Exhibit 10.4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
FFIS CO-PROMOTION AGREEMENT
by and between
▇▇▇, ▇.▇.
and
CRITICAL THERAPEUTICS, INC.
JUNE 25, 2007
1
THIS FFIS CO-PROMOTION AGREEMENT (the "Agreement" or "FFIS Agreement") is made
as of June 25, 2007 ("Effective Date") by and between CRITICAL THERAPEUTICS,
INC., a corporation organized and existing under the laws of the State of
Delaware and having its principal offices at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("CRTX" ) and ▇▇▇, ▇.▇., a limited partnership organized and existing
under the laws of the State of Delaware and having its principal offices at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇").
WITNESSETH
WHEREAS, the Parties desire that CRTX engages in the Promotion (as hereinafter
defined) of the Product (as hereinafter defined) in the Territory (as
hereinafter defined) in the Field (as hereinafter defined) for a certain period
of time and the Parties also desire to coordinate CRTX's activities regarding
the Product with those of ▇▇▇, all of which shall be subject to the terms and
conditions of this Agreement;
WHEREAS, the Parties have previously entered in to that certain Co-Promotion and
Marketing Services Agreement regarding Zileuton products, effective March 13,
2007 (the "Zileuton Co-Promotion Agreement"), as well as that certain Binding
Letter Agreement by and between ▇▇▇, ▇.▇. and Critical Therapeutics, Inc.
effective March 13, 2007, as amended (the "Binding Letter Agreement"), which
Binding Letter Agreement is superseded by this Agreement,
NOW, THEREFORE, in consideration of the foregoing statements and the mutual
agreements and covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms, where
used in the singular or plural, shall have the respective meanings set forth
below:
2
1.1 "Act" means the United States Food, Drug, and Cosmetic Act of 1938, as
amended, and the rules and regulations promulgated thereunder, or any successor
act, as the same shall be in effect from time to time.
1.2 "Adverse Event(s)" means adverse drug experiences, as defined by 21 CFR
312.32 or 314.80, relating to a Product. "Serious Adverse Event(s)" means a
serious Adverse Event, as defined by 21 CFR 312.32 or 314.80, relating to a
Product. For purposes of Section 6 of this Agreement, the use of the phrase
"Adverse Event" is intended to include Serious Adverse Event(s).
1.3 "Affiliate" means (i) any corporation, association or other entity of which
more than fifty percent (50%) of the voting securities or other ownership
interests representing the voting equity, the voting stock or general
partnership interest are owned, controlled or held, directly or indirectly, by a
Party; or (ii) any corporation, association or other entity which, directly or
indirectly, owns, controls or holds more than fifty percent (50%) of the voting
securities or other ownership interests representing the voting equity, the
voting stock or, if applicable, the general partnership interest, or the right
to of a Party.
1.4 "Alliance Manager" shall have the meaning set forth in Section 3.1.
1.5 "Annual Retail Baseline Units" or "ARBU" means, for each Year, the number of
Retail Units of Product forecasted to be sold by ▇▇▇ through retail sales
channels in such Year that are based solely on detailing by DEY's sales force
only (and no detailing by CRTX's sales force), as set forth in Schedule 1.5
attached.
1.6 "Applicable Laws" means all applicable federal, state and local laws,
statutes, rules, regulations and ordinances.
1.7 "Applicable Tier 1 Retail Units" shall have the meaning set forth in Section
5.1(2).
1.8 "Applicable Tier 2 Retail Units" shall have the meaning set forth in Section
5.1(3).
3
1.9 "Binding Letter Agreement" shall have the meaning set forth in the Recitals.
1.10 "Business Day" means any day that is not a Saturday or a Sunday or a day on
which the NASDAQ Global Market is closed.
1.11 "Calendar Quarter" means each of the three month periods ending March 31,
June 30, September 30 and December 31, provided that the first Calendar Quarter
shall commence as of the Detail Commencement Date and end on (i) December 31,
2007 if the Detail Commencement Date is on or after October 1, 2007 or (ii)
September 30, 2007 if the Detail Commencement Date is on or prior to September
30, 2007.
1.12 "Call" means an in person contact between a Sales Representative of a Party
and a Detail Target during which a Detail is made to the Detail Target.
1.13 "CFR" means the United States Code of Federal Regulations.
1.14 "Claims" means any suits, claims, actions, demands, complaints, lawsuits or
other proceedings that are brought by any Third Party, including without
limitation product liability claims and claims seeking to recover for personal
injury or death, alleged to have been caused, in whole or in part, by a Product
regardless of the legal theory alleged.
1.15 "Commercial Launch Date" means the date after full FDA approval of the NDA
for FFIS when FFIS has been produced and is released by ▇▇▇ for purchase by
Third Party wholesalers and/or retailers in the Territory.
1.16 "Commercially Reasonable Efforts" means, with respect to the efforts to be
expended by a Party with respect to any objective, such reasonable, diligent,
good faith efforts to accomplish such objective as such Party would normally use
to accomplish a similar objective under similar circumstances exercising
reasonable business judgment for a product owned by it or to which it has
rights, which product is of similar market potential, taking into account
efficacy, safety, approved labeling, the competitiveness of alternative products
in the marketplace and other relevant factors commonly considered in similar
circumstances.
4
1.17 "CRTX Indemnified Party" shall have the meaning set forth in Section 11.1.
1.18 "CRTX Trademark(s)" means the trademark and domain names listed on Schedule
1.14, together with all related common law trademark rights of CRTX related
thereto.
1.19 "Current Good Manufacturing Practices" or "GMP" or "cGMP" means the current
good manufacturing practice and standards as provided for (and as amended or
updated from time to time) in applicable ICH Harmonized Tripartite Guidelines
and as defined in Parts 210 and 211 of Title 21 of the CFR, as may be amended
from time to time, or any successors thereto.
1.20 "Detail" means a Call during which relevant characteristics of the Product
are described by the Sales Representative of a Party aimed at encouraging the
appropriate use of the Product and using, if necessary or desirable, the
Promotional Materials. A sample drop shall not be considered a primary or
secondary Detail. When used as a verb, "Detail" shall mean to engage in a
Detail.
1.21 "Detail Commencement Date" means the later of the Commercial Launch Date,
or the date that ▇▇▇ receives written notice from CRTX indicating that CRTX has
(a) completed its sales force expansion to the size of 40 or more Sales
Representatives and all of whom have completed the FFIS launch training as
contemplated by this Agreement, and (b) that the first Call has been made by
CRTX's Sales Representatives under the terms of this Agreement.
1.22 "Detail Targets" means all office-based physicians and other health care
professionals in the Territory selected by CRTX from the ▇▇▇ FFIS Target
Universe. For purposes of this Agreement, the "▇▇▇ FFIS Target Universe" shall
mean the group of office-based physicians and other health care professionals in
the Territory that ▇▇▇ uses internally for its Call plan for FFIS, which group
consists of allergists, pulmonologists, internal medicine physicians, and
primary care physicians (excluding pediatricians) who belong to the FFIS Market
Quintile [**] based upon third party data, such as Wolters Kluwer Health. ▇▇▇
shall retain the right to modify the ▇▇▇ FFIS Target Universe from time to time;
provided, however, any such modification shall not affect a previously agreed to
CRTX [**] month Call plan. CRTX will notify ▇▇▇ of the date of the next CRTX
Call plan period at least [**] days prior to the start date of the
5
period. ▇▇▇, within [**] days after receipt of such notice, will provide the ▇▇▇
FFIS Target Universe to a third party retained by CRTX and approved by ▇▇▇ so
that the third party may use it to assist CRTX with its selection of Detail
Targets for the applicable Call plan. ▇▇▇ and CRTX acknowledge and agree that
the ▇▇▇ FFIS Target Universe for the [**] month period starting on the Detail
Commencement Date has been finalized by the parties.
For purposes of this Section, the "FFIS Market Quintile" means the prescriber
quintile based upon the current definition of the FFIS Market used in DEY's Call
plan.
1.23 "▇▇▇ Indemnified Party" shall have the meaning set forth in Section 11.2.
1.24 "▇▇▇ Patents" shall mean those patents listed on Schedule 1.19 attached.
1.25 "▇▇▇ Trademarks" shall mean the trademarks listed on Schedule 1.20
attached.
1.26 "Effective Date" shall have the meaning set forth in the Preamble.
1.27 "FAPI" shall have the meaning set forth in Section 4.3(6).
1.28 "FDA" means the United States Food and Drug Administration and any
successor agency having substantially the same jurisdiction and functions.
1.29 "Field" shall mean the use of the Product as a pharmaceutical product in
humans for the treatment of chronic obstructive pulmonary disease ("COPD") or
other respiratory indications for which ▇▇▇ has received formal FDA approval.
1.30 "Finished Product" means the formulation of the Product described in the
specifications included in the NDA for such Product (the "FFIS Specifications")
and packaged and labeled and in a form ready for distribution in the Territory.
1.31 "GAAP" means U.S. generally accepted accounting principles.
1.32 "Indemnified Party" shall have the meaning set forth in Section 11.3.
6
1.33 "Indemnifying Party" shall have the meaning set forth in Section 11.3.
1.34 "Independent Accountant" shall have the meaning set forth in Section
5.3(1).
1.35 "Losses" means any and all damages, awards, deficiencies, settlement
amounts, defaults, assessments, fines, dues, penalties (including penalties
imposed by any governmental authority), costs, fees, liabilities, obligations,
taxes, liens, losses, and expenses (including court costs, interest and
reasonable fees of attorneys, accountants and other experts) awarded or
otherwise paid or payable to Third Parties.
1.36 "NDA" means a new drug application (as defined in the Act and applicable
regulations promulgated thereunder, as amended from time to time) filed with the
FDA, including any supplements or amendments thereto which may be filed.
1.37 "Net Retail Average Selling Price" shall mean, for any applicable Calendar
Quarter, the average WAC Price per Retail Unit for such Calendar Quarter, less
Rebates and Discounts per Retail Unit for such Calendar Quarter. In the
determination of the Net Retail Average Selling Price, ▇▇▇ will use Commercially
Reasonable Efforts to allocate the Rebates and Discounts relevant to Product
sales to the retail sales channels (and shall not allocate any Rebates or
Discounts relevant to Product sales to non-retail sales channels in such
amounts).
1.38 "PDE" is the measure of Detail Calls, and shall mean primary detail
equivalents calculated as follows: one primary Call is 1.0 PDE and one secondary
Call is 0.4 PDE.
1.39 "PDMA" means the United States Prescription Drug Marketing Act of 1987, as
amended, or any successor act thereto, and the regulations promulgated
thereunder from time to time.
1.40 "Party" means ▇▇▇ or CRTX. "Parties" means ▇▇▇ and CRTX.
1.41 "Patent Office" means the United States Patent and Trademark Office.
1.42 "Product" or "FFIS" means Formoterol Fumarate Inhalation Solution
20mcg/2ml, which is
7
the subject of DEY's NDA No. 22-007.
1.43 "Product Label(ing)" shall have the same meaning as defined in the Act and
regulations as interpreted by the FDA.
1.44 "Product Quality Complaint" shall mean any legitimate complaint (as
reasonably determined by the Party receiving such complaint) by a Third Party
that (a) questions the purity, identity, potency or quality of the Product, its
packaging, or labeling, or (b) claims that the Product or its labeling is
mistaken for, or applied to, another article or any bacteriological
contamination, or (c) claims a significant chemical, physical, or other change
or deterioration exists in the distributed drug product, or (d) claims a failure
of one or more distributed batches of Product to meet the specifications
thereof.
