SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JUNE 15, 1998
SHEFFIELD PHARMACEUTICALS INC.
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(Exact name of Registrant as specified in its charter)
Delaware 1-12584 13-3808303
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification
Number)
425 WOODSMILL ROAD, ST. LOUIS, MISSOURI 63017
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(Address of Principal executive offices) (Zip Code)
(314) 579-9899
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Registrant's telephone number, including area code
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(Former Name or Former Address; if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On June 15, 1998, Sheffield Pharmaceuticals, Inc. (the
"Company") announced that it had entered into a sublicense and development
agreement (the "Agreement") with Inpharzam International, S.A. of Switzerland
("Inpharzam") (an affiliate of Zambon Group, SpA) for the testing and
development of the Company's rights in its MSI technology in respect of
therapies for respiratory diseases. A copy of the press release disclosing
information relating to the Agreement and certain other matters is attached as
an exhibit to this report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) EXHIBITS
1. Press Release of the Company dated June 16, 1998.
2. Form of Sublicense and Development Agreement between
Sheffield Pharmaceuticals, Inc. and Inpharzam
International, S.A. (portions of this exhibit are
omitted and were filed separately with the Securities
and Exchange Commission pursuant to the Company's
application requesting confidential treatment in
accordance with Rule 24b-2 as promulgated under the
Securities Exchange Act of 1934, as amended).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHEFFIELD PHARMACEUTICALS INC.
Date: June 22, 1998 By:/S/ JUDY ROESKE BULLOCK
-------------------------------------
Judy Roeske Bullock
Vice President and Chief Financial
Officer
For further information:
SHEFFIELD PHARMACEUTICALS, INC. ZAMBON GROUP SPA
425 South Woodsmill Road, Suite 270 20091 Bresso
St. Louis, MO 63017 Via Lillo del Duca, 10
(314) 579-9899 Milan, Italy
Contact: Thomas Fitzgerald Contact: Mario Galbiati
(716) 385-0810 011-39-266-52-4269
JOHN MUIR ASSOCIATES
5400 Kincheloe Drive
Los Angeles, CA 90041
Contact: John Muir
(213) 257-4701
SHEFFIELD AND ZAMBON ANNOUNCE STRATEGIC ALLIANCE FOR MSI
DELIVERY SYSTEM
ST. LOUIS, MISSOURI AND MILAN, ITALY, JUNE 16, 1998 -- Sheffield
Pharmaceuticals, Inc. (AMEX:SHM) and Zambon Group SpA announced today the
formation of a strategic alliance for the worldwide development and
commercialization of respiratory drugs using Sheffield's proprietary Metered
Solution Inhaler (MSI) system. Zambon is one of Europe's top five prescription
respiratory companies.
Specific terms of the agreement, the potential value of which is in excess of
$25 million exclusive of the royalty stream or U.S. co-promotion rights,
include:
o A $2.15 million equity investment by an affiliate of Zambon in
Sheffield, which includes $650,000 previously invested, that will
result in ownership of 13% of Sheffield's outstanding common shares. In
addition, upon the achievement of certain early technical milestones,
Zambon will provide Sheffield with $2 million of interest-free loans as
advances against future milestone payments.
o Zambon assumes all development costs, which Sheffield had estimated at
approximately $20 million, for respiratory disease therapies in the MSI
system, including the four drugs that are Sheffield's current focus:
albuterol, ipratropium, cromolyn and beclomethasone, as well as other
respiratory compounds that may be suitable for use with the MSI.
o Zambon may designate a member of Sheffield's Board of Directors.
o Sheffield receives milestone payments upon NDA approval of each of its
current four drugs and for the first European product licenses for
each of the four drugs.
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o Sheffield receives a royalty from Zambon, ranging from 5%-7%, on all
Zambon sales of the MSI system.
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o Sheffield receives co-promotion rights in the United states and will
be compensated in the form of a profit sharing arrangement.
o Sheffield retains the rights to non-respiratory disease application of
the MSI.
Commenting on the alliance, Thomas Fitzgerald, Sheffield's Chairman said, "We
are pleased to establish this alliance with Zambon for respiratory disease
applications of our MSI delivery system on a global basis. Zambon is a
well-respected pharmaceutical company with extensive respiratory expertise and
the resources to develop and commercialize products using our unique MSI
technology. We are especially pleased to partner with a company that has a
significant presence in Europe and ambitions to be a major competitor in the
U.S. market." Added Fitzgerald, "This alliance allows us to focus on expanding
the scope and depth of our pulmonary delivery technology portfolio while
ensuring that our core MSI respiratory products progress to market in a timely
fashion."
"The MSI system is an important component in the achievement of Zambon's overall
strategic business objectives. The MSI system offers tangible patient benefits
and represents an exciting opportunity for Zambon to develop a broad respiratory
product range on a global basis. This alliance is an important step in the
continued growth and development of Zambon's worldwide respiratory business,"
said Andrea Zambon, President and CEO, Zambon Group.
Zambon Group SpA, headquartered in Milan, Italy, is a research-intensive,
multinational pharmaceutical firm. The group researches, develops and
manufactures healthcare products and fine chemicals, which it markets worldwide
either directly or through license.
Sheffield Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on
the development and commercialization of later stage, lower risk pharmaceutical
opportunities, particularly those utilizing unique pulmonary delivery
technologies over a range of therapeutic areas.
This press release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created hereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the company to successfully develop and commercialize
its technologies. Although the Companies believes that the assumptions
underlying the forward-looking statements contained herein are reasonable, any
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this press release will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the company or any other person
that the objectives and plans of the Companies will be achieved.
###
SUBLICENSE AND DEVELOPMENT AGREEMENT
BETWEEN
SHEFFIELD PHARMACEUTICALS, INC.
AND
INPHARZAM INTERNATIONAL, S.A.
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions..........................................................3
2. Conformance with Siemens Agreements..................................7
3. Development Program..................................................8
4. Exclusive Sublicenses...............................................11
5. Representation, Warranties and Additional Covenants.................19
6. Business Decisions and Commercial Efforts...........................25
7. Data................................................................27
8. Indemnification and Infringement....................................28
9. Termination.........................................................32
10. Events of Force Majeure.............................................35
11. Specific Performance................................................36
12. Further Assurances..................................................37
13. Assignment..........................................................38
14. Choice of Law.......................................................39
15. Contractual Relationship............................................40
16. Notices.............................................................41
17. Miscellaneous.......................................................42
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Appendix A - Patents & Patent Applications
Appendix B - Subscription Agreement
Appendix C - Resolution of Sheffield Board of Directors
Appendix D - Development Plan
Appendix E - Promissory Note
Appendix F - Report re: Albuterol
Appendix G - Report re: Beclomethasone
Appendix H - Co-promotion Principles
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<PAGE>
SUBLICENSE AND DEVELOPMENT AGREEMENT
AGREEMENT (this "Agreement"), made June 15, 1998, between Inpharzam
International, S.A., a corporation organized under the laws of Switzerland and
having its principal executive offices at Via Industria 1, 6814 Cadempino,
Switzerland, and its Affiliates (as hereinafter defined)(hereinafter referred to
as "Inpharzam"), and Sheffield Pharmaceuticals, Inc., a corporation organized
under the laws of the State of Delaware and having offices at 37 South Main
Street, Pittsford, New York 14534 (hereinafter referred to as "Sheffield").
WHEREAS, Sheffield holds i) the exclusive worldwide right to be
supplied with Devices (as hereinafter defined) pursuant to the terms of
Sheffield's Basic Supply Agreement with Siemens Aktiengesellschaft Keramik und
Porzellanwerk (hereinafter "Siemens") dated March 21, 1997 and ii) the exclusive
worldwide rights in and to the Sublicensed Patent Rights and Technology (as
hereinafter defined) pursuant to the terms of Sheffield's License Agreement with
Siemens dated March 21, 1997 and by virtue of its own development work; and
WHEREAS, Sheffield disclosed to Inpharzam's Affiliate (as hereinafter
defined) Zambon Group, S.p.A. (hereinafter "Zambon") under a Confidentiality
Agreement dated [TEXT OMITTED] (hereinafter the "Confidentiality Agreement"),
information relating to a Delivery System and certain Formulations (as
hereinafter defined); and
WHEREAS, Inpharzam wishes to be supplied with Devices and sublicensed
under the Sublicensed Patent Rights and Technology
<PAGE>
exclusively in the Field in the Territory (as hereinafter defined), and
Inpharzam and Sheffield desire to complete testing and development of Licensed
Products (as hereinafter defined); and
WHEREAS, Sheffield granted to Inpharzam an option for such supply and
sublicense under an Option Agreement dated April 14, 1998 and both parties
desire to perform certain studies on various Formulations of medicines to be
used in the Delivery System and to seek regulatory approval to market,
distribute and sell Licensed Products in the Field in the Territory.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter set forth, the parties hereby agree as follows:
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1. Definitions
1.1 "AFFILIATE" means any entity which directly or indirectly controls,
is controlled by or is under common control with a party to this Agreement.
