EXHIBIT 10.4
CO-EXCLUSIVE MARKETING AGREEMENT
THIS AGREEMENT is made as of the 29th day of June, 1999 (the "Effective
Date"), by and between PHARMACIA & UPJOHN COMPANY, a corporation organized and
existing under the laws of the state of Delaware, with offices at 00 Xxxxxxxxx
Xxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000-0000 ("P&U"), and MGI PHARMA INC., a
corporation organized and existing under the laws of Minnesota, with offices at
Suite 300 E, Opus Center, 0000 Xxxx Xxxx Xxxx, Xxxxxxxxxx, XX 00000-0000
("MGI").
WHEREAS, P&U has proprietary rights to the pharmaceutical product,
AZULFIDINE EN-T (R), which it markets for use in treating rheumatoid arthritis
among other inflammatory disorders;
WHEREAS, MGI has experience and expertise in the marketing and promotion of
pharmaceutical preparations in various fields, including the field of
rheumatology; and
WHEREAS, P&U and MGI wish to enter into an agreement relating to the
marketing and promotion of AZULFIDINE EN-T (R) in the Territory (defined below).
NOW, THEREFORE, the parties hereby agree as follows:
Section 1. Definitions
1.1 "Affiliate" shall mean in the case of a corporation, any entity in
which P&U or MGI, as the case may be, has ownership, directly or indirectly, of
at least fifty percent (50%) of the stock entitled to vote for the election of
Directors and, in the case of a non-stock company, any entity in which P&U or
MGI, as the case may be, has the legal power to direct or cause the direction of
the general management and policies of such entity.
1.2 "Best Efforts" shall mean those efforts that would be made by a
reasonably prudent business person acting in good faith in the exercise of
reasonable commercial judgment.
1.3 "Contract Year" shall mean each 12 calendar month period commencing on
the first day of the calendar month in which MGI begins Detailing the Product.
1.4 "Dedicated Sales Force" shall mean such employees of MGI as have been
assigned to the promotion and Detailing of the Product. The number of MGI
employees that constitute the Dedicated Sales Force, including their
distribution throughout the Territory, as of the Effective Date is further
described in Exhibit A attached hereto. MGI retains the right to change the
number and distribution of its Dedicated Sales Force needed, due to business
conditions and/or position vacancies, and it will inform P&U of any material
changes in the composition thereof.
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1.5 "Details" or "Detailing" shall mean with respect to the Product the
activity undertaken by a sales representative during a sales call on physicians
and using, as necessary or desirable, labeling or promotional materials, in an
effort to increase physician prescribing preferences for the Product for its
FDA-approved uses.
1.6 "FDA" shall mean the U.S. Food and Drug Administration.
1.7 "Incremental Revenue" shall mean (1) the amount of Net Sales for any
period which exceed the prorated Sales Base for such period, less (2) a
distribution expense deduction of 1.5% of the amount determined in (1) above.
1.8 "Marketing and Promotional Plan" shall mean the plan and budget for the
activities of the parties relating to the Product as approved by the Operations
Committee, including without limitation the budget for Non-Detailing Costs for
advertising, dissemination of literature and brochures, exhibition materials,
promotional aids and mailing, samples and participation in major national and
regional symposia.
1.9 "Marketing Fee" shall mean the quarterly fee calculation to MGI by P&U
hereunder which is described in Section 6.1.
1.10 "Marketing Team" shall mean the Product Managers from P&U and MGI
responsible for the management of day-to-day administrative and operational
activities relating to the marketing of the Product.
1.11 "Net Sales" shall mean with respect to any Product: the gross invoiced
sales of such Product by P&U to unrelated third persons, less the following
deductions to the extent included in the gross invoiced sales for such Product
or otherwise directly paid or incurred by P&U or its sublicensees with respect
to the sale of such Product, all determined in accordance with U.S. Generally
Acceptable Accounting Principles:
(i) discounts, credits, rebates, allowances, adjustments, rejections,
recalls for which the customer has been credited the original sales price
and returns;
(ii) trade, quantity, or cash discounts or rebates customary to the
industry and actually allowed, given or accrued (including, but not limited
to, cash, governmental and managed care rebates, and hospital or other
buying group chargebacks);
(iii) sales, excise, turnover, inventory, value-added, and similar
taxes assessed on the sale of such Product, to the extent included in the
invoiced sales;
(iv) the portion of any management fees paid during the relevant time
period to group purchasing organizations that relate specifically to the
sale of such Product to such organizations.
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1.12 "Non-Detailing Costs" shall mean all amounts approved by the Marketing
Team (as evidenced by inclusion in the Annual Marketing and Promotion Plan) and
spent by either party in promotion and marketing the Product to the prescribing
community (and, if applicable, to the patients), which are not directly related
to the maintenance and functioning of MGI's Dedicated Sales Force. Non-Detailing
Costs include but are not limited to samples, field aids, advertising,
organization of conventions and symposia, Promotional Materials, organization of
training courses, training materials, scientific publications, and all other
expenses not directly related to the support, maintenance and function of the
Dedicated Sales Force or employees or agents of P&U. Except as expressly
provided herein, Non-Detailing Costs shall not include travel and lodging
expenses for employees of MGI or P&U, nor any part of either party's respective
internal operating expenses for any reason or purpose.
