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EXHIBIT 10.86
LICENSE, SUPPLY AND INTERNATIONAL DISTRIBUTION AGREEMENT
This License, Supply and International Distribution Agreement (the
"Agreement") is entered into effective as of September 6, 1996 (the "Effective
Date") by and between Collagen Corporation, a Delaware corporation with offices
at 2500 Faber Place, Palo Alto, CA 94303 ("Collagen"), and Cosmederm
Technologies, Inc., a Delaware corporation with offices at La Jolla Corporate
Center, 3252 Holiday Court, La Jolla, CA 92037 ("Cosmederm"). The parties agree:
1.0 Background.
1.1 Collagen is in the business of researching, developing,
manufacturing, and marketing biocompatible products for the treatment of
defective, diseased, traumatized, and aging tissues.
1.2 Cosmederm is in the business of researching, developing and
manufacturing cosmetic and dermatologic products.
1.3 Cosmederm desires Collagen, and Collagen agrees, to market certain
of Cosmederm's proprietary cosmetic and dermatologic products pursuant to the
terms and conditions of this Agreement.
2.0 Definitions.
2.1 "Affiliate" shall mean any entity which controls, is controlled by,
or is under common control with Collagen.
2.2 "Collagen Field" shall mean throughout the Territory the sale of
the Licensed Products for in-office dispensing under the supervision of a
licensed physician, including, but not limited to, dermatologists, plastic
surgeons, general practitioners, and gynecologists and the free distribution of
samples of Licensed Products to medical professionals. For purposes of this
Agreement, the words "sell" and "sale" shall be deemed to include the free
distribution of samples of Licensed Products to medical professionals.
2.3 "Licensed Know How" shall mean any and all unpatented inventions,
data, processes, compositions, techniques, improvements, derivatives,
formulations, and other technical information proprietary to Cosmederm which are
useful and/or necessary to the sale of Licensed Products in existence as of the
Effective Date or created or acquired (including by license to the greatest
extent permitted under the terms of any such license) by Cosmederm during the
term of this Agreement, including any and all methods proprietary to Cosmederm
for the use or, in the event Collagen exercises a right to manufacture under
Section 4.1, manufacture of the Licensed Products.
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2.4 "Licensed Patents" shall mean any and all United States and foreign
patents which are granted on the inventions described in:
United States Date filed International Date filed
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Application No. Application No.
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* * * *
* * * *
* * * *
* * * *
* * * *
* *
* * * *
having claims reading on any Licensed Product or methods for manufacture or use
of any Licensed Product, owned by, or licensed (to the greatest extent permitted
under the terms of any such license) to Cosmederm during the term of this
Agreement, including any continuations, divisions, reissues, re-examinations,
re-registrations, and all foreign counterparts thereof.
2.5 "Licensed Product(s)" shall mean the initial * products identified
in Exhibit A and any and all products developed and sold pursuant to Section 7.
2.6 "Licensed Technology" shall mean Licensed Know How and Licensed
Patents.
2.7 "Mark(s)" shall mean any and all trademarks, trade names, logos,
and slogans which Cosmederm may at any time during the term of this Agreement
own, adopt, use, or register with respect to the Licensed Products, other than
the Cosmederm name and any trademarks, logos or slogans incorporating the
Cosmederm name.
2.8 "Net Sales" shall mean * .
2.9 "Territory" shall mean all of the countries of the world.
3.0 Grants of Rights.
3.1 Cosmederm hereby grants Collagen and Affiliates * license under the
Licensed Technology, to use (but only in performing development pursuant to a
joint development plan as
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agreed pursuant to Section 7 and testing pursuant to the final sentence of
Section 13.1), make and/or have made (but in either case only pursuant to the
second sentence of Section 4.1), and sell the Licensed Products within the
Collagen Field throughout the Territory pursuant to the terms and conditions of
this Agreement. The parties acknowledge that L'Oreal, S.A. may exercise its
option * under the Licensed Technology within the Collagen Field (and other
fields) throughout the Territory to sell products which incorporate the Licensed
Technology; provided, that Cosmederm (i) shall at all times during the effective
term of this Agreement use its best efforts to exclude from such co-exclusive
license any and all formulations developed pursuant to Section 7.0 of this
Agreement, and/or sold by Collagen, Affiliates and sublicensed subdistributors
under this Agreement, expressly including, but not limited to, the Licensed
Products identified on Exhibit A, and (ii) shall not at any time during the
effective term of this Agreement reveal to L'Oreal, S.A. (or to any other third
party licensee) any formulas or other proprietary technical information relating
to any and all formulations developed pursuant to Section 7.0 of this Agreement
and/or the Licensed Products identified on Exhibit A. Collagen further
acknowledges that Cosmederm and any licensees shall be allowed to distribute
free samples of any products (other than any Licensed Product) to medical
professionals. Collagen and Affiliates shall have no right to sublicense, except
Collagen may sublicense the license-to-sell in a particular foreign country to
any subdistributor which is part of Collagen's standard system of distribution
in that country and Collagen may sublicense the license-to-make to contract
manufacturers to make Licensed Products for Collagen as may be allowed by the
second sentence of Section 4.1.
