EXHIBIT 99.3
CO-PROMOTION AGREEMENT
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This Co-Promotion Agreement ("Agreement") is entered into as of the 21st
day of June, 1999 between ALZA Corporation ("ALZA") and Xxxxxx Laboratories
Inc. ("ABBOTT").
WHEREAS, ALZA markets Ditropan XL(R), a proprietary controlled release
urinary incontinence product; and
WHEREAS, ABBOTT desires to co-promote Ditropan XL(R) with ALZA in the
United States, in accordance with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following definitions
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shall be applicable:
1.1 "Contract Month" means a full calendar month (except that the
first Contract Month shall start on the Effective Date and end on the last
day of such calendar month).
1.2 "Effective Date" shall mean that date which is thirty (30) days
after the date of termination of the Agreement and Plan of Merger between
ALZA, ABBOTT and AC MERGER SUB INC.
1.3 "Net Sales" means gross sales of the Product (as set forth on the
invoice for such Product) in the United States for use in the United States
in a given Sales Quarter by ALZA and any ALZA affiliate, to unrelated third
parties, in arm's length transactions, including but not limited to,
pharmaceutical wholesalers, pharmacies, hospitals, or dispensing
physicians, less any of the following charges or expenses that are incurred
in connection with gross sales of the Product during the Term:
(i) discounts, including cash discounts, customary trade allowances
or rebates actually taken or allowed, governmental rebates,
charge-backs, and group purchasing management fees for formulary
access;
(ii) credits or allowances given or made for rejection, recall or
return (including return reserves) of previously sold Product
actually taken or allowed;
(iii) any tax or governmental charge (including any tax such as a
value added or similar tax or government charge) to the extent
it appears on Product invoices (other than an income tax levied
on the sale, transportation or delivery of Product); and
(iv) freight, insurance and duties on shipments of Product.
The parties agree that the only discounts, allowances or rebates permitted
to be charged against "Net Sales" hereunder shall be those that are
extended by ALZA in good faith and consistent with discounts, allowances or
rebates extended by ALZA on other ALZA products in the ordinary course of
business.
1.4 "Product" means Ditropan XL(R), a proprietary controlled release
urinary incontinence product currently marketed by ALZA in the United
States.
1.5 "Representative" means a sales employee of ALZA or ABBOTT, as the
case may be, trained to make Sales Calls to the Target Audience.
1.6 "Sales Call" means a presentation to a member of the Target
Audience by a Representative during which such Representative promotes the
Product. "Sales Call" may also refer to a presentation to a member of the
Target Audience by a sales employee of Innovex, Inc. ("Innovex") or UCB
Pharma, Inc. ("UCB") in accordance with the terms of ALZA's agreements with
Innovex and UCB, respectively, during which such sales employee promotes
the Product.
1.7 "Sales Quarter" shall mean a period of three (3) consecutive
Contract Months, except that the first Sales Quarter shall mean the period
from the launch of ABBOTT Sales Calls through the end of the calendar month
and the following three (3) Contract Months.
1.8 "Target Audience" means general practitioners, urologists and
other medical personnel in a position to prescribe the Product.
1.9 "Term" means the period commencing on the Effective Date and
ending on June 30, 2004.
2. Co-promotion Activities
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2.1 Appointment and Acceptance. ALZA hereby appoints ABBOTT, and
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ABBOTT hereby accepts appointment, as a co-promoter of Product in the United
States in accordance with the terms and conditions of this Agreement. In the
event that ALZA desires to add additional Sales Calls to its marketing effort
through a co-promotion arrangement with a third party, ALZA agrees that ABBOTT
shall have a right of first negotiation to perform such Sales Calls, and the
parties agree to negotiate in good faith the terms for ABBOTT performing such
additional Sales Calls. If the parties are unable to agree on such terms, ALZA
agrees that it shall not offer more favorable terms to a third party without
first re-offering the additional Sales Calls to ABBOTT on such more favorable
terms.
