant to this Section 4 shall be conditioned upon Inhale's participation
in such underwriting and the inclusion of Inhale's Common Stock in the
underwriting to the extent provided herein. In the event Inhale proposes to
distribute its Common Stock through such underwriting, it shall (together
with the Company and the other holders of securities of the Company with
registration rights to participate therein distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected by
the Company.
(c) If the total amount of securities, including
Inhale's Common Stock, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including such Common Stock, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among Inhale and other
selling shareholders according to the total amount of securities entitled to
be included therein owned by Inhale and such selling shareholders or in such
other proportions as shall mutually be agreed to by Inhale and such selling
shareholders).
(d) Inhale's registration rights as set forth in
this Section 4 shall terminate and be of no further force or effect at such
time as all the Inhale Common Stock held by Inhale may be sold under Rule 144
promulgated under the Securities Act during any 90 day period.
5. CALIFORNIA COMMISSIONER OF CORPORATIONS. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE OF SECURITIES IS EXEMPT FROM QUALIFICATIONS BY SECTIONS 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE
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<PAGE>
RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
6. MISCELLANEOUS.
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
warranties, representations and covenants of the Company and Inhale made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
6.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California (without giving effect to
principles of conflict of laws).
6.4 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.5 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery
service or by fax) to the address or fax number set forth beneath the name of
such party below (or to such other address or fax number as such party shall
have specified in a written notice given to the other parties hereto):
if to the Company:
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Attention: Legal Department
Facsimile: (858) 410-5343
-5-
<PAGE>
WITH A COPY TO:
Pillsbury, Madison & Sutro LLP
101 West Broadway, Suite 1800
San Diego, CA 92101-8219
Attention: John M. Dunn, Esq.
Facsimile: (619) 236-1995
if to Inhale:
Inhale Therapeutic Systems, Inc.
150 Industrial Road
San Carlos, CA 94070
Attention: General Counsel
Facsimile: (650) 631-3190
WITH A COPY TO:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
Facsimile: (650) 857-0663
6.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with a written instrument duly executed by the Company
and Inhale.
6.7 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
6.8 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ALLIANCE PHARMACEUTICAL CORP.
By: /s/
--------------------------------------------------
Lloyd A. Rowland
Vice President and General Counsel
INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/
--------------------------------------------------
Brigid A. Makes
Vice President and Chief Financial Officer
-7-
<PAGE>
Exhibit 99.2(f)
ALLIANCE PHARMACEUTICALS CORP.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as
of the 4th day of November, 1999 (the "EFFECTIVE DATE"), by and between
Alliance Pharmaceuticals Corp., a New York corporation (the "COMPANY"), and
Inhale Therapeutic Systems, Inc., a Delaware corporation ("INHALE").
RECITALS
WHEREAS, the Company and Inhale have entered into an Asset Purchase
Agreement dated as October 4, 1999 (as amended or restated from time-to-time)
(the "ASSET PURCHASE AGREEMENT") pursuant to which the Company assigned and
sold to Inhale certain assets relating to the PulmoSpheres-Registered
Trademark- Technology (the "PURCHASED ASSETs") as more particularly set forth
in the Asset Purchase Agreement. Capitalized terms not otherwise defined
herein have the meanings assigned to them in the Asset Purchase Agreement.
WHEREAS, in connection with the execution of the Asset Purchase
Agreement, the Company and Inhale have also entered into a License Agreement
dated the Effective Date pursuant to which Inhale granted to the Company
certain rights under the PulmoSpheres-Registered Trademark- Technology for
all applications outside the Inhale Field (as defined in the License
Agreement) and for certain products within the Inhale Field (the "LICENSE").
WHEREAS, in consideration for the grant of the License to the
Company, the Company has agreed to issue to Inhale shares of the Company's
unregistered common stock as provided herein.
AGREEMENT
The Company and Inhale agree as follows:
1. ISSUANCE OF STOCK.
1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms
and conditions of this Agreement, in consideration for the License, and in
reliance on the representations and warranties contained herein, the Company
agrees to issue to Inhale at the Closing (as hereinafter defined) 1,134,738
shares of the Company's Common Stock(1), $.01 par value per share (the
"COMMON STOCK").
1.2 CLOSING; DELIVERY.
- --------
(1) The number of shares of common stock shall equal the quotient of $5
million divided by the average closing price for the Company's Common Stock
as quoted on the Nasdaq National Market for the fifteen (15) trading days
preceding the Closing Date (as defined in the Asset Purchase Agreement).
<PAGE>
(a) The issuance of the Common Stock shall take
place at the offices of Cooley Godward LLP, 3000 El Camino Real, Palo Alto,
California, at 9:00 A.M. on the Closing Date (as defined in the Asset
Purchase Agreement), or at such other time and place as the Company and
Inhale shall mutually agree, either orally or in writing (which time and
place are designated as the "CLOSING").
(b) At the Closing, the Company shall deliver to
Inhale a certificate representing the shares of Common Stock to be issued to
Inhale in consideration of the License and upon the satisfaction or waiver of
all conditions to Closing set forth in the Asset Purchase Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Inhale that:
2.1 ORGANIZATION; GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the state of which it is incorporated.
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. The
Company (i) has the corporate power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder, and (ii)
has taken all necessary corporate action on its part to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder and the authorization, issuance, and delivery of the Common Stock
issuable hereunder. This Agreement has been duly executed and delivered on
behalf of the Company, and upon due execution and delivery by Inhale, this
Agreement will be a valid and binding obligation of the Company except as
enforceability may be limited to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally or by
equitable principles..