"Control" for the purposes of this definition means the ownership of at least
fifty percent (50%) of the outstanding voting stock of a corporate entity or
voting interest in a non-corporate equity.
1.2 "BASIC LICENSE AGREEMENT" means the License Agreement dated March
21, 1997 between Sheffield and Siemens.
1.3 "BASIC SUPPLY AGREEMENT" means the Basic Supply Agreement dated
March 21, 1997 between Sheffield and Siemens.
1.4 "DELIVERY SYSTEM" means the multi-dose nebulizer comprising the
Device and Dosator that conforms to the Specification, as may be modified and/or
improved from time to time.
1.5 "DEVELOPMENT PLAN" shall mean the plan setting forth the timing and
events relating to the development and registration in the Territory of four (4)
mutually acceptable Licensed Products (which at this time include the
Formulation for albuterol, ipratropium, cromolyn and beclomethasone, or any
other Formulation mutually agreed to by the parties), as attached hereto as
Appendix D.
1.6 "DEVICE" means that portion of the Delivery System to be
manufactured and supplied by Siemens pursuant to the Basic Supply Agreement, as
described in the Specification.
1.7 "DOSATOR" means a dosating system capable of dispensing a
Formulation, as described in the Specification.
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<PAGE>
1.8 "EFFECTIVE DATE" means the date upon which both parties sign this
Agreement.
1.9 "FDA" means the United States Food and Drug Administration and any
successor bodies.
1.10 "FIELD" means the use of various medicines for humans in treating
respiratory disease and/or other lung disease including, but not limited to,
anti-infectives.
1.11 "FIRST COMMERCIAL SALE" means the first sale by Inpharzam, its
Affiliates or sublicensees of a Licensed Product to an independent third party.
1.12 "FISCAL QUARTER" means a quarter of a Fiscal Year.
1.13 "FISCAL YEAR" means the year commencing on the January 1 of the
year during which the First Commercial Sale occurs.
1.14 "FORMULATION" means a preparation of a pharmaceutical capable of
administration to a human by the Delivery System.
1.15 "LICENSED PRODUCT" means any combination of Dosator and
Formulation in the Field which employs the Technology or which would infringe a
Valid Claim of any Sublicensed Patent Rights, but for the sublicense granted in
this Agreement.
1.16 "NDA" means a new drug application submitted to the FDA for
approval to manufacture, promote, market, distribute and sell Licensed Products
as medicine for humans in the Territory.
1.17 "NET SALES" means the total revenues received by Inpharzam or its
Affiliates from the sale of Licensed Products to independent third parties less
the following amounts (i) customary discounts, including cash discounts or
rebates actually allowed or granted, (ii) customary credits or allowances
actually granted upon claims or returns, regardless of the party requesting the
return,
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(iii) separately itemized freight charges paid by Inpharzam or its Affiliates
for delivery, to the extent included in revenue received. Net Sales shall not
include the value of any promotional samples, including any affixed to or
accompanying other products of Inpharzam.
1.18 "NON-US REGULATORY AUTHORITY" means any health agency or
regulatory authority in and throughout the Territory, outside of the United
States, authorized to grant marketing approval for the Licensed Products.
1.19 "SIEMENS AGREEMENTS" is a collective reference to the Basic Supply
Agreement and the Basic License Agreement.
1.20 "SPECIFICATION" means the complete and detailed description of the
Delivery System as set forth in Annex 2 to the Basic Supply Agreement.
1.21 "SUBLICENSED PATENT RIGHTS" mean i) the patents and patent
applications set forth in Appendix A; and ii) any and all extensions, renewals,
continuations, continuations-in-part, divisions, patents-of-addition, reissues,
reexaminations, supplementary protection certificates or foreign counterparts of
any of the foregoing; and iii) any and all patents which are granted on any i)
and ii); and iv) any and all patents and patent applications owned or controlled
or licensed by Sheffield with the right to sublicense which contain claims, the
practice of which would infringe the claims of a patent or patent application
included in i), ii), or iii), or which are based upon or derived from the
Technology.
1.22 "TECHNOLOGY" means any and all inventions, improvements,
discoveries, claims, formulae, processes, data, trade secrets,
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<PAGE>
technologies, and know-how owned or controlled or licensed by Sheffield with the
right to sublicense and i) incorporated in or useful for the manufacture, use or
sale of the Delivery System and/or Formulations in the Field or ii) claimed or
disclosed in any patent or patent application included in Sublicensed Patent
Rights.
1.23 "TERRITORY" means worldwide.
1.24 "VALID CLAIM" means a claim in any issued, unexpired patent within
the Sublicensed Patent Rights which has not been held invalid or unenforceable
by a nonappealed or unappealable decision by a court or other appropriate body
of competent jurisdiction, and which is not admitted to be invalid through
disclaimer, dedication to the public or otherwise.
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<PAGE>
2. Conformance with Siemens Agreements
Sheffield's rights to be supplied with Devices, or in certain
circumstances to manufacture Devices, and Sheffield's rights in and to the
Sublicensed Patent Rights are derived from the Siemens Agreements; Sheffield's
rights in and to the Technology are derived in part from the Siemens Agreements
and in part from Sheffield's own development work. Any rights of Sheffield which
are derived from the Siemens Agreements are subject to all of the terms and
conditions thereof. It is the parties' express intent that the grant to
Inpharzam by Sheffield of any rights derived from the Siemens Agreements be
consistent with the terms and conditions thereof and with Sheffield's
obligations thereunder.
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<PAGE>
3. Development Program
3.1 Inpharzam agrees to carry out at its expense the development of
Licensed Products set forth in the Development Plan attached as Appendix D
hereto. Sheffield agrees that it shall assist Inpharzam in this development
effort at no substantial cost to Sheffield, disclose to Inpharzam all Technology
required by Inpharzam to evaluate Licensed Products and the marketability and
regulatory status of various inhaled medicines for use with the Delivery System
in the Field, and provide Inpharzam with updates of all newly-developed or
newly-acquired Technology.
3.2 (a) Inpharzam shall periodically provide to Sheffield copies of
reports on all development work and testing performed. The reports shall include
but not be limited to reports on clinical development, regulatory matters,
manufacturing status and intellectual property. Sheffield shall promptly
evaluate such reports and provide comments to Zambon based on the Technology,
and on newly-developed or newly-acquired Technology. Representatives of the
parties shall meet at mutually convenient times to discuss planning and progress
of the Development Plan.
(b) All activities of each party shall be carried out by each party
in strict compliance with all applicable federal, state, or local laws,
regulations or guidelines governing such activities. Without limiting the
generality of the foregoing, neither party shall knowingly infringe any United
States or foreign patent or copyright owned by any third party in connection
with the performance of its obligations under this Agreement.
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<PAGE>
3.3 Inventions
(a) All intellectual property rights such as patents, patent
applications, inventions, data, know-how and the like (hereinafter "Intellectual
Property"), owned or controlled by either party prior to the parties entering
into this Agreement or the Option Agreement, shall remain the property of such
party, subject only to the rights granted herein and to Sheffield's obligations
under the Siemens Agreements.
(b) All Intellectual Property conceived and/or first reduced
to practice during the term of this Agreement or the Option Agreement solely by
personnel employed by or on behalf of either party shall remain the property of
such party, subject only to the rights granted herein and to Sheffield's
obligations under the Siemens Agreements.
(c) All Intellectual Property conceived and/or first reduced
to practice during the term of this Agreement or the Option Agreement jointly by
personnel employed by or on behalf of both parties shall be owned jointly,
subject only to the rights granted herein and to Sheffield's obligations under
the Siemens Agreements. Should the parties agree to file patent applications for
the same, they shall do so, employing an attorney or agent mutually agreed upon
to act in their joint behalf and shall share the costs related thereto equally.
In the event that only one party seeks patent protection, then that party shall
bear all costs and the other party shall cooperate fully in the prosecution and
enforcement of any patent application or patent resulting therefrom.
3.4 Inpharzam has previously paid to Sheffield the option sum of Six
Hundred Fifty Thousand Dollars ($650,000.00), the receipt of
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<PAGE>
which is hereby acknowledged, as an investment in the common stock of Sheffield.
Sheffield has delivered to Inpharzam a Certificate for such common stock, the
receipt of which is also hereby acknowledged.
3.5 Promptly after the Effective Date of this Agreement, Sheffield
shall disclose to Inpharzam all of the Technology required by Inpharzam to
practice the Sublicensed Patent Rights and Technology licensed to Inpharzam
hereunder, and shall certify that all such information has been provided.
