Exhibit 99.2(b)
PRODUCT DEVELOPMENT RIGHTS AGREEMENT
THIS PRODUCT DEVELOPMENT RIGHTS AGREEMENT (this "Agreement") dated as
of November 4, 1999 (the "Effective Date"), is entered into between ALLIANCE
PHARMACEUTICAL CORP., a New York corporation ("Alliance"), having a place of
business at 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, and INHALE
THERAPEUTIC SYSTEMS, INC., a Delaware corporation ("Inhale"), having a place of
business at 000 Xxxxxxxxxx Xxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000.
RECITALS:
WHEREAS, Alliance and Inhale have entered an Asset Purchase
Agreement dated as of the Effective Date (as amended or restated from time to
time, the "Asset Purchase Agreement"), pursuant to which Alliance assigned
and sold to Inhale certain patent rights and know-how relating the
PulmoSpheres-Registered Trademark-Technology as required in the Asset
Purchase Agreement.
WHEREAS, in connection with the execution of the Asset Purchase
Agreement, Inhale has agreed to enter into this Agreement to perform certain
product formulation and development work for Alliance within the Inhale Field
(as defined below) using the PulmoSpheres-Registered Trademark- Technology.
WHEREAS, Alliance and Inhale have also entered into a License Agreement
(License to Alliance) dated as of the Effective Date (as amended or restated
from time to time, the "License to Alliance") pursuant to which Inhale has
granted to Alliance a license to use and sell, and under certain circumstances
manufacture, products designated for development under this Agreement, and a
License Agreement (License to Inhale) as of the Effective Date (as amended or
restated from time to time, the "License to Inhale"), pursuant to which Alliance
has granted to Inhale certain rights under Alliance's proprietary technology for
use within the Inhale Field.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. Without limitation, a Person shall be regarded
as in control of another Person if it owns, or directly or indirectly controls,
at least fifty percent (50%) of the voting stock or other ownership interest of
* INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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the other Person, or if it directly or indirectly possesses the power to direct
or cause the direction of the management and policies of the other Person by any
means whatsoever.
1.2 "Asset Purchase Agreement" shall have the meaning set forth in the
Recitals.
1.3 "Call Right" shall have the meaning set forth in Section 3.1.
1.4 "Competitor of Inhale" *
1.5 "Confidential Information" shall mean, with respect to a party, all
information of any kind whatsoever, and all tangible and intangible embodiments
thereof of any kind whatsoever, which is disclosed by such party to the other
party and is marked, identified as or otherwise acknowledged to be confidential
at the time of disclosure to the other party. Notwithstanding the foregoing,
Confidential Information of a party shall not include information which the
other party can establish by written documentation (a) to have been publicly
known prior to disclosure of such information by the disclosing party to the
other party, (b) to have become publicly known, without fault on the part of the
other party, subsequent to disclosure of such information by the disclosing
party to the other party, (c) to have been received by the other party at any
time from a source, other than the disclosing party, rightfully having
possession of and the right to disclose such information, (d) to have been
otherwise known by the other party prior to disclosure of such information by
the disclosing party to the other party, or (e) to have been independently
developed by persons on behalf of the other party without access to or use of
such information disclosed by the disclosing party to the other party.
1.6 "Designated Product" shall have the meaning set forth in Section
3.2(e).
1.7 "Inhale Field" shall mean uses of perforated microstructures within
the respiratory tract, including without limitation the nasal passage; provided,
however, the Inhale Field shall
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not include the use of perforated microstructures in connection with the direct
intratracheal or direct pulmonary administration (e.g., via bronchoscope or
endotracheal tube) of fluorochemicals or other liquids. For clarity, the Inhale
Field includes the administration of perforated microstructures containing
compounds by means of metered dose inhaler, dry powder inhaler, nasal spray, or
by nebulization of perforated microstructures formulated with fluorochemicals as
suspending agents, provided that the quantities of fluorochemicals so included
in such formulation for nebulization do not exceed that which is commercially
reasonably necessary to provide effective delivery of the active agent. It is
presently anticipated that the quantities of fluorochemicals to be used for
nebulization of an active agent by or on behalf of Purchaser will not exceed 5
ml per dose.
