Document:

exv10w42

 

Exhibit 10.42

Nonstatutory Stock Option Agreement with Robert A. Beardsley

 

 

Exhibit 10.42

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.

STOCK OPTION AGREEMENT

     CollaGenex Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby grants to
Robert A. Beardsley (the “Optionee”) an Option to purchase a total of 25,000 shares of Common Stock
(the “Shares”), at the price determined as provided herein, and in all respects subject to the
terms, definitions and provisions of the 1996 Non-Employee Director Stock Option Plan, as amended,
(the “Plan”) adopted by the Company, which is incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined meanings herein.

     1. Nature of the Option. This Option is a Nonstatutory Stock Option and is not
intended to qualify for any special tax benefits to the Optionee.

     2. Exercise Price. The exercise price is $5.59 for each Share of Common Stock, which
price is 100% of the fair market value per Share of Common Stock on the Grant Date. The exercise
price may be adjusted in accordance with Section 10 of the Plan.

     3. Exercise of Option. This Option shall be exercisable during its term in accordance
with the provisions of Section 9 of the Plan as follows:

          (i) Right to Exercise

               (a) Subject to subsections 3(i)(b), (c), (d), (e) and (f) below, one-fifth (1/5) of the total
number of Shares subject to this Option shall become exercisable on each of the first five
anniversaries of the Grant Date, until all of such Shares are exercisable.

               (b) If the Optionee attends less than 75% of the Board meetings of the Company (whether
regular or special) held in any fiscal year (a “Default Year”), then either (i) the Optionee shall
forfeit his exercise rights with respect to the installment of this Option which vested on the
preceding annual vesting date, in proportion to the percentage of Board meetings actually attended
by such Optionee during the Default Year; or (ii) in the event that the Optionee does not own a
sufficient number of exercisable options to satisfy the forfeiture obligation described above, the
Optionee shall forfeit his right to receive the next succeeding annual installment of this Option,
in proportion to the percentage of Board meetings which the Optionee actually attended in the
Default Year.

               (c) In the event of Optionee’s death or permanent disability or other termination of status as
a Board Member, the exercisability of this Option is governed by Sections 7 and 8 below, subject to
the limitations contained in subsections 3(i)(d) hereof.

 

 

               (d) In no event may this Option be exercised after the date of expiration of the term of this
Option as set forth in Section 10 below.

               (e) This Option may not be exercised for a fraction of a Share.

               (f) There shall be no exercise at any one time as to fewer than one hundred (100) Shares or
all the remaining Shares then purchasable by the Optionee, if fewer than one hundred (100) Shares.

               (g) Upon any merger, consolidation, sale of all (or substantially all) of the assets of the
Company, or a business combination involving the sale or transfer of all (or substantially all) of
the capital stock or assets of the Company in which the Company is not the surviving entity, or, if
it is the surviving entity, does not survive as an operating going concern in substantially the
same line of business, then this Option shall, immediately prior to the consummation of any of the
foregoing events, become fully vested and immediately exercisable by the Optionee.

          (ii) Method of Exercise. This Option shall be exercisable by written notice in the
form attached as Exhibit A, which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other representations and
agreements as to the holder’s investment intent with respect to such Shares of Common Stock as may
be required by the Company pursuant to the provisions of the Plan. Such written notice shall be
signed by Optionee and shall be delivered in person or by certified mail to the Chief Financial
Officer. The written notice shall be accompanied by full payment of the exercise price. This
Option shall be deemed to be exercised upon receipt by the Company of such written notice
accompanied by the exercise price. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option.

          No Shares will be issued pursuant to the exercise of an Option unless such issuance and such
exercise shall comply with all relevant provisions of law and the requirements of any stock
exchange upon which the Shares may then be listed. Assuming such compliance, for income tax
purposes, the Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.

     4. Investment Representations; Restrictions on Transfer.

          (i) By receipt of this Option, by its execution and by its exercise in whole or in part,
Optionee represents to the Company the following:

               (a) Optionee understands that this Option and any Shares purchased upon its exercise are
securities, the issuance of which requires compliance with federal and state securities laws.

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               (b) Optionee is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and knowledgeable decision
to acquire the securities. Optionee is acquiring these securities for investment for Optionee’s
own account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

               (c) Optionee acknowledges and understands that the securities constitute “restricted
securities” under the Securities Act and must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is available. Optionee
further acknowledges and understands that the Company is under no obligation to register the
securities. Optionee understands that the certificate evidencing the securities will be imprinted
with a legend which prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the Company and any other
legend required under applicable state securities laws.

               (d) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under
the Securities Act, which, in substance, permit limited public resale of “restricted securities”
acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701
at the time of exercise of the Option by the Optionee, such exercise will be exempt from
registration under the Securities Act. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90)
days thereafter the securities exempt under Rule 701 may be resold, subject to the satisfaction of
certain of the conditions specified by Rule 144, including among other things: (1) the sale being
made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case
of an affiliate, (2) the availability of certain public information about the Company, and the
amount of securities being sold during any three-month period not exceeding the limitations
specified in Rule 144(e), if applicable. Notwithstanding this paragraph 4(i)(d), the Optionee
acknowledges and agrees to the restrictions set forth in paragraph 4(ii) below.

          In the event that the Company does not qualify under Rule 701 at the time of exercise of the
Option, then the securities may be resold in certain limited circumstances subject to the
provisions of Rule 144, which requires among other things: (1) the availability of certain public
information about the Company; (2) the resale occurring not less than two years after the party has
purchased, and made full payment for, within the meaning of Rule 144, the securities to be sold;
and (3) in the case of an affiliate, or of a non-affiliate who has held the securities less than
three years, the sale being made through a broker in an unsolicited “broker’s transaction” or in
transactions directly with a market maker (as said term is defined under the Securities Exchange
Act of 1934) and the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein, if applicable.

     5. Method of Payment. Payment of the purchase price shall be (a) in United States
dollars in cash or by check, (b) in whole or in part in shares of Common Stock of the Company
already owned by the Optionee or Shares subject to the option being exercised (subject to such

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restrictions and guidelines as the Board may adopt from time to time) valued at fair market
value determined in accordance with the provisions of Section 2, or (c) consistent with applicable
law, through the delivery of an assignment to the Company of a sufficient amount of the proceeds
from the sale of the Common Stock acquired upon exercise of the option and an authorization to the
broker or selling agent to pay that amount to the Company, which sale shall be at the Optionee’s
direction at the time of exercise.

     6. Restrictions on Exercise. This Option may not be exercised if the issuance of such
Shares upon such exercise or the method of payment of consideration for such Shares would
constitute a violation of any applicable federal or state securities or other law or regulation,
including any rule under Part 207 of Title 12 of the Code of Federal Regulations (Regulation G) as
promulgated by the Federal Reserve Board, or if the conditions of Section 11 of the Plan are not
satisfied. As a condition to the exercise of this option, the Company may require Optionee to make
any representation and warranty to the Company as may be required by any applicable law or
regulation.

     7. Death or Disability of Optionee. In the event that an Optionee ceases to be a
member of the Board by reason of his or her death or permanent disability, any option granted to
such Optionee shall be immediately and automatically accelerated and become fully vested and all
unexercised options shall be exercisable by the Optionee (or by the Optionee’s personal
representative, heir or legatee, in the event of death) at any time prior to the scheduled
expiration date of the option.

     8. Termination of Status as Board Member. In the event any Optionee: (i) ceases to be
a member of the Board of Directors at the request of the Company; (ii) is removed without cause; or
(iii) otherwise does not stand for nomination or re-election as a Director of the Company at the
request of the Company, then any unexercised portion of this Option, to the extent not vested at
the date of the applicable event, shall immediately terminate and become void, and to the extent
any such unexercised portion of this Option is vested at such date, it shall continue to be
exercisable for a period of one year from the date of the applicable event; provided,
however, that no portion of this Option, vested or unvested, may be exercised if the
Optionee is removed from the Board of Directors for any one of the following reasons: (i)
disloyalty, gross negligence, dishonesty or breach of fiduciary duty to the Company; (ii) the
commission of an act of embezzlement, fraud or deliberate disregard of the rules or policies of the
Company which results in loss, damage or injury to the Company, whether directly or indirectly;
(iii) the unauthorized disclosure of any trade secret or confidential information of the Company;
(iv) the commission of an act which constitutes unfair competition with the Company or which
induces any customer of the Company to breach a contract with the Company; or (v) engages in any
conduct or activity on behalf of any organization or entity which is a competitor of the Company
(unless such conduct or activity is approved by a majority of the members of the Board of
Directors).

