Exhibit 2.1
Final
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
CO-PROMOTION AGREEMENT
This Co-promotion Agreement (hereafter, the "AGREEMENT") is entered
into as of October 29, 2003, by and between Kos Pharmaceuticals, Inc., a Florida
corporation ("KOS"), and Takeda Pharmaceuticals North America, Inc., a Delaware
corporation ("TPNA"), for the marketing of Kos' fixed-dose niacin product
marketed under the brand name "NIASPAN(R)" and combination niacin and lovastatin
product marketed under the brand name "ADVICOR(R)" (each, a "PRODUCT" and
collectively, the "PRODUCTS", as more fully defined below).
RECITALS
A. Kos is the owner of all right, title and interest in and to
the Products.
B. Kos believes additional resources are necessary to adequately
meet the demands for information about and access to the
Products in the Territory and, therefore, desires to
co-promote the Products with TPNA in the Territory.
C. TPNA desires to co-promote the Products with Kos in the
Territory, and Kos is willing to grant TPNA the right to
co-promote the Products in the Territory, all on the terms and
subject to the conditions set forth in this Agreement.
1. DEFINITIONS
1.1 ADVERSE EVENT(S) shall mean those events defined as adverse drug
experiences in Title 21 of the U. S. Code of Federal Regulations,ss.314.80, as
amended from time to time and published in the Federal Register.
1.2 AFFILIATE shall mean any corporation, firm, partnership or other
entity that directly or indirectly owns, is owned by or is under common
ownership with a Party to the extent of at least fifty percent (50%) of the
equity or other ownership interest having the power to vote on or direct the
affairs of the entity and any person, firm, partnership, corporation or other
entity actually controlled by, controlling or under common control with a Party.
1.3 ANNUAL BASELINE NET SALES AMOUNT shall mean an amount equal to
***** Any adjustment required to exclude Net Sales attributable to a Commercial
Inventory Level that exceeds the Commercially Appropriate Inventory Level will
be added to the Net Sales ***** for purposes of this Agreement. The amount of
any such adjustment to Net Sales shall be calculated by multiplying (A) the
difference between (x) the Commercially Appropriate Inventory Levels and (y) the
Commercial Inventory Levels by (B) the average monthly amount of Product
withdrawals reported by IMS ***** in order to determine the gross number of
units of the Products by which the Commercial Inventory Level exceeds or is less
than the Commercially Appropriate Inventory Levels, and then multiplying such
number of units by the average net selling price per unit of the Products during
such calendar quarter. *****
1.4 BUSINESS DAY shall mean a day on which commercial banks are open
for business in New York City. References in this Agreement to "DAYS" other than
Business Days shall mean calendar days.
1.5 CHANGE OF CONTROL of a Party shall occur if (i) any person or
entity not an Affiliate of such Party acquires directly or indirectly the
beneficial ownership of any voting security of a Party, or if the percentage
ownership of such person or entity in the voting securities of a Party is
increased through stock redemption, cancellation or other recapitalization, and
immediately after such acquisition or increase such person or entity is,
directly or indirectly, the beneficial owner of voting securities representing
fifty percent (50%) or more of the total voting power of all of the
then-outstanding voting securities of such Party; (ii) the consummation of a
merger, consolidation, recapitalization, or reorganization of such Party, other
than any such transaction which would result in stockholders or equity holders
of such Party or an Affiliate of such Party immediately prior to such
transaction owning at least fifty percent (50%) of the outstanding securities of
the surviving entity in such transaction immediately following such transaction;
or (iii) the stockholders or equity holders of a Party shall approve a plan of
complete liquidation of the Party or an agreement for the sale or disposition by
the Party of all or a substantial portion of the Party's assets, other than
pursuant to the transaction as described above or to an Affiliate.
Notwithstanding the foregoing, a "CHANGE OF CONTROL" shall not be deemed to have
occurred upon any transfer (x) by Xxxxxxx Xxxxxxx of any or all of the shares of
capital stock of Kos that he beneficially owns to one or more of the following:
the spouse or sibling or lineal descendent of Xxxxxxx Xxxxxxx, any corporation
or other entity in which fifty percent (50%) or
2
more of the beneficial ownership of equity interests and fifty percent (50%) or
more of the voting securities is owned by Xxxxxxx Xxxxxxx or the spouse or any
sibling or lineal descendent of Xxxxxxx Xxxxxxx, or any trust for the benefit of
Xxxxxxx Xxxxxxx or the spouse or any sibling or lineal descendent of Xxxxxxx
Xxxxxxx (each of the foregoing, a "PERMITTED TRANSFEREE"), (y) by any Permitted
Transferee of any of its shares of the capital stock of Kos to another Permitted
Transferee, and/or (z) of the shares or capital stock of TPNA to an Affiliate of
TPNA.
1.6 CODE OR CODES shall mean the Code on Interactions with Healthcare
Professionals promulgated by the Pharmaceutical Research and Manufacturers of
America (PhRMA) and the American Medical Association Guidelines on Gifts to
Physicians, as either of the foregoing may be amended.
1.7 COMMERCIAL INVENTORY LEVEL shall mean the level of inventory held
by wholesalers as determined on a monthly basis and reported to Kos by IMS,
expressed as the number of months of inventory held by such wholesalers. The
Commercial Inventory Level as of ***** (solely for purposes of Section 4.2 (d))
and *****, shall be calculated by reference to the IMS Inventory Data as set
forth in the preceding sentence, provided that such calculation shall be
adjusted as necessary to more accurately reflect Kos' actual inventory level in
light of deviations in customer buying patterns as evidenced by orders for the
Products from Kos' customers, prescription trends for the Products and other
indicia of the actual amount of inventory held by Kos customers as of such date.
Any such adjustment to the Commercial Inventory Level as of such dates shall be
made by the Steering Committee.
1.8 COMMERCIALLY APPROPRIATE INVENTORY LEVEL shall mean a Commercial
Inventory Level for each Product of not more than ***** months on hand nor less
than ***** months on hand.
1.9 COST OF MANUFACTURE shall mean, with respect to any Product, Kos'
fully allocated manufacturing and packaging cost directly applied by Kos to such
Product calculated in accordance with GAAP, and shall include all production
costs ex factory. Cost of Manufacture shall not include any manufacturing
variances due to idle plant capacity or allocable to other products or any
profit related to intercompany transfer pricing.
1.10 EFFECTIVE DATE shall mean the date upon which this Agreement
becomes effective and shall be the date first written above.
1.11 FDA shall mean the United States Food and Drug Administration and
any successor agency thereto.
1.12 GAAP shall mean Generally Accepted Accounting Principles in the
United States.
1.13 GENERIC ENTRY shall mean the date of the first shipment by a Third
Party (other than a person or entity related to Kos) of an FDA-approved generic
version of Niaspan in the Territory.
1.14 INCREMENTAL NET SALES shall mean the amount by which the Net Sales
of the Products for a Year exceeds the Annual Baseline Net Sales Amount.
3
1.15 JOINT CO-PROMOTION ACTIVITIES shall have the meaning set forth in
Section 5.4.
1.16 JOINT MARKS shall mean any trademark, service xxxx, copyright or
logo developed, applied for or registered or to be applied for or registered for
use in connection with educational activities or services, including "PROCESS OF
CARE" materials or other jointly developed materials, not intended to be used
exclusively in association with the Products.
1.17 KOS TRADEMARKS shall mean the Niaspan(R) and Advicor(R) trademarks
owned by Kos in the Territory, and any other trademark, service xxxx or logo
developed, applied for, registered, or to be applied for or registered for use
in connection with the sale of the Products in the Territory, but shall not
include Joint Marks. The current list of Kos Trademark registrations and
applications is set forth in Appendix A attached hereto.
1.18 KNOW-HOW shall mean all present and future information developed
by Kos, whether or not in written form, that is not in the public domain and
that relates to the Products and shall include, without limitation, all
biological, chemical, pharmacological, toxicological, medical or clinical,
analytical, quality, manufacturing, research, or sales and marketing information
including all processes, methods, procedures, techniques, plans, programs, and
data and any other information relating to the Products or useful for the
development or commercialization of the Products in the Territory.
1.19 MARKETING ADVISORY COMMITTEE shall mean the committee established
and conducted in accordance with the procedures set forth in Article 5.
1.20 MINIMUM KOS DETAILS shall have the meaning set forth in Section
2.2(b).
1.21 MINIMUM TPNA DETAILS shall have the meaning set forth in Section
2.2(b).
1.22 NDA shall mean a New Drug Application for a Product in accordance
with the requirements of the FDA.
1.23 NET SALES shall mean the recorded gross sales of both Products in
the Territory to Third Parties in accordance with GAAP less the following
deductions:
*****
in each case determined in accordance with Kos' commercial and accounting
policies and practices consistently applied in a manner consistent with GAAP.
If Kos chooses to sell one or more of the Products together
with another Kos product with composite pricing, Net Sales for the affected
Product will be recalculated based on the then-average price of the Product to
the applicable customer category when such Product is sold independently of any
other Kos product. Even where Kos does not sell the Products through composite
pricing and a deduction would otherwise be acceptable pursuant to the clauses
above, the Parties agree that the percentage of such deduction from the gross
price under any such clause shall not be greater for any Product than those
applicable to the majority of Kos' other products.
4
1.24 PARTY(IES) shall mean each of Kos and TPNA.
1.25 PATENTS shall mean all patents and patent applications in the
Territory that are or become owned by Kos, or to which Kos otherwise has, now or
in the future, the right to grant licenses and license rights, that generically
or specifically cover the Products or a use or formulation of the Products.
Included within the definition of Patents are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals or
extensions thereof. The current list of patent applications and patents
encompassed within Patents is set forth in Appendix B attached hereto.
1.26 PRIMARY DETAIL EQUIVALENT ("PDE") shall mean *****.
1.27 PRODUCTS shall mean all strengths and dosage forms of Kos'
Niaspan(R) Product and Kos' Advicor(R) Product for all indications approved by
the FDA at any time during the Term *****.
