EXHIBIT 99.4
MANUFACTURING AND MARKETING AGREEMENT
This MANUFACTURING AND MARKETING AGREEMENT (the "Agreement") is made as
of December 22, 1997 by and between DURA PHARMACEUTICALS, INC., a Delaware
corporation ("DURA"), and SPIROS DEVELOPMENT CORPORATION II, INC., a Delaware
corporation ("Spiros Corp. II").
RECITALS
WHEREAS, DURA and Spiros Corp. II are parties to the Development
Agreement, the Technology Agreement and the Albuterol and Product Option
Agreement (all capitalized terms shall have the respective meaning set forth
in Section 1 hereof).
WHEREAS, DURA has the Purchase Option to acquire all of the Spiros Corp.
II Common Stock.
WHEREAS, DURA has the expertise necessary to manufacture, itself or
through subcontractors, the Spiros Products.
WHEREAS, DURA has marketing and sales personnel currently performing
marketing for respiratory pharmaceutical products.
WHEREAS, Spiros Corp. II desires to license DURA to manufacture, promote
and sell the Spiros Products, and DURA is willing to accept such engagement.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce DURA to
enter into the Agreements, DURA and Spiros Corp. II hereby agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the respective meanings, to the extent such terms are used
herein, set forth in SCHEDULE 1.1 attached hereto, which is incorporated by
this reference as though fully set forth herein.
1.2 SINGULAR AND PLURAL. Singular and plural forms, as the case may
be, of terms defined herein shall have correlative meanings.
2. DURA'S RESPONSIBILITIES.
2.1 DURA'S GENERAL RESPONSIBILITIES. During the term of this
Agreement, DURA shall, at its sole expense (except as otherwise expressly
provided herein), in addition to its other obligations hereunder, have
responsibility for performing the activities set forth below:
(a) supervise, train and maintain such competent and qualified
sales personnel as may be required to promote the Spiros Products as provided
herein;
(b) use diligent and commercially reasonable efforts to launch,
market, promote and commence Sales of a Spiros Product promptly upon receipt
of FDA Approval of such Spiros Product;
(c) on or before the thirtieth (30th) day of each calendar quarter
following receipt of FDA Approval, furnish to Spiros Corp. II a report
containing DURA's Manufacture and Sales activities during the prior calendar
quarter;
(d) make no statement, representation or warranty, oral or
written, concerning the Spiros Products inconsistent with or contrary to the
labeling approved by regulatory authorities in respect of the Spiros Products;
(e) promptly submit to Spiros Corp. II all adverse drug experience
information concerning the Spiros Products; and
(f) conform its practices and procedures relating to Spiros
Product sampling to product sampling practices and procedures DURA follows
with respect to other similar products, which practices and procedures shall
be in compliance with applicable rules and regulations.
DURA shall take such other actions as DURA and Spiros Corp. II may jointly
agree upon and deem necessary, desirable or appropriate to promote and Sell
the Spiros Products effectively and as contemplated by this Agreement.
2.2 ADVERTISING AND PROMOTIONAL RESPONSIBILITIES. From time to time,
but at least once each year, DURA shall develop and formulate a marketing
plan setting forth DURA's strategies and plans for pricing, marketing and
detailing Spiros Products. Marketing plans shall be prepared in a manner
appropriate for product launch and consistent with sales and marketing plans
for similarly placed pharmaceutical products. The marketing plans shall be
submitted to the Board of Directors of Spiros Corp. II as part of the annual
workplan and budget for approval.
2.3 TERMS OF SALE. DURA will be responsible for determining all terms
of sale, including but not limited to, policies concerning pricing, credit
terms, cash discounts and returns and allowances.
3. ROYALTIES.
3.1 ROYALTIES ON SALES OF SPIROS PRODUCTS. Dura shall receive and
retain on its own behalf all payments by purchasers
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of the Spiros Products Sold by DURA hereunder. DURA hereby agrees to pay to
Spiros Corp. II royalties equal to seven percent (7%) of Net Sales of each
Spiros Products Sold beginning on the date of FDA Approval of such product;
provided, however, that prior to the expiration of the Albuterol Option no
royalty payment shall apply with respect to Net Sales of the Albuterol
Product.
3.2 ROYALTY PAYMENT. Royalties due on Net Sales of Spiros Products
shall be paid quarterly in arrears, on or before the forty-fifth (45th) day
following the end of each calendar quarter. Acceptance by Spiros Corp. II of
any payment remitted hereunder, whether or not the amount shall be in
dispute, shall not constitute acceptance by Spiros Corp. II of the account or
schedules on which such payment is based.
3.3 SINGLE ROYALTY. All sales of Spiros Products among DURA, its
Affiliates and any of their sublicensees shall be disregarded for purposes of
computing royalties under this Section 3, but in such instances royalties
shall be payable only upon sales to unlicensed third parties unless such
other sales were for purposes of end use, rather than for resale. Nothing
contained herein shall obligate DURA to pay Spiros Corp. II more than one
royalty on any unit of Spiros Products sold.
3.4 LATE PAYMENTS. DURA shall pay interest to Spiros Corp. II on the
aggregate amount of any amounts payable by DURA that are not paid on or
before the date such payments are due under this Agreement at a rate per
annum equal to the lesser of the prime rate of interest as reported by
Citibank, N.A., New York, from time to time, plus two percent (2%), or the
highest rate permitted by applicable law, calculated on the number of days
such payment is delinquent.
