UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) July 1, 2010
COLUMBIA LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 1-10352
|
|
|
Delaware
|
|
59-2758596
|
|
|
|
(State of Incorporation)
|
|
(I.R.S. Employer
|
|
|
Identification No.)
|
|
|
|
354 Eisenhower Parkway
|
|
|
Livingston, New Jersey
|
|
07039
|
|
|
|
(Address of principal
|
|
Zip Code
|
executive offices)
|
|
|
Registrants telephone number, including area code:
(973) 994-3999
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
o
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
o
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
Descriptions of the Supply Agreement, License Agreement and Investors Rights Agreement are set
forth under Item 2.01 of this Current Report on Form 8-K and are incorporated by reference into
this item.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Watson Transactions
On July 2, 2010, Columbia Laboratories, Inc. (the Company) completed the previously announced
sale to Coventry Acquisition, Inc. (the Buyer), a subsidiary of Watson Pharmaceuticals, Inc.
(Watson), pursuant to the terms of that certain Purchase and Collaboration Agreement, dated as of
March 3, 2010 (the Purchase Agreement), among the Company, the Buyer and Watson of (i)
substantially all of its assets primarily relating to the research, development, regulatory
approval, manufacture, distribution, marketing, sale and promotion of pharmaceutical products
containing progesterone as an active ingredient, including CRINONE 8% progesterone gel, PROCHIEVE
4% progesterone gel and PROCHIEVE 8% progesterone gel, each sold by the Company in the United
States (collectively, the Progesterone Products), including certain intellectual property,
promotional materials, contracts, product data and regulatory approvals and regulatory filings (the
Purchased Assets), and (ii) 11,200,000 shares (the Acquisition Shares) of the Companys common
stock, $.01 par value per share (the Common Stock). The Company has retained certain assets and
rights relating to its progesterone business, including all rights necessary to perform its
obligations under its agreement with an affiliate of Merck Serono S.A. (Merck Serono). The
transactions pursuant to the Purchase Agreement and the ancillary agreements thereto are referred
to herein as the Watson Transactions.
In consideration for the sale of the Purchased Assets and the Acquisition Shares, the Company has
received $47 million in cash and the Buyer has assumed certain liabilities associated with the
Purchased Assets. The Buyer has reported that the source of the funds used to effect the Watson
Transactions was working capital. In addition, pursuant to the terms of the Purchase Agreement,
the Buyer agreed to pay the Company up to $45.5 million in cash upon the achievement of several
contingent milestones as follows: (i) upon the delivery of results from the Companys Phase III
PREGNANT Study designed to evaluate the ability of PROCHIEVE 8% to reduce the risk of preterm birth
in women with a short cervix of between 1.0 and 2.0 centimeters (the PTB Indication) as measured
by transvaginal ultrasound at mid-pregnancy (the PREGNANT Study) and (A) if the results of the
PREGNANT Study reflect the achievement of a primary endpoint, reduction in preterm birth, p-value
that is less than or equal to 0.05 and greater than 0.01, $6 million or (B) if the results of the
PREGNANT Study reflect the achievement of a primary endpoint, reduction in preterm birth, p-value
that is less than or equal to 0.01, $8 million; provided, however, in each case, the results
reflect the achievement of a secondary endpoint, infant outcomes composite score, p-value that is
less than or equal to 0.05; (ii) upon acceptance by the United States Food and Drug Administration
of a new drug application (or a supplemental new drug application) to market PROCHIEVE 8% for the
PTB Indication, $5 million; (iii) upon the first commercial sale of PROCHIEVE 8% in the United
States for the PTB Indication, $30 million; (iv) upon filing and acceptance by the applicable
regulatory authority of an application for the authorization to market a Progesterone Product for
the PTB Indication in a
country or jurisdiction outside the United States, $0.5 million; and (v) upon a grant by any
applicable regulatory authority of an approval to market a Progesterone Product for the PTB
Indication in a country or jurisdiction outside of the United States, $2 million.
Pursuant to the Purchase Agreement, after the closing thereunder, the Buyer has also agreed to make
certain royalty payments to the Company in each year during the relevant royalty period based on
the sales of certain Progesterone Products (each a Royalty Product), at the rates of (A) 10% of
the portion of annual United States net sales which are less than or equal to $150,000,000, (B) 15%
of the portion of annual United States net sales which are greater than $150,000,000 and less than
or equal to $250,000,000, (C) 20% of the portion of annual United States net sales which are
greater than $250,000,000 and (D) 10% of annual net sales outside of the United States in a country
where the Buyer or its affiliates are commercializing any Royalty Product; provided, however that
(x) if generic entry by a third party with respect to any Royalty Product occurs in any country
such that quarterly net sales of such Royalty Product in such country are reduced by 50% and such
reduction is directly attributable to the marketing or sale in such country of such generic
equivalent, the royalty rate shall be reduced by 50% in such country (a Generic Entry), (y) if
the Buyer or any of its affiliates grants any licenses, sublicenses, distribution or marketing
rights or otherwise collaborates with a third party to commercialize any Royalty Product in a
country outside of the United States, in lieu of royalties payable in respect of net sales, the
Company will be entitled to 20% of gross profits associated with such commercialization in such
country, and (z) in the event that a Generic Entry by the Buyer or its affiliates with respect to
any Royalty Product in a country occurs in the circumstances permitted by the Purchase Agreement,
in lieu of royalties payable in respect of net sales for such generic product, the Company will be
entitled to 20% of gross profits associated with the commercialization of such generic product in
such country.
Pursuant to the Purchase Agreement, the Company and the Buyer have also agreed to collaborate with
respect to the development of Progesterone Products. In connection therewith, the parties agreed
to establish a joint development committee to oversee and supervise all development activities.
The Company will be responsible for completion of the PREGNANT Study and such other activities as
determined by the joint development committee. The Company will be responsible for the costs of
conducting the PREGNANT Study and the preparation, filing and approval process of the related new
drug application (or supplemental new drug application) up to a maximum amount of $7 million from
January 1, 2010. All other development costs incurred in connection with the development
collaboration will be paid by the Buyer.
The parties, pursuant to the Purchase Agreement, have entered into various ancillary agreements
described below, including an Investors Rights Agreement, a Supply Agreement pursuant to which the
Company will supply the Progesterone Products to the Buyer for sale in the United States at a price
equal to 110% of the cost of goods sold and a License Agreement relating to the grant of certain
intellectual property licenses.
As part of the Purchase Agreement, the Company has agreed not to manufacture, develop or
commercialize products containing progesterone or any other products for the PTB Indication,
subject to certain exceptions, until the second anniversary of the date on which the Company and
the Buyer terminate their relationship with respect to the joint development of the Progesterone
Products. The joint development collaboration is terminable by either party beginning July 2,
2015.
The Company has granted to the Buyer certain registration rights with respect to the resale of the
Acquisition Shares and the right to designate one member to the Board until the Buyer no longer
owns at least 10% of the Companys outstanding Common Stock, pursuant to the terms of the
Investors Rights Agreement, dated July 2, 2010, between the Buyer and the Company (the Investors
Rights Agreement). The Buyer, under the Investors Rights Agreement, has agreed to certain
limitations on its ability to transfer the Acquisition Shares.
The Acquisition Shares are being offered and sold to the Buyer under the Purchase Agreement in
reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended
(the Securities Act), pursuant to Section 4(2) under the Securities Act and Rule 506 promulgated
thereunder, based on the nature of the Buyer and certain representations made by the Buyer to the
Company.
Termination of the PharmaBio Agreement
On July 2, 2010, the Company terminated the Investment and Royalty Agreement, dated March 5, 2003,
between the Company and PharmaBio Development Inc., as amended and supplemented from time to time
(the PharmaBio Agreement). Termination of the PharmaBio Agreement was in accordance with the
terms of a previously reported amendment to the PharmaBio Agreement, dated March 3, 2010,
permitting the Company to make certain payments required thereunder on an accelerated and
discounted basis on the date the Company consummates a sale such as the sale of the Companys
assets in connection with the Watson Transactions.
Forgiveness of the Amounts owed under Watson Note
On July 2, 2010, the $15,000,000, plus accrued interest, owed by the Company to Watson pursuant to
the terms of that certain forgivable Term Loan Promissory Note, dated June 1, 2010, bearing
interest at the rate of 4% per annum (the Watson Note) was forgiven in accordance with the terms
of the Watson Note. Watson provided a pay-off letter to the Company to this effect.
Investors Rights Agreement
In connection with the Watson Transactions, the Company entered into the Investors Rights
Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated
herein by reference. Pursuant to the Investors Rights Agreement, the Buyer has the right to
nominate one director (the Designee) to the Companys board of directors, and the Company will
use its commercially reasonable efforts to expand its board of directors and appoint such designee
as a director prior to July 9, 2010 (the Designation Right) . The Company has also agreed to use
its commercially reasonable efforts to facilitate the re-election of the Buyers board designee
until such time as the Buyer ceases to hold at least 10% of the outstanding shares of Common Stock.
The Buyer has selected Fred Wilkinson, Executive Vice President Global Brands of Watson as its
Designee. The Buyer is subject to a six month lock-up commencing on July 2, 2010 (the Initial
Lock-Up Period), during which it is not permitted to sell the Acquisition Shares, subject to
certain limited exceptions. Following the Initial Lock-Up Period (and until 18 months after July
2, 2010), subject to certain exceptions, the Buyer agreed that it will not, during any fiscal
quarter, transfer more than 2 million shares of Common
Stock. The transfer restrictions will
expire at the time that the Buyer no longer holds 10% of the outstanding shares of Common Stock. In order to provide the Buyer with liquidity with respect to
its holdings in the Company following the Initial Lock-Up Period, the Company agreed to use its
commercially reasonable efforts to file a shelf registration statement with the Securities and
Exchange Commission not later than 90 days prior to the end of the Initial Lock-Up Period and to
keep such shelf registration statement effective until the earliest of the fourth anniversary of
July 2, 2010, the date on which all of the Acquisition Shares have been transferred by the Buyer or
the date upon which the Acquisition Shares may be sold by Buyer under Rule 144 (without limitation
as to volume or compliance with certain specified provisions of Rule 144). Pursuant to the
Investors Rights Agreement, the Company also agreed to certain indemnification and contribution
provisions, including with respect to liabilities arising under the Securities Act.
The foregoing is a summary of the terms of the Investors Rights Agreement, and does not purport to
be complete and is subject to, and qualified in its entirety by reference to, the full text of the
Investors Rights Agreement.
Supply Agreement
In connection with the Watson Transactions, the Company entered into the Supply Agreement, dated as
of July 2, 2010, by and between the Company and the Buyer (the Supply Agreement), which is filed
as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Pursuant to the Supply Agreement, the Company is the exclusive supplier of the Progesterone
Products to the Buyer for sale in the United States at a price equal to 110% of the cost of goods
sold. The initial purchase order under the Supply Agreement, of finished goods inventory held on
hand by the Company on July 2, 2010, was made by the Buyer at the time of the execution of the
Supply Agreement for a batch price set forth in the Supply Agreement, calculated based on an agreed
upon cost of goods formula, which includes a monthly adjustment to reflect the current foreign
currency exchange rates. The initial purchase order will be delivered to the Buyer within 30 days
after July 2, 2010 and each purchase order made pursuant to the Supply Agreement thereafter will be
for a delivery date no earlier than 90 days following the Companys receipt of such purchase order.
The Supply Agreement, unless earlier terminated in accordance with its terms, shall remain in
force through May 19, 2015, and shall renew automatically for two-year terms thereafter, unless
either party gives written notice of its intention not to renew at least 180 days prior to
expiration of the then applicable term. The Supply Agreement is terminable by the Buyer upon 180
days notice, upon the expiration or termination of the Joint Development Period (as defined in the
Purchase Agreement) and by either party at any time pursuant to standard termination provisions,
including the insolvency or uncured default of the other party.
The foregoing is a summary of the terms of the Supply Agreement, and does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the full text of the
Supply Agreement.
License Agreement
In connection with the Watson Transactions, the Company entered into the License Agreement, dated
as of July 2, 2010, by and among the Company, the Buyer and Columbia Laboratories (Bermuda) Ltd.
(the License Agreement), which is filed as Exhibit 10.3 to this Current Report
on Form 8-K and is incorporated herein by reference. Pursuant to the License Agreement, the
parties granted each other certain licenses to use certain intellectual property.
The Company granted to the Buyer, subject to the Purchase Agreement and agreements with Dimera
Incorporated and Merck Serono an exclusive, irrevocable, perpetual, royalty-free and fully paid-up
license, with the right to grant sublicenses, under the Excluded Asset Technology and Seller Next
Generation Delivery System Technology (each as defined in the License Agreement), in each case for
the purposes of developing, manufacturing, having manufactured, using, importing, exporting,
marketing, selling, offering to sell or otherwise commercializing pharmaceutical products
containing progesterone as an active pharmaceutical ingredient (Licensed Products) in any and all
fields.
The Buyer granted to the Company:
|
|
|
a non-exclusive, non-transferable, royalty-free and fully paid-up
license to the patents and know-how included among the Purchased Assets and the
know-how arising from the development activities pursuant to the Purchase
Agreement for the purpose of supplying the Licensed Products to the Buyer under
the terms and conditions of the Supply Agreement;
|
|
|
|
|
a non-exclusive, non-transferable, royalty-free and fully paid-up
license to the patents and know-how included among the Purchased Assets, the
know-how arising from the development activities and the patents and know-how
controlled by the Buyer but identified for the Companys use in writing, for
the purposes of conducting the Companys development activities under the
Purchase Agreement;
|
|
|
|
|
an exclusive, irrevocable, perpetual, royalty-free and fully paid-up
license, with the right to grant sublicenses to the patents and know-how
included among the Purchased Assets and certain know-how arising from the
development activities pursuant to the Purchase Agreement for the purposes of
the Companys compliance with its agreements with Dimera Incorporated and Merck
Serono; and
|
|
|
|
|
a non-exclusive, irrevocable, perpetual, royalty-free and fully paid-up
license, with the right to grant sublicenses to develop, manufacture, have
manufactured, use, import, export, market, sell, offer to sell or otherwise
commercialize the Seller Next Generation Delivery System (as defined in the
License Agreement) to the extent that it incorporates or delivers any product
other than the Licensed Products in any and all fields.
|
The License Agreement may be terminated upon mutual written agreement of the parties. If one party
enters bankruptcy, the other party is entitled to a complete duplicate of, or access to, any
intellectual property licensed under the License Agreement.
The foregoing is a summary of the terms of the License Agreement, and does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the full text of the
License Agreement.
Item 3.02 Unregistered Sales of Equity Securities
On July 2, 2010, the Company completed the purchase of approximately $40 million of the Companys
Convertible Subordinated Notes, due December 31, 2011, bearing interest at the rate of 8% per annum
(the Notes), pursuant to the terms of the Note Purchase and Amendment Agreements, dated March 3,
2010 (the Note Purchase Agreements), entered into with the holders (the Holders) of the Notes
(who are each accredited investors (as such term is defined in Rule 501 under the Securities Act)).
In exchange for the Notes, on July 2, 2010, the Company paid the aggregate purchase price of (i)
$26 million in cash, (ii) warrants (the Warrants) to purchase 7,750,000 shares of Common Stock
(the Warrant Shares) and (iii) 7,407,407 shares of Common Stock (the NPA Shares and,
collectively with the Warrants and the Warrant Shares, the Securities).
The Warrants will be exercisable, subject to certain limitations specified therein, during the
period commencing 180 days after their issuance, and ending on July 2, 2015, unless earlier
exercised or terminated as provided in the Warrants. The Warrants will be exercisable for an
aggregate of 7,407,407 Warrant Shares. The exercise price per share, subject to adjustment in
certain circumstances, is $1.35. A Form of Warrant is attached hereto as Exhibit 4.1.
Under the terms of the Note Purchase Agreements, the Company has granted Holders who are Affiliates
(as such term is defined in Rule 405 of the Securities Act) certain registration rights with
respect to the resale of the NPA Shares and the Warrant Shares.
Under the Note Purchase Agreements, until 45 days after the Companys public announcement of the
results of the PREGNANT Study, if the Company issues any shares of Common Stock (or Common Stock
equivalents) for a price that is less than $2.00 per share, the Company must offer the Holders,
subject to certain exceptions, the right to exchange their Warrants for cash payments of up to an
aggregate of $3,999,996.
The NPA Shares and Warrants are being offered and sold to the Holders in reliance on exemptions
from the registration requirements of the Securities Act pursuant to Section 4(2) under the
Securities Act and Rule 506 promulgated thereunder, based on the nature of the Holders and certain
representations made by them to the Company.
Neither the Acquisition Shares nor the Securities have been registered under the Securities Act (or
the laws of any state or other jurisdiction) and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration requirements thereof. This
Form 8-K does not constitute an offer for the sale of any securities of the Company or a
solicitation of any offer to buy any securities of the Company.
In addition to the matters discussed above, a description of the sale of the Acquisition Shares is
set forth under Item 2.01 of this Current Report on Form 8-K and is incorporated by reference into
this item.
Item 3.03 Material Modification to Rights of Security Holders
On July 1, 2010, the Companys stockholders approved the Certificate of Amendment of Restated
Certificate of Incorporation of the Company to increase the number of shares of the Companys
authorized Common Stock from 100,000,000 to 150,000,000 (the Charter
Amendment), as described below under Item 5.07 of this Current Report. On July 1, 2010, the
Company filed the Certificate of Amendment of Restated Certificate of Incorporation with the
Secretary of State of Delaware. A copy of the Certificate of Amendment of Restated Certificate of
Incorporation of the Company is attached hereto as Exhibit 3.1.
Item 5.01 Changes in Control of Registrant
Descriptions of the Watson Transactions and the Designation Right are set forth under Item 2.01 of
this Current Report on Form 8-K and are incorporated by reference into this item.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
A description of the Charter Amendment is set forth under Item 3.03 of this Current Report on Form
8-K and is incorporated by reference into this item.
Item 5.07 Submission of Matters to a Vote of Security Holders.
On July 1, 2010, the Company held a special meeting of its stockholders (the Special Meeting).
At the Special Meeting, the Companys stockholders voted on the following three proposals: (i) to
approve the Asset Sale pursuant to the Purchase Agreement, (ii) to approve the Charter Amendment,
and (iii) to adjourn the Special Meeting to a later date, if necessary or appropriate, to allow for
the solicitation of additional proxies in favor of the proposal(s) to approve the Asset Sale and/or
Charter Amendment if there are insufficient votes to approve the Asset Sale and/or Charter
Amendment, as applicable (the Adjournment Proposal). A total of 38,475,536 shares of Common
Stock, 0 shares of Series B Preferred Stock and 59,000 shares of Series E Preferred Stock, voting
together as a single class, were voted in person or by proxy (with the holders of shares of Common
Stock entitled to one vote per share, the holders of shares of Series B Preferred Stock entitled to
20 votes per share and the holders of shares of Series E Preferred Stock entitled to 50 votes per
share, collectively, the Voting Power). The votes cast represented 60.5% of the total Voting
Power entitled to be voted.
Proposal 1: To approve the Asset Sale pursuant to the Purchase Agreement:
|
|
|
|
|
|
|
Votes For
|
|
Votes Against
|
|
Abstentions
|
|
Broker Non-Votes
|
39,935,773
|
|
1,419,610
|
|
70,153
|
|
0
|
Proposal 2: To approve the Charter Amendment:
|
|
|
|
|
|
|
Votes For
|
|
Votes Against
|
|
Abstentions
|
|
Broker Non-Votes
|
40,530,682
|
|
820,626
|
|
74,228
|
|
0
|
Proposal 3: To approve the Adjournment Proposal:
|
|
|
|
|
|
|
Votes For
|
|
Votes Against
|
|
Abstentions
|
|
Broker Non-Votes
|
39,501,907
|
|
1,843,518
|
|
80,111
|
|
0
|
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
This communication contains forward-looking statements, which statements are indicated by the words
may, will, plans, believes, expects, anticipates, potential, and similar
expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and
other factors that may cause actual results to differ materially from those projected in the
forward-looking statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on which they are made. Factors that
might cause future results to differ include, but are not limited to, the following: the successful
marketing of CRINONE
®
and STRIANT
®
in the United States; the successful marketing of CRINONE by
Merck Serono outside the United States; the timely and successful completion of the ongoing Phase
III PREGNANT (PROCHIEVE
®
Extending Gestation A New Therapy) Study of PROCHIEVE 8% to reduce the
risk of preterm birth in women with a short cervix at mid-pregnancy; successful development of a
next-generation vaginal progesterone product; success in obtaining acceptance and approval of new
products and new indications for current products by the United States Food and Drug Administration
and international regulatory agencies; the impact of competitive products and pricing; the
Companys ability to obtain financing in order to fund its operations and repay its debt as it
becomes due; the timely and successful negotiation of partnerships or other transactions; the
strength of the United States dollar relative to international currencies, particularly the euro;
competitive economic and regulatory factors in the pharmaceutical and healthcare industry; general
economic conditions; and other risks and uncertainties that may be detailed, from time-to-time, in
the Companys reports filed with the Securities and Exchange Commission. All forward-looking
statements contained herein are neither promises nor guarantees. The Company does not undertake any
responsibility to revise or update any forward-looking statements contained herein.
Item 8.01 Other Events.
The
Company issued a press release entitled Columbia Laboratories
Stockholders Approve Sale of Progesterone Assets to Watson Pharmaceuticals on July 1, 2010, and a press release entitled
Columbia Laboratories Completes Sale of Progesterone Assets to
Watson Pharmaceuticals on July 6, 2010. Copies of the
press releases are filed as Exhibits 99.1 and 99.2,
respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(b)
Pro Forma Financial Information.
|
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
Certificate of Amendment to Restated Certificate of Incorporation of
Columbia Laboratories, Inc., filed with the Secretary of State of
Delaware July 1, 2010
|
|
|
|
4.1
|
|
Form of Warrant to Purchase Common Stock
|
|
|
|
10.1
|
|
Investors Rights Agreement
|
|
|
|
10.2
|
|
Supply Agreement
|
|
|
|
10.3
|
|
License Agreement
|
|
|
|
99.1
|
|
Press Release, dated July 1, 2010
|
|
|
|
99.2
|
|
Press Release, dated July 6, 2010
|
|
|
|
99.3
|
|
Unaudited Pro Forma Financial Statements of Columbia Laboratories, Inc.
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 2, 2010
|
|
|
|
|
|
COLUMBIA LABORATORIES, INC.
|
|
|
By:
|
/s/ Lawrence A. Gyenes
|
|
|
|
Lawrence A. Gyenes
|
|
|
|
Senior Vice President, Chief Financial
Officer & Treasurer
|
|
|
Exhibit Index
|
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
Certificate of Amendment to Restated Certificate of Incorporation of
Columbia Laboratories, Inc., filed with the Secretary of State of
Delaware July 1, 2010
|
|
|
|
4.1
|
|
Form of Warrant to Purchase Common Stock
|
|
|
|
10.1
|
|
Investors Rights Agreement
|
|
|
|
10.2
|
|
Supply Agreement
|
|
|
|
10.3
|
|
License Agreement
|
|
|
|
99.1
|
|
Press Release, dated July 1, 2010
|
|
|
|
99.2
|
|
Press Release, dated July 6, 2010
|
|
|
|
99.3
|
|
Unaudited Pro Forma Financial Statements of Columbia Laboratories, Inc.
|
Exhibit 4.1
COLUMBIA LABORATORIES, INC.