1.28 PRODUCT DETAIL(S) shall mean a face-to-face meeting, between (i) a
professional representative of the applicable Party, meeting minimum
professional standards of a four-year college degree (B.A., B.S. or equivalent),
and (ii) a health care professional with prescribing authority, during which a
presentation of one of the Product's attributes is orally presented in a manner
consistent with the quality of such presentations made by a Party's professional
representatives for such Party's other products. A "PRIMARY PRODUCT DETAIL"
shall mean a Product Detail where the presentation of such Product during the
Product Detail is the first presentation made and is the presentation on which
the most time is spent during such meeting. A "SECONDARY PRODUCT DETAIL" is the
presentation on which the second most amount of time is spent during such
meeting. A "TERTIARY PRODUCT DETAIL" shall mean a Product Detail where the
presentation of such Product during the Product Detail is the presentation on
which the third most amount of time is spent during such meeting and at least
one (1) Product benefit is described. When used as a verb, "PRODUCT DETAIL"
shall mean to engage in a Product Detail.
1.29 QUARTERLY BASELINE NET SALES AMOUNT shall mean the amount equal to
(i) for the first calendar quarter of a Year, the Annual Baseline Net Sales
Amount multiplied by *****, (ii) for the second calendar quarter of a Year, the
Annual Baseline Net Sales Amount multiplied by *****, (iii) for the third
calendar quarter of a Year, the Annual Baseline Net Sales Amount multiplied by
*****, and (iv) for the fourth calendar quarter of a Year, the Annual Baseline
Net Sales Amount multiplied by *****.
1.30 STEERING COMMITTEE shall have the meaning set forth in Section
5.6.
1.31 TAIL PAYMENT ROYALTY BASE shall mean: (i) in the event there is no
early termination of this Agreement, ***** or (ii) in the event this Agreement
is terminated by Kos pursuant to clause (v) of Section 3.2 during the second,
third or fourth calendar quarter of 2006, ***** or (iii) in the event this
Agreement is terminated by Kos pursuant to clause (v) of Section 3.2 during the
first calendar quarter of 2006, ***** or (iv) in the event this Agreement is
terminated by Kos pursuant to clause (vi) of Section 3.2 or by TPNA pursuant to
any of clauses (i), (vii) and (viii) of Section 3.2, *****.
5
1.32 TAIL PERIOD shall mean the three (3) year period of time following
the Initial Term.
1.33 TERM shall have the meaning set forth in Section 3.1.
1.34 TERRITORY shall mean the United States of America its territories
and possessions, including Puerto Rico.
1.35 THIRD PARTY(IES) shall mean any person or entity other than Kos
and TPNA or their Affiliates.
1.36 TPNA TRADEMARKS shall mean the Takeda logo licensed to TPNA in the
Territory, and any other trademark, service xxxx or logo developed, applied for,
registered, or to be applied for or registered for use in connection with TPNA's
business in the Territory, but shall not include Joint Marks.
1.37 YEAR shall mean each calendar year during the Term beginning
January 1, 2004.
2. CO-PROMOTION
2.1 GRANT OF RIGHTS. Kos grants to TPNA the exclusive right to
co-promote the sale of the Products in the Territory, subject to (i) Kos' right
to co-promote the Products in the Territory and (ii) all the other terms and
conditions of this Agreement. Kos shall retain exclusively all of its rights
with respect to the Products outside the Territory and TPNA shall have no rights
with respect to the Products outside the Territory as a result of the execution
or performance of this Agreement. Subject to the provisions of Section 5.5(d),
Kos shall not grant any rights to, permit or authorize any Third Party to
promote, sell or Product Detail the Products in the Territory during the Term
without TPNA's prior written consent. TPNA shall have no other rights relating
to the Products except as specified in this Agreement.
2.2 EFFORTS.
(a) Each of Kos and TPNA shall deploy such of their respective
sales forces in an effort to promote effectively and conduct the Product Details
in accordance with the terms of this Agreement and the instructions of the
Marketing Advisory Committee. Both Kos and TPNA shall use reasonable commercial
efforts consistent with accepted pharmaceutical industry business practices in
conducting their respective promotional and Product Detailing activities
hereunder.
(b) Subject to Section 5.5(d), (i) Kos sales representatives
shall perform at least ***** Primary Detail Equivalents, including not fewer
than ***** Primary Product Details, in the 2004 Year and at least ***** Primary
Detail Equivalents, including not fewer than ***** Primary Product Details, in
each of the 2005 and 2006 Years ("MINIMUM KOS DETAILS"), and (ii) TPNA sales
representatives shall perform at least ***** Primary Detail Equivalents,
including not fewer than ***** Primary Product Details and ***** Secondary
Product Details (unless TPNA elects to perform additional Primary Product
Details), in each Year. ("MINIMUM TPNA DETAILS").
6
(c) The Parties acknowledge and agree that (i) some or all of
TPNA's obligations hereunder may be performed by its wholly-owned subsidiary,
Takeda Pharmaceuticals America, Inc. ("TPA"), and (ii) in no event will TPNA
perform or permit any of its Affiliates to perform Product Details outside the
United States of America. To the exent that TPNA causes or permits TPA to
perform any of TPNA's obligations under this Agreement, (I) TPNA hereby
unconditionally guarantees the performance of all such obligations in accordance
with the terms of this Agreement, subject only to TPNA's rights and remedies
hereunder, and (II) TPNA shall cause TPA to comply with all of the terms,
provisions and conditions contained in this Agreement that would be applicable
to TPNA in the performance of such obligations.
2.3 COMPLIANCE WITH LAW. Each of Kos and TPNA agree that in promoting
the Products and performing Product Details, such Party shall comply with
applicable laws and regulations applicable to the marketing, sale and promotion
of pharmaceutical products (including without limitation the Prescription Drug
Marketing Act ("PDMA"), Federal Health Care Program Anti-Kickback Law (42 U.S.C.
ss.1320a-7b) and the Health Insurance Portability and Accountability Act of
1996), the Codes, and the terms of this Agreement. No Party shall be required to
undertake any obligation, or incur any cost or reimbursement obligation, in
connection with any activity under this Agreement that such Party believes, in
good faith, may violate any applicable law, regulation or Code. Consistent with
recent guidance in the pharmaceutical industry promulgated by the Office of
Inspector General of the Health and Human Services Department on April 28, 2003,
each Party agrees to maintain a compliance program with respect to its
promotional and sales activities pursuant to this Agreement containing all of
the elements described in such guidance document.
3. TERM, TERMINATION AND RENEGOTIATION
3.1 TERM. This Agreement shall commence on the Effective Date (it being
understood and agreed that TPNA shall not be obligated to perform Product
Details prior to January 2004) and shall terminate at 11:59 p.m. Eastern
Standard Time on December 31, 2006, unless earlier terminated pursuant to
Section 3.2 (the "INITIAL TERM"). After the Initial Term, this Agreement may be
renewed by TPNA for an additional renewal term upon (i) delivery by TPNA of a
written notice of its intent to renew this Agreement at least ninety (90) days
prior to the end of the then current term, and (ii) the agreement of the Parties
in writing to the terms and conditions upon which TPNA will continue to
co-promote the Products during such renewal term (the "INITIAL TERM" and any
renewal terms are collectively referred to as the "TERM").
3.2 EARLY TERMINATION. Each Party shall have the right to terminate
this Agreement before the end of the Term (i) subject to Section 5.6, upon a
material breach of this Agreement by the other Party where such breach is not
cured within ninety (90) days following the other Party's receipt of written
notice of such breach; (ii) upon the withdrawal of marketing approval for
Niaspan(R); (iii) upon the occurrence of serious Adverse Events related to the
use of Niaspan(R) that cause a Party to reasonably conclude that the continued
use of Niaspan(R) by patients will result in serious life-threatening health
and/or safety concerns; (iv) upon the bankruptcy or insolvency, or the making or
seeking to make or arrange an assignment for the benefit of creditors of the
other Party, or the initiation of proceedings in voluntary or involuntary
bankruptcy, or the appointment of a receiver or trustee of such Party's property
that is not
7
discharged within ninety (90) days; (v) upon thirty (30) days written notice
delivered to the other Party within thirty (30) days after (X) a Generic Entry
occurs prior to the commencement of the fourth calendar quarter of 2006 and
***** (vi) upon thirty (30) days written notice delivered to the other Party
within thirty (30) days anytime on or after ***** (vii) upon thirty (30) days
written notice delivered to the other Party within sixty (60) days after a
Change of Control of such other Party occurs resulting in either the inability
of such other Party to perform its obligations under this Agreement or, the
terminating Party reasonably concludes that such Change of Control places such
terminating Party at a competitive disadvantage in the performance of its
obligations hereunder or with respect to its other pharmaceutical products; or
(viii) as provided in Section 11.1. TPNA shall have the right (I) to terminate
this Agreement before the end of the Term upon the withdrawal of marketing
approval for Advicor(R), and (II) to cease the co-promotion of Advicor(R) upon
the occurrence of serious Adverse Events related to the use of Advicor(R) that
cause it to reasonably conclude that the continued use of Advicor(R) by patients
will result in serious life-threatening health and/or safety concerns.
4. FEES AND PAYMENTS
4.1 ROYALTY ON NET SALES. TPNA, in consideration for the performance of
its obligations hereunder, shall be entitled to receive from Kos a royalty
payment equal to ***** of the Incremental Net Sales (the "ROYALTY PAYMENT"). The
amount of such Royalty Payment shall be determined and paid on a quarterly basis
and shall be calculated following each of the first three calendar quarters of a
Year by (A) subtracting the Quarterly Baseline Net Sales Amount from the Net
Sales for such calendar quarter, and (B), if such amount is a positive number,
multiplying such amount by *****. No Royalty Payment for a calendar quarter
shall be made if the Quarterly Baseline Net Sales Amount exceeds the Net Sales
for such quarter. Kos shall provide TPNA with a written statement, as provided
in Section 4.5(b), of the Net Sales for a calendar quarter and the amount of the
Royalty Payment for such quarter within thirty (30) days following the end of
each calendar quarter during a Year, except following the fourth calendar
quarter of each Year. Within forty-five (45) days following the end of the
fourth calendar quarter of each Year, Kos shall provide TPNA with a written
statement, as provided in Section 4.5(c), of the Net Sales for such fourth
calendar quarter and the Net Sales for such entire Year. The Royalty Payment to
be paid by Kos following the fourth calendar quarter of each Year shall be
calculated by (X) subtracting the Annual Baseline Net Sales Amount from the Net
Sales for such Year, and then (Y) multiplying such amount by *****, and then (Z)
subtracting from such amount the aggregate amount of all Royalty Payments paid
by Kos following the first three calendar quarters during such Year. Prior to
February 15, 2007, the Steering Committee shall adjust the Net Sales for the
fourth quarter of the 2006 Year, in accordance with the methodology described in
Section 1.3, as necessary to include or exclude Net Sales to the extent that the
Commercial Inventory Level on December 31, 2006, is less than or greater than
Commercially Appropriate Inventory Levels. All Royalty Payments required to be
paid by Kos shall be paid by Kos within ten (10) Business Days following Kos'
delivery of the written statement of the Net Sales and Royalty Payment amount
for a calendar quarter. In the event either Party elects to terminate the
Agreement pursuant to Section 3.2, a pro-rated quarterly Royalty Payment will be
due to TPNA at the close of the quarter in which such termination occurs. The
amount of such Royalty Payment will be calculated by subtracting the pro-rated
Quarterly Baseline Net Sales Amount from the pro-rated Net Sales for such
quarter, based on the number of days that have elapsed during such quarter
immediately prior to the effective date of such termination.
