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G:\CPC\1999 10q\dev agr cndo1999.doc/kw
AMENDMENT NO. 1 TO DEVELOPMENT AGREEMENT
This Amendment No. 1 to Development Agreement (the
"Amendment") is made as of March 19, 1998 by and between
ALZA Corporation, a Delaware corporation ("ALZA"), and
Crescendo Pharmaceuticals Corporation, a Delaware
corporation ("Crescendo").
RECITALS
WHEREAS, ALZA and Crescendo have entered into that
certain Development Agreement dated as of September 5, 1997
(the "Development Agreement") pursuant to which ALZA
performs research and development activities on behalf of
Crescendo directed toward the development of pharmaceutical
products; and
WHEREAS, ALZA is marketing Elmiron -Registered
Trademark- (pentosan polysulfate sodium) in the United
States and Canada; and
WHEREAS, Elmiron -Registered Trademark- has been
approved in the United States by the Food and Drug
Administration ("FDA") and in Canada by the Health
Protection Branch of Health Canada ("HPB") for marketing
only as a treatment for interstitial cystitis; and
WHEREAS, ALZA and Crescendo desire that Crescendo fund
a program with the goal of receiving clearance by the FDA
and the HPB to market Elmiron -Registered Trademark- for the
prevention of vascular access graft occlusion (the "Elmiron
-Registered Trademark- Development Program"); and
WHEREAS, such an arrangement is not currently
contemplated by the Development Agreement.
NOW, THEREFORE, in consideration of the foregoing and
the agreements contained herein, ALZA and Crescendo hereby
agree as follows:
1. Funding of the Development Program.
(a) In consideration of the royalty payments set forth
in Section 2 of this Agreement, Crescendo hereby agrees to
fund the Elmiron -Registered Trademark- Development Program
in amounts as proposed by ALZA and approved by Crescendo
from time to time (the "Development Payments"). The Elmiron
-Registered Trademark- Development Program shall be set
forth in work plans prepared by ALZA which are subject to
the approval (in whole or in part) or the rejection (in
whole or in part) of Crescendo. Each such approved work
plan shall constitute a "Work Plan" within the meaning of
the Development Agreement. The parties agree to review the
Work Plan from time to time (no less often than the end of
each stage of development) and to revise the Work Plan as
appropriate so that it remains a best estimate of the work
to be done under the Elmiron -Registered Trademark-
Development Program and the amounts required to fund such
work. Crescendo shall not be obligated to make Development
Payments in excess of those provided for in an approved Work
Plan, and ALZA shall not be obligated to perform work on the
Elmiron -Registered Trademark- Development Program which
would result in Development Payments exceeding those in an
approved Work Plan.
(b) ALZA and Crescendo agree that the Development
Payments shall be paid under the Development Agreement,
shall be made on the same basis as "Development Costs" (as
set forth in Sections 4.1 and 4.2 of the Development
Agreement) and shall constitute "Development Costs" within
the meaning of the Development Agreement.
(c) ALZA and Crescendo agree that the Elmiron -
Registered Trademark- Development Program constitutes an
activity undertaken pursuant to the Development Agreement
within the meanings of Sections 1.5 and 10.1 thereof.
(d) Developments Payments are intended to be included
as part of the "total amount paid by or due from this
corporation under the Development Agreement" for purposes of
Article FIFTH, Section (A)(18)(c) of the Restated
Certificate of Incorporation of Crescendo (the
"Certificate"), as part of "expenditures pursuant to the
Development Agreement" for purposes of Article FIFTH,
Section (A)(19) of the Certificate, as part of the "total
amounts paid by or due from this corporation pursuant to the
Development Agreement" for purposes of Article FIFTH,
Section (A)(21) of the Certificate, and as part of "any
additional amounts.that are paid by (or due from) this
corporation under the Development Agreement" for purposes of
Article FIFTH, Section (A)(10) of the Certificate.