     9. Non-Transferability of Option. This Option may not be transferred in any manner
other than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.

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     10. Term of Option. Notwithstanding Section 9 of the Plan, this Option may not be
exercised more than ten years from the date of grant of this Option, and may be exercised during
such term only in accordance with the Plan and the terms of this Option.

     11. Withholding of Income Taxes. Upon the exercise of this Option, the Company, in
accordance with Section 3402(a) of the Internal Revenue Code, as amended, may require the Optionee
to pay withholding taxes in respect of amounts considered to be compensation includible in the
Optionee’s gross income.

     12. Tax Consequences. The Optionee understands that any of the foregoing references
to taxation are based on federal income tax laws and regulations now in effect. The Optionee has
reviewed with the Optionee’s own tax advisors the federal, state, local and foreign tax
consequences of the transactions contemplated by this Agreement. The Optionee is relying solely on
such advisors and not on any statements or representations of the Company or any of its agents.
The Optionee understands that the Optionee (and not the Company) shall be responsible for the
Optionee’s own tax liability that may arise as a result of the transactions contemplated by this
Agreement.

     13. Governing Law. The validity and construction of this Stock Option Agreement shall
be governed by the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.

DATE OF GRANT: December 7, 2004

	 	 	 	 	 
	 	CollaGenex Pharmaceuticals, Inc.

 	 
	 	By:  	/s/ Nancy C. Broadbent
 	 
	 	 	Name:  	Nancy C. Broadbent 	 
	 	 	Title:  	Chief Financial Officer 	 

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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION 3 HEREOF IS EARNED
ONLY BY CONTINUING SERVICE AS A MEMBER OF THE BOARD OF DIRECTORS OF THE COMPANY (NOT THROUGH THE
ACT OF BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS OPTION, THE COMPANY’S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A MEMBER OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S
RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE OPTIONEE’S MEMBERSHIP ON THE BOARD OF DIRECTORS AT
ANY TIME, WITH OR WITHOUT CAUSE.

     Optionee acknowledges receipt of a copy of the Plan, a copy of which is annexed hereto,
represents that Optionee is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this
Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing
this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the Board or of the Committee
upon any questions arising under the Plan. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

Dated: December 7, 2004

	 	 	 	 	 
	 	 	Signature: /s/ Robert A. Beardsley
	

	 	 	 	 
	 	 	Name:                         Robert A. Beardsley
	 	 	Residence Address:
	 
	 	 	 	 
	 	 	Social Security No.:

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EXHIBIT A

NOTICE OF EXERCISE OF STOCK OPTION

TO:

FROM:

DATE:

RE: Exercise of Stock Option

     I
hereby exercise my option to purchase ___Shares of Common
Stock at $     per Share
(total exercise price of $___), effective today’s date. This notice is given in accordance
with the terms of my Stock Option Agreement dated ___, 19___. The option price and
vested amount is in accordance with Sections 2 and 3 of the Stock Option Agreement.

     Attached is a check payable to CollaGenex Pharmaceuticals, Inc. for the total exercise price
of the Shares being purchased. The undersigned confirms the representations made in Section 4 of
the Stock Option Agreement.

     Please prepare the stock certificate in the following name(s):

                                                                        

                                                                        

     If the stock is to be registered in a name other than your name, please so advise the Company.
The Stock Option Agreement requires the Company’s approval for registration in a name other than
your name and requires certain agreements from any joint owner.

	 	 	 
	

	 	Sincerely,
	 
	 	 
	

	 	 
	

	 	(Signature)

	

	 	 
	

	 	(Print or Type Name)

Letter and consideration

received on ___, 19___.

	 	 	 
	By:
	 	 
	

	 	 

A-1exv10w43

 

Exhibit 10.43

Sale of Assets Agreement dated November 3, 2004 by and among CollaGenex International Limited,

Alliance Pharmaceuticals Limited and Alliance Pharma plc.

 

 

Exhibit 10.43

SALE OF ASSETS AGREEMENT

This Sale of Assets Agreement (this “Agreement”), dated as of 3 November, 2004, is between:

	1.  	CollaGenex International Limited, a company organised under the laws England and Wales
(Company No. 03250062), with its registered office at The Old Stable Block, 7 Buttermarket,
Thame, Oxfordshire OX9 3EW, United Kingdom (“CollaGenex”), and

	2.  	CollaGenex Pharmaceuticals, Inc., a company organised and existing under the laws of the
State of Delaware, and having its principle place of business at 41 University Drive, Newtown,
Pennsylvania 18940, USA (“CGPI”); and

	3.  	Alliance Pharmaceuticals Limited, a company organised under the laws England and Wales
(Company No. 03250064), with its registered office at Avonbridge House, Bath Road, Chippenham,
Wiltshire SN15 9BB, United Kingdom (“Alliance”), and

	4.  	Alliance Pharma plc, a company organised under the laws England and Wales (Company No.
04241478), with its registered office at Avonbridge House, Bath Road, Chippenham, Wiltshire,
SN15 9BR, as guarantor (“Guarantor”)

WHEREAS

	(A)  	CollaGenex is engaged in the business of marketing, selling and distributing doxycycline
hyclate 20mg tablets under the brand name Periostat® (the “Product”) in the United Kingdom and
other countries, for the treatment of periodontitis (such business being referred to as the
“Dental Business”), and

	(B)  	CollaGenex desires to transfer and assign to Alliance, and Alliance desires to accept the
transfer and assignment from CollaGenex of, certain assets used in the Dental Business, on the
terms and conditions of this Agreement.

The parties to this Agreement (the “Parties”) now undertake and agree as follows:

I            DEFINITIONS

In this Agreement, the following terms are defined in the following sections or paragraphs:

	 	 	 
	Actual Completion

	 	1.1
	Adjustment Amount

	 	2.4
	Affected Party

	 	10.2
	Affiliate

	 	5.3
	Agreement

	 	Preamble
	Alliance

	 	Preamble
	Business Day

	 	Construction (h)

 

 

	 	 	 
	CPGI

	 	Preamble
	CollaGenex

	 	Preamble
	day

	 	Construction (h)
	Dental Business

	 	Preamble
	Dental Business Assets

	 	1.2
	Disclosure Letter

	 	3.9
	Distribution Agreement(s)

	 	1.2(e)
	DPA

	 	5.4(a)
	Escrow Completion

	 	3.1
	Existing Marketing Authorisation(s)

	 	1.2(c)
	Force Majeure

	 	10.1
	Guarantee

	 	3.5
	Guarantor

	 	Preamble
	Inventory

	 	1.2(h)
	Marketing Authorisation(s)

	 	1.2(c)
	MR

	 	1.2(j)
	MR Option

	 	1.2(j)
	Net Trade Sales

	 	6.6
	Numis

	 	3.2
	Party(ies)

	 	Preamble
	Placing Agreement

	 	3.2
	Placing Proceeds

	 	2.2
	Placing Shares

	 	2.5
	Product(s)

	 	Preamble
	Purchase Price

	 	2.1
	Supply Agreement

	 	1.2(i)
	Technical Agreement(s)

	 	1.2(k)
	Territory

	 	1.2(d)
	Trade Mark Licence

	 	1.2(f)

II CONSTRUCTION

In this Agreement, unless otherwise specified, reference to:

	(a)  	Recitals, Clauses, Articles, Sections, Paragraphs, Schedules or Appendices are to Recitals,
Clauses, Articles, Sections, Paragraphs of and Schedules and Appendices to this Agreement. The
Schedules and Appendices form part of the operative provisions of this Agreement and
references to this Agreement shall, unless the context otherwise requires, include reference
to the Recitals, and Schedules and Appendices;

	(b)  	a document in the “agreed form” is a reference to that document in the form approved and
initialled by or on behalf of each party only for the purpose of identification;

(c) “includes” and “including” shall mean including without limitation;

	(d)  	words denoting the singular shall include the plural and vice versa and words denoting any
gender shall include all genders;

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	(e)  	writing shall include typewriting, printing, lithography, photography and other modes of
representing words in a legible form (other than writing on an electronic or visual display
screen) or other writing in a non-transitory form;

