EXHIBIT 10.3
LICENSE OPTION AGREEMENT
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This License Option Agreement (the "Agreement") is made as of the ____
day of August, 1997 by and between ALZA Corporation, a Delaware corporation
("ALZA"), and Crescendo Pharmaceuticals Corporation, a Delaware corporation
("Crescendo").
BACKGROUND
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A. Crescendo has been formed for the purpose of selecting and
developing human pharmaceutical products, including products using ALZA
Technology (as defined herein) and commercializing such products, most likely
through licensing to ALZA.
B. As of the date hereof, ALZA and Crescendo have entered into a
Technology License Agreement and a Development Agreement.
C. Crescendo desires to grant to ALZA an option to commercialize
the products developed by Crescendo under the Development Agreement as set forth
herein.
Now, therefore, the parties agree as follows:
1. Definitions.
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For purposes of this Agreement, the following terms shall have
the meanings set forth below:
1.1 "Affiliate" shall mean a corporation or any other entity
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the designated party. "Control"
shall mean ownership of at least 50% of the shares of stock entitled to vote for
the election of directors in the case of a corporation, and at least 50% of the
interests in profits in the case of a business entity other than a corporation.
1.2 "Crescendo Product" shall mean an Identified Product, or
another human pharmaceutical product which has been recommended by ALZA and
accepted by Crescendo's independent Board of Directors for development as such
under the Development Agreement.
1.3 "Development Agreement" shall mean the Development
Agreement dated as of the date hereof between ALZA and Crescendo.
1.4 "Distribution" shall mean ALZA's distribution of all of the
outstanding shares of Class A Common Stock of Crescendo to ALZA stockholders and
debenture holders of record on August __, 1997.
1.5 "FDA" shall mean the United States Food and Drug
Administration or any successor agency whose clearance is necessary to market a
Crescendo Product in the United States.
1.6 "Identified Products" shall mean the following products:
XXXX(R) oxybutynin, DUROS(TM) leuprolide, XXXX(R) methylphenidate, IUTS
progesterone, D-TRANS(TM) testosterone matrix, E-TRANS(TM) LHRH and E-TRANS(TM)
(skin interface technology) insulin.
1.7 "License Agreement" shall mean an exclusive license
agreement for a particular Crescendo Product between ALZA and Crescendo, in the
form of Exhibit A to this Agreement.
1.8 "License Option" shall mean the option granted to ALZA
pursuant to Section 2 of this Agreement.
1.9 "Product Payments" shall have the meaning set forth in
Section 3.1 of the License Agreement.
1.10 "Proprietary Rights" shall mean data, inventions,
information, processes, know-how and trade secrets, and patents or patent
applications claiming any of the foregoing, owned by, licensed to or controlled
by a person and which such person has the right to license or sublicense.
Proprietary Rights shall not include trademarks.
1.11 "Purchase Option" shall mean that certain option contained
in Crescendo's Restated Certificate of Incorporation pursuant to which ALZA has
the right to purchase all of the outstanding shares of Crescendo Class A Common
Stock.
1.12 "Technology License Agreement" shall mean the Technology
License Agreement dated as of the date hereof between ALZA and Crescendo.
2. License Option.
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2.1 Grant of License Option. On the terms and subject to the
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conditions of this Agreement, Crescendo hereby grants to ALZA an option to
obtain an exclusive license with respect to each Crescendo Product, exercisable
on a product-by-product and country-by-country basis as described in Section
2.2.
2.2 Time for Exercise.
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(a) ALZA may exercise the License Option with respect to
any Crescendo Product on a country-by-country basis at any time during the
period beginning on the date hereof and ending (i) with respect to the Xxxxxx
Xxxxxx, 00 days after clearance by the FDA to market such Crescendo Product in
the United States, and (ii) with respect to any other country, 90 days after the
earlier of (A) clearance by the appropriate regulatory agency to market such
Crescendo Product in such country and (B) clearance by the FDA to market such
Crescendo Product in the United States. Notwithstanding the
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foregoing, the License Option shall expire, to the extent not previously
exercised, at the close of business on the 30th day after the expiration of the
Purchase Option or, with respect to a particular Crescendo Product, upon
exercise by ALZA of the global buy-out option for such Crescendo Product under
the License Agreement for such Crescendo Product. In any case, ALZA must
exercise the License Option for a particular Crescendo Product in a particular
country prior to the first commercial sale of such product in such country by
ALZA or any of its Affiliates, sublicensees, distributors or marketing partners.