8
4.2 TAIL PAYMENTS.
(a) Except as otherwise provided in this Section 4.2 and
subject to Section 1.31(i), in the event that this Agreement is not renewed by
the Parties beyond the Initial Term and this Agreement has not been terminated
prior to the expiration of the Initial Term , TPNA shall be entitled to receive
from Kos the following additional payments (each a "TAIL PAYMENT," and together
the "TAIL PAYMENTS"): (i) an amount equal to ***** of the Tail Payment Royalty
Base (the "FIRST TAIL PAYMENT") shall be paid by Kos to TPNA in four (4) equal
quarterly installments due on the last day of each calendar quarter beginning
March 31, 2007; (ii) an amount equal to ***** of the Tail Payment Royalty Base
(the "SECOND TAIL PAYMENT") shall be paid by Kos to TPNA in four (4) equal
quarterly installments due on the last day of each calendar quarter beginning
March 31, 2008; and (iii) an amount equal to ***** of the Tail Payment Royalty
Base (the "THIRD TAIL PAYMENT") shall be paid by Kos to TPNA in four (4) equal
quarterly installments due on the last day of each calendar quarter beginning
March 31, 2009.
(b) In the event this Agreement is terminated by Kos pursuant
to clause (vi) of Section 3.2 or by TPNA pursuant to any of clauses (i), (vii)
and (viii) of Section 3.2, then the Tail Payment Royalty Base will be determined
in accordance with Section 1.31(iv) and Tail Payments shall be paid by Kos in
four (4) equal quarterly installments due on the last day of each calendar
quarter beginning with the calendar quarter following the calendar quarter in
which such termination occurs; provided that if Kos elects to terminate this
Agreement pursuant to clause (vi) of Section 3.2 prior to January 1, 2006 and a
Generic Entry occurs after the date of such termination, Kos shall not be
obligated to pay any such Tail Payment after such Generic Entry occurs, but Kos
will pay the Tail Payment due for the calendar quarter in which such Generic
Entry occurs pro rated through the date of such Generic Entry.
(c) In the event a Generic Entry occurs and this Agreement is
terminated by Kos during the 2006 Year pursuant to clause (v) of Section 3.2,
the Tail Payment Royalty Base will be determined in accordance with (A) Section
1.31(ii) if such termination occurs in the second, third or fourth calendar
quarter of 2006, and (B) Section 1.31(iii) if such termination occurs in the
first calendar quarter of 2006.
(d) In the event that a Generic Entry occurs either (A) during
the Initial Term and this Agreement has not been terminated by TPNA pursuant to
clause (v) of Section 3.2, or (B) except as provided in Section 4.2(b), during
the Tail Period, then in either such case Kos shall only be obligated to make
the First Tail Payment, the Second Tail Payment, or the Third Tail Payment if
the Net Sales for the Year ending December 31, 2007, the Year ending December
31, 2008, or the Year ending December 31, 2009, respectively, exceeds *****. For
example, if the Net Sales of the Products totals ***** for *****, and the Net
Sales totals ***** for the Year ended December 31, 2007, and ***** for the Year
ended December 31, 2008, and if a Generic Entry occurs in 2007, then Kos would
be obligated to pay the First Tail Payment but Kos would not be obligated to pay
the Second Tail Payment. Prior to February 15, 2006, the Steering Committee
shall adjust the Net Sales for the fourth quarter of the 2005 Year, in
accordance with the methodology described in Section 1.3, as necessary to
include or exclude Net Sales to the extent that the Commercial Inventory Level
on December 31, 2005, is less than or greater than Commercially Appropriate
Inventory Levels; provided that any such adjustment to the Net Sales for the
fourth quarter of the 2005 Year shall only be applicable for purposes of
9
Section 4.2(d) and not for the purposes of calculating the amount of Royalty
Payments under Section 4.1.
(e) Kos' obligation to make Tail Payments is subject to the
following: (i) the Tail Payments will be made quarterly, (ii)except as provided
in Section 4.2(b), no portion of a Tail Payment will be owed by Kos with respect
to the calendar quarter in which a Generic Entry occurs nor with respect to any
of the subsequent calendar quarters remaining in the Tail Period; provided that,
for any Year during the Tail Period in which a Generic Entry occurs, *****, then
Kos shall pay TPNA the remaining amount, if any, of the Tail Payment for such
Year no later than fifty-five (55) days following the end of such Year, and
(iii) in no event shall TPNA be required to return any portion of a Tail Payment
paid by Kos prior to a Generic Entry, and (iv) except under the circumstances
expressly provided in this Xxxxxxx 0.0, XXXX shall not be entitled to receive
and Kos shall not be obligated to make any Tail Payments if this Agreement is
terminated prior to the expiration of the Initial Term.
4.3 PAYMENTS. All payments under this Agreement shall be in U.S.
dollars in immediately available funds, and, unless instructed otherwise by the
receiving Party, shall be made via wire transfer to the account designated from
time to time by the receiving Party.
4.4 TAXES. Unless otherwise required by law, each Party shall be
responsible for paying and reporting all of its own taxes and fees, including
without limitation income taxes, payroll taxes, franchise taxes and all taxes
and fees in connection with the Party conducting business in any jurisdiction.
4.5 REPORTS.
(a) Within twenty (20) days following the end of each calendar
month of the Term, Kos shall provide TPNA with a written statement containing a
calculation of the Net Sales for such month and for the year-to-date period
through the end of such month, Kos shall provide the Commercial Inventory Level
of each Product as of the end of such month or, if the Commercial Inventory
Level is not available as of the end of such month, through the latest date for
which such information is available.
(b) Within thirty (30) days following the end of each of the
first three calendar quarters of each Year during the Term, Kos shall provide
TPNA with a written statement containing a calculation of the Net Sales for such
quarter and for the year-to-date period through the end of such quarter,
Commercial Inventory Levels of each Product as of the end of such quarter, and a
calculation of the Royalty Payment for such quarter.
(c) Within forty-five (45) days following the end of each
calendar Year of the Term, Kos shall provide TPNA with a written statement
containing a calculation of the Net Sales for such Year, Commercial Inventory
Levels of each Product as of the end of such Year, and a calculation of the
Royalty Payment for such Year pursuant to Section 4.1.
(d) Whenever information relating to the Products is reported
under this Agreement, such information shall be listed separately by Product and
in the aggregate.
10
4.6 NET SALES TRUE-UP PAYMENT. Within one hundred eighty (180) days
following the end of each Year during the Term, Kos shall determine the actual
cash paid, allowances or credits issued and write-offs taken related to its
recorded gross sales of both Products in the Territory to Third Parties that
occurred during such Year. In the event that the amount of such actual
deductions is less than the amount of the deductions Kos accrued in accordance
with its accounting practices and the adjusted Royalty Payment on Net Sales is a
positive figure, then Kos shall pay ***** of the difference between the actual
deductions and the accrued deductions to TPNA within ten (10) days of Kos'
issuance of Kos' calculation of the actual and accrued deductions. In the event
that the amount of such actual deductions is greater than the amount of the
deductions Kos accrued in accordance with its accounting practices and the
adjusted Royalty Payment on Net Sales is a positive figure, then TPNA shall pay
***** of the difference between the accrued deductions and the actual deductions
to Kos within ten (10) days of TPNA's receipt of Kos' calculation of the actual
and accrued deductions.
5. CO-PROMOTION MANAGEMENT
5.1 MARKETING ADVISORY COMMITTEE. Within thirty (30) days after the
Effective Date, Kos and TPNA shall assemble a team of appropriate personnel from
both Kos and TPNA (the "MARKETING ADVISORY COMMITTEE") to plan the ongoing sales
and promotional strategies and to review and direct such activities for the
Products in the Territory. The Marketing Advisory Committee shall consist of an
equal number of representatives from each of Kos and TPNA, not to exceed a total
of ten (10) representatives. Kos shall designate one of its representatives on
the Marketing Advisory Committee to serve as its chairperson and TPNA shall
designate one of its representatives on the Marketing Advisory Committee to
serve as its vice-chairperson. The Marketing Advisory Committee may from time to
time include additional non-voting ad-hoc representatives from either Party on
specific issues as the need arises. As appropriate, the Marketing Advisory
Committee may establish one or more sub-committees to act on matters that may
arise between meetings of the Marketing Advisory Committee or to consider
matters that would be more effectively considered by a smaller committee.
The representatives of each Party serving on the Marketing
Advisory Committee shall collectively have one vote on all matters considered by
the Marketing Advisory Committee. In the event that the members of the Marketing
Advisory Committee are unable to agree on any matter, such matter shall be
submitted to the senior marketing officer of each Party, who shall meet in
person or by telephone within seven (7) Business Days to review and resolve such
matter. If the senior marketing officers of the Parties are not able to resolve
such matter, the chairperson of the Marketing Advisory Committee shall make a
final decision with respect to such matter that shall be binding on the Parties,
subject to: (i) the exceptions provided in Section 5.8, and (ii) the right of
either Party to require a disputed matter that is likely, in such Party's
reasonable judgment, to have a material adverse impact on a Party or its sales
force to be submitted to the Steering Committee for resolution.
