1997 PROMOTION AGREEMENT
BETWEEN
SOMERSET PHARMACEUTICALS, INC.
AND
COCENSYS, INC.
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS................................................... 2
1.1 "Actual Gross Sales".......................................... 2
1.2 "Actual Monthly Details"...................................... 2
1.3 "Actual Quarterly Details".................................... 2
1.4 "Adjusted Annualized Detail Payment Reduction"................ 2
1.5 "Adjusted Detail-Based Compensation Reconciliation Payment"... 3
1.6 "Adjusted Target Details"..................................... 3
1.7 "Affiliate"................................................... 3
1.8 "Annualized Detail Payment Reduction"......................... 3
1.9 "CoCensys ELDEPRYL Sales Force"............................... 3
1.10 "Detail-Based Compensation"................................... 3
1.11 "Detail-Based Compensation Reconciliation Payment"............ 3
1.12 "Effective Date".............................................. 4
1.13 "ELDEPRYL Brand".............................................. 4
1.14 "ELDEPRYL Brand Unit"......................................... 4
1.15 "ELDEPRYL Detail"............................................. 4
1.16 "FDA"......................................................... 4
1.17 "First Position Presentation"................................. 5
1.18 "Gross Sales-Based Compensation".............................. 5
1.19 "Key Prescribers"............................................. 5
1.20 "Key Prescriber Marketing Plan"............................... 5
1.21 "Managing Committee".......................................... 5
1.22 "Minimum Aggregate Monthly Details"........................... 6
1.23 "Minimum Aggregate Quarterly Details"......................... 6
1.24 "Monthly Detail Payment"...................................... 7
1.25 "Monthly Detail Payment Reduction"............................ 7
1.26 "NDA"......................................................... 7
1.27 "Promotional Materials"....................................... 7
1.28 "Proprietary Information"..................................... 7
1.29 "Quarterly Detail Payment".................................... 7
1.30 "Quarterly Detail Payment Reduction".......................... 7
1.31 "Sample"...................................................... 7
1.32 "Target Aggregate Monthly Details"............................ 8
1.33 "Target Aggregate Quarterly Details".......................... 8
1.34 "Term"........................................................ 8
1.35 "Territory"................................................... 9
1.36 "Total Actual Details"........................................ 9
1.37 "Total Detail Payment Reduction".............................. 9
1.38 "Total Government Discounts and Rebates"...................... 9
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE 2. PROMOTION RIGHTS.............................................. 10
2.1 Appointment of CoCensys....................................... 10
2.2 Rights Retained by Somerset................................... 10
ARTICLE 3. MANAGING COMMITTEE; KEY PRESCRIBER MARKETING PLAN............. 11
3.1 Managing Committee............................................ 11
(a) Formation; Meetings...................................... 11
(b) Functions of the Managing Committee...................... 12
3.2 Dispute Resolution............................................ 13
ARTICLE 4. PROMOTION OF ELDEPRYL BRAND................................... 14
4.1 CoCensys ELDEPRYL Sales Force................................. 14
4.2 Training of CoCensys ELDEPRYL Sales Force..................... 14
(a) Continued Training....................................... 14
(b) Training Costs........................................... 15
4.3 CoCensys ELDEPRYL Sales Force Support......................... 15
4.4 Conduct of the CoCensys ELDEPRYL Sales Force.................. 15
4.5 Bonus Program for CoCensys ELDEPRYL Sales Force............... 16
4.6 Other Marketing Activities to Physicians...................... 17
(a) Physicians Who Are Not Key Prescribers................... 17
(b) Non-Sales Call Activity.................................. 17
4.7 Other Uses of CoCensys Sales Force............................ 18
4.8 Number of ELDEPRYL Details.................................... 19
4.9 Records and Reports Regarding Promotion Activities............ 19
4.10 Forwarding of ELDEPRYL Brand Orders........................... 20
ARTICLE 5. SOMERSET RIGHTS AND OBLIGATIONS............................... 20
5.1 [ * ] Marketing Responsibility........................ 20
5.2 Supply and Distribution of ELDEPRYL Brand..................... 21
5.3 Regulatory Compliance......................................... 21
5.4 Product Recall................................................ 21
5.5 Promotional Materials......................................... 22
(a) Somerset Materials....................................... 22
(b) Rights To Promotional Materials.......................... 22
5.6 [ * ] Developments Relating to ELDEPRYL Brand......... 23
5.7 Sales and Inventory Data...................................... 23
5.8 Somerset Costs................................................ 24
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE 6. JOINT OBLIGATIONS............................................. 24
6.1 Assistance and Notifications to Other Party................... 24
6.2 Samples of ELDEPRYL Brand..................................... 25
(a) Costs.................................................... 25
(b) Shrink-Wrap.............................................. 25
(c) Disposition Upon Termination............................. 25
6.3 Requests for Information from Key Prescribers................. 26
6.4 Market Surveys................................................ 26
6.5 Withdrawal of ELDEPRYL Brand.................................. 26
6.6 Non-Solicitation of Employees................................. 27
ARTICLE 7. COMPENSATION.................................................. 27
7.1 Detail-Based Compensation..................................... 27
(a) Detail Payments.......................................... 27
(b) Reduction in Detail Payments............................. 29
(c) Detail-Based Compensation Reconciliation................. 31
(d) ......................................................... 34
7.2 Gross Sales-Based Compensation................................ 34
(a) ......................................................... 34
(b) ......................................................... 34
(c) ......................................................... 35
(d) ......................................................... 35
7.3 Adjustments in the Event of Changes in Government Mandated
Discounts and Rebates......................................... 36
7.4 Audit Rights.................................................. 37
ARTICLE 8. TERM; TERMINATION............................................. 38
8.1 Renewal Terms................................................. 38
8.2 Termination Rights............................................ 38
8.3 Termination Upon Cessation of Sale of ELDEPRYL Brand.......... 38
8.4 Termination for Breach........................................ 38
8.5 Effect of Termination......................................... 39
8.6 Termination of the 1996 Agreement............................. 39
ARTICLE 9. WARRANTIES, REPRESENTATIONS AND COVENANTS..................... 40
9.1 Warranties and Representations of Each Party.................. 40
9.2 Warranties and Representations of Somerset.................... 40
9.3 Warranties and Representations of CoCensys.................... 41
iii.
TABLE OF CONTENTS
(CONTINUED)
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ARTICLE 10. INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.................. 41
10.1 Notice........................................................ 41
10.2 Conduct of Infringement Actions............................... 41
ARTICLE 11. INDEMNIFICATION............................................... 42
11.1 Indemnification by Somerset................................... 42
11.2 Indemnification by CoCensys................................... 42
11.3 Indemnification Procedure..................................... 43
ARTICLE 12. CONFIDENTIALITY............................................... 44
12.1 Nondisclosure and Nonuse Obligations.......................... 44
12.2 Exceptions.................................................... 45
12.3 Authorized Disclosure......................................... 45
12.4 Obligations at End of Term.................................... 46
12.5 Retention of Proprietary Information.......................... 46
ARTICLE 13. PUBLICITY..................................................... 47
13.1 ...............................................................47
13.2 ...............................................................47
ARTICLE 14. MISCELLANEOUS................................................. 48
14.1 Notices....................................................... 48
14.2 Captions and Section References............................... 48
14.3 Severability.................................................. 49
14.4 Entire Agreement.............................................. 49
14.5 Amendment..................................................... 49
14.6 Counterparts.................................................. 50
14.7 Waiver........................................................ 50
14.8 Force Majeure................................................. 50
14.9 Assignment; Benefits and Binding Nature of Agreement.......... 50
14.10 Survival...................................................... 51
14.11 Not Strictly Construed Against Either Party................... 51
14.12 Governing Law................................................. 51
iv.
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Exhibit 5.7 - Somerset Standard Sales Report Format.......................... 53
Exhibit 7.1(d) - Examples of Calculation of Detail-Based Compensation Under
Different Hypothetical Scenarios......................................... 54
Exhibit 7.2.................................................................. 57
v.
1997 PROMOTION AGREEMENT
THIS 1997 PROMOTION AGREEMENT ("Agreement"), is made this 7 day of April,
1997, by and between SOMERSET PHARMACEUTICALS, INC., with offices at 0000 X.
Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000 ("Somerset"), and COCENSYS, INC., with
offices at 000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("CoCensys"), with
respect to the following:
WHEREAS, Somerset has the right, under its approved New Drug Application,
to market ELDEPRYL Brand (as further defined in Section 1.13) in the United
States; and
WHEREAS, CoCensys has established a marketing and a sales organization
which currently is promoting certain drugs belonging to third parties to
neurologists and psychiatrists pursuant to certain agreements on file with the
United States Securities and Exchange Commission as of the date of this
Agreement; and
WHEREAS, the parties executed a Promotion Agreement dated January 4, 1996
whereby Somerset utilized CoCensys' sales force to promote ELDEPRYL Brand to
neurologists in the United States on terms and conditions contained therein.