1.13 "Operations Committee" shall mean those persons from P&U and MGI that
shall have responsibility for providing the leadership required to ensure
optimal commercial success of the Product.
1.14 "Product" shall mean AZULFIDINE EN-T(R) (sulfasalazine formulated in a
delayed release tablet for oral administration) in all approved indications,
including any improvements thereto.
1.15 "Product Manager" shall mean the individual at P&U and MGI responsible
for the day-to-day activities related to the marketing and promotion of the
Product.
1.16 "Promotional Materials" shall mean all sales and promotional materials
related to the Product created by or for P&U prior to or after the Effective
Date.
1.17 "Proprietary Information" means any information of value of either
party, not generally known to the public, including (but not limited to):
(a) Information related to the Product; the development status of the
Product; Product indications and modes of administration; technical
information, such as clinical, biological, manufacturing,
pharmaceutical and characterizing data; and know-how;
(b) business information, such as reports; records; customer lists;
supplier lists; marketing and sales plans; financial information;
costs; and pricing information; and
(c) pharmacoeconomic analyses, if any, conducted by P&U with respect to
the Product.
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1.18 "Sales Base" shall mean P&U's Net Sales of Product in the Territory in
the last 12 full calendar months preceding the date on which MGI begins
Detailing the Product. When prorating the Sales Base in the calculation of
Incremental Revenue for periods of less than one year, the Sales Base shall be
evenly distributed by month.
1.19 "Territory" shall mean the United States, including the District of
Columbia.
1.20 "Trademarks" shall mean all trademarks, trade names, brand names,
logos and designs whether or not registered, used during the term of this
Agreement by either party in connection with the promotion, marketing and sale
of the Product.
Section 2. Relationship
2.1 P&U and MGI wish to cooperate in the promotion and marketing of the
Product in order to maximize the sales of the Product in the Territory to the
mutual profit and advantage of both Parties.
2.2 During the term of this Agreement, P&U will not grant, whether by
agreement or otherwise, any third party any rights to promote or market the
Product in the Territory that conflict with the rights granted to MGI hereunder.
Section 3. Structure
3.1 The cooperation between the parties as set forth in this Agreement will
not constitute nor be construed as constituting a partnership or a relationship
of agent and principal. Neither party shall, under any circumstances act as or
represent itself to be a partner, agent or a representative of the other.
Neither party shall have any responsibility for the firing, compensation, or
employee benefits of the other party's employees. No employee or representative
of either party shall have any authority to bind or obligate the other party to
this Agreement for any sum or in any manner whatsoever, or to create or impose a
contractual or other liability on the other party without said party's
authorized written approval. For all purposes, and notwithstanding any other
provision of this Agreement to the contrary the legal relationship of the
parties under this Agreement shall be that of independent contractors.
3.2 For the purpose of coordinating promotional and marketing activities
and expenditures of each party with respect to the Product in the Territory, the
parties will set up an Operations Committee and a Marketing Team in which both
parties are equally represented.
3.3 Operations Committee: The Operations Committee shall be co-chaired by a
senior manager from P&U and MGI. The initial membership of the Operations
Committee shall be as set forth in Exhibit B and as shall be amended from time
to time. Replacements on the Operations Committee shall be any person having a
functionally equivalent position to that of the person replaced. The Operations
Committee is responsible for providing the
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leadership required to ensure the optimal commercial success of the Product. It
shall evaluate and determine the level of human, financial and functional
resource support required and shall approve, and serve as the decision body on
all matters pertaining to implementation of activities outlined in, the
Marketing and Promotional Plan. The Operations Committee shall also oversee the
activities of the Marketing Team and resolve any disputes arising from the
Marketing Team. During the first Contract Year of this Agreement, the Operations
Committee shall meet regularly as needed, but not less than once every four (4)
months. Thereafter, meetings will be held as necessary, but at least twice per
Contract Year. The location of said meetings shall alternate between the home
offices of each party or an acceptable off-site location as agreed to between
each party. In the event the members are unable to reach a unanimous decision on
a matter, P&U shall have the deciding vote.
3.4 Marketing Team: The Marketing Team shall be comprised of Product
Managers (or their representatives) from P&U and MGI and shall be responsible
for management of the day to day administrative and operational activities and
shall coordinate activities of each party's members of its respective marketing
team, including approving the use by MGI of the Promotional Materials (and the
use of the Trademarks included therein). Further, the Marketing Team shall
prepare the annual Marketing and Promotional Plan, including a budget for
Non-Detailing Costs, which shall be reviewed and approved by the Operations
Committee, and the Marketing Team shall periodically review and determine
whether modifications are necessary to a Marketing and Promotional Plan for a
particular year in order to adjust to market circumstances (which modifications
must be approved by the Operations Committee). The Marketing and Promotional
Plan for Contract Year 1 will be developed by the Marketing Team within 45 days
after the Effective Date and will be attached hereto as Exhibit C. The Marketing
and Promotional Plan for subsequent Contract Years will be developed in a timely
manner by the Marketing Team and attached hereto as Exhibit C. The Marketing
Team shall meet regularly as needed. Any disagreement within the Marketing Team
shall be referred to the Operations Committee for resolution.
