<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
Crescendo Pharmaceuticals Corporation
-------------------------------------
(Name of Issuer)
Class A Common Stock, Par Value $0.01
-------------------------------------
(Title of Class of Securities)
225637 10 7
-----------
CUSIP Number
Peter D. Staple, Esq.
ALZA Corporation
950 Page Mill Road
Palo Alto, California 94303
(650) 494-5000
With a copy to:
Sarah A. O'Dowd, Esq.
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301
(650) 324-7000
---------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 18, 1997
---------------------------------------------------------
(Date of Event which requires Filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box: .
Note. Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1 (a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 12 Pages)
- -----------------------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
---
Notes).
- -----
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 225637 10 7 13D PAGE 2 OF 12 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ALZA Corporation
I.R.S. Identification No. 77-0142070
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEM 2(d) OR 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
4,965,470 Shares of Class A Common Stock
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10 4,965,470 Shares of Class A Common Stock
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,965,448 Shares of Class A Common Stock (See Response to Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
100% (See Response to Item 3)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
-------------------
This statement relates to shares of Class A Common Stock, par value $.01
per share (the "Class A Shares") of Crescendo Pharmaceuticals Corporation, a
Delaware corporation ("Crescendo"). The principal executive office of Crescendo
is located at 1454 Page Mill Road, Palo Alto, CA 94303-0806.
The exact title of the class of security which is the subject of this
filing is Class A Common Stock, par value $.01, of Crescendo.
The reporting person, ALZA Corporation ("ALZA"), a Delaware corporation, is
filing this Statement on Schedule 13D because it holds an option (the "Purchase
Option") to acquire all of the outstanding Class A Shares pursuant to
Crescendo's Restated Certificate of Incorporation, as filed with the Secretary
of State for the State of Delaware on September 4, 1997 (the "Restated
Certificate"), on the terms and subject to the conditions set forth in the
Restated Certificate. The Restated Certificate is filed as Exhibit 7.2 hereto.
Item 2. Identity and Background.
-----------------------
This filing is being made by ALZA. Its principal business is
pharmaceutical research and development and the commercialization of
pharmaceutical products. The address of its principal executive offices is 950
Page Mill Road, Palo Alto, CA 94304.
(i) During the last five years, ALZA has not been convicted in a criminal
proceeding (excluding traffic violation or similar misdemeanors). During the
last five years, ALZA has not been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment by decree or final order enjoining
further violations of, or prohibiting activities, subject to, federal or state
securities laws or finding any violation of such laws.
3
<PAGE>
(ii) The following information is given with respect to the executive
officers and directors of ALZA:
(a) Dr. Alejandro Zaffaroni, Director, Founder and Co-Chairman
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Director and Co-Chairman of ALZA; Director
--------------------
of Affymetrix, Inc.; Chairman of the Board and Chief Financial
Officer of Symyx Technologies
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(b) Dr. Ernest Mario, Director, Co-Chairman and Chief Executive
Officer
Business Address:
----------------
950 Page Mill Road
P. O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Chief Executive Officer of ALZA
--------------------
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(c) William G. Davis, Director
Business Address:
----------------
3532 Bay Road, South Drive
Indianapolis, Indiana 46240
Principal Occupation: Independent Business Consultant; President
--------------------
(Retired), Medical Instruments Systems Division, Eli Lilly and
Company, a pharmaceutical company
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(d) Dr. William R. Brody, Director
Business Address:
----------------
3400 North Charles Street
242 Garland Hall
Baltimore, Maryland 21218
4
<PAGE>
Principal Occupation: President of The Johns Hopkins
--------------------
University, a healthcare and educational institution
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(e) Robert J. Glaser, M.D., Director
Business Address:
----------------
1 Elm Place
Atherton, California 94027
Principal Occupation: Director (retired) for Medical Science and
--------------------
Trustee, Lucille P. Markey Charitable Trust, a philanthropic
foundation supporting basic biomedical research
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(f) Dean O. Morton, Director
Business Address:
----------------
3200 Hillview Avenue
Palo Alto, California 94304
Principal Occupation: Executive Vice President and Chief
--------------------
Operating Officer (Retired), Hewlett-Packard Corporation, an
electronics company
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(g) Denise M. O'Leary, Director
Business Address:
----------------
c/o Vivra, Inc.
