EXHIBIT 10.1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
COPROMOTION AND FUTURE DEVELOPMENT AGREEMENT
BETWEEN
KOS PHARMACEUTICALS, INC.
AND
DUPONT PHARMACEUTICALS COMPANY
May 3, 2000
Table of Contents
1. Definitions..............................................................1
1.1 Adverse Event(s)............................................1
1.2 Affiliate...................................................1
1.3 Business Day................................................2
1.4 Cost Of Distribution........................................2
1.5 Cost Of Manufacture.........................................2
1.6 Development Committee.......................................2
1.7 Effective Date..............................................2
1.8 FDA.........................................................2
1.9 Joint Copromotion Activities................................2
1.10 Joint Marks.................................................2
1.11 Kos Trademark...............................................2
1.12 Know-How....................................................2
1.13 Marketing Committee.........................................3
1.14 Minimum Product Details.....................................3
1.15 NDA.........................................................3
1.16 Net Operating Profit........................................3
1.17 Net Sales...................................................3
1.18 Other Copromotion Activities................................3
1.19 Party(ies)..................................................3
1.20 Patents.....................................................3
1.21 Product.....................................................4
1.22 Product Detail(s)...........................................4
1.23 Product Development Costs...................................4
1.24 Safety Surveillance Cost....................................4
1.25 Shared Copromotion Expenses.................................4
1.26 Term........................................................5
1.27 Territory...................................................5
1.28 Third Party(ies)............................................5
1.29 Year........................................................5
2. Grant of Rights..........................................................5
3. Term, Termination and Renegotiation......................................5
3.1 Term........................................................5
3.2 Early Termination...........................................5
3.3 Renegotiation...............................................6
4. Fees and Payments........................................................6
4.1 Stock Purchase Agreement....................................6
4.2 Fees........................................................6
4.3 Reimbursements..............................................6
4.4 Product Profits.............................................6
4.5 Payments....................................................7
4.6 Taxes.......................................................7
5. Development.............................................................7
5.1 Development Committee.......................................7
5.2 Responsibilities of Development Committee...................7
5.3 Meetings of the Development Committee.......................8
5.4 Product Development Activities..............................8
5.5 Funding of Product Development..............................9
5.6 Publications...............................................10
6. Copromotion.............................................................10
6.1 Marketing Committee........................................10
6.2 Responsibilities of Marketing Committee....................10
6.3 Meetings of Marketing Committee............................11
6.4 Joint Copromotion Activities...............................12
6.5 Other Copromotion Activities...............................13
6.6 Joint Copromotion Costs....................................14
6.7 Shared Copromotion Expenses................................15
6.8 Other Copromotion Matters..................................15
7. Manufacturing and Supply................................................16
7.1 Kos Responsibilities.......................................16
7.2 Safety Surveillance Cost...................................17
7.3 Cost of Manufacture........................................17
8. Regulatory, Safety and Surveillance.....................................17
8.1 Regulatory Matters.........................................17
8.2 Adverse Events.............................................18
9. Audit Rights............................................................18
10. Intellectual Property...................................................18
10.1 Ownership of Intellectual Property.........................18
10.2 Patent Prosecution.........................................19
10.3 Notification of Patent Litigation.........................19
10.4 Patent Infringement........................................20
10.5 Title to Trademarks........................................20
10.6 Trademark License..........................................20
10.7 Joint Marks................................................20
10.8 Maintenance of Trademarks..................................20
10.9 Notification of Trademark Litigation.......................21
10.10 Trademark Infringement.....................................21
10.11 Information and Settlements................................21
11. Confidentiality.........................................................21
11.1 Disclosure of Know-How.....................................22
11.2 Confidential Information...................................22
11.3 Public Announcements.......................................22
12. Restrictive Covenants...................................................22
12.1 Non-solicitation...........................................22
12.2 Non-competition............................................23
13. Rights And Duties Upon Termination......................................23
13.1 Payment Obligations........................................23
13.2 Continuing Obligations.....................................23
13.3 Remedies...................................................24
14. Representations, Warranties and Indemnification.........................24
14.1 Representations of Kos.....................................24
14.2 Representations of DuPont..................................24
14.3 Indemnification by Kos.....................................25
14.4 Indemnification by DuPont..................................25
14.5 Limitations on Indemnification.............................25
14.6 Insurance..................................................26
15. Assignment..............................................................26
16. Notices.................................................................26
17. Miscellaneous...........................................................28
17.1 Force Majeure..............................................28
17.2 No Partnership or Joint Venture............................28
17.3 Execution In Counterparts..................................28
17.4 Governing Law..............................................28
17.5 Waiver Of Breach...........................................28
17.6 Severability...............................................29
17.7 Entire Agreement...........................................29
18. Dispute Resolution......................................................29
18.1 Internal Resolution........................................29
18.2 Arbitration................................................29
COPROMOTION AND FUTURE DEVELOPMENT AGREEMENT
This Copromotion and Future Development Agreement (hereafter, the
"Agreement") is entered into as of the 3rd day of May, 2000, by and between Kos
Pharmaceuticals, Inc., a Florida corporation ("Kos"), and DuPont Pharmaceuticals
Company, a Delaware general partnership ("DuPont"), for the development and
marketing of Kos' fixed-dose combination niacin and lovastatin Product (as
defined below).
Recitals
A. Kos is the owner of all right, title and interest in and to the
Product and desires to copromote the Product and jointly plan other
copromotion and future development activities for the Product with
DuPont in the Territory (as defined below).
▇. ▇▇▇▇▇▇ desires to copromote the Product and jointly plan other
copromotion and future development activities for the Product with
Kos in the Territory, and Kos is willing to ▇▇▇▇▇ ▇▇▇▇▇▇ such
rights, all on the terms and subject to the conditions set forth in
this Agreement.
C. Kos and DuPont desire to use their best efforts to work together to
achieve the launch of the Product in the United States as quickly as
possible, to aggressively promote the Product, and to optimize its
sales. Kos and DuPont desire to jointly and equally detail the
Product in the Territory.
D. Kos and DuPont shall on the date hereof enter into a Stock Purchase
Agreement pursuant to which DuPont shall purchase an equity interest
in Kos' common stock.
Agreement
1. Definitions
1.1 Adverse Event(s) shall mean those events as defined by the FDA and
published in the U. S. Code of Federal Regulations, as amended from time to time
and published in the Federal Register.
1.2 Affiliate shall mean any corporation, firm, partnership or other
entity that directly or indirectly owns, is owned by or is under common
ownership with a Party to the extent of at least fifty percent (50%) of the
equity or other ownership interest having the power to vote on or direct the
affairs of the entity and any
person, firm, partnership, corporation or other entity actually controlled by,
controlling or under common control with a Party.
1.3 Business Day shall mean a day on which commercial banks are open
for business in New York City. References in this Agreement to "days" other than
Business Days shall mean calendar days.
1.4 Cost Of Distribution shall be ****************** of Net Sales.
1.5 Cost Of Manufacture shall have the meaning set forth in Section
7.3.
1.6 Development Committee shall mean the committee established and
conducted in accordance with the procedures set forth in Article 5.
1.7 Effective Date shall mean the date upon which this Agreement is
effective and shall be the date this Agreement is entered into by both Parties.
1.8 FDA shall mean the United States Food and Drug Administration and
any successor agency thereto and shall be deemed a reference to the Health
Protection Bureau for matters applicable to Canada.
1.9 Joint Copromotion Activities shall have the meaning set forth in
Section 6.4.
1.10 Joint Marks shall mean any trademark, service ▇▇▇▇, copyright or
logo developed, applied for or registered or to be applied for or registered for
use in connection with educational activities or services, including "process of
care" materials or other jointly developed materials, not intended to be used
exclusively in association with the Product.
1.11 Kos Trademark shall mean NicostatinTM, a trademark owned by Kos in
the Territory, and any other trademark, service ▇▇▇▇ or logo developed, applied
for, registered, or to be applied for or registered for use in connection with
the sale of the Product in the Territory, but shall not include Joint Marks.
1.12 Know-How shall mean all present and future information developed
by Kos, whether or not in written form, that is not in the public domain and
that relates to the Product and shall include, without limitation, all
biological, chemical, pharmacological, toxicological, medical or clinical,
analytical, quality, manufacturing, research, or sales and marketing information
including all processes, methods, procedures, techniques, plans, programs, and
data and any other information relating to the Product or useful for the
development or commercialization of the Product in the Territory.
1.13 Marketing Committee shall mean the committee established and
conducted in accordance with the procedures set forth in Article 6.
2
1.14 Minimum Product Details shall mean the minimum number of Product
Details to be performed by each Party as determined in accordance with Section
6.4.
1.15 NDA shall mean a New Drug Application for the Product in
accordance with the requirements of the FDA.