3. REPRESENTATIONS AND WARRANTIES OF INHALE. INHALE HEREBY
REPRESENTS AND WARRANTS TO THE COMPANY THAT:
3.1 ORGANIZATION; GOOD STANDING. Inhale is a corporation
duly organized, validly existing and in good standing under the laws of the
state of which it is incorporated.
3.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Inhale
(i)has the corporate power and authority and the legal right to enter into
this Agreement and to perform its obligations hereunder, and (ii) has taken
all necessary corporate action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered on behalf of Inhale, and
upon due execution and delivery by the Company, this Agreement will be a
valid and binding obligation of Inhale except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors rights generally or by equitable principles.
3.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is
made with Inhale in reliance upon Inhale's representation to the Company,
which by Inhale's execution of this Agreement Inhale hereby confirms, that
the Common Stock to be purchased by Inhale will be acquired for investment
for Inhale's own account, not as a nominee or agent, and not with a view
-2-
<PAGE>
to the resale or distribution of any part thereof, and that Inhale has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Inhale further represents
that Inhale does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or
to any third person with respect to any of the Common Stock.
3.4 INVESTMENT EXPERIENCE. Inhale, taking into account the
personnel and resources it can practically bring to bear on the purchase of
the Common Stock contemplated hereby, is knowledge, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investment in shares representing an investment decision like that involved
in the purchase of the Common Stock, including the evaluation and investment
in securities of companies such as the Company. Inhale acknowledges that it
is able to fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks the investment in the Common
Stock. Inhale also represents that it has not been organized for the purpose
of acquiring the Common Stock. In addition, Inhale has been given access to
such information of the Company which Inhale has desired to review and
analyze in connection with Inhale's purchase of the Common Stock
3.5 ACCREDITED INVESTOR. Inhale is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), as presently in
effect.
3.6 RESTRICTED SECURITIES. Inhale understands that the
Common Stock may not be sold, transferred or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering the Common Stock
or an available exemption from registration under the Securities Act, the
Common Stock must be held indefinitely. In particular, Inhale is aware that
the Common Stock may not be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of that Rule are met.
3.7 LEGENDS. It is understood that the certificates
evidencing the Common Stock may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. 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 the State
of California or any other jurisdiction.
-3-
<PAGE>
4. REGISTRATION RIGHTS.
(a) On or after January 7, 2000, if the Company
shall determine to register any of its Common Stock either for its own
account or the account of a security holder or holders, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, or a registration on any
registration form that does not permit secondary sales, the Company will (i)
promptly give to Inhale written notice thereof; and (ii) use its best efforts
to include in such registration (and any related qualification under blue sky
laws or other compliance), except as set forth in subsection (c) below, and
in any underwriting involved therein, all of such Inhale's Common Stock
specified in a written request or requests within fifteen (15) days after the
written notice from the Company described in clause (i) above is given. Such
written request may specify all or a part of Inhale's Common Stock.
(b) If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise Inhale as a part of the written notice given pursuant
to subsection (a)(i). In such event, the right of Inhale to registration
pursuant to this Section 4 shall be conditioned upon Inhale's participation
in such underwriting and the inclusion of Inhale's Common Stock in the
underwriting to the extent provided herein. In the event Inhale proposes to
distribute its Common Stock through such underwriting, it shall (together
with the Company and the other holders of securities of the Company with
registration rights to participate therein distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected by
the Company.
(c) If the total amount of securities, including
Inhale's Common Stock, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including such Common Stock, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among Inhale and other
selling shareholders according to the total amount of securities entitled to
be included therein owned by Inhale and such selling shareholders or in such
other proportions as shall mutually be agreed to by Inhale and such selling
shareholders).
(d) Inhale's registration rights as set forth in
this Section 4 shall terminate and be of no further force or effect at such
time as all the Inhale Common Stock held by Inhale may be sold under Rule 144
promulgated under the Securities Act during any 90 day period.
5. CALIFORNIA COMMISSIONER OF CORPORATIONS. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE OF SECURITIES IS EXEMPT FROM QUALIFICATIONS BY SECTIONS 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE
-4-
<PAGE>
RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
6. MISCELLANEOUS.
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
warranties, representations and covenants of the Company and Inhale made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
6.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California (without giving effect to
principles of conflict of laws).
6.4 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.5 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery
service or by fax) to the address or fax number set forth beneath the name of
such party below (or to such other address or fax number as such party shall
have specified in a written notice given to the other parties hereto):
if to the Company:
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Attention: Legal Department
Facsimile: (858) 410-5343
-5-
<PAGE>
WITH A COPY TO:
Pillsbury, Madison & Sutro LLP
101 West Broadway, Suite 1800
San Diego, CA 92101-8219
Attention: John M. Dunn, Esq.
Facsimile: (619) 236-1995
if to Inhale:
Inhale Therapeutic Systems, Inc.
150 Industrial Road
San Carlos, CA 94070
Attention: General Counsel
Facsimile: (650) 631-3190
WITH A COPY TO:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
Facsimile: (650) 857-0663
6.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with a written instrument duly executed by the Company
and Inhale.
6.7 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
6.8 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ALLIANCE PHARMACEUTICAL CORP.
By: /s/ Lloyd A. Rowland
--------------------------------------------------
Lloyd A. Rowland
Vice President and General Counsel
INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/ Brigid A. Makes
--------------------------------------------------
Brigid A. Makes
Vice President and Chief Financial Officer
-7-