3000 Sand Hill Road
1850 Gateway Drive, Suite 5000
San Mateo, California 94404
Principal Occupation: Special Limited Partner with Menlo
--------------------
Ventures, a venture capital investment company
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
5
<PAGE>
(h) Isaac Stein, Director
Business Address:
----------------
525 University Avenue, Suite 700
Palo Alto, California 94301-1908
Principal Occupation: President, Waverley Associates, Inc., a
--------------------
private investment company
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(i) Julian N. Stern, Director
Business Address:
----------------
525 University Avenue, Suite 1100
Palo Alto, California 94301-1908
Principal Occupation: Partner, Heller Ehrman White & McAuliffe,
--------------------
a law firm
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(j) Bruce C. Cozadd, Senior Vice President and Chief Financial
Officer
Business Address:
----------------
950 Page Mill Road
P. O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Senior Vice President and Chief Financial
--------------------
Officer of ALZA
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
6
<PAGE>
(k) Dr. Felix Theeuwes, President, New Ventures and Chief
Scientist
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: President, New Ventures and Chief
--------------------
Scientist of ALZA
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: Belgium
-----------
(l) Dr. Samuel R. Saks, Senior Vice President, Medical Affairs
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Senior Vice President, Medical Affairs
--------------------
of ALZA
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(m) Dr. Gary V. Fulscher, Senior Vice President, Operations
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Senior Vice President, Operations of ALZA
--------------------
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
7
<PAGE>
(n) Peter D. Staple, Senior Vice President and General Counsel
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Senior Vice President and General Counsel
--------------------
of ALZA
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
8
<PAGE>
(o) Dr. James W. Young, Senior Vice President, Research and
Development
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Senior Vice President, Research and
--------------------
Development of ALZA
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(p) James Butler, Senior Vice President, Sales and Marketing
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Senior Vice President, Sales and
--------------------
Marketing of ALZA
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
(q) Harold Fethe, Vice President, Human Resources
Business Address:
----------------
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
Principal Occupation: Vice President, Human Resources of ALZA
--------------------
Criminal Convictions During Preceding Five Years: None
------------------------------------------------
Judgments, Decrees or Orders Under Federal or State Securities
--------------------------------------------------------------
Laws During Preceding Five Years: None
--------------------------------
Citizenship: United States
-----------
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The Purchase Option was granted to ALZA pursuant to, and is set forth in,
the Restated Certificate. The Class A Shares are expected to be issued by
Crescendo to ALZA and distributed by ALZA, subject to the Purchase Option, on
September 30, 1997 to holders of record of ALZA's Common Stock and debentures on
September 18, 1997 (the "Distribution"). Prior to the Distribution, ALZA made a
capital contribution (from its own funds) to Crescendo of $300 million. The
terms of the Distribution and Purchase Option are described in Crescendo's
Prospectus dated September 5, 1997, filed as part of
9
<PAGE>
Exhibit 7.1. Each holder of Class A Shares acquired such Class A Shares subject
to the terms of the Purchase Option.
Item 4. Purpose of Transaction.
----------------------
ALZA's present plans with respect to Crescendo have been outlined in the
Prospectus filed as part of Exhibit 7.1. Except as described in the Prospectus,
ALZA and, to the best knowledge of ALZA, the directors and officers of ALZA,
have no present plans or proposals which relate to or would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D; however,
ALZA reserves the right to develop such plans or proposals.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Pursuant to the Purchase Option, ALZA has the right to acquire 100% of the
issued and outstanding Class A Shares held by persons other than ALZA. It is
expected that approximately 4,965,470 shares will be outstanding immediately
following the Distribution. If the Purchase Option is exercised, ALZA will have
the sole power to vote and to dispose or direct the disposition of the Class A
Shares beneficially owned by it. ALZA is the holder of 1,000 shares of Class B
Common Stock of Crescendo (representing 100% of such class), which shares are
not publicly traded. Other than the Distribution itself, there have been no
transactions in the Class A Shares by ALZA during the past 60 days.
(a) ALZA does not know of any Class A Shares that, as of September 18, 1997,
are beneficially owned by any person named in Item 2 except as set out on
the following table:
<TABLE>
<CAPTION>
Sole Power to Shared Power to
Name Position Vote and Dispose Vote and Dispose
- --------------------- ---------------------------- ----------------- ------------------
<S> <C> <C> <C>
Brody, Dr. William R. Director 0
Butler, James Senior Vice President, 247
Sales and Marketing
Cozadd, Bruce C. Senior Vice President and 135
Chief Financial Officer
Davis, Dr. William G. Director 100
Fethe, Harold Vice President, Human 200
Resources
Fulscher, Dr. Gary V. Senior Vice President, 4,991
Operations
Glaser, Dr. Robert J. Director 544
Mario, Dr. Ernest Director, Co-Chairman and 2,659
Chief Executive Officer
Morton, Dean O. Director 500
O'Leary, Denise M. Director 0
</TABLE>
10
<PAGE>
<TABLE>
Sole Power to Shared Power to
Name Position Vote and Dispose Vote and Dispose
- --------------------- ---------------------------- ----------------- ------------------
<S> <C> <C>
Saks, Dr. Samuel R. Senior Vice President, 1,250(1)
Medical Affairs
Staple, Peter D. Senior Vice President 86
and General Counsel
Stein, Isaac Director 580
Stern, Julian N. Director and Secretary 5,383
Theeuwes, Dr. Felix President, New Ventures and 8,850
Chief Scientist
Young, Dr. James W. Senior Vice President, 128
Research and Development
Zaffaroni, Dr. Alejandro Co-Chairman of the 47,287
Board and Founder
</TABLE>
(1) All of the shares beneficially owned by Dr. Saks are subject to
forfeiture in the event of the termination of his employment with ALZA. The
restrictions on the shares shall lapse with respect to 25% of the shares in
December 1999, 50% of the shares in June 2000 and the remaining 25% of the
shares in January 2001. Notwithstanding the foregoing, the restrictions shall
lapse with respect to all of the shares in the event of certain changes in
control of ALZA.
To the best knowledge of ALZA, all of the above persons acquired Class A Shares
in the Distribution, and there have been no transactions in the Class A Shares
by the above persons during the past 60 days.
(b) As above.
(c) None.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
For a description of the Purchase Option, see the Prospectus.
Item 7. Exhibits.
--------
7.1 Prospectus of Crescendo, dated September 5, 1997 (incorporated by
reference to Crescendo's Registration Statement on Form S-1, file no. 333-
31281).
7.2 Restated Certificate of Incorporation of Crescendo Pharmaceuticals
Corporation as filed with the Delaware Secretary of State on September 4, 1997.