1.16 Net Operating Profit shall mean Net Sales of the Product in the
Territory minus: (i) Cost of Distribution, Safety Surveillance Cost and Cost of
Manufacture; (ii) royalties payable to Third Parties; (iii) an amount equal to
** of Net Sales to be retained by Kos; and (iv) Shared Copromotion Expenses if
not previously reimbursed under Section 6.7(c) (including expenses prior to
first commercial sale).
1.17 Net Sales shall mean the gross receipts representing sales of the
Product in the Territory to Third Parties less the following deductions:
(i) if included in the aggregate gross invoice price of the
Product, sales and excise taxes, duties, and any other
governmental charges imposed upon the production, importation,
use or sale of such Product;
(ii) trade, quantity and cash discounts allowed on the Product;
(iii) allowances or credits to customers on account of rejection or
return of the Product or on account of price reductions
affecting such Product;
(iv) Product rebates and Product charge-backs including those
granted to managed care entities and pharmaceutical benefit
management service entities; and
(v) provisions for actual or expected write-offs of uncollectible
customer accounts for previously recorded sales or other
reserves or provisions established consistent with U.S.
Generally Accepted Accounting Principles ("GAAP").
1.18 Other Copromotion Activities shall have the meaning set forth in
Section 6.5.
1.19 Party(ies) shall mean each of Kos and DuPont.
1.20 Patents shall mean all patents and patent applications in the
Territory that are or become owned by Kos, or to which Kos otherwise has, now or
in the future, the right to grant licenses and license rights or sublicense and
sublicense rights, that generically or specifically cover the Product or a use
or formulation of the Product. Included within the definition of Patents are all
continuations, continuations-in-part, division, patents of addition, reissues,
renewals or extensions thereof. Also included within the definition of Patents
are any patents or patent
3
applications that generically or specifically claim any improvements on the
Product that are developed by Kos, or which Kos otherwise has the right to grant
licenses and license rights or sublicense and sublicense rights, now or in the
future, during the term of this Agreement. The current list of patent
applications and patents encompassed within Patents is set forth in Appendix A
attached hereto. Appendix A shall be updated by Kos at least annually during the
term of this Agreement, but the inadvertent failure to include an item on such
updates of Appendix A does not disqualify such item as a Patent under this
definition.
1.21 Product shall mean all strengths and dosage forms of Kos'
fixed-dose extended release niacin and lovastatin combination product, that is
the subject of Investigational New Drug application number 56,027 effective from
June 26, 1998, or its successor applications, for all indications approved by
the FDA at any time during the Term.
1.22 Product Detail(s) shall mean a face-to-face meeting, in an
individual or group practice or hospital setting, between (i) a professional
representative of the applicable Party, meeting the professional standards for
such representatives that are established by the Marketing Committee, and (ii) a
health care professional with prescribing authority, which health care
professional has been designated by the Marketing Committee as a member of the
target calling audience, during which a full presentation of the Product
attributes are orally presented. The presentation of the Product during any
Product Detail must be one of the *** presentations on which the most time is
spent during such meeting, for the period of time determined by the Marketing
Committee. When used as a verb, "Product Detail" shall mean to engage in a
Product Detail.
1.23 Product Development Costs shall mean those out-of-pocket costs
approved by the Development Committee incurred in connection with Product
Development Activities defined in Section 5.4. Product Development Costs do not
include any expenditures for studies commenced prior to the approval of the NDA
unless specifically approved by DuPont. The amounts and reimbursement of Product
Development Costs shall be determined in accordance with Sections 5.4 and 5.5.
1.24 Safety Surveillance Cost shall have the meaning set forth in
Section 7.2.
1.25 Shared Copromotion Expenses shall mean all expenses approved by
the Marketing Committee directly related to the selling, marketing or promotion
of the Product in the Territory for Other Copromotion Activities. Shared
Copromotion Expenses do not include each Party's costs for Joint Copromotion
Activities. The specific components and amounts of Shared Copromotion Expenses
shall be determined in accordance with Section 6.7.
4
1.25 Six-Month Period shall mean each period from January through June
and July through December of each Year.
1.26 Term shall have the meaning set forth in Section 3.1.
1.27 Territory shall mean the United States of America, its territories
and possessions, including Puerto Rico, and Canada.
1.28 Third Party(ies) shall mean any person or entity other than Kos
and DuPont or their Affiliates.
1.29 Year shall mean each twelve month period ending December 31 during
the Term.
2. Grant of Rights
Kos grants to DuPont the exclusive license right, to the extent of Kos'
rights and interests under the Patents and Know-How, to co-develop and copromote
the sale of the Product in the Territory, subject to Kos' right to co-develop
and copromote the Product in the Territory and all the other terms and
conditions of this Agreement. Kos shall retain all of its rights with respect to
the Product outside the Territory.
DuPont shall have the opportunity to negotiate for license rights to
the Product in ****** prior to *************************************************
******************************. In each case in which Kos is contemplating
granting any license rights to the Product in ****** prior to such date, once
Kos decides to pursue granting such rights or begins negotiations with a Third
Party regarding such rights, Kos shall not grant any such rights for a period of
90 days, during which 90-day period DuPont is given an opportunity to negotiate
for such rights that is at least equal to the opportunity given to any other
Third Party.
3. Term, Termination and Renegotiation
3.1 Term. This Agreement shall have an Initial Term of ten (10) years
beginning on the Effective Date, unless earlier terminated pursuant to Section
3.2 (the "Initial Term"). After the Initial Term, this Agreement shall
automatically renew for one (1) year renewal terms unless it is terminated by
either Party at least sixty (60) days before the end of the then current term
(the "Initial Term" and the renewal terms are collectively referred to as the
"Term").
3.2 Early Termination. Each Party shall have the right to terminate
this Agreement before the end of the Term (i) upon a material breach of this
Agreement by the other Party where such breach is not cured within ninety (90)
days following the other Party's receipt of written notice of such breach; (ii)
if the FDA withdraws marketing approval for the Product; (iii) upon the
bankruptcy or insolvency, or the
5
making or seeking to make or arrange an assignment for the benefit of creditors
of the other Party, or the initiation of proceedings in voluntary or involuntary
bankruptcy, or the appointment of a receiver or trustee of such Party's property
that is not discharged within ninety (90) days; (iv) if at least one patent
based on either of the patent applications U.S. Serial Numbers 08/368,378 and
08/814,974 has not issued within sixty (60) days of the Effective Date; (v) if a
U.S. patent based upon U.S. Serial Numbers 08/368,378 or 08/814,974, or based
upon another U.S. application not yet filed by Kos, and having a claim covering
the Product is declared invalid by a court of competent jurisdiction, is
dedicated to the public by Kos prior to its expiration or is otherwise
unenforceable and there are no remaining claims covering the Product in an
issued U.S. patent owned by Kos; or (vi) if the approval of the NDA for the
Product is delayed by more than 24 months from the date of submission of the
NDA.
3.3 Renegotiation. In the event that (i) the indication in the approved
NDA is substantially narrower than that approved for Kos' Niaspan(R) product, or
(ii) a generic version of niacin plus lovastatin is approved by the FDA, then
the Parties shall promptly negotiate in good faith revisions with respect to the
Parties' obligations for Product Development Costs and Copromotion Activities
and the Term of the Agreement.
4. Fees and Payments
4.1 Stock Purchase Agreement. Contemporaneously with the execution of
this Agreement, the Parties shall execute a Stock Purchase Agreement pursuant to
which DuPont shall purchase an equity interest in Kos' common stock on the terms
set forth therein.
4.2 Fees. In consideration for the co-development and copromotion
rights under the Patents and Know-How granted to DuPont in this Agreement,
DuPont shall pay a milestone payment of $17,500,000 to Kos upon Kos receiving
marketing clearance from the FDA for the Product. Such milestone payment shall
be due within 10 Business Days following the occurrence of the milestone.
4.3 Reimbursements. The foregoing milestone payment shall be in
addition to the reimbursement payments DuPont is required to make pursuant to
Sections 5.5 and 6.7 and any other payments DuPont is required to make under
this Agreement.
4.4 Product Profits. Subject to the provisions of Section 6.6, Kos and
DuPont shall each be entitled to receive 50% of the Net Operating Profit, or be
obligated to bear 50% of the Net Operating Profit in the event such amount is a
loss, for each quarter. The Net Operating Profit shall be calculated by Kos and
communicated to DuPont in writing within 45 days following the end of each
calendar quarter, except following the fourth calendar quarter, in which case
such
6
calculation shall be communicated within 60 days following the end of the
quarter. Kos shall pay to DuPont 50% of the Net Operating Profit within 10
Business Days following such written communication; in the event that such Net
Operating Profit amount is a loss, DuPont shall pay to Kos within 10 Business
Days following such written communication 50% of the amount of the loss.
