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EXHIBIT 99.3
LICENSE AND ROYALTY AGREEMENT
This LICENSE AND ROYALTY AGREEMENT ("Agreement") is entered into as of
August 8, 2000 (the "Effective Date") by and between PFIZER INC, a Delaware
corporation, having an office at 235 East 42nd Street, New York, New York 10017
and its Affiliates ("Pfizer") and ATRIX Laboratories, Inc. ("ATRIX"), a Delaware
corporation, having an office at 2579 Midpoint Drive, Fort Collins, CO
80525-4417. Pfizer and Atrix are sometimes collectively referred to herein as
the "Parties" and individually as a "Party".
WHEREAS, Pfizer desires to obtain a non-exclusive license under ATRIX's
right, title and interest in the Patent Rights so that Pfizer can manufacture,
use, sell, offer for sale and import Product; and
WHEREAS, ATRIX is willing to grant such license on the terms and
subject to the conditions set forth herein;
Therefore, in consideration of the mutual covenants and promises set
forth in this Agreement, the parties agree as follows:
1. DEFINITIONS. The capitalized terms used in this Agreement and not
defined elsewhere in it shall have the meanings specified for such
terms in this Section 1 and in the Research Agreement (defined below).
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1.1. "RESEARCH AGREEMENT" means the Collaborative Research
Agreement between Pfizer and ATRIX effective August 7, 2000.
1.2. "NET SALES" means the gross amount invoiced by Pfizer, its
Affiliates, or any sublicensee of Pfizer for sales to a third
party or parties of Products, less normal and customary trade
discounts actually allowed, returns, credits, taxes the legal
incidence of which is on the purchaser and separately shown on
Pfizer's or any sublicensee of Pfizer's invoices and
transportation, insurance and postage charges, if prepaid by
Pfizer or any sublicensee of Pfizer and billed on Pfizer's or
any sublicensee of Pfizer's invoices as a separate item, and
compulsory payments and rebates, accrued, paid or deducted
pursuant to agreements (including, but not limited to managed
care agreements) or governmental regulations.
2. GRANT OF LICENSE, TERM, RIGHTS AND OBLIGATIONS.
2.1. LICENSE GRANTED TO PFIZER UNDER THE PATENT RIGHTS. ATRIX
grants to Pfizer a non-exclusive, worldwide license, including
the right to grant sublicenses, to manufacture, use, sell,
offer for sale and import, Products under all ATRIX Patent
Rights and Pfizer Patent Rights, subject to the terms and
conditions herein.
2.2. TERM OF LICENSE GRANT AND PAYMENT OF ROYALTIES. The license
granted to Pfizer pursuant to this Agreement will commence on
the Effective Date and, unless terminated earlier as provided
below, the license in each country shall terminate on the date
of the last to expire of the ATRIX Patent Rights and Pfizer
Patent Rights.
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2.3. PAID-UP LICENSE. Pfizer shall have a paid-up license
permitting royalty-free manufacture, use, sale, offer for sale
and import of Products in each country after the expiration of
Pfizer's last obligation to pay royalties on Net Sales of each
such Product in each such country.
2.4. PFIZER OBLIGATIONS.
2.4.1. Pfizer shall use commercially reasonable efforts to
timely promote the sale, marketing and distribution
of the Products and to otherwise exploit Products
commercially.
2.4.2. If Pfizer grants a sublicense pursuant to this
Section 2, Pfizer shall guarantee that any
sublicensee fulfils all of Pfizer's obligations under
this Agreement; provided, however, that Pfizer shall
not be relieved of its obligations pursuant to this
Agreement.
2.5. TECHNICAL ASSISTANCE. ATRIX shall provide to Pfizer or any
sublicensee of Pfizer, at Pfizer's request and sole cost and
expense, any agreed technical assistance reasonably necessary
to enable Pfizer or such sublicensee to manufacture, use,
sell, offer for sale or import each Product and to enjoy fully
all the rights granted to Pfizer pursuant to this Agreement;
provided, however, that ATRIX is reasonably capable of
providing that assistance.