Section 4. Strategy/Role of Parties/Commitments
4.1 Strategy
The parties agree that the most efficient strategy to achieve the
objectives of this Agreement is through the promotion (both Detailing and
the activities related to the Non-Detailing Costs) of the Product by the
Dedicated Sales Forces and the parties, using a centrally coordinated
marketing approach.
4.2 P&U's Role
4.2.1 P&U as owner of the Product will retain full and sole control and
ownership over the Product including all improvements to the Product whether
patentable or not, any and all existing and future intellectual property rights,
including Trademarks and regulatory approvals connected with the Product.
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4.2.2 P&U shall manage all regulatory filings, labeling requirements,
regulatory reporting duties, price approvals for reimbursement purposes, and
post-marketing regulatory obligations.
4.2.3 P&U shall retain exclusive authority and responsibility for the
handling of adverse reaction reports. In the case of serious adverse reaction
reports, MGI shall use Best Efforts to notify P&U immediately by telephone or
telefax of any adverse reaction data it may have received. The parties will meet
to determine the most appropriate way to handle any such reports.
4.2.4 P&U shall retain exclusive authority and responsibility for handling
any disputes and law suits with any regulatory agency, as well as with patients
and customers, regarding advertising, promotion and other activity hereunder,
except that P&U may not obligate MGI (whether monetarily or otherwise) as part
of the settlement of any such dispute or law suit without MGI's prior written
consent.
4.2.5 P&U will manufacture the Product for sale in the Territory.
4.2.6 P&U retains the right to market and sell the Product in the
Territory, provided that P&U reports its marketing and sales activities to the
Marketing Team in order for such activities to be coordinated with the Marketing
and Promotional Plan.
4.2.7 P&U will have the sole right and responsibility for establishing and
modifying the terms and conditions with respect to the sale of the Product,
including the price at which the Product will be sold and any discounts or
rebates granted.
4.2.8 P&U will have sole responsibility for dealing with the FDA and all
regulatory agencies concerning the Product unless otherwise required by law or
regulation.
4.2.9 P&U will be solely responsible for billing of customers and for all
relations with customers.
4.2.10 P&U shall handle all requests or inquiries related to the return of
Product. MGI's Dedicated Sales Force shall not accept returns of Product from
the field and shall refer such requests or inquiries to P&U's Customer Service
representatives for handling in accordance with P&U's returned goods policy.
4.2.11 P&U alone shall have the authority to recall any quantity of the
Product and shall manage any recall.
4.2.12 P&U shall timely supply MGI with mutually agreed upon sales data for
the Product at no charge.
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4.3 MGI's Role
4.3.1 MGI shall use its Best Efforts, consistent with accepted business
practices and legal requirements, to train, deploy, motivate through appropriate
incentive compensation and use its Dedicated Sales Force to promote and Detail
the Product in the Territory in accordance with the Marketing and Promotional
Plan and other promotional programs and budgets approved by the Operations
Committee and otherwise in such a manner and as expeditiously as MGI itself
would have adopted in launching, promotion and Detailing any other major
pharmaceutical product within its product portfolio.
4.3.2 MGI will cooperate with P&U in dealing with any customer complaints
concerning the Product and will take such action to resolve such complaints
concerning the Product as may be reasonably requested by P&U, consistent with
the rights granted to MGI hereunder. MGI will inform P&U in writing regarding
any information concerning the safety or efficacy of the Product as required by
Section 4.2.3.
4.4 Obligations of the Parties
4.4.1 Governmental Contact Reporting MGI shall immediately notify P&U upon
being contacted by the FDA or any state drug regulatory agency for any
regulatory purpose pertaining to the Agreement or to the Product. MGI shall not
respond to such contact before consulting with P&U unless it is impracticable to
give advance notice in which event MGI will notify P&U of such contact as soon
as reasonably practical.
4.4.2 Promotional Materials and Samples. P&U shall provide MGI with all
available Promotional Materials created by or for P&U in quantities sufficient
to allow MGI's representatives to Detail the Product in accordance with the
Marketing and Promotional Plan. Such Promotional Materials and any other items,
such as samples, to be provided by P&U to MGI pursuant to the Marketing and
Promotional Plan shall be provided at P&U's cost, and included in P&U's
Non-Detailing Costs. MGI shall only use Promotional Materials provided by P&U
and shall not in any manner alter such materials provided by P&U except that MGI
may attach to Promotional Materials created by P&U labels created by MGI and
approved by the Marketing Team.
4.4.3 Sales Training P&U shall provide MGI all training, including, without
limitation all training materials, transfer of expertise, advice and assistance
in order for MGI and its Dedicated Sales Force to receive adequate training as
needed to Detail and promote the Product as provided for in this Agreement. MGI
shall ensure that its Dedicated Sales Force is available for such training. MGI
may create or have created training materials for the Products using the
training materials and information provided by P&U.