WARRANT TO PURCHASE COMMON STOCK
Void After July 2, 2015
THIS CERTIFIES THAT, for value received,
, with its principal office at
, or its permitted assigns (the
Holder
), is entitled to
subscribe for and purchase at the Exercise Price (defined below) from Columbia Laboratories, Inc.,
a Delaware corporation, with its principal office at 354 Eisenhower Parkway, Livingston, New Jersey
07039 (the
Company
), up to
shares of common stock of the Company, $0.01 par value per
share (the
Common Stock
), subject to adjustment as provided herein. This Warrant is one of a
series of substantially similar Warrants being issued as of the date hereof (the
Issuance Date
)
pursuant to the terms of those certain Note Purchase and Amendment Agreements (the
NPA Warrants
),
dated on or after March 3, 2010, each by and among the Company and certain other persons or
entities (each a
Purchaser
and together, the
Purchasers
), including the original Holder of this
Warrant (the
Note Purchase Agreements
and including the Note Purchase and Amendment Agreement,
dated as of March 3, 2010, between the Company and the original Holder, the
Note Purchase
Agreement
). Capitalized terms not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Note Purchase Agreement.
1. DEFINITIONS
. As used herein, the following terms shall have the following respective meanings:
(a)
Business Day
means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.
(b)
Closing Bid Price
and
Closing Sale Price
means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the pink sheets by Pink Sheets LLC (formerly the
National Quotation
Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing
Sale Price, as the case may be, of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during
the applicable calculation period.
(c)
Exercise Period
shall mean the period commencing 180 days after the date hereof and
ending at 5:00 p.m., New York time, on July 2, 2015, unless sooner exercised or terminated as
provided below.
(d)
Exercise Price
shall mean $1.35, subject to adjustment pursuant to Section 5 below.
(e)
Exercise Shares
shall mean the shares of the Common Stock issued upon exercise of this
Warrant, subject to adjustment pursuant to the terms herein, including but not limited to
adjustment pursuant to Section 5 below.
(f)
Principal Market
means the principal securities exchange or securities market on which
the Common Stock is then traded.
(g)
Trading Day
means any day on which the Common Stock is traded on the Principal Market;
provided that Trading Day shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York Time).
2. EXERCISE OF WARRANT
.
2.1 Method of Exercise
. Subject to the terms and conditions hereof (including, without limitation, the
limitations set forth in Section 2.5), this Warrant may be exercised by the Holder at any time
during the Exercise Period, in whole or in part, by (i) delivery of a written notice, in the form
attached hereto as Exhibit A (the
Exercise Notice
), of the Holders election to exercise this
Warrant to the Company and (ii) (A) payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of shares of Common Stock as to which this Warrant is being
exercised (the
Aggregate Exercise Price
) in cash or by wire transfer of immediately available
funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 2.3). The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice
with respect to less than all of the Common Stock shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining
number of Exercise Shares. On or before the first Business Day following the date on which the
Company has received each of the Exercise Notice and the Aggregate Exercise Price (or notice of a
Cashless Exercise) (the
Exercise Delivery Documents
), the Company shall transmit by facsimile an
acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the
Companys transfer agent (the
Transfer Agent
). On or before the third Business Day following the
date
on which the Company has received all of the Exercise Delivery Documents (the
Share Delivery
Date
), the Company shall (X) provided that the Transfer Agent is participating in The Depository
Trust Company (
DTC
) Fast Automated Securities Transfer Program, upon the request of the Holder,
credit such aggregate number of Exercise Shares to which the Holder is entitled pursuant to such
exercise to the Holders or its designees balance account with DTC through its Deposit Withdrawal
Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the Companys share register in the
name of the Holder or its designee, for the number of Exercise Shares to which the Holder is
entitled pursuant to such exercise which certificates shall not bear any restrictive legends unless
required pursuant to the Note Purchase Agreement or the Company places (or cauces to be placed) a
restrictive legend thereon in accordance with Section 4.3(b) hereof. Upon delivery of the Exercise
Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder
of record of the Exercise Shares with respect to which this Warrant has been exercised,
irrespective of the date such Exercise Shares are credited to the Holders DTC account or the date
of delivery of the certificates evidencing such Exercise Shares as the case may be. If this
Warrant is submitted in connection with any exercise pursuant to this Section 2.1 and the number of
Exercise Shares represented by this Warrant submitted for exercise is greater than the number of
Exercise Shares being acquired upon an exercise, then the Company shall as soon as practicable and
in no event later than three Business Days after any exercise and at its own expense, issue a new
Warrant (in accordance with Section 2.4) representing the right to purchase the number of Exercise
Shares purchasable immediately prior to such exercise under this Warrant, less the number of
Exercise Shares with respect to which this Warrant is exercised. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant. Fractional shares shall be treated as
provided in Section 6. The Company shall pay any and all taxes which may be payable with respect
to the issuance and delivery of Exercise Shares upon exercise of this Warrant.
2.2 Companys Failure to Timely Deliver Securities
. If within three Trading Days after the Companys
receipt of the facsimile copy of a Exercise Notice the Company shall fail to issue and deliver a
certificate to the Holder and register such Exercise Shares on the Companys share register or
credit the Holders balance account with DTC for the number of Exercise Shares to which the Holder
is entitled upon such Holders exercise hereunder or if the Company fails to deliver to the Holder
the certificate or certificates representing the applicable Exercise Shares (or credit the Holders
balance account at DTC with the applicable Exercise Shares) within three Trading Days after its
obligation to do so under clause (ii) below and if on or after such Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Exercise Shares issuable upon such exercise that the Holder
anticipated receiving from the Company (a
Buy-In
), then the Company shall, within three Business
Days after the Holders request and in the Holders discretion, either (i) pay cash to the Holder
in an amount equal to the Holders total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased (the
Buy-In Price
), at which point the Companys
obligation to deliver such certificate (and to issue such Exercise Shares) or credit such Holders
balance account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Exercise Shares or credit such Holders
balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the
product of (A) such number of Exercise Shares, times (B) the Closing Bid Price on the date of
exercise.
2.3 Cashless Exercise
. Notwithstanding any provisions herein to the contrary, if, at any time during
the Exercise Period, the Current Market Price (as defined below) of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless
exercise by surrender of this Warrant at the principal office of the Company together with the
properly endorsed Notice of Exercise and the Company shall issue to the Holder a number of Exercise
Shares computed using the following formula:
|
|
|
|
|
|
|
|
|
X =
|
|
Y (B-A)
|
|
|
|
|
|
|
B
|
|
|
|
|
|
|
|
|
|
Where:
|
|
X =
|
|
the number of Exercise Shares to be issued to the Holder.
|
|
|
|
|
|
|
|
|
|
Y =
|
|
the number of Exercise Shares purchasable upon exercise of
all of the Warrant or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being exercised.
|
|
|
|
|
|
|
|
A = the Exercise Price.
|
|
|
|
|
|
|
|
B = the Current Market Price of one share of Common Stock.
|
Current Market Price
means on any particular date:
(a) if the Common Stock is traded on the Nasdaq Capital Market, the Nasdaq Global Market or
the Nasdaq Global Select Market (or their successors), the average of the closing prices of the
Common Stock of the Company on such market over the five trading days ending immediately prior to
the applicable date of valuation;
(b) if the Common Stock is traded on any registered national stock exchange but is not traded
on the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (or their
successors), the average of the closing prices of the Common Stock of the Company on such exchange
over the five trading days ending immediately prior to the applicable date of valuation;
(c) if the Common Stock is traded over-the-counter, but not on the Nasdaq Capital Market, the
Nasdaq Global Market, the Nasdaq Global Select Market or a registered national stock exchange, the
average of the closing bid prices over the 30-day period ending immediately prior to the applicable
date of valuation; and
(d) if there is no active public market for the Common Stock, the value thereof, as determined
in good faith by the Board of Directors of the Company upon due consideration of the proposed
determination thereof by the Holder.
2.4 Partial Exercise
. If this Warrant is exercised in part only, the Company shall, upon surrender of
this Warrant, execute and deliver, within 10 days of the date of exercise,
a new Warrant evidencing the rights of the Holder, or, subject to Section 8, such other person as
shall be designated in the Notice of Exercise, to purchase the balance of the Exercise Shares
purchasable hereunder. In no event shall this Warrant be exercised for a fractional Exercise
Share, and the Company shall not distribute a Warrant exercisable for a fractional Exercise Share.
Fractional shares shall be treated as provided in Section 6.
2.5 Limitations on Exercise
.
(a) The Company shall not effect the exercise of this Warrant, and the Holder shall not have
the right to exercise this Warrant, to the extent that after giving effect to such exercise, such
Person (together with such Persons affiliates) would beneficially own in excess of 9.99% of the
shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by
such Person and its affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such sentence is being made,
but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company beneficially owned by such Person and its affiliates (including, without limitation,
any convertible notes or convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of
this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the Companys most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or
(3) any other notice by the Company or the Transfer Agent setting forth the number of shares of
Common Stock outstanding. For any reason at any time, upon the written request of the Holder, the
Company shall within one Business Day confirm in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company,
including the NPA Warrants, by the Holder and its affiliates since the date as of which such number
of outstanding shares of Common Stock was reported.
(b) The Company shall not be obligated to issue any shares of Common Stock upon exercise of
this Warrant, if the issuance of such shares of Common Stock would exceed that number of shares of
Common Stock which the Company may issue upon exercise, redemption or conversion, as applicable, of
the NPA Warrants or otherwise without breaching the Companys obligations under the rules or
regulations of the applicable Principal Market (the number of shares which may be issued without
violating such rules and regulations, the
Exchange Cap
), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the applicable Principal Market for issuances of shares of Common Stock in
excess of such amount or (B) obtains a written opinion from outside counsel to the Company that
such approval is not required, which opinion shall be reasonably satisfactory to the Holders.
Unless and until such
approval or written opinion is obtained, no Holder shall be issued in the aggregate, upon
exercise or conversion, as applicable, of any NPA Warrants, shares of Common Stock in an amount
greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is
the total number of shares of Common Stock underlying the NPA Warrants issued to such Holder
pursuant to the Note Purchase Agreements on the Issuance Date and the denominator of which is the
aggregate number of shares of Common Stock underlying the NPA Warrants issued to the Purchasers
pursuant to the Note Purchase Agreements on the Issuance Date (with respect to each Purchaser, the
Exchange Cap Allocation
). In the event that any Holder shall sell or otherwise transfer any of
such Holders NPA Warrants, the transferee shall be allocated a pro rata portion of such Holders
Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Exchange Cap Allocation allocated to such transferee. In the
event that any Holder of NPA Warrants shall exercise all of such Holders NPA Warrants into a
number of shares of Common Stock which, in the aggregate, is less than such Holders Exchange Cap
Allocation, then the difference between such Holders Exchange Cap Allocation and the number of
shares of Common Stock actually issued to such Holder shall be allocated to the respective Exchange
Cap Allocations of the remaining holders of NPA Warrants on a pro rata basis in proportion to the
shares of Common Stock underlying the NPA Warrants then held by each such holder. In the event
that the Company is prohibited from issuing any Warrant Shares for which an Exercise Notice has
been received as a result of the operation of this Section 2.5(b), the Company shall pay cash in
exchange for cancellation of such Warrant Shares, at a price per Warrant Share equal to the
difference between the Closing Sale Price and the Exercise Price as of the date of the attempted
exercise.
2.6 Insufficient Authorized Shares
. If at any time while any of the Warrants remain outstanding the
Company does not have a sufficient number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon exercise of the Warrants at least a number of
shares of Common Stock equal to 100% of the number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of all of the Warrants then outstanding (the
Required
Reserve Amount
) (such event an
Authorized Share Failure
), then the Company shall immediately
take all action necessary to increase the Companys authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for the Warrants then
outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure, but in no event later than 90 days
after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its
stockholders for the approval of an increase in the number of authorized shares of Common Stock.
In connection with such meeting, the Company shall provide each stockholder with a proxy statement
and shall use its best efforts to solicit its stockholders approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the stockholders that
they approve such proposal.
3. COVENANTS OF THE COMPANY
.
3.1 Covenants as to Exercise Shares
. The Company covenants and agrees that all Exercise Shares that
may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be
validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further
covenants and agrees that the Company will at all times during the Exercise Period have authorized
and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant. If at any time during the
Exercise Period the number of authorized but unissued shares of Common Stock shall not be
sufficient to permit exercise of this Warrant, the Company will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock (or other securities as provided herein) to such number of shares as shall be
sufficient for such purposes.
3.2 Notices of Record Date
. In the event of any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Company shall mail to the Holder, at least ten days
prior to the date specified herein, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
4. REPRESENTATIONS OF HOLDER
.
4.1 Acquisition of Warrant for Personal Account
. The Holder represents and warrants that it is
acquiring the Warrant and the Exercise Shares solely for its account for investment and not with a
present view toward the public sale or distribution of said Warrant or Exercise Shares or any part
thereof and has no present intention of selling or distributing said Warrant or Exercise Shares or
any arrangement or understanding with any other persons regarding the sale or distribution of said
Warrant or, except in accordance with the provisions of Article V of the Note Purchase Agreement,
if applicable, the Exercise Shares, and except as would not result in a violation of the Securities
Act of 1933, as amended. The Holder will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) the Warrant except in accordance with the Securities Act of 1933, as amended, and
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) the Exercise Shares except in
accordance with the provisions of Article V of the Note Purchase Agreement, if applicable, or
pursuant to and in accordance with the Securities Act of 1933, as amended.
4.2 Securities Are Not Registered
.
(a) The Holder understands that the offer and sale of the Warrant or the Exercise Shares have
not been registered under the Securities Act of 1933, as amended, on the basis that no distribution
or public offering of the securities of the Company is to be effected and/or pursuant to specific
exemptions from the registration provisions of the Securities Act of 1933, as amended, which
exemptions depend upon, among other things, the bona fide nature of the Holders investment intent
as expressed herein. The Holder realizes that the basis for such exemptions may not be present if,
notwithstanding its representations, the Holder has a present intention of acquiring the Warrants
and/or the Exercise Shares for a fixed or determinable period in the future, selling (in connection
with a distribution or otherwise), granting any participation in, or otherwise distributing the
Warrants and/or the Exercise Shares. The Holder represents and warrants that it has no such
present intention.
(b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely
unless they are subsequently registered under the Securities Act of 1933, as amended, or an
exemption from such registration is available. The Holder recognizes that the Company has no
obligation to register the Warrant or, except as provided in the Note Purchase Agreement, if
applicable, the Exercise Shares, or to comply with any exemption from such registration.
4.3 Disposition of Warrant and Exercise Shares
.
(a) The Holder further agrees not to make any disposition of all or any part of the Warrant or
Exercise Shares in any event unless and until:
(i) There is then in effect a registration statement under the Securities Act of 1933,
as amended, covering such proposed disposition and such disposition is made in accordance
with said registration statement;
(ii) Solely with respect to the Warrant, the Holder shall have furnished to the Company
the Certificate, after which the Holder may dispose of such Warrant in accordance with the
provisions of Rule 144 under the Securities Act of 1933, as amended;
(iii) Solely with respect to the Exercise Shares that the Holder acquires pursuant to
the cashless exercise provisions of Section 2.3 hereof, and only if the Holder shall have
furnished to the Company the Certificate at the time of such cashless exercise, the Holder
may dispose of such Exercise Shares in accordance with the provisions of Rule 144 under the
Securities Act of 1933, as amended; or
(iv) If reasonably requested by the Company, the Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder
to the effect that such disposition will not require registration of such Warrant or
Exercise Shares under the Securities Act of 1933, as amended, or any applicable state
securities laws; provided, that no opinion shall be required for any disposition made or to
be made in accordance with the provisions of Rule 144 under the Securities Act of 1933, as
amended.
(b) The Holder understands and agrees that all certificates evidencing the Exercise Shares to
be issued to the Holder may bear a legend in substantially the following form (except such legend
will not be placed on Exercise Shares acquired under the Warrant pursuant to a cashless exercise
pursuant to Section 2.3 if immediately prior to such cashless exercise the Holder provides the
Certificate to the Company):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS. COLUMBIA LABORATORIES, INC. SHALL BE ENTITLED TO REQUIRE AN
OPINION OF COUNSEL SATISFACTORY TO COLUMBIA LABORATORIES, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE
SECURITIES WERE ISSUED.
5. ADJUSTMENTS
. In the event of changes in the outstanding Common Stock of the Company by reason of
any stock split, stock dividend, recapitalization, reclassification, combination or exchange of
shares, reorganization, liquidation, dissolution, consolidation or merger effected by the Company,
the number and class of shares available under the Warrant in the aggregate and the Exercise Price
shall be correspondingly adjusted to give the Holder of the Warrant, on exercise for the same
aggregate Exercise Price, the total number, class and kind of shares or other property, including
cash, as the Holder would have owned had the Warrant been exercised prior to the event and had the
Holder continued to hold such shares until after the event requiring adjustment. The form of this
Warrant need not be changed because of any adjustment in the Exercise Price and/or number, class
and kind of shares subject to this Warrant. The Company shall promptly provide a certificate from
its Chief Financial Officer notifying the Holder in writing of any adjustment in the Exercise Price
and/or the total number, class and kind of shares issuable upon exercise of this Warrant, which
certificate shall specify the Exercise Price and number, class and kind of shares under this
Warrant after giving effect to such adjustment. For the avoidance of doubt, if necessary to
effectuate the provisions of this paragraph 5, any successor to the Company or surviving entity in
a reorganization, consolidation or merger effected by the Company shall deliver to the Holder
confirmation (or a new warrant to the effect) that such successor or surviving entity shall have
all of the obligations of the Company under this Warrant with the same effect as if such successor
or surviving entity had been named as the Company herein, and that there shall be issued upon
exercise of this Warrant (or a new warrant) at any time after the consummation of such
reorganization, consolidation or merger, in lieu of the shares of Common Stock issuable upon the
exercise of this Warrant prior to such transaction, the total number, class and kind of shares or
other property, including cash, as the Holder would have owned had the Warrant been exercised prior
to such transaction and had the Holder continued to hold such shares until after such transaction.
6. FRACTIONAL SHARES
. No fractional shares shall be issued upon the exercise of this Warrant as a
consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable
upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise
would result in the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of issuance of any
fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the
product resulting from multiplying the fair market value of the Common Stock on the date of
exercise of this Warrant by such fraction.
7. NO STOCKHOLDER RIGHTS
. This Warrant in and of itself shall not entitle the Holder to any voting
rights or other rights as a stockholder of the Company.
8. TRANSFER OF WARRANT
. Subject to applicable laws and compliance with Section 4.3, this Warrant and
all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon
delivery of this Warrant and the form of assignment attached hereto to any transferee designated by
Holder.
8.1
Upon such surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of
shares of Common Stock without having a new Warrant issued.
8.2
If, at the time of the surrender of this Warrant in connection with any transfer of this
Warrant, (i) the transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and under applicable state
securities or blue sky laws, and (ii) the Holder has not furnished to the Company the Certificate
at such time, the Company may require, as a condition of allowing such transfer (A) that the Holder
or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of
counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that such transfer may be made without registration under
the Securities Act of 1933, as amended, and under applicable state securities or blue sky laws, and
(B) that the holder or transferee execute and deliver to the Company an investment letter in form
and substance acceptable to the Company;
provided
, in any case, that the transferee shall
be an accredited investor as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act of 1933, as amended, or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act of 1933, as amended.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT
. If this Warrant is lost, stolen, mutilated or
destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose
(which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any
such new Warrant shall constitute an original contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
10. MODIFICATIONS AND WAIVER
. This Warrant and any provision hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the Company and (i) Purchasers holding
Warrants representing at least a majority of the number of Exercise Shares then issuable upon
exercise of any then unexercised Warrants issued pursuant to the Note Purchase Agreements,
provided
,
however
, that such modification, amendment or waiver is made with respect
to all unexercised Warrants issued pursuant to the Note Purchase Agreements and does not adversely
affect the Holder without adversely affecting all holders of Warrants in a similar manner; or
(ii) the Holder.
11. NOTICES, ETC
. All notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed email, telex or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) five days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one business day
after deposit with a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company at the address
listed on the signature page and to the Holders at the addresses on the Company records, or at such
other address as the Company or Holder may designate by ten days advance written notice to the
other party hereto.
12. ACCEPTANCE
. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to
all of the terms and conditions contained herein.
13. GOVERNING LAW
. This Warrant and all rights, obligations and liabilities hereunder shall be
governed by the laws of the State of New York without regard to the principles of conflict of laws.
14. DESCRIPTIVE HEADINGS
. The descriptive headings of the several paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this Warrant. The language in this
Warrant shall be construed as to its fair meaning without regard to which party drafted this
Warrant.
15. SEVERABILITY
. The invalidity or unenforceability of any provision of this Warrant in any
jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.
16. ENTIRE AGREEMENT
. This Warrant constitutes the entire agreement between the parties pertaining to
the subject matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and undertakings of the parties, whether oral or written, with respect to such
subject matter.
17. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF
. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available under this Warrant and the Note
Purchase Agreements, at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right to pursue actual
damages for any failure by the Company to comply with the terms of this Warrant. The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction restraining any breach,
without the necessity of showing economic loss and without any bond or other security being
required.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF
, the Company has caused this Warrant to be executed by its duly authorized
officer as of July 2, 2010.
|
|
|
|
|
|
COLUMBIA LABORATORIES, INC.
|
|
|
By:
|
|
|
|
|
Name:
|
Frank C. Condella, Jr.
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
Address:
|
354 Eisenhower Parkway,
Livingston, New Jersey 07039
|
|
|
|
Attention:
|
General Counsel
|
|
|
|
Facsimile:
|
973.994.3001
|
|
|
Exhibit 10.1
INVESTORS RIGHTS AGREEMENT
Dated July 2, 2010
TABLE OF CONTENTS
|
|
|
|
|
|
Page
|
SECTION 1 DEFINITIONS
|
|
1
|
|
1.1 Certain Definitions
|
|
1
|
|
|
|
|
|
SECTION 2 REGISTRATION RIGHTS
|
|
4
|
|
2.1 Shelf-Registration
|
|
4
|
|
2.2 Expenses
|
|
4
|
|
2.3 Registration Procedures
|
|
4
|
|
2.4 Indemnification
|
|
7
|
|
2.5 Registration Covenants
|
|
9
|
|
2.6 Rule 144 Reporting
|
|
11
|
|
|
|
|
|
SECTION 3 BOARD OF DIRECTORS
|
|
11
|
|
3.1 Investor Designee
|
|
11
|
|
3.2 Designation
|
|
11
|
|
3.3 Change in Designee
|
|
11
|
|
3.4 Information
|
|
11
|
|
3.5 Termination of Rights
|
|
12
|
|
3.6 No Compensation
|
|
12
|
|
3.7 Confidentiality Agreement
|
|
12
|
|
|
|
|
|
SECTION 4 LOCK-UP AGREEMENT
|
|
12
|
|
4.1 Lock-Up Agreement
|
|
12
|
|
4.2 Stop-Transfer Instructions
|
|
14
|
|
4.3 Termination of Lock-Up Agreement
|
|
14
|
|
|
|
|
|
SECTION 5 MISCELLANEOUS
|
|
14
|
|
5.1 Amendment
|
|
14
|
|
5.2 Notices
|
|
14
|
|
5.3 Information
|
|
14
|
|
5.4 Successors and Assigns
|
|
15
|
|
5.5 Entire Agreement
|
|
15
|
|
5.6 Delays or Omissions
|
|
15
|
|
5.7 Severability
|
|
15
|
|
5.8 Titles and Subtitles
|
|
15
|
|
5.9 Counterparts
|
|
16
|
|
5.10 Further Assurances
|
|
16
|
|
5.11 Injunctive Relief
|
|
16
|
|
5.12 Governing Law
|
|
16
|
|
5.13 Arbitration
|
|
16
|
|
5.14 Recapitalization, Exchanges, Etc
|
|
17
|
|
5.15 Conflict
|
|
17
|
|
INVESTORS RIGHTS AGREEMENT
This Investors Rights Agreement (this
Agreement
) is dated as of July 2, 2010, and is
between Columbia Laboratories, Inc., a Delaware corporation (the
Company
), and Coventry
Acquisition, Inc., a Delaware corporation (the
Investor
). All capitalized terms used and not
defined herein shall have such meanings as set forth in the Purchase and Collaboration Agreement,
dated as of March 3, 2010, by and between the Company and the Investor (the
Purchase and
Collaboration Agreement
).