1.45 "Promotion" means, as regards to the Product, those activities normally
undertaken by a pharmaceutical company to implement promotion plans and
strategies aimed at encouraging the appropriate use of a particular prescription
pharmaceutical product under a common trademark, up to the point of offering a
product for sale. When used as a verb, "Promote" shall mean to engage in such
activities.
1.46 "Promotion Expenses" means all actual out-of-pocket expenses incurred
(i.e., paid or accrued) to a Third Party by or on behalf of ▇▇▇ in connection
with selling, marketing and Promotion of the Product in the Territory, including
the following (but excluding expenses for Samples purchased by CRTX hereunder,
Third Party market data, such as IMS or Wolters Kluwer Health data purchased by
CRTX, sales forces of CRTX, and salaries for employees of CRTX performing
marketing functions):
(a) marketing, advertising, Promoting, and educational expenses, including
speakers' programs, medical education programs and symposia,
relationships with opinion leaders and professional societies, public
relations and market research;
(b) training and communications materials and detail and visual aids;
8
(c) Third Party market data from IMS or Wolters Kluwer Health purchased by
▇▇▇;
(d) implementing marketing programs; and,
(e) preparation, storage and distribution of Promotional Materials;
provided, however, that Promotion Expenses shall specifically exclude
salaries and other internal overhead and/or compensation paid to
either Party's employees, including their respective sales forces.
1.47 "Promotion Plan" means a plan established by ▇▇▇ relating to the Promotion
of the Product.
1.48 "Promotional Materials" means all written, printed or graphic (or in other
media formats) material provided by ▇▇▇ and intended for use by a Party's Sales
Representatives during a Call, or marketing sponsored speaker programs
including, but not limited to, visual aids, file cards, premium items, clinical
studies reprints, drug information updates and any other promotional support
items or advertising that ▇▇▇ deems necessary or appropriate in connection with
the Promotion of Product. Promotional Materials shall include only those
materials describing FDA-approved indicated uses, safety, effectiveness,
contraindications, side effects, warnings and other relevant characteristics of
a Product that meet the regulations as outlined in the CFR. Promotional
Materials also includes all sales training materials, however promotional
Materials shall not include any Product packaging or Product labeling or Sample
labeling, or Samples.
1.49 "Proprietary Information" means any and all scientific, clinical,
regulatory, sales, marketing, financial and commercial information or data,
customer-related materials, know-how, concepts, ideas, trade secrets, expertise,
and all of the foregoing regardless of whether communicated in writing, orally
or by any other means, which is owned and under the protection of one Party and
is provided by that Party to the other Party in connection with this Agreement.
1.50 "Quarterly Retail Base Units" or "QRBU" means, for each Calendar Quarter of
such Year, the Retail Units of Product forecasted by ▇▇▇ that are based on
detailing by DEY's sales force only and as set forth in Schedule 1.5 attached.
9
1.51 "Rebates and Discounts" means the following deductions to the extent
actually allowed or taken and not in excess of industry standard amounts and
determined in accordance with GAAP, DEY's revenue recognition policies, and
Applicable Laws:
(a) credits or allowances actually granted for damaged or spoiled Product,
returns, recalls or rejections of Product, and retroactive price
reductions;
(b) normal and customary trade, cash and quantity discounts, allowances
and credits, actually given or allowed, as applicable;
(c) sales, value added, excise or similar taxes actually paid or allowed,
or other governmental charges imposed upon the importation, use or
sale of Product in the Territory;
(d) legally allowed chargebacks, rebates, fees or similar payments to
customers, including, but not limited to, managed health care
organizations, wholesalers, distributors, buying groups, retailers,
health care insurance carriers, pharmacy benefit management companies,
health maintenance organizations, or other institutions or health care
organizations or to federal, state/provincial, local and other
governments, their agencies and purchasers and reimbursers;
(e) credit card processing charges and fees, freight, postage, shipping
and insurance charges relating to delivery of the Product; and,
(f) launch discounts, stocking fees and other discounts actually extended
to wholesalers.
1.52 "Retail Unit" means one vial of Product. "Retail Units" means the vials of
Product sold in the retail channel for a given period of time, as reported in
the script data that ▇▇▇ purchases from Wolters Kluwer Health or a similar Third
Party.
1.53 "Sales Representative" means a qualified salesperson meeting the
requirements set forth in this Agreement, including, but not limited to Section
4.2 and 4.6 of this Agreement, and who is employed by a Party.
1.54 "Samples" means Product provided without charge to Detail Targets and in
compliance
10
with Applicable Laws.
1.55 "SEC" means the United States Securities and Exchange Commission and any
successor agency having substantially the same jurisdiction and functions.
1.56 "Term" shall have the meaning set forth in Section 12.1.
1.57 "Territory" means the United States of America (including the District of
Columbia) and all of its territories and possessions now or at any time during
the Term(s).
1.58 "Third Party(ies)" means a person or entity who or which is neither a Party
nor an Affiliate of a Party to this Agreement.
1.59 "WAC Price" means DEY's invoice price per Retail Unit of FFIS to its
wholesalers, which is commonly known as the 'Wholesale Acquisition Cost' as may
also be published in First Data Bank or other Third Party price reporting
agencies.
1.60 "Year" means each consecutive twelve-month period starting January 1 and
ending December 31, provided that the first Year of the Term shall start on the
Effective Date and end on December 31, 2007.
1.61 "Zileuton Co-Promotion Agreement" shall have the meaning set forth in the
Recitals.
Where words and phrases are used herein in the singular, such usage is intended
to include the plural forms where appropriate to the context, and vice versa.
The words "including", "includes" and "such as" are used in their non-limiting
sense and have the same meaning as "including without limitation" and "including
but not limited to". References to Articles, Sections, subsections, and clauses
are to the same with all their subparts as they appear in this Agreement.
"Herein" means anywhere in this Agreement. "Hereunder" and "hereto" means under
or pursuant to any provision of this Agreement.
11
ARTICLE 2
GRANT OF RIGHTS
2.1 ▇▇▇ ▇▇▇▇▇ of Co-Promotion Right. Subject to the terms and conditions of this
Agreement, ▇▇▇ hereby grants to CRTX, in the Territory in the Field and during
the Term, the non-transferable, limited right and license or sublicense (as
applicable) under the ▇▇▇ Trademarks and the ▇▇▇ Patents to Promote and Detail
FFIS; provided, however, CRTX's exercise of such rights to Promote and Detail
the Product shall not occur before the Detail Commencement Date. Notwithstanding
anything to contrary in this Section 2.1, ▇▇▇ reserves all other rights to the
▇▇▇ Patents and the ▇▇▇ Trademarks, including, but not limited to, the right to
Promote and Detail the Product with its sales force in the Territory during the
Term. All use by CRTX of the ▇▇▇ Trademarks and the ▇▇▇ Patents shall be under
the control of ▇▇▇ and subject to ▇▇▇ quality standards and approvals.
2.2 Access to Information. Subject to the terms and conditions of this
Agreement, each Party shall cooperate in good faith to provide access to and
reasonable assistance with its Proprietary Information and other significant
information of which it becomes aware that may be legally disclosed and that it
reasonably believes may be required for the other to perform its obligations
hereunder.
ARTICLE 3
GOVERNANCE
3.1 Alliance Manager. ▇▇▇ and CRTX each shall appoint a person (an "Alliance
Manager") to oversee compliance with this Agreement. The Alliance Managers shall
also be the primary contact between the Parties with respect to the reporting of
each Party's activities and performance. Each Party's initial Alliance Manager
is set forth on Schedule 3.1 attached hereto. Each Party shall notify the other
in writing as soon as practicable upon changing its Alliance Manager
appointment.
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ARTICLE 4
PROMOTION AND MARKETING ACTIVITIES / PARTY OBLIGATIONS / IP/ TRAINING
4.1 General. Subject to the restrictions of Article 2.1, each Party will
diligently Promote the Product in the Territory during the Term and as of the
Detail Commencement Date, subject to the terms and conditions of this Agreement
and in accordance with its business, legal, medical and scientific judgment and
all Applicable Laws.
4.2 Sales Forces. During the Term and as of the Detail Commencement Date, for
▇▇▇ and CRTX, respectively, each Party will provide, at its own expense, a
professional, appropriately-trained sales force to support its obligations under
this Agreement. The sales force of each Party shall remain under the direct and
exclusive authority, supervision and control of that Party at all times during
the Term. For purposes of this Agreement, all members of CRTX's sales force
performing Details on the Product shall be employees of CRTX. ▇▇▇ shall not be
involved in the interviewing, selection or hiring or the management or
supervision of CRTX's sales force. CRTX shall use Commercially Reasonable
Efforts to ensure that the qualifications of its Sales Representatives meet or
exceed the minimum criteria (including, without limitation, with respect to
education and sales experience) required by CRTX as of the date hereof with
respect to its Sales Representatives detailing products other than the Product.
For purposes of this Agreement, all members of DEY's sales force shall be
employees of ▇▇▇. CRTX shall not be involved in the interviewing, selection or
hiring or the management or supervision of DEY's Sales Representatives.
4.3 CRTX Obligations:
(1) During the Term and starting on the Detail Commencement Date, CRTX, at its
expense, shall deliver to Detail Targets at least [**] primary detail
equivalents ("PDEs") of Product Details in at least the secondary position per
full calendar month after the Detail Commencement Date. The frequency of CRTX's
Product Details per full calendar month will be determined by CRTX. A Call in
the tertiary position shall not count toward CRTX's PDE obligations unless the
parties agree otherwise in writing. CRTX will deliver Product Details to at
least [**] Detail Targets per Calendar Quarter.
13
(2) For all Product Details in Subsection 4.3 (1), only details to Detail
Targets (as defined in Section 1.22 of this Agreement) shall be counted towards
CRTX's PDE requirements.
(3) If and to the extent that CRTX decides to acquire Samples, CRTX, [**], may
acquire from ▇▇▇ supplies of Samples for ▇▇▇-approved sampling activities by
CRTX's Sales Representatives at DEY's [**] of such Samples; provided, however,
CRTX shall have no minimum sampling obligations to meet and CRTX may elect not
to procure or provide Samples. CRTX has the option to perform Product sampling
during the Calls. CRTX also is responsible for the proper storage, handling, and
distribution of any Samples that CRTX orders from ▇▇▇. If CRTX notifies ▇▇▇ that
CRTX intends to perform Product sampling, ▇▇▇ shall assume costs of shipment of
Samples to one location designated by CRTX.
(4) CRTX, [**], shall acquire from ▇▇▇ supplies of Promotional Materials for use
by CRTX at DEY's [**] of such Promotional Materials; provided, however, CRTX
shall have no obligation to use any particular Promotional Materials except
those core Promotional Materials mutually agreed to between the Parties.
(5) CRTX's incentive compensation plan for its Sales Representatives detailing
the Product shall reflect the secondary position of the Product, with the goal
of ensuring quality secondary product Details. The plan shall be determined by
CRTX, but CRTX shall consult with ▇▇▇ and consider suggestions from ▇▇▇.
Compensation of such CRTX Sales Representatives shall align with such plan.