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4.4.4 Orders P&U shall manage and fill all orders for the Product, and MGI
shall not take any order for the Product. MGI shall promptly refer any orders
for the Product from third parties to P&U so that such orders can be processed
by P&U on a timely basis.
4.4.5 Invoices All invoices to customers in the Territory shall be sent by
P&U directly to the customer. It is expressly understood that full power and
authority for all collections rests with P&U, which shall exercise complete
control over the approval of all customers credits, orders, and contracts.
4.4.6 Information Requests All significant questions and inquiries
regarding the Product received by MGI which cannot be answered by MGI by
referring to the Product package inserts or labeling shall be forwarded by MGI
to P&U as soon as practical after receipt, but in any event no longer than five
(5) business days after receipt by MGI.
4.4.7 Government Contact. P&U shall provide MGI with prompt written notice
of any inquiries from or positions taken by the FDA or any other government
agency which may significantly affect the marketing of the Product.
4.4.8 Generic Competition and Reduced Sales. In the event that (a) any
generic version of the Product competing with the Product marketed in the
Territory reduces sales of the Product in the Territory by *** percent (***%) or
to the Sales Base Level (where both such reductions will be measured on a
quarter by quarter basis), or (b) if the Marketing Fee for the fourth quarter of
a Contract Year is negative and MGI is required to pay to P&U any amounts for
such quarter pursuant to the terms of Section 6.1, the parties will meet within
twenty (20) days after such determination in order to discuss and agree upon any
necessary modifications to the Marketing and Promotional Plan and the parties'
rights and obligations hereunder (including, without limitation, the formula
used to calculate MGI's Marketing Fee hereunder), in order to adjust to such
unexpected decrease in Incremental Revenue. If the parties cannot reach
agreement on such modifications within ten (10) days after their meeting, then
MGI shall have the right to terminate this Agreement as provided in Section
14.5. In addition, if at any time either party can demonstrate its inability to
promote the Product on a profitable basis to the reasonable satisfaction of the
other party, such party shall have the right to terminate this Agreement as
provided in Section 14.5.
4.4.9 No Hire. During the term of this Agreement and for six (6) months
thereafter, neither party nor its Affiliates shall hire any employees of the
other party without prior written consent, which consent such party may grant in
its sole discretion.
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
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4.4.10 Warranty. Each party warrants to the other that it has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and such execution, delivery and performance hereunder
does not and will not violate any other agreements of such party. P&U warrants
to MGI that it has the right to grant to MGI the rights and license granted
under this Agreement.
Section 5. Sales Target
5.1 Sales Targets. In each Contract Year, MGI shall meet the following
sales targets (the "Sales Targets"): in the first Contract Year, the Sale Base
plus *** percent (***%) of such Sales Base, and in each subsequent Contract
Year, the preceding year's Sales Target, plus *** percent (***%) of such
preceding year's Sales Target. If at the end of any Contract Year, MGI has
failed to meet such Sales Target, the parties shall meet and attempt to arrive
at mutually acceptable compromise within the spirit and intent of this
Agreement, failing which, P&U may terminate this Agreement as provided in
Section 14.4.
Section 6. Compensation
P&U shall compensate MGI for its services rendered during the term of this
Agreement as follows:
6.1 Marketing Fee. P&U shall calculate and pay MGI a Marketing Fee equal to
(a) fifty percent (50%) of Incremental Revenue, minus (b) fifty percent (50%) of
the aggregate total of Non-Detailing Costs incurred by P&U and MGI, plus (c) one
hundred percent (100%) of the Non-Detailing Costs incurred by MGI, with all such
Non-Detailing Costs approved by the Marketing Team as provided in Section 3.4.
The Marketing Fee shall be calculated on a Contract Year-to-date basis as of the
end of the 3rd, 6th, 9th and 12th months (i.e., each quarter) of each Contract
Year. Thus, amounts paid to MGI for previous quarters of a particular Contract
Year shall be deducted in determining the amount due for the current quarter. In
the event the amount due MGI for the 1st, 2nd or 3rd quarter of a Contract Year
is negative, no cash settlement will be made to either party. If the amount due
MGI for the 4th quarter is negative, MGI shall pay to P&U the lesser of: (a) the
amount due for the quarter, or (b) the amount necessary such that MGI has paid
(i.e., expended directly and/or to paid to P&U pursuant to this item (b)) a
total of fifty percent (50%) of the aggregate total Non-Detailing Costs incurred
by MGI and P&U in such Contract Year. Calculation and payment of each quarterly
Marketing Fee will be made within 45 days after the end of the applicable
quarter, and P&U shall provide a written report detailing the basis for the
amount of such payment (even if no payment is due in such quarter), unless MGI
has not provided P&U an accounting of its Non-Detailing Costs for the applicable
quarter within 25 days after the end of such quarter, in which case P&U shall
have 20 days from receipt of the required information from MGI in which to
calculate and make the appropriate payment and report to MGI. An example
calculation of the Marketing Fee for a particular Contract Year is contained in
Exhibit C attached hereto.
