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): May 21, 2022
Kala Pharmaceuticals, Inc.
(Exact Name of Company as Specified in its Charter)
Delaware | 001-38150 | 27-0604595 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1167 Massachusetts Avenue
Arlington, MA 02476
(Address of Principal Executive Offices) (Zip Code)
Company’s telephone number, including area code: (781) 996-5252
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):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.001 par value per share | KALA | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On May 21, 2022, Kala Pharmaceuticals, Inc., a Delaware corporation (the “Company”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Alcon Pharmaceuticals Ltd., a Swiss limited company, and Alcon Vision, LLC, a Delaware limited liability company (together, the “Buyers”), pursuant to which, subject to the satisfaction or waiver of certain conditions, the Buyers agreed to (1) purchase (a) the Company’s rights to (i) manufacture, sell, distribute, market and commercialize EYSUVIS® (loteprednol etabonate ophthalmic suspension) 0.25% and INVELTYS® (loteprednol etabonate ophthalmic suspension) 1% and (ii) develop, manufacture, market and otherwise exploit its proprietary AMPPLIFY® Drug Delivery Technology, which, among other applications, is incorporated into EYSUVIS and INVELTYS and (b) certain assets used by the Company in connection with the foregoing (collectively, the “Commercial Business”) and (2) assume certain liabilities with respect to the Commercial Business (the “Transaction”).
Under the terms of the Asset Purchase Agreement, the Buyers have agreed to pay to the Company an upfront cash payment of $60.0 million upon the closing of the Transaction. In addition, pursuant to the Asset Purchase Agreement, the Company is eligible to receive from the Buyers up to four commercial-based sales milestone payments as follows: (1) $25.0 million upon the achievement of $50.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (2) $65.0 million upon the achievement of $100.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (3) $75.0 million upon the achievement of $175.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029 and (4) $160.0 million upon the achievement of $250.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029. Each milestone payment will only become payable once, if at all, upon the first time such milestone is achieved, and only one milestone payment will be paid with respect to a calendar year. In the event that more than one milestone is achieved in a calendar year, the higher milestone payment will become payable and the lower milestone payment will become payable only if the corresponding milestone is achieved again in a subsequent calendar year.
The closing of the Transaction is subject to (1) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (2) the release of specified liens on the assets of the Commercial Business, (3) the receipt of specified third-party consents and (4) other customary conditions.
The Asset Purchase Agreement further provides that the Company and the Buyers will indemnify each other for losses arising from certain breaches of the Asset Purchase Agreement, including breaches of certain representations and warranties, and for certain other matters and subject to certain limitations as more fully described in the Asset Purchase Agreement.
The Asset Purchase Agreement also contains customary representations and warranties. The assertions embodied in those representations and warranties were made solely for purposes of the Asset Purchase Agreement and may be subject to important qualifications and limitations. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders or may have been used for the purpose of allocating risk between the Company and the Buyers rather than establishing matters as facts. For the foregoing reasons, no person should rely on such representations and warranties as statements of factual information at the time they were made or otherwise.
The Company has agreed not to encourage, solicit, initiate or facilitate, enter into any discussions or negotiations, or provide any information, or enter into any agreement, in each case, with respect to any alternative proposal relating to the disposition of the Commercial Business.
Pursuant to the Asset Purchase Agreement, the Company has agreed to enter into supply and commercial agreements at the closing of the Transaction under which the Company will agree to supply EYSUVIS and INVELTYS to the Buyers and their affiliates and distribute EYSUVIS and INVELTYS to third party customers of the Commercial Business on behalf of the Buyers and their affiliates for a period of six months following the closing of the Transaction, subject to early termination. In addition, the Company has agreed to enter into a transition services agreement under which the Company has agreed to provide agreed upon transition services to the Buyers on a cost-plus pricing arrangement for up to six months following the closing of the Transaction.
The description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
Amendment to Loan and Security Agreement
On May 21, 2022, in connection with its entry into the Asset Purchase Agreement, the Company entered into an amendment (the “Loan Amendment”) with Oxford Finance LLC to the Loan and Security Agreement, dated May 4, 2021 (the “Loan Agreement”), by and among the Company, Combangio, Inc. and Oxford Finance LLC, in its capacity as lender (in such capacity, the “Lender”), and in its capacity as collateral agent (in such capacity, the “Agent”). Pursuant to the Loan Amendment, the Lender and Agent consented to the entry by the Company into the Asset Purchase Agreement and the sale of the Commercial Business to the Buyers and agreed to release its liens on the Commercial Business in consideration for the payment by the Company at the closing of the Transaction of an aggregate amount of $40,000,000 (the “Prepayment”) to the Lender and Agent, representing a partial prepayment of principal in the amount of $36,697.247.71 of the $80,000,000 principal amount outstanding under the term loan advanced by the Lender under the Loan Agreement, plus a prepayment fee and a final payment fee. In addition, the Company will be required to pay all accrued and unpaid interest on the principal amount of the term loan being repaid.
In addition, under the Loan Amendment, the Lender and Agent agreed that, subject to the closing of the Transaction and the Prepayment, the start date for amortization payments would be extended from December 1, 2024 to January 1, 2026, at which time the aggregate principal balance of the term loan then outstanding under the Loan Agreement is required to be repaid in five monthly installments. Pursuant to the Loan Amendment, the Company may also make partial prepayments of the term loan to the Lender, subject to specified conditions, including the payment of applicable fees and accrued and unpaid interest on the principal amount of the term loan being repaid.
The description of the Loan Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Amendment, a copy of which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2022.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information under the heading “Amendment to Loan and Security Agreement” contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
2.1* | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
Forward-looking Statements
This Current Report on Form 8-K contains forward-looking statements that involve substantial risks and uncertainties. Any statements in this Current Report on Form 8-K about our future expectations, plans and prospects, including but not limited to statements about the Transaction and the other transactions contemplated by the Transaction, the prepayment of amounts outstanding under the Loan Agreement and any other statements about future expectations, prospects, estimates and other matters that are dependent upon future events or developments, including statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “likely,” “will,” “would,” “could,” “should,” “continue,” and similar expressions constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our ability to realize the anticipated benefits of the Transaction, the occurrence of any event, change or other circumstance that could give rise to the termination of the Asset Purchase Agreement, the risks associated with the disruption of management’s attention from ongoing business operations due to the Transaction, negative effects of the announcement of the Transaction on the market price of our common stock, significant transaction costs, the risk of litigation and/or regulatory actions related to the Transaction, whether commercial sales-based milestones are achieved, our ability to retain and hire key personnel, the risk that disruption resulting from the Transaction may adversely affect our business,
the sufficiency of our cash resources and need for additional financing and such other important factors as are set forth under the caption “Risk Factors” in our annual and quarterly reports and any other filings on file with the U.S. Securities and Exchange Commission. In addition, the forward-looking statements included in this Current Report on Form 8-K represent our views as of the date of this Current Report on Form 8-K. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KALA PHARMACEUTICALS, INC. | |
|
|
|
Date: May 23, 2022 | By: | /s/ Mary Reumuth |
|
| Name: Mary Reumuth |
|
| Title: Chief Financial Officer |
Exhibit 2.1
Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential. Double asterisks denote omissions.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
KALA PHARMACEUTICALS, INC.,
ALCON PHARMACEUTICALS LTD.
