EXHIBIT 10.25
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
MASTER SERVICES AGREEMENT
This Master Services Agreement (this "Master Agreement"), with an Effective Date
of December 17, 2001, will set forth the terms and conditions among Kos
Pharmaceuticals, Inc. 0000 Xxxxxxxx Xxx Xxxxx, Xxxxx 0000, Xxxxx, XX 00000
("Kos"), Innovex LP, 00 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, XX 00000 ("Innovex"),
and PharmaBio Development, Inc., a North Carolina corporation ("PharmaBio").
BACKGROUND:
A. Kos is in the business of developing, manufacturing and/or
distributing pharmaceutical and/or biotechnology products,
including Kos Advicor(TM) and Niaspan(R) products ("Kos
Products"). Innovex is in the business of providing sales,
marketing and alternative commercialization services for the
pharmaceutical, healthcare and biotechnology industries.
B. Kos, Innovex and PharmaBio desire to enter into this Master
Agreement to provide the terms and conditions upon which Kos
may engage Innovex and its corporate Affiliates to provide
contract sales services relating to the Kos Products.
C. The specific contract sales services to be provided by Innovex
are set forth in this Master Agreement and in the Work Order
attached hereto.
D. PharmaBio is an Affiliate of Innovex and desires to fund
certain expenses incurred by Innovex and to receive certain
payments from Kos as set forth in this Master Agreement and in
the Investment and Royalty Agreement dated as of the date
hereof among Kos, Innovex and PharmaBio (the "Investment and
Royalty Agreement").
AGREEMENT:
1.0 DEFINITIONS
1.1 "Affiliate" shall mean with respect to any person, any corporation or
business entity controlled by, controlling, or under common control
with such person. For this purpose, "control" shall mean direct or
indirect beneficial ownership of at least fifty percent (50%) of the
voting stock or income interest in such corporation or other business
entity, or such other relationship as, in fact, constitutes actual
control.
1.2 "FDA" shall mean the U.S. Food and Drug Administration.
1.3 "Fees" shall mean the compensation payable to Innovex by PharmaBio in
return for Services. Fees shall not include Pass-Through Expenses.
1.4 "Pass-Through Expenses" shall mean the reasonable and necessary
out-of-pocket costs and expenses actually incurred by Innovex in
providing Services and in accordance with the Work Order.
1.5 "Project" shall mean the complete task or set of tasks described in the
Work Order.
1.6 "Services" shall mean the responsibilities, obligations and activities
which are to be performed by Innovex, as they are described in this
Master Agreement and in the Work Order.
1.7 "Term" and "Project Term" shall have the meanings described in Section
11.1.
1.8 "Work Order" shall mean Sales Force Work Order #8775 attached hereto as
Exhibit A.
2.0 SCOPE OF THE AGREEMENT; SERVICES TO BE PROVIDED; WORK ORDER; PROJECT
TEAMS.
2.1 SCOPE OF AGREEMENT. Innovex agrees to provide the contract sales
services as set forth in this Master Agreement and the Work Order. This
Master Agreement covers the provision of professional sales and
marketing services by Innovex, including, but not limited to,
recruitment and hiring of full-time sales personnel, providing
full-time sales personnel, providing promotional education programs and
other related services, as set forth in this Master Agreement and the
Work Order.
2.2 WORK ORDER. The specific details and tasks of the Project are set forth
in this Master Agreement and the Work Order. The Work Order shall be
subject to all of the terms and conditions of this Master Agreement. To
the extent any terms or provisions of the Work Order conflict with the
terms and provisions of this Master Agreement, the terms and provisions
of this Master Agreement shall control, unless the Work Order expressly
and specifically states an intent to supersede the Master Agreement on
a specific matter. A change in a Work Order shall be evidenced by an
amendment to the Work Order duly executed by Kos, Innovex, and
PharmaBio in a form acceptable to all such parties.
3.0 PAYMENT OF FEES AND PASS-THROUGH EXPENSES.
3.1 PharmaBio shall pay Innovex the Fees described in the Work Order by
paying the invoices submitted by Innovex, which payment shall be made
by PharmaBio through an inter-company transfer directly to Innovex.
Notwithstanding the foregoing, in no event shall Innovex incur Fees in
excess of the Maximum Investment set forth in the Investment and
Royalty Agreement. Kos shall pay Innovex the Pass-Through Expenses
incurred by Innovex under the terms of this Master Agreement and the
Work Order.
3.2 Innovex agrees that it shall look only to PharmaBio for the payment of
the Fees and that Kos shall have no liability for any Fees except as
specifically provided in the Work Order (the "Excess Fees"). Innovex
agrees that it shall not be relieved from any obligation to Kos under
this Master Agreement in the event of any dispute with or breach by
PharmaBio.