4.5 Payments. All payments under this Agreement shall be in U.S.
dollars in immediately available funds, and, unless instructed otherwise by the
receiving Party, shall be made via wire transfer to the account designated from
time to time by the receiving Party.
4.6 Taxes. Unless otherwise required by law, each Party shall be
responsible for paying and reporting all of its own taxes and fees, including
without limitation income taxes, payroll taxes, franchise taxes and all taxes
and fees in connection with the Party conducting business in any jurisdiction.
5. Development
5.1 Development Committee. Within thirty (30) days following the
Effective Date, the Parties shall form a Development Committee whose
responsibility shall be to direct the regulatory and clinical development of the
Product other than in connection with the NDA approval for the United States.
The Development Committee shall have equal representation from Kos and DuPont
and shall have a chairperson designated by Kos and a vice-chairperson designated
by DuPont. The Development Committee may from time to time include additional
non-voting ad-hoc representatives from either Party on specific issues as the
need arises. As appropriate, the Development Committee may establish one or more
sub-committees to act on matters that may arise between meetings of the
Development Committee or to consider matters that would be more effectively
considered by a smaller committee.
Each member of the Development Committee shall have one vote on all
matters, and whenever action is to be taken by vote of the Development
Committee, it shall be authorized by a majority vote and shall be binding on
both Parties. Any matters of the Committee that result in a tie vote that the
chairperson and vice-chairperson are unable to resolve shall be referred to the
dispute resolution provisions set forth in Article 18.
5.2 Responsibilities of Development Committee. The Development
Committee shall be responsible for the planning and oversight of all preclinical
and clinical activities associated with the Product (except for studies required
prior to NDA approval in the United States), for all post-approval regulatory
matters concerning the Product, and for managing Product Development Costs. Such
planning and oversight responsibilities shall include, without limitation, the
following: (i) study protocol design, preparation and approval; (ii) the
selection and
7
recruitment of clinical sites and investigators; (iii) quality assurance and
auditing with respect to the conduct of studies; (iv) laboratory analysis of
study samples and specimens; (v) analysis of study data; (vi) safety monitoring
and reporting; (vii) preparation of study reports; (viii) regulatory reports;
(ix) post-approval meetings and other dialogue with the FDA; (x) medical and
scientific support for copromotion activities as requested by the Marketing
Committee; (xi) the establishment of timetables and cost budgets for all studies
and development activities associated with the Product and monitoring actual
performance; (xii) the creation of the draft initial Product development plan by
the end of the second quarter after the Effective Date; and (xiii) approval of
safety and surveillance and drug information efforts. DuPont's representatives
on the Development Committee shall be kept informed of pre-approval Product
development activities and shall be entitled to have a representative attend
meetings with the FDA.
5.3 Meetings of the Development Committee. The first meeting of the
Development Committee shall occur within thirty (30) days after the Effective
Date. Thereafter, meetings shall be held once per calendar quarter unless no
later than thirty (30) days in advance of any meeting there is a determination,
by agreement of both Parties, that no new business or other activity has
transpired since the previous meeting, and that there is no need for a meeting.
In such instance, the next quarterly meeting will be scheduled. The Development
Committee shall also establish a procedure, agreeable to both Parties, for
either (i) calling special interim meetings of the Development Committee in the
event of the need for Development Committee decisions between regularly
scheduled meetings or (ii) establishing a process for making such interim
decisions.
The location of such meetings shall alternate between Kos' offices in
the Miami, Florida metropolitan area and DuPont's offices in the Wilmington,
Delaware metropolitan area unless otherwise agreed upon between the Parties.
Development Committee meetings may, upon the agreement of both Parties, be via
teleconference and/or videoconference.
Minutes of each Development Committee meeting shall be transcribed and
issued by a designee of the Committee within thirty (30) days after each meeting
and shall be approved by the chairperson and vice-chairperson no later than the
first order of business at the immediately succeeding Development Committee
meeting. Each Party shall bear their own expenses in connection with attending
meetings of the Development Committee.
5.4 Product Development Activities. Subject to the direction of the
Development Committee, Kos shall be fully responsible for performing, or causing
to be performed, all development activities associated with the Product in the
Territory in compliance with "current Good Clinical Practices" and "current Good
Manufacturing Practices" as set forth by the FDA and otherwise in conformity
with all applicable local, state, and Federal laws and regulations. The Parties
agree
8
that, subject to the approval of the Development Committee, in executing its
responsibilities hereunder, Kos may rely on services performed by qualified
Third Party providers of such services or Kos may purchase services from DuPont.
Each Party agrees to spend at least $************ on such Product development
activities ("Product Development Activities") during the Term as agreed by the
Development Committee, unless Kos agrees to a lesser level of expenditures. Such
$************ amount to be spent by DuPont shall be paid by DuPont in accordance
with its 50% reimbursement obligations as set forth in Section 5.5. Such Product
Development Activities shall be limited to the following and may not be expanded
without the consent of both Kos and DuPont:
a. Regulatory Requirements: All preclinical or clinical activities
required for regulatory approval of the Product in Canada, and
studies or other development activities that may be required after
the approval of the NDA by the FDA, including without limitation,
all preclinical or clinical studies required for safety, efficacy,
quality, or manufacturing purposes.
b. Phase IV Marketing Studies: To the extent requested by the Marketing
Committee and approved by the Development Committee, all preclinical
or clinical studies conducted for marketing purposes, including
without limitation a long-term clinical outcome study.
c. Studies for Additional Indications or Labeling: To the extent
approved by both the Development Committee and the Marketing
Committee, all preclinical or clinical studies to support regulatory
approval in the Territory for new or modified treatment indications,
new dosage forms, new strengths or other enhancements for the
Product.
5.5 Funding of Product Development. Kos shall be responsible for all
costs incurred in connection with the preclinical and clinical development of
the Product up to and including NDA submission, review and approval. DuPont
shall be responsible for providing funding for 50% of Product Development Costs;
provided, however, that neither DuPont nor Kos are obligated to agree to conduct
Product Development Activities that in the aggregate would create Product
Development Costs in excess of $********** during the Term. DuPont shall
reimburse Kos for 50% of all Product Development Costs incurred by Kos for
studies that commence after the date Kos receives marketing clearance from the
FDA for the Product. Such costs shall be paid within 10 Business Days of
DuPont's receipt of an invoice for such costs, which shall be delivered by Kos
within 45 days following the end of each calendar quarter, except for the fourth
calendar quarter, in which case such invoice shall be delivered within 90 days
following the end of the quarter. Each invoice shall indicate expenditures
incurred classified by categories (a), (b) and (c) in Section 5.4.
Notwithstanding the foregoing, Kos may deliver invoices to DuPont at any time
that the aggregate amount of Product Development Costs for which Kos
9
shall be entitled to seek 50% reimbursement from DuPont exceeds $********** and
DuPont shall reimburse Kos for such costs within 10 Business Days of DuPont's
receipt of such invoices. Kos will use its best efforts to provide DuPont with
at least 15 days advance notice of such invoices.
5.6 Publications. The Development Committee, with input from the
Marketing Committee, shall have oversight responsibility for the publication by
either Party or their representatives of any scientific, medical, or technical
article or other publication relating to the Product. Such responsibility shall
include approval of content, manuscript, preparation, authorship and choice of
journal(s) to which such submission is intended as well as, to the extent
feasible, final pre-publication approval.
6. Copromotion
6.1 Marketing Committee. Within thirty (30) days after the Effective
Date, Kos and DuPont shall assemble a team of appropriate personnel from both
Kos and DuPont (the "Marketing Committee") to plan the pre-launch, launch, and
ongoing sales and promotional strategies and to review and direct such
activities for the Product in the Territory. The Marketing Committee shall have
equal representation from Kos and DuPont and shall have a chairperson designated
by Kos and a vice-chairperson designated by DuPont. The Marketing Committee may
from time to time include additional non-voting ad-hoc representatives from
either Party on specific issues as the need arises. As appropriate, the
Marketing Committee may establish one or more sub-committees to act on matters
that may arise between meetings of the Marketing Committee or to consider
matters that would be more effectively considered by a smaller committee.
Each member of the Marketing Committee shall have one vote on all
matters, and whenever action is to be taken by vote of the Marketing Committee,
it shall be authorized by a majority vote and shall be binding on both Parties.
Any matters of the Committee that result in a tie vote that the chairperson and
vice-chairpersons are unable to resolve shall be referred to the dispute
resolution provisions set forth in Article 18.