RECITALS
WHEREAS
, the Investor and the Company are parties to the Purchase and Collaboration Agreement
pursuant to which Investor, among other things, acquired from the Company 11,200,000 shares of
Common Stock (the
Shares
); and
WHEREAS
, the Company and the Investor are entering into this Agreement pursuant to the
Purchase and Collaboration Agreement.
NOW, THEREFORE
, in consideration of the foregoing and for other good and valuable
consideration, the sufficiency of which is acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions
. As used in this Agreement, the following terms shall have the meanings set
forth below:
(a)
AAA
shall have the meaning set forth in Section 5.13(a).
(b)
Affiliate
shall mean, with respect to any Person (as defined below), any other Person
controlling, controlled by or under direct or indirect common control with such Person (for the
purposes of this definition
control,
when used with respect to any specified Person, shall mean
the power to direct the management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
controlling
and
controlled
shall have meanings correlative to the foregoing).
(c)
Agreement
shall have the meaning set forth in the Preamble.
(d)
Arbitrator
shall have the meaning set forth in Section 5.13(b).
(e)
Board
shall mean the Companys board of directors.
(f)
Business Day
shall mean a day Monday through Friday on which banks are generally open for
business in New York City.
(g)
Bylaws
shall mean the Companys Amended and Restated Bylaws, as amended from time to time.
(h)
Certificate
shall mean the Companys Restated Certificate of Incorporation as filed with the
Secretary of State of the State of Delaware and as amended from time to time.
(i)
Commission
shall mean the Securities and Exchange Commission or any other federal agency at
the time administering the Securities Act.
(j)
Common Stock
shall mean the Companys common stock, $0.01 par value per share.
(k)
Company
shall have the meaning set forth in the Preamble.
(l)
DGCL
shall mean the General Corporation Law of the State of Delaware.
(m)
Dispute
shall have the meaning set forth in Section 5.13(a).
(n)
Enforcing Court
shall have the meaning set forth in Section 5.13(e).
(o)
Exchange Act
shall mean the Securities Exchange Act of 1934, as amended, or any similar
successor federal statute and the rules and regulations thereunder, all as the same shall be in
effect from time to time.
(p)
Filing Date
shall have the meaning set forth in Section 2.1(a).
(q)
Financial Statements
shall mean the financial statements of the Company filed with the
Commission in connection with the registration contemplated under this Agreement.
(r)
Indemnified Party
shall have the meaning set forth in Section 2.4(c).
(s)
Indemnifying Party
shall have the meaning set forth in Section 2.4(c).
(t)
Initial Lock-Up Period
shall have the meaning set forth in Section 4.1(a).
(u)
Investor
shall have the meaning set forth in the Preamble.
(v)
Investor Designee
shall have the meaning set forth in Section 3.1.
(w)
Nasdaq Stock Market
shall have the meaning set forth in Section 2.3(i).
(x)
Person
shall mean any person, individual, corporation, limited liability company,
partnership, trust or other nongovernmental entity or any governmental agency, court, authority or
other body (whether foreign, federal, state, local or otherwise).
(y)
Purchase and Collaboration Agreement
shall have the meaning set forth in the Preamble.
(z) The terms
register,
registered
and
registration
refer to the registration effected by
preparing and filing a registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
(aa)
Registrable Securities
shall mean (i) any Shares and (ii) any Common Stock issued as a
dividend or other distribution with respect to or in exchange for or in replacement of the Shares
referenced in (i) above, in each case until Transferred by the Investor to the extent permitted by
this Agreement;
provided
,
however
, that Registrable Securities shall not include
any securities described in clause (i) or (ii) above which have previously been registered or which
have been sold to the public either pursuant to a Registration Statement or Rule 144, or which have
been sold in a private transaction.
(bb)
Registration Expenses
shall mean all expenses incurred by the Company in complying with
Section 2.1 hereof, including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and expenses of counsel for the Company, blue sky fees and
expenses and the expense of any special audits incident to or required by any such registration
(but, for the avoidance of doubt, excluding the fees of legal counsel for the Investor).
(cc)
Registration Statement
shall mean any registration statement of the Company filed with the
Commission on the appropriate form pursuant to the Securities Act which covers any Registrable
Securities pursuant to the provisions of this Agreement and all amendments and supplements to any
such Registration Statement, including post-effective amendments, all exhibits thereto and all
materials incorporated by reference therein.
(dd)
Registration Period
shall have the meaning set forth in Section 2.1(b).
(ee)
Rule 144
shall mean Rule 144 as promulgated by the Commission under the Securities Act, as
such Rule may be amended from time to time, or any similar successor rule that may be promulgated
by the Commission.
(ff)
Securities Act
shall mean the Securities Act of 1933, as amended, or any similar successor
federal statute and the rules and regulations thereunder, all as the same shall be in effect from
time to time.
(gg)
Selling Expenses
shall mean all underwriting discounts and the selling commissions and stock
transfer taxes applicable to the sale of Registrable Securities and the fees and disbursements of
counsel for the Investor.
(hh)
Shares
shall have the meaning set forth in the Recitals.
(ii)
Shelf Registration Statement
shall have the meaning set forth in Section 2.1(a).
(jj)
Subsidiary
shall mean, when used with reference to an entity, any other entity of which
(i) securities or other ownership interests having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions, or (ii) a majority of the
outstanding securities of which, are owned directly or indirectly by such entity.
(kk)
Transaction Delay Notice
shall have the meaning set forth in Section 2.5(b).
(ll)
Transaction Delay Period
shall have the meaning set forth in Section 2.5(b).
(mm)
Transfer
and
Transferred
shall mean to directly or indirectly sell, transfer, exchange,
assign, pledge, hypothecate, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of.
ARTICLE II.
REGISTRATION RIGHTS
2.1
Shelf-Registration
.
(a) The Company shall use commercially reasonable efforts to file not later than ninety (90) days
before the end of the Initial Lock-Up Period (the
Filing Date
) a Registration Statement pursuant
to Rule 415 under the Securities Act with the Commission covering the resale of the Registrable
Securities on a delayed or continuous basis (the
Shelf Registration Statement
), and effect the
registration, qualifications or compliances (including, without limitation, the execution of any
required undertaking to file post-effective amendments, appropriate qualifications or exemptions
under applicable blue sky or other state securities laws and appropriate compliance with
applicable securities laws, requirements or regulations) of the Registrable Securities as promptly
as possible after the filing thereof. The Shelf Registration Statement will be on Form S-3;
provided
, that if Form S-3 is not available for use by the Company on the Filing Date, then
the Registration Statement will be on such form as is then available.
(b) Except for such times as the Company is permitted hereunder to suspend the use of the
prospectus forming part of the Shelf Registration Statement pursuant to Section 2.5, use
commercially reasonable efforts to keep such registration, and any qualification, exemption or
compliance under state securities laws which the Company determines to obtain, continuously
effective, and to keep such Shelf Registration Statement free of any untrue statement of a material
fact or omission to state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, in light of the circumstances in which they were made,
until the earliest of the following: (i) the date of the fourth (4
th
) anniversary of
the date on which the Shelf Registration Statement is initially declared effective by the
Commission, (ii) the date all of the Registrable Securities have been Transferred by the Investor
and (iii) the date all of the Registrable Securities then held by the Investor may be sold by the
Investor under Rule 144 during any ninety (90) day period without complying with the provisions of
clause (c) or (f) of Rule 144. The period of time during which the Company is required hereunder
to keep the Shelf Registration Statement effective is referred to herein as the
Registration
Period
. The rights of the Investor under this Section 2 shall terminate on the last day of the
Registration Period.
2.2 Expenses
. All Registration Expenses incurred in connection with any registration, qualification,
exemption or compliance pursuant to Section 2, shall be borne by the Company. All Selling Expenses
relating to the sale of Registrable Securities registered hereunder by or on behalf of the Investor
shall be borne by the Investor.
2.3 Registration Procedures
. In the case of the registration, qualification, exemption or compliance
effected by the Company pursuant to this Agreement, the Company shall:
(a) notify the Investor within three (3) Business Days:
(i) when the Shelf Registration Statement or any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement or any post-effective amendment thereto has
become effective;
(ii) of any request by the Commission for amendments or supplements to the Shelf Registration
Statement or the prospectus included therein, upon which the Company will use its commercially
reasonable efforts to file the same with the Commission;
(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities included therein for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, upon which the Company will use its
commercially reasonable efforts promptly to obtain the withdrawal of such suspension or address any
such proceedings, as applicable; and
(v) of the occurrence of any event that requires the making of any changes in the Shelf
Registration Statement or the prospectus forming a part thereof so that, as of such date, the Shelf
Registration Statement and the prospectus forming a part thereof, as applicable, do not contain an
untrue statement of material fact, and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the prospectus, in the light of
the circumstances under which they were made) not misleading (
provided
, that, in no event
shall such notice contain any material, non-public information);
(b) use commercially reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of the Shelf Registration Statement as soon as reasonably practicable;
(c) promptly furnish the Investor, without charge, at least one copy of the Shelf Registration
Statement and any post-effective amendment thereto, including Financial Statements and schedules,
and, if explicitly requested, all exhibits in the form filed with the Commission;
(d) during the Registration Period, promptly deliver to the Investor, without charge, as many
copies of the prospectus included in the Shelf Registration Statement and any amendment or
supplement thereto as the Investor may reasonably request; and, subject to the limitations
contained herein, the Company consents to the use, consistent with the provisions hereof, of the
prospectus or any amendment or supplement thereto by the Investor in connection with the offering
and sale of the Registrable Securities covered by the prospectus forming a part thereof or any
amendment or supplement thereto;
(e) during the Registration Period, if the Investor so requests, deliver to the Investor, without
charge, (i) one copy of the following documents: (A) its annual report to its stockholders, if any
(which annual report shall contain financial statements audited in accordance with generally
accepted accounting principles in the United States of America by an independent registered public
accounting firm of recognized standing), (B) its annual report on Form 10-K (or similar form), (C)
its definitive proxy statement with respect to its annual meeting of stockholders, (D)
each of its
quarterly report(s) on Form 10-Q (or similar form), and (E) a copy of the full Shelf Registration
Statement (the foregoing, in each case, excluding exhibits); and (ii) if explicitly requested, all
exhibits excluded by the parenthetical to the immediately preceding clause (E);
(f) prior to any public offering of Registrable Securities pursuant to the Shelf Registration
Statement, promptly take such actions as may be necessary to register or qualify or obtain an
exemption for offer and sale under the securities or blue sky laws of such United States
jurisdictions as the Investor reasonably requests in writing;
provided
, that the Company
shall not for any such purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction, and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered
by the Shelf Registration Statement;
(g) upon the occurrence of any event contemplated by Section 2.3(a)(v) above, except for such times
as the Company is permitted hereunder to suspend the use of the prospectus forming part of the
Shelf Registration Statement, pursuant to Section 2.5, the Company shall use commercially
reasonable efforts to as soon as reasonably practicable prepare a post effective amendment to the
Shelf Registration Statement or a supplement to the prospectus forming a part thereof, or file any
other required document so that, as thereafter delivered to purchasers of the Registrable
Securities included therein, such prospectus will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(h) otherwise use commercially reasonable efforts to comply in all material respects with all
applicable rules and regulations of the Commission which could affect the sale of the Registrable
Securities;
(i) use commercially reasonable efforts to cause the Registrable Securities included in the Shelf
Registration Statement to be listed on the NASDAQ Global Market (
NASDAQ Stock Market
) or, if the
Common Stock is not then listed on the NASDAQ Stock Market, on the principal national securities
exchange on which the Common Stock is then listed, or if the Common Stock is not then listed on a
national securities exchange, authorized for quotation on any automated quotation system on which
the Common Stock is then quoted;
(j) during the Registration Period, furnish to the Investor, without charge, copies of any
correspondence from the Commission or the staff of the Commission to the Company or its
representatives relating to the Shelf Registration Statement or any document incorporated by
reference therein within five (5) Business Days after the Companys receipt thereof;
(k) use commercially reasonable efforts to take all other steps necessary to effect the
registration of the Registrable Securities contemplated hereby and to enable the Investor to sell
Registrable Securities under Rule 144; and
(l) if the Investor so requests in writing, permit a single counsel, designated by the Investor to
review and provide reasonable comments to the Shelf Registration Statement and all
amendments and
supplements thereto, within three (3) Business Days prior to the filing thereof with the
Commission;
provided
, that, in the case of clause (l) above, the Company shall not be required (A) to
delay the filing of the Shelf Registration Statement or any amendment or supplement thereto to
incorporate any comments to the Shelf Registration Statement or any amendment or supplement thereto
by or on behalf of the Investor if such comments would require or result in a delay in the filing
of the Shelf Registration Statement, amendment or supplement, as the case may be, and the Company
reasonably believes (after consulting with legal counsel) that such comments are not necessary to
incorporate into the Shelf Registration Statement or any amendment or supplement thereto in order
to comply with the Securities Act or (B) to provide, and shall not provide, the Investor or its
representatives with material, non-public information unless the Investor agrees to receive such
information and enters into a written confidentiality agreement with the Company in a form
reasonably acceptable to the Company.
2.4 Indemnification
.
(a) To the extent permitted by law, the Company shall (subject to Section 2.4(c) below) indemnify
the Investor, each of its directors and officers, and each person who controls the Investor within
the meaning of Section 15 of the Securities Act, with respect to any registration that has been
effected pursuant to this Agreement, against all claims, losses, damages and liabilities (or action
in respect thereof), including any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 2.4(c) below), arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in the Shelf Registration
Statement, prospectus or any amendment or supplement thereof, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (in case of any prospectus, in light of the circumstances in
which they were made), or any violation by the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company and relating to any action or inaction required of the
Company in connection with any such registration, qualification or compliance, and will reimburse
the Investor and each person controlling the Investor, for reasonable legal and other out-of-pocket
expenses reasonably incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred;
provided
that the Company will not be liable in
any such case to the extent that any untrue statement or omission is made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of the Investor
specifically for use in preparation of the Shelf Registration Statement, prospectus, amendment or
supplement.
(b) The Investor will indemnify the Company, each of its directors and officers, and each person
who controls the Company within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened (subject to
Section 2.4(c) below), arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in the Shelf Registration Statement, prospectus, or any
amendment or supplement thereof, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements therein not
misleading (in case of any prospectus, in light of the circumstances in which they were
made), and
will reimburse the Company, such directors and officers, and each person controlling the Company
for reasonable legal and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action as incurred, in each case to the
extent, but only to the extent, that such untrue statement or omission or allegation thereof is
made in reliance upon and in conformity with written information furnished to the Company by or on
behalf of the Investor specifically for use in preparation of the Shelf Registration Statement,
prospectus, amendment or supplement. Notwithstanding the foregoing, the Investors aggregate
liability pursuant to this Section 2.4(b) and Section 2.4(d) shall be limited to the net amount
received by the Investor from the sale of the Registrable Securities pursuant to the Shelf
Registration Statement.
(c) Each party entitled to indemnification under this Section 2.4 (the
Indemnified Party
) shall
give notice to the party required to provide indemnification (the
Indemnifying Party
) promptly
after such Indemnified Party has actual knowledge of any claim, action or litigation as to which
indemnity may be sought, and shall permit the Indemnifying Party (at its expense) to assume the
defense of any such claim, action or litigation resulting therefrom;
provided
, that counsel
for the Indemnifying Party, who shall conduct the defense of such claim, action or litigation,
shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and
the Indemnified Party may participate in such defense at such Indemnified Partys expense (and
after the assumption of the defense of any such claim, action or litigation by the Indemnifying
Party, the Indemnified Party shall not be entitled to reimbursement or indemnification for its
legal or other out-of-pocket expenses incurred in action with investigating or defending any such
claim, action or litigation except for out-of-pocket costs (excluding legal or other professional
fees or expenses) solely to the extent incurred by the Indemnified Party for it to comply with any
order or legally binding determination of a court or other governmental authority or to provide
assistance in the defense or investigation of such claim at the request or direction of the
Indemnifying Party), and
provided
,
further
, that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations
under this Agreement, except to the extent such failure is materially prejudicial to the
Indemnifying Party in defending such claim, action or litigation. The Indemnified Party shall not
settle, compromise, or consent to the entry of any judgment with respect to any such claim, action
or litigation without the prior written consent of the Indemnifying Party (which consent will not
be unreasonably withheld) and the Indemnifying Party shall not be liable for any compromise,
settlement or consent to the entry of any judgment with respect to any claim, action or litigation
effected without its prior written consent. No Indemnifying Party, in its defense of any such
claim, action or litigation, shall, except with the consent of each Indemnified Party, settle,
compromise or consent to entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim, action or litigation.
(d) If the indemnification provided for in this Section 2.4 is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim,
damage or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions which resulted in
such loss, liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages,
and liabilities referred to in this Section 2.4 shall include the reasonable legal or other
expenses reasonably incurred by such Indemnified Party in connection with investigating or
defending any such action or claim, subject to the provisions of Section 2.4(c). No Person guilty
of fraudulent misrepresentation (within the meaning of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation.
(f) The obligations of the Company and the Investor under this Section 2.4 shall survive the
completion of any offering of Registrable Securities under the Shelf Registration Statement.
2.5 Registration Covenants
.
(a) The Investor agrees that, upon receipt of any notice from the Company of the happening of any
event:
(i) requiring the preparation of a supplement or amendment to a prospectus relating to Registrable
Securities so that, as thereafter delivered to the Investor, such prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, the Investor will forthwith
discontinue offering or Transferring Registrable Securities pursuant to the Shelf Registration
Statement and prospectus forming a part thereof contemplated by Section 2.1 until its receipt of
copies of the supplemented or amended prospectus from the Company and, if so directed by the
Company, the Investor shall deliver to the Company all copies, other than permanent file copies
then in the Investors possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice;
(ii) contemplated by Section 2.3(a)(iii), the Investor shall forthwith discontinue offering or
Transferring Registrable Securities pursuant to the Shelf Registration Statement and the prospectus
forming a part thereof contemplated by Section 2.1 until its receipt of a notice from the Company
stating that the stop order of the type referred to in Section 2.3(a)(iii) is no longer applicable
or that the Commission will not issue any such stop order pursuant to the proceedings of the type
referred to in Section 2.3(a)(iii); or
(iii) contemplated by Section 2.3(a)(iv), the Investor shall forthwith discontinue offering or
Transferring Registrable Securities pursuant to the Shelf Registration Statement and the prospectus
forming a part thereof contemplated by Section 2.1 until its receipt of a notice from the Company
that any suspension of the type referred to in Section 2.3(a)(iv) is no longer applicable or that
no Person will issue any such suspension pursuant to any proceedings (threatened or initiated) of
the type referred to in Section 2.3(a)(iv).
(b) Notwithstanding anything in this Agreement to the contrary, if the Company delivers to the
Investor a certificate, signed by an officer of the Company (the
Transaction Delay Notice
),
stating that in the good faith judgment of the Board (i) continued use of the Shelf Registration
Statement for purposes of effecting offers or sales of the Registrable Securities pursuant thereto
would require, under the Securities Act or the Exchange Act, premature disclosure in the Shelf
Registration Statement (or the prospectus that is a part thereof or any document that is or would
be incorporated therein) of material, nonpublic information concerning the Company, its business or
prospects or any proposed material transaction involving the Company, (ii) such premature
disclosure would be materially adverse to the Company, its business or prospects or any such
proposed material transaction or would make the successful consummation by the Company of any such
material transaction significantly less likely and (iii) it is therefore desirable to suspend the
use by the Investor of the Shelf Registration Statement (and the prospectus that is a part thereof)
for purposes of effecting offers or sales of the Registrable Securities pursuant thereto, then the
right of the Investor to use the Shelf Registration Statement (and the prospectus that is a part
thereof) for purposes of effecting offers or sales of the Registrable Securities pursuant thereto
shall be suspended. Notwithstanding the foregoing, the Company shall not under any circumstances
be entitled to exercise its right to suspend the use of the Shelf Registration Statement on more
than two (2) occasions during any twelve (12) month period, and each such suspension shall not be
for more than thirty (30) days per such occasion (the
Transaction Delay Period
). The Investor
hereby covenants and agrees that it will not sell any Registrable Securities pursuant to the Shelf
Registration Statement during the periods the Shelf Registration Statement is withdrawn or the
ability to sell thereunder is suspended as set forth in this Section 2.5(b). During the period the
ability of the Investor to sell Registrable Securities under the Shelf Registration Statement is
suspended pursuant to this Section 2.5(b) the Company shall not file a Registration Statement
during the related Transaction Delay Period for the offer or sale of any securities for its own
account or for the offer or sale of any securities for the account of any stockholder of the
Company.
(c) As a condition to the inclusion of its Registrable Securities, the Investor shall furnish to
the Company such information, including completing an investor questionnaire in the form provided
by the Company, as shall be required in connection with any registration referred to in this
Section 2.
(d) The Investor acknowledges and agrees that the Registrable Securities sold pursuant to the Shelf
Registration Statement are not Transferable on the books of the Company unless the stock
certificate submitted to the transfer agent evidencing such Registrable Securities is accompanied
by a certificate reasonably satisfactory to the Company to the effect that (i) the Registrable
Securities have been Transferred in accordance with the Shelf Registration Statement and (ii) the
requirement of delivering a current prospectus has been satisfied.
(e) At the end of the Registration Period the Investor shall discontinue sales of Registrable
Securities pursuant to the Shelf Registration Statement upon receipt of notice from the Company of
its intention to remove from registration the Registrable Securities covered by the Shelf
Registration Statement which remain unsold, and the Investor shall notify the Company of the number
of Registrable Securities registered which remain unsold immediately upon receipt of such notice
from the Company.
2.6 Rule 144 Reporting
. With a view to making available the benefits of certain rules and regulations
of the Commission that may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its commercially reasonable efforts to:
(a) Make and keep adequate current public information with respect to the Company available in
accordance with Rule 144; and
(b) File with the Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act.
ARTICLE III.
BOARD OF DIRECTORS
3.1 Investor Designee
.
(a) Upon execution of this Agreement and in accordance with the terms of this Section 3, the
Investor shall have the right to designate one Person for election to the Board as its nominee in
its sole discretion (the
Investor Designee
). Within five (5) Business Days after the date
hereof, the Company shall take all commercially reasonable actions to expand the Board in
accordance with the Certificate, the Bylaws and the DGCL to create one vacancy on the Board and
appoint the Investor Designee to fill such vacancy.
(b) Subject to Section 3.5, following the appointment of the Investor Designee pursuant to
Section 3.1(a), for applicable subsequent elections of the members of the Board, the Company shall
take all such actions as are commercially reasonable to facilitate the Investor Designees
re-election to the Board.
(c) The Investor Designee must be eligible under applicable law and regulations of any national
securities exchange on which Company securities are traded to serve on the Board;
provided
,
however
, that the Investor Designee shall not be required to be independent under the
listing rules of any applicable national securities exchange, if any, on which Company securities
are traded.