	(f)  	a “person” includes any natural person, individual, firm, company, corporation, body
corporate, government, state, Governmental Authority, association, joint venture, trust or
partnership (in each case whether or not having separate legal personality and irrespective of
the jurisdiction in or under the law of which it was incorporated or exists);

	(g)  	a provision of law is to be construed as a reference to that provision as the same may have
been, or may from time to time be, amended or re-enacted and shall include any rules,
regulations or subordinate legislation made pursuant to or relating to such provision of law
provided however that, as between the parties, no such amendment or re-enactment shall apply
for the purposes of this Agreement to the extent that it would impose any new or extended
obligation, liability or restriction on, or otherwise adversely affect the rights of any
party;

	(h)  	a time of day is a reference to London time and a reference to a day shall mean a period of
24 hours running from midnight to midnight, The phrase “Business Day” shall mean a day during
which the clearing banks in both the cities of New York and London are open for retail
business;

(i) “$” or “dollar” denote the lawful currency of the United States of America;

	(j)  	a “company” shall be construed so as to include any company, corporation or other body
corporate, wherever and however incorporated or established;

	(k)  	any statute, statutory instrument, regulation, bylaw or other requirement of English law or
any English legal term for any action, remedy, method of judicial proceeding, legal document,
legal status, court, official, legal concept, doctrine or thing shall in respect of any
jurisdiction other than England be treated as a reference to that which most nearly
approximates in that jurisdiction to the relevant requirement of English law or English legal
term;

In this Agreement, general words shall not be given a restrictive meaning by reason of the fact
that they are followed by particular examples intended to be embraced by the general words.

The headings in this Agreement are for convenience of reference only and are to be ignored in the
interpretation of this Agreement.

III            TERMS AND CONDITIONS

Article 1. Transfer of Dental Business Assets

	1.1  	Actual completion. Upon completion of all the actions outlined in Article 3 and
Article 3A below, which actions shall take place at the offices of Wilmer Cutler Pickering
Hale and Dorr, Alder Castle, 10 Noble Street, London EC2V 7RJ, United Kingdom, on the dates
specified in Article 3 and Article 3A respectively, or such other time or place as the Parties
may agree in writing (“Actual Completion”), CollaGenex shall assign, license or

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	   	transfer the Dental Business Assets to Alliance in the manner set out below, and Alliance
agrees to accept such assignment, license or transfer.

	1.2  	Dental Business Assets. The following assets and granted rights (as the case may be)
shall constitute the “Dental Business Assets”:

	 	(a)  	All operating data and records of CollaGenex relating to the Dental Business,
including records of all Product unit sales to UK wholesalers, records of all unit and
value sales to UK dental practices, schedules (organised alphabetically and by post
code) of all UK dental practices and/or dental practitioners that have been provided
with information on the Product, and such other market related information available to
CollaGenex as Alliance may reasonably request. Such data shall be physically or
electronically delivered to Alliance within five (5) Business Days of Actual
Completion.
	 
	 	(b)  	All marketing and promotional materials, including all printed professional and
patient materials, all exhibition stands and stand dressing and all promotional items
relating to the Dental Business. Such materials shall be collected by Alliance from
the offices of CollaGenex at a mutually convenient time, within seven (7) Business Days
of Actual Completion, at Alliance’s sole cost. Such materials shall be conveyed with
the right by CollaGenex to use and copy them.
	 
	 	(c)  	The existing Marketing Authorisations, currently held in the name of CollaGenex
in:

	 	   	Austria
	 
	 	   	Finland
	 
	 	   	Ireland
	 
	 	   	Italy
	 
	 	   	The Netherlands
	 
	 	   	Luxembourg
	 
	 	   	Portugal
	 
	 	   	United Kingdom

	 	   	“Marketing Authorisations” means rights to market the Product under licences or
authorisations granted by the Department of Health or analogous body or agency to
permit the marketing of the Product, which rights shall be transferred, with the
supporting dossiers (the latter within 10 Business Days of Actual Completion), to
Alliance by CollaGenex or its Affiliates pursuant to the regulations and procedures
of the relevant regulatory authorities. Those Marketing Authorisations specified
above shall be referred to as the “Existing Marketing Authorisations”.
Responsibility for the transfer of the Existing Marketing Authorisations into the

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	 	   	name of Alliance and any regulatory agency fees associated with the transfer shall
be the sole responsibility of Alliance subject to CollaGenex providing such
documentation and assistance as Alliance may reasonably request.
	 
	 	(d)  	The future right of Alliance, at its own risk and cost, to register for sale,
or to authorise or approve others to register for sale, the Product in any of the
following countries, subject only to those rights of third parties expressly referenced
in this Agreement:

	 	   	The countries of the European Union for the time
being excluding those referenced in paragraph 1.2(c) above
	 
	 	   	Switzerland
	 
	 	   	Norway
	 
	 	   	Israel
	 
	 	   	South Africa
	 
	 	   	Australia
	 
	 	   	New Zealand

	 	   	which right is hereby granted to Alliance. These countries, together with those
countries referenced in paragraph 1.2(c) above, shall constitute the “Territory”.
	 
	 	(e)  	All of CollaGenex future rights and obligations under existing marketing and
distribution agreements with:

	 	   	Willvonseder & Marchesani Ges.m.b.H. & Co. KG., Vienna, Austria;
	 
	 	   	ISDIN S.A. Barcelona, Spain (Iberia and Greece);
	 
	 	   	Karr Dental AG, Horgen, Switzerland;
	 
	 	   	Taro Pharmaceutical Industries Limited, Yakum,
Israel;

	 	   	(the “Distribution Agreements”) which shall be conveyed to Alliance by way of
novations of each of such agreements.
	 
	 	(f)  	A royalty-free exclusive licence to use, in the Dental Business in the
Territory, without any rights of ownership in, the following trade marks:

	 	   	PERIOSTAT®
	 
	 	   	PS20®
	 
	 	   	PERIOSTATUS®

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	 	   	THE WHOLE MOUTH TREATMENT®
	 
	 	   	PERIOSTAN®
	 
	 	   	PERIOSTAND®

	 	   	the terms of which license shall be set forth in the agreed form of a Trade Mark
Licence agreement to be executed at Escrow Completion (the “Trade Mark Licence”), by
and between Alliance and CollaGenex.
	 
	 	(g)  	An option to take a license to use the CollaGenex trade mark PERIOCYCLINE® in
return for an agreed consideration and/or royalty, procedures for the exercise of which
shall be set forth in the Trade Mark Licence.
	 
	 	(h)  	All inventories of the Product in U.K. livery held or ordered in the ordinary
course of business (even if not delivered) by CollaGenex in the U.K. as of the date
such inventory is counted (the “Inventory”). Alliance shall be afforded the
opportunity of a physical Inventory count prior to the actual transfer, such Inventory
count to be carried out by Alliance itself or by an authorised agent of Alliance (whose
identity shall be disclosed to CollaGenex) and a copy of the Inventory count shall be
provided to CollaGenex. The Inventory count shall be conducted at or prior to Actual
Completion or at such other time as shall be mutually agreed, in writing, between the
parties. Alliance shall arrange to move the Inventory to its own warehouse within
three (3) Business Days of completing the Inventory count. Costs of the transfer of
the Inventory from the warehouse of CollaGenex to the warehouse of Alliance shall be
borne by Alliance. The UK QP Certificates of Release for the Inventory shall be
provided to Alliance at the time of delivery of the Inventory. Title to the Inventory
shall not pass to Alliance until the invoice of CollaGenex has been paid in full
pursuant to section 2.6.
	 
	 	(i)  	The right to purchase bulk Periostat® tablets from CollaGenex or its Affiliates
pursuant to the agreed form of a supply agreement to be executed at Escrow Completion
(the “Supply Agreement”).
	 
	 	(j)  	The option to obtain a licence to sell and market a 40mg capsule presentation
containing doxycycline for once a day administration under the brand name Periostat-MR®
(“MR”) for the treatment of periodontitis in the Territory, which option right is
hereby granted to Alliance subject to the terms of Article 6 of this Agreement (the “MR
Option”).
	 
	 	(k)  	All of CollaGenex rights or privileges as a party to or a third party
beneficiary under the technical agreements with:

	 	   	MSAS McGregor Cory Limited trading as Exel, Banbury, Oxfordshire;
	 
	 	   	Cardinal Health U.K. 417 Limited trading as Cardinal Health, Great Oakley,
Corby, Northamptonshire; and

6

 

	 	   	Pharmaceutical Manufacturing Research Services, Inc., 423 Sargon Way,
Horsham, Pennsylvania.