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3.3 Innovex shall invoice Kos monthly for Pass-Through Expenses and Excess
Fees due. Each invoice shall be accompanied by a detailed expense
report and supporting documentation. Kos shall make payment within 15
days after the receipt of each monthly itemized invoice, after which
time interest shall be due and payable on the unpaid balance at the
rate of 1.5% per month. If any portion of an invoice is disputed, Kos
shall pay the undisputed amounts within the aforementioned 15 days, and
the parties shall use good faith efforts to reconcile the disputed
amount for payment as soon as practicable and Kos shall have no
liability for any such fees or expenses. Innovex agrees that it shall
not be relieved from any obligation to Kos under this Master Agreement
in the event of any dispute with or breach by PharmaBio.
Notwithstanding the foregoing, Innovex will use its best efforts to
audit expense reports submitted by its Sales Force (prior to submitting
monthly expenses to Kos) to ensure that the expense detailed in such
expense reports were incurred in support of the services as determined
by the Steering Committee, as defined in Section 5.6.
3.4 If the period of non-payment of an undisputed amount exceeds 15 days,
Innovex may, at its sole discretion and without prejudice to any other
rights or remedies, give Kos a fifteen (15) day written notice of
intent to suspend Services in connection with the Project, and if the
non-payment continues after such fifteen (15) day period, Innovex may
(i) suspend the Services on that Project or (ii) exercise its right to
give notice of a default in accordance with Section 11.2.
4.0 CONFIDENTIALITY AND OWNERSHIP OF INFORMATION.
4.1 Each of Kos, Innovex and PharmaBio acknowledges that, in the course of
performing its obligations hereunder, it may receive information from
another party which is proprietary to the disclosing party and which
the disclosing party wishes to protect from public disclosure
("Confidential Information"). Innovex, PharmaBio and Kos each agrees to
retain in confidence, during the Term of this Master Agreement and the
Work Order, and any subsequent renewals thereof, and thereafter for a
period of seven (7) years, all Confidential Information disclosed to it
by or on behalf of another party, and that it will not, without the
written consent of such other party, use Confidential Information for
any purpose other than the purposes indicated herein. These
restrictions shall not apply to Confidential Information which: (i) is
or becomes public knowledge (through no fault of the receiving party);
(ii) is made lawfully available to the receiving party by an
independent third party not bound by any confidentiality obligation;
(iii) is already in the receiving party's possession at the time of
receipt from the disclosing party (and such prior possession can be
properly demonstrated by the receiving party); (iv) is independently
developed by the receiving party and/or Affiliates by persons who have
not had any contact with the Confidential Information (and such
independent development can be properly demonstrated by the receiving
party); or (v) is required by law, regulation, rule, act or order of
any governmental authority or agency to be disclosed by the receiving
party, provided, however, if reasonably possible, such receiving party
gives the disclosing party sufficient advance written notice to permit
it to seek a protective order or other similar order with respect to
such Confidential Information and, thereafter, the receiving party
discloses only the minimum Confidential Information required to be
disclosed in order to comply.
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4.2 Innovex, PharmaBio and Kos shall limit disclosure of the other party's
Confidential Information to only those of their respective officers,
representatives, agents and employees (collectively "Agents") who are
directly concerned with the performance of this Master Agreement and
have a legitimate need to know such Confidential Information. Upon
receipt of notice of termination by Kos, each of PharmaBio and Innovex
shall return all Kos Confidential Information to Kos within thirty (30)
days of receipt of such notification.
4.3 All Kos patents, trade secrets, copyrights, trade names, trademarks,
service marks, proprietary materials or intellectual property and all
improvements to any of the foregoing (collectively "Kos Property") used
in connection with the Services provided pursuant to this Master
Agreement or the Work Order shall remain the sole and exclusive
property of Kos, and Innovex's rights to use such Kos Property shall be
limited to those permitted by this Master Agreement or the Work Order.
Kos and Innovex agree that any Kos Property or improvements thereto
which are used, improved, modified or developed by Kos under or during
the term of this Master Agreement or the Work Order are the sole and
exclusive property of Kos.
4.4 Kos acknowledges that Innovex possesses certain inventions, processes,
know-how, trade secrets, improvements, other intellectual properties
and other assets, including but not limited to analytical methods,
procedures and techniques, computer technical expertise and software,
and business practices, including, but not limited to the Innovex
Territory Management System (ITMS), which have been independently
developed by Innovex (collectively "Innovex Property"). Kos and Innovex
agree that any Innovex Property or improvements thereto which are used,
improved, modified or developed by Innovex under or during the term of
this Master Agreement or the Work Order are the sole and exclusive
property of Innovex.