AND
ALCON VISION, LLC
May 21, 2022
TABLE OF CONTENTS
- ii -
- iii -
- iv -
Disclosure Schedule
Schedule 1.1(a)(i)(A)–Inventory
Schedule 1.1(a)(i)(C)–Assigned Contracts
Schedule 1.1(a)(i)(D)–Prepayments
Schedule 1.1(a)(ii)–Acquired Equipment
Schedule 1.1(a)(v)–Other Acquired Assets
Schedule 1.1(b)(i)–Certain Excluded Assets
Schedule 1.1(c)–Assumed Liabilities
Schedule 1.1 (d)–Excluded Liabilities
Schedule 1.2(c)–Allocation Principles
Schedule 4.3–Operation of Business
Schedule 4.4–Access
Schedule 5.1(f)–Applicable Foreign Antitrust and Trade Regulation Law
Schedule 8.5(b)–Seller Non-Solicitation Parties
Exhibits
Exhibit AForm of Bill of Sale and Assumption Agreement
Exhibit BForm of Patent Assignment
Exhibit CForm of Trademark Assignment
Exhibit DForm of Commercial Agreement
Exhibit EForm of Domain Name Assignment
Exhibit FForm of Supply Agreement
Exhibit GForm of Transition Services Agreement
Exhibit HR&W Insurance Policy
Exhibit IForm of Seller Closing Certificate
Exhibit JForm of Buyer Closing Certificate
Annexes
Annex 1Buyer Willful Breach Knowledge Parties
Annex 2Drug Substance
Annex 3Product INDs and NDAs
Annex 4Seller Knowledge Parties
- v -
TABLE OF DEFINED TERMS
Defined Term | Section |
|---|---|
| |
1060 Forms | Section 1.2(c) |
Acquired Assets | Section 1.1(a) |
Acquired Equipment | Section 9.1 |
Acquisition Proposal | Section 4.6(a) |
Action | Section 9.1 |
Affiliate | Section 9.1 |
Agreement | Preliminary Statement |
Alcon Swiss | Preliminary Statement |
Alcon Vision | Preliminary Statement |
Allocation Schedule | Section 1.2(c) |
AMPPLIFY® Drug Delivery Technology | Section 9.1 |
Annual Net Sales | Section 1.6(a) |
Anti-Corruption Laws | Section 9.1 |
Antitrust Laws | Section 9.1 |
Antitrust Order | Section 9.1 |
Assigned Contracts | Section 1.1(a)(i)(C) |
Assumed Liabilities | Section 1.1(c) |
Audited Financial Statements | Section 9.1 |
Auditor | Section 1.6(c)(ii) |
Bill of Sale and Assumption Agreement | Section 1.3(b)(iii) |
Books and Records | Section 1.1(a)(i)(E) |
Business | Introduction |
Business Benefit Plans | Section 9.1 |
Business Day | Section 9.1 |
Business IP | Section 9.1 |
Business Material Adverse Effect | Section 9.1 |
Buyer | Preliminary Statement |
Buyer Closing Certificate | Section 5.2(c) |
Buyer FDA Letters | Section 8.2 |
Buyer Indemnitees | Section 6.2 |
Buyer Material Adverse Effect | Section 3.3(b) |
Buyer Willful Breach | Section 9.1 |
Buyer’s Accounting Standards | Section 9.1 |
Calendar Quarter | Section 9.1 |
Calendar Year | Section 9.1 |
Cap | Section 6.4(a) |
Closing | Section 1.3(a) |
Closing Date | Section 1.3(a) |
Closing Payment | Section 1.2(b) |
Code | Section 1.2(c) |
Commercial Agreement | Section 1.3(b)(vii) |
- vi -
Defined Term | Section |
|---|---|
| |
Commercial Information | Section 9.1 |
Confidentiality Agreement | Section 4.4 |
Contracts | Section 9.1 |
COVID-19 Measures | Section 9.1 |
COVID-19 Responses | Section 9.1 |
Designated Contracts | Section 2.11 |
Device Combination Product | Section 9.1 |
Direct Claim | Section 6.5(c) |
Disclosing Party | Section 8.1(e) |
Disclosure Schedule | ARTICLE II |
Domain Name Assignment | Section 1.3(b)(viii) |
Drug Combination Product | Section 9.1 |
Drug Substance | Section 9.1 |
Environmental Claim | Section 9.1 |
Environmental Law | Section 9.1 |
Environmental Notice | Section 9.1 |
Environmental Permit | Section 9.1 |
ERISA | Section 9.1 |
ERISA Affiliate | Section 9.1 |
Excluded Asset | Section 1.1(b) |
Excluded Contracts | Section 1.1(b)(viii) |
Excluded Liabilities | Section 1.1(d) |
FDA | Section 2.18(a) |
FDCA | Section 2.18(a) |
Federal Health Care Program | Section 9.1 |
Final Allocation | Section 1.2(c) |
Financial Information | Section 2.5 |
Fundamental Representations | Section 6.1 |
GAAP | Section 9.1 |
Good Clinical Practice (GCP) | Section 9.1 |
Good Laboratory Practice (GLP) | Section 9.1 |
Good Manufacturing Practice (GMP) | Section 9.1 |
Governmental Entity | Section 9.1 |
Hart-Scott-Rodino Act | Section 2.4 |
Hazardous Substance | Section 9.1 |
IND | Section 9.1 |
Indemnifiable Amount | Section 6.6(a) |
Indemnified Party | Section 6.5 |
Indemnifying Party | Section 6.5 |
Information | Section 8.1(a) |
In-Licensed IP | Section 9.1 |
In-Licensed Patent | Section 9.1 |
Intellectual Property | Section 9.1 |
- vii -
Defined Term | Section |
|---|---|
| |
Inventory | Section 1.1(a)(i)(A) |
IRS | Section 9.1 |
Know-How | Section 9.1 |
Law | Section 9.1 |
Liabilities | Section 9.1 |
Lien | Section 9.1 |
Losses | Section 9.1 |
Manufacturing & Supply Agreements | Section 1.5(b) |
Material Suppliers | Section 2.19 |
Medical Information | Section 9.1 |
Milestone Event | Section 1.6(a) |
Milestone Payment | Section 1.6(a) |
Names and Marks | Section 9.1 |
NDA | Section 9.1 |
NDA Data | Section 9.1 |
NDA Transfer Date | Section 9.1 |
Net Sales | Section 9.1 |
Noncompetition Person | Section 8.4 |
Oxford Loan Release | Section 4.9 |
Party, Parties | Preliminary Statement |
Patent Assignment | Section 1.3(b)(iv) |
Patent Challenge | Section 8.3 |
Permits | Section 2.18(b) |
Permitted Liens | Section 9.1 |
Person | Section 9.1 |
Pre-Closing Period | Section 4.1(a) |
Pre-Closing Tax Period | Section 9.1 |
Product Exploit | Section 9.1 |
Product INDs | Section 9.1 |
Product Line Sale | Section 9.1 |
Product NDAs | Section 9.1 |
Products | Section 9.1 |
Purchase Price | Section 1.2(a) |
Quality System Regulation (QSR) | Section 9.1 |
Receiving Party | Section 8.1(e) |
Regulatory Laws | Section 9.1 |
Retained Marks | Section 5.2(a) |
Release | Section 9.1 |
Representatives | Section 9.1 |
Restricted Business | Section 9.1 |
R&W Insurance Policy | Section 9.1 |
Seller | Preliminary Statement |
Seller Closing Certificate | Section 9.1 |