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3. CLINICAL AND COMMERCIAL DEVELOPMENT. When and if any Pfizer Compound is
identified for further development using ATRIX Patent Rights or Pfizer
Patent Rights, Pfizer and ATRIX shall negotiate a supply agreement
("Supply Agreement").
In addition to the applicable terms and conditions set forth in this
Agreement, the agreement described above shall contain detailed
manufacturing terms including, without limitation, provisions
concerning: specifications, forecasts, orders, materials procurement,
quality control, inspections, storage and other necessary details prior
to market launch of the Product.
3.1 COMMERCIALIZATION. Pfizer shall have the sole and exclusive
right to conduct clinical trials on and to sell all Products
in accordance with the terms of the License set forth in
Section 2.1.
3.2 MANUFACTURE. ATRIX and Pfizer shall have the co-exclusive
right to manufacture or have manufactured; any Product
discovered or developed in the course of activities performed
pursuant to the Research Agreement. Subject to qualification
and approval by Pfizer, such approval not to be unreasonably
withheld, ATRIX shall have the right to manufacture [ ** ] any
Product developed under the Research Agreement. The terms and
conditions for the manufacture of any such Product shall be
pursuant to the Supply Agreement when and if Pfizer identifies
a Compound for further development using ATRIX Patent Rights
or Pfizer Patent Rights.
3.4 For each Product manufactured by ATRIX, Pfizer will pay ATRIX
[ ** ]
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3.5 "MANUFACTURING COSTS" shall mean actual costs based on Direct
Material, Direct Labor, and Allocated Manufacturing Overhead
(as defined below) costs incurred by ATRIX in manufacturing
finished Product(s).
Manufacturing Costs shall be calculated in accordance with
generally accepted accounting principles applied on a
consistent basis ("GAAP"), adapted as necessary to comply with
the provisions set forth below:
3.5.1. "DIRECT MATERIAL" shall mean all formulation
materials, enhancers, excipients and trade-dress
materials, including packaging and packing materials,
used in manufacturing the Product(s). Direct Material
shall not include Pfizer Compounds to be supplied by
Pfizer to ATRIX at Pfizer's expense.
3.5.2. "DIRECT LABOR" shall mean all salaries, wages and
fringe benefits for workers whose time can be
specifically identified with manufacturing the
Product(s).
3.5.3. "ALLOCATED MANUFACTURING OVERHEAD" shall mean those
indirect manufacturing costs related to the
Product(s). Allocation methods vary depending on the
cost item in question. Allocated Manufacturing
Overhead in a given manufacturing facility shall be
allocated to the finished Product(s) produced in that
facility according to their respective production
volumes and manufacturing cost. Allocated
Manufacturing Overhead shall include the following:
a. Repairs and supplies for machine
maintenance;
b. Quality Assurance -- inspection and quality
control, labor costs and supplies;
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c. Materials handling -- salaries and wages of
receiving and handling personnel;
d. Incremental rent depreciation, occupancy
charges and fixed utility charges;
e. Incremental supervision -- the salaries of
line managers and supervisors clearly
associated with production ("Indirect
Labor");
f. Incremental depreciation on equipment; and
g. Other manufacturing overhead costs related
to each finished Product.
3.6. Pfizer shall have the right to inspect ATRIX's accounting
records to verify the Manufacturing Costs on the same basis
that ATRIX may inspect Pfizer's books, pursuant to Section
4.5, substituting "ATRIX" for "Pfizer" where applicable.
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4. MILESTONE PAYMENTS, ROYALTIES, PAYMENTS OF ROYALTIES, ACCOUNTING FOR
ROYALTIES, RECORDS.
4.1. PATENT RIGHTS. Pfizer shall pay ATRIX a royalty based on the
Net Sales of each Product. Such royalty shall be paid with
respect to each country of the world from the date of the
first commercial sale by Pfizer or any sublicensee of Pfizer
of such Product in each such country until the expiration of
the last ATRIX Patent Rights and Pfizer Patent Rights to
expire with respect to each such country and each such
Product.