(b) The License Option for any Crescendo Product in any
country will expire if not exercised within the time periods described above. In
addition, the License Option for any Crescendo Product will expire, with respect
to all countries for which it has not yet been exercised, upon exercise by ALZA
of the global buy-out option for such Crescendo Product under the License
Agreement for such Crescendo Product.
(c) Crescendo will notify ALZA in writing within 10
business days of receipt of each clearance to market any Crescendo Product in
any country.
2.3 Manner of Exercise. ALZA shall exercise its License
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Option by delivering to Crescendo, within the time period described in Section
2.2 above, a written notice of exercise specifying the Crescendo Product and the
country or countries as to which the License Option is exercised. A License
Agreement for such Crescendo Product shall be deemed to be effective in such
country or countries as of the date of such notice of exercise, without the
necessity of any additional action by the parties. For the convenience of the
parties, however, ALZA shall, promptly after delivery of such notice, forward to
Crescendo two executed copies of a License Agreement dated the effective date
thereof and containing completed Attachments A and B. Crescendo shall execute
both copies and return one to ALZA as soon as possible. Failure of either or
both of the parties to execute such License Agreement shall not, however, affect
the effectiveness of the license granted thereby. The parties shall enter into a
separate License Agreement for each Crescendo Product as to which ALZA elects to
exercise a License Option. For convenience, the parties shall amend Attachment B
to a License Agreement to add a country or countries in cases where a License
Option is being exercised for a Crescendo Product for which a License Option
already has been exercised in another country or countries. Such amendment shall
set forth the additional country or countries and the dates of exercise of the
License Option for such countries.
2.4 Development Assets. If ALZA does not exercise the License
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Option for any Crescendo Product in any country prior to the expiration of such
License Option or, if ALZA notifies Crescendo that it will not exercise the
License Option for a Crescendo Product, ALZA shall make available to Crescendo
for further development and commercialization activities at no charge, all
clinical supplies, materials and other assets purchased, manufactured or
developed for use in the development of such
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Crescendo Product with respect to such country to the extent such assets will
not be used under the Development Agreement.
3. No Conflict.
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Crescendo agrees that no license, sale or other commercialization
of any Crescendo Product has been or shall be made or offered to any person or
entity on any basis that is or will be in conflict with this Agreement or any
License Agreement.
4. Access To Information.
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4.1 Information Available to ALZA. Crescendo shall make
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available to ALZA, at all reasonable times, all available information relating
to all Crescendo Products as to which the License Option remains exercisable
so as to enable ALZA to determine whether and when to exercise its License
Option.
4.2 Consultation with ALZA. Crescendo shall consult with ALZA
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and inform ALZA on a continuing basis of the current state of development of all
Crescendo Products as to which the License Option remains exercisable and will
review from time to time with ALZA the progress towards completion of the
Crescendo Products.
4.3 Consultation with Crescendo. In the event that the License
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Option with respect to one or more Crescendo Products in one or more countries
expires unexercised, ALZA shall make available to Crescendo all information
reasonably available to ALZA relating to such Crescendo Products and ALZA's
previous contacts with potential sublicensees, distributors or marketing
partners for such Crescendo Products in such countries.
5. Effective Date; Termination.
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5.1 Effective Date. This Agreement shall become effective on
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the date of the Distribution.
5.2 Termination. This Agreement shall terminate on the
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earlier of (a) the date of expiration of the License Option for all of the
Crescendo Products and (b) 30 days after expiration of the Purchase Option.
6. Miscellaneous.
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6.1 Waiver, Remedies and Amendment. Any waiver by either party
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hereto of a breach of any provisions of this Agreement shall not be implied and
shall not be valid unless such waiver is recited in writing and signed by such
party. Failure of any party to require, in one or more instances, performance by
the other party in strict accordance with the terms and conditions of this
Agreement shall not be deemed a waiver
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or relinquishment of the future performance of any such terms or conditions or
of any other terms and conditions of this Agreement. A waiver by either party of
any term or condition of this Agreement shall not be deemed or construed to be a
waiver of such term or condition for any other term. All rights, remedies,
undertakings, obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be a limitation of any other remedy, right,
undertaking, obligation or agreement of either party. This Agreement may not be
amended except in a writing signed by both parties.
6.2 Assignment. Neither party may assign its rights and
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obligations hereunder without the prior written consent of the other party,
which consent may not be unreasonably withheld; provided, however, that ALZA may
assign such rights and obligations hereunder to an Affiliate of ALZA or any
person or entity with which ALZA is merged or consolidated or which acquires all
or substantially all of the assets of ALZA.