11
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
September 28, 1997 ALZA CORPORATION
By: /s/ Peter D. Staple
---------------------------------------
Peter D. Staple,
Senior Vice President and
General Counsel
12
<PAGE>
EXHIBIT 7.2
RESTATED CERTIFICATE OF INCORPORATION
OF
CRESCENDO PHARMACEUTICALS CORPORATION
(Originally incorporated under the same name on June 26, 1997)
FIRST: Name. The name of this corporation is Crescendo
----
Pharmaceuticals Corporation (the "corporation").
SECOND: Registered Office; Registered Agent. The address of the
-----------------------------------
registered office of this corporation in the State of Delaware is 1013 Centre
Road, in the City of Wilmington, County of New Castle. The name of the
registered agent of this corporation at such address is Corporation Service
Company.
THIRD: Purpose. The purpose of this corporation is to engage in
-------
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: Authorized Capital Stock.
------------------------
(A) This corporation is authorized to issue two classes of shares,
which shall be known as Class A Common Stock ("Class A Common Stock") and Class
B Common Stock ("Class B Common Stock"). The total number of shares of stock of
all classes that this corporation is authorized to issue is 6,001,000. The total
number of shares of Class A Common Stock which this corporation is authorized to
issue is 6,000,000. The total number of shares of Class B Common Stock which
this corporation is authorized to issue is 1,000. Each share of Class A Common
Stock shall have a par value of $0.01, and each share of Class B Common Stock
shall have a par value of $1.00.
Effective immediately upon the filing of this Restated Certificate of
Incorporation, each share of Common Stock, par value $1.00 per share, of this
corporation outstanding immediately prior to such filing shall be converted into
and reclassified as ten shares of Class B Common Stock.
(B) The powers, designations, preferences, and relative,
participating, optional or other special rights granted to, and the
qualifications, limitations and restrictions imposed upon, the Class A Common
Stock and Class B Common Stock and the respective holders thereof are as
follows:
(1) Redemption. The shares of Class A Common Stock are
----------
redeemable and may be redeemed as provided in (but only as provided in)
Article FIFTH, Section (F).
<PAGE>
(2) Dividends. The holders of shares of Class A Common Stock
---------
and Class B Common Stock shall be entitled to receive per share and
without preference such dividends as may be declared by the Board of
Directors from time to time out of funds legally available therefor. No
dividend may be declared on the Class A Common Stock unless the same
per share dividend is declared on the Class B Common Stock, and no
dividend may be declared on the Class B Common Stock unless the same
per share dividend is declared on the Class A Common Stock. Dividends
may not be declared, nor may shares of Class A Common Stock or Class B
Common Stock be repurchased, or redeemed (other than pursuant to
Section (F) of Article FIFTH), if, after payment of such dividend, or
after effecting such repurchase or redemption, the amount of this
corporation's cash, cash equivalents, short-term and long-term
investments would be less than the amount of Available Funds remaining
after expenditures pursuant to the Development Agreement, as of the
date of such dividend, repurchase or redemption.
(3) Liquidation. In the event of voluntary or involuntary
-----------
liquidation of this corporation, the holders of the Class A Common
Stock and Class B Common Stock of the corporation shall be entitled to
receive, on a pro rata per share basis and without preference, all of
the remaining assets of this corporation available for distribution to
its stockholders.
(4) Voting Rights. Except as otherwise required by law or
-------------
provided herein, the holders of Class A Common Stock and Class B Common
Stock shall vote together as a single class. Each holder of Class A
Common Stock and Class B Common Stock shall have one vote for each
share standing in his or her name on all matters submitted to a vote of
holders of the common shares. At any meeting of the stockholders of
this corporation, the determination of a quorum shall be based upon the
presence of shares of Class A Common Stock and Class B Common Stock
representing a majority of the voting power of all of the shares of
Class A Common Stock and Class B Common Stock. This corporation shall
not, without the affirmative vote of the holders of a majority of the
issued and outstanding shares of Class B Common Stock, voting
separately and as a class, (a) alter or change the powers,
designations, preferences and relative, participating, optional or
other special rights granted to, or the qualifications, limitations and
restrictions imposed upon, the Class A Common Stock or the Class B
Common Stock, (b) alter or change this Article FOURTH or any of
Articles FIFTH, SIXTH or SEVENTH of this Restated Certificate of
Incorporation, or otherwise make any amendment to this Restated
Certificate of Incorporation that would alter the rights of the
holders of the Class B Common Stock, (c) authorize the creation or
issuance of any additional class or series of stock, (d) undertake
the voluntary dissolution, liquidation or winding up of this
corporation, (e) merge or consolidate this corporation with or into
any other corporation or entity, (f) sell, lease, exchange, transfer
or otherwise dispose of any substantial asset of this corporation
-2-
<PAGE>
or (g) alter the bylaws of this corporation in a manner described in
the last sentence of Article EIGHTH. Furthermore, from and after the
Purchase Option Exercise Date, as defined in Article FIFTH, (i) the
Board of Directors of this corporation shall cease to be classified
and the holders of Class B Common Stock shall be entitled to remove
directors with or without cause; (ii) the number of directors of this
corporation shall be increased to a number equal to (a) two times the
maximum number of directors then authorized pursuant to Article
SEVENTH, Section (A) (counting for this purpose both directors in
office and vacant directorships), plus (b) one; and (iii) the holders
of the Class B Common Stock shall have the sole right to elect the
directors of this corporation, including directors to fill the new
directorships created pursuant to clause (ii). No new directorships
created as a result of the increase in the size of the Board of
Directors pursuant to the preceding sentence shall be filled other
than by the holders of the Class B Common Stock. From and after the
Purchase Option Exercise Date all directors shall be elected to one
year terms; provided, however, that the term of any director then in
office shall not be reduced.