	 	   	(the “Technical Agreements”), to the extent such rights or privileges relate to the
Dental Business in the Territory. Such rights or privileges shall be conveyed by a
novation, assignment or similar document delivered at Actual Completion. Any future
commercial, as opposed to technical, arrangements with any third party provider
(other than PMRS) of any of the services covered by the Technical Agreements will be
the responsibility of Alliance.

	1.3  	Title and Risk. Except as otherwise provided in this Agreement, the title to and
risk in the Dental Business Assets shall pass to Alliance at the time of Actual Completion.
To the extent that, as a matter of law, such title or risk cannot pass to Alliance at such
time, CollaGenex shall take such actions as may be reasonably necessary as Alliance’s agent to
effect the intentions of this Agreement and the transactions contemplated thereby.

	1.4  	Specific Exclusions. Alliance will not assume any liabilities, commitments or other
obligations of CollaGenex except those arising under the Existing Marketing Authorisations and
the Distribution Agreements after the date of Actual Completion or otherwise expressly
provided in this Agreement. In particular Alliance will not assume:

	 	(a)  	except as provided in 13.5 any obligation of CollaGenex for expenses incurred
in connection with the negotiation or preparation for the transfer of the Dental
Business Assets;
	 
	 	(b)  	any liability arising out of any sale, act or omission of CollaGenex which
occurred prior to Actual Completion;
	 
	 	(c)  	any liability, contract, commitment or other obligation of CollaGenex, known or
unknown, fixed or contingent, the existence of which constitutes a breach of any
representation or warranty of CollaGenex contained in this Agreement.

Article 2. Purchase Price

	2.1  	Purchase Price. The consideration for the purchase of the Dental Business Assets is
$3,300,000 (the “Purchase Price”) which shall be satisfied, subject to Actual Completion, by
the allotment and issue of the Placing Shares to such persons as CollaGenex shall direct.

	2.2  	Payment of Placing Proceeds. At Actual Completion, the Guarantor shall procure that
Numis transfers to CollaGenex, by wire transfer to a United States account nominated by
CollaGenex, all the proceeds from the allotment and issue of the Placing Shares (the “Placing
Proceeds”).

	2.3  	Payment of Adjustment Amount. At Actual Completion, the Guarantor shall transfer or
procure the transfer of the Adjustment Amount to CollaGenex, by wire transfer to a United
States account nominated by the receiving party. If the Adjustment Amount is

7

 

	   	positive, the Adjustment Amount shall be paid by Alliance to CollaGenex. If Adjustment
Amount is negative, the Adjustment Amount shall be paid by CollaGenex to Alliance.

	2.4  	Adjustment Amount. The “Adjustment Amount” shall be X, which shall be determined by
application of the formula:

	 	 	 	 	 
	 	X = y – z
	 
	 	 	 	 
	 	where
	 
	 	 	 	 
	 	y =	the Purchase Price; and
	 
	 	 	 	 
	 	z =	the Placing Proceeds, converted into Dollars
at the exchange rate in effect on the day of Actual Completion, and as
received in CollaGenex United States account.
	 
	 	 	 	 
	 	X shall be a Dollar amount.

	   	If X is positive, Alliance shall ensure that upon arrival of the funds in the United States
account nominated by CollaGenex and conversion of such funds into Dollars, the Dollar amount
of such funds shall be equal to X.

	2.5  	Placing Shares. The “Placing Shares” means such number of ordinary shares of 1p each
in the Guarantor, that are placed and sold pursuant to the Placing Agreement in order to fund
the Purchase Price.

	2.6  	Payment for the Inventory. Alliance shall additionally purchase the Inventory at a
price of £3.25 (three pounds and twenty five pence) per pack of 56 tablets. Upon confirmation
of Alliance Inventory count, CollaGenex shall invoice Alliance accordingly. The invoice of
CollaGenex for the purchase of the Inventory shall be subject to the addition of VAT at the
prevailing rate and shall be due for payment by Alliance within fifteen (15) days of its date.

Article 2A. Obligations relating to the Placing Shares

	   	2A.1 Section 103 Valuation

	 	(a)  	Alliance will, at its own expense, procure that a report and valuation relating
to the allotment of the Placing Shares, as required by Section 103 (“Section 103”) of
the Companies Act 1985 is prepared and shall deliver the same to CollaGenex as soon as
possible following Escrow Completion, and in any event prior to the allotment of the
Placing Shares.
	 
	 	(b)  	Alliance will, at its own expense, procure that all the other requirements of
Section 103 to be fulfilled by it are fulfilled in connection with the allotment of the
Placing Shares.

8

 

	 	(c)  	Alliance will indemnify, and keep indemnified, CollaGenex and its successors in
title from and against all claims, costs, expenses and demands arising from the failure
to comply with all the requirements of Section 103 and from any liability under Section
103.

Article 3. Escrow Completion

	3.1  	Escrow Completion. Completion of this Agreement in escrow (“Escrow Completion”)
shall be effective as soon as the Parties have executed this Agreement and taken all the steps
identified in this Article 3.
	 
	3.2  	Placing Agreement. Each of Alliance, CollaGenex and Numis Securities Limited
(“Numis”) shall execute the Placing Agreement (the “Placing Agreement”) attached as Exhibit A
to this Agreement.
	 
	3.3  	Trade Mark Licence Alliance and CollaGenex shall execute the Trade Mark Licence in
the form attached as Exhibit B to this Agreement.
	 
	3.4  	Supply Agreement. Alliance and CollaGenex Pharmaceuticals Inc. shall execute the
Supply Agreement in the form attached as Exhibit C to this Agreement.
	 
	3.5  	Guarantee. Alliance Pharma plc shall have executed and delivered to CollaGenex a
guarantee substantially in the form attached as Exhibit D to this Agreement (the “Guarantee”).
	 
	3.6  	Disclosure Letter. CollaGenex shall provide to Alliance, a letter fairly disclosing
any fact or circumstance which constitutes, or which but for the giving of notice or passage
of time might constitute as at Escrow Completion, a breach of any of the warranties contained
in Article 7 of this Agreement (the “Disclosure Letter”).

Article 3A. Actual Completion

	3A.1   	 Actual Completion of this Agreement shall be effected as soon as the Parties have taken all
of the steps identified in this Article 3A, which steps and documents shall remain in escrow
until the satisfaction in full of the Consideration condition at 3A.1(f) below.

	 	(a)  	Placing Shares. The Guarantor shall have allotted and issued the
Placing Shares to the Placees, and provided CollaGenex with satisfactory evidence
confirming the same.
	 
	 	(b)  	Marketing Authorisations. CollaGenex shall deliver to Alliance
documentation in appropriate form sufficient to enable Alliance to initiate the
transfers of all the Existing Marketing Authorisations.

9

 

	 	(c)  	Novations. CollaGenex shall deliver to Alliance documentation in
appropriate form sufficient to effect the novation of all of the Distribution
Agreements.
	 
	 	(d)  	Technical Agreements. CollaGenex shall deliver to Alliance a notice,
assignment or similar document conveying to Alliance CollaGenex rights under the
Technical Agreements, to the extent such rights relate to the Dental Business.
	 
	 	(e)  	Further Disclosure Letter. CollaGenex shall provide to Alliance, if
appropriate, a letter fairly disclosing any fact or circumstance which constitutes, or
which but for the giving of notice or passage of time might constitute as at Actual
Completion, a breach of any of the warranties contained in Article 7 of this Agreement
(the “Further Disclosure Letter”).
	 
	 	(f)  	Consideration. The payment of the Placing Proceeds and the Adjustment
Amount having been received into the United States account nominated by CollaGenex in
accordance with Article 2.2 and Article 2.3.
	 
	 	(g)  	Completion Certificate. The Parties shall execute a Completion
Certificate in the form attached as Exhibit E to this Agreement.

	3A.2   	 On execution of the Completion Certificate all documents executed or signed, and actions
taken, subject thereto shall be released from escrow and deemed to be effective. In the event
that the Consideration has not been paid by 5:00p.m. on Wednesday 10 November 2004) then any
documents executed or signed, and actions taken, subject thereto shall be deemed to be void ab
initio and ineffective and each party shall return to the other party any deeds or documents
delivered subject thereto, and this agreement shall lapse so that no party hereto shall have
any claim against the other save in relation to clause 13.5 (“Termination Costs”).