1.8 "IMMUNE MODULATORS" shall mean *
1.9 "IMMUNOGENS" shall mean *
1.10 "LICENSE TO ALLIANCE" shall have the meaning set forth in the
Recitals.
1.11 "LICENSE TO INHALE" shall have the meaning set forth in the
Recitals.
1.12 "MAJOR COUNTRY" means any of the following countries: The United
States, the United Kingdom, France, Germany, Italy, Spain or Japan.
1.13 "MAJOR PHARMACEUTICAL COMPANY" means *
1.14 "MULTI-SOURCE COMPOUND" shall mean *
1.15 "PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.16 "PRODUCT DESIGNATION PERIOD" shall mean, subject to the following
sentence, the period within which Alliance may exercise a Call Right to
designate such compound as a potential Designated Product, and shall be equal
to, as the case may be, either (i) with respect to a Single-Source Compound, the
*************** commencing on the Effective Date or (ii) with respect to a
Multi-Source Compound, a *************** commencing on the Effective Date,
provided that if during such ************* Inhale rejects a proposed Designated
Product which is a Multi-Source Compound for the reasons set forth in
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Section 3.2(a)(i), or in Section 3.2(a)(ii) or Section 3.2(a)(iii) with
respect to Allowed Candidates (as defined below), the Product Designation Period
for Multi-Source Compounds shall be extended for an additional ****************.
In no event shall such Product Designation Period expire for both Single-Source
Compounds and Multi-Source Compounds later than the first to occur of (A) the
*********************of the Effective Date or (B) the date upon which Alliance
commercially launches a second Designated Product. An "Allowed Candidate" is *
and with respect to which, prior to its exercise of a Call Right,
Alliance allocated significant resources in researching the feasibility of a
Designated Product based thereon, as evidenced by the information supplied to
Inhale relating to such compound pursuant to Section 3.2.
1.17 "PULMONARY DRUG DELIVERY COMPANY" shall mean *
1.18 "PULMOSPHERES-Registered Trademark- TECHNOLOGY" shall mean (i)
the method of manufacturing hollow and porous spray dried particles using a
perfluorocarbon emulsion or other blowing agents described in the Assigned
Patent Rights (as defined in the Asset Purchase Agreement), and (ii) the
particles manufactured by such method, both as further described in all of
the Assigned Patent Rights and Proprietary Purchased Assets (as defined in
the Asset Purchase Agreement).
1.19 "SINGLE-SOURCE COMPOUND" shall mean any compound other than a
Multi-Source Compound.
1.20 "THIRD PARTY" shall mean any Person other than Alliance, Inhale
and their respective Affiliates.
1.21 "TOLEROGENS" shall mean *
1.22 "VACCINES" shall mean *
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each party hereby represents and warrants to the other party as
follows:
2.1 CORPORATE EXISTENCE. Such party is a corporation duly organized,
validly existing and in good standing under the laws of the state in which it
is incorporated.
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its
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obligations hereunder, and (b) has taken all necessary corporate action on
its part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly
executed and delivered on behalf of such party, and constitutes a legal,
valid, binding obligation, enforceable against such party in accordance with
its terms.
2.3 NO CONFLICT. The execution and delivery of this Agreement and
the performance of such party's obligations hereunder (a) do not conflict
with or violate any requirement of applicable laws or regulations, and (b) do
not conflict with, or constitute a default under, any contractual obligation
of it.
ARTICLE 3
CALL RIGHTS
3.1 CALL RIGHTS.
(a) Subject to the last sentence of this Section 3.1(a), during
the Product Designation Period, Alliance shall have the right to select two
(2) products in the Inhale Field which are manufactured by means of or
incorporate Pulmospheres-Registered Trademark- Technology for development and
commercialization by Alliance. Subject to the limitations in Section 3.1(b)
and the exclusions of and the mechanisms set forth in Section 3.2, Alliance
shall have the right (each, a "Call Right") to cause Inhale to develop a
powder formulation of active drug substance for up to three (3) such products
to obtain rights to develop and commercialize up to two (2) products,
provided that Inhale shall not be obligated to perform development work on
more than two (2) such products at any given time. Inhale may also, in its
sole discretion, accept a request of Alliance to develop a product outside of
the Inhale Field which is manufactured by means of or incorporates
Pulmospheres-Registered Trademark- Technology as the exercise of one of its
Call Rights. Alliance's Call Rights are subject to termination as provided in
Section 9.7 of the Asset Purchase Agreement.