(5) Conversion. The Class B Common Stock shall automatically
----------
convert into fully paid and non-assessable shares of Class A Common
Stock of this corporation at 12:01 a.m. New York time on the day
immediately following the expiration of the Purchase Option without
exercise granted in Article FIFTH. The Class B Common Stock shall
convert into Class A Common Stock at the rate of one share of Class A
Common Stock for each share of Class B Common Stock.
FIFTH: Purchase Option.
---------------
(A) Definitions. For purposes of this Restated Certificate of
-----------
Incorporation, the following terms shall have the following definitions:
(1) ALZA means ALZA Corporation and its successors, or assigns
----
of the Purchase Option.
(2) ALZA Common Stock means the Common Stock of ALZA or, if
-----------------
such Common Stock is converted into or exchanged for another class or series of
stock of ALZA or any other corporation, such other class or series of stock.
(3) Available Funds means, as of any date of determination,
---------------
$300 million (contributed by ALZA on or about September 30, 1997), plus any
investment income earned thereon, less (i) this corporation's reasonable ongoing
administrative expenses, (ii) the Technology Fee and (iii) reserves of up to $2
million as determined in good faith by the Board of Directors.
(4) Crescendo Product means an Identified Product, or another
-----------------
human pharmaceutical product which has been recommended by ALZA and accepted by
the Board of Directors of this corporation for development as such under the
Development Agreement.
-3-
<PAGE>
(5) Developed Technology means any technology generated or
--------------------
otherwise obtained pursuant to the Development Agreement.
(6) Developed Technology Product means any product other than
----------------------------
a Crescendo Product (i) covered, at the time of sale in a country, by one or
more unexpired patents issued in such country that are included in Developed
Technology and (ii) with respect to which ALZA receives any consideration.
(7) Developed Technology Royalties means the payments made by
------------------------------
ALZA to this corporation with respect to sales of Developed Technology Products.
(8) Development Agreement means the Development Agreement
---------------------
between ALZA and this corporation, dated as of September 5, 1997, as such
agreement may be amended or modified from time to time by amendments approved by
ALZA and the Board of Directors of this corporation.
(9) Fair Market Value means, with reference to ALZA Common
-----------------
Stock, (a) if ALZA Common Stock is listed on the New York Stock Exchange or any
other securities exchange reporting closing sales prices (including without
limitation the Nasdaq National Market), the average of the closing sales price
of ALZA Common Stock on such exchange (which shall be the New York Stock
Exchange or, if ALZA Common Stock is not then traded on such exchange, on the
principal exchange on which ALZA Common Stock is then traded), for the twenty
trading days ending with the trading day that is two trading days prior to the
date of determination, (b) if ALZA Common Stock is not listed on any securities
exchange described in clause (a) but is quoted on Nasdaq or another quotation
system providing bid prices, the average (over the twenty day period described
in clause (a)) of the bid prices for each day in such period on Nasdaq (or, if
ALZA Common Stock is not then quoted on Nasdaq, the largest quotation system on
which ALZA Common Stock is then quoted), and (c) if ALZA Common Stock is not
listed on any exchange or quoted on any quotation system, the value thereof as
determined in good faith by ALZA's board of directors.
(10) Final Purchase Option Exercise Price means the Purchase
------------------------------------
Option Exercise Price minus (a) the amount by which this corporation's
Liabilities existing at the Purchase Option Exercise Date (other than
liabilities under the Development Agreement, Services Agreement and Technology
License Agreement) exceed the aggregate of this corporation's then existing
cash, cash equivalents and short-term and long-term investments (but excluding
from such cash, cash equivalents and short-term and long-term investments the
amount of Available Funds determined as of the Purchase Option Exercise Date
which had not, as of such date, been paid by this corporation in accordance with
the Development Agreement) and minus (b), if the Purchase Option Exercise Price
was determined based upon the provisions of clause (c) of Section (A)(19) of
this Article FIFTH, any additional amounts not already included in the
calculation set forth in Article
-4-
<PAGE>
FIFTH, Section (A)(18) that are paid by (or due from) this corporation under the
Development Agreement from the date of the last report of such expenditures
provided by this corporation to ALZA in a Status Statement through the Purchase
Option Exercise Date pursuant to the Development Agreement.
(11) Identified Products means the following products: OROS(R)
-------------------
oxybutynin, DUROS(TM) leuprolide, OROS(R) methylphenidate, IUTS progesterone,
D-TRANS(TM) testosterone matrix, E-TRANS(TM) LHRH and E-TRANS(TM) (skin
interface technology) insulin.
(12) Liabilities means, with respect to this corporation, (a)
-----------
all liabilities required to be reflected or reserved against in this
corporation's financial statements under generally accepted accounting
principles consistently applied ("GAAP"), (b) any guaranty of any indebtedness
of another person and (c) any reimbursement or similar obligation with respect
to any letter of credit issued for the account of this corporation or as to
which this corporation is otherwise liable. Liabilities of the type described in
(b) and (c) shall be valued at the full amount of the potential liability of the
corporation thereon.