4.5 No public announcement or other disclosure to any third party
concerning the existence of or terms of this Master Agreement, the
Investment and Royalty Agreement, the Work Order, and any other
document or agreement executed in connection with this transaction (the
"Transaction Documents") shall be made, either directly or indirectly,
by any party hereto, except as may be legally required or as may be
required for financial reporting purposes, without first obtaining the
written approval of the other party and agreement upon the nature and
text of such announcement or disclosure. Each party agrees that it
shall cooperate fully with the other with respect to all disclosures
regarding the Transaction Documents to the Securities Exchange
Commission and any other governmental or regulatory agencies or any
third party, including requests for confidential treatment of
proprietary information of any party included in any such disclosure.
4.6 Kos 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,
marks, designs, devices, improvements, manufacturing information and
other technology, whether or not patentable, trademarkable or
copyrightable, and any patent applications, patents, trademarks or
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copyrights based thereon ("Inventions") that are made, discovered,
conceived, reduced to practice or generated by Kos (or its employees or
representatives) or by Innovex's employees or Agents that in any way
relate to the Kos Products or the active ingredients (niacin and
lovastatin) in the Kos Products or to the marketing or sales of such
Kos Products.
5.0 INDEPENDENT CONTRACTOR RELATIONSHIP.
5.1 For the purposes of this Master Agreement and the Work Order, the
parties hereto are independent contractors and nothing contained in
this Master Agreement or the Work Order shall be construed to place
them in the relationship of partners, principal and agent, employer and
employee or joint venturers. Neither party shall have the power or
right to bind or obligate the other party, nor shall either party hold
itself out as having such authority.
5.2 No provision of this Master Agreement or the Work Order shall be deemed
to create or imply any contract of employment between Kos and any
employee of Innovex. All persons performing Services shall be employees
of Innovex, or subcontractors engaged by Innovex with prior written
consent of Kos, and shall not be entitled to any benefits applicable to
employees of Kos.
5.3 Innovex will, among other things, (i) maintain all necessary personnel
and payroll records for Innovex employees; (ii) compute wages and
withhold applicable Federal, State and local taxes and Federal FICA
payments for Innovex employees; (iii) remit Innovex employee
withholdings to the proper governmental authorities and make employer
contributions for Federal FICA and Federal and State unemployment
insurance payments; (iv) pay net wages and fringe benefits, if any,
directly to Innovex employees; and (v) provide for employer's liability
and Workers' Compensation insurance coverage.
5.4 Innovex shall be responsible for management of all employer obligations
in connection with Innovex employees who perform the Services. Innovex
employees shall remain exclusively under the direct authority and
control of Innovex. Kos may be involved in providing training,
direction or equipment to an Innovex employee only in the manner and to
the extent specifically described in the Work Order. The employer
obligations of Innovex shall include, without limitation: (i) human
resource issues, including establishment of employee policies, and
administration of health and benefits plans, 401K plan, and other
employee benefit plans; (ii) work performance and work behavior issues,
including probationary period, periodic and annual appraisals, employee
discipline and termination; (iii) administration of systems for
time-keeping, payroll and employee expense reimbursement; (iv) day to
day management of employment issues in connection with performance of
the Services.
5.5 Innovex agrees that it controls the work site and the scheduling of its
employees. Innovex will not violate any applicable law pertaining to
the payments of wages to its employees. Innovex is responsible for and
hereby agrees to comply with the following: (i) all rules and
regulations governing the reporting, collection and payment of federal
and state payroll taxes on wages paid to Innovex's employees,
including, but not limited to (a) federal income tax withholding
provisions of the Internal Revenue Code; (b) state and/or local income
tax withholding provisions, if applicable; (c) Federal Insurance
Contribution Act (FICA); (d) Federal Unemployment Tax Act (FUTA) and
(e) applicable state unemployment tax provisions (SUTA); (ii)
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applicable workers' compensation laws including, but not limited to:
(a) procuring workers' compensation insurance; (b) completing and
filing all required reports; and (c) administering, managing and
otherwise processing claims and related procedures; (iii) Internal
Revenue Code Section 4980B (COBRA); (iv) the Consumer Credit Protection
Act, Title III; and (v) all rules and regulations governing
administration, procurement and payment of all other employee benefits
specified in the Work Order or covered by this Master Agreement.