6.3 Arbitration.
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(a) All disputes which may arise under, out of or in
connection with this Agreement shall be settled by arbitration conducted in the
city of San Francisco, State of California, in accordance with the then existing
rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The parties hereby agree that service of any notices in the course of
such arbitration at their respective addresses as provided for in Section 6.7 of
this Agreement shall be valid and sufficient.
(b) In any arbitration pursuant to this Section 6.3, the
award shall be rendered by a majority of the members of a board of arbitration
consisting of three members who shall be appointed by the parties jointly, or if
the parties cannot agree as to three arbitrators within 30 days after the
commencement of the arbitration proceeding, then one arbitrator shall be
appointed by ALZA and one arbitrator shall be appointed by Crescendo within 60
days after the commencement of the arbitration proceeding. The third arbitrator
shall be appointed by mutual agreement of such two arbitrators. In the event of
failure of the two arbitrators to agree within 75 days after commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the American Arbitration Association in
accordance with its then existing rules. Notwithstanding the foregoing, in the
event that any party shall fail to appoint an arbitrator it is required to
appoint within the specified time period, such arbitrator and the third
arbitrator shall be appointed by the American Arbitration Association in
accordance with its then existing rules. For purposes of this Section 6.3, the
"commencement of the arbitration proceeding" shall be deemed to be the date upon
which a written demand for arbitration is received by the American Arbitration
Association from one of the parties.
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6.4 Counterparts. This Agreement may be executed in any
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number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute this Agreement.
6.5 Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the state of California as applied to
residents of that state entering into contracts wholly to be performed in that
state.
6.6 Headings. The section headings contained in this
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Agreement are included for convenience only and form no part of the Agreement
between the parties.
6.7 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
facsimile and confirmed by registered or certified mail and addressed as
follows:
If to ALZA: ALZA Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: __________________
Attention: Senior Vice President
and General Counsel
If to Crescendo: Crescendo Pharmaceuticals Corporation
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: __________________
Attention: President and Chief
Executive Officer
All notices shall be deemed to be effective five days after
the date of mailing or upon receipt if sent by 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 6.7.
6.8 Severability. If any provision of this Agreement is held
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by a 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.
6.9 Relationship of the Parties. For purposes of this
---------------------------
Agreement, Crescendo and ALZA shall be deemed to be independent contractors, and
anything in this Agreement to the contrary notwithstanding, nothing herein shall
be deemed to constitute Crescendo and ALZA as partners, joint venturers, co-
owners, an association or any entity
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separate and apart from each party itself, nor shall this Agreement constitute
any party hereto an employee or agent, legal or otherwise, of the other party
for any purposes whatsoever. 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. Anything in this Agreement to the contrary notwithstanding, no party
hereto shall assume nor shall be liable for any liabilities or obligations of
the other party, whether past, present or future.
6.10 Survival. The provisions of Sections 1, 2.4, 4.3, 6.1,
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6.3, 6.5, 6.7, 6.8, 6.9 and this Section 6.10 shall survive the termination for
any reason of this Agreement. Any payments due under this Agreement with respect
to any period prior to its termination shall be made notwithstanding the
termination of this Agreement. Neither party shall be liable to the other due to
the termination of this Agreement as provided herein, whether in loss of good
will, anticipated profits or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ALZA CORPORATION
By:
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Title:
---------------------------------
CRESCENDO PHARMACEUTICALS CORPORATION
By:
------------------------------------
Title:
---------------------------------
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EXHIBIT A
FORM OF LICENSE AGREEMENT
-------------------------
This License Agreement (the "Agreement") is made this ____ day of
_______________ , _____, by and between ALZA Corporation, a Delaware corporation
("ALZA"), and Crescendo Pharmaceuticals Corporation ("Crescendo"), a Delaware
corporation.
BACKGROUND
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A. Crescendo and ALZA have entered into a License Option Agreement
and certain other agreements dated as of August __, 1997.
B. Section 2 of the License Option Agreement provides for a license,
the terms of which are to be set forth herein.
Now, therefore, the parties agree as follows:
1. Definitions.
-----------
For purposes of this Agreement, the following terms shall have
the meanings set forth below:
1.1 "Affiliate" shall mean a corporation or any other entity
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the designated party. "Control"
shall mean ownership of at least 50% of the shares of stock entitled to vote for
the election of directors in the case of a corporation, and at least 50% of the
interests in profits in the case of a business entity other than a corporation.