5.2 RESPONSIBILITIES OF MARKETING ADVISORY COMMITTEE.
(a) Except as provided in Section 5.8, the Parties agree that
Kos will have final planning, oversight, performance evaluation and
decision-making authority and responsibility for all sales, marketing and
promotional activities related to the Products. TPNA
11
will have the opportunity, through the Marketing Advisory Committee, to confer
with and advise Kos on such sales, marketing and promotional matters. Subject to
the foregoing, the following marketing and promotional matters will be
considered by the Marketing Advisory Committee: (i) the fundamental marketing
and promotional strategies; (ii) the development of a comprehensive annual
marketing plan; (iii) the establishment and implementation of appropriate sales
and marketing policies, programs, and procedures; (iv) the establishment of a
targeted physician calling universe and corresponding reach and frequency call
plans, subject to TPNA's existing physician call audience and call cycle; (v)
the allocation of Product Details between each of the Products during each
calendar quarter; (vi) the development of strategies, policies, and objectives
for managed care and professional services representatives; (vii) the
development and monitoring of individual and area performance measures for all
field sales activities; (viii) establishment and monitoring of Product sampling
practices; (ix) establishment of requirements for and regularly review
prescription tracking, call reporting, and other secondary market data; (x)
development of marketing and promotional materials such as product detail aids,
advertising, promotional give-aways, speaker kits, and direct mail; (xi)
establishment as appropriate of supplementary non-personnel promotional programs
such as compliance, telemarketing and internet activities; (xii) development of
professional/medical education programs including seminars, symposia,
participation at professional and medical conferences, and conventions,
physician advocacy programs, and event marketing programs; (xiii) planning and
coordinating all public relations activities for the Products; (xiv) planning
and implementing primary market research activities; and (xv) developing
trademarks and packaging materials.
(b) Notwithstanding anything set forth above in Section
5.2(a), Kos shall bear final responsibility for (i) determining pricing for the
Products, and (ii) ensuring that the Products' promotional materials and
labeling comply with the Federal Food, Drug and Cosmetic Act and all other
applicable laws and regulations; provided, however, pursuant to Xxxxxxx 0.0,
XXXX shall have the right to decline to use any promotional material or item.
For the avoidance of doubt, Kos solely shall make all decisions regarding the
pricing of the Products to all channels of trade (including without limitation
chargebacks, rebates, discounts, credits, free goods or any other matter
affecting the ultimate prices to Third Parties) and under no circumstances shall
any such pricing matter be discussed by the Parties.
5.3 MEETINGS OF MARKETING ADVISORY COMMITTEE. Meetings of the Marketing
Advisory Committee shall be held quarterly commencing with the first meeting to
occur within thirty (30) days following the Effective Date or more often as
determined by the Marketing Advisory Committee. The location of Marketing
Advisory Committee meetings and whether to hold them via teleconference and/or
videoconference shall be determined by the Marketing Advisory Committee,
provided one Party does not bear an undue travel burden. Minutes of each
Marketing Advisory Committee meeting shall be transcribed and issued by a
designee of the Committee within ten (10) Business Days after each meeting and
shall be approved by the chairperson and vice-chairperson not later than the
first order of business at the immediately succeeding Marketing Advisory
Committee meeting. Each Party shall bear its own expenses in connection with
attending meetings of the Marketing Advisory Committee. The Committee shall also
establish a procedure for either (i) calling special interim meetings of the
Committee in the event a need for Committee decisions arises between regularly
scheduled meetings or (ii) establishing a process for making such interim
decisions.
12
5.4 JOINT CO-PROMOTION ACTIVITIES. Subject to the overall marketing and
promotional plan for the Products established by Kos and considered by the
Marketing Advisory Committee, each of Kos and TPNA shall be responsible for
performing the co-promotion activities described below (the "JOINT CO-PROMOTION
ACTIVITIES"), in each case in accordance with the minimum activity levels
established in this Agreement and by the Marketing Advisory Committee.
Accordingly, except as otherwise provided in this Agreement, each Party shall
fully bear all of the costs incurred by such Party in connection with such
Party's performance of the Joint Co-Promotion Activities.
(a) FIELD SALES. The Marketing Advisory Committee shall
determine the target audience and the monthly call reach and frequency
objectives for the Parties' sales organizations, and will determine which
physicians each Party's sales representatives will call upon, subject to Section
5.8 and TPNA's existing physician call audience and call cycle. TPNA agrees to
perform no fewer than the Minimum TPNA Details during each Year during the Term
pursuant to the directives of the Marketing Advisory Committee and consistent
with this Agreement. Kos agrees to perform no fewer than the Mimimum Kos Details
during each Year during the Term pursuant to the directives of the Marketing
Advisory Committee and consistent with this Agreement. No fewer than ***** of
the annual Minimum TPNA Details or the annual Minimum Kos Details shall be
conducted during each quarter of a Year, with the remainder of such minimum
Product Details to be allocated between the Products and on a quarterly basis
during the Year by the Marketing Advisory Committee. Each Party shall maintain
records of each Product Detail by its sales force representatives using a call
document which records the name and address of the member of the target
audience, the date and position of the Product Detail and the number of samples
delivered and shall supply a monthly record of the number of total Product
Details to the other Party within sixty (60) days of the end of each month in a
form to be established by the Marketing Advisory Committee.
(b) SAMPLING. The Marketing Advisory Committee shall determine
the appropriate level of sampling per member of the target audience, consistent
with Kos' sampling practices on the Effective Date and subject to Section 5.8.
All sample distribution, reporting and storage shall be conducted by each Party
in accordance with the PDMA. TPNA shall reimburse Kos for all samples provided
by Kos to TPNA at *****.
(c) SALES FORCE TRAINING. Each of Kos and TPNA agree to
initially jointly train TPNA's sales force and to each provide periodic on-going
training on the Products to its respective sales force in accordance with
training schedules and materials established by the Marketing Advisory
Committee. Each Party shall bear its own expenses in connection with all
training efforts and meetings for its sales force; provided that Kos will on one
occasion train up to ***** TPNA sales force trainers at TPNA's expense.
(d) REIMBURSEMENT OF COSTS. TPNA agrees that certain of the
Joint Co-Promotion Activities will be primarily undertaken by Kos on behalf of
both Parties, and TPNA shall reimburse Kos for the following incremental
out-of-pocket costs actually incurred by Kos on TPNA's behalf:
13
(i) materials shipped to TPNA's warehouse: samples;
marketing and promotion materials (sales aids, premiums, speaker kits, reprints,
etc.); and training materials; and
(ii) program costs due to increased physician reach:
direct mail; medical education; medical symposia; medical meetings and similar
activities approved by the Marketing Advisory Committee.
The Parties acknowledge that TPNA's reimbursement obligations are
intended to correspond to those costs which are incremental based on TPNA's
co-promotion obligations hereunder and not to those costs which Kos would have
incurred regardless of such co-promotion obligations. Each Year, an initial
budget for the reimbursable items listed above will be set by the Marketing
Advisory Committee and will be approved by the Steering Committee. TPNA's
obligation to reimburse Kos under this Article 5 shall not exceed the following
amounts without the prior written agreement of TPNA:
- for 2004 - *****
- for 2005 - *****
- for 2006 - *****
Kos shall submit a detailed invoice to TPNA within thirty (30) days
following the end of each calendar quarter for all reimbursable items hereunder
delivered to TPNA during such quarter. TPNA will pay such invoice within thirty
(30) days following receipt thereof. The Parties acknowledge that although the
samples are included within the maximum amounts to be reimbursed by TPNA herein,
samples shall be reimbursed according to Section 5.4(b) above.
5.5 OTHER CO-PROMOTION MATTERS.
(a) BOOKING OF SALES REVENUE. Kos shall record on its books
all revenue from gross and Net Sales of the Product.
(b) PACKAGING. Kos shall have the responsibility for selecting
and approving all packaging materials .
(c) TRADEMARKS. Kos shall approve the names, design, and usage
in the Territory of all Kos Trademarks and TPNA Trademarks associated with the
Products; provided, however, Kos shall not use TPNA Trademarks therein without
TPNA's prior approval.
(d) FIELD SALES REPRESENTATIVES. Except with the prior written
consent of Kos, all TPNA field sales representatives who are responsible for
Product Details shall be employees of TPNA or TPA. Each Party shall have the
right to contract with a contract sales organization to fulfill no more than
***** of such Party's obligations for Product Details, provided that such
contract sales force receives training comparable to sales representatives of
such Party, and further provided that such sales representatives meet the
professional standards for such representatives that are established by the
Marketing Advisory Committee. The Party retaining such contract sales force will
be responsible for the costs and expenses of such sales force and their
compliance with this Agreement, including, without limitation, the training and
monitoring thereof.
14
(e) SALES INCENTIVE PLAN. *****
5.6 STEERING COMMITTEE.
(a) RESPONSIBILITY. Within thirty (30) days following the
Effective Date, the Parties shall form a Steering Committee (the "STEERING
COMMITTEE") whose responsibility shall be to (i) discuss any proposed amendments
to and renewals of this Agreement, (ii) consider any Disputes in accordance with
Article 17, (iii) without limiting the rights of the Parties under Section 3.2,
consider and propose resolutions to a Party's failure to perform the minimum
number of Product Details established for such Party under this Agreement over a
period of two consecutive quarters, (iv) determine the adjustments referred to
in Sections 1.3, 1.7, 4.1 and 4.2(d), and (v) assume any other oversight role
deemed appropriate by the Parties. Notwithstanding the foregoing, in the event
either Party fails to perform such minimum number of Product Details, the other
Party shall not invoke any termination right pursuant to Section 3.2(i) until
the resolution process provided in this Section 5.6 and Article 17 have been
exhausted.
(b) COMPOSITION AND PROCEDURES. The Steering Committee shall
have three representatives from each of Kos and TPNA. One of the representatives
from each Party shall be the senior marketing executive for such Party. The
Steering Committee may from time to time include additional non-voting ad-hoc
representatives from either Party on specific issues as the need arises. Each
Party shall have one vote on all matters.
5.7 MEETINGS OF STEERING COMMITTEE. The Steering Committee shall meet
on an as needed basis pursuant to the request of a Party. The location of such
meetings shall be agreed upon between the Parties, and may be via teleconference
and/or videoconference. Minutes of each Steering Committee meeting shall be
transcribed and issued by a designee of the Committee within ten (10) Business
Days after each meeting and shall be approved by a representative from each
Party no later than the first order of business at the immediately succeeding
Steering Committee meeting. Each Party shall bear its own expenses in connection
with attending meetings of the Steering Committee. The Committee shall also
establish a procedure for either (i) calling special interim meetings of the
Committee in the event a need for Committee decisions arises between regularly
scheduled meetings or (ii) establishing a process for making such interim
decisions.