2.2 Scope of Co-Promotion. Abbott Representatives shall perform
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Sales Calls on the Target Audience as follows:
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(a) ABBOTT Representatives shall perform a minimum of forty five
thousand (45,000) Sales Calls per Sales Quarter (except for the first
Sales Quarter in which ABBOTT Representatives shall perform an
appropriate number of Sales Calls as determined by ABBOTT for the
first Contract Month and forty five thousand (45,000) Sales Calls for
the following three (3) Contract Months). In the event ABBOTT fails
to perform such required minimum Sales Calls in a given Sales Quarter
by a variance of minus ten percent (10%) or less, ABBOTT shall be
entitled to make up such variance by performing all of such variance
in the subsequent Sales Quarter, in which case ABBOTT shall be
compensated for such variance in accordance with the procedure set
forth in Section 3(a).
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(b) All Sales Calls by ABBOTT Representatives shall be performed
in the first position.
(c) ABBOTT Representatives shall deliver promotional materials
supplied by ALZA pursuant to Section 2.7 to the Target Audience.
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ABBOTT shall not distribute any other Product promotional materials.
(d) ABBOTT Representatives shall perform Sales Calls in
accordance with approved labeling and all applicable laws and
regulations, including but not limited to the Food, Drug and Cosmetics
Act of 1938, as amended, and the Prescription Drug Marketing Act of
1987, as amended.
2.3 ALZA Sales Calls Efforts. ALZA Representatives shall continue to
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perform Sales Calls substantially in accordance with (or greater than) its
current level of performance, which, when combined with the number of Sales
Calls required of Innovex, is equal to fourteen thousand (14,000) Sales
Calls per month.
2.4 Sales Calls Tracking. Each party shall keep track of the number
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and position of Sales Calls by its Representatives in accordance with its
normal internal reporting procedures. From time to time upon the
reasonable request of a party, the other party shall provide a report with
respect to the number of Sales Calls performed by its Representatives
during the preceding time period. In addition, from time to time, upon
request by ABBOTT, ALZA shall provide a report with respect to the number
of Sales Calls performance by Innovex and UCB, respectively. Each party
shall have the right from time to time to accompany Representatives of the
other party on Sales Calls or otherwise audit Sales Calls for compliance
with this Agreement.
2.5 Communication. ABBOTT and ALZA shall meet at least once in each
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Sales Quarter during the Term to review co-promotion effectiveness and to
formulate and implement Sales Calls strategies and other aspects of the co-
promotion. Each party will designate an individual responsible for
overseeing that party=s day-to-day performance under this Agreement.
ALZA=s initial designee is Xx. Xxx Xxxxxxx and XXXXXX=s initial designee is
Mr. Xxxxxx Xxxxxx. Either party may change its designate by written notice
to the other.
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2.6 Training. ALZA shall provide ABBOTT with Product training
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materials for all ABBOTT Representatives, at ALZA's expense. All other
training expenses of ABBOTT Representatives shall be at the sole expense of
ABBOTT.
2.7 Promotional Materials; Samples. ALZA shall provide to ABBOTT,
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without charge, currently available promotional materials specific to the
Product, in sufficient quantities for ABBOTT to perform its obligations
hereunder. ABBOTT shall use promotional materials for the Product supplied
by ALZA or approved in writing by ALZA and the approved Product labeling
and will not deviate from the text of such materials and/or labeling. In
addition, ALZA shall supply ABBOTT, without charge, Product samples for
distribution by the ABBOTT Representatives at a level of samples consistent
with that supplied by ALZA to its own Representatives. ABBOTT shall cause
its Representatives to comply with all federal, state and local laws, rules
and regulations concerning the handling, distribution and tracking of
samples, and ABBOTT shall maintain all required records to enable ALZA to
account for and track such samples.
2.8 Product Complaints. ABBOTT shall give ALZA notice of any
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complaint or correspondence concerning the Product, including, but not
limited to, any adverse drug experience associated with the Product, in
accordance with the following procedure:
(i) information concerning any adverse drug experience associated
with a Product shall be reported to ALZA=s Director of Medical Safety
by telefax within twenty-four (24) hours and by hard copy in writing
three (3) days after initial receipt of such information;
(ii) all Product complaints not covered by (i) above shall be
reported in writing within twenty (20) calendar days following receipt
of such complaint. Such reports shall contain (a) the date the report
was received; (b) the name of the reporter; (c) the address and
telephone number of the reporter; and (d) an indication of the adverse
drug experience.