3.2 Cosmederm hereby grants Collagen and Affiliates * license to use
the Marks in making and/or having made (but in either case only pursuant to the
second sentence of Section 4.1) and selling the Licensed Products within the
Collagen Field throughout the Territory pursuant to the terms and conditions of
this Agreement. Cosmederm shall not at any time use, and shall not at any time
license, sell or otherwise transfer rights under the Marks to any third party,
expressly including L'Oreal, S.A., for use in association with the sale of
products which incorporate the Licensed Technology within the Collagen Field
within the Territory. Collagen and Affiliates shall have no right to sublicense,
except Collagen may sublicense with regard to use-in-selling in a particular
foreign country to any subdistributor which is part of Collagen's standard
system of distribution in that country and Collagen may sublicense with regard
to use-in-making to contract manufacturers to make Licensed Products for
Collagen as may be allowed by the second sentence of Section 4.1.
3.3 Cosmederm hereby grants Collagen and Affiliates * fully-paid-up
license to use the COSMEDERM tradename and all intellectual property rights
therein in making and/or having made (but in either case only pursuant to the
second sentence of Section 4.1) and selling the Licensed Products within the
Collagen Field throughout the Territory pursuant to the terms and conditions of
this Agreement. Collagen and Affiliates shall have no right to sublicense,
except Collagen may sublicense with regard to use-in-selling in a particular
foreign country to any subdistributor which is part of Collagen's standard
system of distribution in that country and Collagen may sublicense with regard
to use-in-making to contract manufacturers to make Licensed Products for
Collagen as may be allowed by the second sentence of Section 4.1.
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Collagen acknowledges that Cosmederm and any licensees shall be allowed to
distribute free samples of any products (other than any Licensed Product) to
medical professionals.
3.4 Cosmederm shall not use, and shall not license, sell or otherwise
transfer rights under the COSMEDERM tradename to any third party for use in
association with the sale of the products which incorporate the Licensed
Technology within the Collagen Field within the Territory during the term of
this Agreement. Collagen acknowledges that Cosmederm and any licensees shall be
allowed to distribute free samples of any products (other than any Licensed
Product) to medical professionals.
3.5 Cosmederm represents and warrants to Collagen and Affiliates that
Cosmederm owns the Licensed Technology and has any and all rights necessary to
grant the rights granted to Collagen and Affiliates pursuant to this Agreement.
4.0 Supply.
4.1 Supply. The parties agree that Cosmederm shall manufacture and
supply to Collagen the Licensed Products specified in Exhibit A during the
effective term of this Agreement subject to the transfer price specified in
Section 5.1 (but not subject to the royalty specified in Section 6.1).
Notwithstanding the immediately preceding sentence, in the event that at any
time during the effective term of this Agreement (i) Cosmederm materially fails
to meet its supply obligations under * purchase orders issued by Collagen
pursuant to Section 4.4 within * , or (ii) there is a change in the control of
Cosmederm, thereafter, Collagen shall during the effective term of this
Agreement have the right, but not the obligation, to manufacture, or have
manufactured, any and all Licensed Product(s) subject to the royalty rate
specified in Section 6.1 (but not subject to the transfer price specified in
Section 5.1.) Further, in the event that at any time during the effective term
of this Agreement Cosmederm elects not to supply any Licensed Product(s) to
Collagen, specifically including, but not limited to, the failure to agree upon
terms of Cosmederm's manufacture of Licensed Product(s) under Section 7.2,
thereafter, Collagen shall during the effective term of this Agreement have the
right, but not the obligation, to manufacture, or have manufactured, such
Licensed Product(s) subject to the royalty rate specified in Section 6.1 (but
not subject to the transfer price specified in Section 5.1.)
4.2 Performance Obligations. Cosmederm shall at all times during the
effective term of this Agreement, use Cosmederm's reasonable best efforts to
supply Collagen with Collagen's requirements for each and every Licensed Product
except as Cosmederm may elect under Section 4.1(ii). Collagen shall at all times
during the effective term of this Agreement use its reasonable best efforts to
commercialize and sell each and every Licensed Product.
4.3 Marks. The parties shall mutually agree upon the Marks. Any and all
Licensed Products sold or otherwise distributed pursuant to the terms and
conditions of this Agreement shall be branded exclusively with the Marks, and
shall bear both Cosmederm and Collagen tradenames. The exact usage and placement
of such tradenames shall be mutually agreed by the parties in good faith.
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4.4 Purchase Orders. All purchase orders for Licensed Products shall be
initiated in writing by Collagen and shall include a requested delivery date.
Such purchase orders should be received by Cosmederm at least * prior to such
requested delivery date. The minimum aggregate purchase order size is * and the
minimum purchase order size per SKU is * . All purchase orders shall be
non-cancelable. All purchase orders, to the extent they would result in calendar
quarter deliveries not in excess of * of the amount last forecasted by Collagen
for such period, shall be shipped by the later of (i) * after receipt of such
order, or (ii) by the shipment request date set forth on such purchase order.
Any purchase order, to the extent it would result in calendar quarter deliveries
in excess of * of the amount last forecasted by Collagen for such period and
which is not (as to such excess amount) rejected by Cosmederm within * of
receipt shall be deemed accepted by Cosmederm upon its receipt of such purchase
order, and shall be shipped by the later of (i) * after receipt of such order,
or (ii) by the shipment request date set forth on such purchase order. In any
event, Cosmederm will use its reasonable best efforts to deliver Licensed
Products at the times and in the amounts specified in Collagen's accepted
purchase orders. Cosmederm agrees to promptly inform Collagen of any potential
failure to meet the delivery time specified in a purchase order.