5.8 TPNA EXCEPTIONS. Notwithstanding anything to the contrary contained
in this Article 5, no decision by the Marketing Advisory Committee or the
Steering Committee shall require TPNA, without TPNA's prior written consent, to:
(i) perform more PDEs than as provided in Section 2.2(b); (ii) pay more
promotional expenses than as provided in Section 5.4(d); (iii) carry any
promotional items or make any promotional statement that does not meet TPNA's
internal pharmaceutical promotional guidelines pursuant to Section 5.2(b); (iv)
revise its existing sales representative compensation policies, (v) alter its
sales representatives' call targets reach and/or frequency for TPNA's own
products. In the event TPNA in good faith based on the advice of counsel
believes that a promotional practice or message approved by the Marketing
Advisory Committee does not comply with the provisions of Xxxxxxx 0.0, XXXX
shall promptly inform Kos in writing by providing its rationale therefor. If Kos
disagrees with TPNA's conclusion regarding such practice or message, then the
disagreement shall be submitted
15
promptly to the Steering Committee for resolution. Until a resolution is
reached, TPNA shall have the right to decline to perform such practice or
message.
5.9 FINANCIAL MATTERS. Within thirty (30) days following the Effective
Date, each of Kos and TPNA shall designate a single finance representative, who
may be changed from time to time on written notice, to be responsible for
correspondence relating to financial reporting, audit activities and any other
financial matters relating to this Agreement. Each Party shall cooperate with
the other Party with respect to any such financial matters and respond to the
requests of the other Party within a reasonable period of time.
6. MANUFACTURING AND SUPPLY
6.1 KOS RESPONSIBILITIES.
(a) Kos shall manufacture, package, store and ship the
Products and samples of the Products in accordance with (i) "CURRENT GOOD
MANUFACTURING PRACTICES" as set forth by the FDA, (ii) the Products' approved
NDA's, and (iii) all applicable local, state, and Federal laws and regulations.
(b) Kos shall manufacture sufficient quantities of (i)
Products to meet its sales forcasts for the Term, and (ii) samples of Products
to adequately support the Product Detail obligations of the Parties hereunder.
(c) Kos shall supply samples of the Products within thirty
(30) days of submission of requirements as forecasted by the Marketing Advisory
Committee or as reasonably requested by TPNA. Samples shall be allotted
according to the Product Detail requirements of each Party under this Agreement.
The Parties will maintain those records required by the PDMA and, subject to
receipt of necessary information from TPNA, Kos shall be solely responsible for
the filing of any necessary reports to the FDA in connection with the PDMA.
7. REGULATORY, SAFETY AND SURVEILLANCE
7.1 REGULATORY MATTERS.
(a) RESPONSIBILITY. All regulatory matters in the Territory
regarding the Products shall remain under the exclusive control of Kos.
(b) PERMITS. Kos shall be responsible for and maintain all
regulatory and governmental permits, licenses and approvals that may be
necessary to manufacture, ship, sell and market the Products in the Territory.
(c) REPORTING. Kos shall be responsible for any reporting of
matters, or other communications with the FDA, regarding the manufacture, sale
or promotion of the Products, including Adverse Events, to the FDA and other
relevant regulatory authorities, in accordance with applicable laws and
regulations. Kos shall promptly notify TPNA of any such matter. In addition, Kos
shall provide TPNA with copies of its reports (both Periodic Reports and
Periodic Safety Update Reports) to the FDA relating to the Products promptly
following submission
16
thereof to the FDA. TPNA shall promptly, but in no event later than one Business
Day, notify Kos of any Adverse Event of which it should become aware. In the
event Kos or TPNA should become aware of information that may require a recall,
field alert, Product withdrawal or field correction arising from any defect in
either of the Products, it shall immediately notify the other Party in writing.
(d) TPNA INVOLVMENT. TPNA shall not without consent of Kos,
unless so required by applicable law, correspond or communicate with the FDA or
with any other governmental authority, concerning the Products, or otherwise
take any action concerning any authorization or permission under which any of
the Products are sold. TPNA shall provide to Kos, upon receipt, copies of any
communication from the FDA or other governmental authority related to the
Products. If TPNA is advised in writing by its outside counsel that it must
communicate with the FDA or other governmental authority, then TPNA shall so
advise Kos and TPNA shall, if the law permits, comply with any and all
reasonable direction of Kos concerning any meeting or communication with the FDA
or other governmental authority.
7.2 ADVERSE EVENTS. Promptly after the Effective Date, in recognition
of Kos' primary responsibility for reporting Adverse Events associated with the
Products, the Parties shall agree upon standard operating procedures, consistent
with this Agreement, for the investigation and reporting of Adverse Events
regarding the Products. The Parties shall immediately implement such agreed
procedures and shall provide each other on a regular basis with any appropriate
information that enables the other Party to meet its regulatory obligations in
the Territory with respect to the Products or that is relevant to the safe use
of the Products. The agreed procedures will be reviewed jointly on a regular
basis or when there is a change in regulations governing Adverse Event
reporting. Kos shall provide TPNA with a copy of its standard operating
procedures for reporting Adverse Events in effect as of the Effective Date and
any future revisions thereto.
7.3 MEDICAL INQUIRIES. Promptly after the Effective Date, the Parties
shall establish procedures to enable the prompt response to any medical
inquiries relating to the Products received by TPNA.
8. AUDIT RIGHTS
Each of Kos and TPNA shall keep complete and accurate records of its
respective Product Details and incentive compensation payments for the Products
to sales representatives. Kos shall keep complete and accurate records of the
Net Sales of the Products, Cost of Manufacture of samples of Products and any
other reimbursable expenses. Each Party shall have the right, at such Party's
expense, through an independent certified public accountant or like person
reasonably acceptable to the other Party, upon execution of a confidentiality
agreement, to examine such records during regular business hours upon reasonable
written notice during the Term of this Agreement and, only in the case where a
Tail Payment is not made because the Net Sales threshold provided in Section
4.2(d) was not met, the Tail Period and for one (1) year after termination of
this Agreement or, if applicable, the Tail Period; provided, however, that (i)
such examination shall not take place more often than once per Year and shall
not cover such records for more than that portion of the year in which the audit
takes place and the two preceding years (other than the period prior to January
1, 2003), and (ii) such accountant shall report to such
17
Party only as to the accuracy of the reports or payments provided or made by the
other Party under this Agreement. Any adjustments required as a result of
overpayments or underpayments identified through a Party's exercise of audit
rights shall be made by subtracting or adding, as appropriate, amounts from or
to the next Royalty Payment or Tail Payment in accordance with Section 4.3 or,
if no further Royalty Payments or Tail Payments are due, by payment to the Party
owed such adjustment within thirty (30) days after identification of such
adjustment. The Party requesting the audit shall bear the full cost of the audit
unless such audit correctly discloses that the discrepancy for the Year differs
by more than ***** from the amount the accountant determines is correct, in such
case the owing Party shall pay the reasonable fees and expenses charged by the
accountant. In addition, the owing Party shall pay interest from the original
date due and until payment on the amount of the underpayment or overpayment at a
rate equal to ***** and calculated from the date due until the payment date. In
the event that a Party disputes an invoice or other payment obligation under
this Agreement, such Party shall timely pay the amount of the invoice or other
payment obligation that is not in dispute, and the Parties shall resolve such
dispute in accordance with Article 17.
9. INTELLECTUAL PROPERTY
9.1 OWNERSHIP OF INTELLECTUAL PROPERTY. Each Party shall have and
retain sole and exclusive right, title and interest in and to all inventions,
discoveries, writings, trade secrets, know-how, methods, practices, procedures,
engineering information, designs, devices, improvements, manufacturing
information and other technology, whether or not patentable or copyrightable,
and any patent applications, patents, or copyrights based thereon ("INVENTIONS")
that are made, discovered, conceived, reduced to practice or generated by such
Party (or its employees or representatives). The Parties shall jointly own the
right, title and interest in and to any Inventions made, discovered, conceived,
reduced to practice or generated jointly by the Parties (or their employees or
representatives); provided that such joint Inventions do not relate to the
Products or the active ingredients in the Products. Kos shall solely own all
right, title and interest in and to all joint Inventions relating to the
Products or the active ingredients in the Products. TPNA shall not represent to
any Third Party that it has any proprietary or property right or interest in the
Products, or in any patent relating thereto, or in any trademark (other than
TPNA Trademarks) used in connection therewith.
9.2 PATENT PROSECUTION. Kos, at its expense, shall have responsibility
for filing, prosecution and maintenance of all Patents that it owns in the
Territory. TPNA shall hold all non-public information disclosed to it under this
Section as confidential subject to the provisions of Article 10. With respect to
any jointly-owned Inventions referred to in Section 9.1, both Parties shall
cooperate in the patent prosecution and maintenance of such Inventions and shall
share the costs for such prosecution and maintenance; provided, however, that if
either Party decides not to prosecute or maintain any jointly-owned Inventions
in any country, such Party shall assign its interest in such specific Inventions
to the other Party in such country free of charge.
9.3 NOTIFICATION OF PATENT LITIGATION. In the event of the institution
of any suit by a Third Party against Kos or TPNA for patent infringement
involving the manufacture, use, sale, license, or marketing or promotion of the
Products anywhere in the Territory during the Term, the Party sued shall
promptly notify the other Party in writing.
18
9.4 PATENT INFRINGEMENT. In the event that after the Effective Date Kos
or TPNA becomes aware of actual or threatened infringement of a Patent as such
infringement relates to the Products anywhere in the Territory, that Party shall
promptly notify the other Party in writing. Kos shall investigate and/or bring
an infringement action against any Third Party as it reasonably determines to be
appropriate. Kos shall have full control over the conduct of such investigations
and litigation, including the settlement thereof. The cost of such investigation
and litigation shall be borne entirely by Kos, with Kos being entitled to the
entire proceeds, if any, of such litigation, unless TPNA agrees, at its sole
discretion, within twenty (20) days of such notice, to bear ***** of such cost,
in which case it shall also be entitled to ***** of any proceeds of such
litigation. TPNA shall reasonably assist Kos and cooperate in any such
investigation and litigation at Kos' request and expense. In the event that Kos
does not adequately investigate or take reasonable action to enforce the Patents
against Third Party infringers, TPNA may bring a lawsuit in the name of Kos to
enforce such Patents. Kos shall reasonably assist TPNA and cooperate in any such
litigation at TPNA's request and expense. The costs for such lawsuit by TPNA,
including its attorneys' fees and all other expenses, shall be borne by TPNA,
and TPNA shall be entitled to all of the proceeds from such litigation. It is
understood and agreed that Kos is currently pursuing litigation against Xxxx
Laboratories in connection with an alleged Patent infringement by Xxxx. TPNA
will not bear any cost of such litigation and will not be entitled to any
proceeds of such litigation, if any.
