Exhibit 10.12
CONFIDENTIAL TREATMENT REQUESTED
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") dated as of August 10, 2001 (the
"Effective Date"), is entered into by and between CELLEGY PHARMACEUTICALS, INC.,
a California corporation, having a place of business at 000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("Cellegy"), VENTIV
HEALTH, INC., a Delaware corporation, having a place of business at 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Ventiv") and VIS FINANCIAL LLC, a
Delaware limited liability company and a wholly owned subsidiary of Ventiv,
having a place of business at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("VFLLC"); Cellegy and Ventiv being referred to collectively as the
"Parties" and each, individually, as a "Party".
RECITALS
WHEREAS, Cellegy is a specialty biopharmaceutical company engaged in the
development of prescription drugs and skin care products; and
WHEREAS, Ventiv is a leading provider of outsourced sales and marketing
services to the healthcare and pharmaceutical industries; and
WHEREAS, Ventiv has agreed to provide, or cause its Affiliates to provide,
a combination of sales, marketing and analytical services, on the terms and
conditions set forth herein, together with funding for such services, to Cellegy
in connection with Cellegy's Anogesic(R) product (the "Product"), in exchange
for a certain percentage of the revenues generated from the sale of the Product;
NOW, THEREFORE, in exchange for the mutual covenants and promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
SECTION 1 Definitions.
(a) Certain terms used but not otherwise defined in this Agreement
shall have the following meanings:
"Additional Products" shall mean those pharmaceutical products approved by
the FDA, other than the Product, that a Party shall in good faith determine
would be economically beneficial to both Parties if introduced to the Product
Detail Team for marketing in the Territory.
"Affiliate" shall mean, with respect to any given Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. The term "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Approval Date" shall mean the date on which Cellegy obtains all necessary
Governmental Body approvals for the sale of the Product in the Territory.
"Business Day" shall refer to a day, other than a Saturday or a Sunday, on
which commercial banks are not required or authorized to close in the city of
New York.
"Call Notice" shall mean the written notice delivered to Cellegy upon the
occurrence of any Call Event, pursuant to which the Funding Arrangement (or a
specified percentage thereof) shall become immediately due and payable in
accordance with the terms of Section 6(d) of this Agreement.
"Change of Control" shall mean, with respect to any Person, the occurrence
of any of the following events: (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) that is not currently a
shareholder of the Person as of the date of this Agreement, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that for the purposes of this definition such person or group shall be
deemed to have "beneficial ownership" of all shares that any such person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 50% of the
total voting power of the capital stock of such Person; provided, however, that
a Person shall not be deemed to have undergone a Change of Control in the event
that pursuant to any such transaction, a person or group who owned a majority of
the total voting power of the capital stock of such Person immediately prior to
the consummation of such transaction shall continue to hold a majority of the
total voting power of the capital stock immediately following the consummation
of such transaction; (b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the board of directors (together
with any new directors whose election by such board of directors or whose
nomination for election by the shareholders of such Person was approved by a
majority vote of the directors of such Person then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the board of directors of such Person then in office; or (c) the
merger or consolidation of such Person with or into another person or the merger
of another person with or into such Person or the sale of all or substantially
all of the assets of such Person to another person, and, in the case of any such
merger or consolidation, where the shareholders of the Person immediately before
the transaction do not, immediately after the transaction and as the result of
securities received by them as a result of the transaction, hold at least a
majority of the voting power of the securities of the surviving or acquiring
entity (or its parent).
"Commercialization Funding" shall mean the funding in the aggregate amount
of up to $10,000,000, together with simple interest thereon, to be provided to
Cellegy by VFLLC in connection with the transactions contemplated hereby.
"Contribution Margin" shall mean *, less (a) ** and (b) ** for the
applicable period.
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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"Economic Value" shall mean *.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Governmental Body" shall mean any supranational body or regulatory body or
successor thereof; any country, government or governmental or regulatory body
thereof or successor thereto, or political subdivision thereof or successor
thereto, whether federal, state, local or foreign; any agency, instrumentality
or authority of any supranational body, country or government; or any court of
competent jurisdiction.
"Impaired Labeling" shall mean any material adverse change to the proposed
label information for "indications", "dosage and administration",
"contraindications", "directions for use" or "adverse reactions" contained in
Cellegy's New Drug Application for the Product dated June 26, 2001, which one of
the Parties reasonably expects will have a Material Adverse Impact on the
Economic Value.
"Launch Date" shall mean the date on which the Parties begin to actively
market the Product to physicians and end-users, provided that such date shall be
no earlier than the Approval Date.
"Law" shall mean any federal, state, local or foreign law (including common
law), constitution, statute, code, ordinance, rule, regulation, executive order,
decree, governmental edict or other requirement.
"Major Change" shall mean, with respect to a quantity, an increase or
decrease of at least * from such quantity over any given three month period.
"Manufacturing Costs" shall mean the variable costs and expenses associated
with the manufacture of the Product including the costs and expenses of sourcing
and warehousing of raw and packaging materials, incoming and outgoing quality
control, and other procedures, or any part thereof, involved in making and
packaging the Product, all in accordance with good manufacturing practices.
"Material Adverse Impact" shall mean, with respect to a quantity, a
decrease of * or more from such quantity over the applicable period.
"Net Sales" means the gross dollar amounts earned by Cellegy (or any
sublicensee, affiliate, subsidiary or other related entity of Cellegy) from or
on account of sales of the Product in the Territory to any independent third
party, less, to the extent included in such gross dollar amount, the aggregate
of the following amounts: (i) discounts, including cash discounts, off-invoice
allowances taken by customers of Cellegy, or rebates actually allowed or
granted, provided that Cellegy does not receive any payments or other
consideration for such discounts, off-invoice allowances or rebates; (ii)
reasonable credits or allowances actually granted by Cellegy upon claims or
returns; and (iii) sales and use taxes, freight, freight insurance and other
governmental charges. For sake of clarity, the Parties acknowledge that the
costs and expenses described in clauses (i), (ii) and (iii) are not expected to
exceed * of gross revenues with respect to the Product.
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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"Person" shall mean any individual, corporation, company, partnership
(limited or general), joint venture, limited liability company, association,
trust, Governmental Body or other entity.
"Product Budget" shall mean the monthly budget for all (a) revenues to be
earned and (b) costs and expenses to be incurred, by the Parties in connection
with the marketing of the Product.
"Product Detail Team" shall mean the group of individuals employed from
time to time by Ventiv or its Affiliates, or, subsequent to an Early Conversion,
employed from time to time by Cellegy or its Affiliates, which shall be
responsible for the marketing and sale of the Product to physicians and
end-users.
"Product Marketing Expenses" shall mean the direct costs and expenses
associated with the Services.
"Product Operating Income (Loss)" shall mean Product Revenues less (i)
Manufacturing Costs, (ii) Product Market Expenses and (iii) any other
advertising, marketing and distribution expenses directly related to the
Product, either as incorporated into the approved Product Budget or as actually
incurred, as appropriate.
"Product Price" shall mean the average wholesale price of the Product.
"Product Quality Complaint" shall mean any complaint that questions the
purity, identity, potency or quality of the Product, its packaging, or labeling,
or any complaint that concerns any incident that causes 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 distributed batches
of the Product to meet the specifications thereof in the New Drug Application
for the Product.
"Product Revenues" shall mean all Net Sales generated from the sale of the
Product at the point of distribution in the Territory from the Product
manufacturer, based upon gross wholesale invoices.
"Product Samples" shall mean samples of the Product of equal strength and
lesser quantity (e.g., * gram tubes) than the actual Product.
"Territory" shall mean the fifty states of the United States of America.
For sake of clarity and avoidance of doubt, Puerto Rico and U.S. territories and
possessions are excluded from the definition of "Territory".
"Ventiv Competitor" shall mean those entities listed on Schedule C attached
hereto.
