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EXHIBIT 10.1
COPROMOTION AGREEMENT
THIS COPROMOTION AGREEMENT (this "AGREEMENT") is entered into and
effective as of this 22nd day of June, 2000 (the "EFFECTIVE DATE"), by and
between KING PHARMACEUTICALS, INC., a Tennessee corporation ("KING"), and
AMERICAN HOME PRODUCTS CORPORATION, a Delaware corporation ("AHPC"), acting
through its Wyeth-Ayerst Laboratories Division ("WYETH-AYERST").
WHEREAS, KING markets and distributes the pharmaceutical product
ramipril in the United States and Puerto Rico under the registered trademark
ALTACE(R);
WHEREAS, AHPC is engaged in the business of and has expertise in, among
other things, the promotion of pharmaceutical products to physicians; and
WHEREAS, KING and AHPC desire to work together to promote the Product
in the United States, its territories and possessions, the District of Columbia
and the Commonwealth of Puerto Rico upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and incorporated
herein for all purposes of this Agreement (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references herein to "Articles" or "Sections" are to
Articles or Sections of this Agreement.
2. GRANT OF RIGHTS TO AHPC
2.1 COPROMOTION RIGHTS.
(a) KING hereby grants to AHPC and its Affiliates, on an
exclusive basis together with KING and its Affiliates, the right to promote the
Product in the Territory during the Term of this Agreement, upon and subject to
the terms and conditions set forth in this Agreement.
(b) The grant of rights set forth in Section 2.1(a) is subject
to and limited by (i) the existing agreement with Medeva Pharmaceuticals, Inc.
("Medeva") pursuant to which Medeva and KING have agreed that Medeva, during the
next twelve (12) month period, will continue to distribute to Physicians in the
Territory, those samples of the Product that Medeva previously received from
KING pursuant to that certain copromotion agreement between KING and Medeva
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dated May 7, 1999, which Agreement has been terminated as of May 16, 2000, at a
rate of no more than 10,000 physician sample packs of the Product per each three
(3) month period, (ii) the right of KING and its Affiliates to promote the
Product in the Territory during the Term of this Agreement in accordance with
the terms hereof; and (iii) other applicable limits and restrictions on KING set
forth in the HMR AGREEMENTS, true and correct copies of which have been provided
to AHPC prior to the date of this Agreement.
(c) In consideration of the rights granted hereunder, upon
execution of this Agreement, AHPC shall pay to KING an amount in cash (by wire
transfer of immediately available funds to an account designated by KING in
writing) equal to Twenty-Five Million Dollars ($25,000,000.00) (the "INITIAL
PAYMENT").
(d) In further consideration of the rights granted hereunder,
AHPC shall pay to KING an amount in cash (by the same means as described in
Section 2.1(c)), equal to Fifty Million Dollars ($50,000,000) within thirty (30)
days after the Initiation Date, provided this Agreement shall not theretofore
have been terminated or written notice of termination have theretofore been
given by AHPC in accordance with Section 11.3.
2.2 TRADEMARK.
(a) Required Use and Compliance. Each party shall promote the
Product only under the Trademarks. Neither Party shall use any Trademarks other
than those listed in Exhibit 2.2 hereto in promoting the Product without the
prior approval of the AMC.
(b) Validity of Trademarks. Each party acknowledges the
validity of the other party's right, title and interest in and to its Trademarks
and shall not have, assert or acquire any right, title or interest in or to any
of such other party's Trademarks, except as otherwise explicitly provided in
this Agreement.
(c) Use of Trademarks. In connection with the subject matter
hereof, each party shall use the other party's Trademarks only in a manner
consistent with the trademark usage guidelines (the "Guidelines") and shall not
use any such Trademark in connection with any goods or products other than the
Product, notwithstanding that such goods or products are dissimilar to the
Product or have a different use. The parties shall develop the Guidelines as
soon as practicable after the Effective Date. Each party shall use the other
party's Tradermarks only to the extent authorized herein.
(d) Notice of Infringement.
(i) Each party shall give the other party notice of
any infringement or threatened infringement of any of such other
party's Trademarks used in connection with the Product. Each party
shall determine in its sole discretion what action, if any, to take in
response to the infringement or threatened infringement of that party's
Trademark, other than the primary brand Trademark(s). The Parties
intend that ALTACE(R) shall be the primary brand Trademark (the
"Primary Brand Trademark"). In the event that one party chooses to take
enforcement action in response to the infringement or threatened
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infringement of its Trademark, the other Party shall reasonably
cooperate in such enforcement; provided, however, the enforcing party
shall reimburse the other party for reasonable expenses incurred by the
other party that are related to such enforcement.
(ii) As to the Primary Brand Trademark(s) only, if
the Party owning such a Trademark fails to take enforcement action
within one hundred twenty (120) days following notice thereof in
response to the infringement or threatened infringement of its
Trademark, the other Party shall have the right, in its sole
discretion, to conduct litigation or other enforcement proceedings at
its own expense, naming the Trademark owner as a party plaintiff. In
such event, the Trademark owner shall reasonably cooperate in such
enforcement; provided, however, the enforcing Party shall reimburse the
other party for reasonable expenses incurred by the other party that
are related to such enforcement.
(iii) The parties shall cooperate in good faith with
respect to all Trademark enforcement action hereunder, and each party
shall notify the other party promptly of all substantive developments
with respect to such Trademark enforcement actions, including, without
limitation, all material filings, court papers and other related
documents. Each party shall consider the timely given, reasonable
comments and advice of the other party with respect to the strategy
employed and submissions made relative to any Trademark enforcement
actions. The party enforcing such Trademark action shall retain for its
own account any damages or other monetary relief obtained in connection
therewith.
3. RESPONSIBILITIES OF AHPC
3.1 PROMOTION BY AHPC.
(a) Commencing as of the Initiation Date and continuing
throughout the Term, AHPC shall use its Commercially Reasonable Efforts to
market and promote the Product to Physicians in the Territory in accordance with
the then current Marketing Plan. Without limiting the foregoing, AHPC agrees
that at all times during the period commencing as of the Initiation Date through
December 31, 2001, AHPC or its Affiliates shall (i) have at least one thousand
(1,000) field sales representatives Detailing the Product to Physicians in the
Territory, and (ii) perform Details at a minimum rate of one million (1,000,000)
per twelve (12) month period. For all periods commencing after January 1, 2002,
the target and minimum number of Details shall be determined by the AMC;
provided, however, that AHPC or its Affiliates shall continue to perform 66 2/3%
of the Details through December 31, 2002. Beginning January 1, 2003 and
thereafter, AHPC or its Affiliates shall be responsible for performing at least
fifty percent (50%) of such Details. The number of Details required in this
Section 3.1 shall be conducted and spaced according to the current Marketing
Plan then in effect, provided, however, that the total number of Details
required in any annual Marketing Plan shall not be less than fifty percent (50%)
of the total number of Details required in the Marketing Plan for the previous
year, unless AHPC can demonstrate good cause, to KING's reasonable satisfaction,
that a further reduction in the number of Details would be prudent given the
then current market conditions (which determination shall not be subject to
Section 8.7(b)). AHPC agrees, subject to KING providing AHPC with a sufficient
quantity of samples of the Product, to use its Commercially Reasonable Efforts
to provide, and/or to cause its
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Affiliates to provide, samples of the Product to Physicians in accordance with
the then current Marketing Plan.
(b) Commencing as of the Initiation Date and continuing
throughout the Term, AHPC shall, in addition to performance of the Details as
set forth in Section 3.1(a), use its Commercially Reasonable Efforts to market
the Product in accordance with the then current Marketing Plans, which shall
include a requirement of attendance at the medical conventions listed in Exhibit
3.1 attached hereto to promote the Products, unless otherwise agreed by the
parties.
(c) In performing its duties hereunder, AHPC shall, and shall
cause its employees and the employees of its relevant Affiliates to, comply with
all regulatory, professional and legal requirements, including, without
limitation, the FDA's regulations and guidelines concerning the advertising of
prescription drug products, the American Medical Associations' Guidelines on
Gifts to Physicians, the PhRMA Guidelines for Marketing Practices, and the ACCME
Standards for Commercial Support of Continuing Medical Education, which may be
applicable to the services (including without limitation the warehousing,
handling and distribution of the Product samples) to be provided by AHPC
hereunder. No employee of AHPC or of any if its relevant Affiliates shall make
any representation, statement, warranty or guaranty with respect to the Product
that is not consistent with current labeling of the Product or promotional
materials approved by the AMC, that is deceptive or misleading, or that
disparages the Products or the good name, good will and reputation of KING. AHPC
represents and warrants that its services hereunder will be provided in a
professional, ethical and competent manner.
3.2 AHPC DETAIL REPORTS.
Throughout the Term, AHPC shall provide KING with a report
(each an "AHPC DETAIL REPORT"), within thirty (30) calendar days after the end
of each calendar quarter, with the first such report due for the calendar
quarter during which the Initiation Date occurs, setting forth the following
information regarding the efforts of AHPC's sales force in promoting and
Detailing the Product during the preceding quarter (or part thereof): (i) the
number of Details made and recorded by AHPC's standard record keeping procedures
based on data recorded by the sales force; (ii) the names and addresses of the
Physicians called upon; (iii) the percentage of physicians Detailed who were
provided with samples of the Product; (iv) the actual number of such samples
delivered on each Detail; and (v) such other information as may be required in
the then current Marketing Plan. Each such AHPC Detail Report shall be in an
electronic format and in hard copy form.
3.3 AHPC SALES FORCE.
(a) Except as agreed to by the parties and subject to the
terms and conditions of this Agreement, AHPC shall be solely responsible for the
costs and expenses of establishing, maintaining and training AHPC's (and its
Affiliates') sales force of sufficient size to perform its obligations
hereunder, and conducting AHPC's other activities under this Agreement;
provided, however, that (i) such training shall be conducted in accordance with
Section 5.1 and (ii) the content and strategic direction of any training
provided by AHPC that relates specifically to the Product shall be coordinated
with the AMC. Notwithstanding the foregoing, AHPC shall pay incentive
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compensation to its sales representatives having primary responsibility for
Detailing the Product with respect to sales of the Product in the Territory in
accordance with AHPC's Sales Incentive Compensation Plan ("SICP") for AHPC's own
products, it being understood that AHPC shall determine the target payout for
the Product in a manner consistent with the way in which it determines the
target payouts for prescription drug products of comparable commercial
potential.
(b) To the extent practicable, all written, electronic and
visual communications provided to any of AHPC's (and its Affiliates') sales
representatives regarding strategy, positioning or selling messages for the
Product will, at the request of the AMC, be subject to review by the AMC and
AHPC's Copy Clearance Committee in accordance with Section 5.2(a).
3.4 COMPETITIVE PRODUCTS.
From the Effective Date through the end of the term of this
Agreement, if AHPC sells, details, markets, promotes or otherwise distributes
any Competitive Product in the Territory, the following provisions shall apply:
(a) NOTICE. AHPC shall give KING at least one hundred eight
(180) days' prior written notice of AHPC's intent to sell, detail,
market, promote or otherwise distribute any product which AHPC believes
is or could become a Competitive Product in the Territory, except where
giving such notice is not feasible (including without limitation, where
a Competitive Product is acquired by AHPC through acquisition or
merger, in which case such written notice shall be given promptly after
such acquisition or merger is closed).