3. Compensation.
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(a) For the period commencing on the Effective Date through the
end of the Term, ALZA shall pay ABBOTT a commission equal to fifteen
percent (15%) of Net Sales for each Sales Quarter in which ABBOTT
makes at least forty five thousand (45,000) Sales Calls within forty-
five (45) days after the end of each Sales Quarter. If the number of
Sales Calls made by ABBOTT Representatives in a Sales Quarter are less
than forty five thousand (45,000), then the commission percentage
shall be reduced proportionately by multiplying fifteen percent (15%)
times the quotient derived from the number of Sales Calls actually
performed by ABBOTT Representatives divided by forty five thousand
(45,000). For example, if in a given Sales Quarter ABBOTT performed
only forty thousand (40,000) Sales Calls, XXXXXX'x compensation would
be 13.33% of Net Sales for such Sales Quarter (i.e., 15% times
[40,000/45,000]). This product is subject to
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adjustment upward to fifteen percent (15%) if the variance is made up
in the following Sales Quarter in accordance with Section 2.2(a), in
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which case ALZA shall compensate ABBOTT for the difference between
fifteen percent (15%) of Net Sales less the amount paid to ABBOTT for
the preceding Sales Quarter. ALZA shall make such additional payment
to ABBOTT with the commission payment due ABBOTT for the subsequent
Sales Quarter.
(b) Within thirty (30) days after the end of each Sales Quarter,
ALZA shall provide ABBOTT with a report showing: (i) gross sales of
the Product in the U.S. for such Sales Quarter; (ii) a calculation
demonstrating the adjustments to gross sales in order to arrive at Net
Sales; and (iii) the calculation of the commission payable, including
any adjustments to the commission payable.
(c) If ABBOTT, in its reasonable judgment, determines that an
audit of ALZA's relevant books and records is necessary to verify the
information supplied by ALZA pursuant to Section 3(c), then XXXXXX'x
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designee, under duty of confidentiality to ALZA and ABBOTT, and
provided such designee is an independent certified public accountant,
shall have the right, on fifteen (15) days advance written notice, at
XXXXXX'x expense, to perform an audit of the relevant books and
records of ALZA not more than once in any twelve (12) month period to
verify the information supplied by ALZA. If an audit reveals that
there has been a variance of two percent (2%) or more in the
determination of the applicable Net Sales, then the cost for such
audit shall be paid by ALZA.
4. Terms of Sales and Market Support Responsibility. All terms of sale
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for Product, including, without limitation, policies concerning pricing, credit
terms, cash discounts and returns and allowances shall be set by ALZA. All
sales of Product shall be recorded on the books of ALZA. ABBOTT is not
authorized to negotiate pricing issues with regard to the Product or make any
representations about such Product except as included in promotional materials
provided hereunder and/or in the Product labeling.
5. Records. Each party shall keep complete and accurate records as are
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required to implement and administer this Agreement.
6. Term. The Term shall commence on the Effective Date and terminate on
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June 30, 2004, unless earlier terminated pursuant to Article 7. The parties may
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extend this Agreement for additional time periods as mutually agreed in writing.
7. Termination.
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7.1 Termination. This Agreement may be terminated at any time by
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ABBOTT without cause upon six (6) month's prior written notice.
7.2 Breach. Either party may terminate this Agreement for material
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breach on thirty (30) days notice to the other party specifying the breach.
If such breach is not
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cured within such thirty (30) day period, then this Agreement shall
terminate at the end of such notice period.
7.3 Termination by ALZA. ALZA may terminate this Agreement on thirty
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(30) days notice to ABBOTT if ABBOTT fails to make at least thirty thousand
(30,000) Sales Calls during any three (3) consecutive Contract Months.