6.2 Responsibilities of Marketing Committee. The Marketing Committee
shall have planning, oversight, performance evaluation and decision-making
authority and responsibility for all sales, marketing and promotional activities
related to the Product and to the field sales forces of both Parties in the
Territory, except that the Marketing Committee shall have no direct authority
over the employees of either Party. The Committee's responsibilities shall
include, without limitation, the following activities: (i) develop, and modify
as appropriate, the fundamental marketing and promotion strategies; (ii) develop
a comprehensive annual marketing plan, calendarized by quarter; (iii) establish
and implement appropriate sales and marketing policies, programs, and
procedures; (iv) establish
10
targeted physician calling universe and corresponding reach and frequency call
plans; (v) establish the professional criteria for field sales representatives;
(vi) establish minimum Product Details by calendar quarter; (vii) develop
complementary strategies, policies, and objectives for managed care and
professional services representatives; (viii) oversee the preparation of
comprehensive annual business plans for the Product; (ix) develop and monitor
individual and area performance measures for all field sales activities; (x)
consult with Kos on pricing and discount strategies; (xi) establish and monitor
Product sampling practices; (xii) forecast annual and quarterly prescriptions
and sales and set appropriate production requirements for sales and samples;
(xiii) establish requirements for and regularly review prescription tracking,
call reporting, and other secondary market data; (xiv) develop and review all
marketing and promotional material such as Product Detail aids, advertising,
promotional give-aways, speaker kits, and direct mail; (xv) establish as
appropriate supplementary non-personnel promotional programs such as compliance,
telemarketing and internet activities; (xvi) develop and direct
professional/medical education programs including seminars, symposia,
participation at professional and medical conferences, and conventions,
physician advocacy programs, and event marketing programs; (xvii) plan and
coordinate all Product public relations activities; (xviii) plan and implement
appropriate training programs; (xix) plan and implement primary market research
activities; (xx) develop trademarks and packaging materials; and (xxi) determine
cost budgets for all activities and monitor actual performance. Notwithstanding
clauses (x) and (xiv) above, Kos shall bear final responsibility for determining
pricing for the Product and for ensuring that Product promotional materials
comply with the Federal Food, Drug and Cosmetic Act and all other applicable
laws and regulations, and for all costs associated with such compliance. Kos has
previously provided DuPont a copy of its standard operating procedure for
medical/regulatory/legal review of promotional materials.
6.3 Meetings of Marketing Committee. Meetings of the Marketing
Committee shall be held quarterly commencing with the first quarter following
the Effective Date and until the filing of the NDA with the FDA, and shall be
held more often thereafter as determined by the Marketing Committee. The
location of Marketing Committee meetings and whether to hold them via
teleconference and/or videoconference shall be determined by the Marketing
Committee. Minutes of each Marketing Committee meeting shall be transcribed and
issued by a designee of the Committee within ten (10) Business Days after each
meeting and shall be approved by the chairperson and vice-chairperson not later
than the first order of business at the immediately succeeding Marketing
Committee meeting. Each Party shall bear its own expenses in connection with
attending meetings of the Marketing Committee. The Committee shall also
establish a procedure, agreeable to both Parties, for either (i) calling special
interim meetings of the Committee in the event a need for Committee decisions
arises between regularly scheduled meetings or (ii) establishing a process for
making such interim decisions.
11
6.4 Joint Copromotion Activities. Subject to the direction of the
Marketing Committee, each of Kos and DuPont shall be responsible for performing
the following copromotion activities (the "Joint Copromotion Activities"), in
each case in accordance with the minimum activity levels established by the
Marketing Committee. It is the intent of the Parties that the minimum activity
levels established by the Marketing Committee for the categories of activities
described in clauses a. through d. below be the same for each party, and that no
amount of activity in any one such category may be substituted for or deemed
equivalent to activity in another such category.
a. Field Sales: The Marketing Committee shall determine the target
audience and the monthly call reach and frequency objectives for
both sales organizations as appropriate. Each of Kos and DuPont
commits to performing Minimum Product Details during each
Six-Month Period during the Term, which shall not be less than
******* Product Details during each of the first six Six-Month
Periods following the commencement of commercial sale of the
Product in the Territory. Each Party shall maintain records of
each Detail by its sales force using a call document which
records the name and address of the member of the target
audience, the date and position of the Detail and the number of
samples delivered and shall supply a monthly record of the number
of total Details to the other Party within 60 days of the end of
each month in a form to be established by the Marketing
Committee. The Marketing Committee shall determine the level and
extent of hospital activities, including obtaining hospital
formulary approval, conducting in-services and performing Product
Details, and shall determine the equalization of activity between
the Kos and DuPont sales forces given that DuPont is likely to
conduct a greater amount of hospital activities. The Marketing
Committee shall adjust the number of Product Details after the
first 12 months as appropriate to optimize sales opportunities
for the Product.
b. Sampling: The Marketing Committee shall determine the level of
sampling per member of the target audience. All sample
distribution, reporting and storage shall be conducted by each
Party in accordance with the Prescription Drug Marketing Act.
c. Other Field Activities: The Marketing Committee shall determine
the minimum level of effort each Party is required to commit to
the field activities listed on Appendix B attached hereto,
including without limitation managed care, professional services,
clinical liason, CoumaCare and hospital based activities. The
minimum amount of effort and
12
resources that each Party is directed by the Marketing Committee
to commit to each of the activities listed on Appendix B may be
different, provided that the minimum overall effort and resources
that each Party is directed to commit to all of such activities
is determined by the Marketing Committee to be substantially
equivalent.
d. On-Going Sales Force Training: Each of Kos and DuPont agrees to
provide periodic on-going training on the Product to their
respective sales forces in accordance with training schedules and
materials established by the Marketing Committee.
6.5 Other Copromotion Activities. Other than the Joint Copromotion
Activities set forth in Section 6.4 and subject to the direction of the
Marketing Committee, Kos shall be fully responsible for performing, or causing
to be performed, all other copromotion activities relating to the Product in the
Territory (the "Other Copromotion Activities"). The Parties agree that, subject
to the approval of the Marketing Committee, in executing its responsibilities
hereunder, Kos may rely on services performed by qualified Third Party providers
of such services or Kos may purchase services from DuPont. Other Copromotion
Activities may include, without limitation, the following:
a. Advertising, marketing and promotion materials including sales
aids, give-aways, direct mail, speaker kits, etc.
b. Samples
c. Public Relations
d. Medical education and physician advocacy programs, including
event marketing meetings, medical symposia, and physician
advocacy programs, medical meetings and conventions.
e. Publications including scientific presentations, reprints, and
supplements.
f. Honoraria and educational grants.
g. Persistency and compliance programs.
h. Telemarketing programs.
i. Training in connection with the launch of the Product, consisting
principally of (i) preparing and distributing all training
materials related to the Product; (ii) training the personnel at
Kos and DuPont who shall be responsible for on-going training for
each Party; (iii) organizing and conducting, with appropriate
assistance from DuPont, all training activities involving the
combined Product sales forces of the Parties or large segments
thereof.
13
j. Primary market research.
k. Other activities as directed by the Marketing Committee.
6.6 Joint Copromotion Costs.
(a) Resources. It is the intent of Kos and DuPont that they will
devote equal resources to carry-out the Joint Copromotion Activities.
Accordingly, except as provided in this Section 6.6, each Party shall fully
bear, without recourse to the other Party, all of the costs incurred by such
Party in connection with such Party's performance of the Joint Copromotion
Activities.
(b) Measurement of Joint Copromotion Activities. The methods for
measuring the actual number of Product Details and other Joint Copromotion
Activities shall be agreed upon by both Parties prior to the launch of the
Product in the Territory. Following the end of each Six-Month Period, the
Marketing Committee shall review the Joint Copromotion Activities, including
without limitation the number of Product Details performed by each Party during
the preceding Six-Month Period. The actual number of Product Details performed
by a Party during a Six-Month Period shall be expressed as a percentage of the
number of Minimum Product Details established for such period by the Marketing
Committee.
(c) Six-Month Period Shortfalls by One Party. At the end of each
Six-Month Period, in the event that a Party (but only one Party) performed fewer
than 95% of the Minimum Product Details during that Six-Month Period, the
portion of the Net Operating Profit to which such Party would be otherwise
entitled for that Six-Month Period under Section 4.4 shall be adjusted such that
the payment received by such Party for the Six-Month Period is reduced (or
increased in the event such Net Operating Profit is a loss) by a percentage
equal to the percentage difference between the required number of Minimum
Product Details during such Six-Month Period and the actual number of Product
Details performed by such Party during such period. For example, if the Minimum
Product Details for a Six-Month Period is ******* and a Party actually performs
******* Product Details during such period (i.e. 85% of the Minimum Product
Details), such Party would be entitled to receive 35% [i.e., 50% - 15%] (or, in
the event of a loss, would be required to pay 65%) of the Net Operating Profit
during such Six-Month Period.