(b) NEGOTIATIONS; REACQUISITION OPTION. Once a product has
become a Competitive Product, and KING provides written notice thereof
to AHPC, AHPC shall have ninety (90) days to notify KING as to whether
AHPC intends to divest its interest in such Competitive Product. In the
event that AHPC elects to divest its interest in such Competitive
Product, AHPC shall use its Commercially Reasonable Efforts to identify
a third party purchaser to whom AHPC will divest its interest in such
Competitive Product and to enter into a definitive agreement with such
third party for such divestiture as soon as practicable. If AHPC elects
not to divest its interest in such Competitive Product or fails to
complete any divestiture within twelve (12) months after providing KING
with notice electing to pursue such divestiture, the Parties shall
attempt in good faith to either (i) establish mutually acceptable
financial terms for KING to copromote such Competitive Product in the
Territory during the remaining term of this Agreement, or for some
other commercial relationship, such as royalties to KING upon sales of
such Competitive Product in the Territory during the remaining term of
this Agreement or (ii) negotiate an adjustment to the Promotion Fee to
be paid to AHPC under Section 9.1 hereof and other applicable terms of
this Agreement. If the parties are unable to establish mutually
acceptable terms under options (i) or (ii) above within ninety (90)
days following such KING notice, as such time period may be extended by
mutual agreement of the parties, KING shall have the option,
exercisable at its sole discretion, to reacquire all marketing rights
to the Product in the Territory in accordance with Section 3.4(c)
below, and simultaneously terminate this Agreement upon providing AHPC
at least one hundred eighty (180) days' prior written notice.
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(c) PURCHASE PRICE FOR REACQUISITION OF MARKETING RIGHTS. In
the event that KING elects to reacquire all marketing rights to the
Product in the Territory, KING agrees to pay to AHPC an amount equal to
the Net Sales of the Product for the twelve month period preceding such
reacquisition multiplied by two (2), which amount shall be paid in cash
in immediately available funds by wire transfer to an account
designated by AHPC.
4. RESPONSIBILITIES OF KING
4.1 PROMOTION OF PRODUCT BY KING.
(a) Commencing as of the Initiation Date and continuing
throughout the Term, KING shall use its Commercially Reasonable Efforts to
market and promote the Product to Physicians in the Territory in accordance with
the then current Marketing Plan. Without limiting the foregoing, KING agrees
that at all times during the period commencing as of the Initiation Date through
December 31, 2001, KING or its Affiliates shall (i) have at least two hundred
fifty (250) field sales representatives Detailing the Product to Physicians in
the Territory, and (ii) perform Details at a minimum rate of five hundred
thousand (500,000) per twelve (12) month period. For all periods commencing
after January 1, 2002, the target and minimum number of Details shall be
reasonably determined by the AMC; provided, however, that KING or its Affiliates
shall continue to perform 33-1/3% of the Details through December 31, 2002.
Beginning on January 1, 2003 and thereafter, KING or its Affiliates shall be
responsible for performing at least fifty percent (50%) of such Details. The
number of Details required in this Section 4.1 shall be conducted and spaced
according to the current Marketing Plan then in effect, provided, however, that
the total number of Details required in any annual Marketing Plan shall not be
less than fifty percent (50%) of the total number of Details required in the
Marketing Plan for the previous year, unless AHPC can demonstrate good cause to
KING's reasonable satisfaction that a further reduction in Details would be
prudent given the then current market conditions (which determination shall not
be subject to Section 8.7(b)). KING agrees to use its Commercially Reasonable
Efforts to provide, and/or cause its Affiliates to provide, samples of the
Product to Physicians in accordance with the then current Marketing Plan.
(b) Commencing as of the Initiation Date and continuing
throughout the Term, KING shall, in addition to performance of the Details as
set forth in Section 4.1(a), use its Commercially Reasonable Efforts to market
the Product in accordance with the then current Marketing Plan, which shall
include a requirement of attendance at the medical conventions listed in Exhibit
4.1 attached hereto to promote the Product, unless otherwise agreed by the
parties.
(c) In performing its duties hereunder, KING shall, and shall
cause its employees and the employees of its relevant Affiliates to, comply with
all regulatory, professional and legal requirements, including, without
limitation, the FDA's regulations and guidelines concerning the advertising of
prescription drug products, the American Medical Associations' Guidelines on
Gifts to Physicians, the PhRMA Guidelines for Marketing Practices, and the ACCME
Standards for Commercial Support of Continuing Medical Education, which may be
applicable to the services (including without limitation the production,
warehousing, handling and distribution of the Product and Product samples) to be
provided by KING hereunder. No employee
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of KING or of any of its relevant Affiliates shall make any representation,
statement, warranty or guaranty with respect to the Product that is not
consistent with current labeling of the Product or promotional materials
approved by the AMC or that is deceptive or misleading, or that disparages the
Products or the good name, good will and reputation of AHPC. KING represents and
warrants that its services hereunder will be provided in a professional, ethical
and competent manner.
4.2 MANUFACTURE, SHIPMENT, ETC. OF THE PRODUCT.
KING (and/or its Affiliates) shall have the sole
responsibility for the manufacture, shipment, distribution, warehousing, billing
and order confirmation of the Product and for the collection of receivables
resulting from sales of the Product in the Territory. AHPC may make
recommendations to KING from time to time regarding the price of and pricing
strategies for the Product during the Term, including, without limitation, price
increases and decreases and the timing thereof, provided, however, that KING
shall have the sole authority to determine the price of the Product during the
Term, including price increases and decreases and the timing thereof. KING shall
manufacture or cause to be manufactured the Product and Product samples in
accordance with all applicable laws including without limitation the Act and all
applicable regulations thereunder, the NDA and Good Manufacturing Practices.
KING shall use its Commercially Reasonable Efforts to ensure that adequate
quantities of the Product and Product Samples are available to meet the
anticipated demand for the Product and Product Samples during the Term of this
Agreement.
4.3 KING SALES FORCE.
(a) Except as otherwise agreed to by the parties and subject
to the terms and conditions of this Agreement, KING shall be solely responsible
for the costs and expenses of establishing, maintaining and training KING's (and
its Affiliates') sales force of sufficient size to perform its obligations
hereunder, and conducting KING's other activities under this Agreement;
provided, however, that such training shall be conducted in accordance with
Section 5.1. Notwithstanding the foregoing, KING shall pay incentive
compensation to its sales representatives having primary responsibility for
Detailing the Product with respect to sales of the Product in the Territory in
accordance with KING's Sales Incentive Compensation Plan ("SICP") for KING's own
products, it being understood that KING shall determine the target payout for
the Product in a manner consistent with the way in which it determines the
target payouts for prescription drug products of comparable commercial
potential.
(b) To the extent practicable, all written, electronic and
visual communications provided to any of KING's sales representatives regarding
strategy, positioning or selling messages for the Product will, at the request
of the AMC, be subject to review by the AMC and AHPC's Copy Clearance Committee
in accordance with Section 5.2(a).
4.4 KING DETAIL AND SALES REPORTS.
(a) Throughout the Term, KING shall provide AHPC with a report
(each a "KING DETAIL REPORT"), within thirty (30) calendar days after the end of
each calendar quarter, with the first such report due for the calendar quarter
during which the Initiation Date occurs, setting forth the following information
regarding the efforts of KING's sales force in promoting and
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Detailing the Product during the preceding quarter (or part thereof): (i) the
number of Details made and recorded by record keeping procedures approved by the
AMC; (ii) the names and addresses of the Physicians called upon; (iii) the
percentage of physicians Detailed who were provided with samples of the Product;
(iv) the average number of such samples delivered on each Detail; and (v) such
other information as may be required in the then current Marketing Plan. Each
such KING Detail Report shall be in an electronic format and in hard copy form.
(b) Throughout the Term, KING shall provide to AHPC a daily
report (each a "KING DAILY SALES REPORT") setting forth the gross sales of the
Product in the Territory for the previous business day. Additionally, within
fifteen (15) days after the end of each month, KING shall provide to AHPC a
summary report (each a "KING Summary Sales Report") setting forth the gross
sales of the Product in the Territory for such month, the gross sales of the
Product in the Territory since January 1 of such year and the itemized
deductions taken in calculating all such Net Sales, the Net Sales of the Product
in the Territory for such month, and the Net Sales of the Product in the
Territory since January 1 of such year. All reports required by this Section
4.4(b) shall be provided to AHPC either by facsimile or transmitted
electronically, in each case with a confirmation copy sent by mail.
(c) KING shall furnish to AHPC, within thirty (30) calendar
days after the end of each Agreement Quarter and each calendar quarter for which
Residual Payments are due, a report setting forth in reasonable detail the
calculation of the total Net Sales of Products in the Territory for such
Agreement Quarter or calendar quarter in a form approved by the AMC.
4.5 HMR AGREEMENTS.
(a) KING shall not amend, terminate or otherwise modify (in
each case, in any way that would adversely affect AHPC's rights under this
Agreement or the ability of KING to perform its obligations under this
Agreement) the HMR Agreements or any provisions thereof, or assign any such
Agreements or any intellectual property or other rights or assets conveyed,
licensed or granted thereunder, without the prior written consent of AHPC.
(b) In connection with the HMR Agreements, KING shall give
AHPC immediate notice of its intentions with respect to the cure by KING of any
breach or default or alleged breach or default by KING under such HMR
Agreements, and (i) if KING states in such notice that it intends to cure such
default or breach, it shall use its best efforts to do so in a timely fashion,
or (ii) if KING states in such notice that it does not intend to do so, or it
fails to do so within thirty (30) days, then AHPC may, at its option, attempt to
cure such breach or default, at KING's cost and expense, and KING shall use its
best efforts to assist AHPC in doing so or, if AHPC is not permitted, under the
applicable HMR Agreement to cure such breach, AHPC may require KING to cure such
breach and KING shall use its best efforts to do so in a timely fashion,
provided, that, to the extent KING has insufficient financial resources to cure
such breach AHPC shall loan such funds to KING, under terms and conditions to be
mutually agreed upon by the parties.
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4.6 PEDIATRIC EXTENSION.
KING shall complete all additional studies of the Product
which the AMC determines are or may be required to obtain pediatric labeling for
the Product in the Territory. Upon completion of such studies, KING shall timely
apply to the FDA for an exclusive pediatric extension with respect to the
Product, or its equivalent, and shall use its Commercially Reasonable Efforts to
pursue the granting of such extension. The costs of such studies shall be shared
by the Parties in accordance with Section 9.5 hereof.
5. TRAINING AND PROMOTIONAL MATERIAL
5.1 TRAINING.
(a) Each of the parties agrees to make its sales
representatives available for training with respect to the marketing and sale of
the Product. The parties agree that AHPC shall, subject to the AMC's approval,
be responsible for developing and, if applicable, conducting training programs
for each of AHPC's and KING's sales forces. KING shall participate in conducting
such training to the extent requested by AHPC and specifically with respect to
matters relating to the nature and regulatory oversight of the Product. Training
shall be carried out at a time which is mutually acceptable to the parties. The
parties' relevant local operating entity Affiliates shall be responsible for the
development and conduct of training programs, subject to the direction of AHPC
and the oversight of the AMC, on an ongoing basis to assure a consistent,
focused promotional strategy. As additional members are added to the parties'
respective sales forces responsible for marketing the Product, training will be
given to groups of the newly selected members.
(b) Each party shall decide where the training of its sales
representatives will occur and absorb the costs of transporting, housing and
maintaining their respective personnel for such training. Subject to the
oversight of the AMC, all sales and marketing training materials will be
prepared and supplied by AHPC and the Direct Cost of such training materials
shall be included in the Budgets of Marketing Expenses and shall be payable
pursuant to Section 9.3.
5.2 PROMOTIONAL MATERIALS.
(a) All written sales, promotion and advertising materials
("MARKETING MATERIALS") relating to the Product shall be consistent with the
Marketing Plans approved by the AMC. All Marketing Materials shall be subject to
the copy clearance procedures established by AHPC from time to time, including
review by the copy clearance committee of AHPC; provided, that KING shall
participate in any such reviews. Approved Marketing Materials shall be provided
to KING for final legal and regulatory approval, which disapproval or approval
and submission shall occur within three (3) days after KING's receipt of the
Copy Clearance Committee approved Marketing Materials. A copy of AHPC's current
copy clearance procedures is attached hereto as Exhibit 5.2, it being understood
that AHPC has the right to modify such copy clearance procedures from time to
time and will notify KING upon doing so to the extent any such modifications
impact the review of Marketing Materials pursuant to this Section 5.2.