WHEREAS, the parties wish to terminate the January 4, 1996 Promotion
Agreement and continue their relationship on the revised terms provided for in
this Agreement.
1.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and obligations hereinafter set forth, the parties hereto agree
as follows:
ARTICLE 1.
DEFINITIONS
The following capitalized terms shall have the meanings indicated for
purposes of this Agreement:
1.1 "ACTUAL GROSS SALES" shall mean, during the Term, [ * ].
The amount of Actual Gross Sales may be adjusted upon mutual agreement of the
parties pursuant to Section 7.3.
1.2 "ACTUAL MONTHLY DETAILS" shall have the meaning set forth in Section
7.1(b)(ii)
1.3 "ACTUAL QUARTERLY DETAILS" shall have the meaning set forth in Section
7.1(b)(i).
1.4 "ADJUSTED ANNUALIZED DETAIL PAYMENT REDUCTION" shall have the meaning
set forth in Section 7.1(c)(ii).
1.5 "ADJUSTED DETAIL-BASED COMPENSATION RECONCILIATION PAYMENT" shall have
the meaning set forth in Section 7.1(c)(ii).
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1.6 "ADJUSTED TARGET DETAILS" shall have the meaning set forth in Section
7.1(c)(ii).
1.7 "AFFILIATE" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question. Solely for purposes of this definition, the
term "control" shall mean direct or indirect beneficial ownership equal to or in
excess of 50% of the voting or income interest in such corporation or other
business entity.
1.8 "ANNUALIZED DETAIL PAYMENT REDUCTION" shall have the meaning set
forth in Section 7.1(c)(i).
1.9 "COCENSYS ELDEPRYL SALES FORCE" shall mean those members of
CoCensys's sales force, as more fully described in Section 4.7, who make
ELDEPRYL Details to Key Prescribers.
1.10 "DETAIL-BASED COMPENSATION" shall have the meaning set forth in
Section 7.1(a)(i).
1.11 "DETAIL-BASED COMPENSATION RECONCILIATION PAYMENT" shall have the
meaning set forth in Section 7.1(c)(i).
1.12 "EFFECTIVE DATE" shall mean January 1, 1997.
3.
1.13 "ELDEPRYL BRAND" shall mean (i) that prescription pharmaceutical
product, in 5 mg capsule form, indicated in the Territory for the adjunctive
treatment of late stage Xxxxxxxxx'x disease, owned by Somerset and promoted as
of the Effective Date under the trademark ELDEPRYL, the active ingredient of
which is selegiline hydrochloride (the "Current Formulation") and
[ * ].
1.14 "ELDEPRYL BRAND UNIT" shall mean 60 capsules, 5 mg each, of ELDEPRYL
Brand.
1.15 "ELDEPRYL DETAIL" shall mean a [ * ] detail for ELDEPRYL
Brand between a CoCensys salesperson and a Key Prescriber. As used herein, [
* ] means that ELDEPRYL Brand is [ * ] such sales call.
1.16 "FDA" shall mean the United States Food and Drug Administration.
1.17 "FIRST POSITION PRESENTATION" shall mean a single discussion relating
to a pharmaceutical product which is held at the commencement of a meeting
between a CoCensys salesperson and a physician.
1.18 "GROSS SALES-BASED COMPENSATION" shall have the meaning set forth in
Section 7.2.
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1.19 "KEY PRESCRIBERS" shall mean those neurologists and "High Prescribing
Non-Neurologists" in the Territory, set forth on a target list approved by the
Managing Committee pursuant to Section 3.1(b)(v), as such target list may be
amended from time to time during the Term, to whom CoCensys will make ELDEPRYL
Details. "High Prescribing Non-Neurologists" shall mean those non-neurologists
in the Territory who rank [ * ] in CoCensys' decile system for
identifying high prescribers of ELDEPRYL Brand, and any other non-neurologists
agreed to by Somerset.
1.20 "KEY PRESCRIBER MARKETING PLAN" shall mean that marketing plan which
has been agreed to by the parties and which sets forth the marketing strategy
and tactics to be used in promoting ELDEPRYL Brand to Key Prescribers during the
Term. The Key Prescriber Marketing Plan may be adjusted from time-to-time
pursuant to Section 3.1(b)(ii).
1.21 "MANAGING COMMITTEE" shall mean the committee established pursuant to
Section 3.1 which is responsible for oversight of the co-promotion relationship
between CoCensys and Somerset in the Territory, including, but not limited to,
the marketing, advertising and promotion of ELDEPRYL Brand pursuant to this
Agreement.
1.22 "MINIMUM AGGREGATE MONTHLY DETAILS" shall be equal to:
[ * ], at the conclusion of the first month of the Term; or
[ * ], at the conclusion of the second month of the Term; or
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[ * ], at the conclusion of the third month of the Term; or
[ * ], at the conclusion of the fourth month of the Term; or
[ * ], at the conclusion of the fifth month of the Term; or
[ * ], at the conclusion of the sixth month of the Term; or
[ * ], at the conclusion of the seventh month of the Term; or
[ * ], at the conclusion of the eighth month of the Term; or
[ * ], at the conclusion of the ninth month of the Term; or
[ * ], at the conclusion of the tenth month of the Term; or
[ * ], at the conclusion of the eleventh month of the Term; or
[ * ], at the conclusion of the twelfth month of the Term.
1.23 "MINIMUM AGGREGATE QUARTERLY DETAILS" shall be equal to:
[ * ], at the conclusion of the first quarter of the Term; or
[ * ], at the conclusion of the second quarter of the Term; or
[ * ], at the conclusion of the third quarter of the Term; or
[ * ], at the conclusion of the fourth quarter of the Term.
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1.24 "MONTHLY DETAIL PAYMENT" shall have the meaning set forth in Section
7.1(a)(ii).
1.25 "MONTHLY DETAIL PAYMENT REDUCTION" shall have the meaning set forth in
Section 7.1(b)(ii).
1.26 "NDA" shall mean an FDA-approved new drug application.
1.27 "PROMOTIONAL MATERIALS" shall have the meaning set forth in
Section 5.5.
1.28 "PROPRIETARY INFORMATION" shall mean any proprietary or confidential
information communicated by one party hereto to the other, whether in written,
electronic, graphic or oral form, which is so identified as proprietary or
confidential by the disclosing party, or which the receiving party knows or has
reason to know is proprietary or confidential including, but not limited to,
financial, marketing, business, technical or scientific information or data.
1.29 "QUARTERLY DETAIL PAYMENT" shall have the meaning set forth in Section
7.1(a)(i).
1.30 "QUARTERLY DETAIL PAYMENT REDUCTION" shall have the meaning set forth
in Section 7.1(b)(i).
1.31 "SAMPLE" shall mean complimentary supply of ELDEPRYL Brand capsules or
other dosage forms which are distributed by the CoCensys ELDEPRYL Sales Force to
Key Prescribers, pursuant to the provisions of the Prescription Drug Marketing
Act.
7.
1.32 "TARGET AGGREGATE MONTHLY DETAILS" shall be equal to:
[ * ], at the conclusion of the first month of the Term; or
[ * ], at the conclusion of the second month of the Term; or
[ * ], at the conclusion of the third month of the Term; or
[ * ], at the conclusion of the fourth month of the Term; or
[ * ], at the conclusion of the fifth month of the Term; or
[ * ], at the conclusion of the sixth month of the Term; or
[ * ], at the conclusion of the seventh month of the Term; or
[ * ], at the conclusion of the eighth month of the Term; or
[ * ], at the conclusion of the ninth month of the Term; or
[ * ], at the conclusion of the tenth month of the Term; or
[ * ], at the conclusion of the eleventh month of the Term; or
[ * ], at the conclusion of the twelfth month of the Term.
1.33 "TARGET AGGREGATE QUARTERLY DETAILS" shall be equal to:
[ * ], at the conclusion of the first quarter of the Term; or
[ * ], at the conclusion of the second quarter of the Term; or
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[ * ], at the conclusion of the third quarter of the Term; or
[ * ], at the conclusion of the fourth quarter of the Term.
1.34 "TERM" shall mean the period commencing on the Effective Date and
terminating December 31, 1997, unless terminated earlier pursuant to the
provisions of Article 8.
1.35 "TERRITORY" shall mean the United States of America, the District of
Columbia and Puerto Rico, but not any other United States territories or
possessions.
1.36 "TOTAL ACTUAL DETAILS" shall equal the total number of ELDEPRYL
Details conducted by the CoCensys ELDEPRYL Sales Force from the Effective Date
to the date of calculation. "Total Actual Details" shall be calculated (i) as
of the last day of each calendar quarter during the Term; or, (ii) in the event
this Agreement terminates prior to December 31, 1997, as of the last day of each
month during the quarter in which such termination occurs and as of the
effective date of termination.