(6) During the Term, CRTX shall not, directly or indirectly, manufacture,
Detail, sell, market or promote in the Territory any product (except for Product
during the Term) containing formoterol, including but not limited to
arformoterol, and any salt, enantiomer, and/or derivative thereof ("FAPI") as
one of the active pharmaceutical ingredients if any approved indication of the
product is the same as any approved indication of the Product as of the date
upon which CRTX intends to begin to, directly or indirectly, manufacture,
Detail, sell, market or promote such product in the Territory (the "Limited
Product"). If this Agreement expires or is terminated for any reason, CRTX shall
not, directly or indirectly, manufacture, Detail, sell, market or Promote
14
any Limited Product in the Territory until one (1) year after such expiration or
termination ("Post-Term Non-Compete Period"); provided, however, this Post-Term
Non-Compete Period shall not apply and shall be void in the event CRTX signs a
definitive agreement to be acquired by or merged with a Third Party that
markets, manufacturers, sells, details or promotes a Limited Product in the
Territory (the "Transaction"); and, instead, the following provision shall apply
(the "Post-Term Non-Promote Period"): CRTX agrees that until the date that is
180 days after the date of the expiration or termination of this Agreement or
the date that is 180 days after the closing date of the Transaction, whichever
occurs sooner, CRTX shall not allow any CRTX Covered Sales Representative (as
defined below) to Detail, market or promote any Limited Product in the Territory
to any office-based physician or other office-based health care professional.
For purposes of this Section 4.3(6), a "CRTX Covered Sales Representatives"
shall mean a Sales Representative employed by CRTX (or by its acquirer or by a
subsidiary of its acquirer) who, within [**] before the date of the expiration
or termination of this Agreement or the closing date of the Transaction,
whichever occurs sooner, either (i) has been trained on the Product or (ii) has
detailed the Product. The Post-Term Non-Promote Period shall not require CRTX or
CRTX's acquirer to take any particular actions with any Sales Representative who
does not satisfy the CRTX Covered Sales Representative definition. This Section
4.3(6) also shall apply with respect to any combination product containing both
FAPI and Zileuton as active ingredients. Notwithstanding the foregoing, if (i)
this Agreement is terminated by CRTX pursuant to a ▇▇▇ breach under Section
12.2(2) or (ii) a Third Party AB-rated generic product to the Product enters the
Territory during this Post-Termination Non-Compete Period, both the
Post-Termination Non-Compete Period and the Post-Term Non-Promote Period in this
Section 4.3(6) shall be void; provided, however, ▇▇▇ and CRTX shall continue to
abide by the provisions of Section 9 of this Agreement after such expiration or
termination.
4.4 ▇▇▇ Obligations:
(1) ▇▇▇ is responsible for all Promotion Expenses and the development and
implementation of Promotion Plans for the Product during the Term. During the
Term, ▇▇▇ is also solely responsible for DEY's sales force expenses, cost of
Samples distributed by DEY's sales force and salaries for its own employees
performing marketing functions, all of which shall be separate from and in
addition to Promotion Expenses (and also includes detail aids,
15
promotional items, market research), and such shall be DEY's responsibility and
not CRTX's responsibility. CRTX's sales force expenses, printing cost of the
Promotional Materials used by CRTX, and the cost of Samples, if any, distributed
by CRTX's sales force shall also be separate from and in addition to the Product
Promotion Expenses and such be CRTX's responsibility and not DEY's
responsibility.
(2) ▇▇▇, at its sole expense, will be responsible for obtaining and maintaining
all applicable FDA regulatory approvals for the Product and for approving and
submitting to FDA all Promotional Materials to be used in the Territory, all as
according to Applicable Laws.
(3) ▇▇▇ also will be solely responsible for the following:
a) Setting the pricing of the Product covered under this Agreement and
approving Rebates and Discounts to wholesalers, managed care
organizations, or Federal, state or local government programs (e.g.,
Medicare or Medicaid) related to the Product;
b) Developing and implementing managed care strategies;
c) Maintaining its exclusive rights to the Product in the Territory,
other than those granted to CRTX herein;
d) the management and costs of any future clinical research and trials
that ▇▇▇ elects to conduct, if any, relating to the Product or any
changes in its labeling;
e) Using Commercially Reasonable Efforts to supply and distribute
GMP-compliant Product in accordance with the Product's respective
specifications; and,
f) Using Commercially Reasonable Efforts to supply and ship only to a
single site designated by CRTX sufficient quantities of GMP-compliant
commercial Samples for CRTX's sampling program, as approved by ▇▇▇,
which Samples shall be provided at DEY's [**] during the Term;
provided, ▇▇▇ shall pay for all shipping charges of such Samples to
the site designated by CRTX.
16
(4) ▇▇▇ shall use Commercially Reasonable Efforts to provide CRTX with
Promotional Materials and training materials for the performance and supervision
of Calls by a reasonable date prior to the Detail Commencement Date projected by
CRTX. In the case of training materials, a reasonable date shall be the later of
August 1, 2007, or within 15 days after CRTX notifies ▇▇▇ in writing of the
projected Detail Commencement Date. In the case of Promotional Materials, a
reasonable date shall be the later of September 3, 2007, or within 30 days after
CRTX notifies ▇▇▇ in writing of the projected Detail Commencement Date. The
Parties agree that timely delivery of such materials is necessary in order for
CRTX to meet the agreed upon Detail Commencement Date. Such Promotional
Materials shall be provided to CRTX by ▇▇▇ at ▇▇▇'▇ [**]. ▇▇▇ shall be solely
responsible for the preparation, content and method of distribution of the
Promotional Materials to one location designated by CRTX. CRTX's Sales
Representatives shall use only the Promotional Materials provided by ▇▇▇ in
conducting Calls hereunder and shall not develop, create, or use any other
promotional material or literature, or any other materials of any kind in
connection with the Detailing of the Product. When depleted by CRTX, ▇▇▇ will
coordinate with CRTX to replenish on a timely basis CRTX's supply of Promotional
Materials, which also shall be sent to one location designated by CRTX. ▇▇▇
shall notify CRTX promptly of any inaccuracy or incompleteness of the
Promotional Materials or labeling. Upon such notice, CRTX will advise its Sales
Representatives to cease the use of all of the Promotional Materials or labeling
(or any portion thereof) so identified by ▇▇▇ and will either destroy or return
such Promotional Materials or labeling to ▇▇▇, at DEY's instruction and expense.
▇▇▇ shall furnish CRTX with corrected Promotional Materials or labeling as soon
as practicable thereafter (such corrected Promotional Materials to be provided
to CRTX at no cost to the extent of materials previously purchased are
unusable). ▇▇▇ shall be responsible for all interactions with the FDA regarding
approval and /or submission of all Promotional Materials.
(5) ▇▇▇ shall use Commercially Reasonable Efforts to provide support to CRTX to
enable CRTX to begin Promoting the Product by Commercial Launch Date.
4.5 Intellectual Property. Each of CRTX and ▇▇▇ shall retain their respective
intellectual property rights, including without limitation, all patents
(including the ▇▇▇ Patents) and patent applications, copyrights and trademarks
(including the ▇▇▇ Trademarks), owned by such Party as of the Effective Date or
otherwise arising during the Term and relating to such Party's
17
respective existing programs and materials in all formats (print, video, audio,
digital, computer, etc.) regarding sales training, patient education and disease
management programs owned or controlled by such Party at the time such materials
are shared with the other Party, as well as any modifications of such programs
each may develop in the future which are not specific to the Product. Except as
otherwise prohibited by Applicable Laws and as otherwise set forth herein, all
Promotional Materials used during the Term, including journal advertising and
sales aids (excluding packaging and FDA approved Product Labeling) may display
the names and logos of CRTX and ▇▇▇. Except as otherwise prohibited by
Applicable Laws, and to the extent reasonably practicable, all Promotional
Materials will indicate that the applicable Product is manufactured and sold by
▇▇▇, promoted by ▇▇▇ and CRTX, and that the CRTX Trademarks are owned by CRTX
and that the ▇▇▇ Trademarks are owned by ▇▇▇. Notwithstanding the foregoing, the
Parties acknowledge and agree that, to the extent ▇▇▇ may have existing stock of
Promotional Materials as of Detail Commencement Date, ▇▇▇ shall be permitted to
utilize such stock and to provide such stock to CRTX for use in connection with
its promotional efforts prior to the development and distribution of new
Promotional Materials displaying the names and logos of both CRTX and ▇▇▇.
During the Term, all applicable logos, subject to compliance with Applicable
Laws, shall be prominently displayed in accordance with each Party's
specifications and be of similar size to each other on all such materials. Each
Party hereby consents to such use of its name and logo, provided that the other
Party adheres to the agreed upon format and language and, provided further, that
neither Party will acquire any ownership rights in the other Party's name or
logo, or any rights to use the other Party's name or logo beyond those set forth
in this Section 4.5. After expiration of the Term or after the termination of
this Agreement, neither Party will include any of the other Party's names or
logos on any Promotional Materials, except as required by Applicable Laws. If
either party's corporate name or logo should change from what it is at Effective
Date of this Agreement, such Party shall be responsible and reimburse the other
party for all additional expenses in connection with procuring additional stock
of Promotion Materials as a result of such name or logo change.
4.6 Training.
18
(1) Each Party shall have the responsibility for training its Sales
Representatives with respect to the Promotion of the Product in the Territory,
and each Party will be solely responsible for all costs associated with training
its respective Sales Representatives. During the Term, ▇▇▇ shall provide CRTX
with such assistance as is reasonably requested by CRTX, and as mutually agreed
to in connection with the training programs to help ensure that the training of
CRTX's Sales Representatives will be consistent with the training provided to
DEY's Sales Representatives regarding the sales of the Product in the Territory.
(2) During the Term, in order for CRTX to meet the projected Detail Commencement
Date, ▇▇▇ shall provide sufficient quantities of training materials relating to
the Product, including an up-to-date programmed learning unit for "at home"
study. ▇▇▇ shall supply such materials to one CRTX-designated location by later
of [**], or [**] days after its receipt of written notice of the projected
Detail Commencement Date from CRTX. ▇▇▇ shall be responsible for the cost of
developing and CRTX shall be responsible for the cost of duplicating such
materials.
(3) All expenses during the Term that are incurred by either Party and
associated with any launch meeting or any training meetings for the Product for
such Party's sales force shall be the responsibility of the Party incurring such
cost. Promptly after the date that CRTX has confirmed the projected Detail
Commencement Date to ▇▇▇, CRTX and ▇▇▇ shall agree on a mutually convenient
schedule that will enable the training of the CRTX sales force in sufficient
time to meet the projected Detail Commencement Date.
(4) In addition to the training referred to above, during the Term, each Party
shall conduct separate training programs for their respective sales force with
respect to the Medicare and Medicaid Anti-Kickback Statute, as set forth at 42
U.S.C. Section 1320(a)-7b(b) and the acts prohibited thereunder, PDMA
regulations, and all other applicable guidances relating to promotion of
Product, including, without imitation, the PhRMA Code on Interactions with
Healthcare Professionals. Upon completion of such additional training, each
sales force member shall be required to sign a certificate acknowledging their
receipt of such training and certifying and acknowledging their attendance at
the training.
4.7 Other Marketing and Promotion Services.
19
(1) ▇▇▇ or its Third Party contractor shall provide reasonable order entry,
customer service, reimbursement management, medical affairs (including reports
for all Adverse Events as set forth herein at Article 6), medical or drug
information, warehousing, physical distribution, invoicing, credit and
collections (including maintaining and enforcing the credit policy applicable to
the Product) production forecasting and other related facilities and services
necessary or desirable for the manufacturing and supply, distribution,
marketing, Promotion and sales of the Product under this Agreement. Such
services shall include contract administration, including handling wholesaler
chargebacks, managed care contracts, federal and state government contracts,
rebate contracts, long-term care contracts, performance-based contracts, and
hospital purchasing contracts. ▇▇▇ shall book all sales and be exclusively
responsible for accepting and filling purchase orders for Product and for
processing billing and returns with respect to the Product.