- viii -
Defined Term | Section |
|---|---|
| |
Seller FDA Letter | Section 8.2 |
Seller Indemnitees | Section 9.1 |
Seller’s Knowledge | Section 9.1 |
Seller Willful Breach | Section 9.1 |
Selling Parties | Section 9.1 |
SSA | Section 9.1 |
Solvent | Section 9.1 |
Straddle Period | Section 9.1 |
Supply Agreement | Section 1.3(b)(ix) |
Tax Returns | Section 9.1 |
Tax Sharing Agreement | Section 2.8(k) |
Taxes | Section 9.1 |
Territory | Section 9.1 |
Third Party | Section 9.1 |
Third Party Claim | Section 6.5(a) |
Threshold | Section 6.4(a) |
Total Cash Consideration | Section 9.1 |
Trademark Assignment | Section 1.3(b)(v) |
Transaction Documents | Section 9.1 |
Transfer Taxes | Section 8.9(b) |
Transferred Domain Names | Section 9.1 |
Transferred IP | Section 9.1 |
Transferred Know-How | Section 9.1 |
Transferred Patents | Section 9.1 |
Transferred Trademarks | Section 9.1 |
Transition Services Agreement | Section 1.3(b)(x) |
Treasury Regulations | Section 9.1 |
- ix -
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into as of May 21, 2022 by and between Kala Pharmaceuticals, Inc., a Delaware corporation (“Seller”), Alcon Pharmaceuticals Ltd, a Swiss limited company (“Alcon Swiss’) and Alcon Vision, LLC, a Delaware limited liability company (“Alcon Vision” and, together with Alcon Swiss, collectively, “Buyer”). Seller and Buyer are sometimes referred to herein individually as a “Party” and together as the “Parties.”
INTRODUCTION
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
- 1 -
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
At the Closing (except in the case of clause (vi) which shall occur at the NDA Transfer Date and clause (viii) which shall occur in the time and manner set forth in the Transition Services Agreement):
- 7 -
- 8 -
Annual Net Sales (U.S. Dollars) | Milestone Payment (U.S. Dollars) | Applicable Period |
|---|---|---|
$50,000,000 | $25,000,000 | 2023-2028 |
$100,000,000 | $65,000,000 | 2023-2028 |
- 9 -
Annual Net Sales (U.S. Dollars) | Milestone Payment (U.S. Dollars) | Applicable Period |
|---|---|---|
$175,000,000 | $75,000,000 | 2023-2029 |
$250,000,000 | $160,000,000 | 2023-2029 |
- 10 -
- 11 -
Seller represents and warrants to Buyer that, except as set forth in the disclosure schedule provided by Seller to Buyer (the “Disclosure Schedule”) pursuant to Section 8.6, the following representation and warranties are true and correct:
- 12 -
similar Laws relating to or affecting the rights of creditors generally and by equitable relief and other equitable remedies and those providing for equitable defenses.
- 13 -
Business for the year ended December 31, 2021 and (viii) accounts receivable aging report of the Business for the year ended December 31, 2021.
- 14 -
- 15 -
- 16 -
- 17 -
- 18 -
provided, however, that (A) no Contract referred to in any of clauses (i) through (xiii) above need be disclosed unless Seller currently has, or may in the future have, any material rights or obligations thereunder and (B) no agreement solely providing a license or other right to use any generally commercially available, off-the-shelf software program (or software as a service) is required to be disclosed in response to any provision of this Section 2.11.
- 19 -
- 20 -
- 21 -
except for any violation or default that would not reasonably be expected to be material to the Business taken as a whole.
- 22 -
- 23 -
material respects with all applicable Laws relating to such supplier’s relationship with Seller or its controlled Affiliates in connection with the Products and (b) there are no regulatory actions threatened in writing against such supplier, except to the extent not material, individually or in the aggregate, to the Products, the Acquired Assets, the Business or the Product Exploitation.
- 24 -
- 25 -
Buyer represents and warrants to Seller the statements made in this ARTICLE III are true and correct.
- 26 -
- 27 -
- 28 -
During the Pre-Closing Period, each Party shall (1) cooperate with the other in connection with the making of all filings required under any applicable Law in connection with the transactions contemplated hereby, including providing the other Party (or its Representatives) with the opportunity to review in advance copies of all such documents to the non-filing Party and its advisors prior to filing and, considering in good faith any reasonable additions, deletions or changes suggested in connection therewith and (2) furnish to the other, or its representatives, all information required for any application or other filing to be made pursuant to any applicable Law in connection with the transactions contemplated by this Agreement. For the avoidance of doubt, nothing contained in this Section 4.1(a) shall modify or affect the rights and responsibilities of either Party under Section 4.1(b) or modify or affect Buyer’s obligations under Section 4.1(c) or Section 4.1(d).
- 29 -
- 30 -
- 31 -
4.4 shall be subject to the Confidentiality Agreement. Notwithstanding the foregoing, Seller shall not be required to provide access to the extent such access would, in the reasonable judgment of Seller, jeopardize protections afforded Seller under the attorney-client privilege or the attorney work product doctrine, be prohibited under any applicable Law, Contract or privacy policy or result in the disclosure of any trade secret. Prior to the Closing, Buyer shall not (and shall cause its representatives not to) contact or communicate with the employees, customers and suppliers of Seller or any of its Affiliates in connection with the transactions contemplated by this Agreement, except with the prior written consent of Seller which shall not be unreasonably conditioned, withheld or delayed.