1.37 "TOTAL DETAIL PAYMENT REDUCTION" shall equal the sum of [ * ] if
any, made to date and shall be calculated (i) at the conclusion of the Term, or
(ii) in the event of termination prior to December 31, 1997, as of the effective
date of termination.
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1.38 "TOTAL GOVERNMENT DISCOUNTS AND REBATES" shall mean all government
mandated discounts and rebates on sales of ELDEPRYL Brand in the Territory
during the Term.
ARTICLE 2
PROMOTION RIGHTS
2.1 APPOINTMENT OF COCENSYS. Subject to Section 4.6, Somerset hereby
appoints CoCensys, effective on the Effective Date and throughout the Term, as
its exclusive agent to detail ELDEPRYL Brand to Key Prescribers in the
Territory, in accordance with this Agreement. In addition, Somerset hereby
appoints CoCensys, as of the Effective Date and throughout the Term, as a
non-exclusive agent to promote ELDEPRYL Brand in the Territory to those third
parties whom CoCensys's regional business directors meet with in the normal
course of their business, in accordance with this Agreement.
2.2 RIGHTS RETAINED BY SOMERSET. Except as otherwise expressly provided
in this Agreement, Somerset shall be responsible for maintaining (or, to the
extent permissible under existing contracts with third parties, causing such
third parties to maintain) all rights in and to ELDEPRYL Brand including, but
not limited to, the NDA(s) for ELDEPRYL Brand, the drug master file(s) for
ELDEPRYL Brand, and all manufacturing, distribution, patent, copyright and
trademark rights relating to ELDEPRYL Brand.
10.
ARTICLE 3
MANAGING COMMITTEE; KEY PRESCRIBER MARKETING PLAN
3.1 MANAGING COMMITTEE.
(a) FORMATION; MEETINGS. The Managing Committee will be responsible
for all decisions regarding the marketing, advertising and promotion of ELDEPRYL
Brand to Key Prescribers in the Territory. Somerset and CoCensys shall each
appoint one (1) person as voting members of the Managing Committee, who will
have expertise in marketing or sales. Each person will have experience which is
relevant to the promotion of ELDEPRYL Brand contemplated by this Agreement.
Somerset and CoCensys may from time to time each replace their respective voting
representatives on the Managing Committee upon one (1) month prior written
notice to the other party. In addition, each party may bring any non-voting
representatives to meetings of the Managing Committee. Each party will ensure
that at least one of its employees who has experience sufficient to monitor and
coordinate the payments to be made between the parties hereunder will be
available in person or by telephone for each meeting of the Managing Committee.
The Managing Committee will meet quarterly, or more or less often as the
Managing Committee determines to be appropriate. Such meetings shall be
scheduled at mutually convenient times in places alternately selected by
Somerset and CoCensys. Each party will bear its own costs for attendance at
Managing Committee meetings. Any member may designate an alternate to act on
his or her behalf at any meetings by notice (which may be oral) to the other
members, said right not to be exercised more than two (2) times per year by each
such member. Any member of the Managing Committee may request a meeting
11.
of the Managing Committee by giving written notice of such meeting at least
fourteen (14) days before the desired date of such meeting. Any disputes within
the Managing Committee will be resolved pursuant to Section 3.2 hereof.
(b) FUNCTIONS OF THE MANAGING COMMITTEE. The Managing Committee will
perform the following functions:
(i) establish guidelines to govern the promotion of ELDEPRYL
brand by CoCensys.
(ii) review, comment upon and approve adjustments to the Key
Prescriber Marketing Plan.
(iii) monitor whether third party or governmental actions (e.g.
third party publication, FDA mandated labeling change,
new discovery, new product on the market, infringement of
trademark rights) are having, or are likely to have, a
material effect on Actual Gross Sales and suggest
adjustments to the Key Prescriber Marketing Plan and/or
recommend to the parties amendments to this Agreement to
respond to such third party or governmental actions.
(iv) in accordance with section 7.3, make recommendations to
the parties in the event of material increases in Total
Government Discounts and Rebates.
(v) approve the target list of Key Prescribers, the initial
version of which has already been approved by the
parties. In addition, upon
12.
approval of the Managing Committee, physicians may, from
time to time, be added to or deleted from the list of Key
Prescribers.
(vi) determine whether and when the CoCensys ELDEPRYL Sales
Force should provide Samples to Key Prescribers.
(vii) otherwise monitor and oversee the promotion and marketing
of ELDEPRYL Brand to physicians in the Territory and the
relationship of the parties hereunder.
3.2 DISPUTE RESOLUTION. In the event of a disagreement between the
parties as to any matters within the scope of the responsibilities of the
Managing Committee, the Managing Committee will, diligently and in good faith,
seek to resolve the matter in dispute. If the Managing Committee is unable to
resolve the dispute, despite its good faith efforts, within thirty (30) days of
first addressing the matter, it shall, within ten (10) days thereafter, refer
such dispute to the President of CoCensys and the President of Somerset who will
discuss and attempt to resolve the dispute. If the Presidents of the parties
are unable to resolve the dispute, the President of Somerset shall have ultimate
authority to resolve all matters within the scope of the responsibilities of the
Managing Committee, except for those matters set forth in Sections 1.19 and
3.1(b)(v).
13.
ARTICLE 4.
PROMOTION OF ELDEPRYL BRAND
4.1 COCENSYS ELDEPRYL SALES FORCE. During the Term, subject to review and
approval by the Managing Committee and consistent with the Key Prescriber
Marketing Plan, CoCensys shall deploy the CoCensys ELDEPRYL Sales Force for the
delivery of ELDEPRYL Details to the Key Prescribers. [ * ].
4.2 TRAINING OF COCENSYS ELDEPRYL SALES FORCE.
(a) CONTINUED TRAINING. Subsequent to the Effective Date, Somerset
may invite the CoCensys ELDEPRYL Sales Force to attend any training sessions
which are provided by Somerset for the purpose of upgrading information relating
to sales of ELDEPRYL Brand, including, but not limited to, information relating
to new developments as set forth in Section 5.6. It is understood that such
training sessions (i) will be provided on an as-needed basis by Somerset after
discussions between CoCensys and Somerset regarding the content and format of
such sessions and (ii) are subject to the approval of the Managing Committee.
Somerset may require some or all of the CoCensys ELDEPRYL Sales Force to attend
certain training sessions ("Mandatory Training Sessions").
(b) TRAINING COSTS. All costs incurred under Section 4.2(a) shall be
subject to prior approval by the Managing Committee. All costs incurred under
Section 4.2(a)
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(including but not limited to, training costs, transportation, and room and
board) for Mandatory Training Sessions will be borne [ * ]. All costs
incurred under Sections 4.2(a) (including, but not limited to, training costs,
transportation and room and board) for any other training will be borne
[ * ].
4.3 COCENSYS ELDEPRYL SALES FORCE SUPPORT. CoCensys will, [ * ]
employ a product segment manager and appropriate secretarial support to
implement its obligations under this Agreement.
4.4 CONDUCT OF THE COCENSYS ELDEPRYL SALES FORCE. In accordance with the
Key Prescriber Marketing Plan and the terms and conditions of this Agreement,
and subject to the Federal Food, Drug and Cosmetic Act, all regulations
promulgated pursuant thereto and any and all applicable state laws and
regulations, CoCensys shall use commercially diligent efforts to direct its
CoCensys ELDEPRYL Sales Force to detail ELDEPRYL Brand to the Key Prescribers to
so persuade such Key Prescribers to prescribe and use ELDEPRYL Brand. The
CoCensys ELDEPRYL Sales Force shall conduct ELDEPRYL Details, shall execute the
programs set forth in the Key Prescriber Marketing Plan and, where deemed
appropriate by the Managing Committee, shall provide Samples to Key
Prescribers. Somerset may, from time to time and upon reasonable prior notice,
request that a Somerset employee be allowed to join the CoCensys ELDEPRYL Sales
Force for certain ELDEPRYL Details. Upon the authorization of CoCensys sales
management, such authorization not to be unreasonably withheld, CoCensys will
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accommodate such request, provided that [ * ] associated with
its employee engaging in such activity. In addition CoCensys will cause its
regional business directors to make presentations regarding ELDEPRYL Brand to
those third parties with whom such regional business directors meet in the
normal course of their business. All presentations and materials to be utilized
by CoCensys to so market, advertise or promote ELDEPRYL Brand shall be subject
to the prior review of Somerset and, if applicable, the FDA. CoCensys shall
cause the CoCensys ELDEPRYL Sales Force, and all other employees, agents and
representatives of CoCensys, to comply with all applicable laws, regulations and
guidelines in connection with the marketing, advertising and promotion of
ELDEPRYL Brand, including the Prescription Drug Marketing Act and the Federal
Anti-Kickback Statute.