(2) ▇▇▇ will provide CRTX with reasonable access (at DEY's expense for any
additional work that ▇▇▇ may request) to all medical education and medical or
drug information regarding the Product and FAQs, with respect to the Promotion
of the Product.
(3) In addition to any other reports required by this Agreement, ▇▇▇ shall
provide to CRTX at no cost to CRTX:
(i) on a monthly basis, within [**] days after the end of each month
beginning or ending during the Term, reports of (A) WAC Price; (B) Rebates
and Discounts; and (C) Net Retail Average Selling Price for the immediately
preceding month;
(ii) on a monthly basis, the number of Retail Units; after ▇▇▇ has received
the data from Wolters Kluwer Health or a similar Third Party;
(iii) on a monthly basis, complete and accurate records of the actual
number of Sales Representatives in DEY's sales force who, at the end of
each calendar month, are actively Detailing the Product to office-based
physicians and other office-based health care professionals in the
Territory); and,
(iv) such other reports as may be reasonably requested by CRTX in
connection with the performance of the Parties' obligations hereunder.
20
4.8 Covenants of the Parties.
(1) CRTX covenants that, during the Term, the CRTX sales force shall (i) limit
its claims of efficacy and safety for the Product to those that are consistent
with approved promotional claims and FDA-approved prescribing information for
the Product in the Territory; (ii) not add, delete or modify claims of efficacy
and safety in the Promotion of the Product from those claims of efficacy and
safety that are consistent with the FDA-approved prescribing information; (iii)
use the Promotional Materials in accordance with this Agreement and Applicable
Laws; (iv) Promote the Product in accordance with Applicable Laws; and, (v)
comply with the CRTX code of business conduct and Comprehensive Compliance
Program.
(2) ▇▇▇ covenants that, during the Term, the ▇▇▇ sales force shall (i) limit its
claims of efficacy and safety for the Product in the Territory to those that are
consistent with approved promotional claims and FDA-approved prescribing
information for the Product; (ii) not add, delete or modify claims of efficacy
and safety in the Promotion of the Product under this Agreement from those
claims of efficacy and safety that are consistent with the FDA-approved
prescribing information; (iii) use the Promotional Materials in accordance with
this Agreement and Applicable Laws; and (iv) Promote the Product in accordance
with Applicable Laws; and, (v) comply with the ▇▇▇ Code of Conduct and
compliance program.
ARTICLE 5
FINANCIAL TERMS / PAYMENTS / STATEMENTS
5.1 During the Term and after the Detail Commencement Date, ▇▇▇ will pay CRTX on
a Calendar Quarter basis a Co-Promotion Fee, which shall be calculated and paid
as follows:
(1) No Co-Promotion fee will be paid with respect to Retail Units sold in
any Calendar Quarter if the number of Retail Units of Product sold in
such Calendar Quarter is less than the QRBU for such Calendar Quarter.
21
(2) TIER 1: With respect to the number of Retail Units sold during each
Calendar Quarter in excess of the QRBU, but not more than [**] Retail
Units above the QRBU for such Calendar Quarter (the "Applicable Tier 1
Retail Units"), ▇▇▇ shall pay to CRTX a Co-Promotion Fee for that
Calendar Quarter calculated according to the following formula:
(Applicable Tier 1 Retail Units) x (Net Retail Average Selling
Price for such Calendar Quarter) x [**]%.
(3) TIER 2: With respect to the number of Retail Units sold during each
Calendar Quarter in excess of those Retail Units that are subject to a
Co-Promotion fee under Section 5.1(2) above during such Calendar
Quarter (i.e., in excess of the QRBU for such Calendar Quarter, plus
[**]) (the "Applicable Tier 2 Retail Units"), ▇▇▇ shall pay to CRTX a
Co-Promotion Fee for that Calendar Quarter calculated according to the
following formula:
(Applicable Tier 2 Retail Units) x (Net Retail Average Selling
Price for such Calendar Quarter) x [**]%.
(4) In the event ▇▇▇ materially increases or decreases the size of its
sales force for Sales Representatives who actively promote the Product
to office-based physicians and other office-based health care
professionals in the Territory, ▇▇▇ shall provide CRTX with written
notice of such change. Promptly thereafter, the Parties will
renegotiate in good faith a mutually agreeable Tier 2 Co-Promotion
Fee. The renegotiated Tier 2 Co-Promotion Fee shall be based, among
other things, upon the expected effect that such increase or decrease
has on Retail Unit sales, and shall take effect [**] days from the
date of CRTX's receipt of such notice from ▇▇▇. For this purpose, a
material increase or decrease shall mean an increase or decrease of 40
Sales Representatives employed by ▇▇▇ who actively Promote the Product
to office-based physicians and
22
other office-based healthcare professionals in the Territory, with the
number of such Sales Representatives at Commercial Launch Date as the
baseline.
(5) For purposes of clarity, the calculation of number of Retail Units
sold for purposes of this Section 5.1 shall include all Retail Units
sold in such Calendar Quarter, regardless of whether such sales were
based on detailing by DEY's sales force, CRTX's sales force or any
combination thereof.
(6) The Co-Promotion Fee will be paid quarterly within 30 days after the
receipt by ▇▇▇ of the Retail Unit data for the applicable Calendar
Quarter.
(7) ▇▇▇ and CRTX each acknowledge and agree that all payments under this
Agreement are and shall be separate and distinct from any other
arrangement between CRTX and ▇▇▇, including, but not limited to, the
Zileuton Co-Promotion Agreement. Neither party shall be allowed to any
right to offset any monies owed or owing pursuant to this Agreement
against any other payments or obligations owed or owing in connection
with any other agreement between the parties.
(8) For any calendar month in which CRTX does not deliver at least [**]
PDEs to Detail Targets as set forth in Section 4.3 (1), CRTX has the
right, but not the obligation, to perform a "make good" detailing
effort during the [**] days following the last day of such calendar
month (the "Make Good Period") (i.e., "make good" means that CRTX
shall perform within the Make Good Period additional Product Details
necessary to satisfy the requirement of [**] PDEs to Detail Targets
per month). If, for any such instance, CRTX does not perform such a
"make good" detailing effort during the Make Good Period, there will
be an adjustment to the Co-Promotion Fees described in Section 5 for
such prior Calendar Quarter as
23
mutually agreed to between the Parties. In addition, if CRTX fails
more than [**] times in any Calendar Year to deliver at least [**]
PDEs per calendar month to Detail Targets, regardless of whether a
"make good" effort is made, the Parties will negotiate in good faith
an adjustment to the Co-Promotion Fees and to the monthly PDE
requirement, all as mutually agreed to between the Parties. As regards
the documentation necessary to prove the "make good" effort, such
shall be received by ▇▇▇ within [**] Business Days after the last day
of the Make Good Period. If ▇▇▇ does not receive such information
within the ten day period, such shall void the "make good" effort and
shall result in an adjustment of the Co-Promotion Fees as described
above, but shall not be a breach of this Agreement.
5.2 Reports / Reconciliations / Records.
(1) CRTX will provide ▇▇▇ actual Product Detail information monthly within [**]
days of the close of each month. CRTX shall keep complete and accurate records
of the actual Product Details made by its Sales Representatives (including,
without limitation, names and identification numbers of doctors, dates of
presentations, whether the call is a primary, secondary or tertiary product
presentation, and the number of Samples delivered per Detail, as well as the
number of Sales Representatives in CRTX's sales force Detailing the Product at
the end of each calendar month) and the other activities carried out pursuant to
this Agreement. For Sample distribution, the records shall include the number of
Samples dropped, the lot number of each sample, the Detail Target's name and
address and date of delivery made by each Sales Representative. CRTX shall make
such records available to ▇▇▇ during CRTX's regular business hours upon
reasonable advance notice and no more than four (4) times during any Agreement
Year and shall provide ▇▇▇ a report summarizing such matters within [**] days
after the end of each calendar month. The summary shall contain the details of
sample distribution records as detailed above. CRTX shall maintain such records
for [**] years following the period to which they relate. CRTX shall provide ▇▇▇
[**] months' prior written notice of its intention to destroy such records, and
▇▇▇ shall have the right to obtain such records from CRTX prior to the time of
CRTX's proposed destruction date at DEY's own expense. CRTX acknowledges and
agrees that ▇▇▇ may from time to time (but no more often than once in any
24
Year) audit, or retain an independent third party audit service to audit, CRTX's
activities under this Agreement, including, but not limited to, Details and call
and Sample reporting. Such independent audit service shall keep confidential any
information obtained during such examination and shall report only the
information which is the subject of the audit.
(2) Any change in the amount that would have been payable from ▇▇▇ to CRTX under
this Agreement which results from any restatements to a prior period's financial
results due to errors, omissions, or any other misstatements, shall be added to
or deducted from, as applicable, the amount of the next payment due under this
Agreement.
(3) ▇▇▇ shall keep, and shall require its Affiliates to keep, complete and
accurate records in sufficient detail to permit accurate determination of all
amounts necessary for calculation and verification of all payment obligations
set forth in this Article 5. In the event payments required to be made under
this Section 5 are not made on or prior to the required payment date, the amount
of the late payment shall bear interest at the Prime Rate plus 2% commencing on
the date such payment is due until such date as the payment is made. "Prime
Rate" for purposes of this Section 5 shall mean the prime rate of Citibank, N.A.
in New York, New York as published in the Wall Street Journal computed on a
daily basis and shall change when and as the Prime Rate changes.
(4) ▇▇▇ shall furnish to CRTX a written report, within [**] days after the
receipt by ▇▇▇ of the Retail Unit data for the applicable Calendar Quarter,
showing the payments owed to CRTX for such Calendar Quarter. Payments for each
Calendar Quarter shall be due at the same time as such written report for such
Calendar Quarter. The report shall include, at a minimum, the information forth
in Section 4.7 of this Agreement for the applicable Calendar Quarter.
5.3 Audits.
(1) Upon no less than [**] Business Days prior written notice by CRTX, ▇▇▇ shall
permit an independent certified public accounting firm of recognized standing
(but not CRTX's current accounting firm Deloitte and Touche LLP), selected by
CRTX and reasonably
25
acceptable to ▇▇▇ (the "Independent Accountant"), as well as representatives of
CRTX, to have access during normal business hours to such of the records of ▇▇▇
to the extent necessary to verify the accuracy of the reports under this Section
5 for any Year ending not more than [**] months prior to the date of such
request. The Independent Accountant shall disclose to CRTX whether the reports
are correct or incorrect, the specific details concerning any discrepancies and
such other information that should properly be contained in a report required
under this Agreement. The number of audits conducted of the records of ▇▇▇
pursuant to this Section 5 shall not exceed [**] with respect to each Year of
the Term or [**] with respect to the last Year of the Term.
(2) If the Independent Accountant concludes that additional amounts were owed by
▇▇▇ for such Year, ▇▇▇ shall pay the additional payments, together with interest
at the Prime Rate on the amount of such underpayment, within [**] Business Days
of the date CRTX delivers to ▇▇▇ the Independent Accountant's written report so
concluding unless the report and alleged underpayment is reasonably contested in
accordance with this Section 5.3(5) of the Agreement. In the event that,
following the Independent Accountant's review and the conclusion of any dispute
with respect thereto, it is determined that that amounts were overpaid by ▇▇▇
during such period, CRTX shall repay ▇▇▇ the amount of such overpayment within
[**] Business Days of the date CRTX delivers to ▇▇▇ such accounting firm's
written report so concluding. The fees charged by such accounting firm shall be
paid by CRTX; provided, however, that if an error in favor of CRTX of more than
[**] percent ([**]%) of the Co-Promotion Fee for most recent Calendar Year is
discovered, then the fees and expenses of the accounting firm shall be paid by
▇▇▇.