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
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6.2 Compensation and Expenses. The Marketing Fee shall be the sole and
exclusive compensation to MGI for any and all services performed pursuant to
this Agreement. MGI shall bear the entire cost and expense of conducting its
business including, but not limited to, salaries and commissions of its
personnel, offices and communications cost, travel and advertising expenses, and
similar expenses.
6.3 Sales in Territory. MGI will be compensated only for sales made by P&U
in the Territory. A sale shall be deemed made in the Territory when an order for
the Product is delivered within the Territory.
Section 7. Promotional Activities
7.1 Field Force Activities
7.1.1 MGI's sales force shall promote the Product by providing Details
according to the Marketing and Promotional Plan. The parties agree that MGI
shall carry out approximately *** Details on an annualized basis in each of the
first two Contract Years.
7.1.2 MGI will generate and maintain its own internal call reporting system
which shall be the basis for generating reports on Detailing activity to
designated physician targets.
7.1.3 MGI shall not sub-contract the performance of any of its Detailing
activities under this Agreement without the prior written consent of P&U.
Section 8 Reports
8.1 Quarterly Reports Within twenty (20) business days after the last day
of each quarter, MGI will provide P&U, in writing, with the following
information for that quarter: the report on Detailing activity described above
in Section 7.1.2 and a status report on the activities to be carried out by MGI
under the Marketing and Promotional Plan.
8.2 Audit For three (3) years after a report provided for in Section 8.1
above is delivered to P&U hereunder, MGI agrees to keep true and accurate
records of all data utilized for the purpose of making such report and such
records shall contain sufficient detail to permit a determination of the
accuracy of such report. For three (3) years after a report is delivered to MGI
hereunder, P&U agrees to keep true and accurate records of all data utilized for
the purpose of making such report, and such records shall contain sufficient
detail to permit a determination of the
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
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accuracy of such report. Each party shall have the right during the applicable
three (3) year period provided above, at its own expense and upon reasonable
notice, to conduct audits of all of the relevant books and records of the other
party which are directly related to the promotion and sale of the Product in
order to determine the accuracy of a report provided and payments made, as
applicable, by the other party pursuant to such report; provided, however, that
if any such audit determines that P&U has underpaid MGI by more than five
percent (5%) in a particular calendar quarter and such underpayment was not
subsequently corrected by P&U in an ensuing quarter, then P&U shall immediately
pay the amount of such underpayment to MGI and shall pay all reasonable costs of
MGI's audit.
8.3 Taxes Each party shall be responsible for its own tax compliance and
payments regarding its activities under this Agreement.
Section 9. Sampling Program
All samples shall be provided to MGI at P&U's cost. All activities in
connection with the distribution of samples shall be conducted in a manner which
conforms to MGI's internal policy regarding sampling and applicable laws and
regulations.
Section 10. Indemnification
10.1 P&U agrees to defend, indemnify and hold MGI and its officers,
directors, agents and employees free and harmless from any third party claim or
suit, judgment, liability or associated expenses (including reasonable outside
attorney's fees) incurred or arising in connection with (a) the manufacture,
advertising, promotion, sale, import or use of the Product and Trademarks,
including, without limitation, product liability, intellectual property
infringement, and personal injury (including death), and (b) any breach of any
warranty, representation or covenant of P&U under this Agreement.
10.2 MGI shall inform P&U promptly of any such claim which is brought
against it and shall, at P&U's request and expense, cooperate fully with P&U in
defending such claim. MGI at its expense shall have the right to advise and
consult in such suit or proceeding. P&U shall have full control over the suit or
proceedings, including the right to conclude any settlement on terms and
conditions as P&U deems fit, provided that P&U may not obligate MGI or any other
indemnitee (whether monetarily or otherwise) as part of any such settlement
without the prior written consent of MGI or the indemnitee, as applicable.
10.3 MGI agrees to indemnify and hold P&U, and its officers, directors,
agents and employees free and harmless from any third party claim or suit,
judgment, liability or associated expenses (including reasonable outside
attorney's fees) on account of personal injury (including death) or other loss
or damage to third parties resulting from MGI's negligence or willful misconduct
related to or arising from MGI's Detailing and promoting the Products as
provided in this Agreement, including, but not limited to, Detailing the Product
in a manner that is inconsistent
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(i) with the FDA approval pertaining to the Product or (ii) the Marketing and
Promotional Plan or decisions of the Marketing Team.
10.4 P&U shall inform MGI promptly of any such claim which is brought
against it and shall, at MGI's request and expense, cooperate fully with MGI in
defending such claim. P&U at its expense shall have the right to advise and
consult in such suit or proceeding MGI shall have full control over the suit or
proceedings, including the right to conclude any settlement on terms and
conditions as MGI deems fit, provided that MGI may not obligate P&U or any other
indemnitee (whether monetarily or otherwise) as part of any such settlement
without the prior written consent of P&U or the indemnitee, as applicable.