(b) Alliance's Call Right shall apply to products which are
manufactured by means of or incorporate PulmoSpheres-Registered Trademark-
Technology comprising compounds or agents which are neither proteins nor
peptides, except that Alliance may exercise a Call Right for one or more
Immunogens (comprising Vaccines or Tolerogens), together with any Immune
Modulator that can be included in such Designated Product (a "Combination") *
. In the event Alliance exercises a Call Right for a
Combination, Inhale shall be free to develop and commercialize, either itself
or with a third party, products containing as an active agent, only either
such Immune Modulator or such Immunogen; provided, however, that nothing in
this sentence shall be deemed to grant to Inhale any implied license under
Alliance's proprietary technologies. Furthermore, Alliance may exercise a
Call Right for a product only if *
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3.2 NOTICE MECHANISM: EXCLUDED PRODUCTS.
(a) In order to exercise a Call Right with respect to a product,
Alliance shall give written notice to Inhale of such exercise with a
description of such product and other information in Alliance's possession
and control that is reasonably sufficient for Inhale to decide whether to
accept or reject such product under this Section 3.2(a). Within forty-five
(45) days after Inhale's receipt of such notice and information, Inhale shall
either confirm its acceptance of the product designation or notify Alliance
that it is rejecting the proposed product. Inhale may reject the proposed
product if Inhale reasonably and in good faith makes one of the following
determinations: (i) Inhale has already begun development of the product prior
to the date of receipt of the Alliance notice; (ii) development of the
product for Alliance would constitute a breach by Inhale of a then existing
agreement to which Inhale is bound; (iii) Inhale began negotiating prior to
the date of receipt of the Alliance notice an agreement with a prospective
customer and believes that the principal terms of such an agreement will be
agreed upon within ninety (90) days following receipt of the Alliance notice
and development of a product would constitute a breach of such agreement if
consummated; (iv) development of the product would pose a medical or safety
risk to Inhale employees or prospective patients; (v) Inhale lacks the
expertise and/or resources to carry out such work; (vi) development of the
product would result in significant delays or disruptions to Inhale's other
research or contractual activities; or (vii) development of the product by
Inhale would infringe an issued patent or a claim of a published patent
application. If Inhale accepts a Call Right notwithstanding its reasonable
belief that subsection (vi) would apply to its development of such product,
Inhale may elect to postpone for up to two (2) calendar quarters from the
date of the Collaboration Agreement to be entered into pursuant to Section
3.2(b) its obligations to develop such product as a Designated Product
pursuant to this Article 3. In making its determination with respect to
clause (vi), Inhale shall treat the Alliance exercise in the same manner as
Inhale would treat a request by a prospective customer at that time to
develop a different product that would require the same type and amount of
resources as would be required to develop the proposed Call Right product. If
Inhale rejects an Alliance exercise of a Call Right based on a determination
covered by clause (iii), Inhale shall diligently pursue the conclusion of
such negotiations with the prospective customer and Inhale shall notify
Alliance promptly if Inhale concludes that it is not going to execute a
definitive agreement for such product with such prospective customer.
(b) Inhale's acceptance of Alliance's exercise of a Call Right
shall remain subject to the parties' successful negotiation of a
collaboration agreement for development of such product including a work
plan, the terms set forth in Sections 3.3 through 3.7, and any other
commercial terms customary for agreements for the development of similar
products (subject to Section 3.8) (each such agreement, a "Collaboration
Agreement").
(c) If either (i) Inhale rejects an Alliance exercise of a Call
Right based upon a determination described in clauses (iv), (v) or (vi), or
(ii) Inhale and Alliance are unable to agree upon the terms of a
Collaboration Agreement pursuant to Section 3.2(b) within ninety (90) days
after Inhale accepts Alliance's designation of the relevant product, then
Alliance shall have the right to conduct development of the product by itself
or through a Third Party.