9.5 TITLE TO TRADEMARKS. The ownership and all goodwill from the use of
any Kos Trademarks shall at all times vest in and inure to the benefit of Kos.
The ownership and all goodwill from the use of any TPNA Trademarks shall at all
times vest in and inure to the benefit of TPNA. Except as expressly provided in
this Agreement or as mutually agreed by the Parties, neither Party shall use the
Trademarks of the other Party for any purpose.
9.6 TRADEMARK LICENSE. Kos grants to TPNA a fully paid, license to use
the Kos Trademarks in the Territory during the Term in connection only with the
marketing and promotion of the Products as contemplated in this Agreement,
subject to Kos retaining full rights to use the Kos Trademarks in the Territory,
and without limiting in any way Kos' rights with respect to the Kos Trademarks
outside the Territory.
9.7 JOINT MARKS. The Joint Marks shall be jointly filed for and jointly
owned on an equal basis by the Parties, and each Party shall have co-exclusive
rights to use the Joint Marks. During the Term, the Joint Marks shall be used by
the Parties solely in connection with the activities contemplated by this
Agreement as determined by the Marketing Advisory Committee. Upon termination or
expiration of this Agreement Kos shall have the sole right to continue using the
Joint Marks which do not contain any element of TPNA Trademarks.
9.8 MAINTENANCE OF TRADEMARKS. Kos agrees to search, file, register and
maintain a registration for the Kos Trademarks and the Joint Marks in the
Territory for the Term of this Agreement for use with the Products. Such
expenses incurred in connection with the Kos Trademarks and the Joint Marks
shall be paid solely by Kos. In the event that the Kos Trademarks are not
available for use and registration in connection with the Products in the
Territory due to a rejection of the trademark by a government agency, actual or
threatened opposition, cancellation or litigation as to use and/or registration
of the Kos Trademarks by a Third Party, and/or a decision by the Marketing
Advisory Committee that use of the Kos
19
Trademarks is likely to cause confusion with another's trademark, Kos shall
provide an alternate Kos Trademark and shall develop, search, file, register and
maintain such alternate Kos Trademark at Kos' sole expense, provided that the
selection of such alternate Kos Trademark shall be made by the Marketing
Advisory Committee in accordance with Section 5.5(c).
9.9 NOTIFICATION OF TRADEMARK LITIGATION. In the event of the
institution of any suit by a Third Party against Kos or TPNA for trademark
infringement involving the marketing, promotion or sale of the Products in
accordance with the annual marketing plan in the Territory, the Party sued shall
promptly notify the other Party in writing.
9.10 TRADEMARK INFRINGEMENT. In the event that Kos or TPNA becomes
aware of actual or threatened infringement of a Kos Trademark or a Joint Xxxx
anywhere in the Territory, that Party shall promptly notify the other Party in
writing. Kos shall investigate and/or bring an infringement and/or opposition or
cancellation action against any Third Party. Kos shall have full control over
the conduct of such investigations and litigation, including the settlement
thereof. The cost of such investigation and litigation shall be borne entirely
by Kos, with Kos being entitled to the entire proceeds, if any, of such
litigation, unless TPNA agrees, at its sole discretion, within twenty (20) days
of such notice, to bear ***** of such cost, in which case it shall also be
entitled to ***** of any proceeds of such litigation. TPNA shall reasonably
assist Kos and cooperate in any such investigation and litigation at Kos'
request and expense. It is understood and agreed that Kos is currently pursuing
litigation against Andrx Corporation and/or its affiliates in connection with an
alleged trademark infringement by Andrx of Kos' "ADVICOR(R)" trademark. TPNA
will not bear any of the cost of such litigation and will not be entitled to any
proceeds of such litigation, if any.
9.11 INFORMATION AND SETTLEMENTS. Kos shall keep TPNA informed of the
status of any patent or trademark infringement litigation or settlement thereof
concerning the Products, Patents or the Kos Trademarks to which TPNA is entitled
to be notified pursuant to this Article 9, provided however that no settlement
or consent judgment or other voluntary final disposition of any suit defended or
action brought pursuant to this Article 9 shall be entered into without the
consent of TPNA if such settlement shall require TPNA to make a monetary payment
or bear any other burden.
10. CONFIDENTIALITY
10.1 DISCLOSURE OF KNOW-HOW. To the extent that Kos has disclosed or in
the future discloses to TPNA any Know-How, TPNA shall not acquire any ownership
rights in such Know-How by virtue of this Agreement or otherwise.
10.2 CONFIDENTIAL INFORMATION. During the Term and for a period of five
(5) years thereafter, Kos and TPNA shall not use or disclose to Third Parties
any information received from the other Party or otherwise developed or attained
(including prior to the Term, during the Term, during the Tail Period or during
any period in which the Parties have audit rights pursuant to Article 8
following the Tail Period) by either Party in the performance of activities in
furtherance of this Agreement without first obtaining the written consent of the
disclosing Party, except as may be otherwise provided in, or required in order
for a Party to fulfill its obligations under, this Agreement. During and
following the Term of this Agreement, this confidentiality
20
obligation shall not apply to such information that (i) is or becomes a matter
of public knowledge (other than by breach of this Agreement by the receiving
Party), (ii) is required by law to be disclosed, (iii) the receiving Party can
establish was already known to it or was in its possession at the time of
disclosure, (iv) the receiving Party can establish was independently developed
by persons in its employ who had no contact with and were not aware of the
content of the confidential information, or (v) is disclosed to the receiving
Party by a Third Party having the right to do so. The Parties shall take
reasonable measures to assure that no unauthorized use or disclosure is made by
others to whom access to such information is granted.
Nothing in this Agreement shall be construed as preventing
either Party from disclosing any information received from the other to an
Affiliate of the receiving Party who is necessary for the purposes of enabling
the receiving Party to fulfill its obligations under this Agreement, provided,
the receiving Party shall be responsible for breaches of the confidentiality
obligations by such Affiliate.
10.3 PUBLIC ANNOUNCEMENTS. No public announcement or other disclosure
to Third Parties concerning the existence of or terms of this Agreement shall be
made, either directly or indirectly, by either Party, without first obtaining
the written approval of the other Party and agreement upon the nature, text and
timing of such announcement or disclosure; provided, however, either Party shall
have the right to make any such public announcement or other disclosure required
by law after such Party has provided to the other Party a copy of such
announcement or disclosure and an opportunity to comment thereon. Each Party
agrees that it shall cooperate fully with the other with respect to all
disclosures regarding this Agreement to the Securities Exchange Commission and
any other governmental or regulatory agencies, including requests for
confidential treatment of proprietary information of either Party included in
any such disclosure. Neither Party shall be required to provide the other Party
with any advance notice of any public announcements or other disclosures related
to periodic, routine financial reporting unless such announcement or other
disclosure will include non-routine information relating to the Products or this
Agreement. Kos shall provide TPNA with an advance copy of any scripts or
questions and answers related to this Agreement which may be prepared for stock
analyst meetings, call, presentations or conferences. TPNA acknowledges its
responsibilities under the federal and state securities laws in the United
States with respect to trading in the securities of Kos while in possession of
material non-public information relating to Kos, and agrees to maintain and
enforce appropriate policies to prevent the violations of such laws by its
employees and representatives.
11. RESTRICTIVE COVENANTS
11.1 NON-COMPETITION.
(a) For purposes of this Section 11.1, the following terms
shall have the definitions set forth below:
(i) "COMPETING PRODUCT" *****
(ii) "COMPETITION PERIOD 1" shall mean the period
beginning *****;
(iii) "COMPETITION PERIOD 2" shall mean the period
beginning *****;
21
(iv) "COMPETITION PERIOD 3" shall mean the period
beginning *****.
(b) During Competition Period 1, neither Kos nor TPNA
(including TPA) shall have the right to promote, market or sell in the Territory
any Competing Product.
(c) During Competition Period 2, each of Kos and TPNA
(including TPA) shall have the right to promote, market or sell in the Territory
any Competing Product, subject to the terms set forth in this subsection (c).
(i) If Kos so promotes, markets or sells a Competing
Product, TPNA shall have the right during Competition Period 2 to terminate this
Agreement and neither Party shall have any further obligation under this
Agreement except for payment obligations pursuant to Sections 4.1 (through the
date of such termination) and 4.2(b) and for other provisions that specifically
survive the termination of this Agreement pursuant to Section 12.1. Kos shall
notify TPNA in writing not later than the date on which Kos begins promoting,
marketing or selling a Competing Product during Competition Period 2 and TPNA
shall provide Kos with thirty (30) days written notice within sixty (60) days
after such date of its election whether to terminate this Agreement under this
Section 11.1(c)(i).
(ii) If TPNA so promotes, markets or sells a
Competing Product, Kos shall have the right during Competition Period 2 to (1)
continue the co-promotion of the Products as contemplated hereunder, (2)
continue the co-promotion of the Products and require TPNA to segregate its
sales force as described in Section 11.1(f) below, or (3) terminate this
Agreement and neither Party shall have any further obligation under this
Agreement except for payment obligations pursuant to Section 4.1 through the
date of such termination and for other provisions that specifically survive the
termination of this Agreement pursuant to Section 12.1, provided, if Kos elects
to continue the co-promotion under either subsection (1) or (2) above, Kos may
not later elect to terminate this Agreement under this subsection (3) or under
11.1(d) with respect to a Competing Product first promoted, marketed or sold by
TPNA in Competition Period 2. TPNA shall notify Kos in writing not later than
the date on which TPNA begins promoting, marketing or selling a Competing
Product during Competition Period 2 and Kos shall provide TPNA with thirty (30)
days written notice within sixty (60) days after such date of which of the
rights under subsections (1), (2) or (3) above it elects to exercise.
(d) During Competition Period 3, TPNA (including TPA) shall
have the right to promote, market or sell in the Territory any Competing
Product, subject to the terms set forth in this subsection (d). If TPNA so
promotes, markets or sells a Competing Product (other than a Competing Product
under Section 11.1(c)(ii) which did not result in the termination of the
Agreement) during Competition Period 3, Kos shall not be obligated to make
additional Tail Payments under this Agreement; provided that Kos shall make any
Tail Payment applicable to the calendar quarter in which, and pro-rated through
the date, TPNA or TPA shall have first promoted, marketed or sold such Competing
Product during Competition Period 3.
22
(e) Following Competition Period 3, neither Party shall have
any restrictions on its right to promote, market or sell any Competing Product.