(3) Upon the expiration of [**] months following the end of any Year for which
▇▇▇ has made payment in full of amounts payable with respect to such year, and
in the absence of negligence or willful misconduct of ▇▇▇ or a contrary finding
by an accounting firm provided pursuant to this Section 5, such calculation
shall be binding and conclusive upon ▇▇▇, and ▇▇▇ shall be released from any
liability or accountability with respect to payments for such year.
(4) Each Party shall treat all financial information subject to review under
this Section 5.3 in accordance with the confidentiality provisions of this
Agreement.
26
(5) Either Party may dispute the report of the Independent Accountant by written
notice to the other Party given within [**] days of receipt of such report,
setting forth in reasonable detail such Party's objections to such report and
the basis therefor. Any such dispute shall be resolved in accordance with the
provisions of Section 13.6 of this Agreement.
5.4 Calculations / Currency of Payment. All calculations herein shall give
pro-rata effect to and shall be proportionally adjusted by giving effect to the
actual number of days in the applicable Calendar Quarter or Year, respectively.
All payments due under this Agreement shall be payable in United States dollars.
ARTICLE 6
REGULATORY MATTERS
6.1 ▇▇▇ shall fulfill and discharge on a timely basis all obligations under all
Applicable Laws as are necessary or customary in accordance with accepted
business practices and legal requirements to maintain the authorization and/or
ability to manufacture, finish, package, store, label and promote the Product in
the Territory, including, without limitation, the obligations set forth in
Section 6 of this Agreement. ▇▇▇ shall be responsible for review and approval of
all Promotional Materials to be used by the Parties for the Product.
6.2 DEY's obligations hereunder shall include as reasonably necessary and
applicable the maintenance of all regulatory approvals necessary (i) for the
manufacture, finishing and labeling of Product in accordance with cGMPs, (ii)
for the use and marketing of Product for all approved indications in the U.S.,
including, without limitation, maintaining such records and filing such reports
as may be required under the provisions of the Act, as well as applicable state
and federal law including, without limitation, all Promotional Materials and
labeling relating to Product. All communications with government agencies
concerning any Product shall be the sole responsibility of ▇▇▇, provided that
during the Term, CRTX shall (i) provide reasonable cooperation with ▇▇▇ to the
extent deemed reasonably necessary by the Parties to respond to such
communications; and (ii) have the right to communicate with the FDA or any other
governmental agency regarding the Product if such communication is in accordance
with the
27
terms of Article 9 of this Agreement or is necessary to comply with the
requirements of Applicable Laws.
6.3 DEY's obligations hereunder shall include obtaining any necessary FDA
approvals of any Product Label, FDA-Approved Prescribing Information, labeling,
monographs and packaging, and Promotional Materials used in connection with the
Product post FDA approval. ▇▇▇ shall provide CRTX with final copies of a
FDA-approved package insert once it is approved.
6.4 Recalls and Other Corrective Action. ▇▇▇ shall have the sole right and
responsibility to conduct, [**], any recall, market withdrawals, or other
corrective action related to Product in the Territory. At DEY's [**], CRTX shall
provide information in the possession or control of CRTX, as needed by ▇▇▇ to
conduct such recall, market withdrawals, or other corrective action related to
Product in the Territory.
6.5 Adverse Events. ▇▇▇ shall use its established operating procedures to report
Adverse Events to the FDA in accordance with Applicable Laws. Such operating
procedures shall include any measures necessary for ▇▇▇ to fully comply with
such Applicable Laws. In any event, CRTX shall notify ▇▇▇ within [**] hours of
CRTX becoming aware of any Adverse Event (as set forth in 21 CFR 314.80);
provided, however, such failure(s) shall not be a material breach under this
Agreement unless such failure occurs more than [**] times in any Calendar Year.
▇▇▇ shall be solely responsible for the timely filing with the FDA of all
Adverse Event reports. ▇▇▇ shall be solely responsible for the safety of the
Product and shall be solely responsible for maintaining a process for patients,
physicians and others to report Adverse Events; provided, however, CRTX shall be
solely responsible for any Samples in its, its Sales Representatives', or its
agents' possession. The costs of such reporting and of all services provided in
connection with Adverse Events hereunder shall be borne solely by ▇▇▇. ▇▇▇ will
timely collect information about the Adverse Events, initiate and conduct
reasonably required investigations, determine if physical or other testing of
Product appears to be reasonably required, determine the nature of the Adverse
Event based on data and reports it has obtained, and issue any reports,
analyses, or summaries of its activities as may be required by Applicable
28
Laws, including, without limitation, preparing and filing with the FDA on a
timely basis such reports as are necessary and appropriate.
6.6 Regulatory Cooperation. During the Term, each Party shall inform the other
Party within [**] days of its receipt of any information that: (i) raises any
concern regarding the safety or efficacy of Product; (ii) concerns suspected or
actual Product tampering or contamination or other similar problems with respect
to Product; (iii) is reasonably likely to lead to a recall or market withdrawal
of Product; or (iv) concerns any ongoing or potential FDA investigation,
inspection, detention, seizure or injunction or other action involving Product
or (v) any circumstances that are reasonably likely to materially adversely
impact the manufacturing or supply of the Product (including the failure of any
batch of Finished Product to meet the FFIS Specifications that ▇▇▇ reasonably
deems such failure likely to impact such supply).
6.7 Safety Contacts. All safety related reports and correspondence shall be
addressed to: [**], ▇▇▇, ▇.▇. (fax number [**]; telephone number [**]), or such
other safety representative as may be designated by ▇▇▇.
6.8 Medical Inquiries. ▇▇▇ and its Third Party contractors shall be responsible
for responding to medical questions or inquiries from members of the medical and
paramedical professions and consumers regarding the Product, including the
distribution of standard medical or drug information letters, provided a form of
such letter has been approved by ▇▇▇, resulting from the activities of the sales
forces except as otherwise specifically agreed to between the Parties. During
the Term, CRTX shall promptly communicate to ▇▇▇ all comments, requests and
inquiries of the medical profession or any other Third Parties for information
relating to the Product, including prescription, Sampling, and safety
information, within the Territory, of which it becomes aware. During the Term,
upon the reasonable request of ▇▇▇, CRTX shall provide reasonable cooperation to
▇▇▇ to the extent deemed necessary to respond to such communications and ▇▇▇
shall provide copies of the responses given, in accordance with the Applicable
Laws, including, but not limited to, any regulations and policies of the FDA,
applicable to CRTX. ▇▇▇ shall formulate responses to such inquiries, including
the content of any Frequently Asked Questions. ▇▇▇ shall maintain appropriate
databases to document and track medical inquiries.
29
6.9 Product Quality Complaints. During the Term, ▇▇▇ or its designated agent
shall have the full responsibility for responding to complaints from DEY's
Product Quality Complaints. CRTX shall promptly notify ▇▇▇ in writing of any and
all Product Quality Complaints received by CRTX in accordance with a procedure
mutually agreed to by the parties. These communications shall be directed to
[**] at ▇▇▇, or another designee. All out-of-pocket costs incurred in respect of
this Section 6.9 shall be borne by ▇▇▇.
6.10 Storage of Samples. Samples sent to and stored by or on behalf of CRTX
during the Term will be stored in accordance with, and will conform to the
storage conditions of the Samples, cGMPs, other applicable FDA and other
regulatory standards and such quality assurance practices as are standard, as
well as other Applicable Laws. Upon request of ▇▇▇, CRTX shall permit duly
authorized representatives of ▇▇▇ or its third party designees, [**] every
calendar year (or more frequently if an audit reveals significant concerns from
the perspective of ▇▇▇, acting reasonably, that require appropriate additional
audit follow-up) during normal business hours and upon reasonable prior written
notice, and in any event on not less than [**] days notice, to audit CRTX's
warehouse facility. ▇▇▇ shall provide CRTX with the approved storage conditions
for the Samples.
6.11 Samples and PDMA Compliance. CRTX is responsible to store, handle, and
distribute Samples and maintain all documentation of sampling and reporting in
compliance with all Applicable Laws, including the PDMA. CRTX shall notify
promptly ▇▇▇ in writing of any FDA reportable event in connection with all
reports submitted to FDA on diversion, theft or loss of Samples in connection
with the CFR. ▇▇▇ shall be responsible for the submission of any required
reports regarding PDMA violations to the FDA, but CRTX (i) shall be responsible
for reporting violations of PDMA by its employees and/or agents to ▇▇▇ in a
timely manner; (ii) shall be responsible for any sanctions imposed regarding any
such violation(s); and (iii) shall be responsible for providing ▇▇▇ quarterly
reports showing the reconciliation of Samples in the possession of its employees
and agents. Upon request of ▇▇▇, CRTX shall permit duly authorized
representatives of ▇▇▇ or its third party designees, [**] every calendar year
(or more frequently if an audit reveals significant concerns from the
perspective of ▇▇▇, acting reasonably, that require appropriate additional audit
follow-up) during normal business hours
30
and upon reasonable prior written notice, and in any event on not less than [**]
days notice, to audit CRTX's PDMA compliance records relating to the Samples.
6.12 State Reporting. Each Party shall timely file reports on the prescription
drug marketing and advertising costs incurred by such party in the promotion,
marketing and sale of the Product to the extent required by Applicable Laws.
Each Party shall be responsible for its own filing fees and other costs in
connection with the reporting of such costs. Each Party shall timely provide the
other Party with copies of such reports as requested and if required by
Applicable Laws for the Parties to be in compliance.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 General Representations. Upon the Effective Date, each Party hereby
represents and warrants to the other Party as follows:
(a) Such Party is a corporation (in the case of CRTX) or limited
partnership (in the case of ▇▇▇) duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its
organization, is qualified to do business and is in good standing as a
foreign corporation or limited partnership, as the case may be, in
each jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification and failure to
have such would prevent it from performing its obligations under this
Agreement;
(b) The execution, delivery and performance by such Party of this
Agreement have been duly authorized by all necessary corporate action
and do not and will not (i) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to it or any
provision of its charter or bylaws (in the case of CRTX) or
certificate of limited partnership or limited partnership agreement
(in the case of ▇▇▇); or (ii) conflict with or
31
constitute a default under any other agreement to which such Party is
a party;
(c) This Agreement has been duly executed and is a legal, valid and
binding obligation of such Party, enforceable against it in accordance
with the terms and conditions hereof, except as enforceability may be
limited by (i) any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditor's rights generally, or
(ii) general principles of equity, whether considered in a proceeding
in equity or at law; and,
(d) Such Party has obtained all authorizations, consents and approvals,
governmental or otherwise, necessary for the execution and delivery of
this Agreement, and to otherwise perform such Party's obligations
under this Agreement.
7.2 Additional ▇▇▇ Representations and Warranties. Upon the Effective Date, ▇▇▇
hereby represents and warrants to CRTX that:
(a) The Promotional Materials are not false or misleading in any material
respect, and are substantially in compliance with the Act and all
rules and regulations of the FDA;
(b) The ▇▇▇ Patents are issued, outstanding and in full force. ▇▇▇ has
sued Sepracor, Inc. for infringement of DEY's United States Patents
Nos. 6,667,334 and 6,814,952 (▇▇▇, ▇.▇. and ▇▇▇, Inc., Plaintiffs, v.
Sepracor Inc., Defendant, United States District Court, Southern
District of New York, Case No. 1:07-cv-2353). Sepracor has
counterclaimed, alleging the ▇▇▇ Patents are invalid, unenforceable,
and for non-infringement. Subject to the vagaries inherent in any
litigation, ▇▇▇ believes that the ▇▇▇ Patents are, or are likely to be
held, valid and/or enforceable.