(d) If either Inhale rejects Alliance's exercise of a Call Right
pursuant to subsection (a) or the parties are unable to agree on the terms of
a Collaboration Agreement with
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respect to a product within ninety (90) days after Inhale accepts Alliance's
designation of the product as provided in subsection (b), and Alliance does
not proceed to develop such product either itself or with a Third Party as
provided in subsection (c) within ninety (90) days after expiration of such
ninety (90) day period within which the parties may negotiate a Collaboration
Agreement, then Alliance shall not be deemed to have exercised a Call Right.
(e) If (i) Inhale accepts the exercise of a Call Right and the
parties agree on the terms of a Collaboration Agreement with respect thereto
as provided in subsection (b), or (ii) Alliance itself or through a Third
Party conducts development work on a product for which it exercises a Call
Right as provided in Section 3.2(c), then Alliance shall be deemed to have
exercised one of its Call Rights even if such development work is later
terminated for any reason other than Inhale's breach of any Collaboration
Agreement relating thereto, and such product shall be a "Designated Product";
provided, however, that if Alliance terminates development of such product
prior to commercial launch thereof, then it shall so notify Inhale and such
product shall thereafter no longer be a Designated Product.
(f) Alliance may exercise up to three (3) Call Rights in order
to obtain rights to develop and commercialize up to two (2) Designated
Products.
3.3 WORK TO BE PERFORMED. Inhale shall use commercially reasonable
efforts in the performance of any work it performs for Alliance with respect
to development of a powder formulation of the active drug substance ("Active
Substance") for a Designated Product for which it accepts a Call Right. Any
such formulation work performed by Inhale with respect to a Designated
Product for Alliance shall be consistent with Inhale's practices for its
customers, and shall include but not be limited to: (a) developing a powder
formulation of the active drug substance (a "Powder Formulation") and
providing sufficient amounts of such Powder Formulation to Alliance for use
in such preclinical in vitro and in vivo models as Alliance reasonably
decides to perform; (b) providing sufficient amounts of such Powder
Formulation for Alliance to conduct clinical trials (including relevant
documentation with respect to such Designated Product and its manufacture as
required by regulatory authorities to be filed prior to commencement of any
clinical trial); (c) making such alterations and improvements to a previously
developed Powder Formulation of the Active Substance for a Designated Product
as may be reasonably indicated by any test or study conducted by Alliance or
Inhale; and (d) satisfying the manufacturing requirements of Section 3.5
below.
3.4 COST REIMBURSEMENT; SUPPLY OF BULK ACTIVE SUBSTANCE. Alliance
shall reimburse Inhale for Inhale's fully burdened costs incurred in
performing development work pursuant to a Collaboration Agreement for a
Designated Product, determined in a manner consistent with the method used by
Inhale for its other customers. Such costs shall include reimbursement for
full time equivalent ("FTE") effort at standard Inhale FTE rates,
reimbursement of direct costs not included in the FTE rate, and reimbursement
for the cost of any capital equipment or facilities or other assets acquired
for such formulation work. Alliance shall be responsible at its own expense
for the supply of the bulk Active Substance that it desires Inhale to
formulate into a Powder Formulation for Designated Products.
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3.5 COMMERCIAL MANUFACTURE.
(a) Except as provided in Section 3.5(c), Inhale shall have a
first option to negotiate a commercial supply agreement for the manufacture
and supply of a Powder Formulation of Designated Products. Any such agreement
shall provide that Alliance shall supply bulk Active Substance to Inhale for
commercial manufacture at no cost, and pay to Inhale a purchase price for
such Powder Formulation equal to ***********************
together with other reasonable terms and conditions customary in
the industry for the supply of similar products. Any such agreement shall
also provide that Inhale shall deliver to Alliance bulk Powder Formulation in
containers mutually agreeable to both parties. For each Designated Product,
Alliance shall notify Inhale when Alliance determines in good faith that it
has sufficient information to define the manufacturing process and is able to
provide reasonable data regarding anticipated volume requirements for the
Designated Product. If Inhale reasonably and in good faith agrees that the
information provided by Alliance is sufficient to commence negotiation of a
commercial supply agreement for a Powder Formulation of a Designated Product,
Inhale shall so notify Alliance and within thirty (30) days thereafter Inhale
shall notify Alliance whether Inhale desires to negotiate the terms of an
agreement pursuant to which Inhale shall manufacture and supply a Powder
Formulation of such Designated Product.