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(b) In all written or visual materials related to the Product
which identify either of the parties, the parties will be presented and
described to the medical communities (including, for example, the physician,
pharmacy, governmental, reimbursement and hospital sectors) as joining in the
promotion of the Product in the Territory. All such written and visual materials
and all documentary information, promotional material, and oral presentations
(where practical) regarding the promoting of the Product will state this
arrangement and will display the names and logos of the parties with equal
prominence, as permitted by applicable law.
(c) All Direct Costs associated with the preparation and
distribution of such Marketing Materials shall be included in the Budgets of
Marketing Expenses and shall be payable by AHPC and KING pursuant to Section
9.3.
6. PRODUCT SAMPLES
6.1 SUPPLY, STORAGE AND DISTRIBUTION OF SAMPLES.
KING shall provide AHPC, from time to time on a schedule and
in such quantities to be reasonably determined by the AMC, with samples of the
Product to be used by AHPC solely in marketing and promoting the Product in the
Territory. KING shall ship the samples to one central warehouse of AHPC, as
designated by AHPC, and the risk of loss and responsibility for handling and
warehousing of the samples shall pass to AHPC upon delivery to a carrier
designated by AHPC. AHPC shall be responsible for distributing the samples to
its sales representatives in a timely manner. AHPC shall also be responsible for
securing the return of and reconciling existing sample inventories from
discontinued field sales representatives. All Product samples provided to AHPC
hereunder shall be accompanied by an appropriate Certificate of Analysis of the
Product specifications and an indication of expiration dating.
6.2 USE OF SAMPLES.
Product samples supplied by KING to AHPC or to KING's sales
representatives shall be used by AHPC and KING solely in making Detail calls to
Physicians in the Territory pursuant to this Agreement. Upon its receipt of
Product samples, AHPC shall be responsible for accountability and compliance
with the PDMA, and other applicable federal, state and local laws and
regulations relating to such samples or the distribution of same. KING shall be
responsible for accountability and compliance with the PDMA, and other
applicable federal, state and local laws and regulations relating to Product
samples that KING supplies for distribution by KING's sales representatives.
AHPC and KING each shall be responsible for adherence by its respective sales
representatives to such laws and regulations. Each party or its appointed agents
shall have the right to audit the records and/or reports for the Product
samples, as required to be kept by the other party under the PDMA, during normal
business hours, at convenient times and upon no less than five (5) calendar
days' prior notice.
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6.3 COST OF SAMPLES.
All costs and expenses associated with the manufacture,
shipment, warehousing, storage and distribution of Product samples shall be
included in the Budgets of Marketing Expenses and shall be payable by AHPC and
KING pursuant to Section 9.3.
7. CERTAIN REGULATORY MATTERS
7.1 LICENSES.
Each party hereto shall, at its sole cost and expense,
maintain in full force and effect all necessary licenses, permits and other
authorizations required by law, regulation, ordinance or statute to carry out
its duties and obligations under this Agreement.
7.2 REGULATORY RESPONSIBILITY.
All regulatory matters regarding the Product shall remain
under the control of KING, subject to the participation by AHPC in matters
related to the marketing of the Product to Physicians in the Territory.
Notwithstanding the foregoing, KING shall promptly provide AHPC with copies of
all communications received from any regulatory agency or authority concerning
the Product or any Marketing Materials and shall submit copies of all
communications and filings to be made to any regulatory agency or authority for
prior review and comment. KING shall give due consideration to all comments
timely made by AHPC and shall notify AHPC, in writing, if it declines to address
any such comments, stating the reason therefor.
7.3 EFFICACY AND SAFETY INFORMATION.
KING shall furnish AHPC with efficacy and safety information
reasonably requested by AHPC to assist AHPC in promoting the Product to
Physicians in the Territory, including without limitation relevant clinical and
safety data included in the NDA for the Product and additional information, if
any, related to the efficacy and safety profile of the Product since the
Product's approval by the FDA. Except for that information that is to be
disclosed to Physicians in connection with conducting Details, such information
shall be treated as confidential and proprietary information pursuant to Section
12 of this Agreement and shall not be disclosed to third parties without KING's
prior written approval or direction.
7.4 NOTICE OF ADVERSE EVENTS.
Each party shall promptly notify the other party of any
event(s) that materially affect(s) or could materially affect the marketing of
the Product, including without limitation adverse drug reactions and
governmental inquiries. Serious Adverse Events for the Product learned of by
AHPC shall be submitted in writing to KING within two (2) business days from the
date of learning thereof by AHPC. Non-Serious Adverse Events for the Product
learned of by AHPC shall be submitted in writing to KING no more than five (5)
business days from the date of learning thereof by AHPC. KING and/or its
Affiliates shall have the sole responsibility for reporting and responding to
such events to applicable regulatory authorities in the Territory; provided,
that AHPC
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may take such actions (including issuing such reports) as it determines is
required by applicable law. KING shall promptly provide AHPC with copies of all
periodic reports and product safety update reports relating to the Product which
are filed or received from third parties. Notwithstanding the foregoing, within
thirty (30) days after the Effective Date, the parties' respective regulatory
affairs departments shall meet and establish a SOP addressing the
responsibilities of each party with respect to adverse event reporting, which
SOP shall supercede this Section 7.4, it being understood, however, that KING
shall have the responsibility of reporting all adverse events to the appropriate
regulatory authorities.
7.5 PRODUCT TECHNICAL COMPLAINTS AND RECALLS.
(a) KING shall have the sole authority and responsibility to
respond to any regulatory agencies, including without limitation the FDA, to
respond to Product Technical Complaints and medical complaints and to handle all
returns, recalls or market withdrawals of the Product in accordance with
applicable law, at KING's cost and expense; provided, however, that if any such
returns or recalls of Product samples are caused solely by actions or inactions
by AHPC constituting a breach of the provisions of this Agreement or a violation
of applicable law, AHPC, as KING's sole remedy, shall bear all reasonable Direct
Costs associated with such actions or in actions in connection therewith,
provided, however that AHPC shall have no obligation to reimburse KING for any
incidental or consequential damages incurred in connection therewith, including,
without limitation, any lost profits. Prior to the Initiation Date, the AMC
shall adopt a standard operating procedure ("SOP") for handling Product
Technical Complaints, medical inquiries and adverse event information received
by AHPC not otherwise specified in this Agreement. The AMC shall revise the SOP
from time to time during the Term as the AMC deems necessary.
(b) Each party shall promptly (but in any case, not later than
48 hours) notify the other party in writing of any order, request or directive
of a court or other governmental authority to recall or withdraw the Product.
KING shall be solely responsible for determining whether to issue a recall or
withdrawal and for the cost and expense of any such recall or withdrawal of the
Product, subject to reasonable consultation with AHPC.
(c) Because the Product is manufactured by or on behalf of
KING and the underlying NDA is owned solely by KING or an Affiliate of KING,
AHPC shall send Product Technical Complaints ("PTC") to KING. If the PTC cannot
be categorized as a B Complaint (meaning no actual or potential harm to
patient), then the PTC will be categorized as an A Complaint. A Complaints shall
be sent to KING within twenty-four (24) hours of receipt and B Complaints shall
be sent within three (3) business days of receipt, but no more than four (4)
calendar days from the receipt date by AHPC. KING shall promptly notify AHPC
following receipt by KING of any PTC's.
7.6 RETURNS.
Any Product returned to AHPC shall be shipped to KING's or its
designee's nearest facility, with shipping and other direct costs to be paid by
KING. AHPC shall incur no liability or any nature in the handling of such
returns unless such Products were stored improperly by AHPC.
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7.7 NOTICE OF GOVERNMENT INSPECTIONS.
KING agrees that, to the extent it becomes aware of the
results, observations and/or outcome of any inspections or audits of the
facilities or operations involved in the manufacture, processing, testing or
packaging of the Product conducted by governmental agencies, including without
limitation the FDA, KING will notify AHPC of any such information as it relates
to the Product within three (3) days of obtaining the information. KING will
provide AHPC copies of reports of quality audits conducted by KING and will
apprise AHPC of material manufacturing issues affecting supply of the Product.
7.8 GOVERNMENT INQUIRIES.
Upon being contacted by the FDA or any other federal, state or
local agency for any regulatory purpose pertaining specifically to this
Agreement or to the Product, a party shall immediately notify the other party.
AHPC agrees that it shall not respond to any such agency making an inquiry of it
until and only as directed by KING or its Affiliates, subject to reasonable
consultation with AHPC; provided, however, that the foregoing shall not be
construed to prevent AHPC in any way from complying with the any regulatory
authority or applicable laws, rules or regulations. AHPC may permit unannounced
FDA or similar unannounced inspections and respond to the extent necessary to
comply with its obligations under applicable law. AHPC shall provide KING with
notice of any other inspection and shall allow KING to participate to the extent
necessary, in the reasonable opinion of KING, as such inspections and responses
pertain to the Product, at KING's cost and expense.
7.9 MEDICAL INQUIRIES.
KING shall handle all medical inquiries concerning the
Product. AHPC shall refer all medical information requests to the Product
Information Services Department of KING in accordance with the procedures set
forth in the SOP referred to in Section 7.5.
8. MANAGEMENT COMMITTEE
8.1 ESTABLISHMENT OF THE AMC.
The parties hereto recognize that it is in the best interests
of both parties to (a) maximize the sales and profits of the Product in the
Territory and (b) optimize the marketing of the Product in the Territory during
the Term and to coordinate the activities of both parties with respect to the
promotion of the Product in the Territory. Accordingly, the parties hereby
establish a management committee (the "ALTACE MANAGEMENT COMMITTEE" or "AMC")
made up of three (3) representatives of each party. One of AHPC's senior
representatives shall chair the AMC. Both parties shall have the right from time
to time to substitute individuals, on a permanent or temporary basis, for any of
its previously designated members of the AMC. The members appointed by each
party shall be vested with appropriate decision-making authority and power by
such party. Members of each such committee shall be employees of the parties (or
their Affiliates), respectively, and shall not be outside consultants,
independent contractors or outside legal counsel,
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but such Persons are permitted to attend meetings of the AMC. Each party shall
bear its own costs associated with its participation on the AMC.
8.2 PURPOSE AND RESPONSIBILITIES OF THE AMC.
(a) The purpose of the AMC is to oversee the marketing and
promotion of the Product as contemplated by this Agreement by coordinating the
marketing and promotional efforts of the parties in the Territory and maximizing
the sales thereof. Accordingly, in addition to the specific matters addressed
elsewhere in this Agreement, and subject to the other provisions of this
Agreement the AMC shall approve the following:
(i) marketing and promotion activities for the
Product;
(ii) the annual Marketing Plan for the Product and
related Budget of Net Sales and Marketing Expenses;
(iii) the market definition against which the Product
will be measured;
(iv) Product production forecasts;
(v) Marketing Expenses;
(vi) targets for sales force staffing, number and
frequency of quarterly and annual Details;
(vii) Product positioning, strategy and objectives;
(viii) determining the format and quantities of
promotional sales, marketing and educational materials for the Product
which will be provided to the Physicians called upon in the Details by
either party's sales representatives;
(ix) quantities and schedule of delivery of Product
samples to be provided by KING to each Party's sales representatives
and to the Physicians called upon in the Details by each Party's sales
force; and
(x) Managed Health Care strategy tactics.