(b) Each of the terms set forth below shall have the meaning ascribed
thereto in the following sections:
"Agreement"..........................................Preamble
"Auditor"............................................ss.6(h)
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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"Call Event".........................................ss. 6(d)
"Cellegy"............................................Preamble
"Cellegy Party"......................................ss.14(b)
"Claim"..............................................ss.16(b)
"Confidential Information"...........................ss.12(a)
"Conversion".........................................ss.7(c)
"Default Conversion".................................ss.7(c)
"Disclosing Party"...................................ss.12(a)
"Dispute"............................................ss.5(c)
"Early Conversion"...................................ss.7(a)
"Effective Date".....................................Preamble
"FDA"................................................ss.3(c)
"Final Decision".....................................ss.5(c)
"Force Majeure"......................................ss.20
"Funding Arrangement"................................ss.6(c)
"Indemnitee".........................................ss.14(c)
"Indemnitor".........................................ss.14(c)
"Initial Term".......................................ss.15(a)
"Introducing Party"..................................ss.9(b)
"Mandatory Conversion"...............................ss.7(b)
"Party" or "Parties".................................Preamble
"Product"............................................Recitals
"Product Committee"..................................ss.5(b)
"Recipient"..........................................ss.12(a)
"Renewal Term".......................................ss.15(a)
"Services"...........................................ss.2(a)
"Steering Committee".................................ss.5(a)
"Supplemental Interest"..............................ss.6(f)
"Term"...............................................ss.15(a)
"Tranche I Amount"...................................ss.6(b)
"Tranche II Amount"..................................ss.6(b)
"Tranche III Amount".................................ss.6(b)
"Ventiv".............................................Preamble
"Ventiv Party".......................................ss.14(a)
"VFLLC"..............................................Preamble
Interpretation. As used in this Agreement, neutral pronouns and any
variations thereof shall be deemed to include the feminine and masculine and all
terms used in the singular shall be deemed to include the plural, and vice
versa, as the context may require. The words "herein," "hereof," and "hereunder"
and other works of similar import refer to this Agreement as a whole, including
the schedules and exhibits hereto, as the same may from time to time be amended
or supplemented and not to any subdivision contained in this Agreement. The word
"including" when used herein is not intended to be exclusive and means
"including, without limitation".
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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SECTION 2 General Objectives; Joint Responsibilities.
(a) During the Term of this Agreement, Ventiv will, or will cause its
Affiliates to, * provide to Cellegy, within the Territory, the strategic
analysis and measurement and outsourced sales and marketing activities set forth
on Schedule A hereto (the "Services," including those listed on Schedule A as it
may be amended from time to time by mutual agreement of the Parties in
accordance with the terms of this Agreement), with respect to the Product, and
VFLLC will provide Cellegy funding pursuant to the terms and conditions of this
Agreement and the Funding Arrangement to the extent of *. In connection
therewith, Cellegy and Ventiv will each use good faith and commercially
reasonable efforts to cooperate with and assist each other in the development,
marketing and sale of the Product, as more specifically described in this
Agreement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Parties hereby acknowledge and agree that nothing in this
Agreement shall prevent or limit (i) Ventiv or its Affiliates from offering any
of its products and services directly to any current or future clients;
provided, however, such products and services are not offered within the
Territory with respect to any product directly competitive to the Product or
(ii) Cellegy from individually manufacturing, marketing or selling any of its
products, except as expressly set forth in this Agreement. Cellegy agrees that
it will not engage any other Person to provide the Services with respect to the
Product during the Term.
(c) During the Term of this Agreement, the Parties shall have the
following joint responsibilities:
(i) Development of a pre-Launch Date promotional plan for the
Product, including Product management, resource allocation analysis (including
any adjustment of Product Detail Team size), structure and geographic placement,
advocacy development programs and representative recruiting and training;
(ii) Development of a post-Launch Date promotional plan, including
Product management, the deployment of a full time Product Detail Team and
promotional events (e.g., symposia and teleconferences);
(iii) Development of a distribution plan for the Product;
provided, however, that Ventiv shall at no time be under any obligation to
maintain or store any Product stock;
(iv) Management of all matters relating to managed care (e.g.,
national accounts), including strategies and order fulfillment and the
deployment of a national Product Detail Team, which shall be composed initially
of no more than seventy five (75) representatives; and
(v) Selection of appropriate advertising agencies for the
marketing and promotion of the Product; provided, however, that the costs and
expenses of such advertising agencies shall be borne by Cellegy, but funded by
VFLLC, if required under the terms of the Funding Arrangement.
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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(d) Beginning as of the Launch Date, each Party shall promptly notify
the other Party in writing of any order, request or directive of a court or
other Governmental Authority to recall or withdraw a Product in any
jurisdiction. Cellegy shall be responsible, at its sole cost and expense, for
the costs of any recall or withdrawal of a Product.
SECTION 3 Ventiv Obligations.
(a) During the Term of this Agreement, Ventiv shall:
(i) provide or cause its Affiliates to provide, as applicable, the
Services of the types and in the amounts set forth on Schedule A attached hereto
with respect to the Product, including the deployment and management of a
Product Detail Team and related activities, conferences and symposia, and other
promotional and accredited programs with respect to the Product (e.g.
teleconferences and advisory board meetings);
(ii) administer and monitor promotional and educational projects
with regard to the Product, and monitor resource allocation plans for the
Product;
(iii) hire a co-Product manager reasonably acceptable to Cellegy;
(iv) distribute all collateral materials and samples to the
Product Detail Team;
(v) utilize good faith efforts to provide seventy five (75)
representatives to the Product Detail Team on the Launch Date; and
(vi) develop and execute an analytic support plan for the Product,
including post-Launch Date strategy adjustments.
(b) Beginning as of the Launch Date, Ventiv shall notify Cellegy within
twenty four hours of any serious adverse event(s) (e.g., death, life threatening
event, event causing hospitalization or prolonging a hospital stay, fetal
abnormality, an event signifying new medical information, adverse drug reactions
and governmental inquiries) learned by Ventiv that may affect the marketing of
the Product; provided, however, that Cellegy shall have the reporting
responsibility for such adverse events to applicable regulatory health
authorities anywhere in the world.
(c) Upon being contacted by the Food and Drug Administration ("FDA") or
any other federal, state or local agency for any regulatory purpose pertaining
to this Agreement or to the Product, Ventiv shall, if not prohibited by
applicable Law, immediately notify Cellegy and will not respond to the agency
until consulting with Cellegy, to the maximum feasible extent; provided,
however, that the foregoing shall not be construed to prevent Ventiv in any way
from complying, and Ventiv may permit unannounced FDA or similar inspections
authorized by Law and respond to the extent necessary to comply, with its
obligation under applicable Law.
(d) Ventiv shall inform Cellegy of any Product Quality Complaint
received within three (3) working days but no more than four (4) calendar days
from the receipt date by Ventiv.
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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SECTION 4 Cellegy Obligations.
(a) During the Term of this Agreement, Cellegy shall:
(i) manage regulatory review and compliance, order fulfillment,
manufacturing and clinical development of the Product and all related matters;
(ii) develop and assemble an adequate distribution chain and
utilize reasonable efforts to ensure the provision of a sufficient supply of
commercial Product stock as may be required for the distribution chain and
end-user demand;
(iii) utilize reasonable efforts to provide a sufficient supply of
Product Samples for the Product Detail Team such that, on an annual basis, at
least ** percent (**%) of targeted physicians are provided with Product Samples;
(iv) to the extent Cellegy pursues any additional indications for
the Product, provide all clinical support for any such additional indications
promoted by Ventiv;
(v) oversee and administer compliance by the Product manufacturer
with applicable regulatory and administrative cost guidelines, including the
utilization of reasonable efforts to ensure Manufacturing Costs do not exceed **
percent (**%) of Product Revenues;
(vi) assess and resolve all trade and wholesale issues involving
inventory or distribution of the Product;
(vii) hire a co-Product manager reasonably acceptable to Ventiv;
(viii) seek in good faith to maximize Product Revenues and
Contribution Margins, and minimize the effect of price promotions and/or
rebates;
(ix) produce all collateral materials and samples for the Product
Detail Team, and pay all costs and expenses associated with the production and
distribution thereof, provided that such costs and expenses shall be funded by
VFLLC, if required under the terms of the Funding Arrangement; and
(x) purchase any prescription data required to monitor Product
Revenues by distribution channel; provided, however, that costs of purchase of
such prescription data, to the extent included in the Product Budget, shall be
borne by Ventiv.
(b) Regulatory Matters.
(i) All regulatory matters regarding the Product shall remain
under the exclusive control of Cellegy, subject to Section 3(c) hereof. Cellegy
will have the sole responsibility, at its cost and expense, to respond to
Product and medical complaints and to handle all returns and recalls of the
Product.
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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(ii) Cellegy shall furnish Ventiv with efficacy and safety
information reasonably necessary or helpful to assist Ventiv in promoting the
Product, including relevant clinical and safety data included in the New Drug
Application for the Product and information related to the efficacy and safety
profile of the Product.
SECTION 5 Structure.
(a) Upon execution of this Agreement, Cellegy and Ventiv shall
establish a steering committee (the "Steering Committee") which shall have the
responsibilities described in this Section 5(a). The Steering Committee shall be
initially comprised of a total of four (4) members, of which two (2) members
shall be appointed by Ventiv and two (2) members shall be appointed by Cellegy.