(b) If the parties do not enter into a commercial supply
agreement for the Powder Formulation of a particular Designated Product
within ********************** after Inhale notifies Alliance of its interest
in negotiating such an agreement, or if Inhale does not notify Alliance of
its interest in manufacturing a Powder Formulation of a Designated Product
within the thirty (30) day period provided in subsection (a), then Alliance
may manufacture a Powder Formulation of the Active Substance itself or enter
into a manufacturing agreement therefor with a Third Party that is not a
Competitor of Inhale, in which case Inhale shall provide to Alliance
technical assistance as described in Section 3.5(c).
(c) If Alliance acquires the right to develop a Designated
Product pursuant to Section 3.2(c), Alliance may request that Inhale provide
reasonable advice regarding whether Alliance's proposed formulation for the
relevant Designated Product is compatible with Inhale's proprietary
technology for manufacturing a Powder Formulation of such Designated Product,
and other reasonable technical assistance as may be relevant to the
manufacture of such product. Any technology transfer to Alliance or
Alliance's Third Party manufacturer in connection with such advice or
assistance shall be governed by a written agreement between Inhale, Alliance
and any such Third Party manufacturer in customary form imposing upon
Alliance and such Third Party manufacturer obligations of confidentiality and
limitations on use of Inhale's proprietary technology for the relevant
Designated Product, which agreement shall be negotiated and entered into
prior to the transfer of such technology pursuant to this Section 3.5. If
Alliance develops a Designated Product either itself or through a Third Party
pursuant to Section 3.2(c), and if Alliance does not request that Inhale
provide technical assistance in the development of such product as provided
in this Section 3.5(c), then Alliance shall be solely responsible for the
development and manufacture of such Designated Product and Inhale shall have
no further right of first option to manufacture a Powder Formulation of such
Designated Product under this Section 3.5 or any obligations in connection
therewith.
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3.6 DEVICE SUPPLY; OTHER TECHNOLOGY. If Alliance desires to utilize
other Inhale proprietary technology, such as a delivery device or processes
for packaging powders that is covered by intellectual property rights owned
or controlled by Inhale in connection with the development of a Designated
Product, the parties will negotiate in good faith a license or supply
agreement containing commercially reasonable terms under which Inhale shall
supply to Alliance such delivery device(s) in connection with the development
and commercialization of Designated Products.
3.7 SUBLICENSES. The Call Rights and other rights described herein
shall not be transferable by Alliance to any other person or entity, except
(i) as provided in Section 7.8 and (ii) that Alliance shall have the right at
any time after commencement of Phase IIa clinical trials for such Designated
Product to grant sublicenses under the license granted to Alliance for the
relevant Designated Product to Third Parties other than Competitors of
Inhale. Any such right to sublicense includes the right to grant a sublicense
to use, sell, offer for sale or import the relevant Designated Product, and
shall include the right to manufacture a Powder Formulation of the Active
Substance of such Designated Product only if Alliance obtains such right
pursuant to Section 3.2 or 3.5. Any sublicensee of Alliance that manufactures
a Powder Formulation of the Active Substance shall be subject to
confidentiality obligations and use limitations with respect to the Inhale
Technology substantially similar to those provided in the second sentence of
Section 3.5(c).