(13) License Agreement means any License Agreement between
-----------------
ALZA and this corporation entered into upon the exercise by ALZA of the license
option granted to it pursuant to the License Option Agreement, as any such
agreement may be amended or modified from time to time by amendments approved by
ALZA and the Board of Directors of this corporation.
(14) License Option Agreement means the License Option
------------------------
Agreement between ALZA and this corporation dated as of September 5, 1997, as
such agreement may be amended or modified from time to time by amendments
approved by ALZA and the Board of Directors of this corporation.
(15) Licensed Product means a Crescendo Product as to which
----------------
the license option under the License Option Agreement has been exercised by
ALZA.
(16) Product Payments means payments made by ALZA to this
----------------
corporation under a License Agreement with respect to Licensed Products.
(17) Purchase Option Exercise Date means the date upon which
-----------------------------
ALZA notifies this corporation in writing of its exercise of the Purchase Option
as provided in Section (C) of this Article FIFTH.
(18) Purchase Option Exercise Price means the greatest of the
------------------------------
following:
(a) (i) 25 times the actual worldwide Product Payments,
Developed Technology Royalties and Technical Evaluation Product
Payments made by or due
-5-
<PAGE>
from ALZA to this corporation with respect to all Licensed Products,
Developed Technology Products and Technical Evaluation Products (and,
in addition, such Product Payments, Developed Technology Royalties and
Technical Evaluation Product Payments as would have been made by or due
from ALZA to this corporation if ALZA had not previously exercised its
payment buy-out option with respect to any such Licensed Product,
Developed Technology Product or Technical Evaluation Product) for the
four calendar quarters immediately preceding the quarter in which the
Purchase Option is exercised (provided, however, that for any Licensed
Product, Developed Technology Product or Technical Evaluation Product
which has not been commercially sold during each of the four calendar
quarters immediately preceding the quarter in which the Purchase Option
is exercised, the portion of the Purchase Option Exercise Price for
such Licensed Product, Developed Technology Product or Technical
Evaluation Product will be 100 times the average of the quarterly
Product Payments, Developed Technology Royalties or Technical
Evaluation Product Payments made by or due from ALZA to this
corporation for each of such calendar quarters during which such
product was commercially sold) less (ii) any amounts previously paid to
exercise any payment buy-out option for any Licensed Product, Developed
Technology Product or Technical Evaluation Product pursuant to a
License Agreement or the Development Agreement.
(b) the Fair Market Value of one million shares of ALZA
Common Stock (which number of shares shall be proportionately adjusted
for any stock dividend, split-up, combination or reclassification of
the ALZA Common Stock) determined as of the Purchase Option Exercise
Date;
(c) $325 million less the total amount paid by or due from
this corporation under the Development Agreement as last reported by
this corporation to ALZA in a Status Statement through the Purchase
Option Exercise Date; and
(d) $100 million.
(19) Purchase Option Expiration Time means 11:59 p.m. New York
-------------------------------
time on January 31, 2002; provided that such date will be extended for
successive six month periods if, as of any July 31 or January 31 beginning with
July 31, 2001, this corporation has not paid (or accrued expenses for) at least
95% of all Available Funds pursuant to the Development Agreement.
Notwithstanding the foregoing sentence, the Purchase Option Expiration Time will
in no event occur later than 11:59 p.m. New York time on the 60th day after this
corporation provides ALZA with a statement that, as of the end of any calendar
month, there are less than $2.5 million of Available Funds remaining after
expenditures pursuant to the Development Agreement, accompanied by a report of
this corporation's independent auditors stating that nothing has come to their
attention indicating that there are $2.5 million or more of Available Funds
remaining at that date.
-6-
<PAGE>
(20) Services Agreement means the Services Agreement between
------------------
ALZA and this corporation, dated as of September 5, 1997, as such agreement may
be amended or modified from time by amendments approved by ALZA and the Board of
Directors of this corporation.
(21) Status Statement means, as of any date, a balance sheet
----------------
prepared by the Company and delivered to ALZA dated as of such date, together
with (a) a statement and brief description of all other liabilities of this
corporation constituting Total Liabilities as of such date not reflected on
such balance sheet, (b) a statement of the amount of Available Funds remaining
as of such date, and (c) a statement of the total amounts paid by and due from
this corporation pursuant to the Development Agreement through such date.
(22) Technical Evaluation means limited technical evaluation
--------------------
involving a proprietary therapeutic agent of a third party undertaken in order
to determine the suitability of such therapeutic agent in an ALZA drug delivery
system or to induce the third party to license the therapeutic agent to ALZA or
this corporation or otherwise collaborate with ALZA and this corporation in the
development of a product.
(23) Technical Evaluation Product means a product, other than one
----------------------------
which becomes a Crescendo Product, for which this corporation funds a Technical
Evaluation.
(24) Technical Evaluation Product Payments means the payments
-------------------------------------
made by ALZA to this corporation with respect to sales of Technical Evaluation
Products.
(25) Technology Fee means the payments to be made over a
--------------
maximum period of three years by this corporation to ALZA in exchange for ALZA
granting this corporation a license to use certain technology relating to the
Identified Products.
(26) Technology License Agreement means the Technology License
----------------------------
Agreement between ALZA and this corporation , dated as of September 5, 1997, as
such agreement may be amended or modified from time to time by amendments
approved by ALZA and the Board of Directors of this corporation.