4.5 BONUS PROGRAM FOR COCENSYS ELDEPRYL SALES FORCE. [ * ] an
incentive cash bonus program for the CoCensys ELDEPRYL Sales Force. The amount
of [ * ] to be made available for distribution through such bonus
program (the "Bonus Pool") will be determined by [ * ]. The
size of the Bonus Pool for the second six months of the Term shall be determined
by [ * ] during such period. Notwithstanding the foregoing,
[ * ]. [ * ] establish the criteria to be
used in dividing the Bonus Pool among the CoCensys ELDEPRYL Sales Force.
[ * ] adjust the specific bonus amounts to be paid to individual
members of the
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CoCensys ELDEPRYL Sales Force in order to reflect the ELDEPRYL Brand sales
efforts of such individuals; provided, however, that [ * ]
documentation which lists the names of the recipients and the amount of the
bonus he/she received. [ * ].
4.6 OTHER MARKETING ACTIVITIES TO PHYSICIANS.
(a) PHYSICIANS WHO ARE NOT KEY PRESCRIBERS. During the Term
hereof, CoCensys may, at its sole discretion, make sales calls or presentations
regarding ELDEPRYL Brand to physicians in the Territory who are not Key
Prescribers.
(b) NON-SALES CALL ACTIVITY. During the Term hereof, Somerset
will not make sales calls regarding ELDEPRYL Brand to Key Prescribers in the
Territory. Somerset may, however, engage in other (i.e. non-sales call)
marketing, advertising or promotion activities for ELDEPRYL Brand directed at
neurologists or other physicians in the Territory, provided that all of the
foregoing activities will be funded in full by Somerset. Somerset agrees to
notify CoCensys of any such other activities.
4.7 OTHER USES OF COCENSYS SALES FORCE. Somerset acknowledges and
understands that CoCensys has certain obligations relating to the deployment of
the CoCensys ELDEPRYL Sales Force pursuant to a promotion agreement which is on
file with the United States Securities and Exchange Commission as of the date of
execution of this Agreement. CoCensys represents and warrants that, as of the
Effective Date, there are at least [ * ] members of the
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CoCensys ELDEPRYL Sales Force and that, during the Term, the CoCensys ELDEPRYL
Sales Force will only be utilized to deliver to Key Prescribers (i) a
[ * ] Presentation for a [ * ] pharmaceutical product and (ii)
an ELDEPRYL Detail. CoCensys further represents and warrants that the size of
the CoCensys ELDEPRYL Sales Force will not fall below [ * ] in number
except as a result of attrition, in which event CoCensys will, within sixty
(60) days of the date upon which the size of the CoCensys ELDEPRYL Sales Force
fell below [ * ] hire additional salespeople to replace those lost
through attrition and to cause the size of the CoCensys ELDEPRYL Sales Force
to number at least [ * ] Provided that the CoCensys ELDEPRYL Sales Force
is comprised of at least [ * ] CoCensys sales representatives and
provided that CoCensys continues to meet all of its obligations hereunder, in
the event that CoCensys increases the size of its overall sales force to more
than [ * ] sales representatives, CoCensys shall have the right, in its
sole discretion and upon prior written notice to Somerset and after
consultation with Somerset, to utilize those members of its sales force who are
not members of the CoCensys ELDEPRYL Sales Force to market, advertise, promote
or otherwise sell other pharmaceutical products to neurologists.
Notwithstanding the foregoing, during the Term, CoCensys will not promote any
pharmaceutical product, other than ELDEPRYL Brand, with an approved indication
for Xxxxxxxxx'x disease without the prior written consent of Somerset.
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4.8 NUMBER OF ELDEPRYL DETAILS. CoCensys represents that the CoCensys
ELDEPRYL Sales Force will present at least [ * ] ELDEPRYL Details per
calendar quarter. Failure to deliver the full [ * ] ELDEPRYL Details per
calendar quarter shall not be deemed a material breach of, or failure to perform
under, this Agreement, PROVIDED, HOWEVER, if, in any calendar quarter, CoCensys
fails to deliver the Minimum Aggregate Quarterly Details, and such failure was
not caused by an event of force majeure, then Detail-Based Compensation for such
calendar quarter shall be adjusted pursuant to Section 7.1(b)(i).
4.9 RECORDS AND REPORTS REGARDING PROMOTION ACTIVITIES. CoCensys will
keep complete and accurate records of the ELDEPRYL Details made by the CoCensys
ELDEPRYL Sales Force (including numbers of ELDEPRYL Details, names of Key
Prescribers, date of presentation and general response to such presentations)
and the other activities carried out pursuant to the Key Prescriber Marketing
Plan. CoCensys will provide Somerset a quarterly report summarizing such
matters. CoCensys will maintain such records for three (3) years following the
period to which they relate. CoCensys shall permit Somerset to have such
records examined by independent certified public accountants retained by
Somerset and acceptable to CoCensys, during regular business hours and upon
reasonable advance notice, but not later than three (3) years following the date
of any such records and no more often than one (1) time per year. Such
independent accountants shall, pursuant to separate written contract, keep
confidential any information obtained during such examination and shall report
to Somerset only the number of ELDEPRYL Details per quarter. Any such
information so reviewed and any such information reported shall be considered
the Proprietary Information of CoCensys. In the
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absence of material discrepancies (in excess of [ * ] of the total
number of ELDEPRYL Details required of CoCensys for such quarter) in any request
for a refund resulting from such audit, the accounting expense shall be paid by
Somerset. If material discrepancies do result, CoCensys shall bear the
accounting expense. Any amounts due to Somerset arising from such discrepancies
shall be paid by CoCensys within ten (10) business days of receipt by CoCensys
of a written notice from Somerset that such discrepancies exists. Somerset will
keep complete and accurate records of the activities carried out by Somerset
pursuant to the Key Prescriber Marketing Plan. Somerset will make such records
available to CoCensys during Somerset's regular business hours and will provide
CoCensys a quarterly report summarizing such matters. Somerset will maintain
such records for three (3) years following the period to which they relate.
4.10 FORWARDING OF ELDEPRYL BRAND ORDERS. Any orders for ELDEPRYL Brand
received by CoCensys, including members of the CoCensys ELDEPRYL Sales Force,
will be promptly forwarded to Somerset.
ARTICLE 5.
SOMERSET RIGHTS AND OBLIGATIONS
5.1 [ * ] MARKETING RESPONSIBILITY. Except as explicitly set
forth in this Agreement, Somerset shall be responsible for
[ * ].
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5.2 SUPPLY AND DISTRIBUTION OF ELDEPRYL BRAND. In accordance with
Somerset's general business practices, Somerset shall use commercially diligent
efforts to perform, or cause to be performed, all manufacturing, labeling,
packaging, warehousing, maintenance of inventory, distribution, order entry,
customer services and all other activities to supply and distribute ELDEPRYL
Brand in order to fill the orders generated by the activities of CoCensys
hereunder and to supply and distribute Samples in accordance with Section 6.2.
Somerset shall accept orders for ELDEPRYL Brand in accordance with Somerset's
general business practices.
5.3 REGULATORY COMPLIANCE. Unless otherwise required by law, Somerset
will retain exclusive authority and responsibility for complying with all
regulatory requirements and maintaining all government agency contacts relating
to ELDEPRYL Brand, including, but not limited to, maintaining and updating the
NDA(s) for ELDEPRYL Brand; [ * ] the reporting of any adverse
drug reactions to the FDA; the filing of Promotional Materials with the FDA; and
the payment of Medicaid and other governmental rebates which in Somerset's sole
judgment are due and owing. Nothing herein shall obligate Somerset
[ * ].
5.4 PRODUCT RECALL. In the event that (i) Somerset determines that an
event, incident or circumstances has occurred which may result in the need for a
recall or other removal of ELDEPRYL Brand or any lot or lots thereof from the
market in the Territory, (ii) the FDA requires a recall of ELDEPRYL Brand or
(iii) the FDA requires distribution of a "Dear Doctor" letter, Somerset shall
promptly advise CoCensys with respect thereto. With respect to clause (i)
above, Somerset shall, in its sole discretion, have the right to order a recall
or other removal
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after such notification. With respect to clauses (ii) and (iii) above, Somerset
shall order such recall or distribute such "Dear Doctor" letter after such
notification. [ * ].
5.5 PROMOTIONAL MATERIALS.
(a) SOMERSET MATERIALS. In accordance with the Key Prescriber
Marketing Plan, Somerset shall, [ * ] produce, provide and ship to
CoCensys reasonable quantities of promotional, sales, marketing and educational
materials for ELDEPRYL Brand (the "Promotional Materials") to allow CoCensys to
fulfill its obligations hereunder. Such Promotional Materials shall include, by
way of example, promotional brochures, videos, visual aids, approved reprints,
medically relevant reminder items, continuing medical education programs,
patient education and compliance programs, medical literature, medical group
presentations, market research and direct mail programs. All Promotional
Materials will be approved by the medical and regulatory departments of
Somerset. In addition to the foregoing, Somerset shall provide CoCensys with
two (2) copies of each item of Promotional Material for CoCensys's archives.