4. ACCOUNTING AND STATEMENTS.
4.1 ROYALTY STATEMENTS. DURA shall keep, and cause its Affiliates, if
any, to keep true and accurate accounts of all royalties payable to Spiros
Corp. II under the Agreement and DURA shall deliver or cause to be delivered
to Spiros Corp. II written statements of royalties due on or before the
forty-fifth (45th) day following the end of each calendar quarter and at the
same time shall pay Spiros Corp. II the amount of such royalties shown to be
due pursuant to Section 3. Such reports shall show in reasonably specific
detail: (a) the gross sales of each Spiros Product sold by DURA, its
Affiliates and sublicensees during the reporting period and the calculation
of Net Sales from such gross sales; (b) the royalties payable in United
States dollars, if any, which shall have accrued hereunder based upon Net
Sales of Spiros Products; (c) the withholding taxes, if any, required by law
to be deducted in respect of such sales; and (d) the date of the first
commercial sale of each Spiros Product.
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4.2 RECORDS. DURA shall keep, and cause its Affiliates and sublicensees,
if any, to keep accurate records in sufficient detail to be able to determine
the amount of royalties payable. Spiros Corp. II shall have the right at its
own expense to have an independent certified public accounting firm examine the
relevant books and records of account of DURA, any of its Affiliates or
sublicensees during reasonable business hours not more often than once during
each calendar year, to determine whether appropriate accounting and payment of
royalties have been made during the preceding two (2) calendar years. This
independent certified public accounting firm shall treat as confidential and
shall not disclose to Spiros Corp. II any information other than information
which is needed or proper to support the information required to be given to
Spiros Corp. II pursuant to this Agreement. If such accounting firm concludes
that additional royalties were owed during such period, DURA shall pay the
additional royalties within thirty (30) days of the date Spiros Corp. II
delivers to DURA such accounting firm's written report so concluding. The fees
charged by such accounting firm shall be paid by Spiros Corp. II; PROVIDED,
HOWEVER, if the audit discloses that the royalties payable by DURA for the
audited period are more than one hundred five percent (105%) of the royalties
actually paid for such period, then DURA shall pay the reasonable fees and
expenses charged by such accounting firm.
4.3 SUBLICENSEE RECORDS. DURA shall include in each permitted sublicense
granted by it pursuant to this Agreement or the License Agreement a provision
requiring the sublicensee to make reports to DURA, to keep and maintain records
of sales made pursuant to such sublicense and to grant access to such records by
Spiros Corp. II's independent accountant to the same extent required of DURA
under this Agreement.
5. MANUFACTURING AND SALE RECORDS. DURA shall keep, maintain, update and
preserve for the benefit of Spiros Corp. II true, accurate and complete
records of all efforts made by DURA pursuant to this Agreement, including,
without limitation, records of current and prospective customer contacts,
status of sales programs, advertising efforts, promotion efforts, market
feedback, marketing strategy, distribution, business leads and sales leads
("Records"). Upon written request of Spiros Corp. II or upon the termination
of this Agreement, copies of the Records shall be sent by DURA to Spiros
Corp. II within sixty (60) days of such request or termination.
6. MANUFACTURING PRACTICES.
6.1 MANUFACTURING SPECIFICATIONS. The Manufacture of all Spiros
Products during the term of this Agreement shall be the responsibility of
DURA. DURA shall manufacture, or cause its
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subcontractor to manufacture, the Spiros Products under this Agreement in
compliance in all material respects with all requirements of applicable laws
and regulations and all applicable good manufacturing practices, as
prescribed from time to time by the FDA and other applicable worldwide
regulatory authorities, using the specifications, manufacturing methods and
formulae as agreed upon by DURA and Spiros Corp. II in writing.
6.2 INSPECTION OF MANUFACTURING FACILITIES. DURA or its subcontractor
shall permit Spiros Corp. II and its duly authorized agents, at Spiros Corp.
II's sole expense, to enter DURA's or its subcontractor's premises, upon
reasonable notice during normal working hours, for the purpose of inspecting
the manufacturing processes and components used in the manufacture of the
Spiros Products and the quality thereof.