3.2 Designation
. The initial Investor Designee shall be Fred Wilkinson
.
3.3 Change in Designee
. From time to time, subject to Section 3.5, the Investor may, in its sole
discretion, notify the Company in writing of its intention to remove the Investor Designee that is
serving on the Board and/or to select a new Investor Designee for election to the Board (whether to
replace a prior Investor Designee or to fill a vacancy on the Board caused by the resignation or
removal of a prior Investor Designee). Subject to Section 3.5, in the event of such an initiation
of a removal or selection of an Investor Designee under this Section 3.3, the Company shall take
such commercially reasonable actions as are necessary to facilitate such removal or election.
Notwithstanding the foregoing sentence, the Company shall not be required to hold a special meeting
of stockholders to replace an Investor Designee and in no event shall there be more than one
Investor Designee on the Board.
3.4 Information
. The Investor shall at the request of the Company provide, and shall cause the
Investor Designee to provide, all information regarding the Investor Designee that the
Company may
reasonably request for inclusion in any proxy statement or other report that is required to contain
such information that the Company is required to file with the Commission or any national
securities exchange on which the Companys securities are listed. The Investor represents,
warrants and agrees that any such information supplied to the Company will not contain any untrue
statement of a material fact, or omit to state any material fact required to be stated therein in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading.
3.5 Termination of Rights
. The rights provided to the Investor under this Section 3 shall terminate at
the first time when the Investor ceases to hold at least ten percent (10%) of the then outstanding
Common Stock;
provided
,
however
, that an Investor Designee who is appointed or
elected prior to the time when the Investor ceases to hold at least ten percent (10%) of the then
outstanding Common Stock may continue as a director of the Company until the Companys next meeting
of stockholders held after the time when the Investor ceases to hold at least ten percent (10%) of
the then outstanding Common Stock at which the stockholders are requested to take action with
respect to the election of directors of the Company. For purposes of this Section 3.5, in
determining, at any time, how many shares of Common Stock the Investor holds, only the Shares then
held by the Investor should be considered and no other shares of Common Stock held by the Investor
shall be considered.
3.6 No Compensation
. The Investor Designee shall not be entitled to receive compensation in any form
from the Company in connection with such designation or in respect of his or her position as a
member of the Board.
3.7 Confidentiality Agreement
. Notwithstanding anything contained herein to the contrary, no Investor
Designee shall be entitled to become a member of the Board unless and until he or she executes a
confidentiality agreement in a form agreed to by the Company, the Investor and the Investor
Designee, each acting reasonably.
ARTICLE IV.
LOCK-UP AGREEMENT
4.1 Lock-Up Agreement
.
(a) Except as otherwise permitted in this Section 4.1, the Investor agrees not to Transfer the
Shares or any legal or beneficial interest therein, without the prior written consent of the
Company, from the date hereof until the date which is six (6) months after the date of this
Agreement (the
Initial Lock-Up Period
);
provided
that the Investor shall have the right
to participate in any buy-back of Common Stock by the Company, any tender offer or exchange offer
for shares of Common Stock or in any extraordinary business combination or recapitalization
transaction involving the Company that is approved by the stockholders of the Company by a vote
required under applicable law.
(b) Notwithstanding Section 4.1(a), the Investor shall be permitted to Transfer any portion or all
of the Shares at any time to any Affiliate under common control with the Investor;
provided
, that any transferee agrees in writing to be bound by the provisions of this
Section 4 to the reasonable
satisfaction of the Company;
provided
, further that any such
Transfer shall not relieve the Investor from its obligations hereunder.
(c) Following the Initial Lock-Up Period, subject to Sections 4.3 and 5.3, the Investor agrees that
it will not, during any fiscal quarter of the Company, Transfer more than two million (2,000,000)
of the Shares;
provided
,
however
, the restrictions in this Section 4.1(c) shall
terminate eighteen (18) months following the date of this Agreement.
(d) In addition to the foregoing Transfer restrictions, the Investor shall not be entitled to
transfer any Registrable Securities at any time if such Transfer would violate the Securities Act,
or any state (or other jurisdiction) securities or blue sky laws applicable to the Company or the
applicable Transfer of Registrable Securities.
(e) Each certificate representing the Registrable Securities shall bear the following legend:
THE SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE IS RESTRICTED BY THE TERMS
OF AN INVESTORS RIGHTS AGREEMENT, DATED AS OF JULY 2, 2010, COPIES
OF WHICH ARE ON FILE WITH THE ISSUER OF THIS CERTIFICATE. NO SALE,
ASSIGNMENT, TRANSFER OR OTHER DISPOSITION SHALL BE EFFECTIVE UNLESS
AND UNTIL THE TERMS AND CONDITIONS OF SUCH INVESTORS RIGHTS
AGREEMENT HAVE BEEN COMPLIED WITH IN FULL.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR
UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THOSE LAWS. COLUMBIA LABORATORIES, INC. (THE COMPANY) SHALL BE
ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
(f) In the event that the restrictive legend set forth in Section 4.1(e) has ceased to be
applicable, the Company shall promptly provide the Investor or its permitted transferee, with new
certificates for such Registrable Securities not bearing the legend with respect to which the
restriction has ceased and terminated.
4.2 Stop-Transfer Instructions
. In order to enforce Section 4.1, the Company may impose stop-transfer
instructions with respect to any Company securities owned by the Investor.
4.3 Termination of Lock-Up Agreement
. This Section 4 shall terminate at the first time when the
Investor, and its Affiliates (other than the Company), in the aggregate, cease to hold at least ten
percent (10%) of the then outstanding Common Stock. For purposes of this Section 4.3, in
determining, at any time, how many shares of Common Stock the Investor and its Affiliates hold,
only the Shares then held by the Investor and its Affiliates shall be considered and no other
shares of Common Stock held by the Investor and/or its Affiliates shall be considered.
ARTICLE V.
MISCELLANEOUS
5.1 Amendment
. Except as expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument referencing this
Agreement and signed by the Company and the Investor.
5.2 Notices
. All notices and other communications required or permitted hereunder shall be in writing
and shall be mailed by registered or certified mail, postage prepaid, sent by electronic mail or
otherwise delivered by hand, messenger or courier service addressed:
(a) if to the Investor, to the address or electronic mail address of the Investor set forth beneath
its name on the signature pages hereto, as may be updated in accordance with the provisions hereof,
with a copy (which shall not constitute notice) to Latham & Watkins LLP, 650 Town Center Drive,
20th Floor, Costa Mesa, CA 92626-1925, Attention: R. Scott Shean; and
(b) if to the Company, to the address or electronic mail address of the Company set forth beneath
its name on the signature pages hereto, as may be updated in accordance with the provisions hereof,
with a copy (which shall not constitute notice) to Kaye Scholer LLP, 425 Park Avenue, New York, NY
10022, Attention: Adam H. Golden and Steven G. Canner.
Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given (i) if delivered by hand, messenger or courier service, when
delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid,
specifying next-business-day delivery, two (2) Business Days after deposit with the courier),
(ii) if sent via registered or certified mail, at the earlier of its receipt or five (5) days after
the same has been deposited in a regularly-maintained receptacle for the deposit of the United
States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, when directed
to the relevant electronic mail address, if sent during normal business hours of the recipient, or
if not sent during normal business hours of the recipient, then on the recipients next Business
Day in either case confirmed in writing.
5.3 Information
. The Investor hereby acknowledges that it is aware (and the Investor agrees that
any Person, including the Investor Designee, who otherwise receives from
the Investor confidential
non-public information relating to the Company has been and will be advised) that the United States
securities laws restrict any Person who possesses material, non-public information regarding the
Company from purchasing or selling securities of the Company and from communicating such
information to any other Person under circumstances in which it is reasonably foreseeable that such
Person is likely to purchase or sell such securities.
5.4 Successors and Assigns
. Except as permitted by Section 4.1(b), this Agreement and the rights and
obligations of the parties hereunder shall not be assignable or otherwise transferred, in whole or
in part, by the Company or the Investor without the written consent of both parties hereto
.
Any
attempted assignment or transfer of this Agreement shall be null and void.
5.5 Entire Agreement
. This Agreement and the exhibits hereto, the Purchase and Collaboration Agreement
and the Other Agreements (as defined in the Purchase and Collaboration Agreement) constitute the
full and entire understanding and agreement between the parties with regard to the subject hereof
and thereof
.
No party hereto shall be liable or bound to any other party in any manner with regard
to the subjects hereof or thereof by any warranties, representations or covenants except as
specifically set forth herein or therein.
5.6 Delays or Omissions
. Except as expressly provided herein, no delay or omission to exercise any
right, power or remedy accruing to any party to this Agreement upon any breach or default of any
other party under this Agreement shall impair any such right, power or remedy of such
non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this Agreement, or any waiver on
the part of any party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be
cumulative and not alternative.
5.7 Severability
. If any provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in
its entirety, to the extent necessary, shall be severed from this Agreement, and such court will
replace such illegal, void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the same economic, business and
other purposes of the illegal, void or unenforceable provision. The balance of this Agreement
shall be enforceable in accordance with its terms.
5.8 Titles and Subtitles
. The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement
.
All references in
this Agreement to sections, paragraphs and exhibits shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits attached hereto.
5.9 Counterparts
. This Agreement may be executed and delivered by PDF signature and in any number of
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
5.10 Further Assurances
. Each party hereto agrees to execute and deliver, by the proper exercise of its
corporate, limited liability company, partnership or other powers, all such other and additional
instruments and documents and do all such other acts and things as may be necessary to more fully
effectuate this Agreement.
5.11 Injunctive Relief
. The Parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with their specific terms
or were otherwise breached and that such damages would not be fully compensable by an award of
money damages. It is accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement without posting a bond or other undertaking, this being in addition to
any other remedy to which they are entitled at law or in equity.
5.12 Governing Law
. This Agreement (including any claim or controversy arising out of or relating to
this Agreement) shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to conflict of law principles that would result in the application of any
law other than the laws of the State of Delaware.
5.13 Arbitration
.
(a) All disputes, differences, controversies and claims of the parties hereto arising out of
or relating to this Agreement (individually, a
Dispute
and, collectively,
Disputes
), except as
otherwise provided under this Agreement, shall be resolved by final and binding arbitration
administered by the American Arbitration Association (
AAA
) under its Commercial Arbitration
Rules, subject to the provisions of this Section 5.13.
(b) Following the delivery of a written demand for arbitration by either party hereto, each of
the Company and Investor shall choose one (1) arbitrator within ten (10) Business Days after the
date of such written demand and the two (2) chosen arbitrators shall mutually, within ten (10)
Business Days after selection, select a third (3
rd
) arbitrator (each, an
Arbitrator
and together, the
Arbitrators
), each of whom shall be a retired judge selected from a roster of
arbitrators provided by the AAA. If the third (3
rd
) Arbitrator is not selected within
fifteen (15) Business Days after the delivery of the written demand for arbitration (or such other
time period as the parties hereto may agree), the parties hereto shall promptly request that the
commercial panel of the AAA select an independent Arbitrator meeting such criteria
(c) The rules of arbitration shall be the Commercial Rules of the American Arbitration
Association;
provided
,
however
, that notwithstanding any provisions of the
Commercial Arbitration Rules to the contrary, unless otherwise mutually agreed to by the Company
and the Investor, the sole discovery available to each party hereto shall be its right to conduct
up to two (2) non-expert depositions of no more than three (3) hours of testimony each.
(d) The Arbitrators shall render an award by majority decision within three (3) months after
the date of appointment, unless the parties hereto agree to extend such time. The award shall be
final and binding upon the parties hereto.
(e) Any judicial proceeding arising out of or relating to this Agreement or the relationship
of the parties hereto, including without limitation any proceeding to enforce this Section 5.13, to
review or confirm the award in arbitration, shall be brought exclusively in the Delaware Chancery
Court sitting in the county of New Castle, Delaware (the
Enforcing Court
). By execution and
delivery of this Agreement, each party hereto accepts the jurisdiction of the Enforcing Court.
(f) Each party hereto shall pay its own expenses in connection with the resolution of Disputes
pursuant to this Section 5.13, including attorneys fees, unless determined otherwise by the
Arbitrator.
(g) The parties hereto agree that the existence, conduct and content of any arbitration
pursuant to this Section 5.13 shall be kept confidential and no party hereto shall disclose to any
Person any information about such arbitration, except in connection with such arbitration or as may
be required by law or by any court, regulatory or governmental authority (or any exchange on which
such partys securities are listed) or for financial reporting purposes in such partys financial
statements.
(h) Notwithstanding the foregoing, none of the provisions of this Agreement (including this
Section 5.13) shall restrict the right of any party hereto to seek injunctive relief or other
equitable remedies, to enjoin any breach or threatened breach of this Agreement or otherwise
specifically enforce any provision of this Agreement.
5.14 Recapitalization, Exchanges, Etc
. The provisions of this Agreement shall apply to the full extent
set forth herein with respect to (i) the Registrable Securities, (ii) any and all securities into
which the shares of Common Stock are converted, exchanged or substituted in any recapitalization or
other capital reorganization by the Company and (iii) any and all equity securities of the Company
or any successor or assign of the Company (whether by merger, consolidation or otherwise) which may
be issued in respect of, in conversion of, in exchange for, or in substitution of, the shares of
Common Stock and shall be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date hereof. The Company shall
cause any successor or assign (whether by merger, consolidation or otherwise) to assume this
Agreement or enter into a new agreement with the Investor on terms substantially the same as this
Agreement as a condition of any such transaction.
5.15 Conflict
. In the event of any conflict between the Companys books and records and this Agreement
or any notice delivered hereunder, the Companys books and records will control absent fraud or
error.
(signature page follows)
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date
first written above.
|
|
|
|
|
|
COLUMBIA LABORATORIES, INC.
|
|
|
By:
|
/s/ Frank C. Condella, Jr.
|
|
|
|
Name:
|
Frank C. Condella, Jr.
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
Address:
|
354 Eisenhower Parkway
Plaza 1, Second Floor
Livingston, New Jersey 07039
|
|
|
|
COVENTRY ACQUISITION, INC.
|
|
|
By:
|
/s/ Paul M. Bisaro
|
|
|
|
Name:
|
Paul M. Bisaro
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
Address:
|
311 Bonnie Circle
Corona, California 92880-2882
|
|
|
Exhibit 10.2
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this
Agreement
) is made as of July 2, 2010 (the
Effective Date
), by
and between
Columbia Laboratories, Inc.
, a corporation existing and organized under the
laws of the State of Delaware, having a place of business at 354 Eisenhower Parkway, Plaza 1,
Second Floor, Livingston, NJ 07039 (
Supplier
), and
Coventry Acquisition, Inc.
, a
corporation existing and organized under the laws of the State of
Delaware
, having a place
of business at
311 Bonnie Circle, Corona, California 92880
(hereinafter
Buyer
).
Capitalized terms used herein but not otherwise defined herein shall have the definitions ascribed
to them in the Purchase and Collaboration Agreement (as hereinafter defined).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS, Buyer and Supplier have entered into that certain Purchase and Collaboration
Agreement, dated as of March 3, 2010 (the
Purchase and Collaboration Agreement
), providing for
the purchase by Buyer from Supplier of certain assets related to, and a collaboration with respect
to the Development of, the Products (as hereinafter defined); and
WHEREAS, in connection with the Purchase and Collaboration Agreement, Buyer and Supplier have
agreed to enter into this Agreement pursuant to which Supplier will be the exclusive supplier of
the Products for Buyer.
NOW THEREFORE, in consideration of the premises, which are incorporated herein by reference,
and other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1.
SCOPE OF AGREEMENT
1.1
Appointment of Supplier
. Subject to the terms and conditions hereof, Buyer hereby
appoints Supplier as its exclusive source and supplier of all of the requirements of Buyer, its
Affiliates and Partners for the products identified on
Exhibit 1.1
hereto in the United
States in packaged, ready-for-sale form (the
Products
), and Supplier agrees to act as the
exclusive source and supplier of the requirements of Buyer, its Affiliates and Partners for the
Products. For purposes hereof Partner means any Third Party to whom Buyer or its Affiliates has
sold, assigned, transferred, disposed of, licensed or conveyed any of the Purchased Assets or
rights in any Products. Notwithstanding anything to the contrary, upon written notice from Buyer,
provided to Supplier in accordance with Section 19 at least thirty (30) days prior to the date of
any requested change, Buyer may designate any of Buyers Affiliates or Partners for the purpose of
furnishing purchase orders and for receipt of shipments of Products from Supplier; provided that,
at any time, there shall be only one such party and that any such designation shall not relieve
Supplier of its obligations hereunder.
1.2
Inventory on Hand
. Buyer shall purchase the quantities of finished goods Products in
inventory of Supplier or its Affiliates (
Inventory
) on the First Closing Date for the Purchase
Price determined in accordance with Section 5.1, including any partial Batches (as defined in
Section 2.3 below). Within thirty (30) days after the Effective Date, Supplier shall deliver the
Inventory to Buyer in accordance with Section 3.1, subject to acceptance by Buyer in accordance
with Section 3.2. Except as otherwise provided in this Agreement, the other terms and
conditions of this Agreement shall apply to such Product to the same extent as if it were
ordered pursuant to a Purchase Order furnished pursuant to Section 2.3.
2.
FORECASTS; PURCHASE ORDERS; MANUFACTURE
2.1
Supplier Forecasts
. Suppliers forecasts for Product in place immediately prior to the
First Closing Date shall govern for the first four (4) months after the First Closing Date.
Supplier shall use Commercially Reasonable Efforts during such period to meet Buyer requirements
for Product in excess of said pre-closing forecasts, but inability to supply such excess amounts of
Product shall not constitute a breach of this Agreement by Supplier.
2.2
Buyer Forecasts
. At the First Closing, and on or before the fifteenth
(15
th
) day of each calendar month during the Term (as hereinafter defined) Buyer shall
and agrees to submit to Supplier a written forecast of Buyers, its Affiliates and Partners
requirements, by calendar month, for the following twelve (12) calendar months for Product (the
Rolling Forecast
). The first Rolling Forecast shall include Suppliers forecast for the first
four (4) months after the First Closing and any additional amount of Product required by Buyer, its
Affiliates and Partners in each of the first four (4) calendar months after the First Closing. The
first four (4) calendar months of each Rolling Forecast for Products will be firm orders (the
Binding Forecast
). It is understood that such forecasts, updated monthly, that extend beyond the
Binding Forecast, are intended to be good faith estimates only, and shall not be binding upon Buyer
or Supplier. Buyer shall be bound to purchase from Supplier, and Supplier shall supply, one
hundred percent (100%) of those quantities of the Products set forth in each Binding Forecast.
Supplier shall comply with Purchase Orders for Products furnished pursuant to Section 2.3 and shall
use Commercially Reasonable Efforts to supply amounts in excess of one hundred percent (100%) of
the Binding Forecast amounts; provided, however, that inability to supply amounts in excess of one
hundred percent (100%) shall not constitute a breach of this Agreement by Supplier. Supplier shall
notify Buyer in writing of any prospective problems of which it is aware that might prevent it from
meeting Buyers forecasted order quantities or estimated delivery dates.
2.3
Binding Purchase Orders
. At the First Closing and with each Binding Forecast
referenced in Section 2.2 hereof, Buyer shall furnish to Supplier a binding purchase order (each,
a
Purchase Order
) for the quantity of the Products which Buyer shall purchase and Supplier shall
deliver in accordance with the most recent Binding Forecast and this Agreement. Supplier shall
acknowledge receipt of such Purchase Order. Each such Purchase Order shall designate the quantity
of the Products ordered, taking into consideration the fact that all Purchase Orders must be for
one or more full batches (each a
Batch
). A Batch of 8% Product, as identified on
Exhibit
1.1
, is approximately 610,000 individual applicators, provided however, that production yields
may vary, and a yield of between 580,000 and 620,000 individual applicators will be considered an
8% Product Batch. A Batch of 4% Product, as identified on
Exhibit 1.1
, is approximately
150,000 individual applicators, provided however, that production yields may vary, and a yield of
between 140,000 and 160,000 individual applicators will be considered a 4% Product Batch. The
initial Purchase Order(s) shall first be filled by utilizing Suppliers inventory on hand (other
than Inventory), including finished goods and in-transit and in-process inventory of Supplier,
labeled with the name and NDC number of Supplier, until exhausted. Each Purchase Order shall
specify a delivery date for the ordered Product no earlier than ninety (90) days following
Suppliers receipt of the Purchase Order.
2.4
Buyers Ability to Require Supplier to Subcontract the Manufacture of Product
.
(a) In the event that (i) the parties reasonably determine that the demand for any Product is
projected to exceed (as evidenced by the Rolling Forecasts provided by Buyer to Supplier) or (ii)
the demand for any Product actually exceeds (as evidenced by Purchase Orders provided by Buyer to
Supplier) Suppliers capacity to supply Buyer with such Product, Buyer shall have the right to
require Supplier to employ a manufacturer selected by Buyer and reasonably acceptable to Supplier
(
Subcontract Manufacturer
), for the manufacture of such Product pursuant to the terms of this
Agreement. Buyer shall exercise this right by (A) specifying to Supplier the amount of any such
excess demand for such Product and the monthly period(s) in which such excess demand is expected to
occur or has occurred and (B) notifying Supplier of the amounts of such excess demand for such
Product which the Subcontract Manufacturer shall manufacture and supply to Supplier.
(b) If Supplier is unable to manufacture or supply substantially all of any Product required
to be supplied to Buyer under the terms of this Agreement for any reason whatsoever including, for
example, and without limitation, an injunction against such manufacture issued by a government
authority, Buyer shall have the right to require Supplier to employ a Subcontract Manufacturer,
selected by Buyer and reasonably acceptable to Supplier, for the manufacture of such Product for
the remaining Term pursuant to the terms of this Agreement. Buyers rights under this Section
2.4(b) shall be exercisable only if (i) Suppliers inability to manufacture or supply such Product
could reasonably be expected to result in the unavailability of such Product for commercial sale
for at least thirty (30) days, (ii) Buyer provides reasonable evidence of the Subcontract
Manufacturers ability to start manufacture of such Product more rapidly than Supplier could
restart manufacture of such Product, and (iii) Suppliers inability to manufacture or supply such
Product did not result, wholly or in part, from a breach by Buyer of its representations,
warranties or obligations under this Agreement.
(c) If, more than four (4) times in any two (2) year period, Supplier fails to supply, in
conforming form, all or substantially all of the amount of Products subject to an accepted Purchase
Order submitted in accordance with this Agreement (excluding amounts in excess of one hundred
percent (100%) of amounts covered by the applicable Binding Forecast) within thirty (30) days after
the delivery date specified for such Products in the respective Purchase Orders in accordance with
Section 2.3 (such failure, a
Critical Supply Failure
), such Critical Supply Failure shall
constitute a material breach under Section 10.2(c), and Buyer shall have the right, at Buyers sole
discretion, to (i) require Supplier to employ a Subcontract Manufacturer (selected by Buyer and
reasonably acceptable to Supplier), for the manufacture of such Product for the remaining Term
pursuant to the terms of this Agreement or (ii) terminate this Agreement pursuant to Section
10.2(c).
(d) Supplier agrees that, notwithstanding anything to the contrary in this Agreement, Buyer,
at any time after the Effective Date, may designate Buyer, or an Affiliate of Buyer or a Third
Party, for the manufacture and supply of Product, provided that (i) Buyer will bear the cost and
expense of establishing Buyer, or an Affiliate of Buyer or a Third Party, for the manufacture and
supply of any Product and (ii) Buyer, or an Affiliate of Buyer or a Third Party, may only supply up
to fifty percent (50%) of the amount of Product ordered in excess of three (3) Batches per calendar
year.