- 32 -
- 33 -
- 34 -
- 35 -
- 36 -
- 37 -
- 38 -
- 39 -
- 40 -
- 41 -
- 42 -
provided, however, that neither Party may terminate this Agreement pursuant to Section 7.1(b), Section 7.1(c) or Section 7.1(d) if the basis for termination results from a material breach by such Party of any of its agreements or covenants contained in this Agreement.
- 43 -
- 44 -
- 45 -
in the Territory and any other relevant costs for such transfers to Buyer. No later than [**] prior to the NDA Transfer Date, Seller shall deliver the NDA Data to Buyer.
- 46 -
- 47 -
“[Buyer product name], formerly a product of Kala Pharmaceuticals, Inc.”; and
- 48 -
- 49 -
“Action” means any action, lawsuit, arbitration, proceeding, litigation, citation, summons, investigation of which Seller has Knowledge, audit, or subpoena of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“AMPPLIFY® Drug Delivery Technology” means Seller’s proprietary selectively-sized drug nanoparticles with a proprietary surface coating designed to penetrate into the mucus pores, while avoiding adhesion to the mucins, currently marked in the United States as AMPPLIFY®, in any form, formulation, or modality.
“Antitrust Laws” means the Hart-Scott-Rodino Act, as amended, the Sherman Act, as amended, the Clayton Act, the Federal Trade Commission Act and any other applicable federal, state or foreign law, regulation or decree designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition.
“Antitrust Order” means any judgment, injunction, order (whether temporary, preliminary or permanent) or decree issued under or with respect to any Antitrust Laws.
“Business Benefit Plan” means all material Employee Benefit Plans entered into, maintained, or contributed to, by Seller for the benefit of the employees of the Seller providing services with respect to the Business (and their beneficiaries) or pursuant to which, following the Closing, Buyer may otherwise have any Liability (including any such plan or arrangement formerly maintained by Seller) with respect to any employee of the Seller providing services with respect to the Business.
- 50 -
“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions located in Boston, Massachusetts, Ft. Worth, Texas or Geneva, Switzerland are permitted or required by law, executive order or governmental decree to remain closed.
“Business IP” means the Transferred IP, the In-Licensed IP, and all Intellectual Property rights in any confidential information of Seller included in the Commercial Information, Medical Information, and NDA Data.
“Business Material Adverse Effect” means any change, effect or circumstance that is or could reasonably be expected to become, individually or in the aggregate materially adverse to the business, condition (financial or otherwise) or results of operations, or the assets of the Business, taken as a whole; provided, however, that no change, effect or circumstance directly or indirectly resulting from or arising out of any of the following shall constitute, or shall be considered in determining whether there has occurred, or may, would or could occur, a Business Material Adverse Effect: (i) actions taken by the Parties that are expressly required by this Agreement, or the failure to take any action prohibited by this Agreement; (ii) the announcement of this Agreement including the identify of Buyer; (iii) changes in the Business’ industry or in markets generally and not specifically relating to the Business; (iv) changes in economic conditions or financial markets in any country or region or globally, including changes in interest or exchange rates and changes in currency and credit markets; (v) changes in general legal, tax, regulatory, political or business conditions in any country or region; (vi) acts of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of this Agreement; (vii) any failure by the Business to meet any projections, guidance, estimates, forecasts or milestones for or during any period ending on or after the date hereof, but not underlying cause thereof; (viii) changes to Seller’s stock price; (ix) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires, weather conditions, calamities, epidemics, pandemics, disease outbreaks, other acts of God or other force majeure events in any country or region, or any Law issued by a Governmental Entity, the World Health Organization or industry group providing for business closures, “sheltering-in-place,” curfews or other restrictions that relate to, or arise out of, an epidemic, pandemic or disease outbreak (including COVID-19) or any change in such law, regulation, statute, directive, pronouncement or guideline or interpretation thereof or any worsening of such conditions; (x) any COVID-19 Measures or COVID-19 Responses; (xi) changes in Law or other legal or regulatory conditions (including rules, regulations and administrative policies of the FDA), or the interpretation thereof, or changes in accounting standards or the interpretation thereof); except to the extent any such change, effect or circumstance resulting from, arising out of or attributable to the matters described in clauses (iii), (iv), (v), (vi), (ix) and (xi) above has a materially disproportionate adverse effect on the Business, taken as a whole, as compared to other similarly situated companies that conduct business in the countries and regions in the world and in the industries and markets in which Seller conducts the Business (in which case, such change, effect or circumstance shall be taken into account only to the extent it is materially disproportionate when determining whether a Business Material Adverse Effect has occurred or may, would or could occur).
“Buyer Willful Breach” means the breach by Buyer of a covenant or obligation of Buyer under this Agreement where: (A) such covenant or obligation is material to the ability of Buyer to timely consummate the transactions contemplated by this Agreement or otherwise perform its
- 51 -
obligations under this Agreement; (B) Buyer shall have materially and willfully breached such covenant or obligation; (C) the breach of such covenant or obligation shall not have been cured in all material respects; and (D) any person listed on Annex 1 had actual knowledge, at the time of such breach of such covenant or obligation, (1) that Buyer was breaching such covenant or obligation and (2) of the consequences of such breach under this Agreement.
“Buyer’s Accounting Standards” means Buyer’s normal accounting standards used to prepare its audited financial statements for external reporting purposes, as consistently applied.
“Calendar Quarter” means each period of three (3) consecutive months commencing on January 1, April 1, July 1 and October 1 of each calendar year.
“Calendar Year” means each twelve (12) month period starting January 1 and ending December 31 in each year.
“Commercial Information” means marketing, advertising, and promotional and similar information, including sales, customer information, customer lists, customer purchasing histories, price lists and distribution lists, that is existing, owned, and used or held for use by Seller and in Seller’s possession as of the Closing Date, in each case exclusively for the commercialization of the Products for use in the Territory, excluding (a) Seller’s Names and Marks, (b) any information that cannot be transferred or otherwise disclosed pursuant to applicable Law, and (c) any information that is covered by confidentiality obligations in respect of a Third Party for which Seller has not obtained such Third Party’s consent.
“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, indentures, joint ventures and all other agreements and legally binding arrangements, commitments and undertakings, whether written or oral.
“Cover” means, with respect to product and a Patent, that the making, having made, use, sale, offer for sale, or importation of such product would, without ownership of or a license or other right under such Patent, infringe one or more claims in such Patent (or, with respect to an unissued patent application, infringe one or more claims in such patent application if such claim(s) were to issue).