7. CONFIDENTIALITY. The provisions of Sections 4.3 and 4.4 of the
Technology Agreement shall apply with equal force and effect to this
Agreement and are incorporated hereunder.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS. The provisions of Section 3
of the Technology Agreement with respect to DURA and Spiros Corp. II shall
apply with equal force and effect to this Agreement and are incorporated
hereunder. In addition, DURA represents, warrants and covenants to Spiros
Corp. II as follows:
8.1 DURA'S EFFORTS. DURA shall use its commercially reasonable efforts
to locate and contact specialist respiratory physicians and other physicians,
hospitals, clinics, health maintenance organizations, preferred provider
organizations and managed care companies for the purpose of determining
whether such persons, groups or entities may be interested in buying or
prescribing the Spiros Products. DURA hereby agrees that failure to use its
commercially reasonable efforts as described in this Agreement shall
constitute a material breach of this Agreement;
8.2 COMPLIANCE WITH APPLICABLE LAWS. DURA shall comply (and shall
require all its sublicensees, agents and representatives to comply) with all
applicable laws, statutes, regulations and treaties relating to the
Manufacture and Sale of the Spiros Corp. II's Products and the performance of
DURA's obligations hereunder. DURA shall demonstrate, at Spiros Corp. II's
reasonable request, compliance with all applicable laws, statutes,
regulations and treaties;
8.3 USE OF NAMES. DURA shall use the then-current names used by Spiros
Corp. II for the Spiros Products (but will not represent or imply that it is
Spiros Corp. II or an Affiliate of Spiros Corp. II, or a part of or partner
or joint venturer with Spiros Corp. II);
8.4 NOTIFICATION OF PROBLEMS WITH SPIROS PRODUCTS. DURA
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shall keep Spiros Corp. II informed as to any problems encountered with the
Spiros Products and any suggested resolutions for those problems and shall
communicate promptly to Spiros Corp. II any and all modifications, design
changes or improvements suggested by any employee or agent; and
8.5 RECORDS. DURA shall keep and maintain a file of all persons and
entities to which Spiros Products have been sold by DURA or its sublicensees,
including: name; address; serial number, if any, of the Spiros Products;
date of delivery; and any applicable contract or purchase order executed by
such person or entity. Such file may be inspected by Spiros Corp. II at any
time and a complete copy of such file shall be delivered to Spiros Corp. II
upon the termination or earlier expiration of this Agreement pursuant to
Section 9.
9. TERM AND TERMINATION.
9.1 TERM. This Agreement shall be effective as of the date hereof and,
unless terminated earlier as provided in Sections 9.2, 9.3 and 9.4 hereof,
and shall continue in full force and effect until such time as the Purchase
Option terminates or expires (other than by exercise), subject to Section 9.6.
9.2 TERMINATION BY MUTUAL AGREEMENT. By mutual agreement, the parties
hereto may at any time terminate this Agreement on mutually acceptable terms.
9.3 EFFECT OF OPTION EXERCISES.
9.3.1 PURCHASE OPTION. Subject to Section 9.6, in the event
the Purchase Option is exercised by DURA, this Agreement shall terminate,
effective upon the Purchase Option Closing Date, without any obligation to
make payments pursuant to Section 7 of the Technology Agreement.
9.3.2 PARTIAL TERMINATION UPON EXERCISE OF ALBUTEROL OPTION.
In the event that the Albuterol Option is exercised, this Agreement shall
terminate, effective on the Albuterol Option Closing Date, with respect to
the Albuterol Program Assets and any obligation to make royalty payments with
respect to the Albuterol Product, but shall otherwise continue in full force
and effect until terminated pursuant to this Section 9.
9.3.3 PARTIAL TERMINATION UPON EXERCISE OF PRODUCT OPTION. In
the event that the Product Option is exercised, this Agreement shall
terminate, effective on the Product Option Closing Date, with respect to the
Option Product and any obligation to make royalty payments with respect to
the Product Option, but shall otherwise continue in full force and effect
until terminated pursuant to this Section 9.
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9.4 TERMINATION BY DURA. Either DURA or Spiros Corp. II shall have the
right to terminate this Agreement, effective as set forth in a written notice
to the other of an Event of Default with respect to such other party.
9.5 EFFECT OF TERMINATION.
9.5.1 RETURN OF SPIROS PRODUCTS. In the event of the
termination of DURA's right to continue to Manufacture and Sell one or more
(other than as a result of the exercise of the Albuterol Option or the
Product Option) Spiros Products pursuant to Section 9.4 as a result of an
Event of Default by DURA, DURA shall within thirty (30) days of the effective
date of such termination, transfer to Spiros Corp. II all Program Technology
and all other data, records and materials in DURA's possession or control
which relate to such Spiros Products. In addition, DURA shall within fifteen
(15) days of the effective date of the termination notify Spiros Corp. II in
writing of the quantity of such Spiros Products which it has in inventory,
and DURA shall thereupon be permitted during the six (6) months following
such termination to Sell such inventory of Spiros Products; provided that
Spiros Corp. II shall first have the right to purchase such Spiros Products
for a transfer price equal to the cost of manufacture of such products
together with DURA's overhead thereon. DURA shall also cooperate in the
transfer of regulatory filings related to such Spiros Products, and take such
other actions and execute such other instruments, assignments and documents
as may be necessary to effect the transfer of the Manufacture and Sale rights
to Spiros Corp. II.
9.5.2 SURVIVAL. Sections 1, 2.1(c), (d), (e) and (f), 3 (but
only to the extent rights to payments have accrued prior to termination), 4,
5, 7, 8, 9, 10 and 11 of this Agreement, and all obligations to pay any
amounts due hereunder, shall survive, and shall not be affected by, any
termination of this Agreement pursuant to this Section 9.
10. INDEMNIFICATION AND INSURANCE.
10.1 INDEMNIFICATION. The provisions of Sections 6.1 and 6.2 of the
Technology Agreement shall apply with equal force and effect to this
Agreement and are incorporated hereunder.
