Document:

Exhibit 4.23

 

INHALE THERAPEUTIC SYSTEMS, INC.

 

AND

 

AFAC
EQUITY, L.P.

 

 

 

COMMON STOCK PURCHASE AGREEMENT

 

 

 

 

 

December 6, 2002

 

 

 

 

INHALE THERAPEUTIC SYSTEMS, INC.

COMMON STOCK PURCHASE AGREEMENT

 

 

                THIS
COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is made
as of December 6, 2002, by and between INHALE THERAPEUTIC SYSTEMS,
INC., a Delaware corporation with its principal office at 150
Industrial Road, San Carlos, California 94070 (the “Company”), and AFAC EQUITY L.P. a
Delaware limited partnership with its offices c/o McKinsey & Company, Inc.
United States at 55 East 52nd Street, 27th Floor, New
York, New York 10022 (“AFAC” or, the “Purchaser”).

 

RECITALS

 

                WHEREAS, the Company
and McKinsey & Company, Inc. United States, an affiliate of AFAC (“McKinsey”)
have entered into that certain Confidentiality Agreement dated April 9, 2002
and that certain letter agreement dated September 17, 2002 with respect to the
performance of certain consulting services by McKinsey (collectively, the
“Related Agreements”); and

 

                WHEREAS, in connection with the Related
Agreements, the Company desires to issue to AFAC and AFAC desires to acquire
from the Company shares of common stock of the Company, on the terms and
subject to the conditions set forth in this Agreement.

 

                NOW, THEREFORE, in consideration of the foregoing
recitals and the mutual covenants and agreements contained herein, the parties
hereto, intending to be legally bound, do hereby agree as follows:

 

1.             PURCHASE OF COMMON STOCK.

 

                1.1.         Agreement to Sell and Purchase.  At the Closing (as hereinafter defined), the
Company will sell to AFAC and AFAC will purchase from the Company Seventy-Two
Thousand Four Hundred Nineteen (72,419) shares of the common stock of the
Company (the “Common Stock”) in exchange for services rendered by McKinsey.

 

                1.2.         Closing; Closing Date.  The completion of the sale
and purchase of the Common Stock (the “Closing”) shall be held at 9:00 a.m.
(Pacific Time) on the date hereof (the “Closing Date”), at the offices of
Cooley Godward LLP, 3175 Hanover Street, Palo Alto, California, or at such
other time and place as the Company and the Purchasers may agree.

 

                1.3.         Delivery.  At the Closing, subject to the terms and conditions
hereof, the Company will deliver to AFAC a stock certificate dated as of the
Closing Date.

 

2.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

                Except
as otherwise specifically disclosed to the Purchasers in writing on the date
hereof, the Company hereby represents and warrants to the Purchasers as
follows:

 

                2.1.         Authorization.  All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement by and between the Company and AFAC dated as of the date
hereof in the form set forth as Exhibit A (the “Registration Rights Agreement”)
has been taken.  The Company has the
requisite corporate power to enter into this Agreement and the Registration
Rights Agreement and carry out and perform its obligations under the terms of
this Agreement and the Registration Rights Agreement.  At the Closing, the Company will have the requisite corporate
power to issue and sell the Common Stock. 
This Agreement and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company and, upon due execution and
delivery by the Purchasers, this Agreement and the Registration Rights
Agreement will be valid and binding agreements of the Company, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally or by
equitable principles.

 

 

 

                2.2.         Organization, Good Standing and
Qualification.  The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted.  The Company is duly qualified
to transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business or
properties.

 

                2.3.         Valid Issuance of Common Stock.  The Common Stock, when issued, sold and
delivered in accordance with the terms hereof will be duly and validly
authorized and issued, fully paid and nonassessable.

 

                2.4.         Offering.  Assuming the accuracy of the representations of the
Purchasers in Section 3.3 of this Agreement on the date hereof and on the
Closing Date, the offer, issue and sale of the Common Stock are and will be
exempt from the registration and prospectus delivery requirement of the
Securities Act and have been or will be registered or qualified (or are or will
be exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws.