3.8 NO FURTHER PAYMENTS. The purpose of the payments provided for in
Sections 3.4 and 3.5 is to provide Inhale customary, arm's-length
compensation related to powder processing work performed by Inhale with
respect to Designated Products, but not to provide Inhale compensation for
its ownership of intellectual property covering the manufacture of a Powder
Formulation of an Active Substance of a Designated Product ("Other Inhale
Technology"). Other than the payments referred to in Sections 3.4, 3.5 and
3.6, Alliance shall have no obligation to pay Inhale any amounts, by way of
royalties or otherwise, in connection with the development, manufacture, sale
or use of Designated Products developed pursuant to the exercise of Call
Rights in connection with Inhale's manufacture of a Powder Formulation of an
Active Substance. However, if the Parties enter into an agreement pursuant to
this Article 3 under which Inhale agrees to perform final container filling
or packaging of a Powder Formulation, or to supply devices to Alliance as
provided in Section 3.6, then such agreement shall provide for additional
payments to Inhale as the parties may mutually agree that will provide to
Inhale reasonable and customary compensation for a license under Inhale's
proprietary technology covering or including such Other Inhale Technology.
3.9 LICENSE. Effective as of the first to occur of (i) the effective
date of any Collaboration Agreement between the parties that may be entered
into pursuant to Section 3.2 (b) or (ii) Alliance's provision of notice to
Inhale that Alliance has elected to proceed with development of a product
with respect to which Inhale rejected a Call Right for reasons set forth in
Sections 3.2(a) (iv), (v), or (vi), as permitted under the last sentence of
Section 3.2(a), or following the failure of the parties to agree on a
Collaboration Agreement, as permitted under Section 3.2 (the "Notice Date"),
the license granted to Alliance pursuant to Section 3.3 of the License to
Alliance shall become effective with respect to such Designated Product on a
worldwide basis. Notwithstanding the foregoing, if as of the second
anniversary of the Notice Date for such Designated Product, Alliance does not
own or acquire rights to any patent applications or patents
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covering such Designated Product and the use thereof in the Inhale Field in
the United States and four (4) of the remaining Major Countries (other than
pursuant to the License to Alliance), then effective as of such date, such
license granted to Alliance for such Designated Product shall revert to
Inhale with respect to those Major Countries in which Inhale has Designated
Product Patent Rights covering such Designated Products and the use thereof
in the Inhale Field and in which Alliance does not own or possess rights
under patent applications or patents covering such Designated Product in such
countries (other than pursuant to License to Alliance), without otherwise
affecting such license granted to Alliance for such Designated Product with
respect to all other countries.
3.10 AVAILABILITY OF THE LICENSED KNOW-HOW. If Alliance obtains the
right to manufacture or have manufactured a Powder Formulation of an Active
Substance pursuant to Section 3.5, upon Alliance's request, which request
shall not be made more than four (4) times a year, Inhale shall provide
Alliance with all information regarding the Designated Product Know-How (as
defined in the License to Alliance) necessary or useful for the manufacture
of such Designated Product.
3.11 USE OF PULMOSPHERES-Registered Trademark- TRADEMARK. Inhale
shall grant to Alliance a license under the trademarks
PulmoSpheres-Registered Trademark- and Homodispersion-Registered Trademark-
for use in connection with the commercialization of Designated Products as
provided in Section 3.4 of the License to Alliance.
ARTICLE 4
CONFIDENTIALITY
4.1 CONFIDENTIAL INFORMATION. For a period of seven (7) years
following the Effective Date, each party shall maintain in confidence all
Confidential Information disclosed by the other party, and shall not use,
disclose or grant the use of the Confidential Information except on a
need-to-know basis to its Affiliates' and actual or potential sublicensees,
directors, officers, employees, agents, consultants, clinical investigators,
contractors, distributors or permitted assignees, to the extent such
disclosure is reasonably necessary in connection with such party's activities
in connection with its performance under and exercise of rights expressly
provided in this Agreement. To the extent that disclosure is authorized by
this Agreement, prior to disclosure, a party hereto shall obtain agreement of
any such Person to hold in confidence and not make use of the Confidential
Information of the other party for any purpose other than those permitted by
this Agreement.
4.2 PERMITTED DISCLOSURES. The confidentiality obligations contained
in this Article 4 shall not apply to the extent that the receiving party (the
"Recipient") is required (a) to disclose information by law, order or
regulation of a governmental agency or a court of competent jurisdiction, or
(b) to disclose information to any governmental agency for purposes of
obtaining approval to test or market a product, provided in either case that
the Recipient shall provide written notice thereof to the other party and
sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof, and shall use reasonable efforts to secure
confidential treatment of, or a protective order for, the information so
required to be disclosed.