3.6 Sheffield and Inpharzam agree to form a Committee, which shall
monitor the progress of the development program and the submissions of the NDA's
for the Licensed Products, as set forth in the Development Plan.
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<PAGE>
4. Exclusive Sublicenses
4.1 Sheffield hereby grants to Inpharzam an exclusive sublicense in the
Field under the Sublicensed Patent Rights and the Technology, with the rights to
grant further sublicenses, to make, have made, use and have sold Licensed
Products in the Territory, subject to the Co-Promotion Rights set forth in
Section 4.10. Notwithstanding anything in this Agreement to the contrary, the
parties hereby expressly agree that the sublicense granted to Inpharzam herein
does not extend to chemical entities developed or acquired by Sheffield after
the execution of this Agreement. However, Sheffield agrees that in the event
that such compounds are developed or acquired (a) it shall negotiate in good
faith for the licensing of such chemical entities for use with the Delivery
System in the Field to Inpharzam; and (b) it shall not license such chemical
entities for use with the Delivery System in the Field to any third-party.
4.2 As consideration for the rights granted herein by Sheffield to
Inpharzam, Inpharzam hereby agrees to make the following payments to Sheffield:
(a) Upon execution of this Agreement, Inpharzam shall make an
additional investment in the common stock of Sheffield in the amount of [TEXT
OMITTED], in return for which Sheffield shall issue to Inpharzam in Inpharzam's
name [TEXT OMITTED] shares of the common stock of Sheffield, all in accordance
with the terms of a Subscription Agreement For Shares Of Common Stock
("Subscription Agreement") executed simultaneously herewith and attached hereto
as Appendix B.
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<PAGE>
(b) Said Subscription Agreement shall include a stock purchase
option on the part of Inpharzam granting Inpharzam, in the event of a public or
private sale of additional shares of common stock of Sheffield at a certain
offering price, an option to purchase within ninety (90) days of that sale
enough additional shares of common stock of Sheffield at that offering price, so
that Inpharzam's percentage ownership of common stock of Sheffield immediately
prior to such public or private sale may be maintained.
(c) In addition, Inpharzam shall be entitled as of the date
hereof to designate one member of the Board of Directors of Sheffield, which
member shall be reasonably acceptable to Sheffield, and which board shall
consist of a maximum of seven members and which board shall not be expanded
during the period in which Inpharzam has the right to designate a member of the
board of Sheffield, in accordance with a resolution of the Board of Directors of
Sheffield dated July 15, 1998, a copy of which shall be attached hereto as
Appendix C. Inpharzam shall have the right to maintain its designee on the board
only for so long as Inpharzam or its Affiliates hold [TEXT OMITTED].
(d) Upon execution of this Agreement Inpharzam agrees to
extend to Sheffield an interest free line of credit loan in the amount of [TEXT
OMITTED]. Such line of credit loan may be drawn down and received by Sheffield
in two payments as follows, with each payment being secured by a promise by
Sheffield in the form of the Promissory Note attached as Appendix E hereto to
repay the amount drawn down by October 1, 2002, in accordance with the schedule
set forth therein, or earlier as hereinafter provided:
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<PAGE>
1. [TEXT OMITTED] upon proof of principle of delivery of
albuterol and the issuance of a report of the type set forth in Appendix F
attached hereto.
2. [TEXT OMITTED] upon the conclusion of successful
beclomethasone formulation studies demonstrating technical feasibility and the
issuance of a study report of the type set forth in Appendix G attached hereto.
(e) The parties agree that in the event that marketing approvals for
Licensed Products are not obtained prior to [TEXT OMITTED], they will discuss in
good faith whether and to what extent the repayment schedule set forth in this
Agreement and its Appendix E should be modified.
(f) Inpharzam shall make up to [TEXT OMITTED] additional milestone
payments to Sheffield, each in the amount of [TEXT OMITTED], on the first
business day following receipt by Inpharzam of a written approval letter from
the FDA with respect to the first [TEXT OMITTED] mutually acceptable Licensed
Products in the U.S. and on the first business day following receipt by
Inpharzam of a written approval letter from a Non-US Regulatory Authority in any
of the major countries in Europe, specifically Italy, France, Germany, Spain and
the U.K., with respect to the first [TEXT OMITTED] mutually acceptable Licensed
Products to be incorporated into the Development Plan. The mutually acceptable
Licensed Products include at this time the Formulation for the following:
1. albuterol
2. ipratropium
3. cromolyn
4. beclomethasone,
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<PAGE>
or any other medicines mutually agreed to by both parties. It is expressly
understood that the receipt of a written approval letter from a Non-US
Regulatory Authority in a major European country of any Licensed Product that
has already been approved in a different major European country shall not
trigger an additional milestone payment. Moreover, under no circumstances shall
Inpharzam be required to make payments to Sheffield under this subsection in
excess of [TEXT OMITTED].
(g) At the time of receipt of each of the milestones set forth in
subsection 4.2(f), Sheffield shall, if applicable, make a payment of [TEXT
OMITTED] to Inpharzam to pay down the balance of any outstanding loans set forth
under subsection 4.2(d). The payments set forth in this subsection 4.2(g) shall
be applied equally to the balances of any of the loans set forth in subsections
4.2(d)(1) and 4.2(d)(2) of this Agreement that were drawn down by Sheffield, to
reduce or eliminate (as may be applicable) the earliest of any payments that may
be due. Under no circumstances shall Sheffield be required to pay to Inpharzam
more than the outstanding loan amount.
(h) It is hereby expressly acknowledged that Sheffield has paid to
Siemens the 1998 annual license fee of DM 2,000,000.00, in accordance with
Section 3.2 of the Option Agreement between Sheffield and Zambon. At the time of
execution of this Agreement and, thereafter, at the time each of the above
milestone payments shall be due and payable to Sheffield, and as a condition
precedent to payment by Inpharzam, Sheffield shall submit to Inpharzam a letter
from Siemens confirming that the Siemens Agreements are in
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<PAGE>
full force and effect and that there are no material defaults thereunder.
(i) Sheffield agrees to use reasonable commercial efforts to cooperate
with Inpharzam in any and all efforts involving contacts with and negotiations
with third party suppliers of raw materials, component parts, formulators and
manufacturers of Dosators or other items related to Licensed Products including
but not limited to [TEXT OMITTED] Sheffield further agrees that it shall use its
best efforts to cause Siemens to extend the Basic License Agreement and Basic
Supply Agreement beyond their initial terms, in accordance with Sections 9.1 and
13.1, respectively, thereof.
4.3 Royalties
(a) Royalties shall be paid to Sheffield within 45 days of the
end of each Fiscal Quarter as follows:
(1) [TEXT OMITTED] of Net Sales made that Fiscal
Quarter of Licensed Products for all sales less than [TEXT OMITTED]
in any Fiscal Year;
(2) [TEXT OMITTED] of Net Sales made that Fiscal
Quarter of Licensed Products for all sales in excess of [TEXT OMITTED] but less
than [TEXT OMITTED] in any Fiscal Year;
(3) [TEXT OMITTED] of all Net Sales made that Fiscal
Quarter of Licensed Products for all sales in excess of [TEXT OMITTED] in any
Fiscal Year;
(4) [TEXT OMITTED] of all payments received by
Inpharzam or its Affiliates from sublicensees for the sale of Licensed Products;
and
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(5) During a time in which there are no Valid Claims
under the Sublicensed Patent Rights, the royalty rates set forth above shall be
[TEXT OMITTED].
(b) Royalties shall be earned and paid by Inpharzam to Sheffield, until
the last Valid Claim under the Sublicensed Patent Rights expires. No royalties
shall be payable on sales transactions between Inpharzam and any Affiliate or
sublicensee. Only one applicable royalty payment shall be due on the sale of
each Licensed Product.
4.4 For purposes of determining the amount of royalties payable under
Section 4.3, a sale in a foreign currency shall be converted into U.S. dollars
at an exchange rate as published on the last business day of the applicable
Fiscal Quarter in the Exchange Rate section of the U.S. edition of the WALL
STREET JOURNAL. In the event such rate is not available, a comparable exchange
rate shall be mutually agreed upon by the parties.
4.5 Royalty payments due to Sheffield from Inpharzam shall be
accompanied by a written report of all Net Sales during the applicable Fiscal
Quarter and will be paid in U.S. dollars.
4.6 Records
Both parties shall maintain accurate and complete records,
which shall be available for review and audit by the other party at reasonable
times, as set forth hereinafter.
4.7 Upon the request of Sheffield, Inpharzam will permit, and will
cause its sublicensees to permit, an independent certified public accountant
selected by Sheffield and reasonably acceptable to Inpharzam to have access, not
more than twice in each calendar year, during regular business hours and upon
reasonable notice to
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Inpharzam and its sublicensees, to the records of Inpharzam and its
sublicensees, which may be necessary to verify the accuracy of the quarterly
reports made during the previous Fiscal Year. Said accountant shall not disclose
to Sheffield any information except that which, in the reasonable judgment of
Inpharzam, should properly have been contained in such quarterly report.