“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other law, regulation, rule, order, directive, guideline or recommendation of any Governmental Entity or industry group in connection with or in response to COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act.
“COVID-19 Responses” means any action or inaction, including the establishment of any policy, procedure or protocol, by Seller that Seller determines in its sole discretion is necessary, advisable or prudent in connection with (i) mitigating the adverse effects of COVID-19 or applicable COVID-19 Measures, (ii) ensuring compliance by Seller with COVID-19 Measures applicable to any of them and/or (iii) in respect of COVID-19, protecting the health and safety of employees or other persons with whom Seller and its personnel come into contact with during the course of business operations.
- 52 -
“Drug Substance” means the active ingredient, loteprednol etabonate, chemical name: (11β,17α)-17-[(Ethoxycarbonyl)oxy]-11-hydroxy-3-oxoandrosta-1,4-diene-17-carboxylic acid chloromethyl ester, CAS number: 82034-46-6, having the chemical structure set forth in Annex 2 and the common name is loteprednol etabonate.
“Employee Benefit Plan” means each benefit plan whether or not reduced to writing that is (i) an “employee benefit plan” (as defined in Section 3(3) of the ERISA), (ii) a stock bonus, stock option, stock purchase, phantom stock, stock appreciation right, restricted stock unit, or other equity-based plan, policy, program, agreement or arrangement, (iii) a bonus, supplemental retirement, medical, dental, vision care, disability, employee relocation, cafeteria benefit (Section 125 of the Code), dependent care (Section 129 of the Code), fringe benefit, life insurance or accident insurance plan, policy, program or arrangement, (iv) a pension, profit sharing, savings, welfare benefit, retiree medical or life insurance, retirement, termination, salary continuation, severance, change in control, deferred compensation or incentive plan, program or arrangement, (v) a loan by the Seller or advance to any Person, and (vi) any employment, consulting, severance or other individual agreement.
“Environmental Claim” means any Action, order from a Governmental Entity, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Substance; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.
“Environmental Law” means any applicable Law, and any order from any Governmental Entity or binding agreement with any Governmental Entity: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Substance. The term “Environmental Law” includes the following (including their implementing regulations and any state or local analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq., and as amended by the Brownfields Utilization, Investment, and Local Development Act of 2018, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Hazardous Material Transportation Act (HMTA), as amended, 49 U.S.C. §§ 5101 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) 7 U.S.C. § 136 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of
- 53 -
1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.
“Environmental Notice” means any written directive, notice of violation or infraction with respect to any Environmental Claim and relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.
“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity that is a member of (i) a controlled group of corporations (as defined in Section 414(b) of the Code), (ii) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (iii) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes Seller.
“Federal Health Care Program” has the meaning specified in Section 1128B(f) of the Social Security Act (“SSA”) and includes the Medicare, Medicaid and TRICARE programs.
“Financial Information” means (a) the statement of inventory of the Business for the year ended December 31, 2021, (b) the cost of goods sold of the Business for each of the years ended December 31, 2021, 2020 and 2019 and the three month period ended March 31, 2022 and (c) Seller’s fixed asset report for the Business for the year ended December 31, 2021.
“Fraud” means, with respect to any Person, an actual and intentional fraud as defined by the common law of the State of Delaware by such Person in regard to this Agreement or the transactions contemplated hereby, including as to the Acquired Assets, the Assumed Liabilities or the Business.
“GAAP” means United States generally accepted accounting principles.
“Good Clinical Practice” or “GCP” means the standards for the clinical development and research of drugs and medical devices, including all applicable Laws and requirements relating to the protection of human subjects and the design, conduct, performance, monitoring, auditing, recording, analysis and reporting of clinical trials, promulgated, enforced, or endorsed by any Governmental Entity, including 21 C.F.R. Parts 11, 50, 54, 56, 312, and 812, the European Union’s Commission Directive 2005/28/EC, the corresponding national law of the European Union’s Member States and the United Kingdom’s Medicines for Human Use (Clinical Trials) Regulations 2004.
“Good Laboratory Practice” or “GLP” means the standards, practices, and procedures for good laboratory practices by research laboratories promulgated, enforced, or endorsed by any Governmental Entity, including 21 C.F.R. Part 58, the European Union’s Directive 2004/10/EC, the corresponding national law of the European Union’s Member States and the United Kingdom’s Good Laboratory Practice Regulations 1999.
- 54 -
“Good Manufacturing Practice” or “GMP” means the then-current applicable standards, practices and procedures for the methods to be used in, and the facilities or controls to be used for, the manufacture of drugs, medical devices or any Product, as promulgated, enforced, or endorsed by any Governmental Entity, including FDA regulations at 21 C.F.R. Parts 210 and 211, Parts 808, 812 and 820, and otherwise under 21 U.S.C. 351, the European Union’s Commission Directive 2003/94/EC, the corresponding national law of the European Union’s Member States and the United Kingdom’s Human Medicines Regulations 2012, or as otherwise required by applicable Laws, as in effect at the time of manufacture.
“Governmental Entity” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision thereof, or any self-regulatory organization or other non-governmental regulatory authority or quasi-Governmental Entity (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Hazardous Substance” means (i) any substance that is regulated or gives rise to liability or which falls within the definition of a “hazardous substance,” “hazardous waste” or “hazardous material” in each case pursuant to any Environmental Law; or (ii) any petroleum product or by-product, asbestos-containing material, polychlorinated biphenyls, radioactive materials or radon.
“IND” means (a) an Investigational New Drug Application as defined in the Act, and (b) all supplements, amendments, variations, extensions and renewals thereof that may be filed with respect thereto.
“In-Licensed IP” means all Intellectual Property owned by a Third Party for which rights are granted to Seller or its subsidiaries or controlled Affiliates pursuant to an Assigned Contract. The In-Licensed IP includes all In-Licensed Patents.
“In-Licensed Patents” means all Patents owned by a Third Party for which rights are granted to Seller or its subsidiaries or controlled Affiliates pursuant to an Assigned Contract. The In-Licensed Patents include the Patents set forth on Schedule 2.10(c).
“Intellectual Property” shall mean (i) patents and applications therefor, including continuations, divisionals, continuations-in-part, reexaminations or reissues of patent applications and patents issuing thereon, and all similar rights arising under the Laws of any jurisdiction (“Patents”), (ii) trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, and corporate names and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof (“Trademarks”), (iii) Internet domain names (“Domain Names”) (iv) all copyrights and registrations and applications therefor, works of authorship and mask work rights (“Copyrights”), (v) any other proprietary technical information, know-how, data, inventions and discoveries (whether patentable or not), trade secrets, specifications, instructions, processes, formulae, materials, and other technology (“Know-How”).