Article 4. Post Actual Completion Undertakings of the Parties – Sales and Customer Service

	4.1  	Pre Actual Completion Sales. All sales invoiced by CollaGenex up to and including
the day of Actual Completion shall be for the sole account of CollaGenex. CollaGenex shall be
responsible for collection for all such invoices, and shall advise Alliance if any such
invoices are uncollectable. If for any reason payment of such invoices is made to Alliance,
Alliance will hold such payment for the account of CollaGenex, without any right of set off.
	 
	4.2  	Post Actual Completion Orders. Any orders relating to the Dental Business that are
received by CollaGenex after Actual Completion will be sent, via e-mail or telefax, to
Alliance and Alliance will have responsibility for processing such orders. All such orders,
including those received in the name of CollaGenex, shall be for the account of Alliance.
	 
	4.3  	Trade Communications. All professional or trade enquiries relating to the Dental
Business and received by CollaGenex after Actual Completion (including responses to journal
inserts placed by CollaGenex) will be forwarded, unanswered and unacknowledged, by CollaGenex
to Alliance. Communications with dental practitioner or

10

 

	   	dental practice customers in relation to payment and future orders will be the
responsibility of Alliance.

	4.4  	Third Party Arrangements. CollaGenex will provide such assistance as is reasonably
necessary to ensure an orderly transfer to Alliance of the relationships underlying the
Distribution Agreements, the Technical Agreements, and the Dental Business.

Article 5. Post Actual Completion Undertakings of the Parties – Regulatory and Product
Registration Matters

	5.1  	Transfer of Existing Marketing Authorisations. CollaGenex shall provide all such
assistance as may be reasonably requested to assist Alliance in effecting the transfer of the
Existing Marketing Authorisations (including the transfer within 10 Business Days of Actual
Completion of the supporting dossiers), provided, however, that CollaGenex shall be entitled
to be reimbursed by Alliance for any professional fees and other costs and expenses that
CollaGenex may reasonably incur in this respect.
	 
	5.2  	Maintenance of Marketing Authorisations. Alliance shall maintain all Marketing
Authorisations in the Territory for the Product in the name of Alliance and/or an affiliate
and/or agent and/or distributor of Alliance, and will make such variations thereto as may be
required from time to time.
	 
	5.3  	Registration Dossiers. CollaGenex shall have the right of full access at any
reasonable time during business hours on a Business Day, provided that it has given notice for
such access, to any of the registration dossiers of Alliance (or those of an Affiliate or
agent or distributor of Alliance), including stability and all other data associated with the
Product, to enable CollaGenex (or an Affiliate of CollaGenex or an authorised regulatory agent
of CollaGenex) to utilise the data contained therein for any registration applications or
potential registration applications that CollaGenex may wish to make in any jurisdiction for
any product for clinical indications outside periodontology, and as a reference in
communications with, or requests for scientific advice from, any regulatory agency in
connection with such applications. Nothing in this Article 5.3 shall limit the right of
CollaGenex to use historical back-up data for the purposes of identifying and fulfilling any
of its obligations pursuant to this Agreement. As used in this Agreement “Affiliate” of a
party shall mean any entity in which the party has a direct or indirect equity or income
interest ownership of at least fifty per cent (50%) or more, or any entity which, directly or
indirectly, through one or more intermediaries, controls, or is controlled by, or is under
common control with the party.
	 
	5.4  	Data Protection. Notwithstanding any other provision of this agreement, Alliance
undertakes that, on receipt of the data and records of the Dental Business Assets (the
“Data”), on Actual Completion:

	 	(a)  	it shall duly observe all its obligations under the Data Protection Act 1998
(“DPA”) which arise in connection with processing Data;

11

 

	 	(b)  	it shall send a fair processing notice to each customer and data employee
identified, in the agreed form, within 7 days of Actual Completion;
	 
	 	(c)  	it shall obtain, and at all times maintain, a notification under the DPA
appropriate to the performance of its obligations under this Agreement.

Article 6. Post Actual Completion Undertakings of the Parties – Periostat MR®

	6.1  	Regular Updates. On or about January 1, 2006, and quarterly thereafter, CollaGenex
shall provide Alliance with an update regarding the progress of compiling the data relating to
MR as set out in 6.6 (c), (d), (e), and (f).
	 
	6.2  	Term of MR Option. The MR Option may be exercised by written notice to CollaGenex at
any time during a period of 90 days, or such other period as the Parties may agree, beginning
on the date when Alliance notifies CollaGenex that it is ready to initiate an application for
Marketing Authorisation for MR for the treatment of periodontitis in any country or countries
in the Territory (the “Option Period”), provided that such notification may not be given after
December 31, 2009. If, upon receipt of such notification, CollaGenex has not completed
assembling the data and supporting documentation necessary to enable Alliance to initiate a
Marketing Authorisation application, the Option Period will not start to run until CollaGenex
has completed assembling such data and documentation.
	 
	6.3  	Review of MR Material. As soon as possible after the start of the Option Period
CollaGenex will furnish Alliance with all the data and documentation that Alliance may
reasonably request to enable it to initiate an application for Marketing Authorisation for MR
for the treatment of periodontitis in any country or countries in the Territory, and Alliance
shall have the opportunity to review such material and determine whether it wishes to initiate
such an application.
	 
	6.4  	Non-Exercise of MR Option. If after review of the MR data and documentation,
Alliance decides that it does not wish to initiate an application for Marketing Authorisation
for MR for the treatment of periodontitis in any country or countries in the Territory,
Alliance shall, before the expiration of the Option Period, return all such data to
CollaGenex, and Alliance’s right to the MR Option shall lapse.
	 
	6.5  	Exercise of Option. If after review of the MR data and documentation, Alliance
decides that it does wish to initiate an application for Marketing Authorisation for MR for
the treatment of periodontitis in any country or countries in the Territory, Alliance shall,

	 	(a)  	before the expiration of the Option Period, and as a condition to the validity
of the MR Option, pay to CollaGenex US$350,000 (three hundred and fifty thousand
Dollars); and
	 
	 	(b)  	immediately upon the granting of a Marketing Authorisation relating to MR by
the relevant UK marketing authority, a further amount equal to:

12

 

(X) thirty per cent (30%) of the aggregate Net Trade Sales of
Periostat® in the Territory during the twelve (12) month period preceding the
date of application by Alliance for a Marketing Authorisation covering MR for
the treatment of periodontitis anywhere in the Territory, provided, however,
that X shall in no event be less than $1,500,000

minus

(Y) $350,000.

	6.6  	Effect of Exercise. Upon Alliance exercising the MR Option, CollaGenex shall provide
or procure the provision to Alliance (as and when available) of the following:

	 	(a)  	Documentation in the proper form necessary to extend all the rights granted in
respect of the Products under this Agreement to cover MR.
	 
	 	(b)  	Documentation in the proper form adding Periostat-MR® (and Periostat-SR®) to
the schedule of trade marks licensed under the Trade Mark Licence;
	 
	 	(c)  	all pharmacokinetic, bio-equivalence and other similar data relating to MR in
the possession of CollaGenex or available to CollaGenex;
	 
	 	(d)  	all active ingredient, excipient, formulation, manufacturing and packaging
information relating to MR, including, where relevant, TSE certificates, developed by
CollaGenex and/or in the possession of CollaGenex;
	 
	 	(e)  	access to documentation describing the patent and other intellectual property
incorporated in MR to the extent developed by or in the possession of CollaGenex and/or
access to the licensors of such intellectual property; and
	 
	 	(f)  	an original of the final report (including all charts, tables and statistical
data) prepared in accordance with applicable US standards for the multi-centre clinical
study for MR (Protocol PERIO-DOXYMR-301).

	6.7  	Royalty. Alliance further agree to pay to CollaGenex an ongoing royalty of ten per
cent (10%) of the amount by which the combined Net Trade Sales of Periostat® and MR in the
Territory in any year exceed the Net Trade Sales of Periostat® in the Territory for the twelve
(12) month period preceding the date of launch of MR in the first country in the Territory.
	 