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ARTICLE 5
INDEMNIFICATION
5.1 INDEMNIFICATION. Each party shall defend, indemnify and hold the
other party and any successor and assign, director, officer, employee,
Affiliate and agent thereof harmless from all losses, liabilities, damages
and expenses including attorneys' fees and costs (all "Liabilities") incurred
as a result of any claim, demand, action or proceeding by any Third Party to
the extent arising out of the negligence, recklessness or intentional acts or
omissions of the indemnifying party or its Affiliates in connection with the
development of the Designated Products. Any agreements entered into by the
parties pursuant to Article 3 shall contain an obligation of Alliance to
indemnify Inhale for claims arising from Alliance's manufacture, use, sale,
offer for sale or import of Designated Products.
5.2 PROCEDURE. A party and any successor and assign, director,
officer, employee, Affiliate and Agent thereof (each an "Indemnitee") that
intends to claim indemnification under this Article 5, shall promptly notify
the other party (the "Indemnitor") of any claim demand, action or proceeding
relating to a Liability in respect of which the Indemnitee may seek such
indemnification. The Indemnitor shall have the right to participate in, and,
to the extent the Indemnitor so desires, jointly with any other indemnitor
similarly noticed, to assume the defense thereof with counsel selected by the
Indemnitor; provided, however, that the Indemnitee shall have the right to
retain separate counsel, together with all Indemnitees similarly situated, at
Indemnitor's expense, if representation of the Indemnitee by the counsel
retained by the Indemnitor would be inappropriate due to actual or potential
conflicts of interests between the Indemnitee and any other party represented
by such counsel therein. The indemnity obligation in this Article 5 shall not
apply to amounts paid in settlement of any claim, demand, action or
proceeding relating to a Liability subject to the indemnification obligation
set forth in Section 5.1 if such settlement is effected without the consent
of the Indemnitor, which consent shall not be unreasonably withheld or
delayed. The failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action or proceeding, if prejudicial
to its ability to defend such action or proceeding, shall relieve Indemnitor
of any liability to the Indemnitee under this Article 5, but the omission to
deliver such notice to Indemnitor shall not relieve it of any liability that
it may have to the Indemnitee other than under this Article 5. The Indemnitor
may not settle the action or otherwise consent to an adverse judgment in such
action that diminishes the rights or interests of the Indemnitee without the
express written consent of the Indemnitee. The Indemnitee, its employees and
agents, shall reasonably cooperate with Indemnitor and its legal
representatives in the investigation and defense of any claim, demand, action
or proceeding covered by this indemnification.
ARTICLE 6
ARBITRATION
6.1 ARBITRATION. Any dispute, controversy or claim initiated by
either Inhale or Alliance arising out of, resulting from or relating to this
Agreement, or the performance by either party of its obligations under this
Agreement (other than bona fide third party actions or proceedings filed or
instituted in an action or proceeding by a Third Party against Inhale or
Alliance), shall be finally resolved by binding arbitration. Whenever Inhale
or Alliance shall decide to institute
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arbitration proceedings, it shall give written notice to that effect to the
other. Either party may, notwithstanding this Agreement, seek from any
judicial authority pre-award interim, provisional or conservatory relief that
may be necessary to protect the rights of that party pending the arbitrator's
determination of the merits of the controversy. Discovery in any arbitration
proceeding under this Section 6.1 shall be permitted as set forth in the
Federal Rules of Civil Procedure with respect to the performance by the
parties of their obligations under this Agreement and such other matters as
the arbitrator may determine (it being the intent of the parties that full
discovery occur with respect to the salient facts). The parties shall apply
the Rules of Federal Evidence to the hearing. Any such arbitration shall be
conducted under the Comprehensive Rules for Commercial, Real Estate and
Construction Cases of the Judicial Arbitration & Mediation Services by a
single arbitrator chosen by mutual consent of Inhale and Alliance. Should
Inhale and Alliance fail to agree on the selection of an arbitrator, Inhale
and Alliance shall each appoint one arbitrator and the two arbitrators shall
agree upon a neutral third arbitrator to serve as the sole arbitrator. Any
such arbitration shall be held in San Xxxxxx if initiated by Alliance, and in
San Diego if initiated by Inhale. The arbitrator shall render his or her
decision within thirty (30) days of the completion of the arbitration. The
arbitrator shall have the authority to allocate between the parties the costs
of arbitration in such equitable manner as he or she determines. Judgment
upon the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award
and an order of enforcement, as the case may be. In no event shall a demand
for arbitration be made after the date when institution of a legal or
equitable proceeding based upon such claim, dispute or other matter in
question would be barred by the applicable statute of limitations or the
provisions of this Agreement. The parties hereby waive their right to a jury
trial in connection with any matter submitted for resolution by arbitration
hereunder, except as provided in the last sentence hereof. Notwithstanding
the foregoing, disputes regarding the validity, scope or enforceability of
patents shall be submitted to a court of competent jurisdiction in the
country where such patent has issued.