4.8 Sheffield and Inpharzam agree and acknowledge that all amounts
payable to Sheffield under this Agreement shall be paid in full by Inpharzam to
Sheffield without deduction for any withholding or similar tax. At the written
request of Inpharzam made to Sheffield from time to time, Sheffield agrees to
execute and deliver such forms as may be delivered to Sheffield to permit
Inpharzam to take advantage of any withholding tax exemptions or reductions that
may be available under applicable tax treaties or tax laws with respect to
amounts payable to Sheffield under this Agreement.
4.9 Regulatory
Inpharzam or its Affiliates shall have, consistent with the
guidelines set forth in the Development Plan, the exclusive authority over all
clinical studies and for preparing, filing, and obtaining approval of the NDA in
the United States and the appropriate marketing approvals throughout the
Territory. Such authority shall include, but not be limited to, Inpharzam's or
its Affiliates' determination of which medicines used in the Delivery Systems
shall be filed for approval in which countries and when.
4.10 Co-promotion Rights
Concurrent with its execution of this Agreement, Inpharzam
grants to Sheffield a right to co-promote Licensed
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Products in the U.S. market consistent with the principles set forth in Appendix
H hereto ("Co-promotion Rights"). Prior to submission of the first application
to the FDA for authority to market a Licensed Product, but in no event later
than twelve months after the execution of this Agreement, Inpharzam or its
designee and Sheffield shall conclude negotiations of the terms and conditions
of such Co-promotion Rights and the parties shall agree upon a Commercialization
Plan. The Commercialization Plan shall establish the minimum requirements for
each of the marketing entities including but not limited to necessary personnel,
geographic territories, and medical specialties, and provide for the
establishment of a co-marketing committee. The co-marketing committee shall be
chaired by Inpharzam or its designee, and Inpharzam shall choose the trademarks
for the products and all details of the marketing program.
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5. Representations, Warranties and Additional Covenants
5.1 Sheffield hereby represents and warrants to Inpharzam that:
(a) Sheffield is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all corporate power and authority to carry on its business as now being
conducted and to own its properties and is duly licensed or qualified as a
foreign corporation in each jurisdiction in which its failure to qualify would
have a material adverse effect on the business, financial condition or
operations of Sheffield.
(b) Sheffield has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Sheffield have been
duly authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Sheffield and constitutes a valid and binding
obligation enforceable in accordance with its terms, subject, as to enforcement,
to applicable bankruptcy, reorganization, insolvency, moratorium, and other laws
affecting creditors' rights generally from time to time in effect.
(c) Neither Sheffield nor any of its Affiliates is a party to,
subject to or bound by any agreement or any judgment, award, order, writ,
injunction or decree of any court, governmental body or arbitrator which would
conflict with or be breached by the execution, delivery or performance of this
Agreement by Sheffield or which could prevent the carrying out of this
Agreement.
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(d) There is (i) no action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or, to Sheffield's
or its Affiliates' best knowledge, threatened nor (ii) to Sheffield's best
knowledge, any investigation pending or threatened against or relating to
Sheffield which, in each case, could prevent the carrying out of this Agreement.
(e) All consents of third parties, governmental authorities
and non-governmental self-regulatory agencies, and all filings with and
notifications of governmental authorities, regulatory agencies (including
non-governmental self-regulatory agencies) or other entities which regulate the
business of Sheffield necessary on the part of Sheffield to the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been obtained or effected.
(f) Subject to the terms and conditions of the Siemens
Agreements, Sheffield is the sole and exclusive holder of the Sublicensed Patent
Rights and Technology rights, and such rights granted herein to Inpharzam will
not violate the rights of any third party. Further, the patents and patent
applications set forth in Appendix A are all of the patents licensed from
Siemens under the Basic License Agreement. Sheffield will promptly update
Appendix A from time to time, as necessary.
(g) To the best of Sheffield's knowledge, as of the Effective
Date, it knows of no facts which would make the sublicense granted herein or the
patents or patent applications which are the subject thereof invalid or
defective, and it knows of no third party patents which would, or patent
applications which if
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issued would, be infringed by either party operating under the terms of this
Agreement. Sheffield agrees to make Inpharzam aware of any such third party
patents and applications promptly upon becoming aware of the same.
5.2 Inpharzam hereby represents and warrants to Sheffield that:
(a) Inpharzam is a corporation duly organized, validly
existing and in good standing under the laws of Switzerland and has all
corporate power and authority to carry on its business as now being conducted
and to own its properties and is duly licensed or qualified as a foreign
corporation in each jurisdiction, in which its failure to qualify would have a
material adverse effect on the business, financial condition or operations of
Inpharzam.
(b) Inpharzam has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement have been duly authorized
by all requisite corporate action. This Agreement has been duly executed and
delivered by Inpharzam and constitutes a valid and binding obligation of
Inpharzam, enforceable in accordance with its terms, subject, as to enforcement,
to applicable bankruptcy, reorganization, insolvency, moratorium, and other laws
affecting creditors' rights generally from time to time in effect.
(c) Neither Inpharzam, nor any Affiliate of Inpharzam, is a
party to, subject to or bound by any agreement or any judgment, award, order,
writ, injunction or decree of any court, governmental body or arbitrator, which
would conflict with or be breached by the execution, delivery or performance of
this
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Agreement by Inpharzam or which could prevent the carrying out of this
Agreement.
(d) There is (i) no action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or, to Inpharzam's
best knowledge, threatened nor (ii) to Inpharzam's best knowledge, any
investigation pending or threatened against or relating to Inpharzam or its
Affiliates which, in each case, could prevent the carrying out of this
Agreement.
(e) All consents of third partes including, without
limitation, governmental authorities and non-governmental self-regulatory
agencies, and all filings with and notifications of governmental authorities,
(including non-governmental self-regulatory agencies) regulatory agencies or
other entities, which regulate the business of Inpharzam or its Affiliates
necessary on the part of Inpharzam to the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
obtained or effected.
(f) All Licensed Products labeled, advertised, and sold by
Inpharzam, its Affiliates and its sublicensees shall be in compliance with all
applicable requirements of the Food, Drug and Cosmetic Act and all other laws
and regulations applicable thereto.
5.3 The representations and warranties of the parties set forth in
Sections 5.1 and 5.2 shall survive the termination, cancellation or expiration
of this Agreement without limitation.
5.4 Sheffield and Inpharzam and its Affiliates further agree
as follows:
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(a) Licensed Products will be manufactured, stored and sold in
compliance with all applicable requirements of the Food, Drug and Cosmetic Act
and regulations promulgated thereunder.
(b) Sheffield shall disclose to Inpharzam and Inpharzam and
its Affiliates shall disclose to Sheffield any reports or other knowledge they
receive with respect to adverse drug experiences, mislabeling, stability
failures or contaminations, to the extent that those items relate to the
Delivery System or the Licensed Products. Sheffield, Inpharzam and its
Affiliates shall comply with FDA requirements for reporting adverse drug
experiences.
(c) Except as otherwise expressly provided herein, all data
pertaining to the Technology generated prior to the Effective Date of this
Agreement and pursuant to this Agreement shall be available to Inpharzam, which
shall have the unrestricted right to use such data in the Field anywhere in the
Territory.
(d) Any written information, submitted by one party, or by an
Affiliate of one party, to the other party, or to an Affiliate of the other
party, that is designated "Confidential" shall be treated as confidential, and
reasonable diligence will be used not to disclose or make available any such
confidential information to any third party for the term of this Agreement, and
for a period of five (5) years following termination, cancellation or expiration
hereof.
An oral disclosure, if reduced to writing by the disclosing
party and submitted to the party that received the oral disclosure within thirty
(30) days of the oral disclosure, will be deemed confidential.
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Confidential Information shall not include
information:
(i) that can be demonstrated to have been in the
public domain prior to the date of its receipt;
(ii) that becomes part of the public domain by
publication, or otherwise, not due to any unauthorized act or omission;
(iii) that is supplied by a third party lawfully in
possession of same and not under any obligation of confidentiality to Sheffield
or Inpharzam or its Affiliates with respect to the information; or
(iv) that was known to Sheffield or Inpharzam or its
Affiliates prior to the date of its disclosure, such knowledge being evidenced
by written records.
However, nothing set forth in this subsection shall prevent any party
or its Affiliates from making a disclosure that is required by applicable laws
or regulations.
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6. Business Decisions and Commercial Efforts
6.1 Subject to the Co-promotion Rights set forth in Section 4.10, all
business decisions related to the Licensed Products in the Field including,
without limitation, regulatory activities, sale price and promotion of products
covered under this Agreement shall be within the sole discretion of Inpharzam.