	6.8  	Access and Audit. Alliance agrees to provide CollaGenex, or its authorised
representative, with access to all of its financial records relating to the sales of
Periostat® and MR as CollaGenex may reasonably require in relation to the calculation of the
royalty described in clause 6.4. In the event of a dispute as to the amount of royalties paid
or payable, CollaGenex may, at its own expense, engage independent auditors to certify the
correctness of the royalties paid or alleged to be payable by Alliance, and Alliance shall pay
CollaGenex any royalties such auditors certify to be payable to CollaGenex in excess of the
royalties actually paid to CollaGenex. If such independent auditors certify that the

13

 

	   	royalties due exceed 105% of the royalties alleged to be payable or actually paid, then
Alliance shall additionally reimburse CollaGenex for CollaGenex’s expenses in engaging such
independent auditors.

	6.9  	Net Trade Sales. For the avoidance of doubt and for the purposes of this Article 6,
the term “Net Trade Sales” shall mean the gross invoice price received by Alliance and
attributable to a commercial sale of Periostat and/or MR to a bona fide customer of Alliance
or an Affiliate of Alliance in the Territory less returns; promotional allowances; import or
export taxes; any tax or Governmental charge levied on the sale of the Products in force from
time to time; commissions to third parties and trade discounts (which term shall include early
invoice settlement discounts) actually taken.
	 
	6.10  	Supply Agreement. As soon as practicable following the exercise of the MR Option by
Alliance, CollaGenex will or will procure that its parent company, CollaGenex Pharmaceuticals,
Inc. will enter into a separate supply agreement with Alliance for Periostat-MR.

Article 7. Warranties of CollaGenex

In consideration of the performance of the obligations of Alliance under this Agreement, CollaGenex
makes the following warranties to Alliance, which shall be true as of the date of execution of this
Agreement and as of Actual Completion, provided, however, that Alliance shall have no right to
claim as a breach of warranty, any fact fairly disclosed in the Disclosure Letter, and its right to
claim under any warranty shall be limited to the extent Alliance knows of a breach of that
warranty, as a result of its analysis of the documents listed in the Disclosure Letter. For the
purposes of this Article 7, references to the Dislosure Letter shall, when taken in the context of
the warranties being given as at Actual Completion, be deemed to be references to the Further
Disclosure Letter:

	(a)  	Organisation. CollaGenex is a corporation duly organised, validly existing and in
good standing under the laws of England and Wales, with full power and authority to conduct
the Dental Business in the Territory.
	 
	(b)  	Necessary Actions; Binding Effect. CollaGenex has taken all actions necessary to
authorize the execution, delivery and performance of this Agreement, the sale of the Dental
Business Assets to Alliance, and the performance of all transactions to be performed under
this Agreement. This Agreement is a valid, legal and binding obligation of CollaGenex,
enforceable against it in accordance with its terms.
	 
	(c)  	No Conflicts. The execution, delivery and performance of this Agreement will not
conflict with, or result in the breach of, the governing corporate documents of CollaGenex,
any decree or order of any court or administrative or governmental body to which CollaGenex is
subject, or any agreement, document, indenture or other instrument to which CollaGenex is a
party or by which it is bound.
	 
	(d)  	Operating data and records. The operating data and records provided or to be
provided to Alliance are true and complete and do not contain any misstatement of a material
fact or

14

 

	   	omit any material fact, qualification or explanation necessary to make the statement or
information made or contained in such documents not misleading. Financial data included in
such records has been prepared in accordance with generally accepted accounting principles
applied on a consistent basis.

	(e)  	Marketing Materials. The marketing and promotional materials are original
copyrighted material of CollaGenex and, so far as CollaGenex is aware, do not infringe the
intellectual property rights of any third party and have been prepared in accordance with
applicable rules and regulations of those countries in the Territory where they have been
used.
	 
	(f)  	Existing Marketing Authorisations. In respect of those countries where CollaGenex
holds the Existing Marketing Authorisations, the Existing Marketing Authorisations are all the
licenses, permits, consents, authorizations and approvals required for the conduct of the
Dental Business in the country where they were issued. Except as set out in the Disclosure
Letter, all the Existing Marketing Authorisations are in full force and effect. CollaGenex is
in good standing with each of the governmental agencies that administers the Existing
Marketing Authorisations. CollaGenex makes no representation with respect to the state of the
relationship of its suppliers and manufacturers with the relevant regulatory bodies and
agencies; however CollaGenex has no information which indicates that such suppliers and
manufacturers are not in good standing. CollaGenex knows of no circumstance which might, with
the passage of time or giving of notice, render any of the foregoing statements untrue.
	 
	(g)  	Distribution Agreements. The Distribution Agreements are the only contracts giving
any third party the right to market and distribute the Product in the Territory. CollaGenex
has performed all of the obligations required to be performed by it to date under such
agreements and, so far as is CollaGenex is aware, is not in default under any such agreement,
nor, so far as is CollaGenex is aware, has there been any default by any other party to any
such agreement. CollaGenex knows of no circumstance (other than the expiration of the term of
any such agreement) or threatened cancellation or dispute as a result of which any such
agreement might cease to be in full force and effect. To the best knowledge of CollaGenex,
there is no bar under any such agreement to the novation, assignment or sublease of
CollaGenex’s interest under each such contract to Alliance or to the consummation of the other
transactions contemplated under this Agreement.
	 
	(h)  	Technical Agreements. The Technical Agreements are all the arrangements relating to
manufacture, release, packaging, storage and freight the Product required under the
regulations governing the import and distribution of human pharmaceutical products in the
territories covered by the Existing Marketing Authorisations. CollaGenex knows of no
circumstance or threatened cancellation or dispute as a result of which any such arrangement
might cease to be continued for the benefit of Alliance. To the best knowledge of CollaGenex,
there is no bar under any such agreement to the novation, assignment or sublease of
CollaGenex’s rights or privileges under each such agreement to Alliance or to the consummation
of the other transactions contemplated under this Agreement.

15

 

	(i)  	Intellectual Property. The trade marks referenced in the Trade Mark Licence are those
applicable to the conduct of the Dental Business. Except as set out in the Trade Mark
Licence, CollaGenex owns all right title and interest in and to such trade marks, free and
clear of all restrictions, liens, options, pledges, claims, security interest, other
encumbrances of any kind and all other third party interests. Where CollaGenex is the
licensee of any of such trade marks, CollaGenex has been granted such license right, together
with a right to sub-license, pursuant to an agreement or arrangement that is in full force and
effect, and CollaGenex knows of no circumstance (other than the expiration of the term of any
such agreement) or threatened cancellation or dispute as a result of which any such agreement
might cease to be in full force and effect. All trade mark registrations and applications
for registration referenced in the Trade Mark Licence are current and in good order.
CollaGenex has no knowledge to the effect that any third party is infringing or intending to
infringe any of such trade marks. CollaGenex has no knowledge to the effect that the Product
or processes used in connection therewith infringes or is claimed to infringe the patents or
other intellectual property rights or know-how of any third party. With respect to the Dental
Business in the Territory, CollaGenex has not granted nor is obliged to grant any licence
sub-licence or assignment in respect of any patents or know-how owned or used by it and has
not disclosed nor is obliged to disclose any know-how to any person other than its employees
or its Affiliates.
	 
	(j)  	Inventory. CollaGenex owns all of the Inventory with good and marketable title, free
from all restrictions, claims, liens, options, pledges, security interests, or other
encumbrances of any kind and all other third party interests. The Inventory includes only
those products which are in good and saleable condition.
	 
	(k)  	Product Liability. To the best of CollaGenex knowledge, there are no products sold in
the Dental Business by CollaGenex in circulation which were, are or will become in any
material respect faulty or defective or which did not or do not comply in any material respect
with any specifications, warranties or representations expressly or impliedly made by
CollaGenex or with all regulations, standards and requirements applicable to the countries in
the Territory in which they were sold. There are no ongoing litigations or other judicial,
arbitral, administrative or other proceedings to which CollaGenex is a party in which it is
alleged that such products are or were in circulation, and, to the best knowledge of
CollaGenex, no such litigation or other proceeding is threatened.
	 
	(l)  	CollaGenex warrants that it has no employees or other staff who could be deemed to be
employees at the date of Actual Completion.

Article 8. Warranties of Alliance

Alliance and Guarantor, make the following warranties to CollaGenex as of the date of execution of
this Agreement and as of Actual Completion:

	(a)  	Organisation. Alliance is a corporation duly organised, validly existing and in good
standing under the laws of its jurisdiction of incorporation.