(27) Total Liabilities means (a) all Liabilities, plus (b) any
-----------------
other debts, liabilities or obligations, absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, including all costs and expenses relating thereto, and
including those debts, liabilities and obligations arising under any law, rule
or regulation, or under any pending or threatened action, suit or proceeding, or
any order or consent decree of any governmental entity or any award of any
arbitrator of any kind, and those arising under any contract, commitment or
undertaking.
-7-
<PAGE>
(B) Grant of Option. ALZA is hereby granted an exclusive
---------------
irrevocable purchase option to purchase all issued and outstanding shares of
Class A Common Stock of this corporation for the Final Purchase Option Exercise
Price (the "Purchase Option"). The Purchase Option, if exercised, must be
exercised as to all, but not less than all, issued and outstanding shares of
Class A Common Stock and may be exercised at any time at or prior to the
Purchase Option Expiration Time. ALZA shall elect, at the time of exercise of
the Purchase Option, to pay all or any portion of the Final Purchase Option
Exercise Price in cash, ALZA Common Stock (valued at its Fair Market Value
determined as of the Purchase Option Exercise Date), or any combination thereof.
The Purchase Option, together with the other rights of ALZA under this Article
FIFTH and Article SIXTH, may, at ALZA's option, be assigned or otherwise
transferred to any person or entity, including this corporation.
(C) Manner of Exercise. The Purchase Option shall be
------------------
exercised, if at all, at or before the Purchase Option Expiration Time by
written notice (the "Exercise Notice") from ALZA to this corporation stating
that the Purchase Option is being exercised and setting forth (1) the Purchase
Option Exercise Price; (2) the portion, if any, of the Final Purchase Option
Exercise Price to be paid in cash and the portion, if any, of the Final Purchase
Option Exercise Price to be paid in ALZA Common Stock, and if any portion of the
Final Purchase Option Exercise Price is to be paid in ALZA Common Stock, stating
the Fair Market Value of such ALZA Common Stock determined as of the Purchase
Option Exercise Date; and (3) a closing date (the "Closing Date") on which all
of the issued and outstanding shares of Class A Common Stock will be purchased.
The Purchase Option shall be deemed to be exercised as of the date of mailing by
first class mail of the Exercise Notice to this corporation at its principal
offices.
(D) Closing.
-------
(1) Closing Date; Cooperation. Except as set forth
-------------------------
below, the Closing Date shall be the date specified as such in the Exercise
Notice, which date specified shall be no later than 60 days after the Purchase
Option Exercise Date. The Closing Date may be extended by ALZA if, in the
judgment of ALZA, an extension of the Closing Date is necessary to obtain any
governmental or third party consent to the purchase of the Class A Common Stock,
to permit any necessary registration statement or similar filing to be declared
effective, or to permit the expiration prior to the Closing Date of any
statutory or regulatory waiting period. ALZA may extend the Closing Date for the
reasons set forth in the preceding sentence by delivering written notice of such
extension to this corporation on or prior to the previously specified Closing
Date. This corporation shall cooperate with ALZA to effect the closing of the
Purchase Option, including without limitation seeking any required third-party
or governmental consents, and filing any applications, notifications,
registration statements or the like which may be necessary to effect the
closing.
-8-
<PAGE>
(2) Certain Restrictions Following Purchase Option
----------------------------------------------
Exercise Date. From the Purchase Option Exercise Date until the Closing Date,
- -------------
this corporation will not take any of the following actions (or permit any such
actions to be taken on its behalf) except with the prior written consent of
ALZA:
(a) borrow money, or mortgage, remortgage,
pledge, hypothecate or otherwise encumber any of its assets;
(b) sell, lease, lend, exchange or otherwise
dispose of any of its assets, other than sales of inventory in the
ordinary course of business;
(c) pay or declare any dividends or make any
distributions on or in respect of any shares of its capital stock;
(d) default in its obligations under any material
contract, agreement, commitment or undertaking of any kind or enter
into any material contract, agreement, purchase order or other
commitment; or
(e) enter into any other transaction or agreement
or arrangement, or incur any liabilities, not in the ordinary course of
this corporation's business.
(3) Determination of Final Purchase Option Exercise Price.
-----------------------------------------------------
Not later than 15 business days following the Purchase Option Exercise Date,
this corporation shall deliver a final Status Statement to ALZA prepared as of
the Purchase Option Exercise Date. Following receipt of such Status Statement
and completion of any other investigation as ALZA shall deem necessary or
appropriate, and prior to the Closing Date, ALZA shall determine the Final
Purchase Option Exercise Price by making the adjustments to the Purchase Option
Exercise Price contemplated by Section (A)(10) of this Article FIFTH and shall
notify this corporation of such determination.
(4) Payment of Final Purchase Option Exercise Price. On or
-----------------------------------------------
before the Closing Date, ALZA shall deposit the full amount of the Final
Purchase Option Exercise Price with a bank or banks or similar entities
designated by ALZA (which may include ALZA's transfer agent if shares of ALZA
Common Stock are being delivered) to pay, on ALZA's behalf, the Final Purchase
Option Exercise Price (the "Payment Agent"). Funds, if any, and ALZA Common
Stock, if any, deposited with the Payment Agent shall be delivered in trust for
the benefit of the holders of Class A Common Stock, and ALZA shall provide the
Payment Agent with irrevocable instructions to pay, on or after the Closing
Date, the Final Purchase Option Exercise Price for the shares of Class A Common
Stock to the holders of record thereof determined as of the Closing Date.