7.4 Effects of Termination. Upon termination of this Agreement for
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any reason, ABBOTT shall deliver to ALZA any and all of its inventory of
Product samples and other promotional material relating to the Product.
Expiration or termination of this Agreement shall not affect the remedies
of the parties otherwise available at law or equity in relation to any
rights accrued under this Agreement prior to expiration or termination.
8. Liability.
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8.1 Indemnification by ALZA. ALZA shall defend, indemnify and hold
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harmless ABBOTT and its officers, directors, agents and employees
(collectively, the "Abbott Indemnitees"), from and against any and all
liability, loss, damages and expenses (including attorneys' fees) as a
result of claims, demands, costs or judgements (collectively, the "Losses")
arising out of or resulting from:
(i) any negligent act or omission or willful misconduct of ALZA
and its directors, officers or employees or Representatives with
respect to the promotion of Product, including but not limited to
product liability claims arising out of out-of-label promotions by
ALZA, its directors, officers or employees or Representatives; or
(ii) any violation of approved labeling or applicable statute or
regulation with respect to the Product, or
(iii) breach of this Agreement by ALZA, or
(iv) the manufacturing, marketing, sale or use of the Product,
including any Product liability claims and/or patent infringement
claims, or
(v) any claim, warranty or representation by ALZA, with respect
to the Product, or
(vi) any infringement claim related to Xxxxxx'x use of the ALZA
name or logo of the ALZA trademarks in connection with the promotion
or sale of the Product, provided XXXXXX'x use is in compliance with
the terms of this Agreement.
Provided, however, that ALZA shall not be required to indemnify ABBOTT to
the extent that such Losses arise out of or result from: (1) the
negligence, recklessness or willful
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misconduct of the Abbott Indemnitees, including, but not limited to, out-
of-label promotion of the Product; and or (2) any breach by ABBOTT of this
Agreement. ABBOTT shall not be considered negligent for purposes of this
Section or Section 8.2 if such claim arises with respect to the content of
the promotional materials, Product labeling or other materials provided to
ABBOTT by ALZA as long as ABBOTT has distributed or employed such
promotional materials as directed herein.
ALZA shall have the exclusive right to control the defense of any action
which is to be indemnified in whole by ALZA hereunder, including the right
to select counsel reasonably acceptable to ABBOTT to defend ABBOTT and to
settle any claim, provided that, without the written consent of ABBOTT
(which shall not be unreasonably withheld or delayed), ALZA shall not agree
to settle any claim against ABBOTT. The provision of this Section shall
survive and remain in full force and effect after termination, expiration
or cancellation of this Agreement.
8.2 Indemnification by ABBOTT. ABBOTT shall defend, indemnify and
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hold harmless ALZA and its officers, directors, agents and employees
(collectively, the "ALZA Indemnitees"), from and against any and all
liability, loss, damages and expenses (including attorneys' fees) as a
result of claims, demands, costs or judgments (collectively, the "Losses")
arising out of or resulting from:
(i) any negligent act or omission or willful misconduct of
ABBOTT with respect to the co-promotion of the Product, or
(ii) any breach of this Agreement by ABBOTT.
Provided, however, that ABBOTT shall not be required to indemnify the ALZA
Indemnitees to the extent that any Losses arise out of or result from: (1)
the negligence, recklessness, or willful misconduct of any ALZA Indemnitee,
including but not limited to, out-of-label promotion of the Product; and/or
(2) any breach by ALZA of this Agreement.
ABBOTT shall have the exclusive right to control the defense of any action
which is to be indemnified in whole by ABBOTT hereunder, including the
right to select counsel reasonably acceptable to ALZA to defend ALZA and to
settle any claim, provided that, without the written consent of ALZA (which
shall not be unreasonably withheld or delayed), ABBOTT shall not agree to
settle any claim against ALZA. The provision of this Section shall survive
and remain in full force and effect after termination, expiration or
cancellation of this Agreement
8.3 Indemnification Procedure. If any claims are made against an
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indemnified party as to which the indemnification provisions set forth in
this Article 8 may apply, as soon as reasonably practicable, the
indemnified party will inform the other party thereof and the indemnifying
party and/or its insurers will assume the defense of any such claims. The
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indemnified party will cooperate in the disposition of any such matters.