The total number of Committee members may be changed by the Steering Committee
from time to time as appropriate, but in all cases it will be comprised of an
equal number of members designated by each of Cellegy and Ventiv, and in no
event shall the Steering Committee be comprised of an aggregate of less than
four (4) members. Each of Cellegy and Ventiv may substitute its representatives
from time to time and the substitution shall be effective upon notice to the
other Party. The Steering Committee shall meet as often as required to ensure
the effective implementation of this Agreement, but in no event less than once
every three months during the term of this Agreement, on such dates and at such
places as to be agreed upon between the Parties. The meetings of the Steering
Committee may be held in person or in any other reasonable manner, including,
without limitation, by telephone, video conference or e-mail. The Committee will
be primarily responsible for (i) decisions regarding Product commercialization
and ongoing clinical support for the Product, (ii) decisions regarding the
introduction of Additional Products to the Product Detail Team, (iii) approval
of the Product Budget and (iv) resolving any difficulties or disagreements which
may arise between the Parties in the implementation of this Agreement (except as
otherwise provided herein). In connection therewith, any representative to the
Steering Committee shall have the right at any time to call a special meeting of
the Steering Committee in order to vote on the amendment of the Product Budget
to include any extraordinary costs not theretofore approved by the Steering
Committee.
(b) Upon execution of this Agreement, Cellegy and Ventiv shall also
establish a product committee (the "Product Committee") which shall have the
responsibilities described in this Section 5(b); provided, however, that to the
extent both the Steering Committee and the Product Committee have responsibility
with respect to a given matter, the decisions of the Steering Committee shall
govern. The Product Committee will initially be comprised of a total of four (4)
members (and shall at all times have a maximum of four (4) members), of which
two (2) members shall be appointed by Ventiv and two (2) members shall be
appointed by Cellegy. The total number of Product Committee members may be
changed by the Product Committee from time to time as appropriate. The Product
Committee, shall be responsible for (i) the day-to-day management and oversight
of the transactions contemplated by Agreement, (ii) overseeing Product
development activities under this Agreement, (iii) reviewing Product
performance, (iv) reviewing marketing and sales arrangements for the Product
including the formulation of any modifications to such arrangements and (v) such
other functions required to be performed by it under this Agreement or as
directed to be performed by the Steering Committee.
(c) Each member of the Steering Committee and the Product Committee
shall have one vote and all the decisions of the Steering Committee and the
Product Committee shall
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be made by a simple majority of the Steering Committee or the Product Committee,
as the case may be; provided, however, that in the event the members of the
Product Committee are deadlocked and cannot reach a decision within three (3)
calendar days after notice of a deadlock with regard to any decision required to
be made by the Product Committee, the decision shall first be referred to the
Steering Committee for resolution. If the Steering Committee cannot resolve such
matter within three (3) calendar days, or if the Steering Committee is
deadlocked and cannot reach a decision with regard to any other decision
required to be made by the Steering Committee (each, a "Dispute"), then the
Dispute shall be referred to the Chief Executive Officer of each Party, and if
such Dispute is not resolved by the Chief Executive Officers within two (2)
calendar days of such referral, Cellegy's Chief Executive Officer (or such other
officer as determined by Cellegy) will be responsible for the tie-breaking vote
with regard to such Dispute (the "Final Decision"); provided, further, that in
the event that Ventiv determines in good faith that a Final Decision is
reasonably expected to have a Material Adverse Impact on the Economic Value, the
Final Decision shall trigger a renegotiation of this Agreement as set forth in
Section 8(a) hereof.
SECTION 6 Reimbursement and Revenue Sharing; Funding Arrangement.
(a) During the Initial Term, and prior to the payment by Cellegy of all
Tranche I and Tranche II Amounts, Ventiv shall invoice Cellegy, within ten (10)
Business Days of each month end date, for all costs and expenses incurred by
Ventiv (or any third Person) during the prior month in connection with sales and
marketing activities with regard to the Product; provided, however, that all
such costs and expenses shall have been included in the Product Budget for such
period or shall have been subsequently approved by the Steering Committee.
Notwithstanding the foregoing proviso, Cellegy shall be obligated to reimburse
Ventiv for all of such costs and expenses to the extent they exceed the Product
Budget by no more than * . Cellegy shall reimburse Ventiv for all such invoiced
costs and expenses within twenty (20) Business Days of the receipt of any such
invoice. In the event Cellegy shall be more than twenty (20) Business Days
delinquent in its payment of any such invoiced costs to Ventiv, after receipt of
a proper invoice not otherwise in dispute as to amount, Cellegy shall pay to
Ventiv simple interest, at a rate of ** percent (** %) per annum, on the amount
of any such delinquent reimbursements (or any undisputed portion thereof).
(b) Subsequent to the Launch Date, and provided there is a Product
Operating Income, any Product Revenues will be distributed between Ventiv and
Cellegy as follows:
(i) Subject to the provisions of the Funding Arrangement, Cellegy
will retain ** percent (**%) of all Product Revenues until Ventiv shall have
received an amount equal to the Commercialization Funding (the "Tranche I
Amount");
(ii) Upon receipt by Ventiv of payments equal to the Tranche I
Amount, and subject to the provisions of the Funding Arrangement, Cellegy will
retain ** percent (**%) of all Product Revenues thereafter until such time as
Ventiv shall have received $** (such amount, the "Tranche II Amount");
(iii) For each ** month period following receipt by Ventiv of
payments equal to the Tranche I Amount and the Tranche II Amount, and until the
expiration of the Initial
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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Term (or any Renewal Term, if applicable) or a Mandatory or Default Conversion,
Cellegy will retain (a) ** percent (**%) of all Product Revenues until such time
as the Product has generated in excess of $** of Product Revenues in the
aggregate during such ** month period, (b) ** percent (**%) of all Product
Revenues thereafter until such time as the Product has generated $** of Product
Revenues in the aggregate during such ** month period and (c) ** percent (**%)
of all Product Revenues thereafter (all such amounts, collectively, the "Tranche
III Amount"); and
(iv) Following the earlier of the expiration of the Initial Term
or any Renewal Term, if applicable (other than as a result of a termination
pursuant to Section 15) or a Mandatory or Default Conversion, Cellegy will
retain (a) ** percent (**%) of all Product Revenues through and including the
date that is ** of the expiration of the Initial Term; provided, however, that
if Product Revenues shall exceed $** during any ** months of the period through
and including the date that is the ** anniversary of the expiration of the
Initial Term, Cellegy will retain ** percent (**%) of the Product Revenues
exceeding $** and (b) ** percent (**%) of all Product Revenues through and
including the date that is the ** anniversary of the expiration of the Initial
Term; provided, however, that if Product Revenues shall exceed $** at any time
during, or prior to, any ** months of the period through and including the date
that is ** of the expiration of the Initial Term, Cellegy will thereafter retain
** percent (**%) of the Product Revenues exceeding $**.
(c) VFLLC will provide the Commercialization Funding pursuant to the
terms and conditions of a funding arrangement (the "Funding Arrangement") in the
form attached hereto as Exhibit II, that will accrue simple interest at a rate
of ** percent (**%) per annum. The initial Commercialization Funding shall not
exceed $**. In addition, (i) to the extent the Steering Committee determines
that an increase in the initial Commercialization Funding is necessary to
provide funding for post-Launch Date costs and expenses, to the extent there is
a ** during the period for which such additional funds are required and (ii)
upon Ventiv's consent, Ventiv may provide future funding for such period of the
Term; provided, however, that in no event will the Commercialization Funding in
connection with the Product exceed $10,000,000 in the aggregate; provided,
further; however, in the event Ventiv chooses not to consent to such future
funding, the Chief Executive Officers of the Parties shall meet as promptly as
practicable thereafter to discuss whether and to what extent Ventiv's
compensation as set forth in this Agreement might be adjusted, if appropriate,
in respect of any such future funding supplied directly by Cellegy (up to $**
million of future funding). It is understood that the preceding sentence shall
not be construed to mean that Cellegy will be entitled to any compensation based
on the foregoing. The Funding Arrangement will be repaid by Cellegy out of the
Contribution Margin in a manner consistent with the revenue sharing percentages
set forth in Section 6(b) above; provided, however, that following the ** period
after the date the Product first achieves Product Operating Income, Cellegy may
use proceeds other than the Contribution Margin to repay the Funding
Arrangement; provided, further, that such repayment does not have a Material
Adverse Impact on the Economic Value.