(d) Six-Month Period Shortfalls by Both Parties. In the event that
both Parties perform fewer than 95% of the Minimum Product Details during the
same Six-Month Period, the Net Operating Profit for such period shall be divided
between the Parties pro rata based on the actual number of Product Details
performed by each Party during such period.
(e) Adjustments to Net Operating Profit. Subject to clauses (c) and
(d) above, within 60 days of the end of each Six-Month Period, Kos shall invoice
14
DuPont for the adjustment (positive or negative), and Kos or DuPont, as
applicable, shall pay the other within 10 Business Days.
6.7 Shared Copromotion Expenses.
(a) Costs. All costs directly incurred by Kos in order to perform,
or cause to be performed, such Other Copromotion Activities as are approved by
the Marketing Committee shall constitute Shared Copromotion Expenses. Such costs
shall exclude ▇▇▇▇-ups over actual direct costs and allocations of overhead;
provided, however, that (i) such costs may include, if approved by the Marketing
Committee, the costs of directly required incremental Kos personnel below the
level of Office Director, and (ii) the cost of samples shall be included at
their Cost of Manufacture but shall not include each Party's respective cost of
distributing samples to their own sales force.
(b) Budgets. At least 90 days prior to each Year, the Marketing
Committee shall establish an annual budget for the Shared Copromotion Expenses
for such year, calendarized by quarter, and shall regularly review actual cost
performance compared with the budget. Prior to commencing any new activity not
provided for in the budget, the Marketing Committee will also approve a cost
budget for such activity. Kos shall not incur any Shared Copromotion Expense
that has not been included in the annual budget, approved by the Marketing
Committee in advance, or otherwise specifically authorized by the Marketing
Committee.
(c) Funding of Shared Copromotion Expenses. Kos shall be
responsible for directly funding all Shared Copromotion Expenses.
Notwithstanding the foregoing sentence, Kos may deliver invoices to DuPont at
any time that the aggregate amount of Shared Copromotion Expenses for which Kos
shall be entitled to seek 50% reimbursement from DuPont exceeds $********** and
DuPont shall reimburse Kos for such costs with 10 Business Days of DuPont's
receipt of such invoices. Kos will use its best efforts to provide DuPont with
at least 15 days advance notice of such invoices.
6.8 Other Copromotion Matters.
(a) Booking of Sales Revenue. Kos shall record on its books all
revenue from gross and Net Sales of the Product.
(b) Packaging. The Marketing Committee shall have the
responsibility for approving all packaging materials subject to input from the
Development Committee with respect to regulatory requirements and from Kos
manufacturing with respect to shipping and cost considerations. Subject to the
approval of the Marketing Committee with respect to size, positioning and other
relevant matters, Kos and DuPont shall both be entitled to have their corporate
logos appropriately displayed on Product packages.
15
(c) Promotional Materials. Subject to the approval of the Marketing
Committee with respect to size, positioning and other relevant matters, Kos and
DuPont shall both be entitled to have their corporate logos appropriately
displayed on Product promotional materials.
(d) Trademarks. The Marketing Committee shall approve the names,
design, and usage in the Territory of all new Kos Trademarks associated with the
Product; provided that if the Marketing Committee is unable to agree on matters
involving the Kos Trademarks, Kos shall have the authority to resolve such
disputes.
(e) Field Sales Representatives. Except with the prior written
consent of both Parties, all field sales representatives who are responsible for
Product Details shall be full-time employees of the respective Parties. However,
without Kos' consent, DuPont shall have the right to contract with McKesson
HBOC, Inc. or its successor to employ a contract sales force to fulfill part of
DuPont's obligations for Product Details, provided that such contract sales
force is dedicated exclusively to DuPont and receives training and compensation
comparable to sales representatives of Kos and DuPont, and further provided that
such sales representatives meet the professional standards for such
representatives that are established by the Marketing Committee.
(f) Sales Incentive Plan. DuPont shall implement and maintain an
incentive plan for the Product for its sales force that is consistent with its
overall sales incentive compensation plan for its own products.
7. Manufacturing and Supply
7.1 Kos Responsibilities. Kos shall use its commercially reasonable
best efforts to produce and timely supply the Product and Product samples for
the Territory. Kos shall manufacture, package, store and ship the Product and
Product samples in strict adherence to "current Good Manufacturing Practices" as
set forth by the FDA, consistent with the Product's approved NDA and the Quality
Agreement (to be negotiated by the Parties within 60 days of the Effective Date
and then attached hereto as Appendix D), and otherwise in conformity with all
applicable local, state, and Federal laws and regulations. Kos shall also use
its commercially reasonable best efforts to produce the Product at the highest
appropriate quality standards and at the least cost feasible. Kos shall supply
such Product and Product samples based on reasonable advance notification of
Product and Product sample requirements as forecasted by the Marketing
Committee, and Kos shall be responsible for providing capacity to support future
requirements for the Product and Product samples as determined by the Marketing
Committee.
7.2 Safety Surveillance Cost. Safety Surveillance Cost shall mean Kos'
costs directly attributable to the Product, if any, for personnel and related
costs for
16
handling safety surveillance and customer inquiries; provided however, that such
costs shall not exceed the equivalent of four full time personnel without the
approval of DuPont.
7.3 Cost of Manufacture. Cost of Manufacture shall be Kos' actual fully
allocated manufacturing cost directly related to the Product calculated in
accordance with GAAP, and determined consistent with Kos' cost accounting method
as set forth by example in Appendix C, and consistent with "cost of sales" as
disclosed in Kos' public financial statements for the respective period, plus a
▇▇▇▇-up of ***************** on such costs; provided that such ▇▇▇▇-up shall not
be charged on the cost of lovastatin in excess of $***** per kilogram. DuPont
reserves the right to audit Kos' Cost of Manufacture twice per Year. In the
event Kos requires services from Third Party providers for manufacture or
distribution of the Product, Kos shall first offer DuPont the option to provide
such services.
8. Regulatory, Safety and Surveillance
8.1 Regulatory Matters.
(a) Permits. Kos shall maintain all regulatory and governmental
permits, licenses and approvals that may be necessary to manufacture, ship, sell
and market the Product in the Territory.
(b) Reporting. Kos shall be responsible for any reporting of
matters regarding the manufacture and sale of the Product, including Adverse
Events, to the FDA and other relevant regulatory authorities, in accordance with
applicable laws and regulations. Kos shall immediately notify DuPont of any such
matter and promptly furnish complete copies of such reports to DuPont. In the
event Kos or DuPont should become aware of information that may require a
recall, field alert, Product withdrawal or field correction arising from any
defect in the Product, it shall immediately notify the other Party in writing.
8.2 Adverse Events. Promptly after the Effective Date, in recognition
of Kos' primary responsibility for reporting Adverse Events associated with the
Product, the Parties shall agree upon standard operating procedures for the
investigation and reporting of Adverse Events regarding the Product. The Parties
shall immediately implement such agreed procedures and shall provide each other
on a regular basis with any appropriate information that enables the other Party
to meet its regulatory obligations in the Territory with respect to the Product
or that is relevant to the safe use of the Product. The agreed procedures will
be reviewed jointly on a regular basis or when there is a change in regulations
governing Adverse Event reporting.
17
9. Audit Rights
Each of Kos and DuPont shall keep complete and accurate records of
their respective Product Details, incentive compensation payments for the
Product to sales representatives, and Kos shall keep complete and accurate
records of the Net Operating Profit and reimbursable expenses. Each Party shall
have the right, at such Party's expense, through a certified public accountant
or like person reasonably acceptable to the other Party, upon execution of a
confidentiality agreement, to examine such records during regular business hours
upon reasonable notice during the life of this Agreement and for six (6) months
after its termination; provided, however, that (i) such examination shall not
take place more often than once a Year and shall not cover such records for more
than the preceding Year, and (ii) such accountant shall report to such Party
only as to the accuracy of the reports or payments provided or made by the other
Party under this Agreement. Any adjustments required as a result of overpayments
or underpayments identified through a Party's exercise of audit rights, and any
other adjustments that may be required from time to time in order to correct
overpayments or underpayments under this Agreement, shall be made by subtracting
or adding, as appropriate, amounts from or to the next distribution of Net
Operating Profit in accordance with Section 4.4. The Party requesting the audit
shall bear the full cost of the audit unless such audit correctly discloses that
the discrepancy for the Year differs by more five percent (5%) from the amount
the accountant determines is correct, in such case the owing Party shall pay the
reasonable fees and expenses charged by the accountant. In the event that a
Party disputes an invoice or other payment obligation under this Agreement, such
Party shall timely pay the amount of the invoice or other payment obligation,
and the Parties shall resolve such dispute in accordance with Article 18.