5.6 STEERING COMMITTEE.
a. Issues may arise under the terms of this Agreement or between
the parties while operating under this Master Agreement and
the Work Order which are appropriate for consultation between
the parties, including the establishment of work rules for the
Sales Force, the revising of the performance standards for the
Sales Force set forth in Attachment B to the Work Order, and
similar matters. The parties shall establish a Steering
Committee, which shall be directed and chaired by Kos and
consist of up to three (3) members from Kos and up to three
(3) members collectively from Innovex and PharmaBio, including
the national sales manager of each of Kos and Innovex (the
"Steering Committee"). The chairperson's duties shall include
site selection, logistics, agenda and facilitations; provided
however, that a Steering Committee member may submit agenda
items to the chairperson and such items shall be included in
the next regular meeting of the Steering Committee. Each
member of the Steering Committee shall be an employee or
member of the Board of Directors of the party that appointed
such member. Initial appointments shall be made within
fourteen (14) days of the date of this Master Agreement. A
member of the Steering Committee may be removed at any time,
with or without cause, by the party that appointed such
member.
b. The Steering Committee shall meet each quarter, or otherwise
at the call of the chairperson to review, coordinate, and
discuss issues regarding the Sales Force. In addition, the
Steering Committee shall review and resolve issues pertaining
to this Master Agreement. Unless this Master Agreement or the
Work Order gives a specific party the right to make decisions
with regard to any particular subject before the Steering
Committee, decisions of the Steering Committee shall be made
by consensus. In the absence of a consensus on any material
matter, the parties shall resolve such dispute in accordance
with the dispute resolution process set forth in Section 11.0
of the Investment and Royalty Agreement.
6.0 REGULATORY COMPLIANCE.
6.1 In carrying out their responsibilities under this Master Agreement and
the Work Order, Innovex and Kos agree to comply, to the extent
applicable, with all laws, rules and regulations, including, but not
limited to the Federal Equal Employment Opportunity Act, Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act,
the Americans with Disabilities Act, the Fair Labor Standards Act, the
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Immigration Reform and Control Act of 1986, the Food, Drug and Cosmetic
Act, Section 1128B(b) of the Social Security Act (42 U.S.C.
ss.1320a-7b(b)), and the Prescription Drug Marketing Act.
6.2 If Innovex or its employees become aware of adverse drug experience
reports involving the use of any Kos Product, while performing any
Services in connection with the Kos Product, they shall immediately
notify Kos in accordance with Kos Standard Operating Procedures (the
"Kos SOPs") in place from time to time. Kos shall deliver to Innovex a
written copy of the Kos SOPs within fifteen (15) days of executing this
Master Agreement and thereafter promptly upon any change in such SOPs.
6.3 Kos shall be solely responsible for responding to any government or
regulatory agency concerning use or marketing of Kos Products, except
where (i) such responsibility is expressly transferred to Innovex in
the Work Order; or (ii) to the extent any notice or reporting
requirement is by law made directly applicable to Innovex. Innovex
shall promptly notify Kos of any information Innovex receives regarding
any threatened or pending action by a government or regulatory agency
that may affect the Kos Products. Innovex shall, at the request of Kos,
cooperate with Kos in order to respond, or in formulating a procedure
for taking appropriate action. In no event shall Innovex respond to any
agency without the prior consent of Kos, unless compelled to do so by
law.
7.0 REPORTS AND PROJECT ADMINISTRATION
7.1 Innovex will manage and administer the Project in accordance with the
specifications and milestones contained in the Work Order. Innovex
shall provide Kos a periodic Project report, in the frequency and with
content as more particularly described in the Work Order. The Project
report shall generally include: (i) headcount, turnover, status of
recruitment; (ii) Project status and progress toward achieving
objectives or milestones; (iii) financial accountability, and tracking
expenses against budget.
8.0 RETURN OF KOS MATERIALS.
8.1 Within thirty (30) days after the completion of Services by Innovex, or
upon termination of the Master Agreement and the Work Order,
Confidential Information, Kos Property and other data owned by Kos,
regardless of the method of storage or retrieval, shall at Kos' request
either be delivered to Kos in such form as is then currently in the
possession of Innovex, or disposed of, at the direction and written
request of Kos, unless such materials are otherwise required to be
stored or maintained by Innovex as a matter of law or regulation.
Innovex reserves the right to retain, at its own expense and subject to
the confidentiality provisions herein, one copy of all materials
provided in connection with performance of the Services, to be used for
the sole purpose of satisfying regulatory requirements or to resolving
disputes regarding the Services.