4.2. ROYALTY RATES.
4.2.1. Pfizer shall pay ATRIX a royalty for the sale of each
Product; [**]
4.2.2. The royalty paid each year by Pfizer to ATRIX shall
be based on increments of Net Sales with respect to
each of the Products according to the following
schedule:
Annual Net Sales (MM) Royalty Rate (%)
--------------------- ----------------
[ ** ]
[ ** ]
4.3. PAYMENT DATES. Royalties shall be paid by Pfizer on Net Sales
within sixty (60) days after the end of each calendar quarter
in which such Net Sales are made. Such payments shall be
accompanied by a statement showing the Net Sales of each
Product by Pfizer or any sublicensee of Pfizer in each
country, the applicable royalty rate for such Product, and a
calculation of the amount of royalty due, including any
offsets.
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4.4. ACCOUNTING. The Net Sales used for computing the royalties
payable to ATRIX by Pfizer shall be computed and paid in US
dollars by wire transfer in immediately available funds to a
U.S. account designated by ATRIX, or by other mutually
acceptable means. For purposes of determining the amount of
royalties due, the amount of Net Sales in any foreign currency
shall be computed by (a) converting such amount into U.S.
dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as published in
the Wall Street Journal for the close of the last business day
of the calendar quarter for which the relevant royalty payment
is to be made by Pfizer and (b) deducting the amount of any
governmental tax, duty, charge, or other fee actually paid in
respect of such conversion into, and remittance of U.S.
dollars.
4.5. RECORDS. Pfizer shall keep for three (3) years from the date
of each payment of royalties complete and accurate records of
sales by Pfizer of each Product in sufficient detail to allow
the accruing royalties to be determined accurately. ATRIX
shall have the right for a period of three (3) years after
receiving any report or statement with respect to royalties
due and payable to appoint at its expense an independent
certified public accountant reasonably acceptable to Pfizer to
inspect the relevant records of Pfizer to verify such report
or statement. Pfizer shall make its records available for
inspection by such independent certified public accountant
during regular business hours at such place or places where
such records are customarily kept, upon reasonable notice from
ATRIX, to verify the accuracy of the reports and payments.
Such inspection right shall not be exercised more than once in
any calendar year nor more than once with
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respect to sales in any given period. If such accounting firm
concludes that such payments were underpaid, Pfizer shall pay
ATRIX the amount of any such underpayments within thirty (30)
days of the date ATRIX delivers to Pfizer such accounting
firm's written report. ATRIX agrees to hold in strict
confidence all information concerning royalty payments and
reports, and all information learned in the course of any
audit or inspection, except to the extent necessary for ATRIX
to reveal such information in order to enforce its rights
under this Agreement or if disclosure is required by law. The
failure of ATRIX to request verification of any report or
statement during said three-year period shall be considered
acceptance of the accuracy of such report, and Pfizer shall
have no obligation to maintain records pertaining to such
report or statement beyond said three-year period. The results
of each inspection, if any, shall be binding on both parties.
4.6. MILESTONE PAYMENTS. Pfizer shall pay ATRIX, within thirty (30)
days of the completion of each event set forth below
("Event"), the payment listed opposite that Event. Payments
shall be made in US dollars by wire transfer in immediately
available funds to a U.S. bank account designated by ATRIX, or
other mutually acceptable means. Pfizer shall be obligated to
make each payment only once with respect to each Product
affected by an Event.
[ ** ]:
EVENT AMOUNT
----- ------
[ ** ]
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5. LEGAL ACTION.