4.5 Forecasts. Commencing with Collagen's first order for Licensed
Products, and at the beginning of each calendar quarter thereafter, Collagen
shall provide Cosmederm rolling written forecasts of Collagen's estimated
requirements of Licensed Products to be delivered for each of the * . Forecasts
provided to Cosmederm by Collagen pursuant to this Section 4.5 shall be prepared
in good faith by Collagen and represent Collagen's reasonable expectation of its
purchase requirements for the forecasted period, but shall be advisory in nature
only and shall not be binding on Collagen. Cosmederm shall be prepared to
deliver at * of Collagen's last forecasted needs for a given calendar quarter.
The "last" forecast refers to the forecast for a quarter delivered * before the
first day of such quarter. Cosmederm and Collagen shall keep each other apprised
in good faith of their respective requirements, projections, production
capability limitations and similar matters.
4.6 Conflicting Terms. In ordering and delivering the Licensed Products
hereunder, Cosmederm and Collagen may use their standard forms, but nothing in
such form shall be construed to amend or modify the terms of this Agreement and,
in the case of conflict herewith, the terms of this Agreement shall control.
4.7 Certificate of Conformity. All Licensed Products delivered by
Cosmederm under this Agreement shall be accompanied by a Certificate of
Conformity issued by Cosmederm warranting that all Licensed Products delivered
under such Certificate of Conformity shall meet the acceptance specifications to
be mutually agreed and called out in Exhibit B, including, but not limited to,
labeling, packaging and product specifications (the "Acceptance
Specifications.") Cosmederm will promptly replace (or, at Cosmederm's sole
option in any particular case, give Collagen credit for such returns at
Collagen's published wholesale prices) any and all Licensed Products returned by
a customer or an enduser within * of purchase and forwarded by Collagen to
Cosmederm within * of such return to the extent any such returns result from the
formulation and/or manufacture by Cosmederm of Licensed Products which do not
meet the Acceptance Specifications.
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4.8 Acceptance. Acceptance by Collagen of Licensed Products delivered
by Cosmederm shall be pursuant to the Certificate of Conformity issued by
Cosmederm pursuant to Section 4.7 and visual inspection by Collagen. Collagen's
failure to send a written rejection notice within * after delivery shall
conclusively be deemed to constitute acceptance. In the event that any shipment,
or part of any shipment, is found upon such visual inspection not to be in
accordance with the Acceptance Specifications, Collagen shall have the right to
reject such shipment, or part of shipment, within * after delivery by Cosmederm;
provided, that such shipment, or part of shipment, has not been used up by
Collagen or shipped to customers. A shipment, or part of a shipment, may be
rejected by Collagen only upon written notice to Cosmederm stating the reason(s)
for rejection. Upon receiving any such notice, Cosmederm shall use its
reasonable best efforts to replace rejected Licensed Products, and to redeliver
to Collagen replacement Licensed Products as soon as possible and in no event
more than * after Cosmederm's receipt of Collagen's written notice of rejection
(or, at Cosmederm's sole option in any particular case, give Collagen credit for
such rejected Licensed Products at Collagen's published wholesale prices).
4.9 Shipment. All shipments will be FOB Collagen's manufacturing
facility in Fremont, California and/or such other place(s) as Collagen shall
direct. Risk of loss will pass to Collagen upon delivery to such facility. ** .
Cosmederm will be responsible for filing any and all freight claims. Collagen
may request a specific carrier and mode of shipment, but Cosmederm may arrange
for an alternative carrier and mode of shipment, provided that Collagen consents
to such alternative carrier and mode of shipment, such consent to not be
unreasonably withheld. Notwithstanding the foregoing, if Collagen's choice of
specific carriers, choice of mode of shipment, choice of ship-to location(s)
outside the continental United States, and/or direction to ship to multiple
locations results in higher freight, insurance and/or other shipping expenses
than using Cosmederm's normal truck delivery to a single location in the
continental United States, then Collagen shall pay the excess.
4.10 Payment. Collagen shall pay Cosmederm the transfer price specified
in Section 5.1 within * after receiving an invoice covering an accepted order.
4.11 Inspection of Manufacturing Facilities and Process. At any time
during the term of this Agreement, Collagen shall have the right to have, at
Collagen's expense, and Cosmederm shall permit, Collagen's authorized
representative(s) to inspect the manufacture of Licensed Products. Cosmederm
agrees at all times to provide Collagen at least * notice in writing prior to
the scheduled date of a manufacturing run of Licensed Products so that Collagen
representative(s) may be present.
5.0 Transfer Prices and Payment of Transfer Prices.
5.1 Transfer prices for any and all Licensed Product(s) initially
specified in Exhibit A which are manufactured by Cosmederm pursuant to the first
sentence of Section 4.1 shall be calculated as * of Collagen's published
wholesale price of such Licensed Product as of the date of delivery by
Cosmederm. Collagen shall promptly notify Cosmederm of all changes in its
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published wholesale prices. The parties shall mutually agree upon the transfer
prices for any additional Licensed Products manufactured by Cosmederm pursuant
to Sections 7.1 and 7.2. Collagen agrees upon Cosmederm's request to discuss in
good faith adjusting the transfer price for the Licensed Product(s) initially
specified in Exhibit A upon Cosmederm's demonstration of convincing evidence of
commercial factors in support of such a proposed adjustment. The parties shall
mutually agree upon the size, quantity, packaging and transfer price, if any,
for sample products.