9.0 INDEMNIFICATION AND LIABILITY LIMITS.
9.1 Innovex shall indemnify, defend and hold harmless Kos, its Affiliates
and its and their respective directors, officers, employees and agents
from and against any and all losses, claims, actions, damages,
liabilities, penalties, costs and expenses (including reasonable
attorneys' fees and court costs) (collectively, "Losses"), resulting
from any (i) breach by Innovex or its employees of its obligations
hereunder; (ii) willful misconduct or negligent acts or omissions of
Innovex or its employees; (iii) violation by Innovex or its employees
of any municipal, county, state or federal laws, rules or regulations
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applicable to the performance of Innovex's obligations under this
Master Agreement or the Work Order (iv) actions or incidents by Innovex
or any of its employees of criminal or dishonest activity, those
actions or incidents covered by all liability or insurance policies
required to be maintained by Innovex under this Agreement, those costs
attendant to the administration of any collective bargaining agreement,
and any liabilities or claims against Kos arising out of Innovex's
non-payment or payment to or participation in a labor organization's
health and welfare retirement or other benefit fund, including the
cessation of payment thereto or withdrawal from participation therein,
with respect to the Sales Force; (v) violations by Innovex of
employment-related matters with respect to Innovex's employees,
including matters arising under local, state and/or federal
right-to-know laws, environmental laws, NLRB, OSHA, EEOC, ADA
(including without limitation those relating to employment, public
access and public accommodation), WARN, FMLA, ERISA, all laws governing
wages and hours (including without limitation: prevailing wage rate;
exempt and non exempt status; child labor; and minimum wage and
overtime matters), all laws governing race, sex, sexual harassment,
retaliation, religion, veteran status, national origin, color, age,
disability, and marital status, disclosed and undisclosed benefit
plans, all other labor laws, in each case except to the extent any such
Losses are determined to have resulted from the negligence or willful
misconduct of Kos or its employees.
9.2 Kos shall indemnify, defend and hold harmless Innovex, its Affiliates
and its and their respective directors, officers, employees and agents
from and against any and all Losses resulting from (i) the manufacture,
storage, packaging, production, transportation, distribution, sale or
other disposition of the Products by Kos or its agents; (ii) breach by
Kos or its employees of its obligations hereunder; (iii) willful
misconduct or negligent acts or omissions of Kos or its employees; and
(iv) violation by Kos or its employees of any municipal, county, state
or federal laws, rules or regulations applicable to the performance of
Kos's obligations under this Master Agreement or the Work Order, (v)
actions or incidents by Kos or any of its employees of criminal or
dishonest activity, those actions or incidents covered by all liability
or insurance policies required to be maintained by Kos under this
Agreement, those costs attendant to the administration of any
collective bargaining agreement, and any liabilities or claims against
Innovex arising out of Kos' non-payment or payment to or participation
in a labor organization's health and welfare retirement or other
benefit fund, including the cessation of payment thereto or withdrawal
from participation therein, with respect to Kos employees; (v)
violations by Kos of employment-related matters with respect to Kos'
employees, including matters arising under local, state and/or federal
right-to-know laws, environmental laws, NLRB, OSHA, EEOC, ADA
(including without limitation those relating to employment, public
access and public accommodation), WARN, FMLA, ERISA, all laws governing
wages and hours (including without limitation: prevailing wage rate;
exempt and non exempt status; child labor; and minimum wage and
overtime matters), all laws governing race, sex, sexual harassment,
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retaliation, religion, veteran status, national origin, color, age,
disability, and marital status, disclosed and undisclosed benefit
plans, all other labor laws, in each case except to the extent any such
Losses are determined to have resulted from the negligence or willful
misconduct of Innovex or its employees.
9.3 The party seeking indemnification hereunder (the "Indemnified Party")
and its employees shall: (a) give the party obligated to indemnify (the
"Indemnifying Party") prompt written notice of any such claim or
lawsuit (including a copy thereof); (b) fully cooperate with
Indemnifying Party and its legal representatives in the investigation
and defense of any matter the subject of indemnification; and (c) shall
not unreasonably withhold its approval of the settlement of any such
claim, liability, or action by Indemnifying Party covered by this
indemnification provision; provided, however, that Indemnified Party's
failure to comply with its obligations pursuant to Section 9.3 shall
not constitute a breach of this Master Agreement nor relieve the
Indemnifying Party of its indemnification obligations pursuant to
Section 9.0, except to the extent, if any, that Indemnifying Party's
defense of the affected claim, action or proceeding actually was
materially impaired thereby.
9.4 No party, nor their Affiliates, nor any of their or their Affiliate's
directors, officers, employees, subcontractors or agents shall have any
liability of any type (including, but not limited to, contract,
negligence and tort liability), for any loss of profits, opportunity or
goodwill, or any type of special, incidental, indirect or consequential
damage or loss, in connection with or arising out of this Master
Agreement, any Work Order, or the Services performed hereunder.
9.5 Innovex shall not be liable to Kos for claims or losses arising out of
the statements or representations of Innovex employees with respect to
Kos Products to the extent the statements or representations conform to
the written or printed statements or representations made to Innovex
and Innovex employees by Kos with respect to the Kos Products.