Payment for shares of Class A Common Stock shall be mailed to each holder at the
address set forth in this corporation's records or at the address provided by
each holder or, if no address is set forth in this corporation's records for a
holder or provided by such holder, to such holder at the address of this
corporation. As soon as practicable upon
-9-
<PAGE>
ALZA's request, this corporation shall provide, or shall cause its transfer
agent to provide, to ALZA or to the Payment Agent, free of charge, a complete
list of the record holders of shares of Class A Common Stock, as of a specified
date, including the number of shares of Class A Common Stock held of record and
the address of each record holder as set forth in the records of this
corporation's transfer agent.
(E) Transfer of Title. Transfer of title to all of the
-----------------
issued and outstanding shares of Class A Common Stock shall be deemed to occur
automatically on the Closing Date and thereafter this corporation shall be
entitled to treat ALZA as the sole holder of all of the issued and outstanding
shares of its Class A Common Stock, notwithstanding the failure of any holder of
Class A Common Stock to tender the certificates representing such shares to the
Payment Agent, whether or not such tender is required or requested by the
Payment Agent. This corporation shall instruct its transfer agent not to accept
any shares of Class A Common Stock for transfer on and after the Closing Date.
This corporation shall take all actions reasonably requested by ALZA to assist
in effectuating the transfer of shares of Class A Common Stock in accordance
with this Article FIFTH.
(F) Redemption of Class A Common Stock. At ALZA's election
----------------------------------
(which election may be made at any time, provided it is made, by delivery of
written notice thereof to this corporation, not less than five days prior to the
Closing Date), this corporation shall, subject to applicable restrictions in the
Delaware General Corporation Law, redeem on the Closing Date all issued and
outstanding shares of Class A Common Stock for an aggregate redemption price
equal to the Final Purchase Option Exercise Price. Such redemption shall be in
lieu of ALZA paying the Final Purchase Option Exercise Price directly to the
stockholders of this corporation, and shall be subject to ALZA providing the
Final Purchase Option Exercise Price to this corporation to allow this
corporation to pay the redemption price.
SIXTH: Protective Provisions.
----------------------
(A) Legend. Certificates evidencing shares of Class A
------
Common Stock issued by or on behalf of this corporation shall bear a legend in
substantially the following form:
"The shares of Crescendo Pharmaceuticals Corporation evidenced
hereby are subject to an option in favor of ALZA Corporation, its successors and
assigns, as described in the Restated Certificate of Incorporation of Crescendo
Pharmaceuticals Corporation to purchase such shares at a purchase price
determined in accordance with Article FIFTH thereof exercisable by notice
delivered to this corporation at or prior to the Purchase Option Expiration Time
(as defined in the Restated Certificate of Incorporation of Crescendo
Pharmaceuticals Corporation). Copies of the Restated Certificate of
Incorporation of Crescendo Pharmaceuticals Corporation are available at the
principal place of business of Crescendo Pharmaceuticals Corporation at 1454
Page Mill Road,
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<PAGE>
Palo Alto, California 94304 and will be furnished to any stockholder on request
and without cost."
(B) No Conflicting Action. This corporation shall not take,
---------------------
nor permit any other person or entity within its control to take, any action
inconsistent with ALZA's rights under Article FIFTH. This corporation shall not
enter into any arrangement, agreement or understanding, whether oral or in
writing, that is inconsistent with or limits or impairs the rights of ALZA and
the obligations of this corporation hereunder, including without limitation any
arrangement, agreement or understanding which imposes any obligation upon this
corporation, or deprives this corporation of any material rights, as a
consequence of the exercise of the Purchase Option or the acquisition of the
outstanding Class A Common Stock pursuant thereto.
(C) Inspection and Visitation Rights; Status Statements.
---------------------------------------------------
ALZA shall have the right to inspect and copy, on reasonable notice and during
regular business hours, the books and records of this corporation. ALZA shall
also have the right to request from time to time (but not more frequently than
monthly) a Status Statement as of such date as ALZA may request. Each Status
Statement shall be sent within seven days of request by ALZA. ALZA shall also
have the right to send a non-voting representative to attend all meetings of
this corporation's Board of Directors and any committees thereof. Any
representative, if designated in writing by ALZA as such, shall receive notice
of all meetings of this corporation's Board of Directors and each committee
thereof, as well as copies of all documents and other materials provided to any
directors of this corporation in connection with any such meeting not later than
the time such materials are provided to other directors. Such representative
shall also be provided with copies of all resolutions adopted or proposed to be
adopted by unanimous written consent not later than the time such resolutions
are provided to other directors.
SEVENTH: Board of Directors.
------------------
(A) The number of directors which shall constitute the whole
Board of Directors of this corporation shall initially be three, but may be
increased or decreased from time to time by a resolution duly adopted by the
Board of Directors and shall be automatically increased as provided in Article
FOURTH, Section (B)(4).
(B) Nomination of candidates for election to the Board of
Directors shall be made as provided in the bylaws of this corporation. Election
of directors need not be by written ballot.
(C) Subject to Article FOURTH, Section (B)(4), the Board of
Directors shall be and is divided into three classes: Class I, Class II and
Class III. Each director shall serve for a term ending on the date of the
third annual meeting of stockholders following the annual meeting at which the
director was elected; provided, however, that each initial director in Class I
shall hold
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<PAGE>
office until the annual meeting of stockholders in 1998; each initial director
in Class II shall hold office until the annual meeting of stockholders in 1999;
and each initial director in Class III shall hold office until the annual
meeting of stockholders in 2000. Notwithstanding the foregoing provisions of
this Article SEVENTH, each director shall serve, until his or her successor is
duly elected and qualified or until his or her death, resignation,
disqualification or removal.