2.5
Provisions Applicable With Subcontract Manufacturer Supplier
. If, at any time,
Supplier subcontracts with a Subcontract Manufacturer pursuant to Sections 2.4(a) (c), or
subcontracts with an Affiliate or a Third Party other than pursuant to Sections 2.4(a) (c), for
the manufacture and supply of any Product, such Subcontract Manufacturer or such Affiliate or a
Third Party shall be reasonably acceptable to Buyer. Supplier shall provide the Subcontract
Manufacturer, the Affiliate or Third Party, as applicable, or cause the Subcontract Manufacturer,
the Affiliate or Third Party to be provided, with all rights required for the manufacture of such
Product and with all assistance reasonably requested by the Subcontract Manufacturer in setting up
and overseeing its manufacturing facility, including know-how concerning the manufacture of such
Product, and copies of all written or other tangible forms of recorded know-how reasonably related
to the manufacture of such Product. Supplier shall obtain and enforce agreements from any such
Subcontract Manufacturer, Affiliate or Third Party requiring the Subcontract Manufacturer,
Affiliate or Third Party to keep all such information conveyed to such Subcontract Manufacturer,
Affiliate or Third Party confidential and not to use any such rights, materials or information to
manufacture Products other than for Products for sale to Supplier.
3.
SHIPMENTS AND ACCEPTANCE
3.1
Delivery
. Supplier shall deliver all Products DDP (as such term is defined and used in
Incoterms 2000, ICC Official Rules for Interpretation of Trade Terms) to Buyers warehouse in
Gurnee, Illinois, United States, or any other single destination within the United States
identified by Buyer at least thirty (30) days prior to the requested delivery date. Title and risk
of loss will transfer from Supplier to Buyer upon delivery of Product to Buyer.
3.2
Inspection; Rejection
. Buyer may inspect the shipment of Product upon receipt to
verify such shipments conformity to the relevant Purchase Order as of the time the Product was
delivered to Buyer. If Buyer determines that any portion or all of any shipment of the Product did
not conform to the Purchase Order as of the time it was delivered to Buyer (each non-conforming
Product, a
Defective Product
), then Buyer shall be entitled to reject such portion or all of any
shipment of Product that includes Defective Product. Buyer shall notify Supplier in writing if the
shipment of Product includes Defective Product that existed at the time of the delivery of the
Products to Buyer. Such notification shall be made as soon as reasonably practicable after
discovery of the nonconformity, but not later than thirty (30) days after delivery of the Products.
Such notice shall specify the reasons for rejection. If Buyer does not so reject the Products
within thirty (30) days after delivery, Buyer shall be deemed to have accepted the Products. After
Buyer accepts a Product, or is deemed to have accepted a Product, except with respect to Latent
Defects (as defined herein below), Buyer shall have no recourse against Supplier except as set
forth in Section 6 hereof. After notice of rejection is received by Supplier, Buyer shall
cooperate with Supplier in determining whether such rejection is justified. Supplier shall notify
Buyer as soon as reasonably possible, but not later than thirty (30) days after receipt of the
notice from Buyer, whether it accepts Buyers basis for rejection. Notwithstanding anything to the
contrary, if a portion or all of any shipment of Product has a latent defect that renders such
Product a Defective Product prior to the expiry date of such Product and that (a) was not
reasonably discoverable within the inspection period specified in this Section 3.2 and (b) was
attributable to Suppliers manufacture and/or supply and (iii) did not occur after receipt of such
Product by Buyer as described in Section 3.2 (each such defect, a
Latent Defect
), Buyer shall
promptly, and in no event more than twenty (20) days after the discovery or notification of
such Latent Defect, notify Supplier of such Latent Defect. If Supplier accepts Buyers
determination that the Product is a Defective Product or that the Product contains a Latent Defect,
then Buyer shall be entitled to the remedies set forth in Section 6.5 hereof. If Supplier does not
accept Buyers determination that the Product is a Defective Product or that the Product contains a
Latent Defect, and Buyer does not accept Suppliers conclusion, then Supplier and Buyer shall
jointly select an independent Third Party to determine whether it conforms to the Purchase Order.
The parties agree that such Third Partys determination shall be final. If the Third Party rules
that the Product conformed to the Purchase Order as of the time the Product was delivered to Buyer
or that the Product does not contain a Latent Defect, as applicable, then Buyer shall be deemed to
have accepted the Product at the agreed upon price and Buyer shall bear the cost of such
independent Third Party determination. If the Third Party rules that the Product does not conform
to the Purchase Order at the time the Product was delivered to Buyer or that the Product contains a
Latent Defect, then Buyer shall be entitled to the remedies set forth in Section 6.5 hereof and
Supplier shall bear the cost of such independent Third Party determination.
4.
RECORDS AND AUDIT RIGHTS, PUBLIC STATEMENTS; RECALLS
4.1
Records; Audit Rights
. Supplier shall maintain, and shall cause its Affiliates and
contract manufacturers and other agents to maintain, all records necessary to comply with all
applicable Laws relating to the manufacture, filling, packaging, testing, storage and shipment of
Products. All such records shall be maintained for such period as may be required by applicable
Laws; provided, however, that all records relating to the manufacture, stability and quality
control of Products shall be retained until the parties agree to dispose of such records. Buyer
and its authorized representatives shall have the right, at Buyers sole cost and expense, to
audit, inspect, and observe the manufacture, storage, disposal, and transportation of Products once
per contract year, during normal business hours upon thirty (30) days prior written notice;
provided that Buyer may conduct additional audits if required to address serious manufacturing
issues or complaints that necessitate reporting to a regulatory authority or for any for cause
audits.
4.2
Public Statements
. Neither party shall use, or authorize others to use, the name,
symbols, or marks of the other in any advertising or publicity material or make any form of
representation or statement with regard to the services provided hereunder which would constitute
an express or implied endorsement by such other of any commercial product or service without the
others prior written approval.
4.3
Recalls
. Buyer, in Buyers sole discretion, shall determine whether any Product must
be withdrawn or recalled from the market. To the extent legally required, Buyer shall notify all
regulatory authorities of any such withdrawal or recall. All costs of withdrawals or recalls
(including costs incurred by Supplier while assisting Buyer) shall be borne by Buyer, except in the
case of recalls or withdrawals caused solely by the negligence or willful malfeasance of Supplier,
its Affiliates or subcontractors or by the material breach by Supplier of its representations and
warranties in this Agreement, in which case Supplier shall credit Buyer for the cost of the
recalled or withdrawn Product and Buyers reasonable costs incurred with such withdrawals or
recalls. Buyer shall give Supplier prompt written notice of any withdrawals or recalls that Buyer
believes was caused or may have been caused by the negligence or willful
malfeasance of Supplier, its Affiliates or subcontractors or the material breach by Supplier of its
representations and warranties in this Agreement.
5.
PRICE AND PAYMENT
5.1
Price
.
(a) The purchase price for Products supplied hereunder (the
Purchase Price
) shall be one
hundred and ten percent (110%) of COGS calculated in accordance with this Section 5.1(a) and paid
in accordance with Section 5.1(d). For purposes hereof
COGS
means internal and external costs
incurred in manufacturing, acquiring, product testing activities for quality assurance and quality
control, packaging, transporting, storing and/or cGMP compliance determined in accordance with
United States generally accepted accounting principles, as consistently applied by Supplier in
accordance with Suppliers past practice and in the ordinary course of Suppliers business, in each
case to the extent related and allocable to the Product supplied to Buyer hereunder.
Notwithstanding the foregoing, COGS shall (i) include payroll taxes and customs charges
consistent in type and nature with those set forth on
Exhibit 5.1(a)
, and (ii) exclude any
and all (A) costs attributable to general corporate activities, including, by way of example,
executive management, investor relations, business development, legal affairs and finance, (B)
Taxes other than as described in clause (i) above, and (C) the NDA maintenance fee and applicable
FDA establishment fees.
Exhibit 5.1(a)
to this Agreement sets forth further detail on the
calculation of COGS. For purposes hereof cGMP means current good manufacturing practices of the
FDA and other appropriate agencies, as set forth in 21 C.F.R. Parts 210 and 211 and all applicable
FDA rules, regulations, guides and guidances, as amended from time to time and in effect during the
term of this Agreement.
(b) Buyer shall reimburse Supplier the amount actually paid by Supplier in connection with
applicable FDA establishment fees to the extent related and allocable to the Product supplied to
Buyer hereunder; provided, that, with respect to the period from the Effective Date through
September 30, 2010, Buyers liability for such establishment fees shall be an amount equal to
$457,200 multiplied by a fraction, the numerator of which is (i) the number of days during such
period, and the denominator of which is (ii) 365. Supplier shall provide Buyer with a detailed
invoice of any amounts due and payable pursuant to this Section 5.1(b) and Buyer shall pay the
amount of such invoice within thirty (30) days following receipt.
(c) Supplier shall at all times use Commercially Reasonable Efforts to keep the cost of
acquiring any Product from a contract manufacturer or Subcontract Manufacturer, if applicable, as
low as possible.
(d) For each Batch of Product supplied hereunder, Buyer shall pay Supplier the Purchase Price
(the
Batch Price
) calculated as set forth in this Section 5.1(d). For the period from the
Effective Date through December 31, 2010, the Batch Price for 8% Product and the Batch Price for 4%
Product shall equal the amount for such Product set forth on
Exhibit 5.1(d)
, subject to
adjustment in accordance with Section 5.1(e) below. For each calendar year thereafter, Supplier
shall notify Buyer of the Batch Price applicable to purchases of Product during such calendar year
no later than December 31
st
of the year immediately preceding such calendar year. Such
Batch Price shall be Suppliers good faith estimate of COGS for such
calendar year, determined based on Buyers Rolling Forecast, Suppliers projected costs for
such calendar year and foreign currency exchange rates in effect as of the last Business Day of
November immediately preceding Suppliers notice, subject to adjustment in accordance with Section
5.1(e); provided, however, that, except for adjustment in accordance with Section 5.1(e), the Batch
Price in any calendar year shall not be greater than one hundred twenty percent (120%) of the Batch
Price in the prior, just-ended calendar year.
(e) The Batch Price shall be adjusted on a monthly basis to reflect foreign currency exchange
rates in effect as published in the
Wall Street Journal
on the last Business Day of the
month immediately preceding the applicable month.
(f) On or after each shipment of the Product, Supplier shall provide Buyer with an invoice
setting forth the Batch Price payable for such delivery pursuant to this Section 5. Each such
invoice shall, to the extent applicable, identify the Purchase Order number, quantities of the
Product, aggregate Batch Price of Product supplied pursuant to such Purchase Order and the total
amount to be remitted to Supplier.
(g) Buyer will pay amounts due pursuant to this Agreement within forty-five (45) days of the
date of invoice.
(h) Buyer will make all payments to Supplier, due pursuant to this Agreement, to Suppliers
accounts in the United States.
5.2
Intentionally Omitted
.
5.3
Interest
. If a party (or any successor thereto pursuant to the terms of this
Agreement) fails to pay in full on or before the date due any payment that is required to be paid
under this Agreement, such party (or any successor thereto pursuant to the terms of this Agreement)
will also pay to the other Party, on demand, interest on any such amount beginning on such due date
at an annual rate (calculated on the basis of a 360-day year) equal to the base rate as announced
by JPMorgan N.A., or any successor thereto, in New York, New York in effect on such due date, plus
three (3) percent to be assessed from the date payment of the amount in question first became due.
5.4
Taxes
.
(a) Supplier and Buyer each shall cooperate with the other party, as reasonably requested by
the other party, to minimize or eliminate Taxes to the extent legally permissible, including by
making available to such other party any existing resale certificates, exemption certificates or
other existing information relevant for such purpose.
(b) If applicable Tax Law requires Buyer to withhold any Tax from a payment to Supplier, Buyer
shall withhold such Tax and shall pay the amount withheld to the relevant Tax authority.
(c) As soon as practicable after any payment of withheld Taxes by Buyer to a Tax authority,
Buyer shall deliver to Supplier the original or a certified copy of a receipt issued
by such Tax authority evidencing such payment, a copy of the return reporting that payment or
other evidence of such payment reasonably satisfactory to Supplier.
6.
REPRESENTATIONS AND WARRANTIES
6.1
Representations and Warranties of Supplier
. Supplier represents and warrants to Buyer
that:
(a) the Products shall be manufactured and packaged in compliance with the provisions of the
Federal Food, Drug, and Cosmetic Act located at 21 U.S.C. §§ 301 to 397 (2000), as it may be
amended from time to time, and regulations promulgated thereunder (the
Act
), the laws or
regulations imposed by other involved health regulatory authorities within the Territory, and
cGMPs;
(b) as of the time of delivery to Buyer (i) Product (other than Inventory) with an FDA
approved shelf-life greater than or equal to thirty (30) months shall have minimum dating of not
less than twenty-four (24) months shelf-life prior to expiration, (ii) Product (other than
Inventory) with an FDA approved shelf-life less than thirty (30) months shall have minimum dating
of not less than eighteen (18) months shelf-life prior to expiration and (iii) Inventory shall have
minimum dating of not less than twelve (12) months shelf-life prior to expiration;
(c) as of the time any Product is delivered to Buyer and during the shelf life of such
Product, such Product shall conform to the specifications set forth in the NDA for such Product
(
the
Specifications
); and
(d) upon transfer of the risk of loss of a Product, as provided in Section 3.1, good and valid
title to such Product sold hereunder will be conveyed by Supplier to Buyer free and clear of any
Encumbrances created by Supplier.
6.2
Representations and Warranties of Buyer
. Buyer represents and warrants to Supplier
that Buyer will not make any false claims in any packaging, labeling, advertising or promotional
material regarding the Products.
6.3
EXCEPT AS OTHERWISE PROVIDED IN THE PURCHASE AND COLLABORATION AGREEMENT, THE WARRANTIES
SET FORTH IN SECTION 6.1 OF THIS AGREEMENT ARE THE EXCLUSIVE WARRANTIES GIVEN BY SUPPLIER TO BUYER
WITH RESPECT TO THE SUPPLY OF PRODUCTS HEREUNDER, AND ARE GIVEN AND ACCEPTED IN LIEU OF ANY AND ALL
OTHER WARRANTIES, GUARANTEES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.4
EXCEPT AS OTHERWISE PROVIDED IN THE PURCHASE AND COLLABORATION AGREEMENT, THE WARRANTIES
SET FORTH IN SECTION 6.2 OF THIS AGREEMENT ARE THE EXCLUSIVE WARRANTIES GIVEN BY BUYER TO SUPPLIER
WITH RESPECT TO THE PURCHASE OF PRODUCT HEREUNDER,
AND ARE GIVEN AND ACCEPTED IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES,
CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.5
Remedy
. Any Product delivered to Buyer by Supplier which is finally determined to be a
Defective Product or contain a Latent Defect in accordance with Section 3.2, shall be replaced at
Suppliers expense, as Buyers sole and exclusive remedy.
7.
INDEMNIFICATION
Each party agrees that it shall indemnify the other party for and hold such other party
harmless against any Losses incurred by such other party as a result of a breach of a
representation, warranty, covenant, agreement or obligation of such party contained in this
Agreement, in accordance with the terms and conditions contained in the Purchase and Collaboration
Agreement.
8.
INSURANCE
8.1
Coverage
. Each party shall maintain during the performance of this Agreement the
following insurance or self-insurance in amounts no less than that specified for each type:
(a) Commercial general liability insurance with combined limits of not less than $1,000,000
per occurrence, $1,000,000 per accident for bodily injury, including death, and property damage, a
general aggregate limit of not less than $1,000,000 and products/completed operations aggregate of
not less than $1,000,000 which coverage shall insure such party for product liability claims and
its obligations under this Agreement;
(b) Workers compensation insurance in the amounts required by the law of the state(s) in which
such partys workers are located and employers liability insurance with limits of not less than
$500,000 per occurrence;
(c) automobile liability insurance covering automobiles and trucks used by or on behalf of
such party either on or away from the other parties premises with combined single limit of not
less than $1,000,000 per occurrence and $1,000,000 per accident for bodily injury, including death,
and property damage, which policy shall include coverage for all hired, owned and no-owned
automobiles and trucks; and
(d) Product Liability Insurance with limits not less than $10,000,000.
8.2
Evidence
. Each party shall provide the other with evidence of its insurance or self
insurance. Each party shall provide to the other thirty (30) days prior, written notice of any
cancellation or material change in its coverage. Each party agrees to deliver to the other
concurrently with the execution of this Agreement and thereafter annually, a certificate from the
insurance company(ies) evidencing that all the insurance required by this Agreement is in force,
including a broad form vendors endorsement naming the other party as an additional insured.
9.
CONFIDENTIALITY
The terms of the Confidentiality Agreement shall apply to any information provided by Supplier
to Buyer.
10.
TERM AND TERMINATION
10.1
Term
. This Agreement shall come into effect on the Effective Date. Unless otherwise
terminated as provided in Section 10.2 or Section 12.2 hereof, this Agreement shall remain in force
through May 19, 2015 (for the purpose of this Section 10 the
Initial Term
). This Agreement shall
renew automatically in two (2) year increments after the Initial Term (each, a
Renewal Term
and,
collectively with the Initial Term, the
Term
) unless either party gives written notice to the
other of its intention to not renew at least one hundred and eighty (180) days prior to expiration
of the Initial Term or the then applicable Renewal Term.
10.2
Termination
.
(a)
Purchase and Collaboration Agreement
. Buyer shall have a right to terminate this
Agreement, upon one hundred and eighty (180) days prior written notice to Supplier, upon the
expiration or termination of the Joint Development Period, as provided in the Purchase and
Collaboration Agreement.
(b)
Insolvency
. A party may immediately terminate this Agreement without written
notice to the other party, if (i) the other party is the subject of voluntary or involuntary
bankruptcy proceedings instituted on behalf of or against such it (except for involuntary
bankruptcy proceedings which are dismissed within sixty (60) days); (ii) an administrative
receiver, receiver and manager, interim receiver, custodian, sequestrator or similar officer is
appointed in respect of the other party (collectively, the
Receiver
) and that party has not
caused the underlying action or the Receiver to be dismissed within sixty (60) days after the
Receivers appointment; (iii) the Board of Directors of the other party shall have passed a
resolution to wind up that party, or such a resolution shall have been passed other than a
resolution for the solvent reconstruction or reorganization of that party; (iv) a resolution shall
have been passed by that party or that partys directors to make an application for an
administration order or to appoint an administrator; or (e) the other party makes a general
assignment, composition or arrangement with or for the benefit of all or the majority of that
partys creditors, or makes, suspends or threatens to suspend making payments to all or the
majority of that partys creditors.
(c)
Default
. In the event either party commits a material breach or defaults in the
performance or observance of any of the material provisions of this Agreement, and such breach or
default is not cured within one hundred and twenty (120) days (or within fifteen (15) days in the
case of any payment default or obligation to pay royalties hereunder) after the receipt of notice
thereof from the other party specifying such breach or default, the party not in breach or default
shall be entitled (without prejudice to any of its other rights) to terminate this Agreement,
without additional penalty, termination fee or cost, by giving notice to take effect immediately.
11.
EFFECT OF EXPIRATION OR TERMINATION
11.1
Mutual Obligations
. Upon expiration or termination of this Agreement pursuant to
Section 10 with effect as of the effective date of termination:
(a) the party terminating this Agreement shall be released from all obligations and duties
imposed or assumed hereunder except from those provided in Sections 4.1, 4.2, 6, 7, 8 and 9 and
this Section 11 and Section 21; and
(b) the other party shall lose the benefit of any rights granted in this Agreement, except for
those accrued prior to the effective date of termination and those set forth in Sections 4.1, 4.2,
6, 7, 8 and 9 and this Section 11 and Section 21.
11.2
Purchase Orders
.
(a) Where this Agreement is terminated by Buyer pursuant to Section 10.2(a) or by Supplier
pursuant to Section 10.2(b) or 10.2(c), Supplier will be entitled, at its option, to fill or cancel
any Purchase Orders that were submitted by Buyer prior to such termination. If Supplier elects to
fill any such Purchase Orders, Supplier shall use commercially reasonable efforts to fill any such
Purchase Orders. If Supplier elects not to fill any such Purchase Orders, Buyer shall reimburse
Supplier for the costs (including, but not limited to, raw material costs) incurred in connection
with Purchase Orders that Supplier had started to supply prior to the termination of this Agreement
and that are canceled by Supplier pursuant to this Section 11.2(a).
(b) Where this Agreement is terminated by Buyer pursuant to Section 10.2(b) or 10.2(c),
Supplier will be entitled, at its option, to fill or cancel any Purchase Orders that were submitted
by Buyer, its Affiliates or sublicensees prior to such termination; provided that if Supplier
elects not to fill any such Purchase Orders, Supplier shall be liable for the costs (including, but
not limited to, raw material costs) incurred in connection with Purchase Orders that Supplier had
started to manufacture prior to the expiration or termination of this Agreement and that are
canceled by Supplier pursuant to this Section 11.2(b).
11.3
Financial Obligations
. In the event that this Agreement is terminated pursuant to
Section 10.2 by either party, Buyer shall make all payments accruing prior to the effective date of
termination to Supplier in the manner specified herein. Supplier may proceed to enforce payment of
all outstanding payments. Each party may proceed to collect any other monies owed to such party
and to exercise any or all of the rights and remedies contained herein or otherwise available to
such party by law or in equity, successively or concurrently at the option of such party.
11.4
Transition upon Termination; HSR
.
(a) Upon expiration or termination of this Agreement for any reason pursuant to Sections 10 or
12.2, Supplier and its Affiliates shall provide to Buyer, its Affiliates or Third Party designee(s)
such cooperation and assistance as may be reasonably required to facilitate Buyer, its Affiliates
or Third Party designee(s) to bring about a smooth and orderly transition to one or more new
manufacturers and suppliers of Product following such expiration or termination and continuing for
such period of time following such termination as is reasonably necessary to fully
effectuate such transition. Buyer shall pay the reasonable internal and
external costs incurred by Supplier in providing such cooperation and assistance.
(b) Upon the expiration or termination of this Agreement, Buyer and Supplier will determine
whether any transfer of rights under this Agreement to Buyer is subject to the premerger
notification requirements of the HSR Act. If HSR Act filings are required, Buyer and Supplier will
use commercially reasonable efforts to make such filings and cause the HSR Act waiting period to
expire or terminate.
11.5
No Release
. Termination of this Agreement for any reason whatsoever shall neither be
deemed a release, nor shall it relieve either party from any obligation under this Agreement which
may have accrued prior thereto.
12.
FORCE MAJEURE
12.1
Suspension of Obligations
. If by reason of force majeure, which shall mean for the
purpose of this Agreement (a) acts of God, war, riots, civil unrest, acts of the public enemy,
fires, earthquakes, severe weather or storms, or (b) to the extent beyond the reasonable control of
the affected party, strikes, labor disputes, labor shortages, product transportation interruptions
or shortages, accidents, unavailability of raw materials or supplies, or any act in consequence of
compliance with any order of any government or governmental authority, and, in the case of either
(a) or (b), the affected party is delayed or prevented from complying with its obligations under
this Agreement, such affected party shall promptly give notice to the other party with an estimated
date by which the contingency will be removed.