 

3.             REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS.

 

                                Purchaser
hereby represents and warrants to the Company as follows:

 

                3.1.         Legal Power.  Purchaser has the requisite corporate power
and authority to enter into this Agreement and the Registration Rights
Agreement, to carry out and perform its obligations under the terms of this
Agreement and the Registration Rights Agreement.  All action on Purchaser’s part required for the lawful execution
and delivery of this Agreement and the Registration Rights Agreement have been
or will be effectively taken prior to the Closing.

 

                3.2.         Due Execution.  This Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by the Purchaser,
and, upon due execution and delivery by the Company, this Agreement and
Registration Rights Agreement will be valid and binding agreements of
Purchaser, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally or by equitable principles.

 

                3.3.         Investment Representations.  In connection with the sale and issuance of
the Common Stock, Purchaser makes the following representations to the Company:

 

                                (a)           Investment for Own Account.  Purchaser is acquiring the Common Stock for its own
account, not as nominee or agent, for investment and not with a view to, or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act.

 

                                (b)           Transfer Restrictions; Legends.  Purchaser understands that
(i) the Common Stock has not been registered under the Securities Act; (ii) the
Common Stock is being offered and sold pursuant to an exemption from
registration and that the Common Stock must be held by Purchaser indefinitely,
and that Purchaser must, therefore, bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration; (iii) each certificate
representing the Common Stock will be endorsed with the following legends:

 

                THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. 
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.  THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

 

 

and (iv) the Company will instruct any
transfer agent not to register the transfer of the Common Stock (or any portion
thereof) unless the conditions specified in the foregoing legend are satisfied,
until such time as a transfer is made, pursuant to the terms of this Agreement,
and in compliance with Rule 144 under the Securities Act or pursuant to a
registration statement or, if the opinion of counsel referred to above is to
the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act or this Agreement, or
other satisfactory assurances of such nature are given to the Company.  Unless otherwise required by applicable
securities laws, the Company shall be obligated, at the request of Purchaser,
to cause the transfer agent to reissue unlegended certificates with respect to
the Common Stock if (A) Purchaser shall have obtained an opinion of counsel
reasonably acceptable to the Company to the effect that the Common Stock with respect
to which unlegended certificates are to be issued may lawfully be disposed of
without registration, qualification or legend; or (B) the Common Stock can be
sold without restriction as to the number of securities sold under Rule 144(k).  Further, the Company will instruct the
transfer agent to remove the legend on Common Stock (A) upon the sale of such
Common Stock pursuant to an effective registration statement, provided the
transfer agent and Company have received evidence or assurances of such sale in
a form satisfactory to the transfer agent and the Company or (ii) upon the sale
of such Common Stock pursuant to Rule 144 under the Securities Act, provided
the transfer agent and the Company have received evidence or assurances from
Purchaser of compliance with Rule 144 in a form satisfactory to the transfer
agent and the Company.

 

                                (c)           Financial Sophistication.  Purchaser has such knowledge
and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in connection with the
transactions contemplated in this Agreement.

 

                                (d)           Accredited Investor Status.  Purchaser is an “accredited
investor” as such term is defined in Rule 501(a) of the rules and regulations
promulgated under the Securities Act.

 

                3.4.         No Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based on arrangements made
by Purchaser.

 

 

4.             CONDITIONS TO CLOSING.

 

                4.1.         Conditions to Obligations of Purchasers
at Closing. AFAC’s obligation to purchase the Common Stock at
the Closing is subject to the fulfillment to the Purchaser’s satisfaction, on
or prior to the Closing, of all of the following conditions, any of which may
be waived by Purchaser:

 

                                (a)           Representations and Warranties True;
Performance of Obligations.  The
representations and warranties made by the Company in Section 2 hereof shall be
true and correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date and the
Company shall have performed and complied with all obligations and conditions
herein required to be performed or complied with by it on or prior to the
Closing.

 

                                (b)           Registration Rights Agreement.  The
Company shall have executed and delivered the Registration Rights Agreement in
the form attached hereto as Exhibit A.

 

                                (c)           Qualifications, Legal Investment.  All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful sale and issuance
of the Common Stock shall have been duly obtained and shall be effective on and
as of the Closing.  No stop order or
other order enjoining the sale of the Common Stock shall have been issued and
no proceedings for such purpose shall be pending or, to the knowledge of the
Company, threatened by the SEC, or any commissioner of corporations or similar
officer of any state having jurisdiction over this transaction.  At the time of the Closing, the sale and
issuance of the Common Stock shall be legally permitted by all laws and
regulations to which Purchaser and the Company are subject.