5.1. ACTUAL OR THREATENED DISCLOSURE OR INFRINGEMENT. When
information comes to the attention of Pfizer to the effect
that any ATRIX Patent Rights or Pfizer Patent Rights claiming
a Product have been or are threatened to be unlawfully
infringed, Pfizer shall have the right at its expense to take
such action as it may deem necessary to prosecute or prevent
such unlawful infringement, including the right to bring or
defend any suit, action or proceeding involving any such
infringement; provided, however, that Pfizer shall not settle
any claim or proceeding which involves or relates to the
infringement of any ATRIX Patent Rights without ATRIX's prior
written consent. Pfizer shall notify ATRIX promptly of the
receipt of any such information and of the commencement of any
such suit, action or proceeding. If Pfizer determines that it
is necessary or desirable for ATRIX to join any such suit,
action or proceeding, ATRIX shall, at Pfizer's expense,
execute all papers and perform such other acts as may be
reasonably required to permit Pfizer to commence such action,
suit or proceeding in which case Pfizer shall hold ATRIX free,
clear and harmless from any and all costs and expenses of
litigation, including attorneys fees. If Pfizer brings a suit,
it shall have the right first to reimburse itself out of any
sums recovered in such suit or in its settlement for all costs
and expenses, including attorney's fees, related to such suit
or settlement, and [ ** ] of any funds that shall remain from
said recovery shall be paid to ATRIX and the balance of such
funds shall be retained by Pfizer. If Pfizer does not, within
one hundred twenty (120) days after giving notice to ATRIX of
the above-described information, notify ATRIX of Pfizer's
intent to bring suit against any infringer, ATRIX shall have
the right to bring suit
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for such alleged infringement, but it shall not be obligated
to do so, and may join Pfizer as party plaintiff, if
appropriate, in which event ATRIX shall hold Pfizer free,
clear and harmless from any and all costs and expenses of such
litigation, including attorney's fees, and any sums recovered
in any such suit or in its settlement shall belong to ATRIX.
However, [ ** ] of any such sums received by ATRIX, after
deduction of all costs and expenses related to such suit or
settlement, including attorney's fees paid, shall be paid to
Pfizer. Each Party shall always have the right to be
represented by counsel of its own selection and at its own
expense in any suit instituted by the other for infringement
under the terms of this Section. If Pfizer lacks standing and
ATRIX has standing to bring any such suit, action or
proceeding, then ATRIX shall do so at the request of Pfizer
and at Pfizer's expense.
5.2. DEFENSE OF INFRINGEMENT CLAIMS. ATRIX will cooperate with
Pfizer at Pfizer's expense in the defense of any suit, action
or proceeding against Pfizer or any sublicensee of Pfizer
alleging the infringement of the intellectual property rights
of a third party by reason of the use of ATRIX Patent Rights
and Pfizer Patent Rights in the manufacture, use, sale, offer
for sale, or import of the Product. Pfizer shall give ATRIX
prompt written notice of the commencement of any such suit,
action or proceeding or claim of infringement and will furnish
ATRIX a copy of each communication relating to the alleged
infringement. ATRIX shall give to Pfizer all authority
(including the right to exclusive control of the defense of
any such suit, action or proceeding and the exclusive right
after consultation with ATRIX, to compromise, litigate, settle
or otherwise dispose of any such suit, action or proceeding),
at Pfizer's expense,
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including by providing information and assistance necessary to
defend or settle any such suit, action or proceeding;
provided, however, Pfizer shall obtain ATRIX's prior written
consent to such part of any settlement which contemplates
payment or other action by ATRIX or has a material adverse
effect on ATRIX's business (which material adverse effect
shall include, but not be limited to, an admission in
connection with such settlement by ATRIX of any issue, fact,
allegation or any other aspect of the claim being settled). If
the Parties agree that ATRIX should institute or join any
suit, action or proceeding pursuant to this Section, Pfizer
may, at Pfizer's expense, join ATRIX as a defendant if
necessary or desirable, and ATRIX shall execute all documents
and take all other actions, including giving testimony, which
may reasonably be required in connection with the prosecution
of such suit, action or proceeding.
5.3. HOLD HARMLESS. ATRIX agrees to defend, protect, indemnify and
hold harmless Pfizer and any sublicensee of Pfizer, from and
against any loss or expense arising from any proven claim of a
third party that it has been granted rights by ATRIX that
Pfizer or any sublicensee of Pfizer in exercising their rights
granted to Pfizer by ATRIX pursuant to this Agreement, has
infringed upon such rights granted to such third party by
ATRIX.
5.4. THIRD PARTY LICENSES. [ ** ]
6. REPRESENTATION AND WARRANTY. ATRIX represents and warrants to Pfizer
that it has the right to grant the License granted pursuant to this
Agreement, and that the License so granted does not conflict with or
violate the terms of any agreement between ATRIX and any third party.