“IRS” means the U.S. Internal Revenue Service.
- 55 -
“Law” means any statute, law, treaty, judgment, ordinance, requirement, decree, regulatory rule, code, order, or other requirement having the force of law of any Governmental Entity.
“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.
“Lien” means any mortgage, hypothecation, pledge, security interest, encumbrance, charge, exclusive license, adverse claim, restrictive covenant, right of first refusal or security interest of any kind or other lien (whether arising by contract or by operation of law) or, with respect to real property, any easement, defect in title, or option.
“Losses” means losses, damages, liabilities, deficiencies, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder; provided, however, that “Losses” shall not include punitive damages, except to the extent actually awarded to a Governmental Entity or other third party.
“Medical Information” means information solely and exclusively relating to the Drug Substance or the Product, existing, owned, and used by Seller or any of its subsidiaries or controlled Affiliates, and in Seller’ possession or reasonably accessible to Seller as of the Closing Date, including clinical and technical matters, such as therapeutic uses for the approved indications, drug-disease information, and other product characteristics.
“Multiemployer Plan” means a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).
“Names and Marks” means, with respect to each Party, all trademarks, service marks, domain names, trade names, trade dress, and corporate names of such Party, and other identifiers of source, containing, incorporating or related thereto, including, with respect to Seller, the following name: “Kala,” together with all associated logos and all variations thereof.
“NDA” means (a) a New Drug Application, as defined in the Act, and (b) all supplements and amendments that may be filed with respect thereto.
“NDA Data” means the existing readily available dossiers or copies thereof in Seller’s or its subsidiaries or controlled Affiliates’ possession as of the Closing Date containing any information actually used or submitted by Seller or any of its subsidiaries or controlled Affiliates to obtain and maintain the Product INDs and the Product NDAs in the Territory.
“NDA Transfer Date” has the meaning set forth in the Transition Services Agreement.
“Net Sales” means the net sales recognized by Buyer, its Affiliates or the Product Licensees or, in the case of sales for the benefit of Buyer pursuant to the Supply Agreement, by Seller (collectively, the “Selling Parties”) for Product sold to Third Parties as determined in accordance with Buyer’s Accounting Standards as consistently applied, less deductions directly related to the sales of the Product. The deductions booked on an accrual basis by Buyer and its
- 56 -
Affiliates under the Buyer’s Accounting Standards to calculate the recognized net sales from gross sales includes the following:
(i)normal trade and cash discounts;
(ii)amounts repaid or credited by reasons of defects, rejections, recalls or returns;
(iii)rebates and chargebacks to customers and Third Parties (including Medicare, Medicaid, managed healthcare and similar types of rebates);
(iv)amounts provided or credited to customers through coupons and other discount programs, including volume discounts provided to customers;
(v)delayed ship order credits, discounts or payments related to the impact of price increases between purchase and shipping dates or retroactive price reductions;
(vi)fee for service payments to customers for any non-separable services (including compensation for maintaining agreed inventory levels and providing information); and
(vii)other reductions or specifically identifiable amounts deducted for reasons similar to those listed above in accordance with Buyer’s Accounting Standards.
With respect to the calculation of Net Sales:
(a)Net Sales only include the first arm’s length sale to a Third Party. Sales between or among Buyer and its Affiliates and sublicensees shall be disregarded for purposes of calculating Net Sales;
(b)Net Sales will be calculated at the time all the revenue recognition criteria under Buyer’s Accounting Standards are met;
(c)Net Sales shall not take into consideration the price for any Products provided or used for development (including for clinical studies) or as samples (including Products transferred in connection with patient assistance programs or other charitable purposes), provided that in each case such Products are sold or transferred without charge or at a price no higher than Buyer’s fully burdened cost to manufacture and supply such Product;
(d)Net Sales shall not include amounts invoiced for Taxes, freight, insurance or other transportation and handling fees to the extent included in the invoice price for such Product;
(e)In the event that a Product is sold in a finished dosage form containing the Drug Substance in combination with one (1) or more other active ingredients or included in a single unit package (a “Drug Combination Product”), the Net Sales
- 57 -
will be calculated by multiplying the Net Sales of the Drug Combination Product by the fraction, A/(A+B) where A is the weighted (by sales volume) average sale price in the relevant country of the Product containing the Drug Substance as the sole active ingredient in finished form, and B is the weighted average sale price (by sales volume) in that country of the product(s) containing the other component(s) as the sole active ingredient(s) in finished form. Regarding prices comprised in the weighted average price when sold separately referred to above, if these are available for different dosages from the dosages of the Drug Substance and other active ingredient components that are included in the Drug Combination Product, then Buyer shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Drug Combination Product. If the weighted average sale price cannot be determined for the Product or other product(s) containing the single Drug Substance or component(s), the calculation of Net Sales for Drug Combination Products will be agreed by the Parties based on the relative value contributed by each component (each Party’s agreement not to be unreasonably withheld or delayed).
(f)In the event that a Product is sold in a finished dosage form containing the Drug Substance in combination with one (1) or more devices, other than dispensing containers (a “Device Combination Product”), the Net Sales will be calculated by multiplying the Net Sales of the Device Combination Product by the fraction, A/(A+B) where A is the weighted (by sales volume) average sale price in the relevant country of the Product, and B is the weighted average sale price (by sales volume) in that country of the device. If the weighted average sale price cannot be determined for the Product or device, the calculation of Net Sales for Device Combination Products will be agreed by the Parties based on the relative value contributed by each component (each Party’s agreement not to be unreasonably withheld or delayed); and
(g)If Product is sold in connection with incentive programs, chargebacks, or similar programs or discounts on portfolio product offerings or bundles that include the Product as well as other products of Buyer or Third Parties, all rebates, discounts and other forms of reimbursements shall be allocated among the Product and other products on the basis on which such rebates, discounts and other forms of reimbursements were actually granted or, if such basis cannot be determined, in accordance with Buyer’s, its Affiliates’ or its or their respective sublicensees’ existing allocation method; provided that any such allocation to a Product shall be (i) done in accordance with applicable law, including any price reporting laws, rules and regulations and (ii) subject to clause (i) fairly allocated between the Product and such other products on a pro rata basis based on the fair market undiscounted value of each such Product or products, included in such program, offering or bundle.
“Oxford Loan” means that certain Loan and Security Agreement, dated as of May 4, 2021, by and between Seller and Oxford Finance LLC.