2. Royalty Payments.
(a) In consideration of Crescendo making Development
Payments with respect to Elmiron -Registered Trademark-,
beginning in the first calendar quarter (the "Initial
Quarter") in which any Public Disclosure (as defined below)
is made, ALZA shall pay Crescendo royalties with respect to
sales of Elmiron -Registered Trademark- in the United States
and Canada as follows: (i) in the Initial Quarter and the
following three calendar quarters, the greatest of (1) 2.5%
of Excess Net Sales (as defined below), (2) 1% of Excess Net
Sales plus an additional 0.1% of such Excess Net Sales for
each full one million dollars of Development Payments paid
by Crescendo or (3) 1% of Net Sales (as defined in the
Development Agreement); and (ii) in each subsequent calendar
quarter, the greatest of (1) 3.0% of Excess Net Sales (as
defined below), (2) 1% of Excess Net Sales plus an
additional 0.1% of such Excess Net Sales for each full one
million dollars of Development Payments paid by Crescendo or
(3) 1% of Net Sales.
(b) ALZA shall notify Crescendo within three business
days after any Public Disclosure referred to in clause (a)
above is first made.
(c) "Public Disclosure" shall mean a presentation at a
public research seminar, lecture, professional meeting or
similar public venue, or any release of an abstract, poster,
summary, article or similar writing to the public (or any
target portion of the medical community), in each case which
(i) is made by or on behalf of ALZA or any person or entity
performing any activities under the Elmiron-Registered
Trademark- Development Program, and (ii) reports human
clinical data or results obtained in connection with the
activities conducted under the Elmiron -Registered Trademark-
Development Program that support the use of pentosan
polysulfate sodium for the delay/prevention of vascular
access graft occlusion. "Excess Net Sales" shall mean the
amount by which Net Sales exceed Base Net Sales. "Base Net
Sales" shall mean Net Sales of Elmiron -Registered Trademark-
in the United States and Canada in the calendar quarter
immediately preceding the Initial Quarter.
(d) In determining payments under this Section 2 for
any calendar quarter, the amount of applicable Development
Payments shall be the cumulative amount of Development
Payments paid as of the last day of the preceding calendar
quarter.
(e) Royalty payments under this Section 2 shall be
subject to the requirements set forth in Sections 5.3, 7.6
and 7.8 of the Development Agreement with respect to
payments due under Section 7.4 of the Development Agreement.
3. Not a "Crescendo Product". Notwithstanding any
of the foregoing, ALZA and Crescendo confirm and agree
Elmiron -Registered Trademark- shall not be considered a
"Crescendo Product" within the meaning of the Development
Agreement, the Technology License Agreement between ALZA and
Crescendo dated as of September 5, 1997 (the "Technology
License Agreement") and the License Option Agreement between
ALZA and Crescendo dated as of September 5, 1997 (the
"License Option Agreement.")
4. Indemnification. ALZA shall indemnify, defend and
hold Crescendo harmless from and against any and all
liabilities, claims, demands, damages, costs, expenses or
money judgments rendered against Crescendo and its
Affiliates, which arise out of the use, design, labeling or
manufacture, processing, packaging, sale or
commercialization of Elmiron -Registered Trademark- by ALZA,
its Affiliates, assignees, subcontractors and sublicensees.
Crescendo shall permit ALZA's attorneys, at ALZA's
discretion and cost, to handle and control the defense of
any claims or suits as to which Crescendo may be entitled to
indemnity hereunder, and Crescendo agrees not to settle any
such claims or suits without the prior written consent of
ALZA. Crescendo shall give ALZA prompt written notice in
writing, in the manner set forth in Section 13.7 of the
Development Agreement, of any claim or demand made against
Crescendo for which Crescendo may be entitled to indemnity
hereunder. 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.
5. Miscellaneous.
(a) Capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Development
Agreement.
(b) Except as otherwise expressly provided herein, the
terms of the Development Agreement, the Technology License
Agreement and the License Option Agreement shall remain in
full force and effect.
(c) The provisions of Sections 1(b), 1(c), 1(d), 3 and
4, and this Section 5(c), of this Amendment, and of Section
2 to the extent of obligations under such section relating
to periods prior to termination of the Development
Agreement, shall survive the termination for any reason of
the Development Agreement. Any payments due under this
Amendment with respect to any period prior to termination of
the Development Agreement shall be made notwithstanding the
termination of the Development Agreement.
IN WITNESS WHEREOF, ALZA and Crescendo have caused this
Amendment to be executed as of the date first set forth
above by their duly authorized representatives.
ALZA Corporation
By: /s/ X.X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President, Commercial Development
Crescendo Pharmaceuticals Corporation
By: __/s/ Xxxx X. Xxxx, PhD_
Name: Xxxx X. Xxxx, PhD
Title: President and Chief Executive Officer