10.0 INSURANCE.
10.1 Innovex and Kos shall each, at its own cost and expense, obtain and
maintain in full force and effect, the following insurance during the
Term (and any subsequent renewals thereof): (i) worker's compensation
insurance in accordance with the statutory requirements of each state
in which the Services are to be performed; (ii) employer's liability
insurance with a minimum limit of ***; (iii) comprehensive general
liability insurance with a minimum limit of ***, combined single limit
per occurrence; (iv) comprehensive auto liability insurance, covering
bodily injury and property damage, for owned, hired or non-owned
automobiles with a minimum limit of ***, combined single limit per
occurrence; and (v) products liability insurance, with a minimum limit
of ***, per occurrence (not required for Innovex). Each party shall
provide the other party an original signed certificate of insurance
evidencing all coverage herein required, within thirty (30) days after
the effective date of this Master Agreement. The certificate must
provide that thirty (30) days prior written notice of cancellation or
material change in insurance coverage will be provided.
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11.0 TERM AND TERMINATION.
11.1 This Master Agreement shall commence on the date of execution and shall
continue until terminated as hereinafter provided (the "Term"). The
Work Order includes a statement of the Project start date and the
Project end date (the "Project Term").
11.2 Either Kos or Innovex may terminate this Master Agreement and the Work
Order by written notice at any time if the other party defaults in the
performance of its material obligations under the Master Agreement or
the Work Order. In the event of such default, the party declaring the
default shall provide the defaulting party with written notice setting
forth the nature of the default, and the defaulting party shall have
thirty (30) days to cure the default. If the defaulting party fails to
cure the default within the foregoing time periods, the other party may
terminate the Master Agreement and the Work Order by written notice to
the defaulting party, which notice shall be effective upon receipt.
11.3 Either party may terminate this Agreement by written notice to the
other party, effective upon receipt with no right to cure the default,
if the other party files a petition for bankruptcy, reorganization or
arrangement under any state statute, or makes an assignment for the
benefit of creditors or takes advantage of any insolvency statute or
similar statute, or if a receiver or trustee is appointed for the
property and assets of the party and the receivership proceedings are
not dismissed within sixty (60) days of such appointment.
11.4 In the event this Master Agreement or the Work Order is terminated, Kos
shall (a) pay to Innovex all Excess Fees which are due and owing to
Innovex because of any completed performance of Innovex's obligations
prior to the effective date of termination; and (b) pay all
Pass-Through Expenses actually incurred by Innovex prior to the
effective date of termination. All other amounts owed to Innovex
hereunder shall be the sole responsibility of PharmaBio.
11.5 Termination of this Master Agreement and the Work Order for whatever
reason shall not affect the accrued rights of either Innovex or Kos
arising under this Master Agreement or the Work Order, and all
provisions which expressly or by implication survive the termination or
expiration of the Master Agreement or the Work Order shall remain in
full force and effect.
11.6 The parties understand and agree that Kos and PharmaBio each have
certain rights to terminate this Master Agreement under the Investment
and Royalty Agreement.
12.0 RELATIONSHIP WITH AFFILIATES.
12.1 Kos agrees that Innovex may utilize the Services of its corporate
Affiliates to fulfill Innovex's obligations under this Master Agreement
and the Work Order. In such event, (i) Innovex shall cause such Innovex
Affiliate to acknowledge and be bound by all the terms and conditions
of this Master Agreement and the Work Order, and (ii) Innovex shall
remain responsible and obligated under this Master Agreement and the
Work Order, as if Innovex was directly providing the Services provided
by such Innovex Affiliate.
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12.2 Kos and Innovex acknowledge that certain Affiliates of Kos may utilize
the services of Innovex (and its Affiliates) under this Master
Agreement and under the Work Order. In such event, (i) Kos shall cause
such Kos Affiliate to acknowledge and be bound by all the terms and
conditions of this Master Agreement and the Work Order, and (ii) Kos
shall remain responsible and obligated under this Master Agreement and
the Work Order, as if Kos was directly receiving the Services provided
to such Kos Affiliate.
13.0 COOPERATION.
13.1 All data and information in Kos's possession or control necessary for
Innovex to perform the Services will be delivered by Kos to Innovex.
Innovex shall not be liable to Kos nor be deemed to have breached this
Master Agreement or the Work Order as a result of errors, delays or
other consequences directly arising from Kos's failure to provide
documents, materials or information or to otherwise cooperate with
Innovex in order for Innovex to timely and properly perform Innovex's
obligations.
14.0 FORCE MAJEURE.
14.1 If the performance or observance of this Master Agreement or any
obligation of this Master Agreement or the Work Order is prevented or
delayed by reason of an act of God, civil commotion, storm, fire,
riots, strikes, legal moratorium, war or revolution, the party so
affected shall, upon prompt notice of such cause being given to the
other party, be excused from such performance or observance to the
extent of such prevention or during the period of such delay, provided
that the party so affected shall use its best efforts to avoid or
remove the cause(s) of non-performance and observance with utmost
dispatch.