10. Intellectual Property
10.1 Ownership of Intellectual Property. Kos shall have and retain sole
and exclusive right, title and interest in and to all inventions, discoveries,
writings, trade secrets, know-how, methods, practices, procedures, engineering
information, designs, devices, improvements, manufacturing information and other
technology, whether or not patentable or copyrightable, and any patent
applications, patents, or copyrights based thereon ("Inventions") that are made,
discovered, conceived, reduced to practice or generated by Kos (or its employees
or representatives) or jointly by Kos and DuPont (or their employees or
representatives) that in any way relate to the Product or the active ingredients
(niacin and lovastatin) in the Product. DuPont shall own exclusively all
Inventions made by DuPont (or its employees or representatives) that in any way
relate to the Product or the active ingredients in the Product. With respect to
any Inventions not relating in any way to the Product or the active ingredients
in the Product, each Party shall own all right, title and interest in and to all
such Inventions made, discovered, conceived, reduced to practice or generated
solely by such Party (or its employees or representatives), and the Parties
shall jointly own the right, title and interest in and to all such Inventions
made, discovered, conceived, reduced to practice or generated jointly by the
Parties (or their employees or
18
representatives). The Parties agree to cooperate in the filing of patent
applications upon such jointly-owned inventions. With respect to Inventions made
by DuPont that in any way relate to the Product or the active ingredients in the
Product, DuPont shall ▇▇▇▇▇ ▇▇▇ a fully-paid, perpetual, exclusive license to
make, use or sell such Inventions, without limiting in any way DuPont's rights
with respect to the use of such Inventions. With respect to Inventions made
jointly by the Parties that in any way relate to the Product or the active
ingredients in the Product, Kos shall ▇▇▇▇▇ ▇▇▇▇▇▇ a fully-paid, perpetual,
exclusive license to make, use or sell such Inventions, without limiting in any
way Kos' rights with respect to the use of such Inventions.
10.2 Patent Prosecution. Kos, at its expense, shall have responsibility
for filing, prosecution and maintenance of all Patents that it owns in the
Territory. Kos shall disclose to DuPont the complete texts of all Patents filed
by Kos in the Territory that relate to the Product as well as all information
received concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation, nullification or any official
proceeding involving a Patent anywhere in the Territory. Kos shall agree to keep
DuPont promptly and fully informed of the course of patent prosecution or other
proceedings including by providing DuPont with copies of substantive
communications, search reports and Third Party observations submitted to or
received from patent offices throughout the Territory. DuPont shall, if
requested by Kos, provide appropriate patent consultation to Kos. DuPont shall
hold all information disclosed to it under this Section as confidential subject
to the provisions of Section 11.2.
10.3 Notification of Patent Litigation. In the event of the institution
of any suit by a Third Party against Kos or DuPont for patent infringement
involving the manufacture, use, sale, license or marketing of the Product
anywhere in the Territory, the Party sued shall promptly notify the other Party
in writing.
10.4 Patent Infringement. In the event that Kos or DuPont becomes aware
of actual or threatened infringement of a Patent anywhere in the Territory, that
Party shall promptly notify the other Party in writing. Kos shall have the sole
right, but not the obligation, to investigate and/or bring an infringement
action against any Third Party. Kos shall have full control over the conduct of
such investigations and litigation, including the settlement thereof. The cost
of such investigation and litigation shall be borne entirely by Kos, with Kos
being entitled to the entire proceeds, if any, of such litigation, unless DuPont
agrees, at its sole discretion, within 20 days of such notice, to bear an equal
share of such cost, in which case it shall also be entitled to an equal share of
any proceeds of such litigation. DuPont shall reasonably assist Kos and
cooperate in any such investigation and litigation at Kos' request and at Kos'
expense, unless DuPont has otherwise agreed to
19
participate in the litigation. Should Kos choose not to bring an infringement
action regarding a particular Patent, DuPont shall then have the right,
exercisable at its sole discretion, to bring such an action. Any such
infringement action shall be at DuPont's expense, and it shall be solely
entitled to the entire proceeds, if any, of such litigation.
10.5 Title to Trademarks. The ownership and all goodwill from the use
of any Kos Trademark shall vest in and inure to the benefit of Kos.
10.6 Trademark License. Kos grants to DuPont a fully paid, exclusive
license to use the Kos Trademark in the Territory for the Term in connection
with the marketing and promotion of the Product as contemplated in this
Agreement, subject to Kos retaining full rights to use the Kos Trademark in the
Territory, and without limiting in any way Kos' rights with respect to the Kos
Trademark outside the Territory.
10.7 Joint Marks. The Joint Marks shall be jointly filed for and
jointly owned on an equal basis by the Parties, and each Party shall have
co-exclusive rights to use the Joint Marks. During the Term, the Joint Marks
shall be used by the Parties solely in connection with the activities
contemplated by this Agreement as determined by the Marketing Committee. Upon
termination or expiration of this Agreement each Party shall have the right to
continue using the Joint Marks.
10.8 Maintenance of Trademarks. Kos agrees to search, file, register
and maintain a registration for the Kos Trademark and the Joint Marks in the
Territory for the term of this Agreement for use with the Product. Such expenses
incurred in connection with the Kos Trademarks shall be paid solely by Kos, and
such expenses incurred in connection with the Joint Marks shall be shared
equally by the Parties, and shall be invoiced separate from the calculation of
Net Operating Profit. In the event that the Kos Trademark is not available for
use and registration in connection with the Product in the Territory due to a
rejection of the trademark by a government agency, actual or threatened
opposition, cancellation or litigation as to use and/or registration of the Kos
Trademark by a Third Party, and/or a decision by the Marketing Committee that
use of the Kos Trademark is likely to cause confusion with another's trademark,
Kos shall provide an alternate Kos Trademark and shall develop, search, file,
register and maintain such alternate Kos Trademark at Kos' sole expense,
provided that the selection of such alternate Kos Trademark shall be made by the
Marketing Committee in accordance with Section 6.8(d).
10.9 Notification of Trademark Litigation. In the event of the
institution of any suit by a Third Party against Kos or DuPont for trademark
infringement involving the marketing, promotion or sale of the Product in
accordance with the annual marketing plan in the Territory, the Party sued shall
promptly notify the other Party in writing.
20
10.10 Trademark Infringement. In the event that Kos or DuPont becomes
aware of actual or threatened infringement of a Kos Trademark anywhere in the
Territory, that Party shall promptly notify the other Party in writing. Kos
shall have the sole right, but not the obligation, to investigate and/or bring
an infringement and/or opposition or cancellation action against any Third
Party. Kos shall have full control over the conduct of such investigations and
litigation, including the settlement thereof. The cost of such investigation and
litigation shall be borne entirely by Kos, with Kos being entitled to the entire
proceeds, if any, of such litigation, unless DuPont agrees, at its sole
discretion, within 20 days of such notice, to bear an equal share of such cost,
in which case it shall also be entitled to an equal share of any proceeds of
such litigation. DuPont shall reasonably assist Kos and cooperate in any such
investigation and litigation at Kos' request and at Kos' expense, unless DuPont
has otherwise agreed to participate in the litigation. Should Kos choose not to
bring an infringement action regarding a particular Kos Trademark, DuPont shall
then have the right, exercisable at its sole discretion, to bring such an
action. Any such infringement action shall be at DuPont's expense, and it shall
be solely entitled to the entire proceeds, if any, of such litigation. In the
event that Kos or DuPont becomes aware of actual or threatened infringement of a
Joint ▇▇▇▇ anywhere in the Territory, that Party shall promptly notify the other
Party in writing and the Parties shall promptly agree on the most appropriate
course of action with respect to such infringement, including the extent to
which the Parties shall share expenses and recoveries.
10.11 Information and Settlements. Kos shall keep DuPont informed of
the status of any patent or trademark infringement litigation or settlement
thereof concerning the Product or the Kos Trademark, provided however that no
settlement or consent judgment or other voluntary final disposition of any suit
defended or action brought pursuant to this Article 10 shall be entered into
without the consent of DuPont if such settlement shall require DuPont to be
subject to an injunction or to make a monetary payment or shall otherwise
adversely affect DuPont's rights under this Agreement.
11. Confidentiality
11.1 Disclosure of Know-How. To the extent that Kos has disclosed or in
the future discloses to DuPont any Know-How, DuPont shall not acquire any
ownership rights in such Know-How by virtue of this Agreement or otherwise.
11.2 Confidential Information. Kos and DuPont shall not use or reveal
or disclose to Third Parties any confidential information received from the
other Party or otherwise developed by either Party in the performance of
activities in furtherance of this Agreement without first obtaining the written
consent of the disclosing Party, except as may be otherwise provided in, or
required in order for a Party to fulfill its obligations under, this Agreement.