1.2 "Development Agreement" shall mean the Development
Agreement between ALZA and Crescendo dated as of August __, 1997.
1.3 "Development Cost(s)" shall mean the cost of activities
undertaken pursuant to the Development Agreement with respect to the Licensed
Product, determined in accordance with Exhibit A thereto.
1.4 "Infringing Product" shall mean any product sold by a third
party, other than pursuant to an agreement with ALZA, (i) which incorporates the
same therapeutic agent or agents as incorporated in the Licensed Product and
(ii) in the case of a Licensed Product using an ALZA drug delivery system, which
incorporates a delivery system substantially similar to that incorporated in the
Licensed Product, and
(iii) which infringes or is alleged to infringe any patent or patents owned by,
licensed to or controlled by ALZA.
1.5 "License Option Agreement" shall mean the License Option
Agreement between ALZA and Crescendo dated as of August __, 1997.
1.6 "Licensed Product" shall mean the product listed on
Exhibit A hereto.
1.7 "Major Market Country" shall mean any of the following
countries: the United States, France, Germany, Italy, Japan or the United
Kingdom.
1.8 "Net Sales" shall mean the total amount invoiced in United
States dollars (or converted thereto in accordance with Section 5.2 hereof) on
sales of a Licensed Product by ALZA (or its Affiliates) or any ALZA sublicensee,
distributor or marketing partner (or its Affiliates) to unrelated third parties
such as wholesalers, hospitals and others, in bona fide arm's-length
transactions, less the following deductions, in each case related specifically
to the Licensed Product and actually allowed and taken and not otherwise
recovered by or reimbursed to ALZA (or its Affiliates) or such sublicensee,
distributor or marketing partner (or its Affiliates): (i) trade, cash and
quantity discounts; (ii) taxes on sales (such as sales or use taxes) to the
extent added to the sales price and set forth separately as such in the total
amount invoiced; (iii) freight, insurance and other transportation charges to
the extent added to the sales price and set forth separately as such in the
total amount invoiced; and (iv) amounts repaid or credited by reason of
rejections, defects or returns or because of retroactive price reductions,
chargebacks or rebates under government programs. Net Sales shall also include
the fair market value of all other consideration received (a) by ALZA (or its
Affiliates) with respect to sales by them of the Licensed Product to unrelated
third parties from persons other than sublicensees, distributors or marketing
partners (or their Affiliates) or (b) by any ALZA sublicensee, distributor or
marketing partner (or its Affiliates) with respect to their sales of the
Licensed Product to unrelated third parties, in each case whether such
consideration is in cash, payment in kind, exchange or other form.
1.9 "Territory" shall mean the country or countries listed on
Exhibit B hereto, as amended from time to time by the parties in connection with
the exercise by ALZA of its option for additional countries under the License
Option Agreement or the
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surrender by ALZA of its rights to commercialize the Licensed Product in any
country or countries.
2. Grant of License.
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2.1 Grant. Crescendo hereby grants to ALZA an exclusive,
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perpetual license, with the right to sublicense, to develop, make, have made and
use the Licensed Product and to sell and have sold the Licensed Product in the
Territory. ALZA agrees to use diligent efforts to conduct or have conducted any
remaining activities necessary to complete the development of the Licensed
Product in the Territory through regulatory clearance to market the Licensed
Product in the Territory. Such activities will be undertaken at no cost to
Crescendo, unless Crescendo agrees otherwise in writing. Promptly after
regulatory clearance, ALZA shall commence and continue to use diligent efforts
to commercialize the Licensed Product in each Major Market Country of the
Territory through the manufacture and sale or the sublicensing of the Licensed
Product, devoting to the Licensed Product the same resources as other
pharmaceutical companies of similar size devote to products with similar market
potential and with similar relative importance to their product portfolios. ALZA
may use reasonable business discretion in the allocation of its technological
and monetary resources in performing its obligations hereunder, taking into
account not only the Licensed Product but also activities for its own account
and its obligations under its other agreements with third parties. Crescendo
acknowledges that ALZA will continue to own and have the right to use any
clinical supplies, materials and other assets purchased, manufactured or
developed for use in the development of such Licensed Product, without any
additional payment to or reimbursement of Crescendo.
2.2 No Other Commercialization. ALZA shall not commercialize
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the Licensed Product in any country except pursuant to this Agreement.
3. Product Payments.
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3.1 Payments.