10.2 INSURANCE.
10.2.1 INSURANCE BY SPIROS CORP. II. To the extent Spiros Corp.
II develops or uses, or causes the development or use (except by DURA or its
Affiliates or sublicensees under this Agreement) of, the Spiros Products,
Spiros Corp. II shall, to the extent available at commercially reasonable
rates, maintain with insurers or underwriters of good repute such insurance
relating
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to the development, sale and use of the Spiros Products, against such risks,
pursuant to such terms (including deductible limits or self-insured
retentions) and for such periods, as is customary for comparable businesses
undertaking the development, sale and use of products of a similar nature,
and shall, to the extent reasonably possible and not unreasonably expensive,
cause DURA and its Affiliates to be named as additional insured parties on
its insurance policies. To the extent Spiros Corp. II is required to obtain
insurance under this Section 10.2.1 during the term of this Agreement, Spiros
Corp. II may use Available Funds to pay the premiums therefore.
10.2.2 INSURANCE BY DURA. DURA shall, to the extent available
at commercially reasonable rates, maintain, with insurers or underwriters of
good repute such insurance relating to the Development, Manufacture and Sale,
against such risks and pursuant to such terms (including deductible limits or
self-insured retentions) as is customary for comparable businesses
undertaking research, development and commercialization programs of a similar
nature, and shall, to the extent reasonably possible and not unreasonably
expensive, cause Spiros Corp. II to be named as an additional insured party
on its insurance policies.
11. MISCELLANEOUS.
11.1 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of
DURA or Spiros Corp. II to exercise and no delay in exercising any right,
power, remedy or privilege under this Agreement or provided by statute or at
law or in equity or otherwise, including, without limitation, the right or
power to terminate this Agreement, shall impair, prejudice or constitute a
waiver of any such right, power, remedy or privilege or be construed as a
waiver of any breach of this Agreement or as an acquiescence therein, nor
shall any single or partial exercise of any such right, power, remedy or
privilege preclude any other or further exercise thereof or the exercise of
any other right, power, remedy or privilege.
11.2 FORCE MAJEURE. DURA and Spiros Corp. II shall each be excused for
any failure or delay in performing any of their respective obligations under
this Agreement, if such failure or delay is caused by Force Majeure.
11.3 RELATIONSHIP OF THE PARTIES. Nothing contained in this Agreement
is intended or is to be construed to constitute DURA and Spiros Corp. II as
partners or joint venturers or one party as an employee of any other party.
Except as expressly provided herein, no party hereto shall have any express
or implied right or authority to assume or create any obligations on behalf
of or in the name of any other party or to bind any other party to any
contract, agreement or undertaking with any third party.
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11.4 NOTICES. All notices, requests and other communications to DURA or
Spiros Corp. II hereunder shall be in writing (including telecopy or similar
electronic transmissions), shall refer specifically to this Agreement and
shall be personally delivered or sent by telecopy or other electronic
facsimile transmission or by registered mail or certified mail, return
receipt requested, postage prepaid, or reliable overnight courier service, in
each case to the respective address specified below (or to such address as
may be specified in writing to the other party hereto):
If to DURA, addressed to:
Dura Pharmaceuticals, Inc.
7475 Lusk Boulevard
San Diego, CA 92121
Attention: President
with a copy to the attention of General Counsel
If to Spiros Corp. II, addressed to:
Spiros Development Corporation II, Inc.
7475 Lusk Boulevard
San Diego, CA 92121
Attention: President
Any notice or communication given in conformity with this Section 11.4 shall
be deemed to be effective when received by the addressee, if delivered by
hand, telecopy or electronic transmission, three (3) days after mailing, if
mailed, and one (1) business day after delivery to a reliable overnight
courier service.
11.5 FURTHER ASSURANCES. Each of DURA and Spiros Corp. II hereby agrees
to duly execute and deliver, or cause to be duly executed and delivered, such
further instruments and do and cause to be done such further acts and things,
including, without limitation, the filing of such additional assignments,
agreements, documents and instruments, that may be necessary or as the other
party hereto may at any time and from time to time reasonably request in
connection with this Agreement or to carry out more effectively the
provisions and purposes of, or to better assure and confirm unto such other
party its rights and remedies under, this Agreement.
11.6 SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, DURA, Spiros Corp. II,
and their respective successors and assigns; PROVIDED, HOWEVER, that DURA and
Spiros Corp. II may not assign or otherwise transfer any of their respective
rights and interests, nor delegate any of their respective obligations,
hereunder, including, without limitation, pursuant to a merger or
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consolidation, without the prior written consent of the other party hereto;
PROVIDED FURTHER, HOWEVER, that DURA may fully assign its rights and
interests, and delegate its obligations, hereunder, effective upon written
notice thereof (a) to an Affiliate if such Affiliate assumes all of the
obligations of DURA hereunder and this Agreement remains binding upon DURA;
or (b) to any Person that acquires all or substantially all of the assets of
DURA, or which is the surviving Person in a merger or consolidation with
DURA, if such Person assumes all the obligations of DURA hereunder.
Notwithstanding the foregoing, Spiros Corp. II shall have the right to assign
its rights and delegate its obligations hereunder following expiration or
termination (other than by exercise) of the Purchase Option. Any attempt to
assign or delegate any portion of this Agreement in violation of this Section
11.6 shall be null and void. Subject to the foregoing any reference to DURA
or Spiros Corp. II hereunder shall be deemed to include the successors
thereto and assigns thereof.