The indemnified party shall have the right to participate at its own
expense in the defense of any such claim.
8.4 Disclaimer of Consequential Damages. IN NO EVENT SHALL EITHER
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ABBOTT OR ALZA BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL OR
INCIDENTAL DAMAGES ARISING UNDER OR AS A RESULT OF THIS AGREEMENT (OR THE
TERMINATION HEREOF).
9. Relationship of the Parties. Each party is performing hereunder as an
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independent contractor of the other party and its employees and representatives
are not eligible to participate in any benefits programs offered by the other
party to its employees, or in any pension plans, profit sharing plans, insurance
plans or any other employee benefits plans. Each party acknowledges and agrees
that it shall be solely responsible for designing and administering any
incentive program to its Representatives in respect to their activity promoting
the Product; and for paying all salaries, wages, benefits and other compensation
which its employees may be entitled to receive in connection with the
performance of this Agreement. Except as specifically set forth herein, no
employees or representatives of a party shall have any authority to bind or
obligate the other party to this Agreement for any such or in any manner
whatsoever, or to create or impose any contractual or other liability on the
other party without such other party's authorized written approval. For all
purposes and notwithstanding any provision of this Agreement to the contrary,
the parties= legal relationship under this Agreement shall be that the parties
are independent of each other and not that of partners or joint venturers.
Neither party hereto is authorized to make any statements or representations on
behalf of the other party or in any way obligate the other party, except as
expressly authorized in writing by the other party.
10. Confidential Information. Except as otherwise expressly provided
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under this Agreement, each party shall hold in confidence, and not use for any
purpose other than performing it obligations under this Agreement, all
confidential information concerning the other party, including, without
limitation, the amount of net sales of the Product. "Confidential Information"
shall not include information: (a) which is or becomes generally available to
the public other than as a result of disclosure thereof by the receiving party;
(b) which is lawfully received by the receiving party on a nonconfidential basis
from a third party that is not itself under any obligation of confidentiality or
nondisclosure to the disclosing party or any other person with respect to such
information; (c) which by written evidence can be shown by the receiving party
to have been independently developed by or for the receiving party; or (d) which
the receiving party establishes by competent proof was in its possession at the
time of disclosure by the other party and was not acquired, directly or
indirectly from the other party.
11. Right of First Negotiation. ALZA hereby grants to ABBOTT and ABBOTT
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hereby accepts a first right of negotiation to obtain from ALZA co-promotion
and/or license rights to XXXX(R) Methylphenidate in the U.S. In the event ALZA
elects to co-promote with and/or license rights to a third party with respect to
XXXX(R) Methylphenidate in the U.S., then prior to entering into such
negotiations with a third party, ALZA shall prepare and submit to ABBOTT a data
package which shall consist of at least the following information: stage of
development, therapeutic category, targeted indications, mechanism of action,
safety profile, and
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anticipated FDA submission date. If ABBOTT notifies ALZA within thirty (30)
days of its receipt of the data package of its desire to pursue discussions to
co-promote and/or license XXXX 7 Methylphenidate in the U.S., then the parties
shall, in good faith, proceed within three (3) months thereafter to negotiate
the terms of a co-promotion and/or license agreement, as the case may be. ALZA
shall not grant any third party any rights that conflict with XXXXXX'x right of
first negotiation unless ABBOTT has waived its right to exercise its right of
first negotiation to co-promote and/or license with respect to XXXX(R)
Methylphenidate. If the parties are not able to agree on the terms of a co-
promotion and/or license, as the case may be, after good faith negotiations,
within three (3) months of XXXXXX'x notice, then ALZA shall not offer co-
promotion and/or license rights to any third party for XXXX(R) Methylphenidate
on economic terms and/or structure of the overall arrangement more favorable to
such third party than those last offered to ABBOTT, without first re-offering
such rights to ABBOTT on such terms in accordance with the procedures set forth
in this Article 11, provided that in such case the period for ABBOTT to exercise
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its rights and negotiate a written agreement shall be thirty (30) days.