10.5 P&U agrees to maintain product liability insurance applicable to the
Product and MGI agrees to maintain commercially reasonable business liability
insurance covering its activities under this Agreement.
10.6 IN NO EVENT SHALL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR
ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR
OTHERWISE, ARISING OUT OF THIS AGREEMENT. P&U ACKNOWLEDGES THAT MGI DISCLAIMS
ANY WARRANTY, REPRESENTATION OR GUARANTEE THAT MGI'S PROMOTION AND DETAILING OF
THE PRODUCT AS PERMITTED HEREUNDER WILL GENERATE ANY PARTICULAR LEVEL OF ACTUAL
PRESCRIPTIONS, OR ANY INCREASE IN SALES OF THE PRODUCT, AND MGI, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS AND AFFILIATES SHALL HAVE NO LIABILITY OF ANY KIND
OR NATURE (INCLUDING, WITHOUT LIMITATION, DIRECT, INDIRECT, SPECIAL,
CONSEQUENTIAL OR ANY OTHER TYPE OF DAMAGES), REGARDLESS OF THE FORM OF ACTION,
FOR ANY FAILURE TO ACHIEVE ANY PARTICULAR LEVEL OF SALES OR NUMBER OF DETAILS
FOR THE PRODUCT. THE PARTIES AGREE THAT P&U'S SOLE REMEDY, AND MGI'S SOLE
LIABILITY, FOR ANY FAILURE OF MGI TO MEET ANY SALES TARGETS IS SET FORTH IN
SECTION 5.1 HEREOF.
Section 11. Industrial Property Rights; Confidentiality
11.1 In order to facilitate this Agreement it will be necessary for the
parties to exchange certain Proprietary Information. Each party agrees to retain
the Proprietary Information of the other party in strict confidence and not to
disclose or transfer the Proprietary Information to any party or use the
Proprietary Information other than as authorized by the terms of this Agreement
or otherwise in writing by the discloser. The parties acknowledge that such
Proprietary Information can constitute "inside information" for securities
purposes and the responsibility to refrain from any unauthorized disclosure,
trading or other such use. Each party represents to the other that it maintains
policies and procedures designed to prevent unauthorized
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disclosure of its own Proprietary Information. All employees of a party
performing services under this Agreement shall be subject to agreements
prohibiting the disclosure of Proprietary Information except on the terms
permitted in this Agreement.
11.2 These obligations of confidentiality and non-use shall not apply to
Proprietary Information: (a) that was previously known to the recipient as
evidenced by recipient's written records, (b) that is lawfully obtained by
recipient from a source independent of the disclosing party, (c) that is now or
becomes public knowledge other than by breach of this Agreement, or (d) that is
legally required to be disclosed under federal or state law, provided that the
party required to make the disclosure takes reasonable steps, consistent with
protection it would seek for its own confidential information, to prevent the
Proprietary Information from becoming public.
11.3 These obligations of confidentiality and non-use shall survive the
expiration or termination of this Agreement.
Section 12. Tradedress and Packaging
The Product will bear a single Trademark and the tradedress of P&U. The
name of MGI will not appear on the Product, package label and insert. As
provided hereunder, both MGI's and P&U's names will appear on all promotional
materials (except where prohibited by law or regulation). Neither Party shall
use or distribute any promotional, educational and/or training materials other
than those authorized by the Operations Committee or Marketing Team.
Section 13. Competitive Products
During the twelve (12) months after the Effective Date of this Agreement,
with the exception of the product "Ridaura", MGI shall not market and/or promote
in the Territory any rheumatoid arthritis product competing with the Product,
unless approved by the Operations Committee.
Section 14. Term-Termination
14.1 This Agreement shall commence on the Effective Date and, unless sooner
terminated pursuant to provisions herein, shall continue in force for a period
of three and one-half Contract Years. Thereafter, the Agreement shall
automatically renew for further periods of one (1) year unless or until either
party shall have given the other written notice of termination of this Agreement
at least six (6) months prior to the expiration of the then current term.
14.2 The Agreement may be terminated by either party before the expiration
of the time period set forth in Section 14.1 in the event of a material breach
by the other Party of its obligations under this Agreement, if such breach is
not remedied within ninety (90) days from date
Marketing Agreement
P&U/MGI Page -14-
on which the non-breaching party gives written notice to the breaching party
describing the alleged breach in sufficient detail.
14.3 Either party hereto shall have the right at any time by notice to the
other Party to terminate this Agreement in the event that such other party shall
be dissolved or liquidated, be declared insolvent or bankrupt.
14.4 Pursuant to Section 5.1, P&U shall have the right to terminate this
Agreement by giving six (6) months advance written notice, provided that such
notice must be received by MGI within thirty (30) days after P&U delivers the
reports required in Section 6.1 for the last quarter of the Contract Year in
which the applicable Sales Target was not met.
14.5 Each party shall have the right to terminate this Agreement by giving
one (1) month advance written notice as provided in Section 4.4.8.