11.7 AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent by DURA or Spiros
Corp. II to any departure therefrom, shall in any event be effective unless
the same shall be in writing specifically identifying this Agreement and the
provision intended to be amended, modified, waived, terminated or discharged
and signed by DURA and Spiros Corp. II, and each amendment, modification,
waiver, termination or discharge shall be effective only in the specific
instance and for the specific purpose for which given. No provision of this
Agreement shall be varied, contradicted or explained by any other agreement,
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by DURA and Spiros Corp. II.
11.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, as applied to
contracts made and performed entirely within the State of California. Except
as otherwise provided herein, any claim or controversy arising out of or
related to this contract or any breach hereof shall be submitted to a court
of competent jurisdiction in the State of California, and the parties hereby
consent to the jurisdiction and venue of such court.
11.9 SEVERABILITY. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by law, (a) all other provisions hereof shall remain
in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as
nearly as may be possible and (b) such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction. To the extent permitted by
applicable law, DURA and Spiros Corp. II
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hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
11.10 HEADINGS. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
11.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
11.12 ENTIRE AGREEMENT. This Agreement, together with any agreements
referenced herein, constitute, on and as of the date hereof, the entire
agreement of DURA and Spiros Corp. II with respect to the subject matter
hereof, and all prior or contemporaneous understandings or agreements,
whether written or oral, between DURA and Spiros Corp. II with respect to
such subject matter are hereby superseded in their entirety.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first above written.
DURA PHARMACEUTICALS, INC.
By: /s/ Cam L. Garner
-------------------------------------------------
Cam L. Garner
President and Chief Executive Officer
SPIROS DEVELOPMENT CORPORATION II, INC.
By: /s/ David S. Kabakoff
-------------------------------------------------
David S. Kabakoff,
President and Chief Executive Officer
[SIGNATURE PAGE TO MANUFACTURING AND
MARKETING AGREEMENT]
SCHEDULE 1.1
GLOSSARY
SCHEDULE 1.1
GLOSSARY
"AFFILIATE" of a person shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with such Person. "Control" (and, with correlative meanings, the
terms "controlled by" and "under common control with") shall mean the possession
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting stock, by contract or
otherwise. In the case of a corporations, "control" shall mean, among other
things, the direct or indirect ownership of more than fifty percent (50%) of its
outstanding voting stock.
"AGREEMENTS" shall mean the Manufacturing and Marketing Agreement, the
Technology Agreement and the Development Agreement.
"ALBUTEROL OPTION" shall have the meaning assigned to it in Section 1.1 of
the Albuterol and Product Option Agreement.
"ALBUTEROL AND PRODUCT OPTION AGREEMENT" shall mean the Albuterol and
Product Option Agreement dated as of December 22, 1997, between DURA and Spiros
Corp. II, as amended, modified or supplemented from time to time.
"ALBUTEROL OPTION CLOSING DATE" shall have the meaning assigned to it in
Section 1.5 of the Albuterol and Product Option Agreement.
"ALBUTEROL PROGRAM ASSETS" shall have the meaning assigned to it in Section
1.1 of the Albuterol and Product Option Agreement.
"ALBUTEROL PRODUCT" shall have the meaning assigned to it in Section 1.1 of
the Albuterol and Product Option Agreement.
"AVAILABLE FUNDS" shall mean the sum of (a) the net proceeds to Spiros
Corp. II from the sale of the Units in the Offering and the Contribution, (b)
all royalties remitted to Spiros Corp. II by DURA (or its Affiliates) from the
Sale of Spiros Products pursuant to the Agreements, (c) the Option Proceeds, if
any, (d) any other amounts provided by DURA to Spiros Corp. II, if any and (e)
interest or other income earned through temporary investment of the amounts
described in clauses (a), (b), (c) or (d).
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as amended
from time to time.
"CLAIM" shall mean any and all liabilities, damages, losses, settlements,
claims, actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees).
SCHEDULE 1.1
"CONFIDENTIAL INFORMATION" shall mean all Program Technology disclosed by
DURA (and its Affiliates) to Spiros Corp. II or by Spiros Corp. II to DURA
pursuant to the Agreements or the Services Agreement.
"CONTRIBUTION" shall have the meaning assigned in Section 5.2 of the
Development Agreement.
"CORE TECHNOLOGY" shall mean the DURA Core Technology, the DDSI Core
Technology and the Spiros Core Technology.
"DDSI CORE TECHNOLOGY" shall mean (a) Technology owned or controlled by
DDSI as of the date of the closing of the Offering necessary or useful to the
development of the Spiros Products, and (b) the DDSI Patent Rights; PROVIDED,
HOWEVER, that DDSI Core Technology shall also include Technology acquired by
DDSI from a third party after the date of the closing of the Offering necessary
or useful to the development of the Spiros Products, except to the extent that
there are any limitations or restrictions on DDSI's ability to license or
sublicense such Technology. "Owned or controlled" shall include Technology that
DDSI owns, or under which DDSI is licensed and has the right to grant
sublicenses and/or grant immunity from suit.
"DDSI INDEMNITEE" shall mean DDSI, its successors and assigns, and the
directors, officers, employees, agents and counsel thereof.