(c) Except as otherwise indicated in Schedules 1.18 and 1.19, (i) ▇▇▇ is
the sole and exclusive owner of, or controls and has the exclusive
rights to use, license and/or sublicense in the Territory, the ▇▇▇
Patents and the ▇▇▇ Trademarks, and the ▇▇▇ Patents and ▇▇▇ Trademarks
are owned
32
by ▇▇▇ and are not subject to any encumbrance, lien or claim of
ownership by any Third Party; (ii) ▇▇▇ has not granted to any Third
Party any license, or other rights to use the ▇▇▇ Patents or the ▇▇▇
Trademarks in the Territory or to import, manufacture, distribute,
use, sell or offer to sell any of the Product in the Territory, which
conflict with the rights granted to CRTX hereunder; and, (iii) at no
time during the Term shall ▇▇▇ encumber or grant rights in or with
respect to the ▇▇▇ Patents or the ▇▇▇ Trademarks that conflict with
the rights granted to CRTX under this Agreement;
(d) The manufacture, authorized use, importation and/or sale of any
Product in the Territory does not infringe or misappropriate any
United States patents and/or trademarks and, to the knowledge of ▇▇▇,
any other intellectual property right of any Third Party;
(e) The data and information that may be provided to CRTX prior to the
Effective Date relating to (i) pre-clinical and clinical study results
and protocols related to the Product; (ii) any communications to and
from any Regulatory Authority with respect to the Product, including
any regulatory submissions and filings, correspondence with, and
minutes of meetings and telephone conferences with Regulatory
Authorities; and (iii) Adverse Events and other IND safety reports
with respect to any of the Product, has been accurate and complete in
all material respects and ▇▇▇ has made no material misrepresentation
or material omission in connection with such data and information. No
information has come to the attention of ▇▇▇ as would render the NDA
for any Product untrue, incomplete or inaccurate in any material
respect;
(f) All Finished Product and Samples manufactured and supplied by or on
behalf of ▇▇▇ during the Term has been and will be manufactured in
accordance with and will conform to the specifications of such
Product, cGMPs, other applicable FDA and other regulatory standards
and such quality assurance and quality control practices as are
standard in the pharmaceutical manufacturing industry;
33
(g) ▇▇▇ is the owner of the registration of the ▇▇▇ Trademarks and no
claim or demand has been asserted in writing against ▇▇▇ as of the
Effective Date alleging trademark infringement resulting from the use
and/or registration of the ▇▇▇ trademarks;
(h) The Annual / Quarterly Retail Baseline Units set forth on Schedule 1.5
are the same as the Retail Units that ▇▇▇ uses for its internal
planning purposes for manufacturing, supply chain and sales incentive
compensation; and,
(i) ▇▇▇ has full legal rights to grant the rights and licenses described
under this Section pursuant to its own ownership rights.
7.3 DISCLAIMERS. EXCEPT AS PROVIDED ELSEWHERE IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, STATUTORY, OR BY OPERATION OF LAW OR OTHERWISE, AND EACH PARTY
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT AND SUITABILITY OF THE PRODUCT AND/OR THE
CO-PROMOTION SERVICES TO BE PROVIDED HEREUNDER.
ARTICLE 8
TRADEMARK MATTERS
8.1 General. Solely on the terms and conditions set forth herein, it is the
intent of the Parties to use the CRTX Trademarks and the ▇▇▇ Trademarks only on
and in connection with the marketing, sale, advertising and/or Promotion of the
Product in the Territory in the Field during the Term. Subject to the terms and
conditions of this Agreement, each of the Parties grants to the other Party and
its Affiliates a non-transferable right to use its respective trademarks in
connection with the performance of such Party's obligations pursuant to this
Agreement. Each Party expressly reserves the sole and exclusive ownership of its
respective trademarks and all rights relating thereto, including the right to
control the use by the other Party and to establish standards for such use. Use
of the trademarks of a Party under this Agreement shall inure to the benefit of
such Party.
34
8.2 Maintenance. Each Party shall use Commercially Reasonable Efforts to
maintain all registrations of its respective trademarks referenced in Section
8.1 above in the Territory. If necessary to permit the other Party to use its
trademark in connection with the performance of such other Party's obligations
pursuant to this Agreement, a Party shall make application to register the other
Party as a permitted user or registered user of its trademark.
8.3 Enforcement. During the Term, each Party shall promptly notify the other of
any actual, alleged or threatened infringement of such Party's trademark or of
any unfair trade practices, passing off of counterfeit goods, or similar
offenses of which it becomes aware. Each Party reserves the right to determine,
in its sole discretion, whether to and to what extent to institute, prosecute or
defend any actions or proceedings involving or affecting any rights relating to
such Party's trademark in the Territory. Upon a Party's reasonable request, the
other Party shall cooperate with and assist such Party in its enforcement
efforts with respect to its trademark. The Party to whom the trademark belongs
shall be responsible for all costs and expenses incurred by either Party at the
first Party's request in connection with any such action defending its
trademark, and, following each Party's recovery of its respective costs and
expenses, the Parties will share all money damages, if any, recovered in
connection with such action in proportion to the amount of damage actually
suffered by such Party.
ARTICLE 9
CONFIDENTIALITY AND PUBLICITY
9.1 Non-Disclosure and Non-Use Obligations. All Proprietary Information
disclosed by one Party to the other Party hereunder shall be maintained in
confidence and shall not be disclosed to any Third Party or used for any purpose
except as expressly permitted herein without the prior written consent of the
Party that disclosed the Proprietary Information to the other Party during the
Agreement Term and for a period of [**] years thereafter. The foregoing
non-disclosure and non-use obligations shall not apply to the extent that such
Proprietary Information:
35
(a) is known by the receiving Party at the time of its receipt, and not
through a prior disclosure by the disclosing Party, as documented by
the receiving Party's business records;
(b) is or becomes properly in the public domain or knowledge without
breach by either Party;
(c) is subsequently disclosed to a receiving Party by a Third Party who
may lawfully do so and is not under an obligation of confidentiality
to the disclosing Party; or
(d) is developed by the receiving Party independently of Proprietary
Information received from the other Party, as documented by the
receiving Party's research and development records.
9.2 Permitted Disclosure of Proprietary Information. Notwithstanding Section
9.1, a Party receiving Proprietary Information of another Party may disclose
such Proprietary Information:
(a) upon prior written approval of the other Party to governmental or
other regulatory agencies in order to obtain patents pursuant to this
Agreement, or to gain approval to conduct clinical trials or to market
Product, but such disclosure may be only to the extent reasonably
necessary to obtain such patents or authorizations and in accordance
with the terms of this Agreement or as otherwise requested by the FDA;
(b) by either Party to its agents, consultants or Affiliates for the
Promotion of Product or to otherwise enable such Party to fulfill its
obligations and responsibilities under this Agreement, on the
condition that such Third Parties and its Affiliates agree to be bound
by confidentiality obligations at least as restrictive as those in
this Agreement; or if required to be disclosed by law or court order,
provided that notice is promptly delivered to the non-disclosing Party
in order to provide an opportunity to challenge or limit the
disclosure obligations at the expense of the non-disclosing party,,
and the disclosing Party renders reasonable cooperation to the
non-disclosing Party in such effort; and
(c) to the extent required by legal or regulatory process, provided that
prior to any such disclosure the putative disclosing Party shall
inform the other Party and
36
allow such Party a reasonable time to seek at its expense a protective
order or other legal mechanism to avoid such disclosure.
9.3 Disclosure of Agreement. Without limiting any of the foregoing, it is
understood that the Parties or their Affiliates may make disclosure of this
Agreement and the terms hereof in any filings required by the SEC, other
governmental authority, the NASDAQ Global Market, or other securities exchange,
may file this Agreement as an exhibit to any filing with the SEC, other
governmental authority or securities exchange, and may distribute any such
filing in the ordinary course of its business; provided, however, that each
Party shall be given the opportunity to review the redacted version (if any) of
this Agreement prior to filing and provide comments within [**] Business Days.
9.4 Other Public Statements. Except as set forth in this Agreement or as
required by law, including federal and state securities laws or the rules or
regulations of any stock exchange (including the NASDAQ Global Market) or
quotation service on which the disclosing Party's securities are listed or
traded, neither Party shall make any press release or other public announcement
or other disclosure to a Third Party concerning the existence of or terms of
this Agreement or the subject matter hereof without the prior written consent of
the other Party, which consent shall not be unreasonably withheld. Each Party
agrees to provide to the other Party a copy of any public announcement as soon
as reasonably practicable under the circumstances prior to its scheduled
release. Each Party shall have the right to expeditiously (but in any event
within forty-eight (48) hours of receipt) review and recommend changes to any
press release or announcement regarding this Agreement or the subject matter of
this Agreement; provided, however, that such right of review and recommendation
shall only apply for the first time that specific information is to be
disclosed, and shall not apply to the subsequent disclosure of substantially
similar information that has previously been disclosed unless there have been
material developments relating to Product since the date of the previous
disclosure.
9.5 Trading in Securities. ▇▇▇ acknowledges and agrees that (i) CRTX is a
publicly-held company and (ii) ▇▇▇ is aware and has advised its employees,
directors, officers and agents involved in the relationship with CRTX that
applicable securities laws prohibit any person who is
37
aware of material, non-public information about a company obtained directly or
indirectly from that company from purchasing or selling securities of such
company or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.
ARTICLE 10
ORDERS AND SUPPLY
10.1 Orders and Terms of Sale. ▇▇▇ shall (i) receive, accept and fill orders for
Product; (ii) reject orders for Product based on a negative credit assessment
for a prospective customer (as determined in DEY's reasonable discretion); (iii)
control invoicing, order processing and collection of accounts receivable for
sales of Product; and, (iv) book and record all sales of Product in its books of
account.
10.2 Mis-directed Orders. Except in the event specifically authorized in writing
to do so by ▇▇▇, (i) CRTX will not accept or fill purchase orders for Product
and will not process billing or returns with respect to Product (and in any
event CRTX shall have no obligation to do so); and (ii) at no time shall CRTX
have any power or authority to accept or reject orders on behalf of ▇▇▇. If, for
any reason, CRTX receives orders for Product, CRTX shall forward such orders to
▇▇▇ immediately for acceptance or rejection. Such communications shall be
directed to ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇. Director Sales at ▇▇▇, or another designee.
10.3 Product and Sample Returns. If any quantities of Product, excluding
Samples, are returned to CRTX, CRTX shall notify ▇▇▇ in writing within [**]
Business Days and promptly ship them to the facility designated by ▇▇▇, with any
shipping or other associated out-of-pocket costs to be paid by ▇▇▇. Such
communications for Products shall be directed to [**] at ▇▇▇, unless otherwise
notified. For Samples, returns shall be processed according to DEY's procedure,
Applicable Laws and PDMA, and the contact for such shall be [**], at DEY's
Allen, TX distribution facility, or another designee. In the absence of [**],
the alternate contact person at DEY's Allen, TX distribution facility shall be
[**], unless otherwise notified.
38
10.4 Supply Obligations. Subject to the terms and conditions of this Agreement,
▇▇▇ shall use Commercially Reasonable Efforts to supply or cause to be supplied
all requirements of Finished Product and Samples of Product for use in the
Territory during the Term. ▇▇▇ shall use Commercially Reasonable Efforts to
produce sufficient supplies of Finished Product and of Samples of Product to
meet the Forecast requirements at all times during the Term and to distribute
Finished Product and Samples of Product in the Territory such that no material
shortages of Finished Product and/or Samples of Product occur during the Term.