(d) In the event of any (i) material breach by Cellegy of the terms of
this Agreement, which material breach has not been cured within thirty (30)
calendar days of the receipt of notice of such breach by Cellegy, (ii) failure
of Cellegy to obtain all required Governmental Body approvals for the
manufacture and sale of the Product on or prior to ** or
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-11-
(iii) the Product receives Impaired Labeling (each of the foregoing
circumstances, a "Call Event"), Ventiv shall have the right to terminate this
Agreement and, upon delivery of a Call Notice to Cellegy concerning the
circumstances of the Call Event, the stated percentage of the Funding
Arrangement shall be immediately due and payable to VFLLC without further notice
or action by any Party hereto. In the event Ventiv shall deliver a Call Notice
pursuant to clause (i) above, then one hundred percent (100%) of the outstanding
principal and interest under the Funding Arrangement shall be subject to the
Call Notice. In the event Ventiv shall deliver a Call Notice pursuant to clauses
(ii) or (iii) above, then * percent (**%) of the outstanding principal and
interest under the Funding Arrangement shall be subject to the Call Notice.
Cellegy shall have forty-five (45) calendar days from the date of such Call
Notice to pay an amount in cash to VFLLC equal to the applicable percentage of
the Funding Arrangement and Cellegy shall have the right thereafter, at its
request, to receive all analytical and other relevant data relating to the
Product, including marketing plans, to the extent such data is held by Ventiv or
the Product Detail Team.
(e) In the event of termination of this Agreement by Cellegy pursuant
to Section 15(b)(ii), Section 15(c) or Section 15(e), or by Ventiv pursuant to
Section 15(d)(i), the obligation to repay any outstanding amounts under the
Funding Arrangement shall be assumed and assigned to Ventiv and Cellegy shall
have no further obligation with respect to such amounts; provided, however, that
Cellegy shall be obligated to pay to Ventiv all outstanding invoiced costs and
expenses previously included in the Product Budget incurred by Ventiv in
connection with sales and marketing activities with regard to the Product.
(f) In addition to the amounts stated above, the outstanding principal
amount of the Commercialization Funding shall accrue supplemental simple
interest at the rate of ** percent (** %) per annum (the "Supplemental
Interest"), until such time as the Commercialization Funding has been repaid in
full by Cellegy in accordance with the provisions of this Section 6. The
Supplemental Interest shall be held by Cellegy for the benefit of VFLLC until
the date that is ** of the termination or expiration of the Services Agreement,
at which time Cellegy shall pay to VFLLC an amount equal to the Supplemental
Interest adjusted for the future value of such amount at a rate of ** percent
(** %).
(g) Payments of all amounts due pursuant to Section 6(b) shall be made
by Cellegy no later than thirty (30) calendar days after the end of every month
in which such amounts accrue; provided, however, that no later than thirty (30)
calendar days following the end of each three month period of the Initial Term,
the Parties shall review all of such payments and promptly rectify any
shortfalls or overpayments that have occurred during such prior three month
period. Each payment pursuant to Section 6(b) shall be accompanied by a report
in the form attached as Exhibit A to the Funding Arrangement containing
reasonably sufficient information for the calculation of amounts due hereunder.
In the event there is a dispute regarding the amount due hereunder, upon a
Party's reasonable request, each Party will provide copies of all corporate and
financial records or other documentation reasonably relevant to the calculation
of such amounts; Each Party agrees to maintain records supporting amounts
payable hereunder for a period of three (3) years following the date that the
payment was made. The relevant portions of such records and accounts shall be
available for inspection and audit by each Party or its representative and at
such Party's expense during regular business hours and upon fifteen (15)
calendar days prior written notice.
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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(h) Following each anniversary of the Launch Date, Ventiv, upon written
notice to Cellegy given not later than ninety (90) days after such anniversary,
shall have the right to retain an independent, nationally recognized accounting
firm reasonably acceptable to Cellegy (the "Auditor"), to audit the records of
Cellegy to the extent they relate to the computation of Product Revenues and
Contribution Margins for the 12-month period ended on such anniversary of the
Launch Date. Cellegy shall make those records available to the Auditor for
inspection during normal business hours at the locations reasonably determined
by Cellegy. The cost of any such Auditor shall be borne by Ventiv; provided,
however, that Cellegy shall bear the cost of any such Auditor to the extent the
Auditor determines that Cellegy has underreported either the Product Revenues or
Contribution Margins for such 12-month period by more than ten percent (10)%.
(i) Following each anniversary of the Launch Date, and until Cellegy
has paid all Tranche I and Tranche II Amounts, Cellegy, upon written notice to
Ventiv given not later than ninety (90) days after such anniversary, shall have
the right to retain an Auditor to audit the records of Ventiv to the extent they
relate to the computation of Product Marketing Expenses. Ventiv shall make those
records available to the Auditor for inspection during normal business hours at
the locations reasonably determined by Ventiv. The cost of any such Auditor
shall be borne by Cellegy; provided, however, that Ventiv shall bear the cost of
any such Auditor to the extent the Auditor determines that Ventiv has
overreported Product Marketing Expenses for such 12-month period by more than
ten percent (10)%.
SECTION 7 Transfer of Detail Team.
(a) During the period from the one year anniversary of the Launch Date
until the expiration of the Initial Term, Ventiv shall have the obligation to
transfer the Product Detail Team to Cellegy, and Cellegy shall have the
obligation to assume such Product Detail Team (including all salary and bonus
obligations with respect thereto) (an "Early Conversion") as follows:
(i) at the written request of Cellegy, and within ninety (90)
calendar days of the delivery of such request, if at the time of such request
the Product Detail Team shall solely be marketing those products owned by or
licensed to Cellegy; or
(ii) at the written request of Cellegy, and within three hundred
sixty five (365) calendar days of the delivery of such request, if at the time
of such request the Product Detail Team shall be marketing any products not
owned by or licensed to Cellegy.
In the event of an Early Conversion, the Parties shall revise the
terms of Section 6(b)(i)-(iii) hereof such that Ventiv shall receive, monthly,
an amount equal to (i) monthly * of the Product for indications approved by the
FDA prior to the date of such Early Conversion, divided by (ii) the ratio of **
for the ** prior to ** to the total ** for the same ** prior ** period;
the quotient of which shall be multiplied by (iii) the ratio of the *
for the ** period immediately preceding ** to the ** in the applicable ** for
the Product Detail Team
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-13-
related to the Product, based on its proportional share of ** and any additional
** directly related to the Product in the applicable **;
the product of which shall be multiplied by (iv) the applicable **
percentage set forth in Sections ** ;
the product of which shall be reduced by (v) the average ** for the **
period immediately preceding ** with respect to those ** that have been assumed
by Cellegy; and
the difference of which shall be multiplied by (iv)(A) ** during the **
(or any portion of such ** ), if applicable, (B) ** , during the ** (or any
portion of such ** ), if applicable and (C) ** , during the ** (or any portion
of such ** ), if applicable, and in each case the provisions of Section 6(b)(iv)
shall survive. An example of this calculation is set forth on Exhibit III
attached hereto.
(b) Upon the expiration of the Initial Term or the Renewal Term of this
Agreement, at the written request of Cellegy delivered no later than thirty (30)
calendar days thereafter, Ventiv shall be obligated to transfer the Product
Detail Team to Cellegy, and Cellegy shall have the obligation to assume such
Product Detail Team (a "Mandatory Conversion"), such Mandatory Conversion to
occur within ninety (90) calendar days of the delivery of such request. In
connection with any Mandatory Conversion, Cellegy shall have the right, upon
thirty (30) calendar days written notice to Ventiv, to transfer all district
sales managers having oversight over the Product Detail Team to Cellegy, if at
the time of such notice the Product Detail Team shall solely be marketing those
products owned by or licensed to Cellegy, and any such conversion shall occur no
earlier than six (6) months prior to the expiration of the Initial Term or the
Renewal Term, as applicable.
(c) In the event of a termination of this Agreement by Cellegy pursuant
to Section 15(b)(ii), Section 15(c) or by Ventiv pursuant to Section 15(d)(i) or
Section 15(e), and upon written notice by Cellegy delivered within thirty (30)
Business Days of such termination, Ventiv shall be obligated to transfer the
Product Detail Team to Cellegy, and Cellegy shall have the right, in its sole
discretion, to assume all or part of such Product Detail Team (a "Default
Conversion," and together with the Early Conversion and Mandatory Conversion, a
"Conversion"). In connection with a Default Conversion, Cellegy shall notify
Ventiv as to the number of Product Detail Team representatives that shall be
transferred, such number to be at the discretion of Cellegy and Cellegy shall
have the obligation to assume such number of representatives.
(d) In the event of (i) a termination of this Agreement by Ventiv
pursuant to Section 15(b), Section 15(d)(ii) or Section 15(d)(iii) or by Cellegy
pursuant to Section 15(e) or (ii) a Call Event pursuant to (A) a failure of
Cellegy to obtain all required Governmental Body approvals for the manufacture
and sale of the Product on or prior to * , or (B) the Product receives Impaired
Labeling, Ventiv shall retain the Product Detail Team and the Parties may
negotiate the terms of a Conversion, including the fee to be paid by Cellegy to
Ventiv in consideration of such Conversion.