(f) In the event that TPNA exercises its right under Section
11.1(c) to promote, market or sell a Competing Product in the Territory during
Competition Period 2 and Kos exercises it right pursuant to Section
11.1(c)ii.(2), then TPNA shall not permit its or TPA's sales force
representatives and other employees (excluding senior level executives) engaged
in the performance of Product Details or the marketing of the Products under
this Agreement to participate in the promotion, marketing or sale of such
Competing Product, and shall implement such internal procedures as are necessary
to ensure that information relating to the marketing or sale of the Products is
not communicated to the represenatives or employees engaged in the promotion,
marketing or sale of such Competing Product.
(g) Notwithstanding the provisions of Sections 11.1(c) and
(d), commencing with Competition Period 2 and ending on the last date on which
Kos is obligated to make any payment to TPNA under this Agreement, the Party
promoting, marketing or selling such Competing Product, if such Party elects to
seek a co-promotion partner, will discuss with the other Party the possibility
of an arrangement pursuant to which the other Party could participate in
promoting, marketing or selling of such Competing Product.
(h) For the avoidance of doubt, with respect to TPNA,
Competing Product shall not include (i) any product of TPNA that contains
pioglitazone or (ii) any pipeline product of TPNA or its ultimate parent
company. The remedies provided in this Section 11.1 shall be the exclusive
remedies of the Parties in the event a Competing Product is promoted, marketed
or sold by the other Party as provided in this Section 11.1 and neither Party
shall make any claim for damages or other compensation in such event.
11.2 NON-SOLICITATION. During the Term and for a period of six (6)
months thereafter, neither Party shall recruit or solicit, directly or through a
Third Party, for employment or otherwise, any employee of the other Party
without the written consent of the other Party. The Parties agree that general
solicitation, such as through advertisements or recruiting services, not
targeted at the other Party's employees shall not be a violation of the
foregoing sentence.
12. RIGHTS AND DUTIES UPON TERMINATION
12.1 CONTINUING OBLIGATIONS. The following provisions shall survive the
termination of this Agreement for any reason: Sections 5.4(d), 5.5(a), 9.1, 9.2,
9.3, 9.5, 9.9, 9.11, 11.2, 16.4 and Articles 4, 8, 10, 12, 13, 15 and 17. In
addition, any other provision required to interpret and enforce the Parties'
rights and obligations under this Agreement shall also survive, but only to the
extent required for the full observation and performance of this Agreement.
12.2 REMEDIES. Termination of this Agreement in accordance with its
provisions shall not limit the remedies that may be otherwise available to
either Party in law or equity; provided that neither Kos nor TPNA shall be
liable under this Agreement for any indirect, incidental, punitive, exemplary,
special or consequential damages of any kind whatsoever sustained as a
23
result of a breach of this Agreement. Any payments due hereunder by a Party to
the other Party shall not be deemed to be indirect, incidental, punitive,
exemplary, special or consequential damages.
12.3 RETURNS. Upon termination of this Agreement TPNA shall immediately
return to Kos all product samples, sales and promotional and communication
materials, marketing plans and reports and other tangible items provided by Kos
to TPNA or otherwise developed or attained jointly or by TPNA pursuant to the
terms and intent of this Agreement. Notwithstanding the foregoing, (i) TPNA
shall have the right to keep one (1) copy of any items reasonably necessary to
confirm its surviving obligations hereunder, and (ii) if any such returned items
are reusable by Kos, Kos shall reimburse TPNA within thirty (30) days after
receipt thereof for TPNA's costs to obtain such items pursuant to Section 5.4.
13. REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNIFICATION
13.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF KOS. Except as
disclosed on Schedule 13.1, Kos represents and warrants that
(a) Kos has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and the
execution, delivery and performance of this Agreement has been duly and validly
authorized and approved by proper corporate action on the part of Kos. Assuming
due authorization, execution and delivery on the part of TPNA, this Agreement
constitutes a legal, valid and binding obligation of Kos, enforceable against
Kos, in accordance with its terms.
(b) The execution and delivery of this Agreement by Kos and
the performance by Kos contemplated hereunder will not violate any applicable
laws.
(c) Neither the execution and delivery of this Agreement nor
the performance hereof by Kos requires Kos or any of its Affiliates to obtain
any permits, authorizations or consents from any governmental authority or from
any other person, not previously obtained.
(d) There is nothing in any Third Party agreement that Kos has
entered into that in any way will limit Kos' ability to perform all of the
obligations undertaken by Kos under this Agreement.
(e) Appendix A contains a correct and complete list of all
trademarks and Appendix B contains a correct and complete list of all patents
which (x) are pending, applied for, granted or registered in the Territory, (y)
are owned by Kos or any of its Affiliates, and (z) relate to the Products in the
Territory.
(f) Kos or its Affiliates own or possess adequate licenses or
other valid rights to use all patents, patent rights, trademarks, applications
and Know-How (collectively, "INTELLECTUAL PROPERTY") reasonably believed by Kos
as necessary to manufacture and package the Products for sale in the Territory,
and to distribute, use, promote and sell the Products in the Territory for their
FDA-approved indications, all free of any material lien, encumbrance, liability
or other restriction. Except as provided in Section 9.4 with respect to Xxxx,
9.10 with respect to Andrx or Schedule 13.1, to the knowledge of Kos, there are
no actions, suits, proceedings or
24
claims, pending against Kos or any of its Affiliates, or, to the knowledge of
Kos, threatened against Kos or any of its Affiliates, at law or in equity, or
before or by any governmental authority relating to (x) the Products, (y) the
ownership, enforceability, use or validity of any of the Intellectual Property,
or (z) the manufacture, marketing, distribution, use, promotion, offer for sale
or sale of the Products contemplated under this Agreement. There are no
investigations of public record pending or, to Kos's knowledge, any
investigations ongoing or threatened against Kos or any of its Affiliates, at
law or in equity, or before or by any governmental authority relating to the
Products or the manufacture, marketing, distribution, use, promotion, offer for
sale or sale thereof contemplated under this Agreement or which could otherwise
adversely affect Kos's ability to perform its obligations hereunder. To Kos'
knowledge, there have not at any time anywhere in the world been any material
Third Party Claims (as defined in Section 13.3) involving death or bodily injury
resulting from the use of the Products.
(g) Kos has not received notice of infringement or
misappropriation of any alleged rights asserted by any Third Party in relation
to any technology used by Kos in connection with the manufacture, marketing,
distribution, use, promotion, offer for sale or sale of the Products and Kos has
no knowledge of any U.S. patent or trademark which can be asserted as infringed
by the manufacture, marketing, distribution, use, promotion, offer for sale or
sale of the Products.
(h) To the best of Kos' knowledge, it is in compliance in all
material respects with all material laws and regulations applicable to the
subject matter of this Agreement, including, without limitation, the Federal
Food, Drug, and Cosmetic Act and the PDMA.
(i) The NDA's filed with the FDA and any amendments and
supplements thereto (i) have been prepared in all material respects in
accordance with all applicable requirements of the Food, Drug and Cosmetic Act,
and (ii) have been approved by FDA, and none of Kos or any of its Affiliates has
received any notice which has, or reasonably should have, led Kos or any of its
Affiliates to believe that the NDA's and any amendments thereto are not
currently in good standing in all respects with FDA. Kos (or its designated
agent) has filed, or caused to be filed, with the FDA all required notices,
supplemental applications and reports, including without limitation Adverse
Event reports, required to be filed by the NDA holder. None of Kos or any of its
Affiliates has received any notice which has, or reasonably should have, led Kos
or any of its Affiliates to believe that any governmental authority (including
the FDA) has commenced, or threatened to initiate, any action anywhere in the
world to withdraw any approval for the Products or to limit the ability of Kos
or any of its Affiliates to manufacture (or to have manufactured for it by a
Third Party) the Products or to request the recall of the Products or commenced,
or threatened to Kos' knowledge, to initiate any action to enjoin production of
the Products at any facility.
(j) All manufacturing operations conducted by Kos and its
Affiliates (or by Third Parties on their behalf) relating to the manufacturing
of the Products are being conducted in material compliance with GMP and other
applicable legal and/or regulatory requirements.
(k) All material information known to Kos or its Affiliates
with respect to (i) the safety of the Products, (ii) the efficacy of the
Products, (iii) any circumstance which could adversely affect the manufacturing,
marketing, promotion or sale of the Products in the Territory,
25
or (iv) Kos' ability or capacity to manufacture the Products (including both
commercial quantities and samples) to meet the demand for the Products
contemplated under this Agreement, has in each case been fully and accurately
disclosed to TPNA in writing.
13.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TPNA. TPNA represents
and warrants that:
(a) TPNA has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and the
execution, delivery and performance of this Agreement has been duly and validly
authorized and approved by proper corporate action on the part of TPNA. Assuming
due authorization, execution and delivery on the part of Kos, this Agreement
constitutes a legal, valid and binding obligation of TPNA, enforceable against
TPNA, in accordance with its terms.
(b) The execution and delivery of this Agreement by TPNA and
the performance by TPNA contemplated hereunder will not violate any applicable
laws.
(c) Neither the execution and delivery of this Agreement nor
the performance hereof by TPNA requires TPNA or any of its Affiliates to obtain
any permits, authorizations or consents from any governmental authority or from
any other person.
(d) There is nothing in any Third Party agreement TPNA has
entered into that in any way will limit TPNA's ability to perform all of the
obligations undertaken by TPNA under this Agreement,
(e) Each of TPNA and TPA is in material compliance with all
material laws and regulations applicable to the subject matter of this
Agreement, including, without limitation, the Federal Food, Drug, and Cosmetic
Act and the PDMA.
13.3 INDEMNIFICATION BY KOS. Except as otherwise expressly provided in
Section 13.4, Kos shall defend, indemnify and hold harmless TPNA and its
Affiliates and their officers, directors, shareholders, employees, agents,
representatives, successors and assigns from and against all claims, complaints,
or lawsuits for damages (collectively referred to as "CLAIMS") arising out of
(i) any negligent act or omission, or willful wrongdoing by Kos or any of its
Affiliates in the performance of this Agreement, (ii) the failure by Kos or any
of its Affiliates to comply with any FDA or other governmental requirement,
(iii) any assertion of the infringement or misappropriation of any Third Party
patent, copyright, trademark, service xxxx, trade secret, or other intellectual
property as a result of the development, registration, marketing, promotion,
labeling, use, sale or distribution of the Products, (iv) any breach of any
covenant, representation or warranty of Kos or any of its Affiliates under this
Agreement, and (v) the development, registration, manufacture, promotion,
labeling, use, sale or distribution of the Products.