During and following the Term of this Agreement, this confidentiality obligation
shall not apply to such information that (i) is or becomes a matter of public
knowledge (other than by breach of this Agreement by the receiving Party), or
(ii) is required by law to be disclosed. Following the Term of this Agreement,
this confidentiality obligation shall not apply to such
21
information that (i) the receiving Party can establish was already known to it
or was in its possession at the time of disclosure, (ii) the receiving Party can
establish was independently developed by persons in its employ who had no
contact with and were not aware of the content of the confidential information,
or (iii) is disclosed to the receiving Party by a Third Party having the right
to do so. The Parties shall take reasonable measures to assure that no
unauthorized use or disclosure is made by others to whom access to such
information is granted.
Nothing in this Agreement shall be construed as preventing either Party
from disclosing any information received from the other to an Affiliate of the
receiving Party who is necessary for the purposes of enabling the receiving
Party to fulfil its obligations under this Agreement, provided, the receiving
Party shall be responsible for breaches of the confidentiality obligations by
such Affiliate.
11.3 Public Announcements. No public announcement or other disclosure
to Third Parties concerning the existence of or terms of this Agreement shall be
made, either directly or indirectly, by either Party, except as may be legally
required or as may be required for financial reporting purposes, without first
obtaining the written approval of the other Party and agreement upon the nature
and text of such announcement or disclosure. Each Party agrees that it shall
cooperate fully with the other with respect to all disclosures regarding this
Agreement to the Securities Exchange Commission and any other governmental or
regulatory agencies, including requests for confidential treatment of
proprietary information of either Party included in any such disclosure.
12. Restrictive Covenants
12.1 Non-solicitation. Without the prior written consent of the other
Party, each of Kos and DuPont agrees that during the term of this Agreement and
for one year following termination of this Agreement for any reason, it will not
directly or indirectly solicit for purposes of hiring any person employed by the
other Party or who was employed by the other Party within the then prior three
(3) months, or in any manner seek to induce any such person to leave his or her
employment.
12.2 Non-competition.
(a) During the Term of this Agreement, neither Party shall
promote, market or sell, or enter into any agreement to promote, market or sell,
in the Territory any oral product for any indication(s) for which the Product
shall have been promoted during the Term of this Agreement ("Other Product"),
other than an
22
***************************** unless pursuant to a business arrangement with the
other Party or with the other Party's prior written approval.
(b) For purposes of this Section 12.2, an ****************************
with respect to a Party means (i) any Other Product that is ********************
************* or (ii) any Other Product that is ********************************
********************************************************************************
************************************************.
(c) Notwithstanding Section 12.2(a) above, if one Party (the "Acquiring
Party") enters into a merger, acquisition or joint venture with a Third Party
who owns, licenses or otherwise controls any Other Product, both Parties shall
engage in good faith negotiations to enter into an arrangement whereby the other
Party (the "Non-Acquiring Party") will co-promote such Other Product. If the
Parties are unable to reach such an agreement within 90 days, then the
Non-Acquiring Party may terminate this Agreement.
13. Rights And Duties Upon Termination
13.1 Payment Obligations. In the event that this Agreement is
terminated for any reason prior to the end of the Term, other than termination
by DuPont pursuant to clauses (i), (iii), (iv) or (v) of Section 3.2 or
termination by Kos pursuant to clauses (i) or (iii) of Section 3.2, the
terminating Party shall reimburse the other Party 50% of the non-cancelable
Product Development Costs and Shared Copromotion Expenses incurred or committed
by the other Party as of the date such termination becomes effective, within 10
Business Days following the terminating Party's receipt of invoices from the
other Party.
13.2 Continuing Obligations. The following provisions shall survive the
termination of this Agreement for any reason: Sections 4.6, 10.1, 10.5, 10.6,
10.7, 14.3, 14.4, 14.5 and 17.4 and Articles 9, 11, 12, 13 and 18. In addition,
any other provision required to interpret and 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.
13.3 Remedies. Termination of this Agreement in accordance with its
provisions shall not limit the remedies that may be otherwise available to
either Party in law or equity. Neither Kos nor DuPont shall be liable under this
Agreement for any indirect, incidental, punitive, exemplary, special or
consequential damages of any kind whatsoever sustained as a result of a breach
of this Agreement.
14. Representations, Warranties and Indemnification
14.1 Representations of Kos. Except as disclosed on Schedule 14.1, Kos
represents and warrants that (i) it owns the entire right, title and interest in
the
23
Patents and Know-How licensed by this Agreement, or otherwise has the right to
grant the license rights under this Agreement, (ii) it has the right to enter
into this Agreement, (iii) that there is nothing in any Third Party agreement
Kos has entered into that in any way will limit Kos' ability to perform all of
the obligations undertaken by Kos under this Agreement, (iv) it will not
encumber, with liens, mortgages, security interests or otherwise, the Patents
and Know-How, (v) it has disclosed to DuPont the complete texts of all Patents
as of the Effective Date as well as all information received by Kos as of the
Effective Date concerning the institution or possible institution of any
interference, opposition, reexamination, reissue, revocation, nullification or
any official proceeding involving a Patent anywhere in the Territory, (vi) it
has received no notice of infringement or misappropriation of any alleged rights
asserted by any Third Party in relation to any technology used in connection
with the manufacture, use or sale of the Product, and it is not aware of any
patent, know-how, trade secret, or other right of any Third Party which could
reasonably be expected to materially adversely affect its ability to carry out
its responsibilities under this Agreement or the manufacture, use or sale of the
Product or the rights granted to DuPont under this Agreement and (vii) it shall
be in compliance with all laws and regulations applicable to the subject matter
of this Agreement, including, without limitation, the Federal Food, Drug, and
Cosmetic Act and the Prescription Drug Marketing Act.
14.2 Representations of DuPont. DuPont represents and warrants that (i)
it has the right to enter into this Agreement, (ii) there is nothing in any
Third Party agreement DuPont has entered into that in any way will limit
DuPont's ability to perform all of the obligations undertaken by DuPont under
this Agreement, (iii) as of the date hereof, it neither has in development nor
plans to develop any product which will be marketed during the Term which shall
compete with the Product, (iv) DuPont shall be in compliance with all laws and
regulations applicable to the subject matter of this Agreement, including,
without limitation, the Federal Food, Drug, and Cosmetic Act and the
Prescription Drug Marketing Act, (v) the services to be performed by DuPont in
connection with this Agreement will be performed only by individuals who are
employees of DuPont (except as set forth in Section 6.8(e)), and such services
will involve the promotion of the Product in a manner consistent with its
approved labeling and the promotional materials approved by Kos, and (vi) it
shall not represent to any Third Party that it has any proprietary or property
right or interest in the Product, or in any patent relating thereto, or in any
trademark used in connection therewith.
14.3 Indemnification by Kos. Kos shall defend, indemnify and hold
harmless DuPont and its Affiliates and their officers, directors, shareholders,
employees, agents, representatives, successors and assigns from and against all
claims, complaints, or lawsuits for damages (collectively referred to as
"Claims") arising out of (i) any negligent act or omission, or willful
wrongdoing by Kos in the performance of this Agreement, (ii) the failure by Kos
to comply with any FDA or other governmental requirement, (iii) the infringement
or misappropriation by Kos
24
of any copyright, trademark, or service ▇▇▇▇, as a result of Kos' marketing or
promotion of the Product which is not pursuant to the terms of this Agreement or
the annual marketing plan or in conformity with the direction of the Marketing
Committee, (iv) the infringement or misappropriation of any patent or trade
secret by Kos or DuPont as a result of Kos' or DuPont's marketing or promotion
of the Product under the terms of this Agreement, (v) any breach of any
representation or warranty of Kos, (vi) the manufacturing of the Product by Kos,
and (vii) the labeling or use of the Product. Kos shall not be obligated under
this Section to the extent that the Claim was the result of the non-performance,
negligence or willful misconduct of any employee or agent of DuPont or anyone
acting on behalf of DuPont, including its Affiliates and their officers,
directors, shareholders, employees, agents, representatives, successors and
assigns.
14.4 Indemnification by DuPont. DuPont shall defend, indemnify and hold
harmless Kos and its Affiliates and their officers, directors, shareholders,
employees, agents, representatives, successors and assigns from and against all
Claims arising out of (i) any negligent act or omission, or willful wrongdoing
by DuPont in the performance of this Agreement, (ii) the failure by DuPont to
comply with any FDA or other governmental requirement, (iii) the infringement or
misappropriation by DuPont of any patent, copyright, trademark, or trade secret,
as a result of DuPont's marketing or promotion of the Product which is not
pursuant to the terms of this Agreement or the annual marketing plan or in
conformity with the direction of the Marketing Committee, and (iv) any breach of
any representation or warranty of DuPont. DuPont shall not be obligated under
this Section to the extent that the Claim was the result of the nonperformance,
negligence or willful misconduct of any employee or agent of Kos or anyone
acting on behalf of Kos, including its Affiliates and their officers, directors,
shareholders, employees, agents, representatives, successors and assigns.