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-14-
(e) The costs of any Conversion, including all costs associated with
salary, benefits, relocation, early lease terminations and severance packages,
shall be borne by Cellegy and, in addition, Cellegy shall pay royalty fees to
Ventiv subsequent to such Conversion in an amount such that Ventiv will earn the
same operating income, on a per annum basis, as though the Conversion had not
occurred. Promptly upon the completion of any such Conversion, but in any event
no later than five (5) Business Days following the completion thereof, Ventiv
shall deliver to Cellegy a written notice setting forth in reasonable detail all
of the costs and expenses associated with such Conversion, and Cellegy shall
deliver to Ventiv the full amount of such costs and expenses no later than
fifteen (15) Business Days of its receipt of notice thereof.
(f) Prior to any Conversion, neither Cellegy nor its Affiliates shall
solicit any active Product Detail Team member to leave Ventiv and become
employed by Cellegy; provided, however, that this restriction shall not (i) be
construed to prevent or restrict Cellegy from discussing and/or offering
employment to a Product Detail Team member who independently contacted Cellegy
regarding possible employment opportunities.
SECTION 8 Renegotiation of Terms.
(a) The Parties agree to renegotiate the provisions of Section 6 of
this Agreement in good faith in the event Cellegy shall exercise its right to
cast a tie-breaking vote in accordance with the terms and conditions of Section
5 hereof and such vote is determined in good faith by Ventiv, pursuant to the
provisions of Section 5 hereof, to have a Material Adverse Impact on the
Economic Value, or in the event the Product receives any additional indications,
including hemorrhoid indications.
(b) In the event of a Major Change in (i) Product Marketing Expenses,
which results in a Material Adverse Impact on Economic Value or (ii) market
conditions which results in a Material Adverse Impact on Economic Value, the
Parties agree to renegotiate the provisions of Section 6 hereof in good faith in
order to ensure that Ventiv and VFLLC continue to achieve, at a minimum, the
Economic Value.
(c) In the event the Parties are unable to successfully renegotiate
this Agreement within thirty (30) calendar days after a Party appropriately
requests such renegotiation, then such failure to successfully renegotiate this
Agreement shall be submitted to arbitration in accordance with Section 16
hereof.
SECTION 9 Additional Products.
(a) During the Term, in the event Cellegy determines to use a CSO for
future Cellegy products, Ventiv shall have an exclusive right of first offer to
provide sales and marketing services with respect to additional Cellegy products
to be marketed in the Territory; provided, however, that such obligation shall
not be applicable to (i) those products set forth on Schedule D attached hereto
and (ii) those products that do not require third-Person marketing or sales
services. In that regard, Cellegy shall promptly notify Ventiv in writing when
any of such products has reached a stage of development where such could be
marketed utilizing services substantially similar to the Services. Following the
receipt of such notice by Ventiv, Ventiv shall have thirty (30) calendar days to
deliver written notice to Cellegy of its desire to enter into a
-15-
services arrangement for such additional products, and Cellegy shall, for a
sixty (60) calendar day period thereafter, negotiate in good faith, exclusively
with Ventiv, with respect to the terms of a services agreement for such
additional products. Following the expiration of such sixty (60) calendar day
period, in the event the Parties are unable to reach an agreement, Cellegy shall
have the right to negotiate with any other Person with regard to such additional
products. Notwithstanding the foregoing, Cellegy shall be under no obligation to
enter into any agreement with Ventiv relating to such additional products.
(b) During the Term, the Parties shall use their respective
commercially reasonable efforts to identify and propose the introduction of
Additional Products that the Party has the right to market (or reasonably
expects to obtain the right to market) to the Product Detail Team, to the extent
the Product Detail Team has excess capacity to market any such Additional
Products. In the event a Party (the "Introducing Party") shall propose that an
Additional Product be introduced to the Product Detail Team for marketing in the
Territory, such proposal shall be brought to the Steering Committee for
determination as to whether the Product Detail Team shall perform marketing
services for such Additional Product. If the Steering Committee shall accept the
Additional Product for marketing by the Product Detail Team, the Parties shall
promptly negotiate and agree upon the revenue sharing arrangement with respect
to such Additional Product; provided, however, that the final decision as to the
acceptability of such Additional Product shall rest with Cellegy.
(c) In the event that (i) Ventiv shall propose the introduction of two
(2) or more Additional Products within any six (6) month period of the Term,
(ii) the Steering Committee shall determine that such Additional Products shall
not be marketed by the Product Detail Team and (iii) Cellegy shall fail to
introduce any Additional Products in place of those Additional Products proposed
by Ventiv, such determination shall be brought to the attention of the Chief
Executive Officers of each of the Parties. The Chief Executive Officers shall
meet as promptly as practicable thereafter to discuss whether and to what extent
Ventiv might be compensated for the potential loss of any profits due to such
rejection by the Steering Committee or Cellegy, if appropriate. It is understood
that this paragraph, (c) shall not be construed to mean that Ventiv will be
entitled to any compensation based on the foregoing.
SECTION 10 Costs. Except as otherwise provided herein, the Parties hereto shall
each be responsible for their own costs and expenses associated with the
Agreement and the transactions contemplated hereby.
SECTION 11 Press Release. The parties shall mutually agree on the initial press
release relating to this Agreement and the transactions contemplated thereby,
and until after the initial press release, no press releases, public
announcements, communications or other promotional materials related to this
Agreement or the transactions contemplated hereby shall be made or sent by
either Party without the prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed, unless such Party reasonably
concludes that such disclosure may be required by applicable Law.
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SECTION 12 Confidentiality.
(a) Confidential Information. Each Party that receives any Confidential
Information (as defined below) (the "Recipient") from the disclosing Party (the
"Disclosing Party") agrees that during the term of this Agreement and for a
period of three (3) years thereafter it will not disclose to any third Person,
any Confidential Information of the Disclosing Party. The term "Confidential
Information" shall mean all non-public information, whether business or
technical in nature identified as being confidential (including but not limited
to, trade secrets, proprietary information, know-how and information relating to
such Party's technology, personnel, customers, business plans, promotional and
marketing activities, finances and other business affairs of such Party), that
either Party, or such Party's agents or affiliates, provides to the other Party
or its representatives or affiliates, or is jointly developed by the Parties. If
either Party has any questions as to what comprises Confidential Information of
the other Party, it agrees to consult with such other Party. Nothing in this
section shall prohibit or limit the Recipient's disclosure of information, and
such information shall not constitute Confidential Information, if (i) at the
time of disclosure hereunder such information is generally available to the
public; (ii) after disclosure hereunder such information becomes generally
available to the public, except through breach of this Agreement by the
Recipient; (iii) the Recipient can demonstrate such information was in the
Recipient's lawful possession prior to the time of disclosure by the Disclosing
Party as requested and was not acquired from the Disclosing Party or its
affiliates; (iv) the information becomes available to the Recipient from a third
Person that is not known by the Recipient to be legally prohibited from
disclosing such information or breaching a contractual obligation to the
Disclosing Party; (v) such information is developed at any time by the Recipient
independent of Confidential Information disclosed by the Disclosing Party to the
Recipient; or (vi) such information must be disclosed pursuant to applicable
federal, state or local law, regulation, court order or other legal process,
provided the Recipient has notified the Disclosing Party within a reasonable
time prior to such required disclosure and, to the extent reasonably possible,
has given the Disclosing Party an opportunity to contest or seek confidential
treatment of such required disclosure. Each Party shall ensure that its
employees and agents are made aware of the confidential status of the
Confidential Information, and that its employees and agents comply with all
relevant provisions of this Section 12.
(b) Return of Confidential Information; Disclosure. Upon request or
upon the expiration or termination of this Agreement, each Party will either
destroy or return to the other Party all Confidential Information including all
copies of any Confidential Information and any written materials derived from or
conclusions based upon any Confidential Information, in its possession or
control. Neither Party will disclose, furnish, or use in any way whatsoever any
Confidential Information to which it becomes privy, except as may be necessary
for that Party to perform its obligations pursuant to this Agreement or for
which the prior written consent of the other Party has been obtained. Each Party
shall be permitted to make such disclosures to the public or to governmental
agencies as its counsel shall deem necessary to maintain compliance with and to
prevent violation of applicable federal or state securities laws, provided each
Party shall use reasonable best efforts to obtain confidential treatment of the
material economic terms hereof.
-17-
SECTION 13 Representations and Warranties.
(a) Cellegy represents and warrants to Ventiv as follows:
(i) Existence, Good Standing and Power. Cellegy is a corporation
validly existing and in good standing under the laws of the State of California,
and has all requisite corporate power and authority to own, lease and operate
its properties. Cellegy has all requisite corporate power and authority to
conduct its business as presently conducted and has all requisite corporate
power and authority to execute and deliver this Agreement and the other
documents and instruments required to be executed and delivered by this
Agreement and to perform its obligations hereunder and thereunder.