12.2
Termination
. To the extent that a party is or has been delayed or prevented by force
majeure from complying with its obligations under this Agreement, the other party may suspend the
performance of its obligations until the contingency is removed. If the party delayed or prevented
from complying with its obligations under this Agreement cannot permanently remove the contingency,
or if the contingency affecting such party results in a delay extending beyond three (3) months,
the other party (upon notice) shall have a right to terminate this Agreement and Section 11,
subject to Section 6.5(b), if applicable, shall apply, with the party delayed or prevented from
complying with its obligations under this Agreement deemed to be the non-terminating party.
13.
NOTICES
All notices, requests, claims, demands and other communications hereunder shall be in writing
and shall be deemed to have been duly given (a) when received if delivered personally, (b) when
transmitted if telecopied (which is confirmed), (c) upon receipt, if sent by registered or
certified mail (postage prepaid, return receipt requested) and (d) the day after it is sent, if
sent for next-day delivery to a domestic address by overnight mail or courier, to the parties at
the following addresses:
If to Supplier, to:
Columbia Laboratories, Inc.
354 Eisenhower Parkway
Plaza 1, Second Floor
Livingston, New Jersey 07039
Attention: General Counsel
Facsimile: 973.994.3001
with copies (which shall not constitute notice) sent concurrently to:
Kaye Scholer LLP
425 Park Avenue
New York, NY 10022
Attention: Adam H. Golden and Steven G. Canner
Facsimile: 212.836.8689
If to Buyer, to:
Coventry Acquisition, Inc.
311 Bonnie Circle
Corona, CA 92880
Attention: General Counsel
Facsimile: 951.493.5817
with copies (which shall not constitute notice) sent concurrently to:
Latham & Watkins LLP
650 Town Center Drive
20th Floor
Costa Mesa, CA 92626-1925
Attention: R. Scott Shean
Facsimile: 714.755.8290
provided, however, that if any party shall have designated a different address by notice to the
others, then to the last address so designated.
14.
ASSIGNMENT
Neither party may assign its rights and obligations under this Agreement without the other
partys prior written consent, except that: either party may (a) assign its rights and obligations
under this Agreement or any part hereof to one or more of its Affiliates without the consent of the
other party; and (b) assign this Agreement in its entirety without the other partys consent to an
entity that acquires all or substantially all of the business or assets of the assigning party to
which this Agreement relates, whether by merger, acquisition or otherwise; provided, however, that
in the event of Suppliers exercise of its right under clause (b), notwithstanding the Product
quantity and minimum order requirements set forth in Section 2.4(d), Buyer, or an Affiliate of
Buyer or a Third Party, may manufacture and supply any and all amounts of Product that Buyer, or an
Affiliate of Buyer or a Third Party, may require, without further obligation to
Supplier under the terms of this Agreement; provided, further, that to the extent an
assignment of rights or obligations by Supplier pursuant to this Section 14 increases the Taxes
(including without limitation any withholding Taxes) of, or the amounts owed under Section 5.1(a)
subsection (i) by, Buyer (or an Affiliate or Partner of Buyer that has been designated by Buyer
pursuant to Section 1 as of the time of such assignment by Supplier), Supplier or the assignee
shall indemnify Buyer (or such Affiliate or Partner of Buyer) for and hold it harmless against such
increase. In the case of any permitted assignment, the assigning party shall remain responsible
for the performance of this Agreement by the assignee. The assigning party shall provide the other
party with prompt written notice of any such assignment. Any permitted assignee shall assume all
obligations of its assignor under this Agreement, and no permitted assignment shall relieve the
assignor of liability hereunder. Any attempted assignment in contravention of the foregoing shall
be void. Subject to the terms of this Agreement, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted assigns.
15.
NO WAIVER
The failure of either party to enforce any condition or part of this Agreement at any time
shall not be construed as a waiver of that condition or part, nor shall it forfeit any rights to
future enforcement thereof.
16.
RELATIONSHIP OF THE PARTIES
Nothing contained in this Agreement shall be deemed to constitute a partnership, joint
venture, or legal entity of any type between Supplier and Buyer, or to constitute one as the agent
of the other. Both parties shall act solely as independent contractors, and nothing in this
Agreement shall be construed to give either party the power or authority to act for, bind, or
commit the other party.
17.
HEADINGS, INTERPRETATION
The headings of sections of this Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement in any way. Words denoting the singular
shall include the plural and vice versa; words denoting any gender shall include all genders; and
words denoting persons shall include bodies corporate, and vice versa.
18.
SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other Regulatory Authority to be invalid, void, unenforceable or against
its regulatory policy such determination shall not affect the enforceability of any others or of
the remainder of this Agreement.
19.
ENTIRE AGREEMENT; AMENDMENT OR MODIFICATION
This Agreement may not be amended, supplemented or otherwise modified except by an instrument
in writing signed by both parties hereto. This Agreement, the Purchase and Collaboration
Agreement, the Confidentiality Agreement and the Other Agreements contain the
entire agreement of the parties hereto with respect to the subject matter hereof, superseding
all negotiations, prior discussions and preliminary agreements made prior to the date hereof. No
provision of this Agreement may be amended or modified other than by a written document signed by
authorized representatives of both parties.
20.
FORMS
The parties recognize that, during the Term, a Purchase Order, acknowledgement form or similar
routine document (collectively
Forms
) may be used to implement or administer provisions of this
Agreement. Therefore, the parties agree that the terms of this Agreement will prevail in the event
of any conflict between this Agreement and the printed provision of such Forms, or typed provisions
of Forms that add to, vary, modify or are at conflict with the provisions of this Agreement with
respect to Product sold hereunder during the Term.
21.
GOVERNING LAW
This Agreement (including any claim or controversy arising out of or relating to this
Agreement) shall be governed by and construed in accordance with the Laws of the State of Delaware
without regard to conflict of law principles that would result in the application of any Law other
than the Laws of the State of Delaware.
22.
ARBITRATION
22.1 All disputes, differences, controversies and claims of the parties arising out of or
relating to this Agreement (individually, a
Dispute
and, collectively,
Disputes
), except as
otherwise provided under this Agreement, shall be resolved by final and binding arbitration
administered by the American Arbitration Association (
AAA
) under its Commercial Arbitration
Rules, subject to the provisions of this Section 22.
22.2 Following the delivery of a written demand for arbitration by either party, each of Buyer
and Supplier shall choose one (1) arbitrator within ten (10) Business Days after the date of such
written demand and the two chosen arbitrators shall mutually, within ten (10) Business Days after
their selection, select a third (3
rd
) arbitrator (each, an
Arbitrator
and together,
the
Arbitrators
), each of whom shall be a retired judge selected from a roster of arbitrators
provided by the AAA. If the third (3
rd
) Arbitrator is not selected within fifteen (15)
Business Days after delivery of the written demand for arbitration (or such other time period as
the Parties may agree), the parties shall promptly request that the commercial panel of the AAA
select an independent Arbitrator meeting such criteria.
22.3 The rules of arbitration shall be the Commercial Rules of the American Arbitration
Association; provided, however, that notwithstanding any provisions of the Commercial Arbitration
Rules to the contrary, unless otherwise mutually agreed to by Buyer and Supplier, the sole
discovery available to each party shall be its right to conduct up to two (2) non-expert
depositions of no more than three (3) hours of testimony each.
22.4 The Arbitrators shall render an award by majority decision within three (3) months after
the date of appointment, unless the parties agree to extend such time. The award shall be final
and binding upon the parties.
22.5 Any judicial proceeding arising out of or relating to this Agreement or the relationship
of the parties, including without limitation any proceeding to enforce this Section 22, to review
or confirm the award in arbitration, shall be brought exclusively in the Delaware Chancery Court
sitting in the county of New Castle, Delaware (the
Enforcing Court
). By execution and delivery
of this Agreement, each party accepts the jurisdiction of the Enforcing Court.
22.6 Each party shall pay its own expenses in connection with the resolution of Disputes
pursuant to this Section 22, including attorneys fees, unless determined otherwise by the
Arbitrator.
22.7 The parties agree that the existence, conduct and content of any arbitration pursuant to
this Section 22 shall be kept confidential and no party shall disclose to any Person any
information about such arbitration, except as may be required by Law or by any Regulatory Authority
(or any exchange on which such Partys securities are listed) or for financial reporting purposes
in such partys financial statements.
22.8 Notwithstanding the forgoing, none of the provisions of this Agreement (including the
provision of this Section 22) shall restrict the right of any party to seek injunctive relief or
other equitable remedies, to enjoin any breach or threatened breach of this Agreement or otherwise
specifically enforce any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date and
year first above mentioned.
|
|
|
|
|
|
COLUMBIA LABORATORIES, INC.
|
|
|
By:
|
/s/ Frank C. Condella, Jr.
|
|
|
|
Name:
|
Frank C. Condella, Jr.
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
COVENTRY ACQUISITION, INC.
|
|
|
By:
|
/s/ Paul M. Bisaro
|
|
|
|
Name:
|
Paul M. Bisaro
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
Exhibit 10.3
LICENSE AGREEMENT
This
LICENSE AGREEMENT
(the
Agreement
), dated as of July 2, 2010 (the
Effective Date
), is
entered into by and between Columbia Laboratories, Inc., a Delaware corporation, and Columbia
Laboratories (Bermuda) Ltd., a Bermuda corporation (together,
Seller
), and Coventry Acquisition,
Inc., a Delaware corporation (
Buyer
). Seller and Buyer are each referred to herein as a
Party
,
and collectively, as the
Parties
.
RECITALS
WHEREAS
, the Columbia Laboratories, Inc., Watson Pharmaceuticals, Inc., a Nevada corporation
and Buyer have entered into a Purchase and Collaboration Agreement, dated as of March 3, 2010 (the
PCA
), for the sale by Seller, and the purchase by Buyer, of the First Closing Date Purchased
Assets on the First Closing Date and the Second Closing Date Purchased Assets on the Second Closing
Date (each as defined in the PCA);
WHEREAS,
pursuant to the PCA, the Parties will collaborate with respect to certain Development
activities relating to the Products (as defined in the PCA); and
WHEREAS
, as a condition to the First Closing (as defined in the PCA) under the PCA, Buyer will
grant to Seller certain licenses, and Seller will grant Buyer certain licenses, on the terms and
conditions set forth herein.
NOW
,
THEREFORE
, in consideration of the foregoing and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the following meanings.
All other capitalized terms used herein and not defined in this Agreement shall be as defined in
the PCA.
Ascend Agreement
means the License and Supply Agreement, dated as of September 27, 2007,
between Columbia Laboratories, Inc. and Ascend Therapeutics, Inc.
Buyer Introduced Technology
means all Patents and Know-How Controlled by Buyer from time to
time during the Joint Development Period covering technology identified by Buyer in writing for use
by Seller in Seller Development Activities.
Buyer Technology
means the Purchased Asset Technology and Collaboration Technology.
Collaboration Invention
shall have the meaning set forth in Section 3.2(a) hereof.
Collaboration Invention Patent
shall have the meaning set forth in Section 3.2(a) hereof.
Collaboration Technology
shall have the meaning set forth in Section 3.2(a) hereof.
Dimera Agreement
means the Reciprocal License Agreement, dated as of May 19, 2004, among
Columbia Laboratories, Inc., Columbia Laboratories (Bermuda) Ltd. and Dimera Incorporated.
Effective Date
means the date set forth in the Preamble.
Excluded Asset Patents
shall have the meaning set forth in the definition of Excluded Asset
Technology.
Excluded Asset Technology
means (a) the Patents (
Excluded Asset Patents
) and Know-How
Controlled by Seller and/or its Affiliates as of the First Closing Date which relate primarily to
the Products and are not included in the Purchased Assets, and (b) the Seller Next Generation
Delivery System Patents.
Non-US Asset Purchaser
shall have the meaning set forth in Section 2.3(a) hereof.
Non-US Rights to Intellectual Property
shall have the meaning set forth in Section 2.3(a)
hereof.
Product Infringement
shall have the meaning set forth in Section 3.4(a)(i) hereof.
Purchased Asset Patents
shall have the meaning set forth in the definition of Purchased
Asset Technology.
Purchased Asset Technology
means the Patents (
Purchased Asset Patents
) and Know-How
included in the Purchased Assets.
Seller Next Generation Delivery System Invention
shall have the meaning set forth in Section
3.2(b) hereof.
Seller Next Generation Delivery System Patents
means any Patent Controlled by Seller and/or
its Affiliates containing at least one claim that, without a license thereunder, would be infringed
by the manufacture, use, marketing, importing, exporting, sale, offer for sale or other
Commercialization of any product utilizing a Seller Next Generation Delivery System.
Seller Next Generation Delivery System Technology
shall have the meaning set forth in
Section 3.2(b) hereof.
Territory
means worldwide.
ARTICLE II.
CERTAIN LICENSES RELATING TO THE PRODUCTS
2.1
Grant of Licenses
.
(a)
Grant of Technology Licenses to Buyer
. Subject to the terms and conditions of
this Agreement, the PCA, the Ascend Agreement, the Merck-Serono Agreement, and the Dimera
Agreement, Seller hereby grants to Buyer an exclusive (even as to Seller and its Affiliates),
irrevocable, perpetual, royalty-free and fully paid-up (except as provided in the PCA) license,
with the right to grant sublicenses subject to Section 2.2, under the Excluded Asset Technology and
Seller Next Generation Delivery System Technology to Develop, manufacture, have manufactured, use,
import, export, market, sell, offer to sell or otherwise Commercialize the Products in the
Territory in any and all fields.
(b)
Grant of Technology Licenses to Seller
. Subject to the terms and conditions of
this Agreement and the PCA, including without limitation Section 8.11 of the PCA, Buyer hereby
grants to Seller:
(i) a non-exclusive, non-transferable (except pursuant to Section 6.8), royalty-free and fully
paid-up license under the Buyer Technology to manufacture, have manufactured, import and export the
Products for the purpose of supply of such Products to Buyer under the terms and conditions of the
Supply Agreement;
(ii) a non-exclusive, non-transferable (except pursuant to Section 6.8), royalty-free and
fully paid-up license under the Buyer Technology, Collaboration Technology and Buyer Introduced
Technology for the sole purpose of conducting the Seller Development Activities during the Joint
Development Period;
(iii) an exclusive (even as to Buyer and its Affiliates), irrevocable, perpetual, royalty-free
and fully paid-up license, with the right to grant sublicenses subject to Section 2.2, under (A)
the Purchased Asset Technology and Collaboration Technology (but solely to the extent such
Collaboration Technology arises out of clinical trials conducted by or on behalf of Seller on the
Product known as progesterone/COL-1620 vaginal gel containing progesterone in a concentration of
either four percent (4%) or eight percent (8%)) to the extent required to permit Seller or its
Affiliate to perform under and comply with the terms of the Merck-Serono Agreement and (B) the
Purchased Asset Technology to the extent required to permit Seller or its Affiliate to perform
under and comply with the terms of the Dimera Agreement; and
(iv) a non-exclusive, irrevocable, perpetual, royalty-free and fully paid-up license, with the
right to grant sublicenses subject to Section 2.2, under Collaboration Technology to Develop,
manufacture, have manufactured, use, import, export, market, sell, offer
to sell or otherwise Commercialize the Seller Next Generation Delivery System to the extent
that it incorporates or otherwise delivers any product other than Products in the Territory in any
and all fields.
2.2
Sublicenses
. In the event that a Party shall have the right to grant sublicenses
under licenses granted pursuant to Section 2.1 of this Agreement, each such Party shall ensure that
its sublicensee shall be subject to a written agreement with terms and condition that are
consistent with, and no less protective of, the other Party than the terms and conditions
hereunder, provided that, it is acknowledged that the Seller shall have no obligation to amend the
Merck-Serono Agreement or the Dimera Agreement notwithstanding that such agreements include
licenses that constitute sublicenses hereunder.
2.3
Non-U.S. Rights.
(a) To the extent that rights licensed by Seller hereunder are to be used in connection with
or in order to exploit the Non-United States Purchased Assets purchased by a wholly-owned
Subsidiary of Parent pursuant to Section 11.1 of the PCA (such licensed rights, the
Non-US Rights
to Intellectual Property,
and such wholly-owned Subsidiary, the
Non-US Asset Purchaser
), such
Non-US Rights to Intellectual Property shall be licensed to the Non-US Asset Purchaser.
(b) To the extent that rights licensed to Seller hereunder are rights to use the Non-United
States Purchased Assets purchased by the Non-US Asset Purchaser, such rights shall be licensed to
Columbia Laboratories (Bermuda) Ltd.
ARTICLE III.
DEVELOPMENT UNDER THE PCA
3.1
Invention Disclosures
. Each Party shall promptly disclose to the other Party any
inventions and other Know-How, including any inventions or other Know-How related to the Products
or any Next Generation Product, arising under the Parties activities conducted pursuant to the PCA
during the Joint Development Period. Such disclosures shall be provided in writing and in
sufficient detail for the other Party to understand the scope and nature of such inventions and
other Know-How. Any such disclosure shall be treated as the Confidential Information (as defined
in the PCA) of the disclosing Party, subject to the terms of this Article III.
3.2
Ownership of Inventions
. All inventions arising from the Parties activities
pursuant to the PCA during the Joint Development Period, including any Patents covering such
inventions, shall be owned as follows:
(a) All inventions arising from the Parties activities under the PCA (each, a
Collaboration
Invention
) and any Patent covering any such an invention (each, a
Collaboration Invention
Patent
) and Know-How arising from the Parties activities under the PCA (Collaboration Invention
Patents and such Know-How, collectively,
Collaboration Technology
) shall be owned by Buyer.
Notwithstanding the previous sentence, Collaboration Invention and Collaboration Technology shall
exclude any Seller Next Generation Delivery
System Inventions and Seller Next Generation Delivery System Technology. Seller and
Affiliates of Seller shall assign, and hereby assign, to Buyer all right, title and interest in and
to Collaboration Inventions, and all right, title and interest in, to and under Collaboration
Technology, in each case, held by Seller and/or Affiliates of Seller. Seller shall, and shall
cause its Affiliates to, cooperate with Buyer and take all reasonable actions and execute
agreements, instruments and documents as may be reasonably required to perfect Buyers right, title
and interest in and to Collaboration Inventions and Buyers right, title and interest in, to and
under Collaboration Technology.
(b) All inventions arising from the Parties activities under the PCA that relate solely to
the Seller Next Generation Delivery System (each a
Seller Next Generation Delivery System
Invention
) and any Patent covering such an invention (each such Patent to constitute a Seller Next
Generation Delivery System Patent) and Know-How arising from the Parties activities under the PCA
that relates solely to the Seller Next Generation Delivery System (Seller Next Generation Delivery
System Patents and such Know-How, collectively,
Seller Next Generation Delivery System
Technology
) shall be owned by Seller. Buyer and Affiliates of Buyer shall assign, and hereby
assign, to Seller all right, title and interest in and to Seller Next Generation Delivery System
Inventions, and all right, title and interest in, to and under Seller Next Generation Delivery
System Technology, in each case, held by Buyer and/or Affiliates of Buyer. Buyer shall, and shall
cause its Affiliates to, cooperate with Seller and take all reasonable actions and execute
agreements, instruments and documents as may be reasonably required to perfect Sellers right,
title and interest in and to Seller Next Generation Delivery System Inventions and Sellers right,
title and interest in, to and under Seller Next Generation Delivery System Technology.
(c) Determination of inventorship shall be made in accordance with United States patent laws.
3.3
Patent Prosecution
.
(a)
Purchased Asset Patents and Collaboration Invention Patents
.
(i) Subject to Sections 3.3(a)(ii) and 3.3(a)(iii), Buyer will have the responsibility for,
and the obligation with respect to, filing, prosecuting and maintaining the Purchased Asset Patents
and Collaboration Invention Patents, at Buyers sole cost and expense. Seller will fully cooperate
with Buyer, at Buyers expense, in connection with the filing, prosecution and maintenance of such
Purchased Asset Patents and such Collaboration Invention Patents, including by providing access to
relevant Persons and executing all documentation reasonably requested by Buyer or its Affiliates.
(ii) Buyer will consult with Seller and keep Seller reasonably informed of the status of the
Purchased Asset Patents and Collaboration Invention Patents, and will provide Seller with all
material filings and correspondences with the patent authorities with respect to such Purchased
Asset Patents and such Collaboration Invention Patents for Sellers review and comment; provided
that Buyer shall have full and complete control over the filing, prosecution and maintenance of the
Purchased Asset Patents and the Collaboration Invention Patents.
(iii) Buyer will notify Seller of any decision not to file applications for, or to cease
prosecution and/or maintenance of, or not to continue to pay the expenses of prosecution and/or
maintenance of, any Purchased Asset Patent or Collaboration Invention Patent. Buyer will provide
such notice at least sixty (60) days prior to any filing or payment due date, or any other due date
that requires action, in connection with such Purchased Asset Patent or Collaboration Invention
Patent. In such event, Buyer shall permit Seller, at Sellers sole discretion and expense, to file
or to continue prosecution or maintenance of such Purchased Asset Patent or such Collaboration
Invention Patent, in each case, in Buyers name.
(b)
Excluded Asset Patents and Seller Next Generation Delivery System Patents
. Seller
will have the responsibility for, and the obligation with respect to, filing, prosecuting and
maintaining the Excluded Asset Patents and Seller Next Generation Delivery System Patents at
Sellers sole cost and expense. Buyer will fully cooperate with Seller, at Sellers expense, in
connection with the filing, prosecution and maintenance of the Excluded Asset Patents and Seller
Next Generation Delivery System Patents, including by providing access to relevant Persons and
executing all documentation reasonably requested by Seller or its Affiliates. Seller shall have
full and complete control over the filing, prosecution and maintenance of the Excluded Asset
Patents and Seller Next Generation Delivery Patents; provided that, so long as Buyer is Developing
and/or Commercializing a Product utilizing the Seller Next Generation Delivery System, Seller will:
(i) consult with Buyer and keep Buyer reasonably informed of the status of the Seller Next
Generation Delivery System Patents with respect to such Product, and will provide Buyer with all
material filings and correspondences with the patent authorities with respect to such Seller Next
Generation Delivery System Patents for Buyers review and comment; and
(ii) notify Buyer of any decision not to file applications for, or to cease prosecution and/or
maintenance of, or not to continue to pay the expenses of prosecution and/or maintenance of, any
Seller Next Generation Delivery System Patents with respect to such Product. Seller will provide
such notice at least sixty (60) days prior to any filing or payment due date, or any other due date
that requires action, in connection with any such Seller Next Generation Delivery System Patent and
Buyer, at Buyers sole discretion and expense, will have a right to file or to continue prosecution
or maintenance of such Seller Next Generation Delivery System Patent in Sellers name.
3.4
Patent Infringement
.
(a)
Purchased Asset Patents and Collaboration Invention Patents
.
(i) Each Party will notify the other of any infringement by a Third Party of any of the
Purchased Asset Patents, Collaboration Invention Patents or Seller Next Generation Delivery System
Patents that cover a Product of which such Party becomes aware, including any patent
certification filed in the United States under 21 U.S.C. §355(b)(2) or 21 U.S.C. §355(j)(2) or
similar provisions in other jurisdictions and of any declaratory judgment, opposition, or similar
action alleging the invalidity, unenforceability or non-infringement of any
of the Purchased Asset Patents, Collaboration Invention Patents or Seller Next Generation
Delivery System Patents that cover a Product (collectively
Product Infringement
).
(ii) Buyer will have the sole right to bring and control any legal action in connection with
Product Infringement at Buyers own expense as it reasonably determines appropriate, and Seller
shall have the right, at Sellers own expense, to be represented in any such action by counsel of
its own choice.