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(a) In consideration of the grant of the license, ALZA
shall make payments to Crescendo ("Product Payments") with respect to the
Licensed Product as follows: 1% of Net Sales of the Licensed Product in the
Territory, plus an additional 0.1% of such Net Sales for each full $1 million of
Development Costs of the Licensed Product paid by Crescendo. Notwithstanding the
foregoing, Product Payments for any quarter will not exceed 2.5% of Net Sales,
on a quarterly basis, in the Territory for the first four calendar quarters
during which the Licensed Product is commercially sold in the first Major Market
Country, and 3% of Net Sales, on a quarterly basis, for each of the following
eight completed calendar quarters.
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(b) In determining Product Payments, Development Costs
shall be determined as of the last day of each calendar quarter, in order to
determine the rates payable with respect to Net Sales for the next calendar
quarter for all countries included in the Territory as of the first day of such
next calendar quarter, and for any country added to the Territory during such
next calendar quarter.
(c) In determining Product Payments, Net Sales by ALZA
shall be reduced by the dollar amount of any license or similar payments made by
or due from ALZA or its Affiliates to third parties with respect to sales of
such Licensed Product in the Territory. If license or similar payments are made
to third parties with respect to sales of both the Licensed Product in the
Territory and to sales of other products, ALZA shall allocate such payments, if
necessary, in a commercially reasonable manner.
3.2 Term of Payments. The obligation to make Product Payments
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hereunder shall continue until 15 years after the date of the first commercial
sale of the Licensed Product in any Major Market Country, and shall terminate as
to all countries at the end of such 15-year period.
3.3 Buy-Out of Payments.
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(a) ALZA shall have the option, in its discretion, at any
time after the end of the twelfth calendar quarter during which the Licensed
Product was commercially sold in any country, to buy out its remaining
obligations to make Product Payments with respect to Net Sales of such Licensed
Product in such country. The buy-out price shall be an amount equal to 15 times
the Product Payments made by or due from ALZA to Crescendo with respect to Net
Sales of such Licensed Product in such country for the four calendar quarters
immediately preceding the quarter in which the buy-out option is exercised, plus
15 times such additional Product Payments as would have been made but for the
2.5% and 3% limits set forth in Section 3.1 on Product Payments for such period.
(b) ALZA shall have the option, in its discretion, at any
time after the end of the twelfth calendar quarter during which the Licensed
Product was commercially sold in either the United States or two other Major
Market Countries, to buy out its remaining obligations to make Product Payments
with respect to Net Sales of such Licensed Product in the Territory. The buy-out
price shall be an amount equal to (i) 20 times (A) the Product Payments made by
or due from ALZA to Crescendo for such Licensed Product in the Territory, plus
(B) such payments as would have been made by or due from ALZA to Crescendo if
ALZA had not exercised any country-specific buy-out option with respect to Net
Sales of such Licensed Product, plus (C) such additional Product Payments as
would have been made but for the 2.5% and 3% limits set forth in Section 3.1 on
Product Payments for such period, in each case, for the
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four calendar quarters immediately preceding the quarter in which the buy-out
option is exercised, less (ii) any amounts previously paid to exercise any
country-specific buy-out option with respect to Net Sales of such Licensed
Product.
4. Accounting.
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4.1 Reports. Within 90 days after the end of each calendar
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quarter for which Product Payments are due, ALZA shall render an accounting to
Crescendo, on a country-by-country basis, with respect to all Product Payments
due for such quarter. Such report shall indicate, for such quarter, the quantity
and dollar amount of Net Sales of the Licensed Product by ALZA and its
Affiliates, sublicensees, distributors and marketing partners (and their
Affiliates), or other consideration with respect to Net Sales, with respect to
which payments are due; provided, however, that if ALZA shall not have received
from any sublicensee, distributor or marketing partner a report of its (and its
Affiliates') sales for such quarter, then such sales shall be included in the
next quarterly report. In case no Product Payments are due for any calendar
quarter, ALZA shall so report.
4.2 Records; Review by Accountants. ALZA shall keep and
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maintain, in accordance with generally accepted accounting principles, proper
and complete records and books of account documenting all amounts paid or
payable by ALZA to Crescendo. Crescendo shall have the right, once in each
calendar year during regular business hours and upon reasonable notice to ALZA,
at Crescendo's expense, to examine or have examined by a certified public
accountant or similar person, such of the records of ALZA as may be necessary to
verify the accuracy of the reports and payments made under this Agreement. Such
examination shall take place not later than two years following the year in
question, and only one examination may take place with respect to any period as
to which such books and records are examined. ALZA shall obtain, for itself and
for Crescendo, similar reasonable rights to audit information pertaining to Net
Sales from each party appointed to commercialize any product as to which
payments are due to Crescendo hereunder.