6.0 Royalty.
6.1 Royalty Rates. In the event that Collagen manufactures or
sublicenses the manufacture of Licensed Product(s) under the second sentence of
Section 4.1, Collagen shall pay to Cosmederm royalties based on the Net Sales of
such Licensed Product(s) and calculated at the rate of (i) * for each and every
such Licensed Product(s) which is a prescription drug, (ii) * for each and every
such Licensed Product(s) which is classified as an OTC drug, but does not
require a physician's prescription, and (iii) * for each and every such Licensed
Product(s) which is a cosmetic product. The parties acknowledge that each of the
initial * Licensed Products specified in Exhibit A are cosmetic products and
shall agree on the characterization of any additional Licensed Products prior to
manufacture.
6.2 Royalty Rate Adjustment. In the event that in any given calendar
year during the effective term of this Agreement, the cumulative Net Sales of
all royalty-bearing Licensed Products sold throughout the Territory which are
cosmetic products exceeds * , the applicable royalty rate for sales of such
royalty-bearing, cosmetic Licensed Products in excess * for the remainder of
such calendar year only shall be * .
6.3 Reports. After the first commercial sale of a Licensed Product
manufactured by or on behalf of Collagen, Collagen shall make quarterly written
reports to Cosmederm within *, stating in reasonably specific detail, on a
country-by-country basis, (i) the number of units of each Licensed Product
directly or indirectly sold by Collagen, Affiliates or sublicensed
subdistributors during the reporting period and the calculation of Net Sales
from such gross sales, (ii) the royalties payable under this Agreement on such
sales of units of each Licensed Product during the reporting period, (iii) the
exchange rates used in converting foreign currencies to United States dollars in
the calculation of such royalties, and (iv) the withholding taxes, if any,
required by law to be deducted from such royalties. With respect to royalties
payable on sales of units of the Licensed Products invoiced in United States
dollars, the gross sales, Net Sales, and royalties payable to Cosmederm shall be
expressed in United States dollars. With respect to royalties payable on sales
of units of the Licensed Products invoiced in a currency other than United
States dollars, the gross sales, Net Sales and amounts payable to Cosmederm
shall be expressed in the domestic currency of the country in which the sale was
together with the United States dollar equivalent of the royalty payable,
calculated using the average of the buying and selling exchange rates quoted by
Bank of America (San Francisco) at the close of business on the last banking day
of the calendar quarter prior to the date of payment.
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6.4 Royalty Payments. Concurrently with the making of each such report,
Collagen shall pay to Cosmederm the royalty payments due under Section 6.1 on
sales of units of the Licensed Products during the quarter covered by such
report. All payments shall be in United States dollars.
6.5 One Royalty. For purposes of this Agreement, each Licensed Product
sold hereunder shall be sold only once in a royalty-generating transaction, and
subsequent sales or transfers of such Licensed Product shall not result in any
additional royalty payment hereunder.
6.6 Taxes. In the event that Collagen is required by law to deduct
withholding taxes from royalty payments which would otherwise be payable to
Cosmederm hereunder, Collagen will promptly provide Cosmederm with all
documentation reasonably required by Cosmederm to obtain a corresponding
reduction in Cosmederm's United States taxes.
6.7 Audits. Collagen shall keep, and cause each Affiliate and each
sublicensed subdistributor to keep, true and accurate books of account and
records in sufficient detail to properly determine the royalties payable to
Cosmederm in connection with the distribution of the Licensed Products. Collagen
shall keep, and cause each Affiliate and each sublicensed subdistributor to
keep, such books and records for at least three (3) years following the end of
the calendar quarter to which they pertain, and shall make available, and cause
each Affiliate and each sublicensed subdistributor to make available, such books
and records for inspection during such three (3) year period by a certified
public accountant retained by Cosmederm for such purpose, solely for the purpose
of verifying Cosmederm's royalty payments hereunder. Such inspections may be
made no more than once in any twelve (12) month period, at reasonable times
mutually agreed upon by the parties after at least five (5) days written notice
to Collagen. The certified public accountant shall execute a confidentiality
agreement reasonably acceptable to Collagen prior to commencing any such
inspection. All such inspections conducted shall be at Cosmederm's expense,
unless an underpayment exceeding * of the amount payable for the period covered
by the inspection is established in the course of any such inspection, whereupon
all costs relating to such inspection shall be paid by Collagen.
7.0 Rights of First Offer.
7.1 Cosmederm shall fully disclose to Collagen (to the greatest extent
that Cosmederm is not contractually prohibited from doing so) in writing any
additional human cosmetic and dermatologic products, including, but not limited
to, acne products, therapeutic emollients and moisturizers, therapeutic
shampoos, skin treatment products and pigment lightening creams which
incorporate the Licensed Technology, Cosmederm contemplates developing with the
Licensed Technology during the effective term of this Agreement. Collagen shall
have * after Collagen's receipt of such disclosure to determine whether or not
Collagen is interested in pursuing such new product
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opportunity within the Collagen Field and to so inform Cosmederm. In the event
that Collagen does not within * inform Cosmederm in writing that Collagen is
interested in pursuing any such proposed product opportunity, then Cosmederm
shall be able to pursue such new product opportunity by itself or with any third
party. If Collagen informs Cosmederm in writing that Collagen is interested in
pursuing such new product opportunity, the parties shall enter into good faith
and exclusive negotiations for up to * regarding the possible terms of an
agreement, including but not limited to the supply and transfer pricing terms,
pursuant to which Cosmederm and Collagen may jointly develop, manufacture,
and/or sell such new product. In the event the parties do not reach such an
agreement within such * , then Cosmederm shall be able to pursue such new
product opportunity with any third party (or by itself), but under terms and
conditions no more favorable than those finally offered to Collagen.