▇▇▇ shall promptly, but in no event later than [**] Business Days after becoming
aware thereof, inform CRTX in writing of any material shortages that occur
during the Term and of the steps that ▇▇▇ is taking to correct any such
situation. Every [**] months, CRTX shall provide ▇▇▇ with a non-binding rolling
[**] month forecast of Sample Product requirements; this forecast shall be
considered an estimated forecast to be used for planning purposes and shall not
be construed as a binding commitment by CRTX to ▇▇▇.
10.5 Conformity / Specifications / Quality Control. All Finished Product and
Samples supplied, distributed and sold by or on behalf of ▇▇▇ in the Territory
during the Term shall (i) be manufactured, packaged and labeled in accordance
with cGMPs and with Applicable Laws; (ii) not be adulterated or misbranded; and
(iii) meet and comply with each Product's Specifications contained in the
applicable NDA. ▇▇▇ shall conduct, or cause to be conducted, quality control
testing of Product, in accordance with such specifications, prior to shipment
and prepare and retain records pertaining to such testing in accordance with the
NDA, Applicable Laws and DEY's internal standard operating procedures. In the
event of any failure to comply with this Section 10.5 (other than a failure due
to ▇▇▇'▇ ▇▇▇▇▇ negligence or intentional misconduct), DEY's sole and exclusive
liability to CRTX under this Agreement, and CRTX's sole and exclusive remedy,
shall be that ▇▇▇ shall replace the non-conforming Product.
ARTICLE 11
INDEMNIFICATION AND INSURANCE
39
11.1 Indemnification by ▇▇▇. ▇▇▇ will indemnify, defend and hold harmless CRTX
and its Affiliates, employees, officers and directors and its successors and
assigns (each, a "CRTX Indemnified Party") from and against any Claims and
Losses, in each case that a CRTX Indemnified Party may incur, suffer or be
required to pay, arising out of or attributable to a Third Party claim or action
based upon (i) the manufacture, testing, storage, marketing, sale, distribution,
use or Promotion of any Product by ▇▇▇ in breach of this Agreement; (ii) DEY's
negligence, gross negligence, recklessness or willful misconduct in exercising
or performing any of its rights or obligations under this Agreement; (iii) a
material breach by ▇▇▇ of any of its representations or warranties under this
Agreement; (iv) any failure by ▇▇▇ to Promote the Product substantially in
accordance with the FDA-approved labeling, the Promotional Materials and the
contractual provisions provided by ▇▇▇ for distribution to customers, and all
Applicable Laws; (v) the content or legal sufficiency of the NDA for any Product
or the Promotional Materials relating to any Product; or (vi) the manufacture of
any Product and/or the Promotion, authorized use, importation, offer for sale,
or sale by ▇▇▇, CRTX or any of their respective Affiliates in the Territory of
any Product that is determined by a court of proper jurisdiction to infringe
upon any Third Party's United States patent rights, copyrights or trademarks;
provided, however, ▇▇▇ shall not be obligated under this Section 11.1 to the
extent it is shown by evidence acceptable in a court of law having jurisdiction
over the subject matter and meeting the appropriate degree of proof for such
Claim that the Claim arose out of (A) a material breach by CRTX of any of its
obligations, representations, warranties or covenants under this Agreement; (B)
negligence, gross negligence, recklessness or willful misconduct on the part of
any CRTX Indemnified Party; or, (C) misuse of the Product not attributable to
▇▇▇.
11.2 Indemnification by CRTX. CRTX will indemnify, defend and hold harmless ▇▇▇
and its Affiliates, employees, officers and directors, and its successors and
assigns, (each, a "▇▇▇ Indemnified Party") from and against any Claims or
Losses, in each case that a ▇▇▇ Indemnified Party may incur, suffer or be
required to pay arising out of or attributable to (i) the Promotion of any
Product by CRTX; (ii) CRTX's negligence, gross negligence, recklessness or
willful misconduct in exercising or performing any of its rights or obligations
under this Agreement; (iii) a material breach by CRTX of any of its
representations or warranties under this Agreement; or (iv) any failure by CRTX
to Promote the Product substantially in accordance with the FDA-approved
labeling, the Promotional Materials and the contractual provisions provided
40
by ▇▇▇ for distribution to customers, and all Applicable Laws; provided,
however, that CRTX shall not be obligated under this Section 11.2, to the extent
it is shown by evidence acceptable in a court of law having jurisdiction over
the subject matter and meeting the appropriate degree of proof for such Claim
that the Claim arose out of (A) a failure to warn, a product design, or a
manufacturing defect attributable to ▇▇▇ (regardless of legal theory, including,
without limitation, product liability, strict liability and/or negligence); (B)
a material breach by ▇▇▇ of any of its obligations, representations, warranties
or covenants under this Agreement; (C) negligence, gross negligence,
recklessness or willful misconduct on the part of any ▇▇▇ Indemnified Party; or,
(D) misuse of the Product not attributable to CRTX.
11.3 Indemnification Procedure. Each Party shall promptly notify the other Party
in writing of any Claim. Concurrently with the provision of notice pursuant to
this section, the Indemnified Party shall provide to the other Party copies of
any complaint, summons, subpoena or other court filings or correspondence
related to such Claim and will give such other information with respect thereto
as the other Party shall reasonably request. The Party obligated to indemnify
the other Party pursuant to this Section 11 (the "Indemnifying Party") and the
party or parties entitled to such indemnification (the "Indemnified Party")
shall meet to discuss how to respond to such Claim. Failure to provide prompt
notice shall not relieve any Party of the duty to defend or indemnify unless
such failure prejudices the defense of any matter. Each Party agrees that it
will take reasonable steps to minimize the burdens of the litigation on
witnesses and on the ongoing business of the Indemnified Party including,
without limitation, making reasonable accommodations to witnesses' schedules
when possible and seeking appropriate protective orders limiting the duration
and/or location of depositions.
11.4 Defense of Claims. Each Party shall undertake the defense of the Claims
that it has obligated itself to defend and indemnify the other Party against in
this Section 11 (provided that if the obligated Party declines or fails to
assume such role thirty (30) days after receiving written notice of such Claim,
then the other Party shall be entitled to assume such role at the obligated
Party's expense). The Indemnified Party shall have the right to participate in
the defense of any such Claim utilizing attorneys of its choice, at its own
expense. The Indemnified Party shall have a reasonable opportunity to
participate in decision-making with respect to the strategy of such defense, and
the Parties shall reasonably cooperate with each other in connection with the
41
implementation thereof. Each Party shall keep any counsel selected by the other
Party reasonably informed of the status and progress of the defense and shall
consult with any counsel selected by the other Party on all material aspects of
the defense, including, without limitation, settlement, of such Claim.
11.5 Settlement of Indemnified Claims. The Indemnifying Party shall have the
sole authority to settle any indemnified Claim without the consent of the other
Party, provided, however, that an Indemnifying Party shall not, without the
written consent of the Indemnified Party, as part of any settlement or
compromise (i) admit to liability on the part of the Indemnified Party; (ii)
agree to an injunction against the Indemnified Party; or (iii) settle any matter
in a manner that separately apportions fault to the Indemnified Party. The
Parties further agree that as part of the settlement of any Indemnified Claim,
an indemnifying party shall obtain a full, complete and unconditional release
from the claimant on behalf of the Indemnified Parties.
11.6 Insurance. Each Party shall obtain and maintain, as of the Detail
Commencement Date and for a period of at least one (1) year after any expiration
of termination of this Agreement, a Commercial General Liability Insurance
policy or policies or extended reporting period under a policy or policies
(including coverage for Contractual Liability, Bodily Injury, Property Damage
and Personal Injury), with minimum limits of per occurrence of at least $10
million and in the aggregate of at least $10 million. Each Party also shall
obtain and maintain, as of the Detail Commencement Date and for a period of at
least one (1) year after any expiration or termination of this Agreement, other
policies of insurance with commercially appropriate limits of coverages that are
usual and ordinary in the day-to-day conduct of its business to meet all of its
obligations hereunder. Upon request each Party shall provide any applicable
Certificates of Insurance to the other Party evidencing the coverage specified
herein. Except as expressly stated herein, a Party's liability to the other is
in no way limited to the extent of the Party's insurance coverage. ▇▇▇ shall
obtain and maintain, as of the Detail Commencement Date and for a period of at
least six (6) years after any expiration of termination of this Agreement, a
products liability insurance policy or policies or extended reporting period
under a policy or policies, with minimum limits of per occurrence of at least
$10 million and in the aggregate of at least $10 million.
42
11.7 Limitation of Liability - Indirect Damages. IN NO EVENT SHALL EITHER PARTY
BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY,
PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES, OR FOR LOSS OF PROFITS, LOSS OF
DATA OR LOSS OF USE DAMAGES, ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE MANUFACTURE, SALE, SUPPLYING OR FAILURE OR DELAY IN SUPPLYING OF
THE PRODUCTS OR SERVICES RELATED THERETO, WHETHER BASED ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇ LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES OR LOSSES.
11.8 Limitation of Liability - Aggregate. EACH PARTY'S AGGREGATE LIABILITY
ARISING OUT OF THIS AGREEMENT, INCLUDING THE MANUFACTURE, SALE, SUPPLYING OR
FAILURE OR DELAY IN SUPPLYING OF THE PRODUCTS OR THEIR USE OR DISPOSITION,
WHETHER BASED ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ LIABILITY OR OTHERWISE,
SHALL NOT EXCEED $10,000,000.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Expiration. The "Term" will begin on the Effective Date, and,
unless terminated earlier pursuant to Section 12.2, shall continue for a period
expiring on December 31, 2013; provided, however, the Term may be extended upon
mutual agreement by the Parties or this Agreement may be earlier terminated as
further described below in Section 12.2.
12.2 Termination and Effects.
(1) This Agreement may be terminated by CRTX by providing ▇▇▇ a minimum of
ninety (90) days prior written notice at any time after June 30, 2008.
(2) Either Party may terminate this Agreement prior to expiration of the Term in
the event
43
that the other Party materially breaches or defaults in the performance of any
of its obligations hereunder, and has not cured such breach within [**] days
after notice requesting cure of the breach has been received. The Parties agree
that if CRTX fails to achieve at least [**] percent ([**]%) of its Detailing
requirements set forth in Section 4.3(1) this Agreement for any three (3) month
period, such failure shall constitute a material breach unless the Parties agree
otherwise in writing.
(3) Either Party may terminate this Agreement in the event that Zileuton
Co-Promotion Agreement is terminated by providing the other Party a minimum of
ninety (90) days prior written notice.
(4) If CRTX signs a definitive agreement to be acquired by or merged with a
Third Party that markets, manufacturers, sells, details or promotes a product
containing FAPI for sale in the Territory, each Party will have the option to
terminate this Agreement upon at least three (3) business days prior written
notice to the other Party.
(5) The right of either ▇▇▇ or CRTX to terminate this Agreement as provided in
this Section 12 shall not be affected in any way by such Party's waiver or
failure to take action with respect to any previous breach or default.
(6) Either Party may terminate this Agreement upon the filing or institution of
bankruptcy, reorganization, liquidation or receivership proceedings, or upon an
assignment of a substantial portion of the assets for the benefit of creditors
by the other Party; provided, however, that in the case of any involuntary
bankruptcy, reorganization, liquidation, receivership or assignment proceeding
such right to terminate shall only become effective if the Party consents to the
involuntary proceeding or such proceeding is not dismissed within ninety (90)
days after the filing thereof.