(iii) If Buyer fails to bring an action or proceeding with respect to, or to terminate,
infringement of any Purchased Asset Patents, Collaboration Invention Patents or Seller Next
Generation Delivery System Patents that cover a Product (A) within ninety (90) days following
notice of alleged infringement or (B) prior to ten (10) days before the time limit, if any, set
forth in the appropriate laws and regulations for the filing of such actions, whichever comes
first, Seller shall have the right, upon prior consultation with Buyer, to bring and control any
such action at Sellers own expense and by counsel of its own choice.
(iv) At the request of the Party prosecuting the Product Infringement action or proceeding,
the other Party, at the prosecuting Partys expense, shall provide reasonable assistance in
connection therewith, including by executing reasonably appropriate documents, cooperating in
discovery and joining as a party to the action if required.
(v) In connection with any such proceeding, Buyer shall not enter into any settlement
admitting the invalidity of, or otherwise impairing the Purchased Asset Patents, Collaboration
Invention Patents or Seller Next Generation Delivery System Patents that cover a Product in any
manner that would impair royalties payable pursuant to the PCA without the prior written consent of
Seller, which will not be unreasonably withheld or delayed.
(vi) Any recoveries resulting from an action relating to a claim of Product Infringement shall
be first applied against payment of each Partys costs and expenses in connection therewith. Any
remainder will be considered Net Sales for purposes of Section 2.8(d) of the PCA.
(b)
Excluded Asset Patents and Seller Next Generation Delivery System Patents
.
(i) Each Party will notify the other of any infringement by a Third Party of any of the
Excluded Asset Patents or Seller Next Generation Delivery System Patents (other than Seller Next
Generation Delivery System Patents that cover a Product, which are included within Section
3.4(a)(i)) of which such Party becomes aware, including any patent certification filed in the
United States under 21 U.S.C. §355(b)(2) or 21 U.S.C. §355(j)(2) or similar provisions in other
jurisdictions and of any declaratory judgment, opposition, or similar action alleging the
invalidity, unenforceability or non-infringement of any of such Excluded Asset Patent or Seller
Next Generation Delivery System Patent (other than Seller Next Generation Delivery System Patents
that cover a Product, which are included within Section 3.4(a)(i)).
(ii) Seller will have the sole right to bring and control any legal action in connection with
infringement of any Excluded Asset Patent or Seller Next Generation
Delivery System Patents (other than Seller Next Generation Delivery System Patents that cover
a Product, which are included within Section 3.4(a)(ii)) at Sellers own expense as it reasonably
determines appropriate.
(iii) If Seller fails to bring an action or proceeding with respect to, or to terminate,
infringement of any Excluded Asset Patent or Seller Next Generation Delivery System Patents (other
than Seller Next Generation Delivery System Patents that cover a Product, which are included within
Section 3.4(a)(iii)) (A) within ninety (90) days following notice of alleged infringement or (B)
prior to ten (10) days before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, Buyer shall have the right, upon
prior consultation with Seller, to bring and control any such action at its own expense and by
counsel of its own choice.
(iv) At the request of the Party prosecuting the infringement action or proceeding, the other
Party shall provide reasonable assistance in connection therewith, including by executing
reasonably appropriate documents, cooperating in discovery and joining as a party to the action if
required.
(v) In connection with any such proceeding, the Party prosecuting the infringement action or
proceeding shall not enter into any settlement admitting the invalidity of, or otherwise impairing
any Excluded Asset Patent or Seller Next Generation Delivery System Patent (other than Seller Next
Generation Delivery System Patents that cover a Product, which are included within Section
3.4(a)(v)) utilized in a Product in any manner that would impair the other Partys Development
and/or Commercialization of such Product or a product utilizing the Seller Next Generation Delivery
System without the prior written consent of the other Party, which will not be unreasonably
withheld or delayed.
(vi) Any recoveries resulting from an action relating to a claim of infringement of any
Excluded Asset Patent or Seller Next Generation Delivery System Patent (other than Seller Next
Generation Delivery System Patents that cover a Product, which are included within Section
3.4(a)(vi)) utilized in a Product shall be first applied against payment of each Partys costs and
expenses in connection therewith. Any remainder will be retained by Seller.
3.5
Third Party Agreements
. Each Party shall ensure that any agreement entered into
with Third Parties engaged to perform Development activities pursuant to the PCA provides for
ownership of inventions and other rights in favor of such Party consistent with this Agreement.
ARTICLE IV.
CONSIDERATION; NO IMPLIED LICENSES
4.1
Consideration
. The rights and obligations provided under this Agreement are being
provided as a condition to the First Closing under the PCA. As such, no further consideration,
financial or otherwise, will be due under this Agreement, except as expressly provided herein.
4.2
No Implied Licenses
. Any Intellectual Property rights of a Party not expressly
granted to the other Party under the provisions of this Agreement shall be retained by such Party.
Except as expressly provided in this Agreement, a Party does not grant to the other Party any right
or license in any Intellectual Property right, whether by implication, estoppel or otherwise.
ARTICLE V.
TERM AND TERMINATION
5.1
Term
. The term of this Agreement shall commence on the Effective Date and shall
continue until the Parties mutually agree in writing to terminate this Agreement.
5.2
Bankruptcy
. Any licenses granted under or pursuant to this Agreement by either
Party to the other Party are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of Title 11, US Code (the
Bankruptcy Code
), licenses of rights to intellectual property as
defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that during the term of
this Agreement, each Party, as a licensee of rights under this Agreement, shall retain and may
fully exercise all of its rights and elections under the Bankruptcy Code. The Parties further
agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party under
the Bankruptcy Code, then the other Party (which is not a Party to such proceeding) will be
entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual
property licensed to such other Party under this Agreement and all embodiments of such intellectual
property, and same, if not already in such other Partys possession, will be promptly delivered by
the Party to such other Party (a) upon any such commencement of a bankruptcy proceeding upon its
written request therefor, unless the Party subject to such proceeding elects to continue, and
thereafter continues, to perform all of its obligations under this Agreement, or (b) if not
delivered under (a) above, following the rejection of this Agreement by or on behalf of the Party
subject to such proceeding upon written request therefor by the non-subject Party.
ARTICLE VI.
MISCELLANEOUS
6.1
Disclaimer of Warranty
. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
AGREEMENT OR THE PCA, NEITHER PARTY MAKES ANY REPRESENTATIONS NOR GRANTS ANY WARRANTIES, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE RELATED TO ANY AND ALL OF
THE INTELLECTUAL PROPERTY LICENSED HEREUNDER, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER
REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS, STATUTORY OR IMPLIED, INCLUDING
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE.
6.2
Governing Law
. This Agreement (including any claim or controversy arising out of
or relating to this Agreement) shall be governed by and construed in accordance
with the Laws of the State of Delaware without regard to conflict of law principles that would
result in the application of any Law other than the Laws of the State of Delaware.
6.3
Waiver
. Any term or condition of this Agreement may be waived at any time by the
Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. The failure of any Party to enforce any condition or part of this Agreement at any time
shall not be construed as a waiver of that condition or part, nor shall it forfeit any rights to
future enforcement thereof.
6.4
Notices
. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (a) when received if
delivered personally, (b) when transmitted if telecopied (which is confirmed), (c) upon receipt, if
sent by registered or certified mail (postage prepaid, return receipt requested) and (d) the day
after it is sent, if sent for next-day delivery to a domestic address by overnight mail or courier,
to the Parties at the following addresses:
If to Seller, to:
Columbia Laboratories, Inc.
354 Eisenhower Parkway
Plaza 1, Second Floor
Livingston, NJ 07039
Attention: General Counsel
Facsimile: 973.994.3001
with copies (which shall not constitute notice) sent concurrently
to:
Kaye Scholer LLP
425 Park Avenue
New York, NY 10022
Attention: Adam H. Golden and Steven G. Canner
Facsimile: 212.836.8689
If to Buyer, to:
Coventry Acquisition, Inc.
311 Bonnie Circle
Corona, CA 92880
Attention: General Counsel
Facsimile: 951.493.5817
with copies (which shall not constitute notice) sent concurrently
to:
Latham & Watkins LLP
650 Town Center Drive, 20th Floor
Costa Mesa, CA 92626-1925
Attention: R. Scott Shean
Facsimile: 714.755.8290
provided, however, that if any Party shall have designated a different address by notice to the
others, then to the last address so designated.
6.5 (a)
Relationship of the Parties
. The Parties are independent contractors.
Nothing herein is intended, or shall be deemed, to constitute a partnership, agency, joint venture
or employment relationship between the Parties. Neither Party shall be responsible for the other
Partys acts or omissions; and neither Party shall have authority to speak for, represent or
obligate the other Party in any way without prior written authority from the other Party. Subject
to the terms of this Agreement, the activities and resources of each Party shall be managed by such
Party, acting independently and in its individual capacity.
(a)
No Third Party Beneficiaries
. This Agreement is solely for the benefit of the
Parties hereto and their respective Affiliates and no provision of this Agreement shall be deemed
to confer upon any third parties any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement.
6.6
Amendment; Entire Agreement
. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both Parties hereto. This
Agreement, the PCA, the Other Agreements and the Confidentiality Agreement contain the entire
agreement of the Parties hereto with respect to the Transactions, superseding all negotiations,
prior discussions and preliminary agreements made prior to the Effective Date.
6.7
Severability
. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other Regulatory Authority to be invalid, void,
unenforceable or against its regulatory policy such determination shall not affect the
enforceability of any others or of the remainder of this Agreement.
6.8
Assignment and Transfer
.
(a) Neither this Agreement nor any right or obligation hereunder may be assigned or otherwise
transferred by either Party without the prior written consent of the other Party, except that
either Party may, without consent of the other Party, assign or otherwise transfer this Agreement
and its rights and obligations hereunder in whole or in part: (i) to any Affiliate; (ii) in
connection with a merger, reorganization or a sale or transfer of all or substantially all of the
assets to which this Agreement relates. Any attempted assignment or other transfer not in
accordance with this Section 6.8 shall be void. Any permitted assignee shall assume in writing all
assigned obligations of its assignor under this Agreement. The Party making any assignment or
other transfer permitted under this Section 6.8 shall provide prompt written notice to the other
Party of such assignment or transfer. The assignor shall remain jointly
and severally liable with any such assignee(s) with respect to all obligations and liabilities
of the assignor hereunder.
(b)
Successors and Assigns
. Except as otherwise provided herein, this Agreement shall
be binding upon and inure to the benefit of the Parties hereto and their successors and permitted
assigns.
6.9
Arbitration
.
(a) All disputes, differences, controversies and claims of the Parties arising out of or
relating to the Agreement (individually, a
Dispute
and, collectively,
Disputes
), except as
otherwise provided under this Agreement, shall be resolved by final and binding arbitration
administered by the American Arbitration Association (
AAA
) under its Commercial Arbitration
Rules, subject to the provisions of this Section 6.9.
(b) Following the delivery of a written demand for arbitration by either Party, each of Buyer
and Seller shall choose one (1) arbitrator within ten (10) Business Days after the date of such
written demand and the two chosen arbitrators shall mutually, within ten (10) Business Days after
selection select a third (3rd) arbitrator (each, an
Arbitrator
and together, the
Arbitrators
),
each of whom shall be a retired judge selected from a roster of arbitrators provided by the AAA.
If the third (3rd) Arbitrator is not selected within fifteen (15) Business Days after delivery of
the written demand for arbitration (or such other time period as the Parties may agree), the
Parties shall promptly request that the commercial panel of the AAA select an independent
Arbitrator meeting such criteria.
(c) The rules of arbitration shall be the Commercial Rules of the American Arbitration
Association; provided, however, that notwithstanding any provisions of the Commercial Arbitration
Rules to the contrary, unless otherwise mutually agreed to by Buyer and Seller, the sole discovery
available to each Party shall be its right to conduct up to two (2) non expert depositions of no
more than three (3) hours of testimony each.
(d) The Arbitrators shall render an award by majority decision within three (3) months after
the date of appointment, unless the Parties agree to extend such time. The award shall be final
and binding upon the Parties.
(e) Any judicial proceeding arising out of or relating to this Agreement or the relationship
of the Parties, including without limitation any proceeding to enforce this Section 6.9, to review
or confirm the award in arbitration, shall be brought exclusively in the Delaware Chancery Court
sitting in the county of New Castle, Delaware (the
Enforcing Court
). By execution and delivery
of this Agreement, each Party accepts the jurisdiction of the Enforcing Court.
(f) Each Party shall pay its own expenses in connection with the resolution of Disputes
pursuant to this Section 6.9, including attorneys fees, unless determined otherwise by the
Arbitrator.
(g) The Parties agree that the existence, conduct and content of any arbitration pursuant to
this Section 6.9 shall be kept confidential and no Party shall disclose to any Person
any information about such arbitration, except in connection with such arbitration or as may
be required by Law or by any Regulatory Authority (or any exchange on which such Partys securities
are listed) or for financial reporting purposes in such Partys financial statements.
(h) Notwithstanding the foregoing, none of the provisions of this Section 6.9 shall restrict
the right of any Party to seek injunctive relief or other equitable remedies, to enjoin any breach
or threatened breach of this Agreement or otherwise specifically enforce any provision of this
Agreement.
6.10
Remedies
.
(a)
Injunctive Relief
. The Parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached and that such damages would not be fully
compensable by an award of money damages. It is accordingly agreed that the Parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement without posting a bond or other
undertaking, this being in addition to any other remedy to which they are entitled at law or in
equity. The parties agree that notwithstanding Section 6.9, any Action brought for an injunction,
or for specific performance shall be heard and exclusively in the Delaware Chancery Court sitting
in New Castle County and each Party waives any objection which it may now or hereafter have to the
laying of venue of any such proceeding, and irrevocably submits to the jurisdiction of such courts
in any such suit, action or proceeding.
(b)
Indemnification
. Seller represents and warrants to Buyer that, other than the
Non-US Rights to Intellectual Property, any Intellectual Property licensed by Seller to Buyer
hereunder (including without limitation any Excluded Asset Technology and Seller Next Generation
Delivery System Technology licensed by Seller to Buyer pursuant to Section 2.1(a)) is owned
directly by Columbia Laboratories, Inc., and has not been assigned or otherwise transferred to any
other Person. Seller shall indemnify, reimburse and defend Buyer and its Affiliates and each of
their respective Representatives, successors and assigns from and against, and hold them harmless
from, any Taxes (including without limitation any withholding Taxes) arising from any breach of the
foregoing representation and warranty.
6.11
Interpretation
. Unless the context of this Agreement otherwise requires, (a)
words of one gender include the other gender; and (b) words using the singular or plural number
also include the plural or singular number, respectively. Reference to days are to calendar days
unless specified otherwise. References to any statute, act, or regulation are to that statute,
act, or regulation as amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof. The headings contained in this Agreement are for convenience of
reference only and shall not be considered in interpreting this Agreement. The words hereof,
herein and hereunder and words of like import used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. Whenever the words
include, includes or including are used in this Agreement, they shall be deemed to be
followed by the words without limitation, whether or not they are in fact followed by those words
or words of like import. The language in all parts of this Agreement shall be construed, in all
cases, according to its fair meaning. The Parties acknowledge that each
Party and its counsel have reviewed and revised this Agreement and that any rule of
construction to the effect that any ambiguities are to be resolved against the drafting Party shall
not be employed in the interpretation of this Agreement.
6.12
Counterparts
. This Agreement may be executed in two or more counterparts
(including by facsimile or by an electronic scan delivered by electronic mail), each of which shall
be deemed to be an original, but all of which, taken together, shall constitute one and the same
agreement and shall become effective when counterparts have been signed by each of the Parties
hereto delivered to the other Parties, it being understood that all Parties need not sign the same
counterpart.
6.13
Further Actions
. Each Party will 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, as may be reasonably necessary or as the other Party may reasonably request in connection
with this Agreement in order to carry out more effectively the provisions and purposes hereof.
[
Remainder of Page Left Intentionally Blank
]
IN WITNESS WHEREOF
, the Parties hereto have caused this Agreement to be duly executed as of
the date first above written.
|
|
|
|
|
|
COLUMBIA LABORATORIES, INC.
|
|
|
By:
|
/s/ Frank C. Condella, Jr.
|
|
|
|
Name:
|
Frank C. Condella, Jr.
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
COLUMBIA LABORATORIES (BERMUDA) LTD.
|
|
|
By:
|
/s/ Michael McGrane
|
|
|
|
Name:
|
Michael McGrane
|
|
|
|
Title:
|
Vice President
|
|
|
|
COVENTRY ACQUISITION, INC.
|
|
|
By:
|
/s/ Paul M. Bisaro
|
|
|
|
Name:
|
Paul M. Bisaro
|
|
|
|
Title:
|
President and Chief
Executive Officer
|
|
|
Exhibit 99.3
UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
The following Unaudited Pro Forma Financial Statements give effect to (i) the transactions
(the Watson Transactions) contemplated under the Purchase and Collaboration Agreement (the
Purchase Agreement), dated March 3, 2010, by and among Columbia Laboratories, Inc. (Company),
Coventry Acquisition, Inc. (the Buyer) and Watson Pharmaceuticals, Inc. (Watson), (ii) the
issuance and forgiveness by Watson of that certain $15 million term loan pursuant to a Term Loan
Promissory Note, dated June 1, 2010 (the Watson Note), and (iii) the elimination of substantially
all of the Companys debt (the Debt Retirement) as a result of the satisfaction of the Companys
payment obligations owing to (a) PharmaBio Development, Inc. (PharmaBio) pursuant to the
Investment and Royalty Agreement, dated March 5, 2003, between the Company and PharmaBio, as
amended and supplemented from time to time (the PharmaBio Agreement), and (b) the holders of the
$40 million in outstanding principal amount of the Companys convertible subordinated notes due
December 31, 2011 (the Notes), pursuant to certain Note Purchase and Amendment Agreements (Note
Purchase Agreements) entered into with the holders of the Notes and are based upon the Companys
Unaudited Statements of Net Revenues and Direct Costs for U.S. Progesterone Products for the fiscal
year ended December 31, 2009 and the quarter ended March 31, 2010 and the related notes included in
the Companys Definitive Proxy Statement on Schedule 14A, dated June 1, 2010 and from the Companys
financial statements for the fiscal year ended December 31, 2009 and the quarter ended March 31,
2010 and the related notes, each included in the Companys filings on Form 10-K/A for the fiscal
year ended December 31, 2009, or Form 10-Q for the quarter ended March 31, 2010, respectively, and
certain estimates, adjustments and assumptions that the Companys management believes to be
reasonable. The Unaudited Pro Forma Consolidated Statements of Operations for the fiscal year
ended December 31, 2009 and the quarter ended March 31, 2010 are presented as if the Watson
Transactions and the Debt Retirement were completed as of January 1, 2009 and the Unaudited Pro
Forma Consolidated Balance Sheet as of March 31, 2010 is presented as if the Watson Transactions,
the issuance and forgiveness of the Watson Note, and the Debt Retirement were consummated at March
31, 2010.
The Unaudited Pro Forma Financial Statements include adjustments to reflect the effects of the
Watson Transactions and the issuance and forgiveness of the Watson Note. After the closing of the
Watson Transactions, the Company is no longer directly involved in the commercialization of
pharmaceutical products containing progesterone as an active ingredient, including CRINONE 8%
progesterone gel, PROCHIEVE 4% progesterone gel and PROCHIEVE 8% progesterone gel, each sold by the
Company in the United States (collectively, the Progesterone Products) and the Company is
primarily involved in the supplying of Progesterone Products to the Buyer and Ares Trading S.A., an
affiliate of Merck Serono S.A. (Merck Serono). The Unaudited Pro Forma Financial Statements also
include adjustments in respect of the effects of the Debt Retirement. The Unaudited Pro Forma
Financial Statements should be read in conjunction with the Companys Annual Report on Form 10-K/A
for the fiscal year ended December 31, 2009, the Companys Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010 and the Companys Definitive Proxy Statement on Schedule 14A, dated
June 1, 2010.
The Unaudited Pro Forma Financial Statements are based on the issuance of the $15 million
Watson Note, the transactions that occurred at the closings under the Purchase Agreement and the
Debt Retirement, including the sale by the Company of certain of its assets pursuant to the
Purchase Agreement (the Assets), its receipt of a $47,000,000 cash payment from the Buyer at the
closing of the transactions contemplated by the Purchase Agreement (Upfront Payment), the
issuance by the Company of 11,200,000 shares (Acquisition Shares) of the Companys common stock,
$.01 par value per share (Common Stock), to the Buyer pursuant to the Purchase Agreement, the
forgiveness of the $15,000,000 Watson Note, the payment by the Company to PharmaBio of $16,028,197
in cash (which represents the net present value of the Companys payment obligations under the
PharmaBio Agreement of $16,500,000 due in November 2010, discounted at a rate of 4.6% to March 31,
2010), and the payment by the Company of approximately $26,800,000 in cash (including accrued and
unpaid interest), and the issuance by the Company of warrants to purchase 7,750,000 shares of
Common Stock (the Warrants) and 7,407,407 shares of Common Stock under the Note Purchase
Agreements. The issuance and forgiveness of the Watson Note has not been broken out separately in
the Unaudited Pro Forma Financial Statements; instead the net effect of the issuance and
forgiveness of the Watson Note, results in $15,000,000 of deferred revenue. The Unaudited Pro
Forma Financial Statements do not give effect to the Companys receipt of any portion of the up to
$45,500,000 in contingent milestone payments that may be payable to it pursuant to the terms of the
Purchase Agreement. In addition, the Unaudited Pro Forma Financial Statements do not give effect
to any adjustments in respect of potential reductions in the Companys Research and Development or
General and Administrative expenses that may occur following the consummation of the Watson
Transactions.
Pro forma information is intended to provide investors with information about the continuing
impact of a transaction by showing how a specific transaction might have affected historical
financial statements, illustrating the scope of the change in the historical financial position and
results of operations. The adjustments made to historical financial information give effect to
events that are directly attributable to the Watson Transactions, the issuance and forgiveness of
the Watson Note and the Debt Retirement, factually supportable, and expected to have a continuing
impact. The Unaudited Pro Forma Financial Statements are prepared in accordance with Article 11 of
Regulation S-X.
The Unaudited Pro Forma Financial Statements set forth below are not fact and there can be no
assurance that the Companys actual results will not differ significantly from those set forth
below or that the impact of the Watson Transactions, the issuance and forgiveness of the Watson
Note and the Debt Retirement will not differ significantly from those presented below.
Accordingly, the Unaudited Pro Forma Financial Statements are presented for illustrative purposes
only and do not purport to represent, and are not necessarily indicative of, what the Companys
actual financial position and results of operations would have been had the Watson Transactions,
the issuance and forgiveness of the Watson Note and the Debt Retirement occurred on the dates
indicated, nor are they indicative of the Companys future financial position or results of
operations.