6.2 Inpharzam hereby agrees that it shall use commercially reasonable
efforts, or shall cause its Affiliates to use commercially reasonable efforts,
to seek FDA approval for and to market and sell Licensed Products in the Field
in the U.S., and to seek Non-US Regulatory Authority approval for and to market
and sell Licensed Products in the Field in the remainder of the Territory.
6.3 In the event that Inpharzam makes a decision not to seek FDA
approval for and/or a decision not to market and sell any Licensed Products in
the U.S. or sublicense a third-party to do the same, Inpharzam shall grant to
Sheffield an exclusive sublicense, with the right to grant further sublicenses,
in the U.S. in and to all of the rights acquired by Inpharzam under this
Agreement, for which exclusive sublicense Sheffield shall pay to Inpharzam
either:
(a) in the event that Sheffield does not grant a further
sublicense, (i) [TEXT OMITTED] Inpharzam's total expenditures, based upon
Inpharzam's normal accounting methods, in developing Licensed Products for and
seeking FDA approval for the U.S. market and (ii) [TEXT OMITTED] of Sheffield's
Net Sales (as defined in subsection 1.17 of this Agreement, substituting
Sheffield for Inpharzam) of Licensed Products; or
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(b) in the event that Sheffield does grant further
sublicenses, [TEXT OMITTED] of all milestone, royalty and other payments
received from sublicensees.
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7. Data
Sheffield and Inpharzam agree as follows with respect to the
data related to the Technology generated pursuant to this Agreement and the
NDA's:
(a) Subject to the Co-Promotion Rights sets forth in Section
4.10, Inpharzam shall have the exclusive right to use such data in the Field in
connection with its commercialization of the Licensed Products.
(b) Sheffield shall have the right to use such data outside of
the Field.
(c) Upon the expiration of the last Valid Claim under the
Sublicensed Patent Rights, Inpharzam shall have the right to use all data
related to the Technology generated pursuant to this Agreement for all purposes,
and shall have the right to make, have made, use and sell Licensed Products
[TEXT OMITTED].
(d) Inpharzam agrees that it will share, and will cause its
Affiliates and sublicensees to share, data relating to the Delivery System, but
not to Formulations, with Sheffield and other licensees of Sheffield if such
other licensees similarly agree to and do in fact share their such data with
Inpharzam.
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8. Indemnification and Infringement
8.1 Inpharzam and Sheffield shall each indemnify and hold the other
harmless from and against any costs, expenses or damages which arise from a
breach of their respective obligations, covenants, representations or warranties
herein, excluding, however, any amounts representing loss of profits.
8.2 Inpharzam agrees to indemnify and hold Sheffield harmless from and
against any costs, expenses or damages resulting from or otherwise arising out
of manufacturing defects in Licensed Products. Sheffield agrees to indemnify and
hold Inpharzam harmless from and against any costs, expenses or damages
resulting from or otherwise arising out of manufacturing defects in the Device.
Notwithstanding the provisions of this Section 8.2, in no event shall either
party be liable to the other party for any indirect or consequential damages,
including but not limited to loss of profit or interest, production stoppages,
operation breakdowns, handling or labor costs or loss of data and retrieval
costs, nor for any punitive damages, except where such liability is mandatory by
law due to intent or gross negligence.
8.3 The party obligated to provide indemnity pursuant to this Article 8
is hereinafter referred to as the "Indemnifying Party". Promptly after the
receipt by any party hereto of notice of (a) any claim or (b) the commencement
of any action or proceeding, such party will, if a claim with respect thereto is
to be made against any party obligated to provide indemnification pursuant to
this Agreement, give such Indemnifying Party written notice of such claim or the
commencement of such action or proceeding. Such Indemnifying Party shall have
the right, at its option, to
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compromise or defend, at its own expense and by its counsel, any such matter
involving the asserted liability of the party seeking such indemnification. Such
notice, and the opportunity to compromise or defend, shall be a condition
precedent to any liability of the Indemnifying Party under the indemnification
agreement contained in this Agreement.
In the event that any Indemnifying Party shall undertake to
compromise or defend any such asserted liability, it shall promptly notify the
party seeking indemnification of its intention to do so, and the party seeking
indemnification agrees to cooperate fully with the Indemnifying Party and its
counsel in the compromise of, or defense against, any such asserted liability.
In any event, the indemnified party shall have the right, at its own expense, to
participate in the defense of such asserted liability, provided that the
Indemnifying Party's counsel shall make all final decisions concerning the
defense or compromise or settlement of such claim or litigation.
8.4 In the event a third party appears to be infringing one or more
Licensed Patents, Sheffield shall, at its own expense, take whatever steps in
its own and sole discretion it deems advisable including, but not limited to,
settlement or the filing of suit for damages or to enjoin such sales or offers
for sale by such third party. Inpharzam agrees, upon reasonable notice, to
cooperate and, to the extent deemed necessary or desirable by Sheffield and at
Sheffield's expense, participate in any suit to enjoin such infringement and to
collect, for Sheffield's sole and exclusive benefit any and all damages, profits
and awards of any nature recoverable for such infringement.
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8.5 Should Sheffield elect not to take any action, or fail to take
action within thirty (30) days following notice by Inpharzam of an apparent
infringement, Inpharzam shall have the right, at its expense, to take whatever
steps in its own and sole discretion it deems advisable including, but not
limited to, settlement or the filing of suit for damages or to enjoin such sales
or offers for sale by such third party. Sheffield agrees to perform all acts
which are or may become necessary to vest in Inpharzam the right to institute
any such suit and will, upon reasonable notice, cooperate and, to the extent
deemed necessary or desirable by Inpharzam and at Inpharzam's expense,
participate in any suit to enjoin such infringement and to collect, for
Inpharzam's sole and exclusive benefit, any and all damages, profits and awards
of any nature recoverable for such infringements.
8.6 In the event a third-party is infringing a Valid Claim of the
Sublicensed Patent Rights, then on request from Inpharzam Sheffield shall, at
Sheffield's sole discretion, take reasonable action to remove such infringing
activity or grant Inpharzam the right to bring suit. In the event that Sheffield
elects to grant Inpharzam the right to bring suit, Inpharzam shall have during
the pendency of the suit the right to deposit in an interest-bearing escrow
account fifty-percent (50%) of the royalties payable to Sheffield with respect
to the Net Sales of Licensed Products in the country in which the infringement
is occurring. Upon final determination of the suit, all royalties held in escrow
shall be released to Sheffield, less the reasonable costs and attorney fees
incurred by Inpharzam in connection with such suit, which costs and fees shall
not exceed the total amount of royalties held in escrow.
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8.7 In the event that any third-party raises claims against or sues
Inpharzam in connection with the Device, Sheffield shall defend, indemnify, and
hold harmless Inpharzam from and with respect to any claim, demand, damage,
liability, cause of action, costs and/or expenses (including reasonable
attorneys' fees) of whatever kind or nature, whether arisen, arising or to arise
in the future from or directly or indirectly related to, patents, patent
applications, copyrights, or similar. Sheffield shall at its sole discretion and
cost acquire a license on such intellectual property rights. Sheffield shall
alternatively cause the Devices to be modified so as to become noninfringing
provided such modification does not violate Inpharzam's regulatory approvals,
with the written consent of Inpharzam. In any event, Sheffield shall take form
Inpharzam Devices which are not salable due to infringement and reimburse
Inpharzam the price paid therefor. The aforementioned liability shall, however,
only be valid if Inpharzam informs Sheffield to this effect without any delay
and in writing, does not acknowledge or accept of its own accord any such claims
and does not conduct negotiations with such third-party without the prior
consent of Sheffield and in accordance with the instructions of Sheffield.
8.10 The provisions of this Article 8 shall survive the termination,
cancellation or expiration of this Agreement without limitation.
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9. Termination
9.1 In the event of any default by either party, or an Affiliate of
either party, in the performance of any of the material terms or conditions of
this Agreement, the other party may terminate this Agreement upon ninety (90)
days' written notice; provided, however, that (a) if during such ninety (90) day
period the party against whom the default is claimed cures such default, or (b)
if such breach cannot be cured within such ninety (90) day period, such party
takes reasonable steps to commence and proceeds diligently after default, and,
in fact, cures such default within a reasonable period of time, or (c) if such
default is cured in any other manner satisfactory to the other party as a
substitute for full performance, then this Agreement will continue in full force
and effect as if the default had not occurred.
9.2 Upon termination of this Agreement for Sheffield's failure to cure
a material breach, the NDA's and regulatory and marketing approval throughout
the Territory shall be retained and owned by Inpharzam.