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7. OTHER AGREEMENTS. Concurrently with the execution of this Agreement,
ATRIX and Pfizer shall enter into a Research Agreement and a Stock
Purchase Agreement. This Agreement, the Research Agreement, and the
Stock Purchase Agreement are the sole agreements with respect to the
subject matter and supersede all other agreements and understanding
between the parties with respect to same.
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8. TERMINATION AND DISENGAGEMENT.
8.1 EVENTS OF TERMINATION. The following events shall constitute
events of termination ("Events of Termination"):
8.1.1 Any written representation or warranty by ATRIX or
Pfizer, or any of its officers, made under or in
connection with this Agreement shall prove to have
been incorrect in any material respect when made;
8.1.2 ATRIX or Pfizer shall fail in any material respect to
perform or observe any term, covenant or
understanding contained in this Agreement or in any
of the other documents or instruments delivered
pursuant to, or concurrently with, this Agreement,
and any such failure shall remain unremedied for
thirty (30) days after written notice to the failing
party.
8.1. Upon the occurrence of any Event of Termination, the Party not
responsible may, by notice to the other Party, terminate this
Agreement.
8.2. Termination of this Agreement by either Party, with or without
cause, will not terminate the licenses granted pursuant to
Section 5.2 of the Research Agreement.
8.3. Termination of this Agreement for any reason shall be without
prejudice to:
a. the rights and obligations of the Parties provided in
Sections 6, 7, and 9;
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b. ATRIX's right to receive all royalty payments accrued
hereunder; or
c. any other remedies which either Party may otherwise
have.
8.4. At any time or times Pfizer may terminate, at its sole
discretion, this Agreement with respect to any Product in any
country or countries in the world upon thirty (30) days prior
notice to ATRIX. Upon such termination by Pfizer, all
licenses, other than the licenses granted under Section 5.2 of
the Research Agreement shall terminate with respect to such
country or countries for any such Product.
8.5. Expiration or termination of this Agreement shall not relieve
the Parties of any obligation accruing prior to such
expiration or termination. Except as set forth below or
elsewhere in this Agreement, the obligations and rights of the
Parties under Sections 4, 5, 9, 10 and 11 shall survive
expiration or termination of this Agreement.
8.6. Within thirty (30) days following the expiration or
termination of this Agreement, each Party shall return to the
other Party, or destroy, upon the written request of the other
Party, any and all Confidential Information of the other Party
in its possession and upon a Party's request, such destruction
(or delivery) shall be confirmed in writing to such Party by a
responsible officer of the other Party. Notwithstanding the
provisions of this Section 8.6, either Party may retain one
(1) copy of such Confidential Information for the sole purpose
of determining its continuing confidentiality obligation to
the other Party under this Agreement.
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9. INDEMNIFICATION. Pfizer and ATRIX will indemnify each other for
damages, settlements, costs, legal fees and other expenses incurred in
connection with a claim by a third party against either Party based on
any action or omission of the indemnifying Party's agents, employees,
or officers related to its obligations under this Agreement; provided,
however, that the foregoing shall not apply (a) if the claim is found
to be based upon the negligence, recklessness or wilful misconduct of
the Party seeking indemnification; or (b) if such Party fails to give
the other Party prompt notice of any claim it receives and such failure
materially prejudices the other Party with respect to any claim or
action to which its obligation pursuant to this Section applies.
Notwithstanding the foregoing, ATRIX shall not indemnify Pfizer for
claims arising from the sale of Products or exercise of rights granted
to Pfizer under Section 5.2 of the Research Agreement, or the License
Agreement (including without limitation product liability claims) and
Pfizer shall indemnify ATRIX with respect to such claims and to claims
arising from Pfizer Patent Rights, except for intellectual property
claims with respect to ATRIX Patent Rights. Each Party, in its sole
discretion, shall choose legal counsel, shall control the defense of
such claim or action and shall have the right to settle same on such
terms and conditions it deems advisable; provided however, it shall
obtain the other Party's prior consent to such part of any settlement
which requires payment or other action by the other Party or is likely
to have a material adverse effect on the other Party or the other
Party's business.