7.2 Collagen shall fully disclose to Cosmederm in writing any
additional cosmetic and dermatologic products for the Collagen Field, including,
but not limited to, acne products, therapeutic emollients and moisturizers,
therapeutic shampoos, skin treatment products and pigment lightening creams,
Collagen desires to develop with the Licensed Technology during the term of this
Agreement. Cosmederm agrees to negotiate with Collagen exclusively and in good
faith regarding the joint development of such product, and to use Cosmederm's
best efforts to conclude an agreement between the parties pursuant to which
Cosmederm and Collagen may jointly develop, Collagen and/or Cosmederm may
manufacture, and Collagen may sell such new product. In the event that Collagen
does manufacture, directly or indirectly, any such additional Licensed
Product(s) independently of Cosmederm, Cosmederm shall cooperate fully and
diligently with Collagen's efforts to manufacture and commercialize such new
product(s). For avoidance of doubt, (i) Collagen shall have the right, but not
the obligation, to manufacture (or have manufactured) any Licensed Product
proposed by Collagen and developed by the parties under this Section 7.2 in the
event that the parties do not agree upon manufacturing terms pursuant to which
Cosmederm would manufacture such Licensed Product, and (ii) Cosmederm shall be
entitled to receive the royalty called for in Section 6.1 on each and every
Licensed Product manufactured and sold by Collagen, Affiliates or sublicensees
under this Agreement. If the parties are unable to mutually agree upon the terms
and conditions of a development agreement, neither party shall develop,
manufacture or sell such product.
8.0 Licensed Product Development
8.1 Cosmederm shall be responsible for * of all research, development,
manufacturing and marketing claims support costs of the Licensed Products
specified in Exhibit A. Collagen is responsible for * of all other marketing,
sales and distribution costs for the Licensed Products specified in Exhibit A,
including, but not limited to, consumer acceptance studies, focus groups, and
test market studies. The parties may mutually agree upon the allocation of costs
related to the joint development of any additional Licensed Product(s) proposed
by either Collagen or Cosmederm pursuant to Sections 7.1 and 7.2.
9.0 Indemnities.
9.1 Collagen's Indemnity. Cosmederm shall defend, indemnify and hold
Collagen harmless against all damages, costs (including reasonable attorneys'
fees) or other liability, actually incurred by Collagen, or assessed against
Collagen by a court, arbitrator or government agency of competent jurisdiction,
arising from any claim, suit or proceeding based on a third party claim of
intellectual property infringement related to the Licensed Technology or product
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liability (to the extent such claim is related to Cosmederm's supplying Licensed
Product(s) not meeting the Acceptance Specifications, and/or if such product
liability arises from or is related to the product design of Licensed Products
designed solely by Cosmederm) brought individually or severally against Collagen
as a result of Collagen's distribution of Licensed Products. Collagen shall
provide Cosmederm with prompt notification of any such claim, suit or
proceeding, and shall provide Cosmederm with reasonable assistance, at
Cosmederm's expense, in connection with the defense or settlement thereof.
Cosmederm shall have sole control of the defense or settlement of any such
claim, suit or proceeding, subject to Collagen's right to step in and assume
control of such defense in the event Cosmederm refuses to conduct such defense.
No settlement shall be binding on Collagen without Collagen's written consent.
However, should Collagen refuse to consent to a settlement arranged by
Cosmederm, then Cosmederm may (but shall not be obligated to) pay Collagen the
indicated settlement amount; if Cosmederm does so, Cosmederm shall thereupon be
relieved of all further responsibility to Collagen under this Section 9.1.
9.2 Cosmederm's Indemnity. Collagen shall defend, indemnify and hold
Cosmederm harmless against all damages, costs (including reasonable attorneys'
fees) or other liability, actually incurred by Cosmederm, or assessed against
Cosmederm by a court arbitrator or government agency of competent jurisdiction,
arising from any claim, suit or proceeding brought individually or severally
against Cosmederm to the extent such claim, suit or proceeding is the result of
Licensed Product(s) manufactured by Collagen (or Collagen's manufacturing
sublicensees) which fail to meet the Acceptance Specifications, and/or arises
from or is related to marketing claims made by Collagen and not approved by
Cosmederm and/or product design of Licensed Products designed solely by
Collagen. Cosmederm shall provide Collagen with prompt notification of any such
claim, suit or proceeding, and shall provide Collagen with reasonable
assistance, at Collagen's expense, in connection with the defense or settlement
thereof. Collagen shall have sole control of the defense or settlement of any
such claim, suit or proceeding, subject to Cosmederm's right to step in and
assume control of such defense in the event Collagen refuses to conduct such
defense. No settlement shall be binding on Cosmederm without Cosmederm's written
consent. However, should Cosmederm refuse to consent to a settlement arranged by
Collagen, then Collagen may (but shall not be obligated to) pay Cosmederm the
indicated settlement amount; if Collagen does so, Collagen shall thereupon be
relieved of all further responsibility to Cosmederm under this Section 9.2.