"DDSI PATENT RIGHTS" shall mean those certain inventions described in
claims of (a) the patent applications pending, filed by DDSI (or the rights to
which have been assigned to DDSI) as of the date of the Technology Agreement
relating to dry powder inhalers, powder storage systems and/or formulation
methods for dry powder inhalation, (b) any patent application constituting an
equivalent, counterpart, reissue, extension or continuation (including, without
limitation, a continuation in part or a subdivision) of any of the foregoing
patent applications and (c) any patent issued or issuing upon any of the
foregoing.
"DESIGNATED COMPOUND(S)" shall mean any compounds for delivery using the
System selected by Spiros Corp. II, and agreed to be developed by DURA.
"DEVELOPED TECHNOLOGY" shall mean any Technology including, without
limitation, any enhancements, substitutions or improvements to the Core
Technology that is (a) discovered, developed or otherwise acquired by DURA
pursuant to the terms of the Development Agreement or (b) otherwise acquired by
or on behalf of Spiros Corp. II during the term of the Development Agreement.
"DEVELOPMENT" shall mean the further development of the Program Technology
for the purpose of identifying, developing, manufacturing, marketing and
commercializing Spiros Products and
SCHEDULE 1.1
the making of the Other Expenditures.
"DEVELOPMENT AGREEMENT" shall mean the Development Agreement dated as of
December 22, 1997, between DURA and Spiros Corp., as amended, modified or
supplemented from time to time.
"DEVELOPMENT COSTS" shall mean the Direct Development Costs, the Indirect
Development Costs and the Other Expenditures.
"DEVELOPMENT TERM" shall mean the period commencing on the Closing Date and
ending on the earlier of (a) the Option Closing Date or (b) the date the Option
terminates or expires other than by exercise.
"DIRECT DEVELOPMENT COSTS" shall mean all costs incurred by DURA or its
Affiliates in respect of the Development, other than Indirect Development
Costs, determined in accordance with generally accepted accounting principles
consistent with DURA's internal accounting system, allocated on a reasonable
and consistent basis. Direct Development Costs shall consist primarily of
fully-burdened payroll costs (burdened to include benefits, payroll taxes and
an allocation of facilities and overhead costs) and any other such costs
generated internally by DURA in respect of the Development.
"DPI" shall mean the motor-driven dry powder inhaler (other than an inahler
designed to deliver a single dose of a drug) developed by DURA, DDSI and/or
Spiros Corp. and to be developed by DURA and/or Spiros Corp. II.
"DURA COMMON STOCK" shall mean the Common Stock of DURA, par value $.001
per share.
"DURA CORE TECHNOLOGY" shall mean (a) Technology owned or controlled by
DURA as of the date of the closing of the Offering necessary or useful to the
development of the Spiros Products, and (b) the DURA Patent Rights and DURA
Trademarks; PROVIDED, HOWEVER, that DURA Core Technology shall also include
Technology acquired by DURA from a third party after the date of the closing of
the Offering necessary or useful to the development of the Spiros Products,
except to the extent that there are any limitations or restrictions on DURA's
ability to license or sublicense such Technology. "Owned or controlled" shall
include Technology that DURA owns, or under which DURA is licensed and has the
right to grant sublicenses and/or grant immunity from suit.
"DURA INDEMNITEE" shall mean DURA, its successors and assigns, and the
directors, officers, employees, agents and counsel thereof.
"DURA PATENT RIGHTS" shall mean those certain inventions described in
claims of (a) the patent applications pending, filed by DURA (or the rights to
which have been assigned to DURA) as of the date of the Technology Agreement
relating to DPIs, PSSs and/or formulation methods for dry powder inhalation, (b)
any
SCHEDULE 1.1
patent application constituting an equivalent, counterpart, reissue,
extension or continuation (including, without limitation, a continuation in part
or a subdivision) of any of the foregoing patent applications and (c) any patent
issued or issuing upon any of the foregoing.
"DURA TRADEMARKS" shall mean Spiros=TM=.
"EVENT OF DEFAULT" shall mean any of the following events: (a) at any
time, if DURA or Spiros Corp. II fails to perform or observe or otherwise
breaches any of its Material Obligations, and such failure or breach continues
unremedied for a period of sixty (60) days after receipt by of written notice
thereof from the other party; (b) at any time, effective as set forth in a
written notice from the other party if DURA or Spiros Corp. II shall (i) seek
the liquidation, reorganization, dissolution or winding-up of itself or the
composition or readjustment of its debts (other than pursuant to a merger with
an Affiliate), (ii) apply for or consent to the appointment of, or the taking
possession by, a receiver, custodian, trustee or liquidator for itself or of all
or a substantial part of its assets, (iii) make a general assignment for the
benefit of its creditors, (iv) commence a voluntary case under the Bankruptcy
Code, (v) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
readjustment of debts (other than pursuant to a merger with an Affiliate) or
(vi) adopt any resolution of its Board of Directors or shareholders for the
purpose of effecting any of the foregoing (other than pursuant to a merger with
an Affiliate); or (c) at any time, effective as set forth in a written notice
from the other party, if a proceeding or case shall be commenced without the
application or consent of DURA or Spiros Corp. II as applicable, and such
proceeding or case shall continue undismissed, or an order, judgment or decrees
approving or ordering any of the following shall be entered and continued
unstayed and in effect, for a period of sixty (60) days from and after the date
service of process is effected, seeking (i) DURA's or Spiros Corp. II's, as
applicable, liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of DURA or Spiros Corp. II or for
all or any substantial part of its assets or (iii) similar relief in respect of
DURA or Spiros Corp. II under any law relating to bankruptcy, insolvency,
reorganization, winding-up or the composition or readjustment of debts.