(b) RIGHTS TO PROMOTIONAL MATERIALS. As between Somerset and
CoCensys, Somerset shall own all right, title and interest in and to any
Promotional Materials provided to CoCensys pursuant to this Section 5.5
including applicable copyrights and trademarks. Somerset hereby grants to
CoCensys the right, during the Term, to use all Promotional Materials and all
sales, marketing, educational and training materials produced by Somerset and
supplied to
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CoCensys with respect to ELDEPRYL Brand in conjunction with CoCensys's promotion
of ELDEPRYL Brand.
5.6 [ * ] DEVELOPMENTS RELATING TO ELDEPRYL BRAND. Somerset
will promptly inform CoCensys of the following information relating to ELDEPRYL
Brand: (i) [ * ] (ii) [ * ] (iii)
[ * ] and (iv) any changes in regulations affecting
ELDEPRYL Brand or Somerset's obligations with respect to this Agreement.
CoCensys will promptly inform Somerset of information relating to changes in
regulations affecting CoCensys' obligations with respect to this Agreement.
Based on such information, and subject to any federal, state or local laws
and/or regulations, Somerset shall use commercially diligent efforts to maintain
the training materials supplied to CoCensys pursuant to this Agreement current
with such [ * ] information.
5.7 SALES AND INVENTORY DATA. Somerset will provide CoCensys with a
report of overall sales of ELDEPRYL Brand in the Territory, in Somerset's
standard sales report format, a copy of which is attached hereto as Exhibit 5.7,
for each month of the Term as it becomes available to Somerset in the normal
course of business. Somerset shall also provide CoCensys with a report of
inventories and back orders of ELDEPRYL Brand.
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5.8 SOMERSET COSTS. Except as specifically set forth in this Agreement,
[ * ] in accordance with the marketing budget which has been
established for the Term. In the event [ * ] are materially affecting
sales of ELDEPRYL Brand, Somerset may, after notification to CoCensys,
[ * ] to respond to such [ * ].
ARTICLE 6.
JOINT OBLIGATIONS
6.1 ASSISTANCE AND NOTIFICATIONS TO OTHER PARTY. Each party agrees to
provide to the other reasonable assistance and take actions reasonably requested
by the other party that are necessary to enable the other party to comply with
its obligations hereunder and with any law or regulation applicable to ELDEPRYL
Brand, including, but not limited to, Somerset's meeting its reporting and other
obligations under Section 5.3. Such assistance and actions shall include, among
other things: (i) CoCensys promptly reporting to Somerset adverse drug
reactions of which it becomes aware, so as to permit Somerset to meet its FDA
reporting and other obligations in a timely fashion; (ii) Somerset carrying out
any FDA-mandated notifications relating to ELDEPRYL Brand; (iii) Somerset
immediately notifying CoCensys of any inquiry or other contact by the FDA or any
other governmental agency or authority with Somerset or its Affiliates relating
to ELDEPRYL Brand, except that Somerset will notify CoCensys only of such
inquiries or contacts which may materially affect CoCensys's performance of its
obligations relating to ELDEPRYL Brand under this Agreement or which may
adversely affect Somerset's
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ability to manufacture and supply ELDEPRYL Brand; and (iv) Somerset promptly
notifying CoCensys of any adverse drug reactions to ELDEPRYL Brand or any
regulatory action with respect to ELDEPRYL Brand. Somerset will make available
to CoCensys all FDA-authorized procedures and forms necessary for CoCensys to
meet its obligations hereunder.
6.2 SAMPLES OF ELDEPRYL BRAND.
(a) COSTS. Pursuant to Section 3.1(b)(vi) hereof, the Managing
Committee may determine that the CoCensys ELDEPRYL Sales Force should provide
Samples of ELDEPRYL Brand to some or all Key Prescribers. Upon such
determination, Somerset shall make Samples of ELDEPRYL Brand available to
CoCensys in such amounts and at such times as may be determined by the Managing
Committee. Samples will be shipped to the one or more locations designated by
CoCensys by written notice to Somerset. Sample distribution and accountability
will be administered by Somerset.
(b) SHRINK-WRAP. All Samples shall be encased in shrink-wrap and
packaged appropriately to comply with FDA packaging requirements.
(c) DISPOSITION UPON TERMINATION. Within thirty (30) days after the
end of the Term, or other earlier termination date, CoCensys shall return, or
otherwise dispose of in accordance with written instructions from Somerset, all
remaining Samples provided by Somerset and will provide Somerset with a
certified statement that CoCensys has utilized commercially diligent efforts to
ensure that, to the best of CoCensys's knowledge, all remaining Samples have
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been returned or otherwise properly disposed of and that CoCensys is no longer
in possession or control of any such Samples in any form or fashion.
6.3 REQUESTS FOR INFORMATION FROM KEY PRESCRIBERS. The parties
acknowledge that each may receive requests for medical or technical information,
or reports of adverse drug reactions, concerning ELDEPRYL Brand from Key
Prescribers and others. The parties agree that it shall be the obligation of
Somerset to so respond and/or report, as appropriate, and CoCensys shall ensure
that its employees and agents comply with Somerset's adverse event reporting
procedures and policies.
6.4 MARKET SURVEYS. Each party hereto may, at its discretion and expense,
undertake such market surveys, research or analyses relating to ELDEPRYL Brand
as it deems fit, and such surveys, research or analyses shall remain the
property of the party undertaking same. Each party shall make such surveys,
research and analyses specifically relating to ELDEPRYL Brand available to the
other party at no cost to that other party. Somerset may request that CoCensys
undertake market surveys, research or analyses relating to ELDEPRYL Brand and
CoCensys may, in its sole discretion, elect to undertake such surveys, research
or analyses. [ * ].
6.5 WITHDRAWAL OF ELDEPRYL BRAND. Each party agrees to notify the other
immediately of any pending or threatened event which may lead to withdrawal of
ELDEPRYL Brand from the market, including, without limitation; (i) actual or
threatened regulatory action
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by the FDA or other governmental entity, including, but not limited to, the loss
by Somerset of any right necessary to market ELDEPRYL Brand; or (ii) safety
concerns relating to ELDEPRYL Brand. The final decision as to whether to so
withdraw ELDEPRYL Brand shall be within Somerset's sole discretion. In the
event of such withdrawal of ELDEPRYL Brand, the rights of the parties shall be
governed by Section 8.3 hereof.
6.6 NON-SOLICITATION OF EMPLOYEES. During the Term, neither party will
solicit for the purpose of hiring the sales and marketing employees of the other
party.
ARTICLE 7.
COMPENSATION
7.1 DETAIL-BASED COMPENSATION.
(a) DETAIL PAYMENTS.
(i) Subject to the terms and conditions of this agreement, as
compensation for the ELDEPRYL Details to be made each
calendar quarter by the CoCensys ELDEPRYL Sales Force during
the calendar year 1997, Somerset shall pay
[ * ] ("Detail-Based Compensation") to
CoCensys. Detail-Based Compensation shall be due and
payable in four (4) equal quarterly installments of
[ * ] for each calendar quarter
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during the Term ("Quarterly Detail Payment") (unless subject
to adjustment under Sections 7.1 (a) (ii) or 7.1 (b)).
CoCensys acknowledges that, prior to the date of execution
of this Agreement it received [ * ] of the first
Quarterly Detail Payment due hereunder. The [ * ]
balance of the first Quarterly Detail Payment shall be made
within 5 days after the execution of this Agreement by both
parties, and each subsequent Quarterly Detail Payment shall
be made on April 1, 1997, July 1, 1997 and October 1, 1997.
(ii) In the event that a notice of termination is given by either
party pursuant to Section 8 hereof, then commencing on the
first day of the calendar quarter following the calendar
quarter for which the last Quarterly Detail Payment has been
made, (if the effective date of such termination has not yet
occurred) Detail-Based Compensation shall be paid, until the
effective date of termination, on a monthly basis on the
first day of each month and shall be in the amount of
[ * ] (unless subject to adjustment under
Section 7.1 (b)(ii)) ("Monthly Detail Payment"). The final
Monthly Detail Payment shall be paid on a pro-rata basis in
the event that the effective date of termination does not
occur on the final day of any calendar month.
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(b) REDUCTION IN DETAIL PAYMENTS.