ARTICLE 7
MISCELLANEOUS
7.1 NOTICES. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties to the other
shall be in writing and delivered to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor, and shall be effective upon receipt by
the addressee.
If to Alliance: Alliance Pharmaceutical Corp.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
With copies to: Xxxxx X. Xxxxxxx
Vice-President and General Counsel
Alliance Pharmaceutical Corp.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
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If to Inhale: Inhale Therapeutic Systems
000 Xxxxxxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
With copies to: Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
7.2 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
7.3 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstance other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
7.4 WAIVER. No failure or delay on the part of any party to exercise
any right under this Agreement, operate as a waiver of such right; and no single
or partial exercise of any such right shall preclude any other or further
exercise thereof or of any other right. No party shall be deemed to have waived
any claim arising out of this Agreement, or any right under this Agreement,
unless the waiver of such right is expressly set forth in a written instrument
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
7.5 ENTIRE AGREEMENT. This Agreement, together with the Asset Purchase
Agreement, License to Alliance and the License to Inhale, contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied representations, agreements and understandings, either oral
or written, heretofore made are expressly superseded by this Agreement. This
Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by both parties.
7.6 INDEPENDENT CONTRACTORS. Each party hereby acknowledges that the
parties shall be independent contractors and that the relationship between the
parties shall not constitute a partnership, joint venture or agency. Neither
party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other party, without the prior consent of the other party to do so.
7.7 ASSIGNMENT. Except as otherwise expressly provided under this
Agreement neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred (whether voluntarily, by operation of law or
otherwise), without the prior express written consent of the other party;
PROVIDED, HOWEVER, that either party may, without such consent, assign this
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Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction; and further provided that in no event shall
Alliance assign this Agreement or its rights and obligations hereunder to a
Competitor of Inhale or shall Inhale assign its rights under this Agreement
to an entity that has fewer than two hundred (200) employees without
Alliance's prior written consent, not to be unreasonably withheld.
Notwithstanding the foregoing, Inhale may only assign its obligations under
this Agreement to a third party in conjunction with an assignment of
sufficient rights under the Pulmospheres-Registered Trademark- Technology
necessary for the performance of its obligations hereunder. Any permitted
assignee shall assume all obligations of its assignor under this Agreement.
Any purported assignment or transfer in violation of this Section 7.7 shall
be void.
7.8 NO FURTHER RIGHTS. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a party, as a result of this Agreement,
obtain any ownership interest, license or other right in any invention,
discovery, composition or other technology, or in any patent right or other
intellectual property right, of the other party. No rights other than those
expressly provided in this Agreement are granted to either party hereunder, and
no additional rights shall be deemed granted, by implication, estoppel or
otherwise.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall for all purposes be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ALLIANCE PHARMACEUTICAL CORP.
By: /s/
-------------------------------------------
Name: Xxxxxxxx X. Xxxx
----------------------------------------
Title: President and Chief Operating Officer
---------------------------------------
INHALE THERAPEUTIC SYSTEMS, INC.
By: /s/
--------------------------------------------
Name: Xxxxxx X. Makes
-----------------------------------------
Title: Vice President & Chief Financial Officer
----------------------------------------
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SCHEDULE A
LIST OF COMPETITORS
*
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