9.3 This Agreement may be terminated (a) in the event that a case or
proceeding shall be commenced and continue undismissed or unstayed for a period
of thirty (30) days against either party or either party shall commence a
voluntary case, in either case seeking relief under the bankruptcy laws or any
other law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, in each case as now or hereafter in effect,
or (b) either party shall apply for, consent to, or fail to contest, the
appointment of a receiver, liquidator, custodian, trustee or the like of such
party or for all or any part
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of its property, or (c) either party shall make a general assignment for the
benefit of its creditors, or (d) either party shall fail, or admit in writing
its inability, to pay, or generally not be paying, its debts as they become due,
in each case, by the other party.
9.4 All rights and sublicenses granted under or pursuant to this
Agreement are, and shall otherwise be deemed to be, for the purposes of Section
365(n) of Title 11, U.S. Code ("Bankruptcy Code") license rights to
"intellectual property" as defined under Section 101(60) of the Bankruptcy Code.
The parties agree that Inpharzam, as sublicensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code.
9.5 Termination of this Agreement for any reason shall not relieve
either party of any obligations occurring prior to such termination.
9.6 The sublicenses granted hereunder shall terminate upon termination
or cancellation of this Agreement.
9.7 Upon the expiration of the last Valid Claim under the Sublicensed
Patent Rights, Inpharzam shall have a royalty free license to continue to market
all Licensed Products royalty free.
9.8 Upon termination of this Agreement for Inpharzam's failure to cure
a material breach of this Agreement, in addition to any other remedies that
Sheffield may have available, all rights in and to the Sublicensed Patent Rights
and the Technology granted by Sheffield to Inpharzam hereunder shall revert to
Sheffield.
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9.9 The provisions of Sections 5.1 and 5.2, and Articles 8, 14 and 16
shall survive termination, cancellation or expiration of this Agreement without
limitation. The provisions of subsection 5.4(e) shall survive termination,
cancellation or expiration of this Agreement to the extent provided therein. In
the event of termination each party shall return and/or destroy all copies and
other tangible forms of the other's confidential information except that one
copy may be retained by legal counsel for archival and evidentiary purposes.
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10. Events of Force Majeure
10.1 "Force Majeure" shall mean any cause which is beyond the
reasonable control of the party invoking Force Majeure and which, by the
exercise of reasonable diligence, such party is unable to prevent, including but
not limited to, and whether or not of the same class or kind as, the following:
any law, decree, regulation, order, or request of any governmental authority
(national, state or regional), nationalization, expropriation, confiscation,
requisition, riot, war, hostilities, public disturbance, act of the public
enemy, act of terrorism, strike lockout or other labor dispute, fire, flood,
earthquake, storm, tidal wave, explosion, Act of God, accident of navigation,
breakdown or failure of transportation or transportation facilities.
10.2 If either party is prevented from or delayed in carrying out any
provision of this Agreement by reason of Force Majeure, the party whose
performance is so prevented, delayed, interfered with or restricted, upon prompt
written notice thereof to the other party, shall be excused from such
performance to the extent and during the period of such prevention, delay,
interference or restriction.
10.3 The provisions of this Article 10 shall not be available to a
party, if such party fails to use reasonable diligence to remedy the applicable
situation described in subsection 10.1 above in an adequate manner and with all
reasonable dispatch or if such applicable situation is caused by such party,
except that this Article 10 shall not require the unreasonable settlement of
controversies by acceding to the demands of the opposing party or parties.
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11. Specific Performance
Each party agrees that a violation by it of any of its
covenants and undertakings contained in this Agreement may cause irreparable
injury to the other, and that such other party shall be entitled, in addition to
any other rights and remedies it may have hereunder or at law or in equity, to
an injunction or similar equitable remedy enjoining and restraining any such
violation or threatened violation thereof.
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12. Further Assurances
Each of the parties shall, from time to time during the term of the
Agreement upon request by the other, execute and deliver all such further
documents or instruments as may be required in order to give effect to the
purpose and intent of this Agreement. Without limiting the generality of the
foregoing, the obligations of the parties hereunder are undertaken with a
principal objective of complying with all pertinent provisions of applicable
law, orders and regulations relating to the manufacture, use or sale of
pharmaceutical products, and the parties shall take all necessary action as may
be required to comply with such provisions.
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13. Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective assigns and successors in interest;
provided, however, that neither party may assign or otherwise transfer its
interest, or any part thereof, under this Agreement to any other person, firm or
corporation without the written consent of the other party, which consent shall
not be unreasonably withheld, except (a) in connection with the transfer of all
or substantially all of the assets of Inpharzam or Sheffield to any other
person, whether by means of a merger, asset or stock sale or otherwise, or (b)
to an Affiliate, provided that the transferring party shall guaranty its
transferee-Affiliate's performance and compliance hereunder and shall notify the
other party in writing of such transfer.
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14. Choice of Law
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to its principles of
conflicts of law.
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15. Contractual Relationship
Sheffield and Inpharzam are independent contractors and shall
not be deemed to be partners, joint venturers or each other's agents, and
neither shall have the right to act on behalf of the other except as expressly
provided hereunder or otherwise expressly agreed to in writing.
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16. Notices
All notices and other communication required or permitted to
be given under or in connection with this Agreement shall be in writing and
shall be deemed given if delivered personally or by facsimile transmission
(receipt verified), express courier service (signature required), telexed, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice; provided, that notices of a change
of address shall be effective only upon receipt thereof):
If To Inpharzam: If To Sheffield:
Inpharzam International Sheffield Pharmaceuticals
Via Industria 1 37 South Main Street
6814 Cadempino, Switzerland Pittsford, NY 14534
Attn: Managing Director Att: Chairman
Fax: 011 41919664351 Fax: 716-385-0813
With a copy to: With a copy to:
Zambon Corporation Sheffield Pharmaceuticals
One Meadowlands Plaza 425 South Woodsmill Road
East Rutherford, NJ 07073 USA Suite 270
Att: General Manager St. Louis, MO 63017
Fax: 201/896-2209 Att: Corporate Secretary
Fax: 314-579-9799
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17. Miscellaneous
17.1 This Agreement (including the Appendices attached hereto) and the
Confidentiality Agreement constitute the entire agreement between the parties
and, except as noted in Article 2 of this Agreement, supersede all prior written
or oral agreements or understandings concerning the subject matter thereof or in
conflict with their terms.
17.2 Any controversy or claim arising out of or relating to this
Agreement, or the parties' decision to enter into this Agreement, or the breach
thereof, including, without limitation, any dispute relating to patent validity
or infringement arising under this Agreement, shall be settled by arbitration in
accordance with the applicable rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. Such arbitration shall be conducted with a
panel of three (3) arbitrators; each party shall select one arbitrator and the
two selected arbitrators shall select the third. The arbitration shall be held
in New York City and the arbitrators shall apply the substantive law of the
State of New York, except that the interpretation and enforcement of this
arbitration provision shall be governed by the U.S. Federal Arbitration Act. The
arbitrators shall not award either party punitive damages and the parties shall
be deemed to have waived any right to such damages.
17.3 Each party hereby consents that it shall be subject to
jurisdiction in New York in any legal proceeding or equitable action that
relates in any way to this Agreement, and further consents to venue for any such
proceeding or action in the United
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States District Court for the Southern District of New York. Inpharzam hereby
designates Zambon Corporation as its agent for service of process in connection
with any legal action which may be brought hereunder and agrees to maintain such
designation during the term hereof.
17.4 No modification or waiver of any of the terms of this Agreement
shall be deemed valid unless it is in writing and signed by the party against
whom such modification is sought to be enforced. The failure of either party to
insist upon the strict performance of any term of this Agreement or the waiver
by either party of any breach under this Agreement shall not prevent the
subsequent strict enforcement of such term and shall not be deemed a waiver of
any subsequent breach.
17.5 In the event any court declares illegal or unenforceable, as
written or applied, any provision or portion hereof, such provision shall be
treated as if it had been deleted or rendered inapplicable to the situations to
which such provision cannot be legally applied.
17.6 Neither party shall publicly disclose, directly or through any of
its representatives, the subject matter or terms and conditions hereof without
the prior consent of the other, except to the extent of disclosures which either
party may be required to make by applicable laws or regulations.
17.7 Each party agrees that, unless the other party has given its
written consent thereto, no public announcement or other disclosure shall be
made by either party or any of their representatives, including their
consultants, that might prejudice the rights of the other.
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17.8 Inpharzam shall cause all Licensed Products or the packaging
therefor sold in the Territory by it, its Affiliates and its sublicensees to be
labelled in accordance with any obligations undertaken by Sheffield in the
Siemens Agreements, and in accordance with all applicable laws and regulations,
including but not limited to the marking provisions set forth in Title 35
Section 287 of the United States Code.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the respective dates written below.
SHEFFIELD PHARMACEUTICALS, INC.