8.3 AMC MEETINGS.
During the Term of this Agreement, the AMC shall meet: (a) at
least once each Agreement Quarter on a date and at a location to be agreed to by
the AMC, and (b) upon written notice by either party to the other that a meeting
is required or requested, in which case a meeting will be held within thirty
(30) calendar days of such notice on a date and at a location to be agreed to by
the parties, or sooner if warranted by circumstances. Notice requesting a
meeting shall include adequate information describing the activity to be
reviewed. Any meetings of the AMC may be held in person at a location to be
agreed to by the parties, or by videoconference or teleconference.
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Other representatives of the parties may attend AMC meetings as participants. At
least one week prior to any meeting of the AMC, each of the parties shall
provide the other party with a proposed agenda of the matters to be discussed at
such meeting. The parties shall agree, at the first meeting of the AMC, upon
procedures for maintaining meeting minutes.
8.4 VOTE AND APPROVAL.
The AMC may take action on a matter at a meeting only if a
quorum exists with respect to that matter. The attendance of at least two (2)
members of the AMC of each party at a meeting shall constitute a quorum for the
transaction of business. Each member of the AMC shall be entitled to cast one
(1) vote on any matter to be acted upon at any meeting of the AMC. All decisions
made by the AMC shall require a unanimous vote by the members of the AMC present
at the meeting. Any action required or permitted to be taken at any meeting of
the AMC may be taken without a meeting if the action is taken by all members of
the AMC. The action must be evidenced by one or more written consents describing
the action taken and signed by each member of the AMC.
8.5 MARKETING PLAN AND BUDGET.
On or prior to November 1 of each year during the Term of this
Agreement, AHPC shall develop a Marketing Plan and the related Budget of Net
Sales and Marketing Expenses for the following calendar year and submit such
Marketing Plan to the AMC for approval; provided, that the Marketing Plan for
the period between the Initiation Date and December 31, 2000 shall be developed
by AHPC and submitted for the approval of the AMC on or prior to the Initiation
Date, which shall be based on the Altace Preliminary Promotional Plan dated May
11, 2000. Each Marketing Plan shall set forth the manner in which the Product is
to be promoted and Detailed during the period to which the Marketing Plan
relates and shall include, at a minimum: (a) the minimum number of quarterly and
annual Details to be provided by each party and targets therefor which shall be
allocated in a professionally equitable manner; (b) Product positioning,
strategy and tactics with supporting advertising and promotional activity to be
undertaken; (c) the Budget of Net Sales and Marketing Expenses, including,
without limitation, direct to consumer advertising; (d) any training and/or
sampling programs to be conducted; (e) medical and education programs to be
conducted; (f) public relations activities; and (g) such other information
relating to the marketing of the Product as deemed advisable by the AMC. Neither
party shall make any material change in any previously approved Marketing Plan
without the prior written approval of the AMC. Additionally, within thirty (30)
days after the Effective Date, KING shall submit to the AMC for review and
approval an initial Product production forecast.
8.6 ADDITIONAL STUDIES, LINE EXTENSIONS AND NEW PRODUCTS.
(a) Any proposals for additional clinical studies of any Product,
including, without limitation, Phase IV studies and clinical studies for
purposes of expanding the indications or otherwise changing the label for such
Product shall be submitted to the AMC for consideration, whether such studies
are proposed by AHPC or KING or have been submitted by Aventis to KING for
consideration pursuant to the HMR Agreements. If AHPC, in its sole discretion,
elects to equally share with KING, those Direct Costs for such study for which
KING
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will be responsible (i.e., after any cost sharing by Aventis), AHPC shall be
entitled to receive fifty percent (50%) of any royalties that KING may receive
from Aventis in connection with such study. If AHPC, in its sole discretion,
elects not to share in the costs of such study, KING shall be free to proceed
with such study and AHPC shall have no right to receive any portion of any
royalty KING receives from Aventis in connection therewith.
(b) Any proposals for development of additional Products, including,
without limitation, new formulations and line extensions, shall be submitted to
the AMC for consideration, whether such development activities are proposed by
KING or have been submitted by Aventis to KING for consideration pursuant to the
HMR Agreements. If AHPC, in its sole discretion, elects to equally share with
KING, those Direct Costs for such development activities for which KING will be
responsible (i.e., after any cost sharing by Aventis), AHPC shall be entitled to
receive fifty percent (50%) of any royalties that KING may receive from Aventis
in connection with such development activities and any such additional Products
shall become Products under this Agreement. If AHPC, in its sole discretion,
elects not to share in the costs of such development activities, KING shall be
free to proceed with such development activities and AHPC shall have no right to
receive any portion of any royalty KING receives from Aventis in connection
therewith and such additional Products shall not be considered to be Products
under this Agreement (i.e., KING will have the right to receive all the benefits
in connection with such additional Products and AHPC shall have no obligations
in connection therewith.
8.7 DISPUTE RESOLUTION.
(a) The parties recognize that disputes as to certain matters
may from time to time arise during the Term of this Agreement that relate to
either party's rights and/or obligations hereunder. It is the objective of the
parties to establish procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resort to litigation. To accomplish this objective, the parties agree to follow
the procedures set forth in this Section 8.7 if and when a dispute arises under
this Agreement.
(b) Unless otherwise specifically recited in this Agreement,
disputes between the parties under this Agreement shall be first referred to the
AMC by either party as soon as reasonably possible after such dispute has
arisen. If the AMC is unable to resolve such a dispute within fifteen (15) days
of being requested by a party to resolve such dispute, either party may, by
written notice to the other, have such dispute referred to their respective
executive officers designated below or their designees, for attempted resolution
by negotiations within thirty (30) days after such notice is received. The
designated officers are as follows:
For AHPC: President of Wyeth-Ayerst Pharmaceuticals -
North America
For KING: President of King Pharmaceuticals
In the event such designated officers are unable to
resolve such dispute, (i) the decision of AHPC, with respect to Detailing,
marketing and promotional matters relating to the Product shall be binding on
the parties and (ii) the decision of KING, with respect to all other
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matters relating to the Product shall be binding on the parties. Notwithstanding
the foregoing, this paragraph shall not apply to determinations as to whether
either party is in breach of any of its obligations under this Agreement.
(c) Notwithstanding Section 8.7(b), if AMC proposes a
modification to a previously approved Marketing Plan and such modification will
have a material adverse impact on the results of operations of one of the
parties then the individuals identified in Section 8.7(b) shall mutually agree
to such modifications prior to the implementation thereof.
9. FEES AND EXPENSES
9.1 PROMOTION FEE.
(a) As compensation for services rendered by AHPC during the
Term, KING shall pay to AHPC a promotion fee (the "PROMOTION FEE") as follows:
(i) For the calendar year ended December 31, 2000,
fifty percent (50%) of the product of A and B where A is the portion of
Annualized Net Sales in excess of one hundred sixty-five million
dollars ($165,000,000); and B is the Y2K Fraction. For purposes of this
Section 9.1(a)(i) Annualized Net Sales shall mean the Net Sales of the
Product between the Initiation Date and December 31, 2000 divided by
the Y2K Fraction. An example of a calculation of the Promotion Fee for
calendar year 2000 is set forth in Exhibit 9.1 attached hereto.
(ii) For each of the calendar years ending December
31, 2001 and December 31, 2002, respectively, (A) twenty percent (20%)
of the first One Hundred Sixty-Five Million Dollars ($165,000,000) of
Net Sales during such year; plus (B) fifty percent (50%) of any Net
Sales during such year in excess of One Hundred Sixty-Five Million
Dollars ($165,000,000) up to Four Hundred Sixty-Five Million Dollars
($465,000,000); plus (C) fifty-two and one-half percent (52-1/2%) of
any Net Sales during such year over Four Hundred Sixty-Five Million
Dollars ($465,000,000); and
(iii) For the calendar year ending December 31,
2003, and for each calendar year thereafter during the Term (including
calendar years during the Extended Promotion Term), (A) fifteen percent
(15%) of the first One Hundred Sixty-Five Million Dollars
($165,000,000) of Net Sales during such year; plus (B) fifty percent
(50%) of any Net Sales during such year in excess of One Hundred
Sixty-Five Million Dollars ($165,000,000) up to Four Hundred Sixty-Five
Million Dollars ($465,000,000); plus (C) fifty-two and one-half percent
(52-1/2%) of any Net Sales during such year over Four Hundred
Sixty-Five Million Dollars ($465,000,000).
(b) Within forty-five (45) days after the end of each calendar
quarter during the Term, KING shall pay to AHPC (by wire transfer of immediately
available funds to an account designated by AHPC to KING in writing) an amount
equal to the Promotion Fee accrued but unpaid through the end of such calendar
quarter.
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9.2 RESIDUAL PAYMENTS.
(a) If this Agreement shall expire at the end of the Initial
Term and AHPC shall not have elected (or shall not have the right to elect) to
extend the Initial Term for the Extended Promotion Term, then for the
twenty-four (24) month period after the date of such expiration: (i) KING shall
make residual payments (the "RESIDUAL PAYMENTS") to AHPC equal to twenty-five
percent (25%) of Net Sales during such period, and (ii) shall conduct its
business involving the marketing and sale of the Product only in the ordinary
course and shall not effect the time of any sales of the Product in order to
affect the amount of Net Sales for such period. Within forty-five (45) days
after the end of each calendar quarter (or part thereof) during such period,
KING shall pay to AHPC (by wire transfer of immediately available funds to an
account designated by AHPC to KING in writing) an amount equal to the Residual
Payments accrued but unpaid through the end of such calendar quarter.
9.3 MARKETING EXPENSES.
(a) In accordance with Section 8.5, as part of the Marketing
Plan, AHPC shall develop a Budget of Marketing Expenses and submit such
Marketing Plan to the AMC for approval for each calendar year during the Term.
AHPC and KING acknowledge and agree that (i) the Budget of Marketing Expenses
for the period of time between the Effective Date and twelve (12) months after
the Initiation Date shall not be less than Ninety Million Dollars ($90,000,000),
and (ii) the Budget of Marketing Expenses for the period of time between the
Effective Date and six (6) months after the Initiation Date, shall not be less
than Forty-Five Million Dollars ($45,000,000), with a goal of Twenty-Two Million
Five Hundred Thousand Dollars ($22,500,000) of such amount expended on direct to
consumer advertising (the amounts referred to in clauses (i) and (ii), the
"INITIAL MINIMUM MARKETING EXPENSES").
(b) Subject to Section 9.3(c), Marketing Expenses approved by
the AMC in the Budget shall be shared as follows:
(i) For the period of the Effective Date through
December 31, 2002, AHPC shall be responsible for two-thirds (2/3) and
KING shall be responsible for one-third (1/3) of the Marketing Expenses
incurred during such period.
(ii) At all times from and after January 1, 2003,
until the end of the Term (including the Extended Promotion Term), AHPC
shall be responsible for one-half (1/2) and KING shall be responsible
for one-half (1/2) of the Marketing Expenses incurred during such
period.
(c) KING shall have no obligation to pay for Marketing
Expenses in excess of the following amounts:
(i) For the calendar year ending December 31, 2001,
KING's payment obligations pursuant to Section 9.3(b) for Marketing
Expenses incurred during such year shall not exceed ten percent (10%)
of the projected annual Net Sales for such year as set forth in the
Budget for such year; provided, however, that this clause (i) shall not
limit
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KING's obligation under Section 9.3(b)(i) to be responsible for
one-third (1/3) of the Initial Minimum Marketing Expenses.
(ii) For the calendar year ending December 31, 2002,
KING's payment obligations pursuant to Section 9.3(b) for Marketing
Expenses incurred during such year shall not exceed seven percent (7%)
of the projected annual Net Sales for such year as set forth in the
Budget for such year.
(iii) For the calendar year ending December 31, 2003,
KING's payment obligations pursuant to Section 9.3(b) for Marketing
Expenses incurred during such year shall not exceed eight percent (8%)
of the projected annual Net Sales for such year as set forth in the
Budget for such year.