12.3 Effect of Expiration or Termination.
44
(1) Expiration or termination of this Agreement shall not relieve either Party
of any obligation accruing prior to such expiration or termination, including,
without limitation, the obligation to satisfy all accrued payment obligations
arising hereunder. In addition, the Parties shall have the following obligations
upon the expiration or termination of this Agreement: (i) CRTX shall promptly
return to ▇▇▇ any and all Promotional Materials and Samples not delivered to
customers, and CRTX shall receive a full refund for all Samples it has paid for
and returned; and (ii) each Party shall (and shall cause its respective agents,
employees and subcontractors to) return or destroy, as the owner may direct, any
and all documentation in any medium that contains, refers to, or relates to the
other Party's Proprietary Information.
(2) In addition to any other provisions of this Agreement which by their express
terms continue after the expiration of this Agreement, the provisions of Article
9, Article 11 and this Article 12.3 shall survive the expiration or termination
of this Agreement and shall continue in effect for at least six (6) Years from
the date of expiration or termination. In addition, any other provisions
required to interpret and/or enforce the Parties' rights and obligations under
this Agreement shall also survive, but only to the extent required for the full
observation and performance of this Agreement. Any expiration or early
termination of this Agreement shall be without prejudice to the rights of any
Party against the other accrued or accruing under this Agreement prior to
termination. Except as expressly set forth herein, the rights to terminate as
set forth herein shall be in addition to all other rights and remedies available
under this Agreement, at law, or in equity, or otherwise.
ARTICLE 13
MISCELLANEOUS
13.1 Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached the Agreement for
failure or delay in fulfilling or performing any term of the Agreement during
the period of time when such failure or delay is caused by or results from
factors beyond the reasonable control of a Party, including, without limitation,
fire, flood, earthquake, explosion, storm, blockage, embargo, war, acts of war
(whether war be declared or not), terrorism, insurrection, riot, civil
commotion, strike, lockout or other labor disturbance, failure of public
utilities or common carriers, act of God or act, omission
45
or delay in acting by any governmental authority or the other Party. The
affected Party shall notify the other Party of such force majeure circumstances
as soon as reasonably practicable, but in no event later than five (5) days
after the commencement of the Force Majeure circumstances. Either Party may
terminate upon thirty (30) days written notice if a Force Majeure event
continues beyond sixty (60) days.
13.2 Assignment. The Agreement may not be assigned or otherwise transferred
without the prior written consent of the other Party; provided, however, either
Party may, subject to the terms and conditions of this Agreement, assign this
Agreement to an Affiliate or in connection with the transfer or sale of its
business or all or substantially all of its assets or in the event of a merger,
consolidation, change in control or similar corporate transaction, without such
consent. This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties. Any permitted assignee shall
assume in writing all obligations of its assignor under this Agreement. Any
assignment not in accordance with this Agreement shall be void.
13.3 Severability. In the event that any of the provisions contained in this
Agreement are held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affects the substantive rights of the
Parties. In such event, the Parties covenant and agree to renegotiate any such
term, covenant or application thereof in good faith in order to provide a
reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the Parties that the basic purposes of this Agreement are to be
effectuated.
13.4 Notices. Notices and communications (including but not limited to notices
of termination, force majeure, material breach, change of address, or any other
notices required by this Agreement) shall be in writing and shall be deemed to
be effective upon receipt or documented refusal to receive, if delivered in
person, if sent by overnight courier service (e.g., FedEx), postage prepaid, or
if sent by prepaid registered or certified air mail, return receipt requested,
to the following persons at the following addresses of the Parties (or to such
other person or
46
persons or address or addresses as may be specified from time to time in a
written notice by either Party):
IF TO ▇▇▇: ▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President / Chief
Executive Officer
Attention: SVP, Legal Affairs
IF TO CRTX: CRITICAL THERAPEUTICS, INC.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
Attention: General Counsel
13.5 Specific Performance. Each of the Parties acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in all material respects or otherwise are
breached. Accordingly, and notwithstanding anything herein to the contrary, each
of the Parties agree that the other Party shall be entitled to seek injunctive
relief to prevent breaches of the provisions of this Agreement, and/or to
enforce specifically this Agreement and the terms and provisions hereof, in any
action instituted in any court or tribunal having jurisdiction over the Parties
and the matter, without posting any bond or other security, and that such
injunctive relief shall be in addition to any other remedies to which such Party
may be entitled, at law or in equity.
13.6 Applicable Law and Dispute Resolution. This Agreement shall be governed by
the laws of the State of New York, without regard to the conflict of laws
provisions thereof. The Parties agree to attempt initially to solve all claims,
disputes, or controversies arising under, out of, or in connection with this
Agreement (a "Dispute") by promptly conducting good faith negotiations. Any
Disputes which cannot be resolved by good faith negotiation within thirty (30)
Business Days, shall be referred, by written notice from either Party to the
other, to the Chief Executive Officers of both Parties. Such Chief Executive
Officers shall negotiate in good faith to achieve a
47
resolution of the Dispute referred to them within thirty (30) Business Days
after such notice is received. If the Chief Executive Officers are unable to
settle the Dispute between them within thirty (30) Business Days, they shall so
report to the Parties in writing. The Dispute shall then be referred to
mediation as set forth in the following paragraph.
For any such unresolved Dispute between the Parties, either Party shall give the
other written notice to pursue mediation. Within thirty (30) days following the
delivery of such notice, the parties shall participate in good faith in
non-binding mediation at the New York, New York office of J.A.M.S./ENDISPUTE.
Each party agrees to pay its own costs in connection with the mediation, as well
as its share the fees and costs of J.A.M.S./ENDISPUTE in connection with the
mediation. If the dispute is not resolved by mediation, either party may file an
action in any court of competent jurisdiction in the City of New York, State of
New York; provided, however, no party to any such action shall be entitled to
punitive, exemplary, special, indirect, consequential, or similar damages of any
kind, including lost profits and lost business opportunity.
13.7 Entire Agreement. This Agreement, including the exhibits, appendices, and
schedules hereto, contains the entire understanding of the Parties with respect
to the subject matter hereof. For the avoidance of doubt, this Agreement
supersedes the Binding Letter Agreement executed March 13, 2007, as amended, in
its entirety. All express or implied agreements and understandings, either oral
or written, heretofore made, including any offering letters or term sheets, are
expressly superseded by this Agreement. Notwithstanding the foregoing in this
Section 13.7 or anything to the contrary herein, the Zileuton Co-Promotion
Agreement shall not be affected by or superseded by this Agreement. This
Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by all Parties hereto.
13.8 Independent Contractors. It is expressly agreed that the Parties shall be
independent contractors and that the relationship between the Parties shall not
constitute a partnership, joint venture or agency. Neither Party 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
consent of such other Party.
48
13.9 Waiver. The waiver by a Party hereto of any right hereunder or the failure
to perform or of a breach by another Party shall not be deemed a waiver of any
other right hereunder or of any other breach or failure by said other Party
whether of a similar nature or otherwise.
13.10 Headings / References. The captions to the Articles and Sections hereof
are not a part of the Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof. Any reference in
this Agreement to an Article, Exhibit, Schedule, Appendix or Section shall,
unless otherwise specifically provided, be to an Article, Exhibit, Schedule,
Appendix or Section of this Agreement.
13.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which, together,
shall constitute one and the same Agreement. This Agreement, once executed by
either Party, may be delivered via electronic facsimile transmission with the
same force and effect as if it were executed and delivered by the Parties in the
presence of one another.
13.12 No Third Party Beneficiaries. Except as specifically set forth herein, no
provision of this Agreement shall be for the benefit of, or be enforceable by,
any Third Party, including without limitation any creditor of either Party
hereto. No such Third Party shall obtain any right under any provision of this
Agreement or shall by reasons of any such provision make any claim in respect of
any debt, liability or obligation (or otherwise) against either Party hereto.
13.13 No Benefits. Employees and Sales Representatives of a Party are not
eligible to participate in any benefits programs offered by the other Party to
its employees, or in any pension plans, profit sharing plans, insurance plans or
any other employee benefit plans offered from time to time by it to its
employees. Each Party acknowledges and agrees that the other Party shall not be
responsible for, and shall not maintain or procure, any worker's compensation or
unemployment compensation insurance for or on behalf of the first Party's
employees or Sales Representatives. Each Party shall be solely responsible for
any personal injury or property damage suffered by the Party, its employees, its
Sales Representatives or its agents in the course of carrying out any duties
under this Agreement. Each Party acknowledges and agrees that it shall be solely
responsible for paying all salaries, wages, benefits and other
49
compensation which its employees, its Sales Representatives or its agent may be
entitled to receive in connection with the performance of the services here
under and that each Party shall likewise be liable for all taxes, excises,
assessments and other charges levied by any government authority on, or because
of, the services to be provided by it under the terms of this Agreement.
13.14 Non-Solicitation: For the duration of this Agreement and a period of six
(6) months after the termination or expiration of the Agreement, neither Party,
without the prior written consent of the other Party, shall directly solicit to
employ any person who within the prior six (6) months was employed in any
capacity by the other Party (a "Covered Person"); provided, however, that this
Section 13.14 shall not prevent a Party from hiring a Covered Person if: (1)
such Covered Person contacts the party on the Covered Person's own initiative
without any direct or indirect solicitation by or encouragement from such party;
(2) such Covered Person's employment with the other party was terminated by such
other party, or (3) such Covered Person responds to a general solicitation of
employment not specifically directed towards the other Party or particular
employees of the other Party.
SIGNATURE PAGE FOLLOWS BELOW
50
SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the
Effective Date, intending to be bound hereby.
▇▇▇, ▇.▇.,
BY ▇▇▇, INC., ITS GENERAL PARTNER
BY: /s/ J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
NAME: J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TITLE: President / CEO
DATE: June 25, 2007
CRITICAL THERAPEUTICS, INC.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TITLE: President and CEO
DATE: June 25, 2007
THE FOLLOWING SCHEDULES ARE ATTACHED HERETO:
SCHEDULE 1.5 Annual / Quarterly Retail Baseline Units or ARBU / QRBU for FFIS
SCHEDULE 1.14 CRTX Trademarks
SCHEDULE 1.19 ▇▇▇ Patents
SCHEDULE 1.20 ▇▇▇ Trademarks
SCHEDULE 3.1 Alliance Managers
51
SCHEDULE 1.5
ANNUAL / QUARTERLY RETAIL BASELINE UNITS OR ARBU / QRBU
For 2007 through 2009, the Annual/Quarterly Retail Baseline Units for FFIS shall
be as follows:
(in [**])
YEAR 2007 2008 2009
---- ---- ---- ----
ARBU [**] [**] [**]
QRBU 3rd Quarter [**]and 1st Quarter is [**]; *
4th Quarter is [**]. 2nd Quarter is [**]; 3rd
Quarter is [**]; and 4th
Quarter [**]
* QRBU for each Year starting January 1, 2009 and later will be provided by
▇▇▇ by December 31 of the immediately preceding Year based on DEY's
internal forecast for retail sales of Product for such period.
52
SCHEDULE 1.14
CRTX TRADEMARKS
ZYFLO(R)
ZYFLO CR(TM)
▇▇▇.▇▇▇▇▇.▇▇▇
▇▇▇.▇▇▇▇▇▇▇.▇▇▇
53
SCHEDULE 1.19
▇▇▇ PATENTS
The ▇▇▇ Patents are issued, outstanding and in full force, and are United States
Patents Nos. 6,667,334 and 6,814,952.
54
SCHEDULE 1.20
▇▇▇ TRADEMARKS
▇▇▇
▇▇▇ LOGO
Perforomist
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
55
SCHEDULE 3.1
ALLIANCE MANAGERS
▇▇▇ DESIGNEE: [**]
CRTX DESIGNEE: [**]
56