(i) Commencing with the first quarter of the Term, not later
than thirty (30) days after the end of each quarter during
the Term, CoCensys will send to Somerset a statement
indicating the number of ELDEPRYL Details made by the
CoCensys ELDEPRYL Sales Force during each such completed
quarter ("Actual Quarterly Details") and shall compute the
Total Actual Details as of the last day of the completed
quarter in the manner provided in Section 1.36. In the
event that Total Actual Details as of the end of such
quarter are less than the Minimum Aggregate Quarterly
Details for such quarter as set forth in Section 1.23,
Somerset shall be entitled to a "Quarterly Detail Payment
Reduction". The Quarterly Detail Payment Reduction for such
quarter shall be equal to [ * ] where
A = [ * ] (applicable to the end of such quarter)
minus [ * ] (through the end of such quarter);
and
B = the [ * ] paid to Somerset by CoCensys, if any,
for any prior quarters of the Term.
CoCensys shall pay to Somerset such Quarterly Detail Payment
Reduction with delivery of the statement indicating the
Actual
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Quarterly Details. If payment is not received, Somerset may
deduct any Quarterly Detail Payment Reduction from any
future Quarterly Detail Payment or any other payment due to
CoCensys by Somerset.
(ii) In the event that any Monthly Detail Payment is due pursuant
To Section 7.1 (a) (ii) hereof, CoCensys shall be required,
within 30 days after the end of the month, to provide
Somerset with a statement indicating the number of ELDEPRYL
Details made by the CoCensys ELDEPRYL Sales Force during
each such month or portion thereof ("Actual Monthly
Details"). CoCensys shall include on the statement the
number of Total Actual Details completed as of the end of
such month as set forth in Section 1.36. In the event that
Total Actual Details are not equal to or greater than the
Minimum Aggregate Monthly Details for the period upon which
Total Actual Details are based, as defined in Section 1.22,
Somerset shall be entitled to a "Monthly Detail Payment
Reduction." The Monthly Detail Payment Reduction for a
given month shall be equal to [ * ], where
C = [ * ] (applicable to the end of such month)
minus [ * ] (through the end of such
month); and
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D = the [ * ] if any, for any prior
months of the Term.
CoCensys shall pay to Somerset such Monthly Detail
Payment Reduction with delivery of the statement
indicating the Actual Monthly Details. If payment is
not received, Somerset may deduct any Monthly Detail
Payment Reduction from any future Monthly Detail
Payment or any other payment due to CoCensys by
Somerset.
(c) DETAIL-BASED COMPENSATION RECONCILIATION.
(i) At the conclusion of the full Term, Somerset shall calculate
the Total Actual Details for the entire Term and Total
Detail Payment Reduction for the entire Term, if any, in the
manner provided in Sections 1.36 AND 1.37 respectively. In
the event that Total Actual Details are equal to or greater
than [ * ], then Somerset shall reimburse to
CoCensys the amount of the Total Detail Payment Reduction,
if any, previously paid by CoCensys. In the event that the
Total Actual Details are less than [ * ], Somerset
shall calculate the "Annualized Detail Payment
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Reduction" by multiplying [ * ]. If the
Annualized Detail Payment Reduction is less than the Total
Detail Payment Reduction for the entire Term,
[ * ]. If the Annualized Detail Payment
Reduction is equal to the Total Detail Payment Reduction,
then Somerset shall [ * ]. If the
Annualized Detail Payment Reduction is greater than the
Total Detail Payment Reduction, then CoCensys shall pay to
Somerset an amount equal to [ * ] The
Detail-Based Compensation Reconciliation Payment, if any,
shall be made no later than February 10, 1998.
(ii) In the event that this Agreement is terminated prior to the
conclusion of the Term, Somerset shall calculate Total
Actual Details as of the termination date and Total Detail
Payment Reduction as of the termination date in the manner
provided in Sections 1.36 AND 1.37 respectively. In
addition, "Adjusted Target Details" shall be calculated in
the following manner: Adjusted Target Details =
[ * ]. In the event that the Total Actual Details
are equal to or greater than the Adjusted Target Details,
[ * ]. In the event that the Total Actual
Details are less than the Adjusted Target Details,
[ * ]. If the
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Adjusted Annualized Detail Reduction is less than the Total
Detail Payment Reduction, [ * ]. If the
Adjusted Annualized Detail Payment Reduction is equal to the
Total Detail Payment Reductions, [ * ]. If
the Adjusted Annualized Detail Payment Reduction is greater
than the Total Detail Payment Reduction, then
[ * ]. The Adjusted Detail-Based
Compensation Reconciliation Payment shall be made no later
than February 10, 1998.
(d) Examples of Detail-Based Compensation, under different
hypothetical sales scenarios, are set forth on Exhibit 7.1 (d).
7.2 GROSS SALES-BASED COMPENSATION.
(a) No later than February 10, 1998, Somerset shall send CoCensys a
statement setting forth Actual Gross Sales of ELDEPRYL Brand and
shall pay to CoCensys, with delivery of the statement indicating
the Actual Gross Sales, the amount of compensation listed on
Exhibit 7.2 (the "Gross Sales-Based Compensation"), so long as
CoCensys' ELDEPRYL Sales Force provided services to Somerset
through December 31, 1997.
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(b) In the event that this Agreement is terminated by either party
prior to the end of the Term, then all amounts listed on Exhibit
7.2 shall be adjusted [ * ]. No later than
February 10, 1998, Somerset shall send CoCensys a statement
setting forth Actual Gross Sales through the effective date of
termination of the Agreement and shall pay to CoCensys, with
delivery of the statement indicating such Actual Gross Sales, the
amount of Gross Sales-Based Compensation listed on Exhibit 7.2 as
hereby adjusted.
(c) In the event that Somerset terminates this Agreement under
Section 8.4 below (Termination for Breach), Somerset may
[ * ]. No later than February 10, 1998
following such early termination, Somerset shall send CoCensys a
statement setting forth Actual Gross Sales, a revised Exhibit 7.2
(as adjusted under Section 7.2 (b)) and any offset permitted
under this Section 7.2 (c) and shall pay to CoCensys, with
delivery of the statement indicating such amounts, the amount of
Gross Sales-Based Compensation listed on the revised Exhibit 7.2,
as adjusted pursuant to this Section 7.2 (c).
(d) The parties acknowledge and understand that the outcome of
certain litigation, currently pending in the United States
District Court, District of Delaware entitled SOMERSET
PHARMACEUTICALS, INC. X. XXXXXXX, XX XX.,
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Docket No. 96-403-SLR, may materially affect the sales of ELDEPRYL
Brand without regard to the efforts of CoCensys' ELDEPRYL Sales
Force. In the event such litigation results in rescission or
suspension of FDA approval for any of the generic ELDEPRYL Brand
products or otherwise results in a significant reduction of the
competitive forces in the marketplace for ELDEPRYL Brand, then the
parties shall immediately commence good faith negotiations to amend
Exhibit 7.2 in order [ * ] so that Gross
Sales-Based Compensation continues to reflect the marketing efforts
of CoCensys and not increased sales arising from the results of
such litigation. The parties will use reasonable efforts to
complete such good faith negotiations promptly; PROVIDED, HOWEVER,
in the event the good faith negotiations described in the preceding
sentence are not completed as of February 1, 1998, Somerset shall
not be obligated to make the payment to CoCensys required by this
Section 7.2 (as adjusted pursuant to this Section 7.2 (d)) until
the parties are able to mutually agree upon revised dollar
thresholds.
7.3 ADJUSTMENTS IN THE EVENT OF CHANGES IN GOVERNMENT MANDATED DISCOUNTS
AND REBATES. Somerset represents that Total Government Discounts and Rebates
during 1996 total approximately [ * ]. In the event that
governmental actions result in a mandated increase in Total Government
Discounts and Rebates so that the Total Government Discounts and Rebates are
higher than [ * ] and Somerset makes a good faith
determination
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that such increased [ * ] is a material increase, Somerset may call
an emergency meeting of the Managing Committee, upon five (5) days written
notice, and the Managing Committee will meet to discuss the circumstances
surrounding such government mandated increase and recommend to the parties
amendments to this Agreement so that the parties will share the risks
associated with such government mandated increase. The parties will then
meet to consider the recommendations put forth by the Managing Committee and
to negotiate in good faith an amendment to this Agreement so that the parties
will share the risks associated with such government mandated increase. Such
amendment may include amendments to the [ * ].
7.4 AUDIT RIGHTS. In accordance with its standard accounting practices,
Somerset shall keep full and accurate books, records and invoices with
respect to Actual Gross Sales, and the amounts payable hereunder, for no less
than three (3) years after the end of the Term. Somerset shall permit
CoCensys to have such books and records examined by independent certified
public accountants retained by CoCensys and acceptable to Somerset, during
regular business hours and upon reasonable advance notice, but not later than
three (3) years following the rendering of any such reports, accounting and
payments and no more often than one (1) time per year. Such independent
accountants shall, pursuant to separate written contract, keep confidential
any information obtained during such examination and shall report to CoCensys
only Actual Gross Sales and the amounts which the independent accountant
believes to be due and payable hereunder. Any such information so reviewed
and any such information reported shall be considered the Proprietary
Information of Somerset. In the absence of material discrepancies (in excess
of [ * ] of the total amount due to CoCensys in respect of the
audited period)
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in any request for payment resulting from such audit, the accounting expense
shall be paid by CoCensys. If material discrepancies do result, Somerset
shall bear the accounting expense.