 

 

 

                4.2.         Conditions to Obligations of the
Company.  The Company’s
obligation to issue and sell the Common Stock at the Closing is subject to the
fulfillment to the Company’s satisfaction, on or prior to the Closing of the
following conditions, any of which may be waived by the Company:

 

                                (a)           Representations and Warranties True.  The representations and warranties made by
Purchaser in Section 3 hereof shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.

 

                                (b)           Performance of Obligations.  Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by them on or before the Closing.

 

                                (c)           Registration Rights Agreement.  Purchaser
shall have executed and delivered the Registration Rights Agreement in the form
attached hereto as Exhibit A.

 

                                (d)           Qualifications, Legal
Investment.  All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Common Stock shall have
been duly obtained and shall be effective on and as of the Closing.  No stop order or other order enjoining the
sale of the Common Stock shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened by the
SEC, or any commissioner of corporations or similar officer of any state having
jurisdiction over this transaction.  At
the time of the Closing, the sale and issuance of the Common Stock shall be
legally permitted by all laws and regulations to which the Purchaser and the
Company are subject.

 

5.             MISCELLANEOUS.

 

                5.1.         Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
regard to the choice of law provisions thereof, and the federal laws of the
United States.

 

                5.2.         Successors and Assigns.  Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto.

 

                5.3.         Entire Agreement.  This Agreement, the
Registration Rights Agreement, the Related Agreements and the exhibits hereto
and thereto, and the other documents delivered pursuant hereto, constitutes the
full and entire understanding and agreement among the parties with regard to
the subjects hereof and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants, or agreements except
as specifically set forth herein or therein. 
Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided herein.

 

                5.4.         Severability.  In the event any provision of this Agreement
shall be invalid, illegal, or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.

 

                5.5.         Amendment and Waiver.  Except as otherwise provided herein, any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and Purchaser.  Any amendment or waiver effected in
accordance with this Section shall be binding upon any holder of any securities
purchased under this Agreement, each future holder of all such securities, and
the Company.

 

                5.6.         Notices.  Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with 

 

 

 

the United States Post Office, by registered
or certified mail, postage prepaid and addressed to the party to be notified at
the address first indicated for such party above, or at such other address as
such party may designate by ten (10) days’ advance written notice to the other
parties.

 

                5.7.         Fees
and Expenses.  The Company
and Purchaser shall bear their own expenses and legal fees incurred on their
behalf with respect to this Agreement and the transactions contemplated
hereby.  Each party hereby agrees to
indemnify and to hold harmless of and from any liability the other party for
any commission or compensation in the nature of a finder’s fee to any broker or
other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which such indemnifying party or any of
its employees or representatives are responsible.

 

                5.8.         Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

 

 

 

                IN WITNESS WHEREOF, the foregoing Common Stock
Purchase Agreement is hereby executed as of the date first above written.

 

 

	
   

  	
  THE
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INHALE THERAPEUTIC SYSTEMS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ AJIT GILL

  	
   

  
	
   

  	
  Name:

  	
  Ajit S. Gill

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer
  and President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  150 Industrial Road

  San Carlos, CA 94070

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE PURCHASER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AFAC EQUITY, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: Paul Harris Management
  Inc.,

  its General Partner

  	
   

  
	 
	 
	 
	 

	 
	 
	 
	 

	
   

  	
  By:

  	
  /s/ BRIAN M FEUER

  	
   

  
	
   

  	
  Name:

  	
  Brian M. Feuer

  	
   

  
	
   

  	
  Title:

  	
  Attorney-In-Fact

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o McKinsey & Company

  55 East 52nd Street, 27th Floor

  New York, NY 10022

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

 

EXHIBIT
A

REGISTRATION
RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS
AGREEMENT is made as of the 6th day of December, 2002, by and
between Inhale Therapeutic Systems, Inc., a Delaware corporation (the “Company”)
and AFAC Equity, L.P., a Delaware limited partnership (the “Investor”).