16

 

	(b)  	Necessary Actions; Binding Effect. Alliance has taken all actions necessary to
authorize the execution, delivery and performance of this Agreement, the purchase of the
Dental Business Assets from CollaGenex, and the performance of all transactions to be
performed under this Agreement, including the issue of the Guarantee. The Asset Sale
Agreement constitutes the valid obligation of Alliance and is legally binding upon Alliance in
accordance with its terms.
	 
	(c)  	No Conflicts. The execution, delivery and performance of this Agreement will not
conflict with, or result in the breach of, the governing corporate documents of Alliance, any
decree or order of any court or administrative or governmental body to which Alliance is
subject, or any agreement, document, indenture or other instrument to which Alliance is a
party or by which it is bound.
	 
	(d)  	PLC. The Guarantor is a public company limited by shares incorporated in England;
	 
	(e)  	AIM. The existing issued share capital of the Guarantor is admitted to trading on
the AIM market of the London Stock Exchange (“AIM”);
	 
	(f)  	Authority to Allot. The Directors of the Guarantor are duly authorised to allot the
Placing Shares pursuant to Section 80 Companies Act 1985 and all the other requirements of
Part IV of that Act will have been complied with and all requisite waivers and consents will
have been obtained for such allotments;
	 
	(g)  	Placing Agreement. Alliance and Guarantor restate for the benefit of CollaGenex
those warranties made by Alliance Pharma plc in the Placing Agreement, which are incorporated
herein by reference save insofar as such warranties relate to this Agreement and matters
recorded herein.

Article 9. Survival of Warranties; Indemnities, Claims

	9.1  	Survival of Warranties. All warranties, covenants and other undertakings contained
herein shall be valid and enforceable after Actual Completion and shall survive Actual
Completion for a period of one year and after one year shall be extinguished subject to
Section 9 (1).
	 
	9.2  	Timing and Size of Alliance Claims. Alliance may, up to six (6) months from the
expiration of the one year period referenced in Section 9.1, notify CollaGenex of a claim for
a breach of warranty that occurred during the one year period referenced in Section 9.1,
provided, however, that Alliance shall bring no claim and CollaGenex shall not be liable under
this Article unless CollaGenex’s alleged liability is for an aggregate sum exceeding
U.S.$500,000, and provided, further, however, that CollaGenex’s liability for all such claims
made, if any, under the warranties or covenants contained herein shall not in any event exceed
the Purchase Price.
	 
	9.3  	Inadmissable Claims. No claim for a breach of warranty shall be admissible and
CollaGenex shall not be liable in respect of such a claim to the extent that it occurs or is
increased as a result of or is attributable to:

17

 

	 	(a)  	a change in legislation which is first announced after Escrow Completion (or
Actual Completion, as the case may be); or
	 
	 	(b)  	a voluntary transaction, act or omission by Alliance or the Guarantor or their
respective directors or employees or agents after Escrow Completion (or Actual
Completion, as the case may be).

	9.4  	Reduction in Purchase Price. Without prejudice to Article 9.2, any payment made by
CollaGenex in respect of a claim made pursuant to this Article 9 shall be deemed to be a
reduction in the purchase price due to CollaGenex to the extent permitted by law.
	 
	9.5  	Contingent Claims. No claim may be made against CollaGenex based upon a liability
which is contingent unless and until such contingent liability becomes an actual liability.
	 
	9.6  	Third Party Recovery. If Alliance recovers (whether by payment, discount, credit,
relief or otherwise) from a third party an amount which relates to a claim, any actual
recovery shall to that extent reduce or satisfy, as the case may be, such claim.
	 
	9.7  	Subsequent Recovery. If CollaGenex pays an amount in respect of a claim and Alliance
subsequently recovers (whether by payment, discount, credit, relief or otherwise) from a third
party an amount which relates to that claim, Alliance shall pay to CollaGenex an amount equal
to the lesser of the amount recovered from the third party less any reasonable costs and
expenses incurred in obtaining such recovery and the amount previously paid by CollaGenex to
Alliance.
	 
	9.8  	Insured Losses. No liability of CollaGenex in respect of a breach of warranty shall
arise to the extent that it relates to a loss in respect of which Alliance is insured under
any policy of insurance and Alliance successfully recovers money under such policy.
	 
	9.9  	Double Recovery. Alliance shall not be entitled to recover from CollaGenex more than
once for the same damage suffered.
	 
	9.10  	Employee Claims. CollaGenex shall indemnify and keep indemnified Alliance
immediately upon demand and on a full indemnity basis against all and any claims that may be
made against Alliance by any agent or contractor or employee of CollaGenex who is employed or
may be deemed to be employed by CollaGenex and whose employment is or is deemed to be
transferred to Alliance by the Transfer of Undertakings (Protection of Employment) Regulations
1981. This indemnity shall include without limitation, all losses, damages, actions,
proceedings, claims, demands, employment tribunal awards, compensation, penalties,
liabilities, costs and expenses (including without limitation legal and other professional
fees and expenses on an indemnity basis) whatsoever including without limitation protective
awards, damages for wrongful dismissal, claims for breach of contract, unfair dismissal and
unlawful deductions from wages.

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Article 10. Force Majeure

	10.1  	Force Majeure. All circumstances beyond the reasonable control of either party and
which have, or may have, a material effect on the ability to perform under this Agreement
including, but not limited to, failure of power or other utility or sanitary supplies or
services; fire; flood; earthquake; explosion; riot; strike or lock-out of that party’s own
work force; civil insurrection or unrest; terrorist activity; war (whether war be declared or
not) and regulations of any governmental, national or trans-national authority (each a “Force
Majeure”) shall, for the duration and to the extent of the effects caused thereby, release the
parties from the performance of their contractual obligations hereunder.
	 
	10.2  	Affected Party. The party who has suffered the Force Majeure (“the Affected Party”)
shall notify the other party without delay of any such incidents occurring and the parties
shall discuss the effects of such incidents on this Agreement and the measures to be taken.
	 
	10.3  	Mitigation. Each party shall endeavour and take all necessary steps to avoid or
restrict Force Majeure and to mitigate any loss therefrom.
	 
	10.4  	Resumption of Performance. In the event of an incident or incidents of Force
Majeure, the parties shall as soon as reasonably possible resume performance of their
obligations hereunder but in the event that Force Majeure has prevailed for a continuous
period in excess of one hundred and twenty (120) days, the party which is not the Affected
Party may terminate this Agreement immediately by notice, in writing, citing Force Majeure.
	 
	10.5  	Government Restrictions. This Agreement is made subject to any laws, regulations,
orders or other restrictions on the export from the United States of America of human
pharmaceutical products as may be imposed from time to time by the Government of the United
States of America and the other countries of the Territory. Alliance acknowledges that the
export of the Product from the United States of America is subject to CollaGenex receiving the
necessary licence(s) or approval(s) for export from the United States of America and
CollaGenex shall not be liable in any way for any delays, including, without limitation,
delays in obtaining required export authorisations, which are beyond the reasonable control of
CollaGenex.

Article 11. Notices

All notices required or permitted under this Agreement shall be in writing and delivered by any
method providing proof of delivery or receipt. Any notice shall be deemed to have been given on
day of receipt. Notices shall be delivered to the parties at the following addresses until a
different address has been designated, by notice, to the other party:-

If to CollaGenex

CollaGenex International Limited

The Old Stable Block,

7 Buttermarket,

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Thame,

Oxfordshire OX9 3EW,

United Kingdom

Fax: +44 (0) 1844 218 795

Attention: Company Secretary

With a Copy to

CollaGenex Pharmaceuticals, Inc.,

41 University Drive,

Newtown,

Pennsylvania 18940,

United States of America.

Fax: +1 215 579 8577

Attention: Chief Financial Officer

If to Alliance

Alliance Pharmaceuticals Limited,

Avonbridge House,

Bath Road,

Chippenham,

Wiltshire SN15 2BB,

United Kingdom.

Fax: + 44 (0) 1249 466977

Attention: Finance Director

Article 12. Dispute Resolution

	12.1  	Good Faith Negotiation. The Parties shall attempt in good faith to settle among
themselves any and all disputes arising regarding the validity, interpretation or application
of this Agreement, or other disputes arising from legal relationships resulting from this
Agreement.
	 