15.0 REVIEW OF WORK; AUDIT.
15.1 During the term of this Master Agreement, Innovex will permit Kos's
representative(s) (unless such representatives are competitors of
Innovex), at reasonable times and in a reasonable manner, and at Kos's
expense, to (i) examine the work performed hereunder to determine that
the Services are being conducted in accordance with the agreed terms,
or (ii) audit the financial records related to Innovex's performance of
the Services.
16.0 NOTICES.
16.1 Any notice required or permitted to be given by either party shall be
in writing. All notices shall be to the parties and addresses listed
below, and shall be sufficiently given (i) when received, if delivered
personally or sent by facsimile transmission, or (ii) one business day
after the date mailed or sent by an internationally recognized
overnight delivery service.
If to Innovex: Innovex LP
c/o President, Innovex America Holding Company
00 Xxxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
Attention: President
Fax: 000-000-0000
11
With a copy to: General Counsel
Innovex America Holding Company
00 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to PharmaBio: PharmaBio Development, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: President
Fax: 000-000-0000
With a copy to: General Counsel
PharmaBio Development, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
If to Kos: Kos Pharmaceuticals, Inc.
0000 Xxxxxxxx Xxx Xxxxx
00xx Xxxxx
Xxxxx, XX 00000
Fax: (000) 000-0000
Attn: President
Secretary
Vice President, Commercial Operations
With a copy to: Holland & Knight LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fax: 000-000-0000
17.0 ASSIGNMENT.
17.1 Except for Affiliates, as stated above in Section 12.0, neither party
may assign any of its rights or obligations under this Master Agreement
or any Work Order to any third party without the written consent of the
other party, which consent shall not be unreasonably withheld, or with
respect to Kos, in connection with the sale or transfer of all of the
business to which this Master Agreement relates.
18.0 ARBITRATION.
a. Resolution of disputes concerning any aspect of the Services,
this Master Agreement or the Work Order, excluding
termination, shall be accomplished by good faith negotiations
between Kos and Innovex, within thirty (30) days after notice
12
and after complying with the provisions of Section 11.2 of the
Investment and Royalty Agreement. If necessary, thereafter,
resolution of such disputes shall be accomplished, at written
request of either party to the other party within 5 days
following the end of such 30 day period, by binding
arbitration, which shall not interfere with the timely
rendering of Services. The arbitration panel will be composed
of three arbitrators, one of whom will be chosen by Kos, one
by Quintiles Transnational Corporation ("Quintiles"), and the
third by the two so chosen. If both or either of Kos or
Quintiles fails to choose an arbitrator or arbitrators within
fourteen (14) days after receiving notice of commencement of
arbitration, or if the two arbitrators fail to choose a third
arbitrator within fourteen (14) days after their appointment,
the American Arbitration Association shall, upon the request
of both or either of the parties to the arbitration, appoint
the arbitrator or arbitrators required to complete the panel.
The arbitrators shall have reasonable experience in the matter
under dispute. The decision of the arbitrators shall be final
and binding on the parties, and specific performance giving
effect to the decision of the arbitrators may be ordered by
any court of competent jurisdiction. Nothing contained herein
shall operate to prevent either party from asserting
counterclaim(s) in any arbitration commenced in accordance
with this agreement.
b. The arbitration shall be filed with the office of the American
Arbitration Association ("AAA") located in New York, New York
or such other AAA office as the parties may agree upon
(without any obligation to so agree). The arbitration shall be
conducted pursuant to the Commercial Arbitration Rules of AAA
as in effect at the time of the arbitration hearing, such
arbitration to be completed in a sixty (60) day period. In
addition, the following rules and procedures shall apply to
the arbitration.
c. The arbitrators shall have the sole authority to decide
whether or not any Dispute between the parties is arbitrable
and whether the party presenting the issues to be arbitrated
has satisfied the conditions precedent to such party's right
to commence arbitration.
d. The decision of the arbitrators, which shall be in writing and
state the findings the facts and conclusions of law upon which
the decision is based, shall be final and binding upon the
parties, who shall forthwith comply after receipt thereof.