RECITALS

 

WHEREAS, the Company and
McKinsey & Company, Inc. United States, an affiliate of the Investor (“McKinsey”)
are parties to a certain confidentiality agreement effective as of April 9,
2002 and a letter agreement dated September 17, 2002 (collectively, the “Consulting
Agreement”); and

 

WHEREAS, the Company and
Investor are parties to that certain Common Stock Purchase Agreement dated as
of the date hereof the “Purchase Agreement”)
pursuant to which the Company shall issue Seventy-Two Thousand Four Hundred
Nineteen (72,419) shares of Company common stock (the “Shares”) to the Investor
in partial consideration of services provided by McKinsey to the Company; and

 

WHEREAS, the Purchase
Agreement provides that the Company and the Investor will enter into a
registration rights agreement in form and substance reasonably satisfactory to
both parties;

NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, the
parties hereto agree as follows:

1.     Registration
Rights.

1.1   Definitions. For purposes of this
Section 1:

(a)   The term “Act” means the Securities Act
of 1933, as amended.

(b)   The term “Holder” means any person
owning Registrable Securities or any assignee thereof in accordance with
Section 1.9 hereof.

(c)   The term “1934 Act” means the
Securities Exchange Act of 1934, as amended.

(d)   The terms “register,” “registered,”
and “registration”
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document.

(e)   The term “Registrable Securities” means
(i) the Shares and (ii) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to,
or in exchange for, or in replacement of, the Shares.  Notwithstanding the foregoing, Registrable Securities shall not
include (i) any securities sold by a person to the public either pursuant to a
registration statement or Rule 144 or sold in a private transaction in which
the transferor’s rights under Section 1 of this Agreement are not assigned;
(ii) any securities for which the rights of a Holder have terminated pursuant
to Section 1.10 herein.

 

(f)    The number of shares of “Registrable
Securities” outstanding shall be determined by the number of shares of Common
Stock outstanding that are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities that are, Registrable
Securities.

(g)   The term “SEC” shall mean the
Securities and Exchange Commission.

1.2   Company Registration.

(a)   If (but without any obligation to do so) the
Company proposes (i) to register for its own account any of its common stock
under the Act in connection with an underwritten public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan or a registration relating to a
corporate reorganization, merger or other transaction under Rule 145 of
the Act) (a “Company Offering”);
or (ii) to register the offering of its common stock by stockholders of the
Company other than the Holders (“Other
Selling Stockholders”) other than in connection with a Company
Offering or a registration relating solely to the sale of securities to
participants in a Company stock plan or a registration relating to a corporate
reorganization, merger or other transaction under Rule 145 of the Act (a “Secondary Offering”), the Company shall, at
such time, promptly give each Holder written notice of such Company Offering or
Secondary Offering, as applicable.  Upon
the written request of each Holder given within fifteen (15) days after mailing
of such notice by the Company in accordance with Section 2.5, the Company
shall, subject to the provisions of Section 1.2(b) and other restrictions
set forth herein, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.  Notwithstanding the foregoing, the Company
shall have no obligation to notify the Holders, cause to be registered any
Registrable Securities, or undertake any other obligation in connection with
this Agreement in connection with (i) any proposed Company Offering in which
the proposed maximum offering price to the public exceeds [80% of Purchase Price] (as adjusted for
stock splits, combinations, dividends and the like occurring after the date
hereof); or (ii) any Secondary Offering made pursuant to that certain Preferred
Stock Purchase Agreement dated January 7, 2002 by and between the Company and
Enzon, Inc.

(b)   Underwriting Requirements.  In connection with any offering in which the
Holder would otherwise be permitted to include Registrable Securities pursuant
to this Section 1.2 involving an underwriting of shares of the Company’s
capital stock, the Company shall not be required under this Section 1.2 to
include any of the Holders’ securities in such underwriting unless they accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters) and enter into an underwriting agreement in customary form with
an underwriter or underwriters selected by the Company, and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company.  If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling Holders according to the total amount of securities
entitled to be included therein owned by each selling Holder or in such other
proportions as shall mutually be agreed to by such selling Holders), but in no
event shall the amount of securities of the selling Holders included in the
offering be reduced below fifteen percent (15%) of the total amount of
securities included in such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder that is a
Holder of Registrable Securities and that is a partnership or corporation, the
partners, retired partners and stockholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single “selling
Holder,” and any pro rata reduction with respect to such “selling Holder” shall
be based upon the aggregate amount of Registrable Securities owned by all such
related entities and individuals.