(iv) For the calendar year ending December 31, 2004,
and for each calendar year thereafter during the Term (including
calendar years during the Extended Promotion Term), KING's payment
obligations pursuant to Section 9.3(b) for Marketing Expenses incurred
during each such year shall not exceed seven percent (7%) of the
projected annual Net Sales for such year as set forth in the Budget for
such year.
(d) AHPC shall initially pay for all Marketing Expenses (other
than the cost of Product Samples as such Marketing Expenses are incurred by
either Party and shall keep accurate and reasonably detailed records of such
payments. AHPC shall provide KING with a weekly update of an estimate of the
Marketing Expenses incurred during the previous week within fifteen (15) days
after the end of each month, AHPC shall provide KING with a detailed statement
of Marketing Expenses and other AMC approved miscellaneous expenses incurred
during such month along with an invoice for KING's share thereof, which invoice
will be payable, less any credits for Marketing Expenses and other AMC approved
miscellaneous expenses incurred and paid by KING (such as cost of Product
Samples), within fifteen (15) days of KING's receipt thereof. KING shall also
provide AHPC with a weekly update of an estimate of the Marketing Expenses and
other AMC approved miscellaneous expenses incurred and paid (other than to AHPC)
by it during the previous week and within fifteen (15) days after the end of
each month, KING shall provide AHPC with a detailed statement of all Marketing
Expenses and other AMC approved miscellaneous expenses incurred and paid (other
than to AHPC) by KING during such month. Within thirty (30) days after the end
of each calendar quarter during the Term, AHPC shall prepare a reconciliation
statement of Marketing Expenses incurred by each party during such calendar
quarter. If such reconciliation statement shall show that either party
reasonably incurred and paid Marketing Expenses and AMC approved other
miscellaneous costs and expenses in excess of the amount payable by such party
pursuant to Section 9.3(b) or Section 9.5, as applicable, and that the other
party incurred and paid Marketing Expenses below the amount payable by such
party pursuant to Section 9.3(b), or Section 9.5, as applicable then, within
thirty (30) days after such reconciliation statement is submitted to KING, the
underpaying party shall reimburse the other party for the amount of such
underpayment up to the amount payable by such party pursuant to Section 9.3(b)
or Section 9.5, as applicable. Any overpayment which is not reimbursed in
accordance with the foregoing sentence shall be credited to Marketing Expenses
payable by the overpaying party in the following calendar year, up to an amount
equal to five percent (5%) of the amount that was payable by such party pursuant
to Section 9.3(b) as
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applicable, in the year to which the overpayment relates, and the remainder of
any such unreimbursed overpayment shall be repaid as determined by the AMC.
9.4 EXCESS DETAIL COSTS.
If , during any calendar year during the Term, a party
reasonably determines, based on the AHPC Detail Reports or the KING Detail
Reports, as the case may be, that the other party is failing to conduct the
minimum number or percentage of Details (the "MINIMUM TARGETED DETAILS")
required to be conducted by such other party by the Marketing Plan for such
year, then such party may elect to conduct a greater number of Details than the
Minimum Targeted Details for such party (such greater number of Details, the
"EXCESS DETAILS"). A party conducting Excess Details shall notify the other
party promptly in writing following the Agreement Quarter in which such Excess
Details were conducted, and within thirty (30) days after receipt of such
notice, the other party shall pay to such party an amount equal to two (2) times
the then Current Detail Cost multiplied by the number of Excess Details;
provided, that any payments to a party under this Section 9.4 on Details in
excess of one hundred five percent (105%) of the Minimum Targeted Details for
such party for any calendar year shall be subject to the prior approval of the
AMC.
9.5 OTHER MISCELLANEOUS COSTS AND EXPENSES.
Except as otherwise expressly provided in this Agreement, AHPC
and KING shall each pay one-half (1/2) of all costs and expenses, which are
specifically approved by the AMC.
9.6 COSTS SAVINGS.
If AHPC is able to assist KING in reducing KING's cost of
goods of the Product in a manner acceptable to KING, then KING shall pay to AHPC
one half (1/2) of the resulting cost savings and the parties shall in good faith
establish arrangements for making such payments.
10. RECORDKEEPING AND AUDITS
10.1 MAINTENANCE OF BOOKS AND RECORDS.
Each party shall maintain complete and accurate books and
records in sufficient detail, in accordance with GAAP and all applicable laws,
rules, ordinances and regulations, to enable verification of the performance of
such party's obligations under this Agreement. Such records shall be maintained
for a period of twenty-four (24) months after the end of the Term or longer if
required by applicable law.
10.2 PAYMENT AUDITS.
(a) Either party (herein, the "AUDITING PARTY") may demand, no
more than once during any calendar year from the Initiation Date until two (2)
years following the end of the Term, an audit of the relevant books and records
of the other party (herein, the "AUDITED PARTY") in order to verify the Audited
Party's reports on the matters addressed in this Agreement. Upon no less than
fifteen (15) days' prior written notice to the Audited Party, the
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Audited Party shall grant access to members of a nationally recognized
independent public accounting firm selected by the Auditing Party to the
relevant books and records of the Audited Party in order to conduct a review or
audit thereof. Such access shall be available during normal business hours. The
accountants shall report its conclusions and calculations to the Auditing Party
and the Audited Party; provided, that in no event shall the accountants disclose
any information of the Audited Party except to the extent necessary to verify
the Audited Party's reporting and other compliance with the terms of this
Agreement and, at the request of the Audited Party, such accountants will
execute appropriate non-disclosure agreements. Except as hereinafter set forth,
the Auditing Party shall bear the full cost of the performance of any such
audit.
(b) If, as a result of any audit of the books and records of
Audited Party, it is shown that the Audited Party's payments to the Auditing
Party under this Agreement with respect to the period of time audited were less
than the amount which should have been paid to the Auditing Party pursuant to
this Agreement, then the Audited Party shall pay to the Auditing Party the
amount of such shortfall within thirty (30) days after the Auditing Party's
demand therefor. If, as a result of any audit of the books and records of
Audited Party, it is shown that the Audited Party's payments to the Auditing
Party under this Agreement with respect to the period of time audited were more
than the amount which should have been paid to the Auditing Party pursuant to
this Agreement, then the Auditing Party shall pay to the Audited Party the
amount of such overpayment within thirty (30) days after the Audited Party's
demand therefor. In addition, if any amount payable by the Audited Party
pursuant to this Section 10.2 is more than the amount which should have
originally been paid pursuant to this Agreement by an amount in excess of ten
percent (10%) of the payments actually made with respect to the period in
question, then the Audited Party shall also reimburse the Auditing Party for its
documented reasonable out-of-pocket costs and expenses incurred in connection
with the audit.
10.3 COMPLIANCE AUDITS.
In addition to the access and audit rights of the parties set
forth in Section 10.2, no more than once during any calendar year during the
Term, each party shall, and shall cause its Affiliates to, afford to the other
party reasonable access during normal business hours (and at such other times as
the parties may mutually agree) to the relevant books, records and other
information of such party upon reasonable prior notice from the other party may
reasonably request in order to monitor such party's compliance with such party's
Detailing obligations under the applicable Marketing Plan. Such access shall be
available during normal business hours. Any inspection conducted by either party
pursuant to this Section 10.3 shall be at the sole cost and expense of such
party.
11. TERM AND TERMINATION
11.1 TERM OF AGREEMENT.
(a) The initial term of this Agreement (the "INITIAL TERM")
shall commence as of the Effective Date hereof and shall continue until October
29, 2008, unless terminated sooner or extended as provided below (the Initial
Term, as extended or sooner terminated, the "TERM").
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(b) The Initial Term shall automatically be extended for six
(6) months upon any pediatric exclusivity extension or its equivalent granted
with respect to the Product under applicable regulations of the FDA, and
"Initial Term" for all purposes hereof shall include such 6-month extension.
(c) If KING (or any of its Affiliates) shall obtain any
additional patent or other exclusive rights with respect to the manufacturing,
sale, marketing or promotion of the Product, and such rights shall have a term
which extends beyond the Initial Term ("ADDITIONAL EXCLUSIVITY RIGHTS"), then
AHPC may, in its sole discretion, elect to extend the Initial Term of this
Agreement until the expiration or termination of such Additional Exclusivity
Rights (the "EXTENDED PROMOTION TERM"); provided, however, that AHPC shall not
be entitled to extend the Initial Term pursuant to this Section 11.1(c) if AHPC
shall then be in breach or default of this Agreement in any material respect. If
AHPC shall elect to extend the Initial Term pursuant to this Section 11.1(c),
then AHPC shall provide written notice thereof to KING at least sixty (60) days
prior to the expiration of the Initial Term, in which case the terms and
conditions of this Agreement shall remain in full force and effect until the
expiration of the Extended Promotion Term, unless terminated sooner as provided
herein. In connection with any extension of the Initial Term pursuant to this
Section 11.1(c), the parties shall in good faith enter into such amendments or
modifications to this Agreement that may be necessary or appropriate to
implement the terms and conditions of this Agreement with respect to the
Product, as modified or supplemented by the Additional Exclusivity Rights;
provided, that the extension provided under this Section 11.1(c) shall not be
subject to agreement on such amendments or modifications, and failing such
agreement this Agreement shall continue in full force and effect.
11.2 TERMINATION BY KING.
(a) KING shall have the right to terminate this Agreement
except as provided in Section 11.4 below, at any time upon written
notice to AHPC, if AHPC breaches in a material way any of the
representations, warranties, covenants or agreements set forth in this
Agreement or otherwise materially defaults in the performance of any of
its duties or obligations under this Agreement, which breach or default
shall not be cured within sixty (60) days after written notice is given
to AHPC specifying the breach or default.
(b) KING shall have the right to terminate this Agreement on
sixty (60) days' prior written notice to AHPC, if, as of the third
anniversary of the Initiation Date the annualized Net Sales of the
Product, based on the run rate over the preceding six (6) months, are
less than three hundred million dollars ($300,000,000).
(c) To the extent permitted by law, KING shall have the right
to terminate this Agreement immediately upon notice to AHPC, if AHPC is
declared bankrupt or insolvent where there is an assignment for the
benefit of creditors, or if a receiver is appointed or proceedings
commenced, (and not dismissed within sixty (60) days) voluntarily or
involuntarily, under any bankruptcy or similar law.
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11.3 TERMINATION BY AHPC.
AHPC shall have the right to terminate this Agreement as
follows:
(a) at any time on or before July 22, 2000, or immediate
notice, in the event that AHPC, in conducting its continued due diligence on the
Product, determines, in its sole discretion, that there are safety concerns
relating to the Product;
(b) immediately upon written notice to KING on or prior to
February 28, 2001, if the FDA shall not have approved the sNDA for the Product
with the Model Claims on or prior to January 31, 2001;
(c) Within sixty (60) days after the third anniversary of the
Initiation Date, upon sixty (60) days' written notice to KING if annualized Net
Sales of the Product, based on the run rate over the preceding six (6) months)
are less than three hundred million dollars ($300,000,000);
(d) at any time upon written notice to KING, if KING breaches
in a material way any of the representations, warranties, covenants or
agreements set forth in this Agreement or otherwise materially defaults in the
performance of any of its duties or obligations under this Agreement, which
breach or default shall not be cured within thirty (30) days after written
notice is given to KING specifying the breach or default; provided, however,
that any act or omission hereunder by KING for which this Agreement provides an
adjustment mechanism or specific resolution procedure shall not be a breach by
KING for purposes of this Section 11.3(c);
(e) upon thirty (30) days' prior notice to KING if there has
been a material adverse change in the market for the Product in the Territory
such as a recall or withdrawal of the Product, or a safety problem related to
the Product, which was not remedied by KING within sixty (60) days after
receiving notice of such changes; or
(f) immediately upon notice to KING, to the extent permitted
by law, if KING is declared bankrupt or insolvent where there is an assignment
for the benefit of creditors, or if a receiver is appointed or proceedings
commenced (and not dismissed within sixty (60) days), voluntarily or
involuntarily, under any bankruptcy or similar law.