14.6 Either party may terminate this Agreement as provided in Section 17.2.
14.7 The parties have considered the possibility of expenditures necessary
for the performance of the terms of this Agreement and the possible loss and
damage incident to them in the event of termination. Neither party shall be
liable to make any payment of damages or goodwill indemnity or compensation in
any other manner on account of termination of this Agreement pursuant to its
terms.
14.8 The following Sections of this Agreement shall survive any termination
hereof: 4.2, 4.3.2, 4.4.1, 4.4.4-4.4.7, 4.4.9, 4.4.10, 8, 10, 11 and 17.
Section 15. Trademarks and Tradenames
15.1 Trademarks and trade names used by P&U or by its Affiliates in
connection with the Product shall be used by MGI only with reference to such
Product and only in the manner approved by the Marketing Team, as provided
herein. MGI acknowledges that it has and will obtain no proprietary interest in
Trademarks and trade names and agrees not to use any of them as part of its
corporate or business name and to discontinue all use thereof immediately upon
termination of this Agreement.
15.2 MGI shall advise P&U promptly upon its becoming aware of any
infringement by a third party of Trademarks identifying the Product in the
Territory. If warranted in the opinion of P&U, P&U shall promptly take such
legal action as is required to restrain or otherwise prevent such infringement
MGI shall cooperate fully with and as requested by P&U, at P&U's expense, in
P&U's attempt to restrain such infringement. P&U shall have the sole right to
control the suit or proceeding, including the right to conclude a settlement on
terms and conditions it deems fit, provided that P&U may not obligate MGI
(whether monetarily or otherwise) as part of any such settlement without the
prior written consent of MGI.
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P&U/MGI Page -15-
Section 16. ***
***
Section 17. Miscellaneous
17.1 Notice Any notice required or permitted hereunder shall be in writing
and shall be sufficiently given when personally delivered, sent by telefax,
delivered by overnight courier or mailed prepaid first class registered or
certified mail and addressed to the party for whom it is intended at its record
address, and such notice shall be effective upon receipt, if delivered
personally, sent by telefax or overnight courier, or shall be effective five (5)
days after it is deposited in the mail, if mailed. The record addresses and
facsimile number of the parties are set forth below:
If to P&U: Pharmacia & Upjohn Company
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: General Counsel
Facsimile No.: 000 000 0000
If to MGI: MGI Pharma Inc.
Suite 300 E, Opus Center
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: CEO
Facsimile No.: 000 000 0000
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
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P&U/MGI Page -16-
Any party, at any time, may change its previous record address or facsimile
number by giving written notice of the substitution to the other party as herein
provided.
17.2 Force Majeure The performance by both parties of any covenant or
obligation on its part to be performed under this Agreement, with the exception
of the obligation to make any payments already due and owing to the other party,
shall be excused by floods, riots, fire, war, acts, injunctions, or restraints
of government (whether or not now threatened), or any cause preventing such
performance whether similar or dissimilar to the foregoing beyond the reasonable
control of the party bound by such covenant or obligation ("force majeure"). In
addition, if a force majeure event or the effects thereof prevents or affects
P&U's supply of the Product to the market, for more than fifteen (15) days, MGI
shall be relieved of its Detailing and other promotional obligations hereunder
if and for so long as such force majeure event or the effect thereof continues.
Further, if such force majeure event or the effects thereof continues for a
period of ninety (90) or more consecutive days, the parties shall meet and
attempt to arrive at a mutually acceptable compromise within the spirit and
intent of this Agreement, failing which, either party may terminate this
Agreement on thirty (30) days' prior written notice to the other party.
17.3 Assignment This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
Neither party shall assign this Agreement or any of its rights, privileges or
obligations without the prior written consent of the other party, which consent
shall not be unreasonably withheld, provided that,(a) either party may assign
this agreement without the prior written consent of the other party to an
Affiliate, and (b) either party may assign this Agreement to a third party in
connection with the divestiture of all or substantially all of such party's
related business or product portfolio, as applicable, or in connection with a
sale of all or substantially all of the business of assets of such party,
whether through merger, sale of stock, sale of assets or other transaction;
provided that in the case of (b), the parties shall first meet to discuss the
potential impact of such transaction on this Agreement and the business
relationship contemplated hereby, and failing agreement, either party shall have
the right to terminate this Agreement, effective upon the later of sixty (60)
days written notice or the expiration of the second Contract Year. Any such
permitted successor or assignee shall in writing to the other party expressly
assume performance of the rights and/or obligations assigned.
17.4 Modification No modification or amendment hereof shall be valid or
binding upon the parties hereto unless made in writing and duly executed on
behalf of both of the parties.
17.5 Waivers Failure of a party to insist upon the strict performance of
any provision hereof or to exercise any right or remedy shall not be deemed a
waiver of any right or remedy with respect to any existing or subsequent breach
or default.
17.6 Governing Law This Agreement shall be construed and the legal
relations between the parties hereto determined in accordance with the laws of
the State of New
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P&U/MGI Page -17-
York without regard to what laws might otherwise govern under applicable
principles of conflict or choice of law.