By: /S/ THOMAS M. FITZGERALD
----------------------------
Name: THOMAS M. FITZGERALD
Title: CHAIRMAN
Dated: JUNE 15, 1998
INPHARZAM INTERNATIONAL, S.A.
By: /S/ ANDREA ZAMBON
---------------------------
Name: ANDREA ZAMBON
Title: CHIEF EXECUTIVE OFFICER
Dated: JUNE 15, 1998
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CONFIDENTIAL
APPENDIX A
PATENTS AND PATENT APPLICATIONS
[TEXT OMITTED]
<PAGE>
CONFIDENTIAL
APPENDIX B
FORM OF SUBSCRIPTION AGREEMENT
FOR
SHARES OF COMMON STOCK OF
SHEFFIELD PHARMACEUTICALS, INC.
INSTRUCTIONS
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING ON PAGE 8.
SIGNIFICANT REPRESENTATIONS ARE
CONTAINED HEREIN
<PAGE>
SUBSCRIPTION AGREEMENT
Sheffield Pharmaceuticals, Inc.
425 South Woodsmill Road
St. Louis, Missouri 63017
Ladies and Gentlemen:
1. SUBSCRIPTION. The undersigned (sometimes referred to herein as the
"Investor") hereby subscribes for and agrees to purchase shares of Common
Stock, par value, $.01 per share, of Sheffield Pharmaceuticals, Inc. (the
"Company"), on the terms and conditions described herein and in the Confidential
Private Placement Memorandum ("Memorandum") dated June , 1998 of the Company,
together with all supplements, if any, relating to this offering.
2. SUBSCRIPTION AGREEMENT; PURCHASE PRICE. The undersigned herewith
delivers to the Company two manually executed copies of this Subscription
Agreement. The undersigned hereby agrees to remit to the Company ($.
per share) (the "Purchase Price") on the date hereof by wire transfer to the
following account: Chase Manhattan Bank, 11 West 51st Street, New York, New York
10119, Account No. , ABA .
3. DELIVERY OF SHARES. The Shares subscribed for herein shall not be
deemed issued to or owned by the undersigned until two copies of this
Subscription Agreement have been executed and delivered to the Company by the
undersigned, such agreements have been countersigned by the Company and the
Purchase Price has been remitted to the Company. Upon such execution, delivery
and remittance a certificate representing the Shares shall promptly be delivered
to the undersigned.
4. DISCLOSURE. Because this offering is limited to accredited investors
as defined in Section 2(15) of the U.S. Securities Act of 1933, as amended
("Securities Act"), and Rule 501 promulgated thereunder, in reliance upon the
exemption contained in Sections 3(b), 4(2) or 4(6) of the Securities Act and
applicable state securities laws, the Shares are being sold without registration
under the Securities Act. The undersigned acknowledges receipt of the Memorandum
and all exhibits listed therein and represent that the undersigned has carefully
reviewed and understand the Memorandum and its exhibits. The undersigned has
received all information and materials regarding the Company that the
undersigned has requested.
The undersigned fully understands that an investment in the Shares is a
speculative investment that involves a high degree of risk of loss of its entire
investment. The undersigned fully understands the nature of the risks involved
in purchasing the
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Shares and the undersigned is qualified by its knowledge and experience to
evaluate investments of this type. The undersigned has carefully considered the
potential risks relating to the Company and purchase of the Shares and have, in
particular, reviewed each of the risks set forth or incorporated by reference in
the Memorandum. The undersigned has had the opportunity to ask questions of and
receive answers from officers and other representatives of the Company
concerning the Company and the terms and conditions of a proposed investment in
the Company and the undersigned's advisors, if any, and the undersigned has also
had the opportunity to obtain additional information necessary to verify the
accuracy of information furnished about the Company. Accordingly, the
undersigned has independently evaluated the risks of purchasing the Shares.
5. INVESTOR REPRESENTATIONS AND WARRANTIES. The undersigned
acknowledges, represents and warrants to, and agrees with, the Company as
follows:
(a) The undersigned is aware that an investment in Shares
involves a high degree of risk, and the undersigned has read and fully
understands the Memorandum, including the section entitled "Risk Factors"
(Exhibit E).
(b) The undersigned acknowledges and is aware that there is no
assurance as to the future performance of the Company.
(c) The undersigned is purchasing the Shares for its own
account for investment and not with a view to or for sale in connection with the
distribution of the Shares, nor with any present intention of selling or
otherwise disposing of all or any part of the Shares. the undersigned agrees
that (i) the purchase of the Shares is a long-term investment, (ii) the
undersigned may have to bear the economic risk of investment for an indefinite
period of time because the Shares have not been registered under the Securities
Act and the Shares may never be registered and cannot be resold, pledged,
assigned, or otherwise disposed of unless they are subsequently registered under
said Securities Act and under applicable securities laws of certain states or an
exemption from such registration is available. The undersigned understands that
the Company is under no obligation to register the Shares or to assist the
undersigned in complying with any exemption from such registration under the
Securities Act or any state securities laws. The undesigned acknowledges that
the Company will place a legend on the certificate representing the Shares
denoting the restrictions on the Shares.
(d) The undersigned has been given full and complete access to
information regarding the Company and has utilized such access to its
satisfaction for the purpose of obtaining information in addition to, or
verifying information included in, the Memorandum and exhibits thereto, and the
undersigned has met with
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officers of the Company for the purpose of asking questions of, and receiving
answers from, such officers concerning the terms and conditions of the offering
of the Shares and the business and operations of the Company and to obtain any
additional information, to the extent reasonably available.
(e) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and has obtained, in its judgment,
sufficient information from the Company to evaluate the merits and risks of an
investment in the Company.
(f) The undersigned has relied solely upon its own
investigation of the Company in making a decision to invest in the Company.
(g) The undersigned has received no representation or warranty
from the Company or any of its officers, directors, employees or agents in
respect of its investment in the Company and has received no information
(written or otherwise) from the Company relating to the Company or its business
other than as set forth in the Memorandum. The undersigned is not participating
in the offer as a result of or subsequent to: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television, radio or the internet or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
(h) The undersigned has had full opportunity to ask questions
and to receive satisfactory answers concerning the offering and other matters
pertaining to its investment and all such questions have been answered to the
undersigned's full satisfaction.
(i) The undersigned has been provided an opportunity to obtain
any additional information concerning the offering and the Company and all other
information to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense.
(j) The undersigned is an "accredited investor" as defined in
Section 2(15) of the Securities Act and in Rule 501 promulgated thereunder.
(k) The undersigned understands that (i) the Shares have not
been registered under the Securities Act or the securities laws of certain
states in reliance on specific exemptions from registration, (ii) no securities
administrator of any state or the federal government has recommended or endorsed
this offering or made any finding or determination relating to the fairness of
an investment in the Company, and (iii) the Company is relying on the
undersigned's representations and agreements for the purpose of
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determining whether this transaction meets the requirements of the exemptions
afforded by the Securities Act and certain state securities laws.
(l) The undersigned has been urged by the Company to seek
independent advice from its professional advisors relating to the suitability of
an investment in the Company in view of the undersigned's overall financial
needs and with respect to the legal and tax implications of such investment.
(m) The undersigned is authorized and qualified to become an
investor in the Company and the person signing this Subscription Agreement on
behalf of the undersigned has been duly authorized by the undersigned to do so.
(n) The undersigned hereby acknowledges and is aware that,
except for any rescission rights that may be provided under applicable laws, the
undersigned is not entitled to cancel, terminate or revoke this subscription.
(o) The undersigned hereby agrees that the Memorandum and
documents related thereto and attached as Exhibits thereto will be kept
confidential by it; provided, however, that any such information may be
disclosed (i) to the undersigned's officers, employees and advisors
(collectively, the "Agents") who need to know such information for the purpose
of evaluating the purchase of the Shares described in the Memorandum (it being
understood that such Agents shall be informed by the undersigned of the
confidential nature of such information and shall be directed by the undersigned
to treat such information confidentially) or (ii) as required by law. In the
event disclosure of the Memorandum and documents related thereto is required by
law, the undersigned shall promptly notify the Company of any anticipated
disclosure obligation, cooperate with the Company, at the Company's expense, in
its efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded to that portion of the Memorandum or the
documents related thereto that is required to be disclosed. In addition, the
undersigned agrees that, without the prior written consent of the Company,
neither the undersigned's Agents nor the undersigned will disclose to any other
person the fact that the Memorandum or the documents related thereto has been
made available to the undersigned or any of the terms, conditions or other facts
with respect thereto (including the status thereof). The term "person" as used
in this letter agreement shall be broadly interpreted to include the media and
any corporation, partnership, group, individual or other entity.
The undersigned agrees to undertake reasonable precautions to
safeguard and protect the confidentiality of the Memorandum and the documents
related thereto and at the undersigned's sole expense to take all reasonable
measures (including but not limited to court proceedings) to restrain its
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Agents from prohibited or unauthorized disclosure or uses of the Memorandum and
the documents related thereto.