(ii) Authority. The execution, delivery and performance of this
Agreement and the other agreements contemplated hereby to be executed and
delivered by Cellegy and the consummation by Cellegy of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Cellegy.
(iii) Execution and Binding Effect. This Agreement has been duly
and validly executed and delivered by Cellegy and constitutes, and each of the
other agreements to be executed and delivered by Cellegy pursuant hereto upon
its execution and delivery by Cellegy shall constitute (assuming in each case
the due and valid authorization, execution and delivery thereof by the other
parties thereto), a valid and legally binding obligation of Cellegy enforceable
against Cellegy in accordance with its respective terms.
(iv) No Violation. The execution, delivery and performance by
Cellegy of this Agreement and the transactions contemplated hereby, do not and
will not conflict with or result in, with or without the giving of notice or
lapse of time or both, any violation of or constitute a breach or default, or
give rise to any right of acceleration, payment, amendment, cancellation or
termination, under (i) the articles of incorporation or bylaws of Cellegy or any
resolution adopted by the board of directors of Cellegy and not rescinded, (ii)
any material agreement or other instrument to which Cellegy is a party or by
which Cellegy or any of its properties or assets is bound or (iii) any
applicable Law of any Governmental Body or any rule or policy of any industry
association of competent jurisdiction, to which Cellegy is bound or subject.
(v) Third Party Approvals. The execution, delivery and performance
by Cellegy of this Agreement and the transactions contemplated hereby do not
require (i) any material consents, waivers, authorizations or approvals of, or
filings with, any third Persons, or (ii) any consents, waivers, authorizations
or approvals of, or filings with, any Governmental Body, in each case which have
not previously been obtained by Cellegy.
(vi) Litigation. There are no judicial, administrative or other
actions, proceedings or claims pending or to the knowledge of Cellegy,
threatened, that question the validity of this Agreement or any action taken or
to be taken by Cellegy in connection with this Agreement or that, if adversely
determined, would have a material adverse effect on Cellegy' ability to conduct
its business in the ordinary course of business or to perform its obligations
under this Agreement.
-18-
(b) Ventiv represents and warrants to Cellegy as follows:
(i) Existence, Good Standing and Power. Ventiv is a corporation
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own, lease and operate
its properties. Ventiv has all requisite corporate power and authority to
conduct its business as presently conducted and has all requisite corporate
power and authority to execute and deliver this Agreement and the other
documents and instruments required to be executed and delivered by this
Agreement and to perform its obligations hereunder and thereunder.
(ii) Authority. The execution, delivery and performance of this
Agreement and the other agreements contemplated hereby to be executed and
delivered by Ventiv and the consummation by Ventiv of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Ventiv.
(iii) Execution and Binding Effect. This Agreement has been duly
and validly executed and delivered by Ventiv and constitutes, and each of the
other agreements to be executed and delivered by Ventiv pursuant hereto upon its
execution and delivery by Ventiv shall constitute (assuming in each case the due
and valid authorization, execution and delivery thereof by the other Party
thereto), a valid and legally binding obligation of Ventiv, enforceable against
Ventiv in accordance with its respective terms.
(iv) No Violation. The execution, delivery and performance by
Ventiv of this Agreement and the transactions contemplated hereby, do not and
will not conflict with or result in, with or without the giving of notice or
lapse of time or both, any violation of or constitute a breach or default, or
give rise to any right of acceleration, payment, amendment, cancellation or
termination, under (i) the certificate of incorporation or bylaws of Ventiv or
any resolution adopted by the board of directors of Ventiv and not rescinded,
(ii) any material agreement or other instrument to which Ventiv is a party or by
which Ventiv or any of its properties or assets is bound or (iii) any applicable
Law or regulation of any Governmental Body or any rule or policy of any industry
association of competent jurisdiction, to which Ventiv is bound or subject.
(v) Third Party Approvals. The execution, delivery and performance
by Ventiv of this Agreement and the transactions contemplated hereby do not
require (i) any material consents, waivers, authorizations or approvals of, or
filings with, any third Persons, or (ii) any consents, waivers, authorizations
or approvals of, or filings with, any Governmental Body, in each case which have
not previously been obtained by Ventiv.
(vi) Litigation. There are no judicial, administrative or other
actions, proceedings or claims pending or to the knowledge of Ventiv,
threatened, that question the validity of this Agreement or any action taken or
to be taken by Ventiv in connection with this Agreement or that, if adversely
determined, would have a material adverse effect on Ventiv' ability to conduct
its business in the ordinary course of business or to perform its obligations
under this Agreement.
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(c) In addition to the other covenants of the Parties contained
elsewhere herein, the Parties covenant and agree as follows:
(i) No Restrictions. A Party shall not, and shall cause its
Affiliates not to, become subject to any contractual or other obligations or
restrictions during the Term which will prohibit that Party from providing the
Services or otherwise fulfilling the obligations to the other Party to the
extent contemplated hereby.
(ii) Other Actions. Each Party shall use its commercially
reasonable efforts to take all actions necessary or appropriate to consummate
the transactions contemplated by this Agreement.
(iii) Additional Agreements. In case at any time after the
Effective Date any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each Party
shall take all such necessary or desirable actions.
(iv) Representations and Warranties. Neither Party shall
affirmatively take any action that would cause any of the representations and
warranties made by it in this Agreement not to be true and correct in all
material respects at any time during the Term and, without limiting the other
Party's rights or remedies hereunder, each Party shall take all commercially
reasonable action to cause its representations and warranties to remain true and
correct in all material respects at all times during the Term.
(v) Cooperation. During the Term, the Parties shall cooperate with
each other and take all reasonable actions necessary or appropriate to further
the purposes of this Agreement.
(d) EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14 Indemnification; Limitation of Liability.
(a) Cellegy shall defend, indemnify and hold Ventiv and its employees,
agents, officers, directors and Affiliates (a "Ventiv Party") harmless from and
against any and all losses, liabilities, obligations, claims, damages, fees
(including, without limitation, attorneys fees), and expenses incurred by a
Ventiv Party that are claimed by or become payable to any third Person and that
result from or arise in connection with (i) the breach of any covenant,
representation or warranty of Cellegy contained in this Agreement, (ii) the
manufacturing, sale or distribution of the Product by Cellegy or any licensee or
affiliate thereof, including any claim of patent infringement, (iii) any product
liability claim related to the Product, including the use by any Person of any
Product that was manufactured, sold or distributed by Cellegy or any licensee or
Affiliate thereof, (iv) any contamination of or defect in the Product; and (v)
negligence or willful misconduct of Cellegy, or any member of the Product Detail
Team subsequent to a Conversion.
(b) Ventiv shall defend, indemnify and hold Cellegy and its employees,
agents, officers, directors and Affiliates (a "Cellegy Party") harmless from and
against any and all losses, liabilities, obligations, claims, damages, fees
(including, without limitation, attorneys
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fees) and expenses brought against or incurred by a Cellegy Party that are
claimed by or become payable to a third Person resulting from or arising in
connection with (i) the breach by Ventiv of any covenant, representation or
warranty of Ventiv contained in this Agreement this Agreement and/or (ii)
negligence or willful misconduct by Ventiv, or any member of the Product Detail
Team prior to a Conversion.
(c) Any Party claiming indemnification hereunder (the "Indemnitee")
shall notify the indemnifying Party (the "Indemnitor") in writing promptly and
in any event within thirty (30) calendar days after receiving written notice of
the commencement of any legal action or of any claims or threatened claims
against such Indemnitee in respect of which indemnification may be sought. The
Indemnitee's failure to give, or tardiness in giving, such notice shall not
relieve the Indemnitor from any liability hereunder except to the extent it is
actually prejudiced hereby. If any such claim or legal action shall be made or
brought against an Indemnitee and such Indemnitee shall notify the Indemnitor
thereof, the Indemnitor may, or if so requested by such Indemnitee, shall assume
the defense thereof, without any reservation of rights, and after notice from
the Indemnitor to such Indemnitee of an election to assume the defense thereof.
No Indemnitee shall settle any indemnified claim as to which the Indemnitor has
not been afforded the opportunity to assume the defense without the Indemnitor's
approval, which approval shall not be unreasonably withheld or delayed. The
Indemnitor shall control settlement of all claims as to which it has assumed the
defense, provided, however, that the Indemnitor shall not conclude any
settlement without the prior approval of the Indemnitee, which approval shall
not be unreasonably withheld or delayed. The Indemnitee shall provide reasonable
assistance to the Indemnitor when the indemnifying party so requests, at the
indemnifying party's expense, in connection with such legal action or claim.