10.0 Limitation of Liability.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST
PROFITS OR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, OR INDIRECT DAMAGES OF SUCH
OTHER PARTY, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF THIS
AGREEMENT OR THE ACTIVITIES CONTEMPLATED BY THIS AGREEMENT. THESE LIMITATIONS
SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
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11.0 Confidentiality.
11.1 The parties may, from time to time and in connection with the work
contemplated under this Agreement, disclose to each other Confidential
Information. "Confidential Information" shall mean any confidential and
proprietary information, disclosed either in writing or orally, and either
obviously such or identified as such by the disclosing party within thirty (30)
days of such disclosure. Each party shall keep strictly confidential and not use
such Confidential Information except for the purposes set forth in this
Agreement. Confidential Information shall not include information which:
(i) the receiving party can by written records show has already
lawfully come into its possession at the time of disclosure;
(ii) is or later becomes part of the public domain through no
fault of the receiving party;
(iii) is later communicated lawfully to the receiving party by a
third party not bound by confidentiality;
(iv) the receiving party can show by written records is later
developed independently by the receiving party without any use of the disclosing
party's Confidential Information; or
(v) is required by law or regulation to be disclosed; however,
that the party subject to such disclosure requirement provides written notice to
the other party promptly to enable such other party to seek a protective order
or otherwise prevent or limit disclosure of such Confidential Information.
Either party may disclose Confidential Information to any third party
having a valid need to know so long as the disclosing party and such third party
have entered into a written confidentiality agreement, of which the original
disclosing party is a third party beneficiary, containing restrictions on
further disclosure and use no less stringent than the provisions of this Section
11.1.
11.2 Upon expiration or termination of this Agreement, each party shall
promptly deliver to the other party all records, notes and other documents, in
whatever medium (and including all copies) in its possession or control
containing Confidential Information belonging to the other party, except that
each party may retain one copy of Confidential information to be held by its
legal department solely for archival purposes.
12.0 Patent and Trademark Prosecution.
12.1 Cosmederm shall, at its sole expense, prosecute, maintain and
defend the Licensed Technology throughout the Territory and the Marks throughout
the countries specified in Exhibit C. Collagen shall, at its sole election and
expense, prosecute, maintain and defend the Marks
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throughout the remainder of the Territory. Collagen and Cosmederm shall each
provide the other reasonable assistance in any actions necessary for such
prosecution, maintenance and defense. Collagen may, at its sole election and at
Cosmederm's expense (and in Cosmederm's name and for Cosmederm's benefit),
prosecute, maintain and/or defend any Licensed Patents, or Marks in the event
that Cosmederm fails to promptly initiate, and diligently pursue, any
prosecution, maintenance and/or defense of any such Licensed Patents, or Marks
upon Collagen's written request throughout the countries specified in Exhibit C.
Cosmederm shall fully and promptly cooperate with any such prosecution,
maintenance and/or defense by Collagen.
13.0 Regulatory Approvals.
13.1 In the event that the approval or authorization of any regulatory
agency or body is required to permit Collagen to lawfully sell as a cosmetic
product any Licensed Product(s) specified in Exhibit A within the Collagen Field
anywhere within the Territory, Cosmederm shall at its sole expense obtain such
regulatory approval and authorization. Collagen shall fully and diligently
cooperate with all such Cosmederm efforts. Collagen shall at its sole expense be
primarily responsible for performing such tests as may be required for obtaining
regulatory approvals and authorizations for any additional Licensed Product(s),
for bearing all expenses in obtaining such regulatory approvals and
authorizations, and for determining the manner in which such regulatory
approvals and authorizations shall be sought. Cosmederm shall fully and
diligently cooperate with all such Collagen efforts.
14.0 Term and Termination.
14.1 Initial Term. This Agreement shall become effective on the
Effective Date and shall continue in effect for all Licensed Products, unless
terminated in accordance with Sections 14.3, 14.4, 14.5 or 14.6, for an initial
term of * from the date of Cosmederm's first delivery of a commercial lot of any
Licensed Product (the "Initial Term") plus any renewal term(s) as provided in
Section 14.2.