"FDA" shall mean the United States Food and Drug Administration or any
successor agency or authority, the approval of which is required to market
health care products in the United States.
"FDA APPROVAL" shall mean the final regulatory approval of the FDA required
to commence commercial marketing of a health product.
SCHEDULE 1.1
"FORCE MAJEURE" shall mean any act of God, any accident explosion, fire,
storm, earthquake, flood, drought, peril of the sea, riot, embargo, war or
foreign, federal, state or municipal order of general application, seizure,
requisition or allocation, any failure or delay of transportation, shortage of
or inability to obtain supplies, equipment, fuel or labor or any other
circumstance or event beyond the reasonable control of the party relying upon
such circumstance or event.
"INDIRECT DEVELOPMENT COSTS" shall mean all costs, fees and out-of-pocket
or other expenses, including the purchase of any capital equipment related to
the Development, incurred or paid by DURA to a third party, other than an
Affiliate of DURA, in respect of the Development, determined in accordance with
generally accepted accounting principles consistent with DURA's internal
accounting system, allocated on a reasonable and consistent basis.
"MANUFACTURING AND MARKETING AGREEMENT" shall mean the Manufacturing and
Marketing Agreement dated as of December 22, 1997 between DURA and Spiros
Corp. II, as amended, modified or supplemented from time to time.
"MANUFACTURE" shall mean the manufacture and assembly of the Spiros
Products.
"MATERIAL OBLIGATION" shall mean the material obligations of a party under
the Technology Agreement, the Development Agreement or the Manufacturing and
Marketing Agreement.
"NET SALES" shall mean the gross amount invoiced for sales of Spiros
Products by DURA or its sublicensees, if any, to third parties less (i)
discounts actually allowed, (ii) credits for claims, allowances, retroactive
price reductions or returned Spiros Products, (iii) prepaid freight charges
incurred in transporting Spiros Products to customers, (iv) sales taxes and
other governmental charges actually paid in connection with the sales (but
excluding what is commonly known as income taxes) and (v) any royalty
obligations under the 1993 Royalty Agreement. Net Sales shall not include sales
between or among DURA, its Affiliates and its sublicensees unless such sales are
for end use rather than for purposes of resale.
"OFFERING" shall mean the underwritten public offering of the Units
pursuant to the Registration Statement.
"OPTION PROCEEDS" shall have the meaning assigned to it in Section 3 of the
Albuterol and Product Option Agreement.
"OPTION PRODUCT" shall have the meaning assigned to it in Section 2.1 of
the Albuterol and Product Option Agreement.
"OTHER EXPENDITURES" shall mean funds spent by Spiros Corp. II to acquire
capital equipment, develop a next generation inhaler system or to enhance the
System.
SCHEDULE 1.1
"PATENT RIGHTS" shall mean any patents or patent applications within the
Spiros Corp. II Patent Rights, the DURA Patent Rights, the DDSI Patent Rights
and the Spiros Corp. Patent Rights.
"PERSON" shall mean any individual, partnership, corporation, firm,
association, unincorporated organization, joint venture, trust or other entity.
"PRODUCT OPTION" shall have the meaning assigned to it in Section 2.1 of
the Albuterol and Product Option Agreement.
"PRODUCT OPTION CLOSING DATE" shall have the meaning assigned to it in
Section 2.5 of the Albuterol and Product Option Agreement.
"PROGRAM TECHNOLOGY" shall mean the Core Technology and the Developed
Technology.
"PSS" shall mean the powder storage system developed and to be developed by
DURA for use with the DPI.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement dated as of
December 16, 1997, among DURA, Spiros Corp. II, Merrill Lynch & Co., and
Donaldson, Lufkin & Jenrette.
"PURCHASE OPTION" shall mean the option granted to the holder of Spiros
Corp. II's Special Common Stock to purchase all of the Spiros Corp. II Common
Stock as set forth in Article V of the Spiros Corp. II Charter.
"PURCHASE OPTION CLOSING DATE" shall have the meaning assigned to it in
Article V of the Spiros Corp. II Charter.
"PURCHASE OPTION EXERCISE PRICE" shall have the meaning assigned to it in
Article V of the Spiros Corp. II Charter
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-1/S-3 filed by Spiros Corp. II and DURA dated October 10, 1997 (No. 333-
37673/333-37673-01), including all exhibits and any amendments thereof
and supplements thereto.
"RESEARCH FUNDS" shall mean the Available Funds, less (i) all general and
administrative expenses including, without limitation, those paid or payable
pursuant to the Development Agreement or the Services Agreement, and the
reasonable out-of-pocket expenses of Spiros Corp. II directors and reasonable
compensation for Spiros Corp. II's independent directors, less (ii) any amounts
paid to DURA under the Development Agreement or the Services Agreement, less
(iii) any costs and expenses incurred in the defense or settlement of any action
or claim or in respect of a judgment thereon, and less (iv) One Million Dollars
($1,000,000) to be retained by Spiros Corp. II as working capital in the event
DURA does not exercise the Purchase Option.