11.4 FAILURE TO MEET DETAILED REQUIREMENTS.
Notwithstanding any provision in this Agreement to the
contrary, in the event that either party (the "Nonperforming Party") fails to
perform at least ninety percent (90%) of the minimum number of Details it is
required to perform during any calendar year and the other party has performed
at least ninety percent (90%) of the minimum number of Details it is required to
perform during such calendar year, such other party shall have sixty (60) days
from its receipt of the Nonperforming Party's final Detail Report for such
calendar year to notify the Nonperforming Party that it is in breach of such
obligations, in which event the Nonperforming Party shall have the opportunity
to cure such default by providing a sufficient number of extra Details to make
up for such short fall prior to the end of the first full calendar quarter
following the calendar quarter in which the other party provides such breach
notice to the Nonperforming Party. In the event the
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Nonperforming Party fails to so cure such default, the other party may, within
thirty (30) days after the end of such calendar quarter terminate this Agreement
on sixty (60) days' prior notice to the Nonperforming Party. If the other party
(i) fails to give timely notice of the Nonperforming Party's breach or of
termination due to the other Nonperforming Party's failure to cure such breach
in accordance with this Section 11.2(b) or (ii) elects, in accordance with
Section 9.4 hereof, to perform excess Details to make up the Nonperforming
Party's shortfall of required Details, the other party shall be deemed to have
waived its rights under this Section 11.2(b) with respect to such breach,
provided, however, that any such waiver shall not be construed as a waiver of
such other party's rights under this Section 11.2(b) as to any further breaches
by the Nonperforming Party. Notwithstanding the foregoing, the parties agree
that the Nonperforming Party shall not be in breach of its Detailing
obligations for any calendar year hereunder if the Nonperforming Party provides
at least ninety percent (90%) of the minimum number of Details it is required to
perform during such calendar year.
11.5 EFFECTS OF TERMINATION.
(a) Neither the termination nor expiration of this Agreement
shall release or operate to discharge either party from any liability or
obligation that may have accrued prior to such termination or expiration. Any
termination of this Agreement as provided herein shall not be an exclusive
remedy but shall be in addition to any remedies whatsoever that may be available
to the terminating party.
(b) Notwithstanding the giving of any notice of termination
pursuant to this Section 11, each party shall continue to fulfill its
obligations under this Agreement at all times until the effective date of any
such termination.
(c) If AHPC terminates this Agreement pursuant to Section
11.3(a), KING shall immediately refund to AHPC all amounts paid by AHPC to KING
under Section 2.1 hereof and all Marketing Expenses and other AMC approved
miscellaneous expenses paid by AHPC under Section 9.3 and Section 9.5 hereof
less any reimbursements KING has previously made to AHPC for KING's share of
such Marketing Expenses.
11.6 ACTIONS UPON TERMINATION.
Upon the termination or expiration of this Agreement for any
reason, AHPC shall immediately cease all of its promotional and marketing
activities for the Product, discontinue any use of KING's Trademarks, and return
to KING or destroy all sales training, Marketing Materials for the Product
containing Trademarks and any remaining Product samples (not already distributed
or destroyed with destruction certified by AHPC). After any termination KING
shall retain the right to use any sales training and Marketing Materials
developed under the auspices of the AML during the term of this Agreement,
provided, however, that KING shall have no further right to use AHPC's name or
any of AHPC's Trademarks or logos in connection therewith.
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11.7 SURVIVAL.
The representations, warranties, covenants and agreements of
the parties in Sections 4.4(c), 9 (to the extent applicable pursuant to Section
11.8), 10, 11, 12, 13, 14, 15 and 16 hereof shall survive any expiration or
termination of this Agreement.
11.8 PAYMENTS UPON TERMINATION.
(a) The expiration or termination of this Agreement pursuant
to this Section 11 shall not release (i) either party from any obligation to pay
to the other party any amounts accrued under Section 9 of this Agreement in
connection with activities completed, expenses accrued and Net Sales realized
with respect to the period prior to the effective date of such expiration or
termination or (ii) if applicable, KING from any obligation to make Residual
Payments to AHPC; provided, that no further amounts shall be payable under
Section 9, except as provided for in this Section 11.
(b) Within thirty (30) days after the expiration or
termination of this Agreement, AHPC shall provide to KING (i) an AHPC Detail
Report for the month during which such expiration or termination occurs (and all
AHPC Detail Reports for prior months that were required to be submitted to KING
pursuant to Section 3.2 but were not submitted); (ii) a reasonably detailed
statement of Marketing Expenses incurred by AHPC during the period of January 1
of the calendar year in which such expiration or termination occurs through the
effective date of such expiration or termination; and (iii) a reasonably
detailed statement of costs and expenses incurred by AHPC in performing Excess
Details, if any, during such period.
(c) Within thirty (30) days after the expiration or
termination of this Agreement, KING shall provide to the AHPC (i) a KING Detail
Report for the month during which such expiration or termination occurs (and all
KING Detail Reports for prior months that were required to be submitted to AHPC
pursuant to Section 4.4 but were not submitted); (ii) a statement of Net Sales
during the period of January 1 of the calendar year in which such expiration or
termination occurs through the effective date of such expiration or termination;
and (iii) a reasonably detailed statement of Marketing Expenses incurred by KING
during such period; and (iv) a reasonably detailed statement of costs and
expenses incurred by KING in performing Excess Details, if any, during such
period.
(d) Within thirty (30) days after receipt of such information
from KING and AHPC, the AMC shall determine the net amounts due and or payable
by AHPC and KING, and such amounts shall be paid by the parties within thirty
(30) days after such AMC determination.
(e) In the event of termination of this Agreement pursuant to
Section 11.3(b), KING, as AHPC's sole remedy for the failure to have such Model
Claims approved, shall, within thirty (30) days after the effective date of such
termination; pay to AHPC an amount equal to (i) eighty percent (80%) of the
Initial Payment (by wire transfer of immediately available funds to an account
designated by AHPC in writing) and (ii) all Marketing Expenses paid and other
AMC approved miscellaneous expenses by AHPC under Section 9.3 and Section 9.5
hereof less any
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reimbursements KING has previously made to AHPC for KING's share of such
Marketing Expenses and other AMC approved miscellaneous expenses.
12. CONFIDENTIALITY; OWNERSHIP
12.1 CONFIDENTIAL INFORMATION.
(a) Each party acknowledges that it may receive confidential
or proprietary information of the other party in the performance of this
Agreement, including without limitation information obtained or reviewed in
connection with any audits or investigations performed pursuant to Section 10.2
or Section 10.3 of this Agreement. Each party shall hold confidential and shall
not, directly or indirectly, disclose, publish or use for the benefit of any
third party or itself, except in carrying out its duties hereunder, any
confidential or proprietary information of the other party or confidential or
proprietary information jointly developed by the parties, without first having
obtained the furnishing party's written consent to such disclosure or use.
"Confidential or proprietary information" shall include without limitation
know-how, scientific information, clinical data, efficacy and safety data,
adverse event information, formulas, methods and processes, specifications,
pricing information (including discounts, rebates and other price adjustments)
and other terms and conditions of sales, customer information, business plans,
and all other intellectual property. This restriction shall not apply to any
information within the following categories:
(i) is or becomes part of the public domain other
than by unauthorized acts of the party obligated not to disclose such
information or its Affiliates, sublicensees, consultants and
contractors, as applicable;
(ii) can be shown by written documentation to have
been disclosed to the receiving party or its Affiliates or sublicensees
by a third party, provided such information was not obtained by such
third party directly or indirectly from the other party under this
Agreement pursuant to a confidentiality agreement;
(iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party or its Affiliates or
sublicensees, provided such information was not obtained directly or
indirectly from the other party under this Agreement pursuant to a
confidentiality agreement;
(iv) can be shown by written documentation to have
been independently developed by the receiving party or its Affiliates
without breach of any of the provisions of this Agreement;
(v) is disclosed by the receiving party pursuant to
oral questions, interrogatories, requests for information or documents,
subpoena, or a civil investigative demand of a court or governmental
agency; provided, however, that, to the extent practicable, the
receiving party notifies the other party promptly following receipt
thereof so that the other may seek a protective order or other
appropriate remedy to prevent or limit such disclosure, and provided
further that the disclosing party furnishes only that portion of
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the information which it is advised by counsel is legally required and
imposes such obligations of secrecy as are possible in that regard;
(vi) is required or permitted to be disclosed by a
party under any statutory, regulatory or similar legislative
requirement or any rule of any stock exchange to which it or any
Affiliate is subject; provided, however, that the non-disclosing party
shall be allowed to review the proposed disclosure and the disclosing
party agrees to consider in good faith any proposed revisions thereof
provided to the disclosing party within two (2) business days of the
non-disclosing party's receipt of the proposed disclosure and the
parties shall seek confidential treatment for such disclosure as
permitted by applicable law; or
(vii) is required by authorities to obtain regulatory
approval.
(b) The obligations set forth in this Section 12 shall survive
the termination or expiration of this Agreement for a period of five (5) years.
The confidentiality obligations described in this Section 12 shall be in
addition to the parties' obligations under the Confidentiality Agreements dated
as of April 5, 2000 (the "CONFIDENTIALITY AGREEMENTS"), except that to the
extent there is a conflict between the Confidentiality Agreements and provisions
of this Agreement, this Agreement shall govern.
(c) Any of confidential information of Aventis transmitted by
KING to AHPC shall be treated by AHPC in accordance with the confidentiality
provisions of the HMR Agreements.
13. INDEMNIFICATION AND INSURANCE
13.1 INDEMNIFICATION BY AHPC.
AHPC shall defend, indemnify and hold KING and its Affiliates,
and their respective officers, directors, employees, successors and assigns,
harmless from and against any and all claims, liabilities, losses, costs,
actions, suits, damages and expenses (other than special, incidental,
consequential or punitive damages, but including attorneys' fees and costs)
arising out of: (a) any breach by AHPC of any representation, warranty or
covenant contained in this Agreement; and (b) any claims by third parties
relating to the performance or nonperformance of AHPC's obligations under this
Agreement, provided, however, that AHPC shall not be required to indemnify KING
with respect to any such claim, liability, loss, cost, action, suit, damage or
expense hereunder to the extent the same is caused by any negligent act or
omission or intentional misconduct by KING or any or its Affiliates or is
otherwise covered by KING's indemnification obligation in Section 13.2
13.2 INDEMNIFICATION BY KING.
KING shall defend, indemnify and hold AHPC and its Affiliates,
and their respective officers, directors, employees, successors and assigns,
harmless from and against any and all claims, liabilities, losses, costs,
actions, suits, damages and expenses (other than special, incidental,
consequential or punitive damages, but including attorneys' fees and costs)
arising out
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of: (a) any breach by KING of any representation, warranty or covenant contained
in this Agreement; (b) the infringement or alleged infringement of any patent,
trademark or other intellectual property rights of a third party by its
activities with respect to the Product or Trademark in accordance with the terms
and conditions of this Agreement; (c) any personal injury (including death)
and/or property damage resulting from the handling, possession or use of the
Product; and (d) any other liability arising out of the manufacture, marketing,
labeling, distribution or use of the Product; provided, however, that KING shall
not be required to indemnify AHPC with respect to any such claim, liability,
loss, cost, action, suit, damage or expense hereunder to the extent covered by
AHPC's indemnification obligation in Section 13.1.