10. NOTICES AND REPORTS.
10.1. All notices shall be in writing mailed via certified mail,
return receipt requested, courier, or facsimile transmission
addressed as follows, or to
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such other address as may be designated from time to time:
If to Pfizer: Pfizer Global Research and
Development
Eastern Point Road
Groton, CT 06340
Attention: Dr. George M. Milne, Jr.,
Executive Vice President, PGRD with
copy to: Assistant General Counsel
If to ATRIX: ATRIX Laboratories, Inc.
2579 Midpoint Drive
Fort Collins, CO 80525-4417
Attention: Charles P. Cox, Ph.D.,
MBA, Vice President, New Business
Development
with a copy to: Morrison & Foerster LLP
5200 Republic Plaza
370 Seventeenth Street
Denver, CO 80202-5638
Attention: Warren L. Troupe, Esq.
Either Party may by like notice specify or change an address to which notices
and communications shall thereafter be sent. Notices sent by facsimile, computer
mail or other electronic means shall be effective upon confirmation of receipt,
notices sent by mail or overnight delivery service shall be effective upon
receipt, and notices given personally shall be effective when delivered.
10.2. Reports. Pfizer agrees to keep ATRIX informed with respect to
activities and progress toward further research, development
and commercialization of Products. Pfizer agrees to provide to
ATRIX every six months a written summary of such activities
and progress.
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11. MISCELLANEOUS.
11.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
11.2 HEADINGS. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
11.3 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective legal
representatives, successors and permitted assigns.
11.4 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original.
11.5 AMENDMENT; WAIVER; ETC. This Agreement may be amended,
modified, superseded or cancelled, and any of the terms may be
waived, only by a written instrument executed by each Party
or, in the case of waiver, by the Party or Parties waiving
compliance. The delay or failure of any Party at any time or
times to require performance of any provisions shall in no
manner affect the rights at a later time to enforce the same.
No waiver by any Party of any condition or of the breach of
any term contained in this Agreement, whether by conduct, or
otherwise, in any one or more instances, shall be deemed to
be, or considered as, a further or continuing waiver of any
such condition or of the breach of such term or any other term
of this Agreement.
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11.6 NO THIRD PARTY BENEFICIARIES. No third party including any
employee of any Party to this Agreement shall have or acquire
any rights by reason of this Agreement. Nothing contained in
this Agreement shall be deemed to constitute the Parties
partners with each other or any third party.
11.7 INDEPENDENT CONTRACTORS. It is expressly agreed that ATRIX and
Pfizer shall be independent contractors and that the
relationship between the two Parties shall not constitute a
partnership or agency of any kind. Neither ATRIX nor Pfizer
shall have the authority to make any statements,
representations or commitments of any kind, or to take any
action, which shall be binding on the other Party, without the
prior written consent of the other Party.
11.8 ASSIGNMENT AND SUCCESSORS. This Agreement may not be assigned
by either Party, except that each Party may assign this
Agreement and the rights and interests of such Party, in whole
or in part, to any of its Affiliates, any purchaser of all or
substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such
Party with or into such corporations.
11.9 FORCE MAJEURE. Neither Pfizer nor ATRIX shall be liable for
failure of or delay in performing obligations set forth in
this Agreement, and neither shall be deemed in breach of its
obligations, if such failure or delay is due to natural
disasters or any causes reasonably beyond the control of
Pfizer or ATRIX; provided that the Party whose performance is
delayed or prevented shall continue to use good faith diligent
efforts to mitigate, avoid or end such delay or failure in
performance as soon as practicable.
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11.10 SEVERABILITY. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent
jurisdiction or is deemed unenforceable, it is the intention
of the Parties that the remainder of the Agreement shall not
be affected.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.
PFIZER INC ATRIX LABORATORIES, INC.
By: /s/ George M. Milne, Jr. By: /s/ David R. Bethune
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Name: George M. Milne, Jr. Name: David R. Bethune
Title: Senior Vice President Title: Chairman and
Chief Executive Officer
Date: August 10, 2000 Date: August 8, 2000
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