13.4 INDEMNIFICATION BY TPNA. TPNA shall defend, indemnify and hold
harmless Kos and its Affiliates and their officers, directors, shareholders,
employees, agents, representatives, successors and assigns from and against all
Claims arising out of (i) any negligent act or omission, or willful wrongdoing
by TPNA or any of its Affiliates in the performance of this Agreement, (ii) the
infringement or misappropriation by TPNA or any of its Affiliates of any
26
Third Party patent, copyright, trademark, service xxxx, trade secret or other
intellectual property, as a result of TPNA's or such Affiliate's marketing or
promotion of the Products which is not pursuant to the terms of this Agreement
or in conformity with the direction of the Marketing Advisory Committee, (iii)
any breach of any covenant representation or warranty of TPNA under this
Agreement, and (iv) the adulteration of any Product samples, after their
delivery to TPNA or any of its Affiliates and while still under the control of
TPNA or its Affiliates. TPNA shall not be obligated under this Section to the
extent that the Claim was the result of the nonperformance, negligence or
willful misconduct of any employee or agent of Kos or anyone acting on behalf of
Kos, including its Affiliates and their officers, directors, shareholders,
employees, agents, representatives, successors and assigns. For the avoidance of
doubt, if TPNA acts in compliance with the directives of the Marketing Advisory
Committee or as required pursuant to provisions giving Kos the right of
determination, such acts shall not constitute a basis for indemnification by
TPNA of Kos under this Agreement.
13.5 LIMITATIONS ON INDEMNIFICATION. The obligations to indemnify,
defend, and hold harmless set forth in Sections 13.3 and 13.4 shall be
contingent upon the Party seeking indemnification (the "INDEMNITEE"): (i)
notifying the indemnifying Party of a claim, demand or suit within fifteen (15)
Business Days of receipt of same; provided, however, that Indemnitee's failure
or delay in providing such notice shall not relieve the indemnifying Party of
its indemnification obligation except to the extent the indemnifying Party is
prejudiced thereby; (ii) allowing the indemnifying Party and/or its insurers the
right to assume direction and control of the defense of any such claim, demand
or suit; (iii) using its best efforts to cooperate with the indemnifying Party
and/or its insurers in the defense of such claim, demand or suit at the
indemnifying Party's expense; and (iv) agreeing not to settle or compromise any
claim, demand or suit without prior written authorization of the indemnifying
Party. The Indemnitee shall have the right to participate in the defense of any
such claim, demand or suit referred to in this Section utilizing attorneys of
its choice, at its own expense, provided, however, that the indemnifying Party
shall have full authority and control to handle any such claim, demand or suit.
13.6 INSURANCE.
(a) During the Term and continuing for a period of ***** after
the expiration of this Agreement or the earlier termination thereof, Kos shall
obtain and/or maintain, at its sole cost and expense, ***** in amounts which are
reasonable and customary in the U.S. pharmaceutical industry for companies of
comparable size and activities at its place of business. Such ***** shall insure
against all ***** arising out of the manufacture, sale, distribution, marketing
and/or promotion of the Products in the Territory and shall *****.
(b) During the Term, Each Party shall carry insurance in
amounts not less than the following for each type specified or as otherwise
might be required by applicable law or regulation:
*****
*****
*****
27
(c) Each Party shall provide written proof of the existence of
such insurance to the other Party upon request. If requested by TPNA, Kos shall
cooperate with TPNA in purchasing and maintaining, at TPNA's expense, insurance
regarding TPNA's activities under this Agreement.
14. ASSIGNMENT
Neither Party shall assign or transfer its rights or obligations under
this Agreement without the prior written consent of the other Party; provided
however, that either Party may make such an assignment or transfer without such
consent (i) to an Affiliate of such Party, or (ii) in connection with a merger,
or consolidation with, or the sale to a Third Party of, the entire
pharmaceutical business of such Party. In the event of any such permitted
assignment or transfer without such consent, as a condition to such assignment
or transfer, the assigning or transferring Party must confirm to the other Party
in writing that it will remain fully liable for all obligations under this
Agreement as if such assignment or transfer had not occurred.
15. NOTICES
Any notice, request, approval or other document required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given when delivered in person, or sent by overnight courier service,
postage prepaid, or sent by certified or registered mail, return receipt
requested, or by facsimile transmission, to the following addresses of the
Parties and to the attention of the persons identified below (or to such other
address, addresses or persons as may be specified from time to time in a written
notice). Any notices given pursuant to this Agreement shall be deemed to have
been given and delivered upon the earlier of (i) if sent by overnight courier
service, on the date when received at the address set forth below as proven by a
written receipt from the delivery service verifying delivery, or (ii) if sent by
certified or registered mail, three (3) Business Days after mailed by certified
or registered mail postage prepaid and properly addressed, with return receipt
requested, or (iii) if sent by facsimile transmission, on the day when sent by
facsimile as confirmed by automatic transmission report coupled with certified
or registered mail or overnight courier service receipt proving delivery, or
(iv) if delivered in person, on the date of delivery to the address set forth
below as proven by written signature of the recipient.
Kos Pharmaceuticals, Inc:
0000 Xxxxxxxx Xxx Xxxxx
00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx, President and
Chief Executive Officer
28
Copy to:
Raritan Plaza I
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Senior Vice President,
General Counsel
Takeda Pharmaceuticals North America, Inc.:
000 Xxxx Xxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx, President
Copy to:
Facsimile: (000) 000-0000
Attention: General Counsel
Notwithstanding the foregoing, notice of any breach of this Agreement
delivered by a Party under Section 3.2 shall be provided in accordance with the
foregoing provisions to the chief executive officer of the other Party in
addition to the persons identified above.
16. MISCELLANEOUS
16.1 FORCE MAJEURE. If the performance of any part of this Agreement by
either Party, or of any obligation under this Agreement, is prevented,
restricted, interfered with or delayed by reason of any cause beyond the
reasonable control of the Party liable to perform, unless conclusive evidence to
the contrary is provided, the Party so affected shall, upon giving written
notice to the other Party, be excused from such performance to the extent of
such prevention, restriction, interference or delay, provided that the affected
Party shall use its reasonable best efforts to avoid or remove such causes of
nonperformance and shall continue performance with the utmost dispatch whenever
such causes are removed. When such circumstances arise, the Parties shall
discuss what, if any, modification of the terms of this Agreement may be
required in order to arrive at an equitable solution.
16.2 NO PARTNERSHIP OR JOINT VENTURE. It is expressly agreed that Kos
and TPNA shall be independent contractors and that the relationship between the
two Parties shall not constitute a partnership, joint venture or agency. Neither
Kos nor TPNA shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other, without the prior written consent of the other Party to do so.
16.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
29
16.4 GOVERNING LAW. This Agreement shall be deemed to have been made in
the State of New York, without giving effect to its conflicts of laws
principles, and its form, execution, validity, construction and effect shall be
determined in accordance with the laws of the State of New York.
16.5 WAIVER OF BREACH. The failure of either Party at any time or times
to require performance of any provision hereof shall in no manner affect its
rights at a later time to enforce the same. No waiver by either Party of any
condition or term in any one or more instances shall be construed as a further
or continuing waiver of such condition or term or of another condition or term.
16.6 SEVERABILITY. In the event any portion of this Agreement were to
be held illegal, void or ineffective, the remaining portions of this Agreement
shall remain in full force and effect. If any of the terms or provisions of this
Agreement are in conflict with any applicable statute or rule of law, then such
terms or provisions shall be deemed inoperative to the extent that they may
conflict therewith and shall be deemed to be modified to conform with such
statute or rule of law. In the event that the terms and conditions of this
Agreement are materially altered as a result of this Section 16.6, the Parties
shall renegotiate the terms and conditions of this Agreement to resolve any
inequities.
16.7 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Parties relating to the subject matter thereof and shall
supersede all previous writings and understandings. No terms or provisions of
this Agreement shall be varied or modified by any prior or subsequent statement,
conduct or act of either of the Parties, except that the Parties may amend this
Agreement by written instruments specifically referring to and executed in the
same manner as this Agreement.
17. DISPUTE RESOLUTION
17.1 INTERNAL RESOLUTION. Any dispute, controversy or claim arising out
of or relating to this Agreement (collectively referred to as "DISPUTE") shall
be attempted to be settled by the Parties, in good faith, by submitting each
such Dispute to the Steering Committee, which shall meet in person or by
telephone within seven (7) Business Days to review any Dispute. If the Dispute
is not resolved by the Steering Committee within fourteen (14) Business Days
after a meeting to discuss the Dispute, either Party may at any time thereafter
provide the other written notice specifying the terms of such Dispute in
reasonable detail. Within seven (7) Business Days of receipt of such notice, the
Chief Executive Officers of each Party, or a member of management designated by
the respective Chief Executive Officer, shall meet in person (at a mutually
agreed upon time and location) or by telephone for the purpose of resolving such
Dispute. They will discuss the problems and/or negotiate for a period of up to
twenty (20) Business Days in an effort to resolve the Dispute or negotiate an
acceptable interpretation or revision of the applicable portion of this
Agreement mutually agreeable to both Parties, without the necessity of formal
procedures relating thereto.
17.2 ARBITRATION. If the Parties have been unable to resolve a Dispute
through the above-described procedures, the Party initiating such procedures
may, in its discretion, within fourteen (14) Business Days after the
above-described procedures have been exhausted, propose
30
non-binding arbitration in accordance with the CPR Non-Administered Arbitration
Rules in effect on the date of this Agreement and subject to the terms of this
Agreement. Any such non-binding arbitration shall be concluded within ninety
(90) days of the initiation of such proceeding, the location of any such
non-binding arbitration shall be New York, NY, and it shall be conducted by a
sole arbitrator reasonably acceptable to both Parties. The Parties may not
pursue any other legal or equitable rights or remedies relating to any dispute
until the conclusion of the non-arbitration, unless their rights would
irreparably prejudiced by such delay. In the event such non-binding arbitration
is not commenced within an additional fourteen (14) Business Day period, the
Parties may pursue any available legal or equitable rights or remedies.
31
NOW THEREFORE, the Parties, through their authorized officers, have
executed this Agreement as of the date first written above.
KOS PHARMACEUTICALS, INC TAKEDA PHARMACEUTICALS NORTH AMERICA, INC.
By: By:
-------------------------------- --------------------------------------
Name: Name: Xxxx Xxxxx
Title: Title: President
Date: Date:
------------------------------ ------------------------------------
32