13.3 CLAIMS PROCEDURES.
A party (the "INDEMNITEE") which intends to claim
indemnification under this Section 13 shall notify the other party (the
"INDEMNITOR") within a reasonable time in writing of any action, claim or
liability in respect of which the indemnitee believes it is entitled to claim
indemnification, provided that the failure to give timely notice to the
indemnitor shall not release the indemnitor from any liability to the indemnitee
to the extent the indemnitor is not prejudiced thereby. The indemnitor shall
have the right, by notice to the indemnitee, to assume the defense of any such
action or claim within the fifteen (15) day period after the indemnitor's
receipt of notice of any action or claim with counsel of the indemnitor's choice
and at the sole cost of the indemnitor. If the indemnitor does not so assume the
defense of such third party claim, the indemnitee may assume such defense with
counsel of its choice and at the sole cost of the indemnitor. If the indemnitor
so assumes such defense, the indemnitee may participate therein through counsel
of its choice, but at the sole cost of the indemnitee. The party not assuming
the defense of any such claim shall render all reasonable assistance to the
party assuming such defense, and all reasonable out-of-pocket costs of such
assistance shall be for the account of the indemnitor. No such claim shall be
settled other than by the party defending the same, and then only with the
consent of the other party which shall not be unreasonably withheld; provided
that the indemnitee shall have no obligation to consent to any settlement of any
such action or claim which imposes on the indemnitee any liability or obligation
which cannot be assumed and performed in full by the indemnitor, and the
indemnitee shall have no right to withhold its consent to any settlement of any
such action or claim if the settlement involves only the payment of money by the
indemnitor or its insurer.
13.4 INSURANCE.
Each party shall maintain insurance (either through purchase
of a policy form a nationally recognized third party insurer or through
maintenance of a self-insurance program) against such risks and upon such terms
(including coverages, deductible limits and self-insured retentions) as is
customary for the activities to be conducted by such party under this Agreement
and is appropriate to cover its indemnification obligations hereunder. Each
party shall name the other as an additional insured on such party's relevant
insurance policies and shall furnish to the other party evidence of such
insurance, upon request.
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14. REPRESENTATIONS AND WARRANTIES
14.1 BY AHPC.
AHPC represents and warrants to KING that:
(a) the execution, delivery and performance of this Agreement
by AHPC does not conflict with, or constitute a breach of or under, any order,
judgment, agreement or instrument to which AHPC is a party; and
(b) the execution, delivery and performance of this Agreement
by AHPC does not require the consent of any Person or the authorization of (by
notice or otherwise) any governmental or regulatory authority.
14.2 BY KING.
KING represents and warrants to AHPC that:
(a) the execution, delivery and performance of this Agreement
by KING does not conflict with, or constitute a breach of or under, any order,
judgment, agreement or instrument to which KING is a party;
(b) the execution, delivery and performance of this Agreement
by KING does not require the consent of any Person or the authorization of (by
notice or otherwise) any governmental or regulatory authority,
(c) the rights granted by KING to AHPC hereunder do not
conflict with any rights granted by KING to any third party;
(d) KING has sufficient rights in and to the Product and all
intellectual property, use, development, manufacturing, marketing, distribution
and sale rights related thereto necessary or advisable for such purposes as
contemplated by this agreement (the "PRODUCT RIGHTS"), free and clear of any
liens or encumbrances, except to the extent identified on Exhibit 14.2(d)
attached hereto, and other than the Third Party Rights and subject to the HMR
Agreements, to grant to AHPC the rights provided in this Agreement;
(e) KING will use its Commercially Reasonable Efforts not to
diminish the Product Rights, including without limitation by not committing or
permitting the commission by any of its Affiliates of any acts or omissions
which could cause the breach of any of the HMR Agreements;
(f) except as otherwise identified on Exhibit 14.2(f) attached
hereto, the HMR Agreements, true and complete copies of which have been
delivered to AHPC, are the sole agreements between KING and any Person with
respect to the rights of KING in the Product and the Product Rights, and all
such Agreements are in full force and effect, are valid and binding obligations
of the parties thereto, enforceable against each such party in accordance with
the respective terms of such Agreements, to KING's knowledge, as of the
Effective Date, there are
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no breaches or defaults under any such Agreement by any party thereto, and to
KING's knowledge, as of the Effective Date, there exists no event or condition
which will or may result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default by any party thereto of
any such Agreement;
(g) KING has the right to and, as of the Effective Date, has
no reason to believe it will not have a continuous and sufficient supply of the
active ingredient included in the Product under the HMR Agreements during the
entire Term;
(h) the Product Rights, and the use thereof as contemplated
under this Agreement, do not interfere or infringe on any intellectual property
rights owned or possessed by any Person;
(i) to KING's knowledge, there are no third party pending
patent applications which, if issued, may cover the use, development,
manufacture, distribution or sale of the Product;
(j) there are no claims, judgments or settlements against or
owed by KING or, to KING's knowledge, HMR, or pending or threatened claims or
litigation relating to the Product or the Product Rights;
(k) it has reviewed the available safety data relating to the
Product and has no reason to believe the Product is not safe.
15. NOTICES
Except as otherwise specifically provided herein, any notice or other
documents to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if sent by registered post, nationally recognized
overnight courier or confirmed facsimile transmission to a party (followed by
hard copy by mail) or delivered in person to a party at the address or facsimile
number set out below for such party or such other address as the party may from
time to time designate by written notice to the other:
If to KING:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
Attn: President
Facsimile: (423) 989-8006
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with a copy to:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
Attn: Executive Vice President and General Counsel
Facsimile: (423) 989-6282
If to AHPC:
Wyeth-Ayerst Global Pharmaceuticals
555 E. Lancaster Ave.
St. Davids, Pennsylvania 19087
Attn: President
Facsimile: (610) 688-9498
with a copy to:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
Attn: Senior Vice President and General Counsel
Facsimile: (610) 660-7156
Any such notice or other document shall be deemed to have been received by the
addressee three (3) business days following the date of dispatch of the notice
or other document by post or, where the notice or other document is sent by
overnight courier, by hand or is given by facsimile, simultaneously with the
transmission or delivery thereof.
16. MISCELLANEOUS PROVISIONS
16.1 ASSIGNMENT.
Neither party shall assign or otherwise transfer this
Agreement or any interest herein or right hereunder without the prior written
consent of the other party, and any such purported assignment, transfer or
attempt to assign or transfer any interest herein or right hereunder shall be
void and of no effect; except that each party may assign its rights and
obligations hereunder to an Affiliate or to the transferee or successor of its
assets or securities in the event of a Change of Control without the prior
consent of the other party, provided that (i) in the case of an assignment to an
Affiliate, the assigning party shall remain responsible for all of its
obligations and agreements set forth herein, notwithstanding such assignment,
and (ii) in the case of a Change of Control, such transferee or successor shall
assume in writing the obligations of the party to which it is the transferee or
successor. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
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16.2 GOVERNING LAW.
This Agreement shall be construed under and in accordance
with, and governed in all respects by, the laws of the State of New York,
without regard to its conflicts of law principles.
16.3 NON-WAIVER.
The failure of either party to enforce or to exercise, at any
time or for any period of time, any term of or any right arising pursuant to
this Agreement does not constitute, and shall not be construed as, a waiver of
such term or right, and shall in no way affect that party's right later to
enforce or exercise such term or right.
16.4 ENTIRE AGREEMENT.
This Agreement and the Confidentiality Agreements contain all
of the terms agreed to by the parties regarding the subject matter of this
Agreement and supersede any prior agreements, understandings or arrangements
between them, whether oral or in writing. This Agreement may not be amended,
modified, altered or supplemented except by means of a written agreement or
other instrument executed by both of the parties hereto. No course of conduct or
dealing between the parties shall act as a modification or waiver of any
provisions of this Agreement.
16.5 CONSENT TO JURISDICTION.
Each of the parties hereby submits to the exclusive general
jurisdiction of the courts of the State of New York and the courts of the United
States of America for the Eastern District of New York in any action or
proceeding arising out of or relating to this Agreement and to the jurisdiction
of the appellate courts to which appeals are required to be taken from any of
the foregoing. Each of the parties waives any defense of inconvenient forum to
the maintenance of any such action or proceeding. Any party may make service on
any other party by sending or delivering a copy of the process to the party to
be served at the address and in the manner provided for the giving of notices in
Section 15 above. Nothing in this Section 16.6, however, shall affect the right
of any party to serve legal process in any other manner permitted by law or
equity.
16.6 SEVERABILITY.
In the event that any of the provisions or a portion of any
provision of this Agreement are held to be invalid, illegal or unenforceable by
a court of competent jurisdiction or a governmental authority, such provision or
portion of provision shall be construed and enforced as if it had been narrowly
drawn so as not to be invalid, illegal or unenforceable and the validity,
legality and enforceability of the enforceable portion of any such provision and
the remaining provisions shall not be adversely affected thereby.
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16.7 RELATIONSHIP OF THE PARTIES.
The parties hereto are acting and performing as independent
contractors, nothing in this Agreement creates the relationship of partnership,
joint venture, sales agency or principal and agent. Neither party is the agent
of the other, and neither party may hold itself out as such to any other party.
All financial obligations associated with each party's business shall be the
sole responsibility of such party.
16.8 PUBLIC ANNOUNCEMENTS.
The form and content of any public announcement to be made by
one party regarding this Agreement, or the subject matter contained herein,
shall be subject to the prior written consent of the other party (which consent
shall not be unreasonably withheld, delayed or conditioned), except as may be
required by applicable law (including, without limitation, disclosure
requirements of the SEC, NYSE, NASDAQ, or any other stock exchange) in which
event the other party shall endeavor to give the other party reasonable advance
notice and review of any such disclosure.
16.9 COUNTERPARTS.
This Agreement shall become binding when any one or more
counterparts hereof, individually or taken together, shall bear the signatures
of each of the parties hereto. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original as against the party
whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
16.10 FORCE MAJEURE.
Neither party shall be liable to the other party for any
failure to perform as required by this Agreement if the failure to perform is
due to circumstances reasonably beyond such party's control including, without
limitation, acts of God, civil disorders or commotions, acts of aggression,
fire, explosions, floods, drought, war, sabotage, embargo, utility failures,
material shortages, labor disturbances, a national health emergency, or
appropriations of property. A party whose performance is affected by a force
majeure event shall take prompt action using its reasonable best efforts to
remedy the effects of the force majeure event.
16.11 INTERPRETATION.
The parties hereto acknowledge and agree that: (a) each party
and its representatives have reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision; and (b) the terms and
provisions of this Agreement shall be construed fairly as to each party hereto
and not in favor of or against either party regardless of which party was
generally responsible for the preparation or drafting of this Agreement.
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16.12 CERTAIN EXPENSES AND COMMISSIONS.
Except as otherwise expressly set forth in this Agreement, the
parties hereto shall each pay all their costs and expenses, including legal and
accounting fees, incurred in connection with the preparation, negotiation,
execution and delivery of this Agreement, respective brokerage fees, commissions
and finder's fees, if any, and shall indemnify and hold the other harmless from
and against any and all other claims or liabilities for such costs and expenses,
brokerage fees, commissions and finder's fees incurred by reason of any action
taken by any such party.
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16.13 HEADINGS.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Copromotion
Agreement as of the first date written above.
KING PHARMACEUTICALS, INC.
By: /s/ Jefferson J. Gregory
----------------------------
Name: Jefferson J. Gregory
Title: President and Chief Operating Officer
AMERICAN HOME
PRODUCTS CORPORATION
By: /s/ Kenneth J. Martin
-------------------------
Name: Kenneth J. Martin
Title: Senior Vice President and Chief
Financial Officer
35
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ANNEX I
DEFINITIONS
"ACT" shall mean the United States Federal Food, Drug and
Cosmetic Act, as it may be amended from time to time.
"ADDITIONAL EXCLUSIVITY RIGHTS" shall have the meaning set
forth in Section 11.1(c).