 

2

 

1.3   Obligations of the Company. Whenever
required under this Section 1 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:

(a)   prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective until, with respect to a
Company Offering, the distribution of securities by the Company contemplated in
the registration statement is completed, or, with respect to a Secondary
Offering, the earlier of (i) the completion of the distribution contemplated in
the registration statement by the Other Selling Stockholders; (ii) the
termination of all Other Selling Stockholders’ rights to require registration
pursuant to such registration statement or (iii) the date 120 days following
the initial effective date of such registrations statement.  Notwithstanding any other provision of this
Agreement, the Holders understand and acknowledge that there may be periods
during which the Company may determine, in good faith, based on the advice of
counsel, that it is in the best interest of the Company and its stockholders to
defer disclosure of non-public information until such information has reached a
more advanced stage and that during such periods sales of Registrable
Securities and the effectiveness of any registration statement covering Registrable
Securities, may be suspended or delayed. 
The Holders agree that upon receipt of any notice from the Company of
the development of any material non-public information, each Holder will
forthwith discontinue its disposition of Registrable Securities pursuant to any
such registration statement until such Holder’s receipt of copies of an
appropriately supplemented or amended prospectus and, if so directed by the
Company, each Holder will use reasonable commercial efforts to deliver to the
Company all copies, of the prospectus relating to such Registerable Shares
current at the time of receipt of such notice;

(b)   prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement;

(c)   furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them;

(d)   use reasonable commercial efforts to register
and qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;

(e)   notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;

(f)    cause all such Registrable Securities
registered pursuant to this Section 1 to be listed on each securities exchange
on which similar securities issued by the Company are then listed;

(g)   provide a transfer agent and registrar for
all Registrable Securities registered pursuant to this Section 1 and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration; and

 

3

 

(h)   use reasonable commercial efforts to furnish,
at the request of any Holder requesting registration of Registrable Securities
pursuant to this Section 1, on the date that such Registrable Securities
are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold through
underwriters, (i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters.

1.4   Information from Holder. It shall be a
condition precedent to the obligations of the Company to take any action
pursuant to this Section 1 with respect to the Registrable Securities of
any selling Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to
effect the registration of such Holder’s Registrable Securities.

1.5   Expenses of Registration. All expenses
other than underwriting discounts, commissions and fees and disbursements of
counsel for the Selling Holders incurred in connection with registrations,
filings or qualifications pursuant to Section 1.2, including (without
limitation) all registration, filing and qualification fees, printers’ and
accounting fees, fees and disbursements of counsel for the Company shall be
borne by the Company.

1.6   Delay of Registration. No Holder shall
have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this
Section 1.

1.7   Indemnification. In the event any
Registrable Securities are included in a registration statement under this
Section 1:

(a)   To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, the partners or officers,
directors and stockholders of each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or any state securities laws, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively, a “Violation”): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities laws or any rule or regulation promulgated under the Act, the
1934 Act or any state securities laws; and the Company will reimburse each such
Holder, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection l.7(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation that occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or
controlling person.

 

4

 

(b)   To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the 1934 Act or any state securities
laws, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse any person intended to be indemnified pursuant to this subsection
l.7(b), for any legal or other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this subsection l.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.7(b) exceed the gross proceeds from the offering
received by such Holder.

(c)   Promptly after receipt by an indemnified
party under this Section 1.7 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 1.7, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 1.7, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.7.

(d)   If the indemnification provided for in this
Section 1.7 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 herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, 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 that 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 obligations of the Company and Holders
under this Section 1.7 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1,
and otherwise.

 

5

 

1.8   Rule 144 Reporting. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration,
the Company agrees to:

(a)   file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the 1934
Act; and

(b)   furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements
of SEC Rule 144 (at any time after ninety (90) days after the effective
date of the first registration statement filed by the Company for an offering
of its securities to the general public), the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements), (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule
or regulation of the SEC that permits the selling of any such securities
without registration or pursuant to such form.