- 58 -
“Permitted Liens” means any Lien (i) that is a mechanic’s, materialmen’s, landlord’s or similar Lien, (ii) arising under worker’s compensation, unemployment insurance, social security, retirement or similar legislation, (iii) on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, (iv) for Taxes not yet due and payable, (v) for Taxes which are being contested in good faith by appropriate proceedings, (vi) arising solely by action of Buyer, (vii) relating to capitalized lease financings or purchase money financings that have been entered into in the ordinary course of business, (viii) created by the terms of any lease agreement or license agreement or (ix) that does not materially and adversely impair the use or value of the Acquired Assets, taken as a whole.
“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Entity, unincorporated organization, trust, association or other entity.
“Pre-Closing Tax Period” means any taxable period (or portion of any Straddle Period) ending on or before the Closing Date.
“Product Exploit”, with correlative meaning for the term “Product Exploitation” and “Exploitation of the Products”, means any or all of the following with respect to the Product: research, develop, design, test, modify, manufacture, make, use, sell, have made, used and sold, import, promote, market, distribute or commercialize.
“Product INDs” means the INDs for the Product as set forth on Annex 3.
“Product Licensee” means: (i) any Third Party to which Buyer or any of its Affiliates, directly or indirectly, grants a license, sublicense, covenant not to sue, or other transfer or assignment of any rights to such Third Party that enables such Third Party to sell or otherwise commercialize such Product in the United States; (ii) any Person that is granted rights relating to any Product that flows from any grant of rights described in subsection (i) above (including any further (sub)licensee); and (iii) any Affiliate of any Person described in subsection (i) or (ii) above.
“Product Line Sale” means (i) a sale, transfer or assignment to any Third Party that includes all or substantially all of rights covering a Product in the United States; or (ii) the sale or transfer of all or substantially all of the stock or consolidated assets of Buyer (whether by means of a merger, stock sale, asset sale, change of control or otherwise).
“Product NDAs” means the NDAs for Product as set forth on Annex 3.
“Products” means: (i) loteprednol etabonate ophthalmic suspension 0.25%, currently marketed in the United States as EYSUVIS®; (ii) loteprednol etabonate ophthalmic suspension 1.0%, currently marketed in the United States as INVELTYS® and (iii) solely for purposes of Section 1.6, any other loteprednol etabonate using the Transferred Know-How or the Transferred Patents.
“Quality System Regulation” or “QSR” is meant to include all applicable standards and requirements related to the methods used in, and the facilities and controls used for, designing, manufacturing, packaging, labeling, storing, installing, and servicing of medical devices Products
- 59 -
intended for human use, promulgated, enforced or endorsed by any Governmental Entity, or as otherwise required by applicable Laws, as in effect at the time of the Products manufacture.
“R&W Insurance Policy” means the buyer-side representation and warranty insurance policy to be issued by Nautilus Insurance Company by their authorized representative Berkley Transactional to Buyer in the form set forth on Exhibit H.
“Regulatory Laws” means any United States federal, state or local or foreign law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any order by a Governmental Entity, applicable to the exploitation of drugs or medical devices or to regulatory approvals, investigational exemptions, or the procurement, development, research, manufacture, production, packaging, labeling, distribution, importation, exportation, handling, quality, safety, surveillance, reporting of adverse events and product complaints, recall, reprocessing, commercialization, sale, or promotion of the Products involved in any such exploitation activities, including: (a) the FDCA; (b) GCP, GLP, GMP and QSR (c) all terms, conditions, and requirements of any regulatory approvals (d) Laws pertaining to the licensing of, Permits for, certification, accreditation, registration of, and standards for drug and medical device manufacturers and distributors (e) laws governing drug price reporting requirements; (f) federal Medicare and Medicaid statutes (Title XVIII and Title XIX of the Social Security Act) and all rules and regulations promulgated thereunder; (g) PHSA, the Patient Protection and Affordable Care Act; (h) the Physician Payments Sunshine Act; (i) the federal Anti-Kickback Statute (42 U.S.C.A § 1320a-7b(b)), Stark Law (42 U.S.C.A § 1395nn), False Claims Act (31 U.S.C.A § 3729 et seq.), Civil Monetary Penalties Act (42 U.S.C. § 1320a-7a), Health Insurance Portability and Accountability Act of 1996 (42 U.S.C.A § 1320d et seq.) (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act, and any comparable federal, state, provincial or local legal requirements; (j) state or provincial medical device licensing, disclosure and reporting requirements; (k) the Federal Trade Commission Act; and (l) any comparable foreign, state, or local legal requirements for any of the foregoing, in each case as amended.
“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).
“Representatives” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Restricted Business” means the use of ocular corticosteroids for the treatment of (i) the signs and symptoms of dry eye disease (including the treatment of dry eye flares) or (ii) post-operative inflammation and pain following ocular surgery.
“Seller’s Knowledge,” “known by Seller” or other words of similar meaning shall mean the knowledge of the individuals set forth on Annex 4 after due inquiry of their direct reports.
“Solvent”, when used with respect to any person or entity, means that, as of any date of determination, (i) the fair value of the assets of such person or entity and its subsidiaries on a
- 60 -
consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of such person or entity and its subsidiaries on a consolidated basis, (ii) the present fair saleable value of the property of such person or entity and its subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of such person or entity and its subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (iii) such person or entity and its subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date and (iv) such person or entity and its subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured.
“Seller Willful Breach” means the breach by Seller of a covenant or obligation of Seller under this Agreement where: (A) the consequence of a breach of the covenant or obligation is material to the Business, taken as a whole; (B) Seller shall have materially and willfully breached such covenant or obligation; (C) the breach of such covenant or obligation shall not have been cured in all material respects; and (D) any of the persons listed on Annex 4 had actual knowledge, at the time of Seller’s breach of such covenant or obligation, (1) that Seller was breaching such covenant or obligation and (2) of the consequences of such breach under this Agreement.
“Straddle Period” means any taxable period beginning on or prior to and ending after the Closing Date.
“Tax Returns” means all reports, returns, declarations, statements, claims for refund, information return, forms or other information or document filed or required to be filed with respect to Taxes, including any schedule or attachment thereto and any amendment thereof.
“Taxes” means all U.S. federal, state, local, non-U.S. and other taxes, including income, gross receipts, ad valorem, value-added, excise, real property, personal property, sales, use, transfer, withholding, employment, unemployment, estimated, severance, environmental, stamp, registration, occupation, profits, gains, windfall profits, escheat, abandoned property, customs, duties, payroll, and franchise taxes, and any other taxes, fees, assessments or charges of any kind whatsoever in the nature of a tax imposed by the United States of America or any U.S. state, local or non-U.S. government, or any agency thereof, or other political subdivision of the United States of America or any such government, and any interest, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection therewith and any interest in respect of such additions, penalties or assessments, including any liability for any of the foregoing amounts by contract (including any Tax Sharing Agreement), as a transferee or successor or otherwise by operation of law.