"AFFILIATE(S)" shall mean, with respect to any Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, such Person. A
Person shall be regarded as in control of another Person if such Person owns, or
directly or indirectly controls, more than fifty percent (50%) of the voting
securities (or comparable equity interests) or other ownership interests of the
other Person, or if such Person directly or indirectly possesses the power to
direct or cause the direction of the management or policies of the other Person,
whether through the ownership of voting securities, by contract or any other
means whatsoever, provided, however, that, for purposes of this Agreement, the
term "Affiliate" shall not include subsidiaries in which a party or its
Affiliates owns a majority of the ordinary voting power to elect a majority of
the Board of Directors, but is restricted from electing such majority by
contract or otherwise, until such time as such restrictions are no longer in
effect.
"AGREEMENT" shall mean this Agreement, together with all
appendices, exhibits and schedules referenced herein or attached hereto, and as
the same may be amended or supplemented from time to time hereafter pursuant to
the provisions hereof.
"AGREEMENT QUARTER" shall mean each three (3) month period
commencing on the first (1st) day of January, April, July or October, as the
case may be, during the Term.
"AHPC" shall have the meaning set forth in the PREAMBLE of
this Agreement.
"AHPC DETAIL REPORT" shall have the meaning set forth in
Section 3.2(a).
"AHPC SUMMARY DETAIL REPORT" shall have the meaning set forth
in Section 3.2(b).
"ALTACE MANAGEMENT COMMITTEE" or "AMC" shall have the meaning
set forth in Section 8.1.
"ASSET PURCHASE AGREEMENT" shall mean the Asset Purchase
Agreement dated the date hereof between the parties hereto.
"AUDITED PARTY" shall have the meaning set forth in Section
10.2(a).
"AUDITING PARTY" shall have the meaning set forth in Section
10.2(a).
<PAGE> 37
"BUDGET(S)" shall mean the annual budget of Net Sales and
Marketing Expenses prepared and approved by the AMC in accordance with this
Agreement.
"CHANGE OF CONTROL" shall mean any sale of voting securities
or sale of assets (whether by sale, merger, consolidation, share exchange or
otherwise in one transaction or a series of transactions) in or by a party
hereto that, directly or indirectly, results in any third party becoming the
beneficial owner, directly or indirectly, of securities or assets of such first
party representing over fifty percent (50%) of the combined voting power of such
Person's then outstanding securities or over fifty percent (50%) of such first
party's total assets.
"COMMERCIALLY REASONABLE EFFORTS" shall mean efforts and
resources normally used by a party for a product owned by it or to which it has
rights, which is of similar market potential at a similar state in its
development or product life, taking into account issues of safety, efficacy,
product profile, the competitiveness of the marketplace, the proprietary
position of the product, the regulatory structure involved, the profitability of
the applicable products, and other relevant commercial factors.
"COMPETITIVE PRODUCT" shall mean an Ace Inhibitor, an
angiotensin II receptor blocker ("ARB") or an Ace Inhibitor or ARB in
combination with other cardiovascular agents in a single product, provided,
however, that an ARB alone or in combination with other cardiovascular agents
shall be a Competitive Product only if the level of promotional effort used by
AHPC for such ARB is greater than fifty percent (50%) of that applied to the
Product hereunder. A Competitive Product shall not include any product which (a)
results from a collaboration with KING, (b) is AB rated to any existing product
containing an ACE Inhibitor or is an off patent ACE Inhibitor, (c) has Net Sales
(as defined herein with respect to the Product applied to such other AHPC
product) in the Territory below One Hundred Million Dollars ($100,000,000) or
fifteen percent (15%) of Net Sales of the Product in the Territory, in each case
for the latest twelve (12) months, whichever is higher, or (d) is acquired by
AHPC from a third party in connection with a merger with or an acquisition of or
by such third party, but is no longer actively promoted by AHPC (or the
surviving entity) through detailing such product to physicians.
"CONFIDENTIALITY AGREEMENTS" shall have the meaning set forth
in Section 12.1(b).
"DETAIL(S)" or "DETAILING" shall mean a face-to-face contact
by a sales representative with a Physician during which time the promotional
message involving the Product is a primary topic of discussion and the product
discussed for either the longest period of time during the contact or, at a
minimum, discussed no less than the second longest period of time during the
contact.
"DETAILED COST" shall be the cost per Detail to be established
by the AMC each year and included in the Marketing Plan for such year.
"DIRECT COST" shall mean (a) costs directly attributable to an
activity (i.e., those costs which vary with such activity), including, but not
limited to, direct labor and benefit expenses for such activity and consumable
bulk and other materials, as determined in accordance with generally accepted
cost accounting practices in the country of the activity, plus (b) fixed
overhead
ANNEX I - 2
<PAGE> 38
costs allocable to the activity, including, but not limited to, direct
benefit and labor expenses for technical services and support services,
depreciation, maintenance and repairs and insurance costs associated with such
activity, as determined in accordance with generally accepted cost accounting
practices in the country of the activity.
"EFFECTIVE DATE" shall have the meaning set forth in the
PREAMBLE of this Agreement.
"EXCESS DETAILS" shall have the meaning set forth in Section
9.4.
"EXTENDED PROMOTION TERM" shall have the meaning set forth in
Section 11.1(c).
"FDA" shall mean the United States Food and Drug
Administration or any successor entity thereto.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOOD MANUFACTURING PRACTICES" shall mean the current
standards for the manufacture of biologicals, as set forth in the Act and
applicable regulations and guidelines promulgated thereunder or successors
thereto, as shall be in effect from time to time during the Term.
"GUIDELINES" shall have the meaning set forth in Section
2.2(a).
"HMR AGREEMENTS" shall mean those certain agreements dated
December 17, 1998 by and among Hoechst Marion Roussel, Inc., Hoechst Marion
Roussel Deutschland GmbH and King Pharmaceuticals, Inc. and styled as the
General Products Agreement, the U.S. Product Agreement, and the U.S. Product
Manufacturing Agreement together with all schedules, annexes and exhibits
attached thereto or referred to therein, all as may be amended from time to
time, together with those certain agreements dated June 22, 2000 by and among
King Pharmaceuticals, Inc., Aventis Pharmaceuticals, Inc. and Aventis Pharma
Deutschland GmbH and styled as the Altace(R) Finished Product Manufacturing
Agreement and the Inventory Agreement together with all schedules, annexes and
exhibits attached thereto or referred to therein, all as may be amended from
time to time.
"INDEMNITEE" shall have the meaning set forth in Section 13.3.
"INDEMNITOR" shall have the meaning set forth in Section 13.3.
"INITIAL MINIMUM MARKETING EXPENSES" shall have the meaning
set forth in Section 9.3(a).
"INITIAL TERM" shall have the meaning set forth in Section
11.1(a).
"INITIATION DATE" shall mean the later to occur of (i) FDA
approval of the sNDA for the Product with Model Claims or (ii) September 1,
2000.
ANNEX I - 3
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"KING" shall have the meaning set forth in the PREAMBLE.
"KING DETAIL REPORT" shall have the meaning set forth in
Section 4.4(a).
"KING SUMMARY DETAIL REPORT" shall have the meaning set forth
in Section 4.4(b).
"MARKETING EXPENSES" shall mean the costs and expenses
directly related to the marketing and promotion of the Product in the Territory
in accordance with the Marketing Plans, including without limitation costs and
expense relating to: (i) general advertising, including without limitation
journal advertising, direct mail and point of prescription advertising; (ii)
continuing medical education programs, (iii) market research; (iv)
Product-related publications; (v) Product sampling; (vi) direct to consumer
advertising; and (vii) the items (other than sales force costs) listed in the
Altace Preliminary Promotional Plan dated May 11, 2000.
"MARKETING MATERIALS" shall have the meaning set forth in
Section 5.2(a).
"MARKETING PLAN" shall mean an annual plan and budget for the
promotion and marketing of the Product as developed pursuant to Section 8.5.
"MINIMUM TARGETED DETAILS" shall have the meaning set forth in
Section 9.4.
"MODEL CLAIMS" shall mean final approval by the FDA of
[inclusion of the primary endpoints from the HOPE Study in the revised labeling
for the Product].
"NDA" shall mean the new drug applications related to the
Product, submitted to the FDA pursuant to provisions of the Act and applicable
regulations related thereto.
"NET SALES" shall mean the gross amount invoiced for the
Product by KING or its Affiliates to unaffiliated third parties in the
Territory, less returns and less the following amounts to the extent deducted
from or on such invoice or absorbed or accrued by KING or its Affiliates as
required by GAAP: (i) customary quantity, trade and/or cash discounts,
chargebacks, returns, allowances, rebates (including any and all federal, state
or local government rebates, e.g., Medicaid rebates) and price adjustments
allowed or given; (ii) sales and other excise taxes and duties directly related
to the sale, to the extent such items are included in the gross invoice price;
(iii) two and one half percent (2.5%) of Net Sales paid or payable by KING or
its Affiliates to Hoechst Marion Roussel Deutschland GmbH or its Affiliates
until January 2005; and (iv) in the event AHPC exercises its option, under
Section 11.1(c) hereof, to extend the Initial Term of this Agreement, any
royalties or other payments based on Net Sales KING must pay to third parties
for any Additional Exclusivity Rights.
"NON-SERIOUS ADVERSE EVENT" shall mean any adverse drug
experience associated with the use of the Product in humans, whether or not
considered drug related which is not a Serious Adverse Event.
ANNEX I - 4
<PAGE> 40
"PDMA" shall mean the Prescription Drug Marketing Act, as
amended, an the implementing rules and regulations thereunder.
"PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority, or any other form of entity not
specifically listed herein.
"PHYSICIANS" shall mean primary care physicians (i.e., general
practitioners, family practitioners, internal medicine physicians and doctors of
osteopathy), cardiologists, nephrologists and other prescribers of Angiotensin
Converting Enzyme (ACE) Inhibitor therapy, in each case who are authorized by
applicable law to prescribe the Product.
"PRODUCT" shall mean, subject to Section 8.6(d) hereof, any
pharmaceutical product containing ramipril or ramiprilat as an Active
Ingredient.
"PRODUCT RIGHTS" shall have the meaning set forth in Section
14.2.
"PRODUCT TECHNICAL COMPLAINTS" or "PTC" shall mean any
complaint that questions the purity, identity, potency or quality of the
Product, its packaging or labeling, the compliance of any batch of the Product
with applicable laws, including the Act, and current Good Manufacturing
Practices, or any complaint that concerns any incident that causes the Product
or its labeling to be mistaken for, or applied to, another article or any
bacteriological contamination, or any significant chemical, physical, or other
change or deterioration in the Product, or any failure of one or more batches of
the Product to meet the specifications therefor in the NDA.
"PROMOTION FEE" shall have the meaning set forth in Section
9.1(a).
"RESIDUAL PAYMENTS" shall have the meaning set forth in
Section 9.2(a).
"SERIOUS ADVERSE EVENT" shall mean any serious and unexpected
adverse drug experience, as defined by FDA in 21 C.F.R. Section 314.80,
associated with the use of the drug in humans, whether or not considered drug
related.
"SOP" shall have the meaning set forth in Section 7.2.
"TERM" shall have the meaning set forth in Section 11.1(a).
"TERRITORY" shall mean the United States, its territories and
possessions, the District of Columbia and the Commonwealth of Puerto Rico.
"THIRD PARTY RIGHTS" shall have the meaning set forth Section
2.1(b).
"TRADEMARK" shall mean the federally registered trademark
ALTACE(R) associated with the Product, any other related trademark or
servicemark containing the word "ALTACE" and any other trademark or service mark
(whether registered or unregistered) that KING decides to use
ANNEX I - 5
<PAGE> 41
on or with the Product or in any promotional material related to the Product in
the Territory during the Term.
"Y2K FRACTION" shall mean a fraction, the numerator of which
is the number of days from and including the Initiation Date through and
including December 31, 2000 and the denominator of which is 366.
ANNEX I - 6