5. Times and Currencies Of Payments.
--------------------------------
5.1 Payments. Payments shown by each calendar quarter report
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to have accrued shall be due and payable on the date such report is due and
shall be paid in United States dollars. Any and all taxes due or payable on such
payments or with respect to the remittance thereof shall be deducted from such
payments and shall be paid by ALZA to the proper taxing authorities, and proof
of payment shall be secured and sent to Crescendo as evidence of such payment.
The rate of exchange to be used in computing the amount of the United States
dollars due to Crescendo in satisfaction of payment obligations with respect to
sales in foreign countries shall be calculated by converting the amount due in
such foreign currency into United States dollars at the rate for the purchase
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of United States dollars with such currency as published in The Wall Street
Journal on the last business day of the calendar quarter for which payment is
being made.
5.2 Certain Foreign Payments. If governmental regulations
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prevent remittance from any foreign country of any amounts due under Section 3.1
in respect of that country, ALZA shall so notify Crescendo in writing, and the
obligation under this Agreement to make payments with respect to sales in that
country shall be suspended (but the amounts due but not paid shall continue to
accrue) until such remittances are possible. Crescendo shall have the right,
upon written notice to ALZA, to receive payment in any such country in the local
currency.
5.3 Late Payments. Any payments due hereunder that are not
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made when due shall bear interest at the lesser of 10% per annum or the maximum
rate as may be allowed by law, beginning on the date when Crescendo has notified
ALZA that such payments are overdue.
6. Patent Infringement.
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6.1 Notice. Each party shall promptly notify the other party
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of use or sale by a third party of an Infringing Product.
6.2 Legal Action. If a third party manufactures or sells an
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Infringing Product, ALZA may, at its own expense, bring legal action to restrain
such infringement and for damages. Any recoveries resulting from any such action
shall be first applied to reimburse ALZA for its expenses (including reasonable
attorneys' fees) incurred in bringing the action. Crescendo will be entitled to
a share of the remaining recoveries in the same percentage as the percentage of
Net Sales as to which Product Payments are due to Crescendo during the period of
the infringement or alleged infringement. If (a) ALZA fails to take the
necessary steps to restrain such infringement or alleged infringement by
litigation or otherwise within 90 days after either party's notice described in
Section 6.1, (b) if the infringement or alleged infringement occurs during a
period for which Crescendo is entitled to receive Product Payments hereunder,
and (c) if over a period of at least two calendar quarters such Infringing
Product achieves an annualized unit sales volume in the country of infringement
equal to 25% of the annualized unit sales volume of the Licensed Product sold by
ALZA and its Affiliates, sublicensees, distributors and marketing partners (and
their Affiliates) in such country during such year, then Crescendo may
institute, in its own name, at its own expense and with the right to all
recoveries, such litigation or other appropriate action as it may deem
appropriate to restrain such infringement, provided that Crescendo has first
given to ALZA 60 days advance notice of its intention to take such action, and
provided further, that ALZA has not itself taken appropriate action during such
60 day period.
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6.3 Cooperation. If either party desires to bring an action in
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accordance with Section 6.2, the other party agrees to cooperate fully with the
party bringing such action in the pursuit thereof, at the expense of the party
bringing such action and to the extent reasonably requested by such party. If
the third party in any such action brought by Crescendo brings a counteraction
for invalidation or misuse of a patent covering the Licensed Product, Crescendo
promptly shall notify ALZA and ALZA may, within six months of the notification,
join and participate in such action at its own expense.
6.4 Settlement. Each party agrees not to settle any action it
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brings in a manner that would adversely affect the other party without the other
party's prior written approval.
7. Effective Date and Term.
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7.1 Effective Date and Term. This Agreement will become
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effective in accordance with Section 2.3 of the License Option Agreement and,
unless terminated in accordance with any of the provisions hereof, shall remain
in full force and effect thereafter.