(d) In any case in which the Indemnitor assumes the defense or
settlement of any suit, action, claim or proceeding, the Indemnitee shall be
entitled to continue to participate at its own cost in any such action or
proceeding or in any negotiations or proceedings to settle or otherwise
eliminate any claim for which indemnification is being sought and shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee unless (i) the
employment of such counsel shall have been authorized in writing by the
Indemnitor in connection with the defense of such suit, action, claim or
proceeding, (ii) the Indemnitor shall not have employed counsel (reasonably
satisfactory to the Indemnitee) to take charge of the defense of such action,
suit, claim or proceeding within 30 calendar days (or such shorter period as is
reasonably necessary to avoid default for failure to timely respond) after
notice of commencement of the action, suit, claim or proceeding, or (iii) such
Indemnitee shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to the
Indemnitor which, if the Indemnitor and the Indemnitee were to be represented by
the same counsel, would reasonably be expected to result in a conflict of
interest for such counsel or materially prejudice the prosecution of the
defenses available to such Indemnitee. If any of the events specified in clauses
(ii) or (iii) of the preceding sentence shall have occurred or shall otherwise
be applicable, then the reasonable fees and expenses of one counsel or firm of
counsel selected by the Indemnitee shall be borne by the Indemnitor. In no event
shall an Indemnitor be liable to any Indemnitee for the cost of employing or
using in-house legal counsel regardless of whether such Indemnitor has, or has
not, assumed the defense or settlement of such action, proceeding or claim.
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(e) Notwithstanding, any other provision in this Agreement to the
contrary, the indemnities set forth in this Section 14 shall survive termination
of this Agreement.
(f) EXCEPT FOR LIABILITY UNDER SECTIONS 14(a) AND (b) HEREOF, IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR LOST PROFITS OR ANY INDIRECT, SPECIAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, WHETHER IN AN ACTION BASED ON CONTRACT, TORT (INCLUDING
NEGLIGENCE) OR ANY OTHER LEGAL THEORY, EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
SECTION 15 Term and Termination.
(a) Term. This Agreement shall commence on the date hereof and shall
continue in force until the fourth anniversary of the Launch Date (the "Initial
Term"), unless earlier terminated according to the terms of this Agreement. This
Agreement may be extended for additional one (1) year periods upon the same
terms and conditions hereof upon the mutual consent of the Parties hereto (any
such one-year period, a "Renewal Term", and together with the Initial Term, the
"Term").
(b) Termination By Any Party. This Agreement may be terminated by
either Party hereto immediately by written notice to the other Party:
(i) if the other Party ceases to do business, or otherwise
terminates substantially all of its operations;
(ii) if the other Party materially breaches any provision of this
Agreement and fails to cure such breach within thirty (30) calendar days of
written notice describing such breach; or
(iii) if the other Party becomes insolvent, or seeks protection
under any bankruptcy, receivership, trust deed, creditor's arrangement
composition or comparable proceeding, or if any such proceeding is instituted
against such Party.
(c) Termination by Cellegy. Cellegy will have a right to terminate the
Services Agreement, upon ninety (90) calendar days prior written notice, in the
event Ventiv shall fail to meet certain operational performance based metrics,
as such metrics are set forth in Schedule B attached hereto and such failure is
not cured within thirty (30) calendar days after the date such metrics are
required to be met.
(d) Termination by Ventiv. Ventiv will have the right to terminate this
Agreement:
(i) at any time after the first anniversary of the Launch Date, in
the event that there is a cumulative Contribution Margin of less than zero for
any three (3) calendar month period of the Term, or a cumulative Product
Operating Loss for any consecutive three (3) calendar month period of the Term,
either of which is reasonably expected to result in a Material
-22-
Adverse Impact on the Economic Value, such termination to be effective upon
ninety (90) calendar days prior written notice by Ventiv;
(ii) upon the occurrence of a Call Event as provided in Section
6(d) hereof; or
(iii) upon the occurrence of a Change of Control of Cellegy
pursuant to a transaction with a Ventiv Competitor.
(e) Additional Termination Right. This Agreement may be terminated by
either Party hereto, upon six (6) months prior written notice if cumulative Net
Sales do not exceed (i) * percent (**%) of cumulative projected Net Sales of $**
for the first ** months following the Launch Date or (ii) ** percent (**%) of
cumulative Net Sales, as projected in the approved annual Product Budget for the
** period following ** of the Launch Date or (iii) a percentage of cumulative
Net Sales, as projected in the approved annual Product Budget for the ** period
following ** of the Launch Date, or any subsequent ** period thereafter, such
percentage to be agreed upon by the Steering Committee simultaneously with the
approval of ** .
(f) Effect of Termination. Upon termination, each Party will destroy or
return to the other Party, any of the other Party's Confidential Information,
except as otherwise set forth in Section 6(d). Following the termination of this
Agreement, all obligations of the Parties hereto shall cease; provided, however,
that all obligations, if any, relating to the revenue sharing obligations set
forth in Section 6(b)(iv) hereof shall continue as set forth therein.
SECTION 16 Governing Law; Disputes.
(a) This Agreement shall be governed by the laws of the State of New
York without regard to its conflicts of laws rules.
(b) All controversies or claims arising out of or relating to this
Agreement or the subject matter hereof, other (i) than third party claims
governed by the procedures set forth in Section 14 and (ii) Steering Committee
deadlocks ("Claims"), shall first be submitted to the Product Committee for
resolution. If the Product Committee is unable to resolve any Claims within
three (3) calendar days of submission (or such other period as determined by the
Product Committee), the Claim shall be submitted to the Steering Committee for
resolution. If the Steering Committee is unable to resolve any Claim within
three (3) calendar days of submission (or such other period as determined by the
Steering Committee), or if the Parties are unable to renegotiate the terms of
this Agreement as provided herein, subject to the procedures set forth in
Section 5(c) hereof, such Claim or failure to renegotiate shall be automatically
submitted to arbitration.
(c) There shall be three (3) arbitrators. Each Party shall select one
(1) arbitrator and the two arbitrators selected by each of the Parties shall
select a third arbitrator. The arbitrators shall be selected within thirty (30)
calendar days after submission for arbitration. Such arbitrators shall be
accredited and shall not be Affiliates of either Party. In the event of the
failure of the two arbitrators to agree as to the third arbitrator within twenty
(20) Business Days after the appointment of the last of said two arbitrators,
the third arbitrator shall be appointed by
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-23-
the American Arbitration Association within fifteen (15) Business Days
thereafter. If a Party does not appoint an arbitrator who has consented to
participate within thirty (30) days after submission for arbitration, the
American Arbitration Association shall make the relevant appointment. The
arbitration tribunal shall conduct the arbitration in Chicago, Illinois and
apply such procedural rules as the arbitrators determine are necessary or
appropriate in the circumstances and shall specify the same at the commencement
of the arbitration and the substantive law set forth in Section 16(a) of this
Agreement.
(d) The decision of the arbitrators shall be final and binding upon all
Parties, and not subject to any appeal, to the fullest extent permitted by
applicable Law, and shall deal with the question of costs of arbitration and all
matters related thereto. The arbitrators may in their discretion award costs,
including legal fees, to the prevailing party. Decisions of the arbitrators
shall be in writing, and shall set forth the reasons therefor and, to the extent
applicable, the manner in which the amount of the award was calculated, or, to
the extent the dispute is related to a failure of the Parties to renegotiate as
provided herein, then the basis for the arbitrators' choice as to the
appropriate terms of renegotiation.
(e) Judgment upon the award rendered by the arbitration may be entered
in any court having jurisdiction, or application may be made to such court for a
judicial recognition of the award or any order of enforcement thereof.
(f) Any monetary award arising from the arbitration proceedings shall
include interest from the date of any damages incurred for breach or other
violation of this Agreement and from the date of the award, until paid in full,
at a rate to be fixed by the arbitrators. Any costs, fees, including, without
limitation, attorneys' fees, or taxes incident to enforcing an arbitral decision
rendered in accordance with this Section 16 shall be charged against the
non-prevailing party.
SECTION 17 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the Parties hereto and their
respective successors and assigns. No Party may assign its rights or obligations
under this Agreement or the Funding Arrangement without the prior written
consent of the other Party hereto; provided, however, that no consent shall be
required in connection with a Change of Control of a Party or the sale of all or
substantially all of the assets of a Party, in each case, so long as such
Party's successor or assign agrees to be, or by operation of law is, bound by
the terms of this Agreement and; provided, further, that any purchaser of the
ownership rights to the Product or all or substantially all of the assets of
Cellegy, or any successor to Cellegy by merger shall be required to expressly
assume the obligations under this Agreement or the Funding Arrangement prior to
the consummation of any such transaction. Any purported assignment in violation
hereof shall be null and void and have no force or effect.