1.9   Assignment of Registration Rights. The
rights to cause the Company to register Registrable Securities pursuant to this
Section 1 may be assigned (but only with all related obligations) by a
Holder only to an affiliate of the Investor or McKinsey (an “Affiliate”), provided: (a) the Company
is, within a reasonable time after such transfer, furnished with written notice
of the name and address of such Affiliate and the securities with respect to
which such registration rights are being assigned; (b) such Affiliate
agrees in writing to be bound by and subject to the terms and conditions of
this Agreement, including without limitation the provisions of
Section 1.10 below; and (c) such assignment shall be effective only
if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.

1.10  Termination of Registration Rights.
The Company’s obligations under this Section 1 to effect the registration of
any Registrable Securities shall terminate as to any Holder at such time as all
the Registrable Securities held by such Holder are eligible for sale under Rule
144.

2.     Miscellaneous.

2.1   Successors and Assigns. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any shares of Registrable
Securities).  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

2.2   Governing Law. This Agreement shall be
governed by, and construed and enforced in accordance with the internal laws of
the State of California, without reference to conflicts of law provisions
thereof.

2.3   Counterparts. This Agreement may be
executed by facsimile and in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

2.4   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.

 

6

 

2.5   Notices. Unless otherwise provided,
any notice required or permitted under this Agreement shall be given in writing
and shall be deemed effectively given upon personal delivery to the party to be
notified or upon delivery by confirmed facsimile transmission, nationally
recognized overnight courier service, or upon deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days’ advance written notice to the other parties.

2.6   Expenses. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

2.7   Entire Agreement: Amendments and Waivers.
This Agreement, the Purchase Agreement, the Consulting Agreement and the
agreements referenced therein constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and
thereof.  Any term of this Agreement may
be amended and the observance of any terms of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least two-thirds of the Registrable Securities. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Registrable Securities each future holder of all such Registrable
Securities, and the Company.

2.8   Severability. If one or more
provisions of this Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.

2.9   Aggregation of Stock. All shares of
Registrable Securities held or acquired by affiliated entities or persons shall
be aggregated together for the purpose of determining the availability of any
rights under this Agreement.

 

7

 

                IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  INHALE THERAPEUTIC SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  AJIT S.
  GILL

  
	
   

  	
  Name:

  	
  Ajit S. Gill

  
	
   

  	
  Title:

  	
  Chief Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  150 Industrial Road

  
	
   

  	
   

  	
  San Carlos, CA 94070

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  INVESTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  AFAC
  EQUITY, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul Harris Management Inc.,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  BRIAN M
  FEUER

  
	
   

  	
  Name:

  	
  Brian M Feuer

  
	
   

  	
  Title:

  	
  Attorney-In-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o McKinsey & Company

  
	
   

  	
   

  	
  55 East 52nd Street, 27th
  Floor

  
	
   

  	
   

  	
  New York, New York 10022

  

 

 

8Exhibit 10.45

 

29 December 2001

 

Dr. Arnold J. Repta

1639 W. Fort Rd.

Park City, UT 84098

 

Re:          Letter
Agreement covering Change in Control

 

Dear Arnie,

 

This will formalize our understanding in the
event of an entity “Change in Control,” defined as the circumstances whereby
any third part entity acquires 50% or more of the Common Stock in Inhale
Therapeutic Systems, Inc.,

 

Upon any Change in Control you will be
entitled to a Change in Control lump sum payment of two times your annual
target compensation (fixed plus target variable compensation) under either of
the following conditions:

 

1.               In the event
your employment with the acquiring entity is terminated without cause, or if
you terminate your employment with the acquiring company on your accord for
“good reason,” defined as (1) substantive, material diminution of authority or
responsibilities, (2) reduction in your aggregate compensation and benefits, or
(3) relocation without your consent of more than 35 miles from San Carlos,
California following the Change in Control event, or

 

2.               Your employment
terminates for any reason other than termination with cause within nine months
following the Change in Control event.

 

Please indicate your acceptance of this
agreement by countersigning below and returning one signed original to me.

 

Thank you for your attention to this matter.

 

Inhale Therapeutic Systems, Inc.,

 

 

	
  By:

  	
  /s/ Stephen L. Hurst

  	
   

  
	
   

  	
  Stephen L. Hurst

  V.P., Human Resources

  	
   

  
	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Arnold J. Repta

  	
   

  
	
  Dr. Arnold J. Repta

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