8. Indemnification.
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8.1 Indemnity. ALZA shall indemnify, defend and hold Crescendo
---------
(and its Affiliates) harmless from and against any and all liabilities, claims,
demands, damages, costs, expenses or money judgments incurred by or rendered
against Crescendo and its Affiliates, which arise out of the use, design,
labeling or manufacture, processing, packaging, sale or commercialization of the
Licensed Product by ALZA, its Affiliates, subcontractors, sublicensees,
distributors and marketing partners (and their Affiliates). Crescendo shall
permit ALZA's attorneys, at ALZA's discretion and cost, to control the defense
of any claims or suits as to which Crescendo may be entitled to indemnification
hereunder, and Crescendo agrees not to settle any such claims or suits without
the prior written consent of ALZA. Crescendo shall have the right to
participate, at its own expense, in the defense of any such claim or demand to
the extent it so desires.
8.2 Notice. Crescendo shall give ALZA prompt notice in
------
writing, in the manner set forth in Section 11.7 below, of any claim or demand
made against Crescendo for which Crescendo may be entitled to indemnification
under Section 8.1.
9. Disclaimers.
-----------
CRESCENDO DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY (A) THAT THE
LICENSED PRODUCT OR ANY TECHNOLOGY INCORPORATED THEREIN, OR THE MANUFACTURE, USE
OR SALE THEREOF, WILL BE FREE FROM CLAIMS OF PATENT INFRINGEMENT, INTERFERENCE
OR UNLAWFUL
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USE OF PROPRIETARY INFORMATION OF ANY THIRD PARTY AND (B) OF THE ACCURACY,
RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS OR
MERCHANTABILITY OF THE LICENSED PRODUCT OR ANY TECHNOLOGY INCORPORATED THEREIN
OR THEIR SUITABILITY OR FITNESS FOR ANY PURPOSE WHATSOEVER INCLUDING, WITHOUT
LIMITATION, THE DESIGN, DEVELOPMENT, MANUFACTURE, USE OR SALE OF THE LICENSED
PRODUCT. CRESCENDO DISCLAIMS ALL OTHER WARRANTIES OF WHATEVER NATURE, EXPRESS OR
IMPLIED.
10. Termination.
-----------
10.1 Termination by Crescendo. Crescendo may, in its
------------------------
discretion, terminate this Agreement in the event that ALZA:
(a) breaches any of its material obligations hereunder
and such breach continues for a period of 60 days after written notice thereof;
or
(b) enters into any proceeding, whether voluntary or
otherwise, in bankruptcy, reorganization or arrangement for the appointment of a
receiver or trustee to take possession of ALZA's assets or any other proceedings
under any law for the relief of creditors or makes an assignment for the benefit
of its creditors.
10.2 Termination by ALZA. ALZA may terminate this Agreement
-------------------
with respect to one or more countries included in the Territory upon 30 days'
prior written notice to Crescendo if ALZA elects for any reason to discontinue
commercialization of the Licensed Product in such country.
10.3 Consequences of Termination. Termination of this
---------------------------
Agreement for any reason in accordance with the terms hereof shall be without
prejudice to:
(a) Crescendo's right to receive all payments accrued
under Section 3 prior to the effective date of such termination; and
(b) any other remedies which either party may then or
thereafter have hereunder or otherwise. If this Agreement terminates pursuant to
this Section 10, ALZA shall immediately discontinue any promotion and sales of
the Licensed Product. Notwithstanding the foregoing, in the event of any
termination under this Section 10, ALZA may sell its inventory in stock on the
date of termination for a period of up to six months after the termination, and
shall remit payments to Crescendo in respect thereto in accordance with this
Agreement.
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11. Miscellaneous.
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11.1 Waiver, Remedies and Amendment. Any waiver by either party
------------------------------
hereto of a breach of any provisions of this Agreement shall not be implied and
shall not be valid unless such waiver is recited in writing and signed by such
party. Failure of any party to require, in one or more instances, performance by
the other party in strict accordance with the terms and conditions of this
Agreement shall not be deemed a waiver or relinquishment of the future
performance of any such terms or conditions or of any other terms and conditions
of this Agreement. A waiver by either party of any term or condition of this
Agreement shall not be deemed or construed to be a waiver of such term or
condition for any other term. All rights, remedies, undertakings, obligations
and agreements contained in this Agreement shall be cumulative and none of them
shall be a limitation of any other remedy, right, undertaking, obligation or
agreement of either party. This Agreement may not be amended except in a writing
signed by both parties.
11.2 Assignment. Neither party may assign its rights and
----------
obligations hereunder without the prior written consent of the other party,
which consent may not be unreasonably withheld; provided, however, that ALZA may
assign such rights and obligations hereunder to an Affiliate of ALZA or to any
person or entity with which ALZA is merged or consolidated or which acquires all
or substantially all of the assets of ALZA.