SECTION 18 Notices. All notices hereunder shall be in writing (including by
e-mail) and shall be delivered in person or by registered or certified mail,
return receipt requested, or sent by a nationally recognized overnight delivery
service to the applicable Party at its address set forth below (or at such
different address as may be designated by such Party by written notice to the
other Party). All notices by mail shall be deemed delivered upon receipt.
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If to Ventiv of VFLLC:
Ventiv Health, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxxxxx
With a copy to:
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: X. Xxxx Angus, Esq.
Xxxxxx Xxxxxxx, Esq.
If to Cellegy:
Cellegy Pharmaceuticals, Inc.
000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxx Xxxxxxxx
Vice President, Business Development
With a copy to:
Fenwick & West LLP
000 Xxxxxxxxxxx Xxxxxx X.X.
Xxxxx 000
Xxxxxxxxxx, X.X.00000
Attention: C. Xxxxx Xxxxx, Esq.
SECTION 19 Relationship of the Parties. Each of Cellegy and Ventiv is an
independent contractor in the performance of services under this Agreement, and
shall not be considered to be or permitted to be an agent, employee, joint
venturer or partner of the other Party. Each of Cellegy and Ventiv shall be
solely responsible for the compensation and taxes of its employees and the other
Party shall have no obligations thereto. Each Party shall at all times during
the term of this Agreement maintain such supervision, direction and control over
its employees as is consistent with and necessary to preserve its independent
contractor status. Nothing herein shall be construed to create a relationship of
employer and employee, joint venture, partnership or association between Cellegy
and Ventiv, and the Parties agree (except to the extent otherwise required by
law) to treat Ventiv as an independent contractor performing services for
Cellegy (and not as a partner of Cellegy) for all income tax purposes. Except as
expressly provided herein, neither Party nor any of its employees shall have the
right, power, or authority to bind or expend funds on behalf of the other Party
without the express authorization of the other Party or to create any
obligations, express or implied, on behalf of the other Party.
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XXXXXXX 00 Xxxxx Xxxxxxx. Each Party shall have no obligation to perform under
this Agreement to the extent and for the period of time that such Party is
prevented from doing so by reason of any cause beyond its reasonable control and
without the negligence of the Party with respect to whose obligations such a
delay in performance or failure in performance has occurred. Such causes shall
include, without limitations, acts of God, fire, flood, earthquake,
transportation disruption, labor dispute, war insurrection, or other causes
beyond the reasonable control of such Party (collectively referred to herein as
"force majeure"). The Party affected by such an event of force majeure, upon
giving prompt notice to the other Party, shall be excused from performance
hereunder on a day-to-day basis to the extent of such prevention, provided,
however, that the Party so affected shall use commercially reasonable efforts to
avoid or remove such cause of nonperformance and to minimize the consequences
thereof and both Parties shall resume performance hereunder forthwith upon the
removal of such causes.
SECTION 21 Survival. The provisions of Sections 6(b)(iv), 6(f), 7(c), 10, 11,
12, 14, 16 and this Section 21 shall survive the termination of this Agreement,
and the termination of this Agreement shall not terminate any obligation with
respect to any fees, costs or other amounts due and owing but unpaid to one
Party from the other Party or any causes of action arising prior to termination.
SECTION 22 Severability. If any provision of this Agreement is held invalid or
unenforceable by a Governmental Body of competent jurisdiction for any reason,
the invalidity shall not affect the validity of the remaining provisions of this
Agreement, and the Parties shall substitute for the invalid provisions a valid
provision which most closely approximates the intent and economic effect of the
invalid provision.
SECTION 23 Entire Agreement; Waiver; Counterparts. This Agreement including the
Exhibits attached hereto sets forth all of the promises, agreements, conditions
and understandings between the Parties respecting the subject matter hereof and
supersedes all negotiations, conversations, discussions, correspondence and
agreements between the Parties concerning the subject matter hereof, including,
without limitation, the Memorandum of Terms entered into between Cellegy and
Ventiv, dated July 12, 2001. This Agreement may not be modified except by a
writing signed by authorized representatives of both Parties to this Agreement.
No waiver of any term or provision of this Agreement or right hereunder shall be
valid unless the waiver is in writing and signed by the waiving Party. No waiver
or failure to enforce any provision or right hereunder shall be deemed to be a
waiver of the same or any other provision or right in any other instance, nor
shall the waiver by either Party of a breach of any provision hereof be taken or
held to be a waiver of any succeeding breach of such provision or as a waiver of
the provision itself. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
SECTION 24 Headings. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the interpretation or
construction of this Agreement.
SECTION 25 Equitable Relief. The Parties hereto acknowledge and agree that,
except as otherwise specifically provided herein, it will be impossible to
measure in money the damage that would be suffered if any Party hereto fails to
comply with any of the restrictions or obligations imposed in this Agreement,
and that the aggrieved Party will not have an adequate
-26-
remedy at Law. It is therefore agreed that such Person shall be entitled without
posting a bond or other security to seek injunctive relief to enforce such
restrictions or obligations, and that in the event that any action should be
brought in equity to enforce any of the provisions of this Agreement, no party
shall raise the defense that there is an adequate remedy at Law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have executed this Agreement to be
effective as of the date first written above.
CELLEGY PHARMACEUTICALS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
VENTIV HEALTH, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
VIS FINANCIAL LLC
By:_________________________________
Name:_______________________________
Title:______________________________
-28-
Schedule A
Services
Pre-Launch
Co-Product Management
Recruitment and Training 75 detailing representatives
Market Research
Demand Forecast & Product Utilization
Key Opinion Leaders
Resource Optimization
Tactical Plan Development prior to product launch
A launch meeting
*
Development of product website before or immediately after launch
At Launch and/or Annually
Co-Product Management
Deployment and Management of 75 detailing representatives
Tactical Execution & Call Planning
Monthly/Quarterly Cycle
Annual Performance reporting
Market Research
Product Utilization & Tracking
At least ** per year
Message Effectiveness/Adoption Analysis
Annual Promotion Response Measurement Analysis
Utilize Market Research and Secondary Data Source Analysis
Annual Resource Optimization Analysis
Call Plan and Alignment Revisions, as needed
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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* advisory panel meeting
** clinical update meeting
**
Updates to ** as needed (approximately every ** )
** updates to formulary kit, as necessary
** maintenance of product website
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-30-
Schedule B
**Operational Performance Metrics*
Recruiting: 75 reps recruited, screened and
employed on profile by National
Training Meeting.
Annualized *: **
Physician Groups (% represents Colorectal surgeons (~**%), General
approximate percent of total time Surgeons (~**%),
spent with the respective physician Gastroenterologists (~**%), OB/GYN
specialty): (~**%), GP/FP/Internist (~**%)
Targets: ** of physicians within a Colorectal: **/**
segment we are targeting / ** of
total potential in the ** and ** General surgeons: **/**
that the ** of the physicians
represents: Gastroenterologists: **/**
OB/GYN: **/**
GP/FP/Internist: **/**
Approximate number of **/year/ **/year during the ** of launch, **
targeted physician: /year during the next **
Calls on Targeted Physicians: ** of all calls to targeted
physicians
Call to Pharmacies: ** calls / ** /**.
* Subject to change based on resource optimization analysis and tactical plan
development, as approved by the Product Committee.
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
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Schedule C
Ventiv Competitors
Contract Sales Organizations
*
Other
**
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-32-
Schedule D
Excluded Products
All products not requiring a prescription including:
o Cosmeceutical Products
o OTC Products
o Health Supplements
In addition, one Rx product is excluded:
o Glylorin, monolaurin
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Exhibit I
Economic Value Model
* Pre-Launch Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
---------- ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------------------
Operating Profit before tax * ** ** ** ** ** **
=====================================================================================
------------
NPV @ 15% **
------------
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-34-
Exhibit II
Funding Arrangement
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-35-
Exhibit III
Early Conversion Calculation
As an example, in the event of an Early Conversion in the * post-Launch
Date, the Parties shall revise the terms of Section 6(b)(i)-(iii) hereof such
that Ventiv shall receive, monthly, an amount equal to:
(((** / (**/**)) * (**/**) * **) -**) * **
where:
X = the ** from ** of the Product for ** prior to the date of **
Y = the ** from ** for the ** prior to **
Z = the ** for the ** prior to **
A = the average ** for the ** period immediately preceding **
B = the ** incurred in the applicable ** for the Product Detail Team
related to ** , based on its proportional share of the total ** and any
additional ** directly related to the Product in the applicable **
C = the applicable ** percentage set forth in Sections 6(b)(i)-(iii)
D = the average monthly ** for the ** period immediately preceding the
Early Conversion with respect to those Product Marketing Expenses that have been
assumed by Cellegy
-------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
-36-