Unaudited Pro Forma Consolidated Statement of Operations
For the Quarter Ended March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended March 31, 2010
A
|
|
|
|
Historical
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
Columbia
|
|
|
Sale of U.S.
|
|
|
Pro Forma
|
|
|
|
|
|
|
Laboratories,
|
|
|
Progesterone
|
|
|
Adjustments
|
|
|
|
|
|
|
Inc.
|
|
|
Products (-) B
|
|
|
(+)
|
|
|
Pro Forma
|
|
NET REVENUES
|
|
$
|
7,172,899
|
|
|
$
|
4,356,251
|
|
|
$
|
798,484
|
C
|
|
$
|
3,615,132
|
|
|
COST OF REVENUES
|
|
|
1,176,579
|
|
|
|
329,872
|
|
|
|
329,872
|
D
|
|
|
1,176,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
5,996,320
|
|
|
|
4,026,379
|
|
|
|
468,612
|
|
|
|
2,438,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and distribution
|
|
|
3,250,319
|
|
|
|
3,250,319
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
4,126,318
|
|
|
|
|
|
|
|
(1,525,000)
|
E
|
|
|
2,601,318
|
|
Research and development
|
|
|
2,341,818
|
|
|
|
|
|
|
|
|
|
|
|
2,341,818
|
|
Amortization of licensing right
|
|
|
1,261,182
|
|
|
|
1,261,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
10,979,637
|
|
|
|
4,511,501
|
|
|
|
(1,525,000
|
)
|
|
|
4,943,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,983,317
|
)
|
|
|
(485,122
|
)
|
|
|
1,993,612
|
|
|
|
(2,504,583
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,620
|
|
|
|
|
|
|
|
|
|
|
|
1,620
|
|
Interest expense
|
|
|
(2,302,794
|
)
|
|
|
|
|
|
|
2,302,794
|
F
|
|
|
|
|
Change in fair value of derivative
|
|
|
(2,781,660
|
)
|
|
|
|
|
|
|
2,781,660
|
G
|
|
|
|
|
Other, net
|
|
|
(110,685
|
)
|
|
|
|
|
|
|
|
|
|
|
(110,685
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,193,519
|
)
|
|
|
|
|
|
|
5,084,454
|
|
|
|
(109,065
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before income tax
|
|
|
(10,176,836
|
)
|
|
|
(485,122
|
)
|
|
|
7,078,066
|
|
|
|
(2,613,648
|
)
|
State income tax benefits
|
|
|
(2,200
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(10,179,036
|
)
|
|
$
|
(485,122
|
)
|
|
|
7,078,006
|
|
|
|
(2,615,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER COMMON SHARE
BASIC AND DILUTED
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING
BASIC AND DILUTED
|
|
|
65,388,921
|
|
|
|
|
|
|
|
18,607,407
|
X, Y
|
|
|
83,996,328
|
X, Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2009
A
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
Historical
|
|
|
Sale of U.S.
|
|
|
Pro Forma
|
|
|
|
|
|
|
Columbia
|
|
|
Progesterone
|
|
|
Adjustments
|
|
|
|
|
|
|
Laboratories, Inc.
|
|
|
Products (-) B
|
|
|
(+)
|
|
|
Pro Forma
|
|
NET REVENUES
|
|
$
|
32,196,381
|
|
|
$
|
15,182,828
|
|
|
$
|
2,746,712
|
C
|
|
$
|
19,760,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES
|
|
|
9,194,538
|
|
|
|
1,116,754
|
|
|
|
1,116,754
|
D
|
|
|
9,194,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
23,001,843
|
|
|
|
14,066,074
|
|
|
|
1,629,958
|
|
|
|
10,565,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and distribution
|
|
|
11,982,229
|
|
|
|
11,982,229
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
10,559,298
|
|
|
|
|
|
|
|
|
|
|
|
10,559,298
|
|
Research and development
|
|
|
8,579,035
|
|
|
|
|
|
|
|
|
|
|
|
8,579,035
|
|
Amortization of licensing right
|
|
|
5,044,728
|
|
|
|
5,044,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
36,165,290
|
|
|
|
17,026,957
|
|
|
|
|
|
|
|
19,138,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(13,163,447
|
)
|
|
|
(2,960,883
|
)
|
|
|
1,629,958
|
|
|
|
(8,572,606
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
33,830
|
|
|
|
|
|
|
|
|
|
|
|
33,830
|
|
Interest expense
|
|
|
(8,851,253
|
)
|
|
|
|
|
|
|
8,848,828
|
F
|
|
|
(2,425
|
)
|
Other, net
|
|
|
(243,720
|
)
|
|
|
|
|
|
|
|
|
|
|
(243,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,061,143
|
)
|
|
|
|
|
|
|
8,848,828
|
|
|
|
(212,315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before income tax
|
|
|
(22,224,590
|
)
|
|
|
(2,960,883
|
)
|
|
|
10,478,786
|
|
|
|
(8,784,921
|
)
|
State income tax benefits
|
|
|
355,032
|
|
|
|
|
|
|
|
|
|
|
|
355,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(21,869,558
|
)
|
|
$
|
(2,960,883
|
)
|
|
|
10,478,786
|
|
|
|
(8,429,889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER COMMON SHARE
BASIC AND DILUTED
|
|
$
|
(0.39
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING
BASIC AND DILUTED
|
|
|
56,358,843
|
|
|
|
|
|
|
|
18,607,407
|
X, Y
|
|
|
74,966,250
|
X, Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2010
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Columbia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laboratories,
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Adjustments
|
|
|
|
|
|
|
Pro Forma
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents of which $9,220,493
is interest bearing
|
|
$
|
11,284,243
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Upfront Payment from Watson
|
|
|
|
|
|
|
47,000,000
|
|
|
|
H
|
|
|
|
|
|
Payment for Notes
|
|
|
|
|
|
|
(25,999,999
|
)
|
|
|
I
|
|
|
|
|
|
Payment for Notes accrued interest
|
|
|
|
|
|
|
(800,000
|
)
|
|
|
J
|
|
|
|
|
|
Payment for PharmaBio
|
|
|
|
|
|
|
(16,028,197
|
)
|
|
|
K
|
|
|
|
|
|
Payment for Series C preferred stock
|
|
|
|
|
|
|
(600,000
|
)
|
|
|
L
|
|
|
|
|
|
Transaction costs
|
|
|
|
|
|
|
(2,475,000
|
)
|
|
|
M
|
|
|
|
|
|
Sale of finished goods inventory to Watson
|
|
|
|
|
|
|
598,560
|
|
|
|
N
|
|
|
|
|
|
Watson Note
|
|
|
|
|
|
|
15,000,000
|
|
|
|
O
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
11,284,243
|
|
|
|
16,695,364
|
|
|
|
|
|
|
|
27,979,607
|
|
Accounts receivable, net of allowances for doubtful accounts of $100,000
|
|
|
3,297,668
|
|
|
|
|
|
|
|
|
|
|
|
3,297,668
|
|
Inventories
|
|
|
3,088,990
|
|
|
|
(598,560
|
)
|
|
|
N
|
|
|
|
2,490,430
|
|
Prepaid expenses and other current assets
|
|
|
1,009,323
|
|
|
|
|
|
|
|
|
|
|
|
1,009,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
18,680,224
|
|
|
|
16,096,804
|
|
|
|
|
|
|
|
34,777,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT
|
|
|
637,812
|
|
|
|
|
|
|
|
|
|
|
|
637,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS NET
|
|
|
17,509,150
|
|
|
|
(17,509,150
|
)
|
|
|
P
|
|
|
|
|
|
Deposits/long term investments
|
|
|
483,328
|
|
|
|
|
|
|
|
|
|
|
|
483,328
|
|
Deferred charges
|
|
|
950,696
|
|
|
|
(950,696
|
)
|
|
|
Q
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
1,434,024
|
|
|
|
(950,696
|
)
|
|
|
|
|
|
|
483,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
38,261,210
|
|
|
$
|
(2,363,042
|
)
|
|
|
|
|
|
$
|
35,898,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2010
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Columbia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laboratories,
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Adjustments
|
|
|
|
|
|
|
Pro Forma
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of financing agreements
|
|
$
|
58,563
|
|
|
$
|
(58,563
|
)
|
|
|
R
|
|
|
$
|
|
|
Accounts payable
|
|
|
2,805,472
|
|
|
|
|
|
|
|
|
|
|
|
2,805,472
|
|
Accrued expenses
|
|
|
5,512,142
|
|
|
|
(800,000
|
)
|
|
|
J
|
|
|
|
4,712,142
|
|
Derivative embedded within convertible notes, fair value
|
|
|
2,781,660
|
|
|
|
(2,781,660
|
)
|
|
|
G
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
11,157,837
|
|
|
|
(3,640,223
|
)
|
|
|
|
|
|
|
7,517,614
|
|
NOTES PAYABLE
|
|
|
33,749,209
|
|
|
|
(33,749,209
|
)
|
|
|
S
|
|
|
|
|
|
DEFERRED REVENUE
|
|
|
312,181
|
|
|
|
15,000,000
|
|
|
|
O
|
|
|
|
32,819,031
|
|
|
|
|
|
|
|
|
17,506,850
|
|
|
|
T
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM PORTION OF
FINANCING AGREEMENTS
|
|
|
15,867,735
|
|
|
|
(15,867,735
|
)
|
|
|
U
|
|
|
|
|
|
REDEEMABLE WARRANTS
|
|
|
|
|
|
|
2,456,798
|
|
|
|
V
|
|
|
|
2,456,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
61,086,962
|
|
|
|
(18,293,519
|
)
|
|
|
|
|
|
|
42,793,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingently redeemable series C preferred stock, 600 shares issued and outstanding in 2009 (liquidation preference of $600,000)
|
|
|
600,000
|
|
|
|
(600,000
|
)
|
|
|
L
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY (DEFICIENCY):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; 1,000,000 shares authorized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B convertible preferred stock, 130 shares issued and outstanding (liquidation preference
of $13,000)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Series E convertible preferred stock 59,000 shares issued and outstanding (liquidation preference
of $5,900,000)
|
|
|
590
|
|
|
|
|
|
|
|
|
|
|
|
590
|
|
Common Stock $.01 par value; 100,000,000 shares authorized; 65,761,986 shares issued
(footnotes W, X and Y)
|
|
|
657,619
|
|
|
|
186,074
|
|
|
|
X, Y
|
|
|
|
843,693
|
|
Capital in excess of par value
|
|
|
243,191,797
|
|
|
|
19,723,851
|
|
|
|
X, Y
|
|
|
|
264,916,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,777
|
|
|
AA
|
|
|
|
|
Less cost of 152,795 treasury shares
|
|
|
(306,369
|
)
|
|
|
|
|
|
|
|
|
|
|
(306,369
|
)
|
Accumulated deficit
|
|
|
(267,158,299
|
)
|
|
|
(904,448
|
)
|
|
|
Z
|
|
|
|
(272,538,524
|
)
|
|
|
|
|
|
|
|
(2,000,777
|
)
|
|
AA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,475,000
|
)
|
|
|
M
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
188,909
|
|
|
|
|
|
|
|
|
|
|
|
188,909
|
|
Stockholders equity (deficiency)
|
|
|
(23,425,752
|
)
|
|
|
16,530,477
|
|
|
|
|
|
|
|
(6,895,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)
|
|
$
|
38,261,210
|
|
|
$
|
(2,363,042
|
)
|
|
|
|
|
|
$
|
35,898,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
Description of Transaction and Basis of Presentation
The historical information in the Unaudited Pro Forma Financial Statements is derived from the
Companys Unaudited Statements of Net Revenues and Direct Costs for U.S. Progesterone Products for
the fiscal year ended December 31, 2009 and the quarter ended March 31, 2010 and the related notes
included in the Companys Definitive Proxy Statement on Schedule 14A, dated June 1, 2010 and from
the Companys financial statements for the fiscal year ended December 31, 2009 and the unaudited
financial statements for the quarter ended March 31, 2010 and the related notes, each as included
in the Companys filings on Form 10-K/A for the fiscal year ended December 31, 2009, or Form 10-Q
for the quarter ended March 31, 2010, respectively. The Unaudited Pro Forma Financial Statements
as of and for the year ended at December 31, 2009 and the quarter ended March 31, 2010 are
presented to illustrate the estimated effects of the Watson Transactions, the issuance and
forgiveness of the Watson Note and the Debt Retirement on the Company had those transactions
occurred on January 1, 2009 for purposes of the Unaudited Pro Forma Consolidated Statements of
Operations and at March 31, 2010 for purposes of the Unaudited Pro Forma Consolidated Balance Sheet
including but not limited to the following:
|
|
|
The Company is, after the closing under the Purchase Agreement, no
longer directly involved in the commercialization of Progesterone Products and
is primarily in the business of supplying Progesterone Products to the Buyer
and Merck Serono;
|
|
|
|
|
The Debt Retirement, including the payment by the Company to PharmaBio
of $16,028,197 in cash (which represents the net present value of the Companys
payment obligations under the PharmaBio Agreement of $16,500,000 due in
November 2010, discounted at a rate of 4.6% to March 31, 2010), and payment by
the Company of approximately $26,800,000 in cash (including accrued and unpaid
interest), and the issuance by the Company of the Warrants to purchase
7,750,000 shares of Common Stock and the 7,407,407 shares of Common Stock
issuable under the Note Purchase Agreements;
|
|
|
|
|
The sale by the Company of the Assets, receipt of the $47,000,000
Upfront Payment from the Buyer and the issuance of the 11,200,000 Acquisition
Shares to the Buyer pursuant to the Purchase Agreement;
|
|
|
|
|
The issuance of the Watson Note pursuant to which Watson loaned the
Company $15,000,000 and the forgiveness of such amount upon the closing of the
Watson Transactions; and
|
|
|
|
|
Each of the other Pro Forma Adjustments described in the notes below.
|
The Unaudited Pro Forma Financial Statements do not give effect to the Companys receipt of
any portion of the up to $45,500,000 in contingent milestone payments that may be payable to the
Company pursuant to the terms of the Purchase Agreement. In addition, the Unaudited Pro Forma
Financial Statements do not give effect to any adjustments in respect of potential reductions in
the Companys research and development or general and administrative expenses that may occur
following the consummation of the Watson Transactions.
Allocation of $47,000,000 Upfront Payment
|
|
|
|
|
Upfront Payment from the Buyer
|
|
$
|
47,000,000
|
|
Acquisition Shares
|
|
|
(11,984,000
|
)
|
Write-off of Net Book Value of Intangible Assets to be
sold pursuant to the Purchase Agreement
|
|
|
(17,509,150
|
)
|
|
|
|
|
Net Proceeds (Deferred Revenue)
|
|
$
|
17,506,850
|
|
Pro Forma Adjustments
Pro forma information is intended to reflect the impact of the Watson Transactions, the
issuance and forgiveness of the Watson Note and the Debt Retirement on the Companys historical
financial position and results of operations through adjustments that are directly attributable to
the Watson Transactions, the issuance and forgiveness of the Watson Note and the Debt Retirement,
factually supportable and expected to have a continuing impact. These Unaudited Pro Forma
Financial Statements reflect the adjustments that, in the opinion of the Companys management, are
necessary to present fairly the pro forma results of operations and financial position set forth
above.
A.
|
|
The pro forma information is presented on the basis that the Watson Transactions, the
issuance and forgiveness of the Watson Note and the Debt Retirement had occurred (x) as of
January 1, 2009 for the Unaudited Pro Forma Consolidated Statements of Operations for the year
ended as of December 31, 2009 and the quarter ended March 31, 2010, and (y) at March 31, 2010
for the Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2010, including that as
of such dates the Company transferred the Assets to the Buyer, received the $47,000,000 cash
Upfront Payment from the Buyer, received the $15,000,000 proceeds of the Watson Note and the
Watson Note was forgiven, issued the 11,200,000 Acquisition Shares to the Buyer, paid to
PharmaBio $16,028,197 in cash (which represents the net present value of the Companys payment
obligations under the PharmaBio Agreement (as amended by the PharmaBio Amendment) of
$16,500,000 due in November 2010, discounted at a rate of 4.6% to March 31, 2010), paid
approximately $26,800,000 in cash (including accrued and unpaid interest) and issued the
Warrants to purchase 7,750,000 shares of Common Stock and the 7,407,407 shares of Common Stock
under the Note Purchase Agreements, and that the Company will no longer be directly involved
in the commercialization of the Progesterone Products and will be primarily be involved in the
supplying of Progesterone Products to the Buyer and Merck Serono. The unaudited pro forma
information does not give effect to the Companys receipt of any portion of the up to
$45,500,000 in contingent milestone payments that may be payable to the Company pursuant to
the Purchase Agreement. In addition, the Unaudited Pro Forma Financial Statements do not give
effect to any adjustments in respect of potential reductions in the Companys research and
development or general and administrative
|
expenses that may occur following the consummation of the Watson Transaction. These
Unaudited Pro Forma Financial Statements reflect all adjustments that, in the opinion of the
Companys management, are necessary to present fairly the pro forma results of operations
and financial position presented herein.
B.
|
|
Represents the unaudited net revenues and direct expenses for the U.S. Progesterone Products
for the year ended December 31, 2009 and the quarter ended March 31, 2010.
|
C.
|
|
Represents the Net Sales (as defined below) that the Company would have made to the Buyer
under the Supply Agreement entered into by the Company and the Buyer on July 2, 2010 (the
Supply Agreement) and royalties that the Company would have received under the Purchase
Agreement had all Progesterone Products sold by the Company in the U.S. during the fiscal year
ended December 31, 2009 and the quarter ended March 31, 2010 been manufactured by the Company
and sold to the Buyer under the Supply Agreement during 2009 and the first quarter of 2010,
respectively (at the pricing set forth in the Supply Agreement), and then sold during 2009 and
the first quarter of 2010, respectively, by the Buyer to its customers at the prices that the
Company sold Progesterone Products to the Companys customers during the relevant period.
|
|
|
Net Sales means, with respect to sales of a Progesterone Product by the Buyer and its
affiliates and/or licensees, sublicensees, distributors or other agents, the amount of gross
sales (in dollars or other currencies) for such Progesterone Product, reduced by the sum of
the following items relating to such sales that are actually given to or taken by, as
applicable, the Buyer, and its affiliates and/or licensees, sublicensees, distributors or
other agents, to the extent such deductions are accrued and recognized under and in
accordance with United States generally accepted accounting principles (or other
internationally recognized accounting standard in use by the Buyer):
|
|
|
|
trade, quantity and cash discounts;
|
|
|
|
|
adjustments for price adjustments, billing errors, rejected goods, returns,
product recalls and damaged goods (excluding goods damaged while under the control of
the Buyer or its affiliates or their respective licensees, sub-licensees, or
distributors);
|
|
|
|
|
credits, charge-backs, reimbursements, and similar payments provided to
wholesalers and other distributors, buying groups, health care insurance carriers,
pharmacy benefit management companies, health maintenance organizations, other
institutions or health care organizations or other customers;
|
|
|
|
|
rebates or other price reductions provided to any regulatory authority with
respect to any state or federal Medicare, Medicaid or similar programs;
|
|
|
|
|
any invoiced charge for freight, insurance, handling or other transportation
costs directly related to delivery of the Progesterone Products;
|
|
|
|
|
distributor fees per contract based solely as a percentage of gross sales; and
|
|
|
|
taxes that are in the nature of tariffs, duties, excise, sales, use or
value-added taxes;
|
|
|
provided
,
however
, that the foregoing deductions shall only be deducted once and only to the
extent not otherwise deducted from gross sales.
|
D.
|
|
Represents cost of revenues that the Company would have incurred had all Progesterone
Products sold by it in the United States during the fiscal year ended December 31, 2009 and
the quarter ended March 31, 2010, respectively, been manufactured by the Company and sold to
the Buyer under the Supply Agreement during 2009 and the first quarter of 2010, respectively.
|
E.
|
|
Represents the reversal of the costs directly related to the Watson Transactions and the Debt
Retirement incurred during the quarter ended March 31, 2010.
|
F.
|
|
Represents interest expense on the Notes and obligations owing to PharmaBio under the
PharmaBio Agreement as if the Debt Retirement had occurred on January 1, 2009.
|
G.
|
|
Represents the reversal of the non-cash charge for the embedded derivative related to the
Notes which was booked during the first quarter of 2010 as it is a non-recurring charge
directly related to the Watson Transaction and Debt Retirement that has no continuing impact.
|
H.
|
|
Represents the $47,000,000 Upfront Payment in cash that would be received by the Company from
the Buyer under the Purchase Agreement.
|
I.
|
|
Represents the approximately $26,000,000 cash payment (excluding the payment relating to
accrued and unpaid interest) that would be made by the Company to the Note holders at the
closings under the Note Purchase Agreements.
|
J.
|
|
Represents the approximately $800,000 of accrued and unpaid interest on the Notes that would
be paid by the Company at the closings under the Note Purchase Agreements.
|
K.
|
|
Represents the $16,028,197 in cash (which is the net present value of the Companys payment
obligations under the PharmaBio Agreement (as amended by the PharmaBio Amendment) of
$16,500,000 due in November 2010, discounted at a rate of 4.6% to March 31, 2010).
|
L.
|
|
Assumes that all holders of the Companys Series C Preferred Stock had exercised their
rights, resulting from the sale of the Assets pursuant to the Purchase Agreement, to have
their shares of Series C Preferred Stock redeemed by the Company as of March 31, 2010 and that
the Company had redeemed such shares on such date.
|
M.
|
|
Reflects the remaining estimated transaction related costs and expenses unpaid at March 31,
2010, which include fees and expenses relating to legal services, accounting services,
investment advisory fees, fairness opinion fees and proxy statement printing and distribution.
Total transaction costs are estimated to be $4,000,000.
|
N.
|
|
Represents the finished goods inventory of Progesterone Products to be sold by the Company to
the Buyer at the closing of the Watson Transactions pursuant to the Supply Agreement.
|
O.
|
|
Reflects the cash proceeds and the forgiveness of the $15,000,000 Watson Note.
|
P.
|
|
Reflects the write-off of net book value of intangible assets that would be sold by the
Company pursuant to the Purchase Agreement.
|
Q.
|
|
Reflects the write-off of deferred charges related to financing costs for the Notes and
obligations owing to PharmaBio under the PharmaBio Agreement.
|
R.
|
|
Represents payment of the current portion of the Companys obligations owing to PharmaBio
under the PharmaBio Agreement.
|
S.
|
|
Represents the settlement of the Notes which is $39,999,998, less the unamortized discount
related to the relative fair market value of the warrants issued by the Company in connection
with the sale of the Notes and the beneficial conversion feature.
|
T.
|
|
Reflects deferred revenue from the $47,000,000 Upfront Payment that would be received by the
Company from the Buyer under the Purchase Agreement less the value of the 11,200,000
Acquisition Shares as determined by the closing price of the Common Stock on March 31, 2010,
and the write off of the net book value of intangible assets described in Note P.
|
U.
|
|
Represents the payment of the unpaid portion of the $30 million minimum royalty obligation
payable under the PharmaBio Agreement (without giving effect to the amendment to the PharmaBio
Agreement on March 3, 2010), net of unamortized imputed interest and the value of certain
warrants issued to PharmaBio.
|
V.
|
|
Represents the fair market of the Companys contingent obligation as of March 31, 2010 under
the Note Purchase Agreements to purchase the Warrants for an aggregate purchase price of
$3,999,996 under certain circumstances.
|
W.
|
|
Assumes that, as of March 31, 2010, the Company had amended its Restated Certificate of
Incorporation, as amended, to increase the number of the Companys authorized shares of Common
Stock from 100,000,000 to 150,000,000.
|
X.
|
|
Assumes that the Company had issued the 11,200,000 Acquisition Shares to the Buyer as of
January 1, 2009 at a price of $1.07 per share (which was the closing price of the Companys
Common Stock on March 31, 2010).
|
Y.
|
|
Assumes that the Company had issued the 7,407,407 shares of Common Stock under the Note
Purchase Agreements as of January 1, 2009 at a price of $1.07 (which was the closing price of
the Companys Common Stock on March 31, 2010).
|
Z.
|
|
Represents unamortized expense for options and restricted shares issued under the Companys
1996 Long-Term Performance Plan or the Companys 2008 Long-Term
|
|
|
Incentive Plan that would vest and/or become exercisable upon consummation and
as a result of the sale of the Assets pursuant to the Purchase Agreement.
|
|
AA.
|
|
Represents net loss on extinguishment of debt as of
March 31, 2010, less the value of the embedded
derivative related to the Notes.
|