11.3 Arbitration.
-----------
(a) All disputes which may arise under, out of or in
connection with this Agreement shall be settled by arbitration conducted in the
City of San Francisco, State of California, in accordance with the then existing
rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrators may be entered in any court having jurisdiction
thereof. The parties hereby agree that service of any notices in the course of
such arbitration at their respective addresses as provided for in Section 11.7
of this Agreement shall be valid and sufficient.
(b) In any arbitration pursuant to this Section 11.3,
the award shall be rendered by a majority of the members of a board of
arbitration consisting of three members who shall be appointed by the parties
jointly, or if the parties cannot agree as to three arbitrators within 30 days
after the commencement of the arbitration proceeding, then one arbitrator shall
be appointed by ALZA and one arbitrator shall be appointed by Crescendo within
60 days after the commencement of the arbitration proceeding. The third
arbitrator shall be appointed by mutual agreement of such two arbitrators. In
the event of failure of the two arbitrators to agree within 75 days after
commencement of the arbitration proceeding upon the appointment of the third
arbitrator, the third arbitrator shall be appointed by the American Arbitration
Association in
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accordance with its then existing rules. Notwithstanding the foregoing, in the
event that any party shall fail to appoint an arbitrator it is required to
appoint within the specified time period, such arbitrator and the third
arbitrator shall be appointed by the American Arbitration Association in
accordance with its then existing rules. For purposes of this Section 11.3, the
"commencement of the arbitration proceeding" shall be deemed to be the date upon
which a written demand for arbitration is received by the American Arbitration
Association from one of the parties.
11.4 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute this Agreement.
11.5 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the state of California as applied to
residents of that state entering into contracts to be performed in that state.
11.6 Headings. The headings set forth at the beginning of the
--------
various sections of this Agreement are for convenience and form no part of the
Agreement between the parties.
11.7 Notices. Notices required under this Agreement shall be in
-------
writing and sent by registered or certified mail, postage prepaid, or by
facsimile and confirmed by registered or certified mail, postage prepaid, and
addressed as follows:
If to ALZA: ALZA Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: __________________
Attention: Senior Vice President
and General Counsel
If to Crescendo: Crescendo Pharmaceuticals Corporation
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: __________________
Attention: President and Chief
Executive Officer
All notices shall be deemed to be effective five days after
the date of mailing or upon receipt if sent by 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 11.7.
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11.8 Severability. If any provision of this Agreement is held
------------
by a 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.
11.9 Relationship of the Parties. For all purposes of this
---------------------------
Agreement, Crescendo and ALZA shall be deemed to be independent contractors and
anything in this Agreement to the contrary notwithstanding, nothing herein shall
be deemed to constitute Crescendo and ALZA as partners, joint venturers,
co-owners, an association or any entity separate and apart from each party
itself, nor shall this Agreement constitute any party hereto an employee or
agent, legal or otherwise, of the other party for any purposes whatsoever.
Neither party hereto is authorized to make any statements or representations on
behalf of the other party or in any way to obligate the other party, except as
expressly authorized in writing by the other party. Anything in this Agreement
to the contrary notwithstanding, no party hereto shall assume nor shall be
liable for any liabilities or obligations of the other party, whether past,
present or future.
11.10 Survival. The provisions of Sections 1, 4.2, 8, 9,
--------
10.3, 11.1, 11.3, 11.5, 11.6, 11.7, 11.8, 11.9, and this Section 11.10 shall
survive the termination for any reason of this Agreement. Any payments due under
this Agreement with respect to any period prior to its termination shall be made
notwithstanding the termination of this Agreement. Neither party shall be liable
to the other due to the termination of this Agreement as provided herein,
whether in loss of good will, anticipated profits or otherwise.
11.11 Force Majeure. Neither party to this Agreement shall be
-------------
liable for failure or delay in the performance of any of its obligations
hereunder, if such failure or delay is due to causes beyond its reasonable
control including, without limitation, acts of God, earthquakes, fires, strikes,
acts of war, or intervention of any governmental authority, but any such delay
or failure shall be remedied by such party as soon as possible after the removal
of the cause of such failure or delay.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first set forth above.
ALZA CORPORATION
By:
-------------------------------------
Title:
----------------------------------
CRESCENDO PHARMACEUTICALS CORPORATION
By:
-------------------------------------
Title:
----------------------------------
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ATTACHMENT A
LICENSED PRODUCT
ATTACHMENT B
TERRITORY
DATE OF EXERCISE COUNTRY
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