17.7 Arbitration Except for the right of either party to apply to a court
of competent jurisdiction for a temporary restraining order to preserve the
status quo or to prevent irreparable harm pending the selection and confirmation
of a panel of arbitrators in accordance herewith, any and all disputes arising
out of or in connection with the performance of this Agreement shall be finally
settled by arbitration in accordance with the rules of the American Arbitration
Association, except that each party will be entitled to select one (1)
arbitrator and the two (2) arbitrators so selected shall select a third
arbitrator and if they cannot agree, then the third arbitrator will be selected
by the American Arbitration Association. The arbitration shall be held in New
York, New York. The award rendered shall be final and binding upon the parties.
Judgment on any award may be entered in any court having jurisdiction over the
parties or their assets. The costs of the arbitrators shall be shared equally by
the parties, unless the arbitrators award costs to one or the other party.
17.8 Public Disclosure Subject to the requirements of law and/or the stock
exchange on which either party's stock is listed, neither party shall issue a
press release or in any other way announce to the public the existence and/or
contents of this Agreement and the negotiations preceding it without consent of
the other party.
17.9 Headings The clause headings are placed herein merely as a matter of
convenience and shall not affect the construction or interpretation of any of
its provisions.
17.10 Entire Agreement This Agreement constitutes the entire agreement
between the Parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers or representatives as of the day and
year first above written.
PHARMACIA & UPJOHN COMPANY MGI PHARMA INC.
By: /s/ Apet X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------- ------------------------------------
Name: Apet X. Xxxxxxxxxxx Xxxxxxx X. Xxxxxxx
------------------------------
Title: Group Vice President President & Chief Executive Officer
-----------------------------
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P&U/MGI Page -18-
EXHIBIT A
DESCRIPTION OF MGI'S DEDICATED SALES FORCE
----------------------------------------------
Territory Area Name
----------------------------------------------
1-1110 ***
----------------------------------------------
1-1210 ***
----------------------------------------------
1-1310 ***
----------------------------------------------
1-1410 ***
----------------------------------------------
1-1810 ***
----------------------------------------------
1-1910 ***
----------------------------------------------
1-2110 ***
----------------------------------------------
1-2210 ***
----------------------------------------------
1-2310 ***
----------------------------------------------
1-2610 ***
----------------------------------------------
1-2710 ***
----------------------------------------------
1-2810 ***
----------------------------------------------
2-1710 ***
----------------------------------------------
2-2410 ***
----------------------------------------------
2-2510 ***
----------------------------------------------
2-3010 ***
----------------------------------------------
2-3110 ***
----------------------------------------------
2-3210 ***
----------------------------------------------
2-3310 ***
----------------------------------------------
2-3410 ***
----------------------------------------------
2-3510 ***
----------------------------------------------
2-3610 ***
----------------------------------------------
2-3710 ***
----------------------------------------------
2-3810 ***
----------------------------------------------
2-9110 ***
----------------------------------------------
* Part-time territory
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
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P&U/MGI Page -19-
EXHIBIT B
MEMBERSHIP OF OPERATIONS COMMITTEE
For MGI:
1. Chief Operating Officer
2. Vice-President of Sales and Marketing
For P&U:
1. Group Vice-President, Diversified Products, Global Business Management
2. Vice-President, Diversified Products, Global Business Management
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P&U/MGI Page -20-
EXHIBIT C
EXAMPLE CALCULATION OF MARKETING FEE
Q1 Q2 Q3 Q4
-- -- -- --
Contract Year-to-date
Sales base $4,750 $9,500 $14,250 $19,000
Actual sales $6,000 $11,500 $16,000 $19,000
---------------------------------------------------------------
$1,250 $2,000 $1,750 $0
Distribution fee $(19) $(30) $(26) $0
---------------------------------------------------------------
Incremental Revenue $1,231 $1,970 $1,724 $0
---------------------------------------------------------------
50% of Incremental Revenue $616 $985 $862 $0
Non-Detailing Costs:
P&U $175 $350 $525 $700
MGI $25 $50 $75 $100
---------------------------------------------------------------
$200 $400 $600 $800
---------------------------------------------------------------
50% of Non-Detailing Costs $100 $200 $300 $400
MGI Non-Detailing Reimbursement $25 $50 $75 $100
---------------------------------------------------------------
Contract Year-to-date Marketing Fee $541 $835 $637 $(300)
less prior payments $0 $541 $835 $0
---------------------------------------------------------------
Marketing Fee calculation for quarter $541 $294 $(198) $(300)
===============================================================
Quarterly Payments:
===============================================================
Marketing fee payment due MGI $541 $294 $0 $0
===============================================================
Marketing fee refund due P&U $0 $0 $0 $300
Note: Given these assumptions and applying the terms of Section 6.1 of the
Agreement, the result of the Marketing Fee calculation for Q4 would be a payment
of $300 by MGI to P&U after the end of the Contract Year. MGI would have
received $835 in Marketing Fees from P&U pertaining to earlier quarters, so
MGI's net receipts in Marketing Fees for the Contract Year would be $535.