14.2 Renewal Terms. Collagen may at its sole election renew this
Agreement , by giving written notice to Cosmederm at least * before the
expiration of the Initial Term (or any Renewal Term) for another * ("Renewal
Term(s)"), so long as the Net Sales of the Licensed Products sold by Collagen
and Affiliates and sublicensed subdistributors during Year 5 of the Initial
Term, or if applicable, Year 5 of the then-ending Renewal Term, throughout the
Territory equal or exceed * (such amount shall be adjusted to the extent any
deficit is attributable, in whole or in part, to any act or failure to act of
Cosmederm, including, but not limited to, Cosmederm's failure to supply
sufficient quantities of any Licensed Product(s) to Collagen and/or any action
or requirement of the United States Food and Drug Administration or state
regulatory equivalent). In the event that such Net Sales of the Licensed
Products are less than * (or less than any applicable adjusted amount) and
Collagen, at Collagen's sole election, desires to renew this Agreement for a
Renewal Term, Collagen's right to renew shall be subject to Collagen, before or
within * after sending the renewal notice:
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(i) in the event that Cosmederm is then manufacturing one hundred
percent (100%) of Licensed Products(s) being sold by Collagen, Affiliates and
sublicensed subdistributors, placing a purchase order (for delivery in no less
than * nor more than * for a sufficient total number of units of such Licensed
Product(s) from Cosmederm to equal the deficiency in the Section 14.2 minimum
Net Sales,
(ii) in the event that Collagen is then manufacturing one hundred
percent (100%) of Licensed Products(s) being sold by Collagen, Affiliates and
sublicensed subdistributors, paying Cosmederm an additional payment equal to the
incremental royalty which Cosmederm would have been entitled to if Collagen had
sold sufficient total units of Licensed Product(s) to meet the Section 14.2
minimum Net Sales, or
(iii) in the event that both Cosmederm and Collagen are then
manufacturing Licensed Product(s), Collagen shall, in a proportion equal to the
ratio of the dollar amount of such Licensed Product(s) manufactured by Cosmederm
and Collagen, respectively, place a purchase order according to (i) above and
pay to Cosmederm an additional incremental royalty payment according to (ii)
above which together equal the total dollar amount to which Cosmederm would have
been entitled to if Collagen had met the Section 14.2 minimum Net Sales.
All such purchases and royalty payments shall be deemed made in the
shortfall Year, not the following Year. In the event that and so long as a valid
United States patent is not in effect at any time during Year 5, the Net Sales
performance figure specified in this Section 14.2 shall be reduced by * .
14.3 Default. If either party defaults in the performance of any of its
material obligations hereunder and if such default is not corrected within *
after written notice thereof by the other party, then the nondefaulting party,
at its option, may, in addition to any other remedies it may have, terminate
this Agreement by giving written notice of termination to the defaulting party.
14.4 Insolvency. This Agreement may be terminated by either party, on
notice, (i) upon the institution by the other party of insolvency, receivership
or bankruptcy proceedings or any other proceedings for the settlement of its
debts, (ii) upon the institution of such proceedings against the other party,
which are not dismissed or otherwise resolved in its favor within sixty (60)
days thereafter, (iii) upon the other party's making a general assignment for
the benefit of creditors, or (iv) upon the other party's dissolution or ceasing
to conduct business in the normal course.
14.5 Cosmederm's Right to Buy Collagen Out. Cosmederm may at its sole
election terminate this Agreement at any time after the expiration of the
Initial Term by providing Collagen * prior written notice and paying to Collagen
an amount equal to * of Collagen, Affiliates and sublicensed subdistributors.
14.6 Failure to Meet Minimums. If Collagen, Affiliates and sublicensed
subdistributors fail to sell in any Year at least the minimum Net Sales of all
Licensed Product(s)
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as set forth in Exhibit D (and so long as such failure is not attributable, in
whole or in part, to any act or failure to act of Cosmederm, including, but not
limited to, Cosmederm's failure to supply sufficient quantities of any Licensed
Product(s) to Collagen and/or any action or requirement of the United States
Food and Drug Administration or state regulatory equivalent), Cosmederm may, at
its sole election, notify Collagen in writing of Cosmederm's intent to terminate
this Agreement. Cosmederm may terminate this Agreement * after such notice
unless Collagen has, at Collagen's sole election, within such * period done one
of the following:
(i) in the event that Cosmederm is then manufacturing one hundred
percent (100%) of Licensed Products(s) being sold by Collagen, Affiliates and
sublicensed subdistributors, place a purchase order (for delivery in no less
than * nor more than * for a sufficient total number of units of such Licensed
Product(s) from Cosmederm to equal the deficiency in the applicable minimum Net
Sales,
(ii) in the event that Collagen is then manufacturing one hundred
percent (100%) of Licensed Products(s) being sold by Collagen, Affiliates and
sublicensed subdistributors, pay to Cosmederm an additional payment equal to the
incremental royalty which Cosmederm would have been entitled to if Collagen had
sold sufficient total units of Licensed Product(s) to meet the applicable
minimum Net Sales, or
(iii) in the event that both Cosmederm and Collagen are then
manufacturing Licensed Product(s), Collagen shall, in a proportion equal to the
ratio of the dollar amount of such Licensed Product(s) manufactured by Cosmederm
and Collagen, respectively, place a purchase order according to (i) above and
pay to Cosmederm an additional incremental royalty payment according to (ii)
above which together equal the total dollar amount to which Cosmederm would have
been entitled to if Collagen had met the applicable minimum Net Sales.
All such purchases and royalty payments shall be deemed made in the
shortfall Year, not the following Year.
14.7 Marks. The parties each acknowledge that neither party shall be
entitled to make any use of the Marks after the termination or expiration of
this Agreement.
14.8 Survival. Sections 6.3, 6.4, 6.7, 9, 10, 11 and 14.7 shall survive
any termination or expiration of this Agreement
15.0 Miscellaneous Provisions
15.1 Governing Law. This Agreement shall be construed in accordance
with the laws of California without reference to its conflict of laws
principles.
15.2 Further Acts and Instruments. Each party agrees to execute,
acknowledge and deliver such further instruments and to do all such other acts
as may be necessary or appropriate to carry out the purpose and intent of this
Agreement.