12. Miscellaneous.
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12.1 Compliance with Law. In performing the co-promotion activities
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contemplated by this Agreement, each party shall comply with all applicable
federal and state laws and regulations (including without limitation the
Prescription Drug Marketing Act and laws relating to Afraud and abuse@ in
Medicare or Medicaid) and shall not be required to perform any service in
respect to a Product if in doing so it might violate any such law or
regulation.
12.2 Amendment. This Agreement may not be amended except in writing
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signed by both parties.
12.3 Governing Law. This Agreement shall be governed and construed
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in accordance with the laws of the state of New York as applied to
residents of that state entering into agreements wholly to be performed in
that state.
12.4 Notices. Notices required under this Agreement shall be in
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writing and sent by registered or certified mail, postage prepaid, or by
telex or facsimile and confirmed by registered or certified mail and
addressed as follows:
If to ALZA: ALZA Corporation
950 Page Mill Road
X.X. Xxx 00000
Xxxx Xxxx, XX 00000-0000
Attn: Senior Vice President and General Counsel
Fax: (000) 000-0000
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If to ABBOTT: Xxxxxx Laboratories Inc.
000 Xxxxxx Xxxx Xxxx
Xxxx. XX0X, Xxxx. 000
Xxxxxx Xxxx, XX 00000-0000
Attn: Senior Vice President, Secretary
and General Counsel
Fax: (000) 000-0000
All notices shall be deemed to be effective five (5) days after the date of
mailing or upon receipt if sent by telefax or facsimile (but only if
followed by certified or registered confirmation). Either party may change
the address at which notice is to be received by written notice pursuant to
this Section 12.4.
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12.5 Publicity. ABBOTT and ALZA agree not to disclose any terms or
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conditions of this Agreement to any third party or to make any public
statement about this Agreement without the prior consent of the other party
(which consent shall not be unreasonably withheld or delayed) except as is
required by applicable law, rule or regulation.
12.6 Severability. If any provision of this Agreement is held by a
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court of competent jurisdiction to be invalid or unenforceable, it shall be
modified, if possible, to the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible, it shall be stricken
and the remaining provisions shall remain in full force and effect, unless
the deletion of such provision or provisions would result in such a
material change as to cause completion of the transactions contemplated
herein to be impossible and provided that the performance required by this
Agreement with such clause deleted remains substantially consistent with
the intent of the parties.
12.7 Headings. The headings set forth at the beginning of the
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various sections of this Agreement are for reference and convenience and
shall not affect the meanings of the provisions of this Agreement.
12.8 Assignment. This Agreement may not be assigned or otherwise
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transferred by either party without the consent of the other party. Any
purported assignment in violation of the proceeding sentences shall be
void. Any permitted assignee shall assume all obligations of its assignor
under this Agreement (provided that such assigning party shall remain
primarily liable hereunder in the case of any assignment to an affiliate).
Notwithstanding the foregoing, this Agreement shall be binding upon and
inure to the benefit of any successor by merger to either of the parties,
whether by purchase of a controlling interest of such party's stock, assets
or otherwise.
12.9 Survival. The provisions of Sections 2.8, 3 (but only as to
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amounts accrued to the termination date), 7.4, 8, 10, 12.3, 12.4, 12.5,
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12.8 and this Section 12.9 shall survive the expiration or termination of
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this Agreement.
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12.10 Entire Agreement. This Agreement sets forth the entire
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understanding between the parties hereto as to the subject matter hereof
and supersedes all other documents, agreements, verbal consents,
arrangements and understandings by or between the parties with respect to
the subject matter hereof.
12.12 Counterparts. The Agreement may be executed simultaneously in
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any number of counterparts and may be executed by facsimile. All
counterparts collectively constitute one and the same Agreement.
XXXXXX LABORATORIES INC. ALZA CORPORATION
By: /s/ Miles X. Xxxxx By: /s/ Xxxxxx Xxxxx
_____________________ _______________________
Title: Chairman & CEO Title: Chairman & CEO
_____________________ _______________________
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