	12.2  	Referral to Senior Officers. If the Parties are unable to settle a dispute
themselves after good faith negotiation for at least 30 days from the date the dispute arose,
then such dispute shall be referred to two senior officers, one from each of the parent
companies of the Parties, one nominated by each Party, to resolve.
	 
	12.3  	Mediation. If within 30 days the senior officers cannot resolve a dispute, the
parties will promptly engage a mutually acceptable mediator and work in good faith with such
mediator for a further 30 days to resolve the dispute.
	 
	12.4  	Arbitration. If the Parties’ senior officers are unable to resolve a dispute after
good faith negotiation for a further 60 days, then the dispute shall be finally settled by
arbitration under the rules of Conciliation and Arbitration of the International Chamber of
Commerce (“ICC”) by one arbitrator admitted to the practice of law in a common law
jurisdiction and appointed in accordance with said rules. The language of arbitration is
English and the place of arbitration is London. Notwithstanding the application of

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	   	substantive provisions of the Law of England and Wales pursuant to Section 13(c), the
arbitration proceedings shall be conducted according to the procedures of the ICC.

	12.5  	Injunctive Relief. Nothing in this Article 12 shall limit either Party’s right to
seek injunctive relief in appropriate circumstances in a court of competent jurisdiction.

Article 13 General Provisions

	13.1  	Entire Agreement. This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof, and no modification, amendment, supplement
or change shall be effective unless in writing and signed by authorised officers of the
parties. This Agreement supersedes all prior understandings, negotiations and agreements,
whether written or oral, relating to the subject matter hereof.
	 
	13.2  	No Waiver. The waiver by either party of a breach or default of any of the
provisions contained herein shall be in writing and shall not be construed as waiver of any
succeeding breach or default or of the provision itself.
	 
	13.3  	Choice of Law. This Agreement shall be governed and construed in accordance with the
laws of the England, and any disputes arising under it shall (to the extent not chosen to be
arbitrated on pursuant to 12.4 above) be resolved in the courts of England and Wales.
	 
	13.4  	Injunction. Nothing in this Agreement shall limit either party’s right to seek
injunctive relief in appropriate circumstances in a court of competent jurisdiction.
	 
	13.5  	Expenses. Except as may be otherwise provided for in this Agreement, each of the
parties hereto shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby, save that in any event Alliance shall pay the costs of
CollaGenex’s professional fees in relation to the Placing Agreement within 14 days of receipt
of such invoice.
	 
	13.6  	Termination Costs. In the event of Alliance not proceeding to Actual Completion for
any reason other than a breach by CollaGenex, then Alliance shall pay liquidated damages to
CollaGenex in the amount of £50,000 (fifty thousand pounds sterling) plus any expenses
incurred by CollaGenex in connection with the transactions contemplated by this Agreement up
to such date.
	 
	13.7  	Partial Invalidity. If any provision of this Agreement shall be held to be illegal
or unenforceable, such holding shall not affect the validity or enforceability of any of the
other provisions of this Agreement.
	 
	13.8  	Successors. This Agreement shall be binding upon and inure to the benefit of each of
CollaGenex and Alliance and each of their respective successors and assigns.
	 
	13.9  	No Partnership. Nothing in this Agreement shall create or imply any association,
partnership or joint venture between the parties, it being agreed and understood that the

21

 

	   	parties are independent contractors and neither party shall have the power or authority to
bind the other in any way.

	13.10  	Third Party Rights. Nothing in this Agreement shall confer any obligations on any
person who has not executed this Agreement. The parties of this Agreement expressly agree for
the purposes of the Contracts (Rights of Third Parties) Act 1999 that they do not intend any
person other than a party to this Agreement (whether an original party or one who has adhered
by deed of adherence) to be able to enforce any term of this Agreement.
	 
	13.11  	No Rescission. The Parties agree that rescission shall not be available as a remedy
for any breach of this Agreement and each agree not to claim that remedy.
	 
	13.12  	Procurement by CGPI. To the extent that CollaGenex has obligations pursuant to this
Agreement that it is unable to fulfil, CGPI shall procure that such obligations shall be
fulfilled by CollaGenex’s Affiliates from time to time.

Article 14 Value Added Tax

	14.1  	Application of article 5. CollaGenex and Alliance intend that article 5 of the Value
Added Tax (Special Provisions) Order 1995 shall apply to the sale of the Dental
Business Assets under this Agreement and agree to use all reasonable endeavours to secure that
the sale is treated as neither a supply of goods nor a supply of services under that article.

 

	14.2  	Alliance Obligation. If nevertheless any VAT is payable on the sale of the Dental
Business Assets under this Agreement and HM Customs & Excise (“Customs”) have so confirmed in
writing after full disclosure of all material facts, then Alliance shall pay to CollaGenex the
amount of that VAT forthwith on payment of the VAT by CollaGenex or, if earlier,
promptly after delivery by CollaGenex to Alliance of a proper VAT invoice in respect of it.
	 
	14.3  	Application of Section 49. CollaGenex and Alliance intend that s. 49 of the Value
Added Tax Act 1994 shall apply to the sale of the Dental Business Assets under this agreement
and accordingly:

	 	(a)  	CollaGenex shall forthwith make a request to Customs for a direction that those
records be preserved by CollaGenex;
	 
	 	(b)  	CollaGenex shall promptly notify Alliance of the result of that request and if
Customs do not grant it shall on demand deliver the records to Alliance;
	 
	 	(c)  	CollaGenex shall:

	 	(i)  	preserve the records for such period as may be required by law;
	 
	 	(ii)  	so long as it preserves those records permit Alliance
reasonable access to them to inspect or make copies of them; and

22

 

	 	(iii)  	not at any time cease to preserve those records without giving
Alliance reasonable opportunity to inspect and remove such of them as Alliance
wishes; and

	 	(d)  	if the records are delivered to Alliance under paragraph (b), paragraph (c)
shall apply as if references to CollaGenex were references to Alliance and vice versa.

	14.4  	Due Registration. Alliance represents and warrants to CollaGenex that Alliance is
duly registered for VAT with registration number 682 2155 39 and that with effect from Actual
Completion the Dental Business Assets will be used by Alliance in carrying on the same kind of
business as the business carried on by CollaGenex prior to date of Actual Completion.
	 
	15.  	Confidentiality. The parties agree that this Agreement and any matters contemplated
by this Agreement remain private and confidential and shall not be disclosed to any third
party except to employees and relevant professional advisers or pursuant to the marketing of
the Placing or except as may be required by law or the London Stock Exchange or NASDAQ listing
agreement or the NASDAQ listing rules.
	 
	16.  	Press releases. The parties agree that publication of this Agreement and/or the
Placing Agreement or matters contemplated by such documents may be of significant commercial
or public or investor relations value to each of the parties and the parties agree to the
publishing of press releases announcing the matters contemplated in such documents either
jointly or separately provided that:-

	 	(a)  	the text of any press release(s) must be approved, in writing, by both the
parties; and
	 
	 	(b)  	each party shall provide the other with a list of the entities through which
such press release(s) shall be distributed,

	   	and provided further that notwithstanding the above CollaGenex, CollaGenex Pharmaceuticals,
Inc., Alliance and the Guarantor may distribute any press release, filing or public
announcement as may be required by any applicable law or the London Stock Exchange or NASDAQ
listing agreement or the NASDAQ listing rules.

Executed as of the date first above written by their authorized representatives:

	 	 	 	 	 
	

	 	 	 	COLLAGENEX
	 
	 	 	 	 
	

	 	 	 	/s/ Andrew Powell
	

	 	 	 	 
	

	 	By:
	 	Andrew Powell
	

	 	 	 	Vice President, General Counsel & Corporate Secretary

23

 

	 	 	 	 	 
	

	 	 	 	ALLIANCE
	 
	 	 	 	 
	

	 	 	 	/s/ John Dawson
	

	 	 	 	 
	

	 	By:
	 	John Dawson
	 
	 	 	 	 
	

	 	 	 	GUARANTOR
	 
	 	 	 	 
	

	 	 	 	/s/ Maddy Scott
	

	 	 	 	 
	

	 	By:
	 	Maddy Scott
	 
	 	 	 	 
	

	 	 	 	CGPI

	

	 	 	 	/s/ Andrew Powell
	

	 	 	 	 
	

	 	By:
	 	Andrew Powell
	

	 	 	 	Vice President, General Counsel & Corporate Secretary

24

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