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15.3 Assignment. Neither this Agreement nor any interest hereunder
shall be assignable by either party by operation of law or otherwise without the
prior written consent or agreement of the other (which consent shall not be
unreasonably withheld), except in connection with a sale or transfer of all or
substantially all of its business unit to which this Agreement relates. It is
agreed that, for this purpose, the smallest applicable Collagen business unit is
the Aesthetics Technologies division, or its successor. This Agreement shall
inure to the benefit of and shall be binding upon the parties and their
successors and permitted assigns, and the name of a party appearing herein shall
be deemed to include the names of such party's successors and permitted assigns
to the extent necessary to carry out the intent of this Agreement.
15.4 Notices. Any notice required by this Agreement shall be deemed to
have been fully given when sent by facsimile with a copy sent by express
courier, addressed in the case of Collagen to:
Collagen Corporation
2500 Faber Place
Palo Alto, California 94303
Attention: President
Facsimile: (415) 354-4752
or in the case of Cosmederm to:
Cosmederm Technologies, Inc.
La Jolla Corporate Center
3252 Holiday Court
La Jolla, CA 92037
Attention: Chief Executive Officer
Facsimile: (619) 550-7075
or at such other addresses as may be given from time to time in accordance with
the terms of this notice provision.
15.5 Entire Agreement; Amendments. This Agreement constitutes the
entire and only agreement between the parties relating to the subject matter
hereof, and all prior and contemporaneous negotiations, representations, and
understandings, except the Mutual Disclosure of Confidential Information
Agreement dated April 12, 1996, are superseded hereby. No agreements altering or
supplementing the terms hereof may be made except by means of a written document
signed by the duly authorized representatives of the parties.
15.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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15.7 Independent Contractors. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship between the parties. All activities by the parties
hereunder shall be performed by them as independent contractors. No party shall
incur any debts or make any commitments for or on behalf of the other party,
unless specifically authorized in writing by an officer of the other party.
15.8 No Waiver for Failure to Enforce Compliance. Failure of any party
to insist upon strict observance of or compliance with any of the terms of this
Agreement in one or more instances shall not be deemed to be a waiver of its
rights to insist upon observance of or compliance with such term thereafter, or
with any of the other terms of this Agreement.
15.9 Force Majeure. No failure or omission of a party hereunder in the
performance of any obligation according to this Agreement shall be deemed a
breach of the Agreement or create any liability if the same shall arise from any
cause or causes beyond the control of, and not resulting from the negligence of,
such party, including, but not limited to, acts of God; acts or omissions of any
government; any rule, regulation or order issued by any governmental authority
or by any officer, department, agency or instrument thereof; fire; storm; flood;
natural phenomenon; earthquake; accident; war; rebellion; insurrection; riot;
invasion; strike; lockout; or other kind of force majeure. Each party agrees to
notify the other promptly of any circumstance delaying its performance hereunder
and to resume performance as soon thereafter as is reasonably practicable.
15.10 Press Release. Upon execution of this Agreement, the parties
shall make a public announcement regarding the collaboration herein by issuing
an agreed press release. Thereafter, neither party shall without the other's
consent (such consent not to be unreasonably withheld) make any public release
using the other party's name or referring to the other party, except that
consent shall not be required for uses or references in product marketing
materials or where such uses or references are affirmatively required by law.
The undersigned are duly authorized to execute this Agreement on behalf
of Cosmederm and Collagen effective as of the date first above written.
COLLAGEN CORPORATION COSMEDERM TECHNOLOGIES, INC.
BY: /s/ Howard D. Palefsky BY: /s/ Anne Crossway, Ph.D.
---------------------------- ------------------------------
PRINT NAME: Howard D. Palefsky PRINT NAME: Anne Crossway, Ph.D.
-------------------- ----------------------
TITLE: Chief Executive Officer TITLE: Chief Executive Officer
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EXHIBIT A
LICENSED PRODUCTS
1. One mutually agreed formulation of a facial treatment lotion with 15%
lactic acid and with CT-746.
2. One mutually agreed formulation of a facial treatment hydrogel with 15%
lactic acid and with CT-746.
3. One mutually agreed formulation of a facial treatment cream with 15% lactic
acid and with CT-746.
4. One mutually agreed formulation of a facial treatment cleanser with 0.1%
lactic acid and with CT-746.
5. One mutually agreed formulation of a facial treatment toner with 0.5%
lactic acid and with CT-746.
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EXHIBIT B
ACCEPTANCE SPECIFICATIONS
[TO BE MUTUALLY AGREED.]
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EXHIBIT C
COUNTRIES IN WHICH COSMEDERM SHALL PROSECUTE, MAINTAIN AND DEFEND THE MARKS
*
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EXHIBIT D
PERFORMANCE MINIMUMS
For purposes of this Exhibit D, a "Year" of distribution of Licensed
Products shall commence on the date of Cosmederm's first delivery of a
commercial lot of any Licensed Product, or an anniversary of such date.
Year 1 - Net Sales of *
Year 2 - Net Sales of *
Year 3 - Net Sales of *
Year 4 - Net Sales of *
Year 5 -- Net Sales of *
* Year 6 and thereafter - Net Sales equal to *
In the event that and so long as a valid United States patent is not in effect
at any time during Year 3 or thereafter, the performance minimums specified
above shall be reduced by *.
* Assumes a Renewal Term is in effect.
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