“Termination Right Notice” means a written statement from Seller certifying that matters have occurred since the date of this Agreement that would reasonably be expected to have a Business Material Adverse Effect and irrevocably stating that Buyer is entitled to terminate this Agreement in accordance with the provisions of Section 7.1(f) as a result of such notice (which statement shall be binding on Seller).
- 61 -
“Territory” means worldwide.
“Third Party” means any person or entity that is not an Affiliate of a Party.
“Total Cash Consideration” means the aggregate amount of the Adjusted Closing Payment plus any Milestone Payments actually paid by Buyer to Seller.
“Transaction Documents” means the Bill of Sale & Assignment and Assumption Agreement, the Commercial Agreement, the Patent Assignment Agreement, the Trademark Assignment Agreement, the Domain Name Assignment Agreement, the Supply Agreement, the Transition Services Agreement, the Seller FDA Letters, the Buyer FDA Letters, the Seller Closing Certificate, the Buyer Closing Certificate, and each other agreement or certificate to be delivered by any Party hereto at the Closing contemplated hereby.
“Transferred Domain Names” means the Domain Names set forth on Schedule 2.10(b)(iii).
“Transferred IP” means all Transferred Know-How, Transferred Patents, Transferred Domain Names, and Transferred Trademarks.
“Transferred Know-How” means all Know-How owned or held for use by Seller or its Affiliates which exclusively or primarily relates to the Business, including any information or data contained within the NDA Data but specifically excluding Commercial Information and Medical Information.
“Transferred Patents” means all Patents (a) which relate to, or are used or held for use by Seller or its controlled Affiliates in connection with or that Cover the Products and (b) which are used or held for use by Seller exclusively or primarily in the conduct of the Business.
“Transferred Trademarks” means all Trademarks set forth on Schedule 2.10(b)(ii).
“Treasury Regulations” means the regulations promulgated under the Code by the U.S. Department of the Treasury.
- 62 -
to obtain “confidential treatment” of the information required to be so disclosed as the other Party shall reasonably request.
- 63 -
same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party, it being understood that each Party need not sign the same counterpart. This Agreement may be executed and delivered by facsimile or by an electronic scan delivered by electronic mail.
If to Alcon Vision: Alcon Vision, LLC 6201 South Freeway Fort Worth, TX 76134-2099 Attention: VP, Global Head of BD&L E-mail: [**] and Alcon Pharmaceuticals, Ltd. c/o Alcon Vision, LLC 6201 South Freeway Fort Worth, Texas 76134-2099 Attention: Alcon Head, Legal - Global Transactions E-mail: [**] | Copy to: Arnold & Porter Kaye Scholer LLP 250 West 55th Street New York, NY 10019-9710 Attention: Derek Stoldt E-mail: [**] |
- 64 -
If to Alcon Swiss: Alcon Pharmaceuticals, Ltd. c/o Alcon Vision, LLC 6201 South Freeway Fort Worth, TX 76134-2099 Attention: VP, Global Head of BD&L E-mail: [**] | Copies to: Alcon Pharmaceuticals, Ltd. Rue Louis-d’Affry 6, 1701 Fribourg, Switzerland Attn: APL Head of Legal and Compliance E-mail: [**] Alcon Pharmaceuticals, Ltd. c/o Alcon Vision, LLC 6201 South Freeway Fort Worth, Texas 76134-2099 Attention: Alcon Head, Legal - Global Transactions E-mail: [**] and Arnold & Porter Kaye Scholer LLP 250 West 55th Street New York, NY 10019-9710 Attention: Derek Stoldt E-mail: [**] |
If to Seller: Kala Pharmaceuticals, Inc. 1167 Massachusetts Ave Arlington, MA 02476 Attention: Eric Trachtenberg, General Counsel Email: [**] | Copy to: Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109 Attention: Stuart M. Falber, Esq. E-mail: stuart.falber@wilmerhale.com |
Either Party may give any notice, request, demand, claim, or other communication hereunder using any other means (including personal delivery, expedited courier, messenger service, ordinary mail, or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the Party for whom it is intended. Either Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.
- 65 -
giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware.
- 66 -
- 67 -
legislation issued thereunder; (l) unless the context otherwise clearly dictates, references to “Seller” shall be interpreted to include Seller and its subsidiaries and controlled Affiliates, including that the phrase “Seller shall” shall be interpreted to mean “Seller shall and shall cause its subsidiaries and controlled Affiliates to”, and representations, warranties, Acquired Assets, Excluded Assets, Assumed Liabilities and Excluded Liabilities of Seller shall be interpreted to include Seller’s subsidiaries and controlled Affiliates, (m) references to accounting terms used and not otherwise defined herein have the meaning assigned to them under GAAP, and (n) references to “Buyer” herein shall refer to each of Alcon Swiss and Alcon Vision, acting jointly and severally, and the consent of either Buyer with respect to any matter in this Agreement or any Transaction Document is hereby deemed to be the consent of both Alcon Swiss and Alcon Vision. Any reference to “ordinary course of business” (or any similar expression) or “ordinary course of business consistent with past practice” (or any similar expression) takes into account acts or omissions that Seller has taken, or may take, in good faith related to COVID-19 or any other pandemic, epidemic or disease outbreak. When reference is made in this Agreement to information that has been “made available” to Buyer, that shall include information that was (i) contained in Seller’s electronic data room no later than 5:00 p.m., Eastern time, on the Business Day prior to the date of this Agreement or (ii) delivered to Buyer or its counsel. The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party. No summary of this Agreement prepared by either Party shall affect the meaning or interpretation of this Agreement. If any date on which a Party is required to make a payment or a delivery pursuant to the terms hereof is not a Business Day, then such Party shall make such payment or delivery on the next succeeding Business Day. Time shall be of the essence in this Agreement.
[Remainder of page intentionally left blank]
- 68 -
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
| Kala Pharmaceuticals, Inc. | |
| | |
| By: | /s/ Mark Iwicki |
| Print Name: | Mark Iwicki |
| Print Title: | Chief Executive Officer and |
| | Chairman of the Board |
| | |
| Alcon Pharmaceuticals Ltd. | |
| | |
| By: | /s/ Jean-Baptiste Emery |
| Print Name: | Jean-Baptiste Emery |
| Print Title: | Authorized Signatory |
| | |
| By: | /s/ Robert Kamffer |
| Print Name: | Robert Kamffer |
| Print Title: | Authorized Signatory |
| | |
| Alcon Vision, LLC | |
| | |
| By: | /s/ Laurent Attias |
| Print Name: | Laurent Attias |
| Print Title: | SVP, Head of Corporate Strategy, |
| | BD&L, M&A |
[Signature Page to Asset Purchase Agreement]