SCHEDULE 1.1
"SALE(S)" or "SELL" shall mean the activity undertaken by a sales
representative during a sales call on physicians, physician assistants, nurses,
hospitals, clinics, health maintenance organizations, preferred provider
organizations and managed care companies (including all forms of communication
not involving face to face contact by such sales representatives), describing
the FDA-approved indicated uses, safety, effectiveness, contraindications, side
effects, warnings and other relevant characteristics of the Spiros Product, in a
fair and balanced manner consistent with the requirements of the Federal Food,
Drug, and Cosmetic Act, as amended (and the regulations thereunder).
"SPIROS CASSETTE SYSTEM" shall mean a DPI in which the PSS is in the form
of a cassette.
"SPIROS CORE TECHNOLOGY" shall mean (a) Technology owned or controlled by
Spiros Corp. as of the date of the closing of the Offering necessary or useful
to the development of the Spiros Products, and (b) the Spiros Corp. Patent
Rights; PROVIDED, HOWEVER, that Spiros Core Technology shall also include
Technology acquired by Spiros Corp. from a third party after the date of the
closing of the Offering necessary or useful to the development of the Spiros
Products, except to the extent that there are any limitations or restrictions on
Spiros Corp.'s ability to license or sublicense such Technology. "Owned or
controlled" shall include Technology that Spiros Corp. owns, or under which
Spiros Corp. is licensed and has the right to grant sublicenses and/or grant
immunity from suit.
"SPIROS CORP. INDEMNITEE" shall mean Spiros Corp., its successors and
assigns, and the directors, officers, employees, agents and counsel thereof.
"SPIROS CORP. PATENT RIGHTS" shall mean those certain inventions described
in claims of (a) the patent applications pending, filed by Spiros Corp. (or the
rights to which have been assigned to Spiros Corp.) as of the date of the
Technology Agreement relating to dry powder inhalers, powder storage systems
and/or formulation methods for dry powder inhalation, (b) any patent application
constituting an equivalent, counterpart, reissue, extension or continuation
(including, without limitation, a continuation in part or a subdivision) of any
of the foregoing patent applications and (c) any patent issued or issuing upon
any of the foregoing.
"SPIROS CORP. II CHARTER" shall mean Amended and Restated Certificate of
Spiros Development Corporation II, Inc. in effect as of the closing of the
Offering, as amended from time to time.
"SPIROS CORP. II COMMON STOCK" shall mean the Callable Common Stock of
Spiros Corp. II, $.001 par value.
"SPIROS CORP. II INDEMNITEE" shall mean Spiros Corp. II, its
SCHEDULE 1.1
successors and assigns, and the directors, officers, employees, agents and
counsel thereof.
"SPIROS CORP. II PATENT RIGHTS" shall mean those certain inventions
described in claims of (a) any patent application having one or more claims
covering Developed Technology, (b) any patent application constituting an
equivalent, counterpart, reissue, extension or continuation (including, without
limitation, a continuation in part or a subdivision) of any of the foregoing
applications or (c) any patent issued or issuing upon any of the foregoing
applications.
"SPIROS PRODUCT(S)" shall mean (a) any System used with a formulation of
albuterol, beclomethasone, ipratropium, an albuterol-ipratropium combination,
budesonide or a Designated Compound developed, produced, manufactured or
marketed by DURA on behalf of Spiros Corp. II using the Program Technology.
"SPIROS PRODUCT PROGRAM ASSETS" shall have the meaning assigned to it in
Section 2.1 of the Albuterol and Product Option Agreement.
"SYSTEM" shall mean the DPI and the PSS when used together.
"TECHNOLOGY" shall mean, solely with respect to motor-driven dry powder
inhalers and powder storage systems for drugs for delivery through such
inhalers, the manufacture thereof, and formulations of drugs to be delivered
through such inhalers, public and nonpublic technical or other information,
trade secrets, know-how, processes, formulations, concepts, ideas, preclinical,
clinical, pharmacological or other data and testing results, experimental
methods, or results, assays, descriptions, business or scientific plans,
depictions, customer lists and any other written, printed or electronically
stored materials, pharmaceutical compounds or any other natural or man-made
pharmaceutical materials and any and all other intellectual property, including
patents and patent applications, of any nature whatsoever. The term
"Technology" shall include, without limitation, any of the foregoing as it
relates to enhancements of, substitutions for or improvements to the Core
Technology.
"TECHNOLOGY AGREEMENT" shall mean the Technology License Agreement dated as
of December 22, 1997, among DURA, DDSI, Spiros Corp. and Spiros Corp. II, as
amended, modified or supplemented from time to time.
"TERRITORY" shall mean the entire world.
"UNDERWRITERS" shall have the meaning assigned to it in the Registration
Statement.
"UNITS" shall mean units, each consisting of one share of Spiros Corp. II
Common Stock and one warrant to purchase one-fourth of one share of DURA Common
Stock, all as described in the Registration Statement.
SCHEDULE 1.1
"1993 ROYALTY AGREEMENT" shall have the meaning assigned to it in the
Registration Statement.
SCHEDULE 1.1