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
PAGE
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
PAGE
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.
PAGE
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; ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇................................................................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.
PAGE
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
iv.
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
▇. ▇▇▇▇▇▇ 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.
▇. ▇▇▇▇▇▇ 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.
(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 ▇▇▇▇▇▇▇▇▇. 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.
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.
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.
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.
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.
****** 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.
7.
1.13 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ Godward LLP,
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 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.
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,
9.
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
10.
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. ▇▇▇▇▇▇▇▇▇ has agreed to and will pay
the fees owed by Seller to ▇▇▇▇▇▇ 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.
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.
(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.
13.
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 ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇ 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
14.
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) ▇▇▇▇▇▇ 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
15.
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.
16.
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
17.
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇▇ and delivered to Seller.
(c) The License Agreements described in Section 1.10 shall have been
executed by ▇▇▇▇▇▇▇▇▇ 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
18.
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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
19.
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
20.
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
21.
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
22.
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
23.
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 ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
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
24.
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 ▇▇▇▇▇▇▇▇▇,
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.
25.
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; ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The Closing Date shall be five (5)
days after the later to occur of (i) the expiration or termination of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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.
26.
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.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
Pillsbury, Madison & Sutro LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to Purchaser:
Inhale Therapeutic Systems
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
27.
WITH A COPY TO:
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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 ▇▇▇▇▇▇▇▇▇ 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.
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 ▇▇▇▇▇▇ 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.
29.
(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 ▇▇▇▇▇▇▇▇▇ 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.
30.
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/ ▇▇▇▇▇▇ ▇. Makes
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. Makes
-----------------------------------------------
Title: Vice President & Chief Financial Officer
----------------------------------------------
"SELLER": ALLIANCE PHARMACEUTICAL CORP.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
Title: Executive Vice President, Business Development
----------------------------------------------
31.
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.
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.
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.
(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.
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
4.
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
5.
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.
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.
EXHIBIT B
LICENSE AGREEMENT
FROM ALLIANCE TO INHALE
See Exhibit 2(c) to the Form 8-K dated November 4, 1999
1.
EXHIBIT C
LICENSE AGREEMENT
FROM INHALE TO ALLIANCE
See Exhibit 2(d) to the Form 8-K dated November 4, 1999
1.
EXHIBIT D
EMPLOYEES
*
1.
EXHIBIT E
ALLOCATION OF PURCHASE PRICE
*
1.
EXHIBIT F
PRODUCT DEVELOPMENT RIGHTS AGREEMENT
See Exhibit 2(b) to the Form 8-K dated November 4, 1999
1.
EXHIBIT G
ESCROW AGREEMENT
1.
EXHIBIT H
SECURITY AGREEMENT
This agreement was intentionally not used.
1.
EXHIBIT I
FORM OF OPINION OF SELLER'S COUNSEL
See attached.
1.
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.
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
See attached.
1.
EXHIBIT J
FORM OF PURCHASER'S COUNSEL OPINION
[Such opinion may be in standard ▇▇▇▇▇▇ 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.
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-
DISCLOSURE SCHEDULE - PART 1.1(b)
EQUIPMENT
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2.
DISCLOSURE SCHEDULE - PART 1.1(c)
SUPPLIES AND MATERIALS
See Attached
DISCLOSURE SCHEDULE - PART 1.1(c)
SUPPLIES AND MATERIALS
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DISCLOSURE SCHEDULE - PART 1.1(d)
FILES AND RECORDS
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See attached.
LABORATORY NOTEBOOKS - *
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Assignee Notebook Number Issue Date
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2.
LABORATORY NOTEBOOKS: *
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Assignee Notebook Number Issue Date Subject
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LABORATORY NOTEBOOKS: *
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Assignee Notebook Number Issue Date Subject
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3.
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REPORT TITLE PRINCIPAL INVESTIGATOR STATUS FILENAME(S)
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4.
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LIST OF PULMOSPHERES RELATED PROJECTS 9/17/99
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5.
EXPERIMENTAL BIOLOGY PULMOSPHERES STUDIES
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6.
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.
DISCLOSURE SCHEDULE - PART 2.6
CONSENTS AND NONCONTRAVENTION
Imperial Bank consent & waiver of ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act waiver or approval
8.
DISCLOSURE SCHEDULE - PART 2.9(b)
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9.
DISCLOSURE SCHEDULE - PART 7.3
Imperial Bank consent or waiver
▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act waiver or approval
10.
DISCLOSURE SCHEDULE - PART 8.3
Imperial Bank waiver or consent
▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act waiver or approval
11.