14.5 Limitations on Indemnification. The obligations to indemnify,
defend, and hold harmless set forth in Sections 14.3 and 14.4 shall be
contingent upon the Party seeking indemnification (the "Indemnitee"): (i)
notifying the indemnifying Party of a claim, demand or suit within five (5)
Business Days of receipt of same; provided, however, that Indemnitee's failure
or delay in providing such notice shall not relieve the indemnifying Party of
its indemnification obligation except to the extent the indemnifying Party is
prejudiced thereby; (ii) allowing the indemnifying Party and/or its insurers the
right to assume direction and control of the defense of any such claim, demand
or suit; (iii) using its best efforts to cooperate with the indemnifying Party
and/or its insurers in the defense of such claim, demand or suit; and (iv)
agreeing not to settle or compromise any claim, demand or suit without prior
written authorization of the indemnifying Party. The Indemnitee shall have the
right to participate in the defense of any such claim, demand or suit referred
to in this Section utilizing attorneys of its choice, at its own expense,
provided, however, that the indemnifying Party shall have full authority and
control to handle any such claim, demand or suit. Kos' indemnification
obligations under
25
clause (iv) of Section 14.3 shall be limited to the aggregate amount of Net
Operating Profit Kos has received from the sale of the Product under this
Agreement less the amount of such Net Operating Profits paid to DuPont.
14.6 Insurance. Immediately upon the launch of the Product in the
Territory, and for a period of ************** after the expiration of this
Agreement or the earlier termination thereof, each Party shall obtain and/or
maintain, respectively, at its sole cost and expense, product liability
insurance in amounts, respectively, which are reasonable and customary in the
U.S. pharmaceutical industry for companies of comparable size and activities at
the respective place of business of each Party. Such product liability insurance
shall insure against************************************************************
*************arising out of the manufacture, sale, distribution, or marketing of
the Product in the Territory. Each Party shall provide written proof of the
existence of such insurance to the other Party upon request. Kos acknowledges
that ***********************
15. Assignment
Neither Party shall assign or transfer its rights or obligations under
this Agreement without the prior written consent of the other Party, except (i)
to an Affiliate, or (ii) in connection with a merger, or consolidation with, or
the sale to a Third Party of, the entire pharmaceutical business of such Party
or the entire cardiovascular pharmaceutical business of such Party, provided
that in the case of both clauses (i) and (ii) above, the other Party has no
reasonable objection to the Affiliate's or Third Party's ability or willingness
to perform the assigning Party's obligations hereunder or reasonably concludes
that the Affiliate or Third Party places the marketing of the Product at a
competitive disadvantage. Kos acknowledges and agrees that a change in the
structure of DuPont from a general partnership to a corporation shall not
require the prior written consent of Kos.
16. Notices
Any notice, request, approval or other document required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given when delivered in person, or sent by overnight courier service,
postage prepaid, or sent by certified or registered mail, return receipt
requested, or by facsimile transmission, to the following addresses of the
Parties and to the attention of the persons identified below (or to such other
address, addresses or persons as may be specified from time to time in a written
notice). Any notices given pursuant to this Agreement shall be deemed to have
been given and delivered upon the earlier of (i) if sent by overnight courier
service, on the date when received at the address set forth below as proven by a
written receipt from the delivery service verifying delivery, or (ii) if sent by
certified or registered mail, three (3) Business Days after mailed by certified
or registered mail postage prepaid and properly addressed, with return receipt
requested, or (iii) if sent by facsimile transmission,
26
on the day when sent by facsimile as confirmed by automatic transmission report
coupled with certified or registered mail or overnight courier service receipt
proving delivery, or (iv) if delivered in person, on the date of delivery to the
address set forth below as proven by written signature of the recipient.
Kos Pharmaceuticals, Inc:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President, Licensing
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President,
Controller and Secretary
Copy to:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
DuPont Pharmaceuticals Company:
Chestnut Run Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Executive Vice President,
Cardiovascular/Thrombosis Franchise
Copy to:
Chestnut Run Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Associate General Counsel,
Cardiovascular/Thrombosis Franchise
Notwithstanding the foregoing, notice of any breach of this Agreement
delivered by a Party under Section 3.2 shall be provided in accordance with the
foregoing provisions to the chief executive officer of the other Party in
addition to the persons identified above.
27
17. Miscellaneous
17.1 Force Majeure. If the performance of any part of this Agreement by
either Party, or of any obligation under this Agreement, is prevented,
restricted, interfered with or delayed by reason of any cause beyond the
reasonable control of the Party liable to perform, unless conclusive evidence to
the contrary is provided, the Party so affected shall, upon giving written
notice to the other Party, be excused from such performance to the extent of
such prevention, restriction, interference or delay, provided that the affected
Party shall use its reasonable best efforts to avoid or remove such causes of
nonperformance and shall continue performance with the utmost dispatch whenever
such causes are removed. When such circumstances arise, the Parties shall
discuss what, if any modification of the terms of this Agreement may be required
in order to arrive at an equitable solution.
17.2 No Partnership or Joint Venture. It is expressly agreed that Kos
and DuPont shall be independent contractors and that the relationship between
the two Parties shall not constitute a partnership, joint venture or agency.
Neither Kos nor DuPont 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, without the prior written consent of the other Party to
do so.
17.3 Execution In Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
17.4 Governing Law. This Agreement shall be deemed to have been made in
the State of Florida and its form, execution, validity, construction and effect
shall be determined in accordance with the laws of the State of Florida.
17.5 Waiver Of Breach. The failure of either Party at any time or times
to require performance of any provision hereof shall in no manner affect its
rights at a later time to enforce the same. No waiver by either Party of any
condition or term in any one or more instances shall be construed as a further
or continuing waiver of such condition or term or of another condition or term.
17.6 Severability. In the event any portion of this Agreement were to
be held illegal, void or ineffective, the remaining portions of this Agreement
shall remain in full force and effect. If any of the terms or provisions of this
Agreement are in conflict with any applicable statute or rule of law, then such
terms or provisions shall be deemed inoperative to the extent that they may
conflict therewith and shall be deemed to be modified to conform with such
statute or rule of law. In the event that the terms and conditions of this
Agreement are materially altered as a result of this Section 17.6, the Parties
shall renegotiate the terms and conditions of this Agreement to resolve any
inequities.
28
17.7 Entire Agreement. This Agreement and the Stock Purchase Agreement
shall constitute the entire agreement between the Parties relating to the
subject matter thereof and shall supersede all previous writings and
understandings. No terms or provisions of this Agreement shall be varied or
modified by any prior or subsequent statement, conduct or act of either of the
Parties, except that the Parties may amend this Agreement by written instruments
specifically referring to and executed in the same manner as this Agreement.
18. Dispute Resolution
18.1 Internal Resolution. Any dispute, controversy or claim arising out
of or relating to this Agreement, excluding termination, (collectively referred
to as "Dispute") shall be attempted to be settled by the Parties, in good faith,
by submitting each such Dispute to designated senior management representatives
of each Party, who shall meet within seven (7) Business Days as reasonably
requested by either Party to review any Dispute. If the Dispute is not resolved
by the designated representatives by mutual agreement within fourteen (14)
Business Days after a meeting to discuss the Dispute, either Party may at any
time thereafter provide the other written notice specifying the terms of such
Dispute in reasonable detail. Within seven (7) Business Days of receipt of such
notice, the presidents of each Party, or a member of management designated by
them, shall meet at a mutually agreed upon time and location for the purpose of
resolving such Dispute. They will discuss the problems and/or negotiate for a
period of up to twenty (20) Business Days in an effort to resolve the Dispute or
negotiate an acceptable interpretation or revision of the applicable portion of
this Agreement mutually agreeable to both Parties, without the necessity of
formal procedures relating thereto.
18.2 Arbitration. If the Parties have been unable to resolve a dispute
through the above-described procedures, the Party initiating such procedures
may, in its discretion, within fourteen (14) Business Days after the
above-described procedures have been exhausted, propose non-binding arbitration
in accordance with the CPR Non-Administered Arbitration Rules in effect on the
date of this Agreement. The place of any such arbitration shall be Washington,
DC and it shall be conducted by a sole arbitrator. The Parties may not pursue
any other legal or equitable rights or remedies relating to any dispute until
the conclusion of the arbitration.
In the event such arbitration is not commenced, the parties may pursue
any available legal or equitable rights or remedies.
29
NOW THEREFORE, the Parties, through their authorized officers, have
executed this Agreement as of the date first written above.
KOS PHARMACEUTICALS, INC
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
Date: May 3, 2000
DUPONT PHARMACEUTICALS COMPANY
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
Date: May 3, 2000