ARTICLE 8.
TERM; TERMINATION
8.1 RENEWAL TERMS. On or before November 1, 1997, the parties shall
meet to discuss whether the term of this Agreement shall be renewed following
the Term hereof.
8.2 TERMINATION RIGHTS. Either party may terminate this Agreement for
any reason, upon ninety (90) days advance written notice, subject to Sections
8.3 and 8.4.
8.3 TERMINATION UPON CESSATION OF SALE OF ELDEPRYL BRAND. This
Agreement may be terminated at any time without advance notice by either
party, if, pursuant to Section 6.5 hereof, ELDEPRYL Brand is withdrawn from
the market in the Territory.
8.4 TERMINATION FOR BREACH. Either party may terminate this Agreement
for material breach or failure to perform any material duties or obligations
under this Agreement by the other party, where such breach shall remain
uncured, or such failure to perform shall continue, for at least thirty (30)
days after the aggrieved party shall have given written notice of the breach
or failure to perform to the other party. If after the thirty (30) day
period for cure and/or performance such breach remains uncured or such
failure to perform continues, then the aggrieved party may, in accordance
with Section 14.1, provide written notice to the other party
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of termination of this Agreement ("Notice of Termination"). Such termination
shall be effective fifteen (15) days from receipt of said Notice of
Termination.
8.5 EFFECT OF TERMINATION. In the event this Agreement is terminated
early, Gross Sales Based Compensation shall be calculated in the manner
provided in Section 7.2(b) and Detail-Based Compensation shall be calculated
in the manner provided in Section 7.1. In the event that the effective date
of termination occurs prior to June 30, 1997, [ * ] payment
due for the first six months of the Term, based on the portion of the first
six months of 1997 during which the Agreement was in effect. In the event
that the effective date of termination occurs during the second six months of
the Term, [ * ]. Any sums which may be due to either party
by reason of its performance through the effective date of termination will
be paid by the other party within thirty (30) days of such termination.
Neither party shall have any further rights to compensation from the other
party in connection with ELDEPRYL Brand after the effective date of
termination.
8.6 TERMINATION OF THE 1996 AGREEMENT. As of the Effective Date, the
Promotion Agreement between Somerset and CoCensys effective January 4, 1996
is terminated.
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ARTICLE 9.
WARRANTIES, REPRESENTATIONS AND COVENANTS
9.1 WARRANTIES AND REPRESENTATIONS OF EACH PARTY. Each party warrants
and represents that (i) such party possesses all right, title, interest and
authority necessary to enter into this Agreement, perform its obligations
hereunder and to make the appointments set forth herein, (ii) all necessary
corporate action has been taken to enable such party to execute and deliver
this Agreement and perform its obligations hereunder, (iii) no governmental
or third party consent is required in connection with such party's execution,
delivery or performance of this Agreement, except such regulatory approvals
as may be required to manufacture, sell and distribute ELDEPRYL Brand, (iv)
this Agreement is such party's valid and binding obligation, enforceable in
accordance with its terms, (v) such party is not and will not become party to
any agreement in conflict herewith and (vi) such party will comply with all
applicable local, state and federal laws and regulations, including, but not
limited to, the Federal Food, Drug and Cosmetic Act, the Prescription Drug
Marketing Act and the Federal Anti-Kickback Statute in carrying out its
obligations pursuant to this Agreement.
9.2 WARRANTIES AND REPRESENTATIONS OF SOMERSET. Somerset warrants and
represents that it is a corporation duly organized and validly existing under
the laws of Delaware, with full power to conduct its affairs as contemplated
herein.
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9.3 WARRANTIES AND REPRESENTATIONS OF COCENSYS. CoCensys warrants and
represents that it is a corporation duly organized and validly existing under
the laws of Delaware, with full power to conduct its affairs as contemplated
herein.
ARTICLE 10.
INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
10.1 NOTICE. If either party shall learn of a claim or assertion that
the manufacture, use or sale of ELDEPRYL Brand infringes or otherwise
violates the intellectual property rights of any third party in the
Territory, or that any third party violates the intellectual property rights
of Somerset in ELDEPRYL Brand in the Territory, then the party becoming so
informed shall promptly, but in all events within ten (10) business days
thereof, notify the other party to this Agreement of the claim or assertion.
10.2 CONDUCT OF INFRINGEMENT ACTIONS. At its sole discretion, subject
to this Article 10, Somerset shall conduct all infringement actions relating
to ELDEPRYL Brand at its own expense. Should any third party violation of
the intellectual property rights of ELDEPRYL Brand have a material effect on
Actual Gross Sales, the Managing Committee may address such material effect,
as provided for in Section 3.1(b)(iii).
40.
ARTICLE 11.
INDEMNIFICATION
11.1 INDEMNIFICATION BY SOMERSET. Somerset shall defend, indemnify and
hold harmless CoCensys from all liability, loss, costs, judgments, amounts
paid in settlement, fines or penalties, including, but not limited to,
reasonable attorneys' fees incurred by CoCensys which (i) relate to the
manufacture, promotion, use or sale of ELDEPRYL Brand and (ii) CoCensys may
suffer or sustain as a direct result of any third party claim, charge, suit
or other action (a "Claim"), including, but not limited to Claims related to
product liability, intellectual property infringement and advertising and
promotion of ELDEPRYL Brand, except to the extent CoCensys's negligence or
intentional malfeasance in connection with its promotion, use or sale of
ELDEPRYL Brand shall have given rise to such Claim.
11.2 INDEMNIFICATION BY COCENSYS. CoCensys shall defend, indemnify and
hold Somerset harmless from all liability, loss, costs, judgments, amounts
paid in settlement, fines or penalties, including, but not limited to,
reasonable attorneys' fees incurred by Somerset which Somerset may suffer or
sustain as a direct result of any third party claim, charge, suit or other
action as a direct result of any CoCensys negligence or intentional
malfeasance in connection with its promotion, use or sale of ELDEPRYL Brand.
41.
11.3 INDEMNIFICATION PROCEDURE. The obligations of Somerset and CoCensys
under this Article 11 shall be subject to the following terms and conditions:
(i) The party claiming a right to indemnification shall, within
ten (10) business days after receipt of any claim, charge,
suit or other action (or within ten (10) business days after
learning of a situation that is reasonably likely to lead to
a claim, charge, suit or other action), give, in accordance
with Section 14.1, written notice to the indemnifying party,
of any such claim, charge, suit or other action received
from a third party (or a description of the situation that
is reasonably likely to lead to the same) which is governed
by the indemnity obligations of this agreement;
(ii) The indemnifying party shall conduct, at its own expense,
the defense of any and all such claims, charges, suits or
other actions by a third party;
(iii) Neither party shall settle or admit liability with respect
to any such claims, charges, suits or other actions which
could result in liability to the other party without the
prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed;
(iv) If the indemnifying party does not promptly take the steps
necessary against any such claims, charges, suits or other
actions by a third party, the party claiming indemnification
may defend against or settle such claims, charges, suits or
other actions
42.
provided that party may not settle such claims, charges,
suits or other actions without prior written consent of
the indemnifying party which consent shall not be
unreasonably withheld or delayed; however, the defense
and/or settlement under this Article 11 shall not act as a
waiver of rights to indemnification under this Agreement,
or any other rights or remedies of a party claiming
indemnification and shall not excuse the indemnifying party
from its obligations hereunder and all reasonable costs and
expenses incurred by the party claiming indemnification
shall be subject to indemnity by the indemnifying party;
and,
(v) Each party will offer reasonable assistance to the other
party in defending or settling the claim, charge, suit or
other action.
ARTICLE 12.
CONFIDENTIALITY
12.1 NONDISCLOSURE AND NONUSE OBLIGATIONS. During the Term, and for a
period of [ * ] after expiration or termination hereof, each party
will maintain all Proprietary Information in trust and confidence and will
not disclose any Proprietary Information to any third party or use any
Proprietary Information for any unauthorized purpose. Each party may use
such Proprietary Information only to the extent required to accomplish the
purposes of this Agreement. No Proprietary Information shall be disclosed to
any employee, agent, Affiliate or
43.
* Confidential treatment requested
consultant who does not have a need for such information. To the extent that
disclosure to any third party is authorized by this Agreement, such third
party shall be bound by written obligations to hold in confidence and not
make use of such Proprietary Information for any purpose other than those
permitted by this Agreement. Each party will promptly notify the other upon
discovery of any unauthorized use or disclosure of the Proprietary
Information.