The undersigned shall promptly upon request redeliver to the Company or
destroy all written material containing or reflecting any information in the
Memorandum or the documents related thereto (whether prepared by the Company,
its advisors or otherwise) and will not retain any copies, extracts or other
reproductions in whole or in part of such written material.
6. INDEMNIFICATION. The undersigned hereby agrees to indemnify and hold
harmless the Company and its respective officers, directors, stockholders,
employees, agents, and attorneys against any and all losses, claims, demands,
liabilities, and expenses (including reasonable legal or other expenses)
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person, to which any such indemnified party may become subject under the
Securities Act, under any other statute, at common law or otherwise, insofar as
such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
made by the undersigned and contained in this Subscription Agreement or (b)
arise out of or are based upon any breach by the undersigned of any
representation, warranty, or agreement made by the undersigned contained herein.
7. STOCK PURCHASE OPTION. In the event that the Company issues
additional shares of Common Stock after the date hereof in either a private or
public offering (an "Additional Offering"), the Company shall offer the Investor
the right to purchase an amount of additional shares of Common Stock determined
based on the following formula:
AS = AO x HS
--
OT
where "AS" means the number of additional shares to be offered for sale to the
Investor, "AO" means the number of shares of Common Stock issued in the
Additional Offering, "HS" means the number of shares of Common Stock held by the
Investor immediately following the offering contemplated by this Subscription
Agreement (I.E., shares) and "OT" means the number of shares of Common
Stock outstanding on the date of the issuance of the Shares contemplated by this
Subscription Agreement.
The Company shall give the Investor written notice of an issuance
pursuant to any Additional Offering within ten days after the date of such
issuance, which notice shall state the number of additional shares of the Common
Stock that the Investor may purchase pursuant to this Section 7 as a result of
such Additional Offering and the applicable purchase price (which shall be the
same
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purchase price per share paid for the shares of Common Stock sold in the related
Additional Offering), and the Investor shall have 80 days from the date of
receipt of such notice to deliver the purchase price for such additional shares
to the Company. Upon receipt of such purchase price, the Company shall promptly
issue such additional shares of Common Stock to the Investor. In the event that
the Investor fails to exercise its right to purchase all additional shares of
Common Stock offered to the Investor under this Section 7 in connection with any
Additional Offering, the Investor's rights under this Section 7 shall terminate.
Any additional shares of Common Stock issued to the Investor pursuant
to this Section 7 shall be represented by a stock certificate that shall contain
a restrictive legend in substantially the form set forth under "Restrictions on
Resale" above.
As used in this Section 7, "Additional Offering" shall not include (i)
the issuance of Common Stock issuable upon the exercise or conversion of
options, warrants on other rights to purchase securities of the Company
outstanding as of the date hereof or (ii) the issuance of Common Stock to
officers, directors or employees of the Company or any of its subsidiaries.
8. SEVERABILITY: REMEDIES. In the event any parts of this Subscription
Agreement are found to be void, the remaining provisions of this Subscription
Agreement shall nevertheless be binding with the same effect as though the void
parts were deleted.
9. GOVERNING LAW. This Subscription Agreement will be deemed to have
been made and delivered in New York City and will be governed as to validity,
interpretation, construction, effect and in all other respects by the internal
laws of the State of New York.
10. COUNTERPARTS. This Subscription Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Subscription Agreement may be by actual or facsimile signature.
11. NOTICES. All notices, offers, acceptance and any other acts under
this Subscription Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by overnight
courier service, or, if mailed, postage prepaid, by certified mail (return
receipt requested), and shall be effective five days after being placed in the
mail if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier, in each case addressed to a party. The addresses for such
communications shall be:
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Investor: At the address designated on the signature
page of this Subscription Agreement.
The Company: Sheffield Pharmaceuticals, Inc.
425 South Woodsmill Road
St. Louis, Missouri 63017
Attention: Loren Peterson
President and
Chief Executive Officer
In either case,
with a copy to: Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Daniel J. Gallagher, Esq.
or to such other address as any of them, by notice to the others may designate
from time to time.
12. ORAL EVIDENCE. This Subscription Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior oral and written agreements between the parties hereto with
respect to the subject matter hereof. This Subscription Agreement may not be
changed, waived, discharged, or terminated orally but, rather, only by a
statement in writing signed by the party or parties against which enforcement or
the change, waiver, discharge or termination is sought.
13. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements contained herein shall survive the
delivery of, and the payment for, the Shares.
RESIDENTS OF ALL STATES: THE SHARES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SHARES ARE SUBJECT TO
RESTRICTION ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR
HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE
OFFERING OR THE ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the
___ day of June, 1998.
INPHARZAM INTERNATIONAL, S.A.
BY:_______________________________
NAME:_____________________________
TITLE:____________________________
__________________________________
Address
__________________________________
ACCEPTED this _____ day of June, 1998 on behalf of the Company.
SHEFFIELD PHARMACEUTICALS, INC.
BY:_______________________________
Name:
Title:
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CONFIDENTIAL
APPENDIX C
RESOLUTION OF SHEFFIELD BOARD OF DIRECTORS
(To be attached after July 15, 1998 Board meeting)
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CONFIDENTIAL
APPENDIX D
DEVELOPMENT PLAN
[TEXT OMITTED]
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CONFIDENTIAL
APPENDIX E
PROMISSORY NOTE
FOR VALUE RECEIVED the undersigned, Sheffield Pharmaceuticals, Inc., a Delaware
corporation with offices at 37 South Main Street, Pittsford, New York 14534,
promises to pay, in lawful money of the United States of America, to the order
of Inpharzam International, S.A., at Via Industria 1, 6814 Cadempino,
Switzerland, the principal sum of [TEXT OMITTED] without interest according to
the following schedule:
[TEXT OMITTED]
[TEXT OMITTED]
[TEXT OMITTED]
[TEXT OMITTED]
or earlier as may be provided in subsection 4.2(g) of the Sublicense and
Development Agreement between Sheffield Pharmaceuticals, Inc. and Inpharzam
International, S.A.("Agreement") dated .
In the event of any default in payments as herein agreed or in
the event of a filing for bankruptcy or insolvency or any other act of default
as provided in said Agreement, the entire balance of this note shall become
immediately due and payable at the election of the holder hereof, and a lien and
security interest shall be created in accordance with Title 11 of the United
States Code upon the intellectual property that is the subject of this Agreement
in favor of Inpharzam International, S.A upon notice delivered to the
undersigned of such election.
The undersigned further agrees, in the event suit is
instituted to collect this note or any portion thereof, to pay all costs of
collection, other costs and reasonable attorneys' fees incurred by Inpharzam
International, S.A. in connection therewith.
This Promissory Note may be prepaid in whole or in part by the
undersigned without premium or penalty.
This Promissory Note may not be assigned or otherwise
transferred by Inpharzam International, S.A. without the prior written consent
of the undersigned, except that no such consent shall be required for the
assignment of this Promissory Note to an Affiliate (as the term is defined in
subsection 1.1 of the Agreement) of Inpharzam International, S.A.
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I hereby certify that this is one of the notes described in
Section 4.2 of said Agreement between Sheffield Pharmaceuticals, Inc. and
Inpharzam International, S.A. dated June , 1998, and the execution of same by
the undersigned has been duly authorized by the Board of Directors of Sheffield
Pharmaceuticals, Inc. on June , 1998.
Dated this day of , 19 .
SHEFFIELD PHARMACEUTICALS, INC.
BY:____________________________
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CONFIDENTIAL
APPENDIX F
REPORT RE: ALBUTEROL
[TEXT OMITTED]
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CONFIDENTIAL
APPENDIX G
REPORT RE: BECLOMETHASONE
[TEXT OMITTED]
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CONFIDENTIAL
APPENDIX H
CO-PROMOTION PRINCIPLES
The following principles shall apply to the terms of the
Co-promotion Rights:
1. Co-promotion shall mean the direct promotion of Licensed Products under
a single brandname to healthcare professionals and distribution
channels in the United States by a Sheffield salesforce and Zambon
salesforce.
2. A "Profit Contribution" from Licensed Products sales in the U.S. will
be negotiated by the parties based on promotion efforts measured by
each party's percentage of total audited details for Licensed Products
and other relevant commercial considerations.
3. Specific call coverage assignments for each salesforce by specialty
and/or geography will be agreed to by the parties.
4. There will be a minimum of [TEXT OMITTED] field sales representatives
to qualify for profit sharing.
5. The parties will agree upon one unified system for coordination of
adverse event reporting.
6. The parties agree to appoint a Co-Marketing Committee as part of the
Commercialization Plan to oversee the ongoing relationship between the
parties regarding all co-promotion activities.