(D) In the event of any increase or decrease in the
authorized number of directors, the newly created or eliminated directorships
resulting from such increase or decrease shall be apportioned by the Board of
Directors among the three classes of directors. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
(E) Except as otherwise provided in Article FOURTH, Section
(B)(4), or as required by law, newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or
other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office (and not by stockholders), even though less
than a quorum of the Board of Directors. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full
term of the class of directors in which the new directorship was created or
the vacancy occurred and until such director's successor shall have been
elected and qualified.
(F) The name and mailing address of each person who is to
serve as a director until the annual meeting of the stockholders entitled to
vote for the class or until a successor is elected or appointed and qualified
are as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS CLASS
- ---- --------------- -----
<S> <C> <C>
James Butler 950 Page Mill Road, Palo Alto, CA 94304 I
Dr. Samuel R. Saks 950 Page Mill Road, Palo Alto, CA 94304 II
Dr. James W. Young 950 Page Mill Road, Palo Alto, CA 94304 III
</TABLE>
EIGHTH: Bylaws. In furtherance and not in limitation of the
------
powers conferred by statute, and subject to the next sentence, the Board of
Directors and the stockholders of this corporation are each expressly authorized
to adopt, amend or repeal the bylaws of this corporation subject to any
particular provisions concerning amendments set forth in this Restated
Certificate of Incorporation or the bylaws of this corporation. No amendment to
the bylaws may be adopted by the stockholders without the approval of holders of
a majority of the Class B Common Stock voting separately as a class if such
amendment would affect the classification of the Board of Directors, or
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<PAGE>
would otherwise regulate the conduct of the Board's affairs or the manner in
which it may act.
NINTH: Stockholder Meetings.
--------------------
(A) Special Meetings. Special meetings of the stockholders
----------------
for any purpose or purposes whatsoever may be called at any time only by the
Board of Directors, the Chairman of the Board or the President of this
corporation.
(B) No Action Without Meeting. At any time when this
-------------------------
corporation has more than one stockholder of any class of capital stock, no
action required to be taken or which may be taken at any annual or special
meeting of the stockholders may be taken without a meeting, and the power of
stockholders to consent in writing, without a meeting, to the taking of any
action is specifically denied. Notwithstanding the foregoing, the holder or
holders of the Class B Common Stock may take any action permitted to be taken by
such holders as a class by written consent without a meeting.
TENTH: Limitation of Liability and Indemnification of Directors.
--------------------------------------------------------
(A) Elimination of Certain Liability of Directors. No
---------------------------------------------
director of this corporation shall be personally liable to this corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director
except, to the extent provided by applicable law, for liability (i) for any
breach of the director's duty of loyalty to this corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or repeal of this
Article TENTH shall apply to or have any effect on the liability or alleged
liability of any director of this corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment.
(B) Indemnification and Insurance.
-----------------------------
1. Right to Indemnification. Each person who was or
------------------------
is made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), because he or she, or a person of whom he or she
is the legal representative, is or was a director or officer of this corporation
or is or was serving at the request of this corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise (including service with respect to employee benefit
plans), whether the basis of the proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by this corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same
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<PAGE>
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits this corporation to provide broader
indemnification rights than that law permitted this corporation to provide
before such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, penalties, fines, Employee Retirement Income
Security Act of 1974 excise taxes or penalties, and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith; provided, however, that this corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of this corporation. Such indemnification shall
continue as to a person who has ceased to be a director or officer of this
corporation and shall inure to the benefit of his or her heirs, executors and
administrators. The right to indemnification conferred by this Section shall be
a contract right which may not be retroactively amended and shall include the
right to be paid by this corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that the
payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service with respect to an employee benefit plan)
in advance of the final disposition of the proceeding shall be made only upon
delivery to this corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if ultimately it shall be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. This corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of this corporation
with the same scope and effect as the indemnification of directors and officers.
-14-
<PAGE>
2. Right of Claimant to Bring Suit. If a claim under
-------------------------------
Paragraph 1 of this Section is not paid in full by this corporation within
ninety (90) days after a written claim has been received by this corporation,
the claimant may at any time thereafter bring suit against this corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any, has been tendered
to this corporation) that the claimant has not met the standards of conduct
which make it permissible under the Delaware General Corporation Law for this
corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on this corporation. Neither the failure of this
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by this
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct.
3. Nonexclusivity of Rights. The right to
------------------------
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Section shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of this Restated Certificate of Incorporation,
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
4. Insurance. This corporation may maintain
---------
insurance, at its expense, to protect itself and any director, officer, employee
or agent of this corporation or another corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss, whether
or not this corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
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<PAGE>
IN WITNESS WHEREOF, the undersigned officer has executed this
Restated Certificate of Incorporation on September 4, 1997 and does hereby
certify that this Restated Certificate of Incorporation, which restates and
integrates, and also further amends, the provisions of this corporation's
Certificate of Incorporation, was duly adopted by the stockholders of this
corporation in accordance with Sections 242 and 245 of the Delaware General
Corporation Law.
CRESCENDO PHARMACEUTICALS CORPORATION
By: /s/ James W. Young
----------------------------------------
Dr. James W. Young
President and Chief Executive Officer
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