12.2 EXCEPTIONS. Proprietary Information shall not include any
information which:
(i) is now, or hereafter becomes, through no act or failure to act
on the part of the receiving party, generally known or
available to the public;
(ii) is known by the receiving party at the time of receiving such
information, as evidenced by its written records;
(iii) is hereafter furnished to the receiving party by a third party,
as a matter of right and without restriction on disclosure;
(iv) is independently developed by the receiving party without any
breach of this Article 12; or
(v) is the subject of a written permission to disclose provided by
the disclosing party.
12.3 AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this
Agreement, each party may disclose Proprietary Information if such disclosure
is required (i) by an order of a court or other governmental body of the
United States or any political subdivision thereof; (ii) by law or
regulation; or (iii) to prosecute or defend litigation or otherwise establish
rights or enforce obligations under this Agreement, but only to the extent
that any such disclosure is
44.
necessary; provided that the disclosing party shall first have given notice to
the other party hereto, so that the other party may raise any objections to such
disclosure, shall cooperate with the other party to minimize the scope and
content of such disclosure, and, with respect to clauses (i) and (iii) of this
sentence, shall have made a reasonable effort to obtain a protective order
requiring that the Proprietary Information so disclosed be used only for the
purposes set forth in clause (i) or (iii) and, with respect to clause (ii) of
this sentence, shall have made a reasonable effort to obtain confidential
treatment for such Proprietary Information. Notwithstanding any other provision
of this Agreement, each party may disclose the terms of this Agreement, on a
confidential basis, to lenders, investment bankers and other financial
institutions of its choice solely for due diligence purposes relating to
financing the business operations of such party.
12.4 OBLIGATIONS AT END OF TERM. Each party agrees, at the request of
the other party, at the end of the Term to either (i) return to the other party
all originals and copies of the other party's Proprietary Information; or, (ii)
at the other party's option, destroy all originals and copies of the other
party's Proprietary Information and to certify in writing such destruction to
the other party.
12.5 RETENTION OF PROPRIETARY INFORMATION. Each party may maintain 1
copy of any document containing Proprietary Information in its legal department,
or with its counsel, solely for archival purposes.
45.
ARTICLE 13.
PUBLICITY
13.1 Subject to Section 13.2, all publicity, press releases and other
announcements relating to this Agreement or the transaction contemplated hereby
shall be reviewed in advance by, and be subject to the approval of, both
parties; PROVIDED, HOWEVER, that either party may, without the consent of the
other, (i) disclose the existence and general subject matter of this Agreement
without the other party's approval and (ii) subject to Section 12.3, disclose
the terms of this Agreement as required to comply with applicable securities
laws. Any party that determines applicable securities laws require it to file
this Agreement shall first provide the other party a copy of the redacted
version it intends to file and shall provide the other party the opportunity to
comment thereon. Notwithstanding the foregoing, the filing party will make the
final decisions regarding the version hereof to file.
13.2 Subject to Section 12.3, any party that determines applicable
securities laws require it to disclose publicly (i) non-financial information
with respect to its relationship to the other party or (ii) any aspect of the
other party's business, shall first provide the other party a copy of the
disclosure it intends to disclose and shall provide the other party the
opportunity to comment thereon. Notwithstanding the foregoing, the disclosing
party will have final decision-making authority with respect to its disclosures.
46.
ARTICLE 14.
MISCELLANEOUS
14.1 NOTICES. All notices required or permitted hereunder shall be given
in writing and sent by facsimile transmission, or mailed postage prepaid,
certified or registered mail, return receipt requested, or sent by a nationally
recognized express courier service, or hand-delivered at the following address:
Somerset Pharmaceuticals, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxx, President
Fax: (000) 000-0000
CoCensys, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Office of the President
Fax: (000) 000-0000
All notices shall be deemed made upon receipt by the addressee as evidenced by
the applicable written receipt or, in the case of a facsimile, as evidenced by
the confirmation of transmission.
14.2 CAPTIONS AND SECTION REFERENCES. The titles, headings or captions
in this Agreement do not define, limit, extend, explain or describe the scope or
extent of this Agreement or any of its terms or conditions and therefore shall
not be considered in the interpretations, construction or application of this
Agreement.
47.
14.3 SEVERABILITY. Whenever possible, each clause, subclause, provision
or condition of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any clause, subclause,
provision or condition of this Agreement should be prohibited or invalid under
applicable law, such clause, subclause, provision or condition shall be
considered separate and severable from this Agreement to the extent of such
prohibition or invalidity without invalidating the remaining clauses,
subclauses, provisions and conditions of this Agreement, so long as the
remaining Agreement reflects the economic intentions of the parties as evidenced
by this Agreement as a whole.
14.4 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all negotiations, preliminary agreements, memoranda or letters of
proposal or intent, discussions and understandings of the parties hereto in
connection with the subject matter hereof. All discussions between the parties
have been merged into this Agreement and neither party shall be bound by any
definition, condition, understanding, representation, warranty, covenant or
provision other than as expressly stated in or contemplated by this Agreement or
as subsequently shall be set forth in writing and executed by a duly authorized
representative of the party to be bound thereby.
14.5 AMENDMENT. No amendment, change or modification of any of the
terms, provisions or conditions of this Agreement shall be effective unless made
in writing and signed on behalf of the parties hereto by their duly authorized
representatives.
48.
14.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original document, but all
such separate counterparts shall constitute only one and the same Agreement.
14.7 WAIVER. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such or
other term, provision or condition of this Agreement.
14.8 FORCE MAJEURE. Neither party shall be liable hereunder to the other
party nor shall be in breach for failure to perform its obligations caused by
circumstances beyond the control of either party, including, but not limited to,
acts of God; fires; earthquakes; floods; riots; wars; civil disturbances;
sabotage; accidents; labor disputes; shortages or government actions. In the
case of any such event, the affected party shall promptly notify the other
party, and shall keep the other party informed of the efforts to resume
performance. After thirty (30) days of such inability to perform, the parties
agree to meet and in good faith discuss to proceed. In the event that the
affected party is prevented from performing its obligations pursuant to this
Section 14.8 for a period of thirty (30) additional days, the other party shall
have the right to terminate this Agreement on thirty (30) days prior written
notice, i.e. ninety (90) days from the date of such force majeure event, subject
to the provisions of Section 8.5.
14.9 ASSIGNMENT; BENEFITS AND BINDING NATURE OF AGREEMENT. This
Agreement may not be assigned by either party without the consent of the other
party, which consent shall not
49.
be unreasonably withheld, except to any Affiliate or successor by merger or sale
of substantially all of its business units to which this Agreement relates.
Upon a permitted assignment, the assigning party shall promptly notify the other
party of such assignment. If CoCensys assigns this Agreement, either party may,
within thirty (30) days of the date on which notice is given pursuant to the
preceding sentence, terminate this Agreement upon ninety (90) days written
notice. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns permitted under
this Agreement.
14.10 SURVIVAL. The provisions of Sections 4.9, 6.2(c), 7.4 and 8.5 and
Articles 11, 12, and 13 shall survive, and remain in effect, after termination
or expiration of this Agreement.
14.11 NOT STRICTLY CONSTRUED AGAINST EITHER PARTY. This Agreement has
been prepared jointly and shall not be strictly construed against either party.
14.12 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware other than those provisions
governing conflicts of law. In the event the parties are unable to resolve
disputes which go beyond the scope of the responsibilities of the Managing
Committee, or any disputes arising from matters set forth in Sections
3.1(b)(iii) and 3.1(b)(iv), each party shall be free to pursue any action at law
or equity.
50.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the day and year first above written.
SOMERSET PHARMACEUTICALS, INC. COCENSYS, INC.
By: /s/ By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- ----------------------------
Title: President Title: President
Somerset Pharmaceuticals CoCensys Pharma
Sales & Marketing
---------------------------- ---------------------
51.
EXHIBIT 5.7
SOMERSET STANDARD SALES REPORT FORMAT
[SOMERSET LETTERHEAD]
ELDEPRYL SHIPMENTS
DATE OF SHIPMENTS
------------
BOTTLES DOLLARS
------- -------
TODAYS SHIPMENT
------------- --------------
MONTH-TO-MONTH
------------- --------------
QUARTER-TO-DATE
------------- --------------
YEAR-TO-DATE
------------- --------------
EXHIBIT 7.1(d)
EXAMPLES OF CALCULATION OF
DETAIL-BASED COMPENSATION UNDER
DIFFERENT HYPOTHETICAL SCENARIOS
(1) HYPOTHETICAL #1: QUARTERLY DETAIL PAYMENT REDUCTION
[ * ]
53.
* Confidential treatment requested
HYPOTHETICAL #2: MONTHLY DETAIL PAYMENT REDUCTION (E.G., AGREEMENT TERMINATES
ON 9/1/97)
[ * ]
54.
* Confidential treatment requested
EXHIBIT 7.2
[ * ]
55.
* Confidential treatment requested