Judgment upon the award rendered by the arbitrator may be
entered by any competent court. Each party submits itself to
the jurisdiction of any such court, but only for the entry and
enforcement to judgment with respect to the decision of the
arbitrators hereunder. The arbitrators shall have the power to
grant all legal and equitable remedies (including, without
limitation, specific performance) and award compensatory
damages provided by applicable law, but shall not have the
power or authority to award punitive damages. No party shall
seek punitive damages in relation to any matter under, arising
out of, or in connection with or relating to this Agreement in
any other forum.
e. The parties shall bear their own costs in preparing for and
participating in the resolution of any Dispute and the costs
of the arbitrator(s) shall be equally divided between the
13
parties; provided, however, that each party shall bear the
costs incurred in connection with any Dispute brought by such
party that the arbitrators determine to have been brought in
bad faith.
19.0 ADDITIONAL WARRANTIES AND REPRESENTATIONS.
19.1 Innovex and Kos warrant and represent to the other that they have the
full right and authority to enter into this Master Agreement and that
there is no impediment that would inhibit their ability to perform
their respective obligations under this Master Agreement or the Work
Order.
19.2 Innovex and Kos agree to perform their obligations hereunder in a
timely, professional and competent manner.
19.3 Kos warrants and represents that it possesses good title to, or the
right to use, any and all trademarks of the Kos Products, free and
clear of any claims or encumbrances that would impede the performance
by either party under the terms of this Agreement or the Work Order. In
addition, Kos owns or controls the patents or appropriate licenses in
connection with all Kos Products to be involved in the Services, and
has no knowledge of the existence of any claim or adverse rights which
would restrict or prevent Kos or Innovex from performing the Services
pursuant to this Master Agreement or the Work Order.
19.4 Innovex represents and warrants that there are no collective bargaining
agreements binding upon Innovex affecting its employees who are or may
provides services under this Master Agreement or the Work Order, and
that there are no pending or threatened organizing efforts affecting
the same.
20.0 GENERAL PROVISIONS
20.1 This Master Agreement shall be construed, governed, interpreted, and
applied in accordance with the laws of the State of New York, without
giving effect to the principles of conflict of laws.
20.2 The rights and obligations of Kos and Innovex under this Master
Agreement and the Work Order, which by intent or meaning have validity
beyond such termination (including, but not limited to, rights with
respect to confidentiality, mutual indemnification and liability
limitations) shall survive the termination of this Master Agreement and
the Work Order.
20.3 This Master Agreement contains the entire understandings of the parties
with respect to the subject matter herein, and cancels all previous
agreements (oral and written), negotiations and discussions, dealing
with the same subject matter. The parties, from time to time during the
term of this Master Agreement, may modify any of the provisions hereof
only by an instrument in writing duly executed by Kos and Innovex.
20.4 References to any Schedule, Appendix, Attachment or Exhibit attached to
this Master Agreement or the Work Order shall be deemed to incorporate
the entire contents of the Schedule, Appendix, Attachment or Exhibit by
14
reference, as if it were fully set forth in the Master Agreement or the
Work Order to which it is attached.
20.5 No failure or delay on the part of a party in either exercising or
enforcing any right under this Master Agreement or the Work Order will
operate as a waiver of, or impair, any such right. No single or partial
exercise or enforcement of any such right will preclude any other or
further exercise or enforcement thereof or the exercise or enforcement
of any other right. No waiver of any such right will have effect unless
given in a signed writing. No waiver of any such right will be deemed a
waiver of any other right.
20.6 If any part or parts of this Master Agreement or the Work Order are
held to be illegal, void or ineffective, the remaining portions of the
Master Agreement or the Work Order shall remain in full force and
effect. If any of the terms or provisions are in conflict with any
applicable statute or rule of law, then such term(s) or provision(s)
shall be deemed inoperative to the extent that they may conflict
therewith, and shall be deemed to be modified or conformed with such
statute or rule of law. In the event of any ambiguity respecting any
term or terms hereof, the parties agree to construe and interpret such
ambiguity in good faith in such a way as is appropriate to ensure its
enforceability and viability. No party shall assert against the other
that the compensation arrangement provided in this Agreement or the
Work Order is ground for voiding the Agreement or the Work Order, or
rendering the same unenforceable.
20.7 The headings contained in this Master Agreement and the Work Order are
used only as a matter of convenience, and in no way define, limit,
construe or describe the scope or intent of any section of this Master
Agreement or the Work Order.
20.8 This Agreement is intended solely for the mutual benefit of the parties
hereto and is not intended to create any rights of any kind in a third
party.
IN WITNESS WHEREOF, this Master Agreement has been executed by the parties
hereto through their duly authorized officers on the date(s) set forth below.
INNOVEX LP KOS PHARMACEUTICALS, INC.
by: Innovex America Holding
Company, its General Partner
By:/s/ XXXXX X. OVERS By:/s/ XXXXXX XXXXX
--------------------------------- ----------------------------
Name: Xxxxx X. Overs Name: Xxxxxx Xxxxx
Title: Chief Financial Officer Title: President and COO
PHARMABIO DEVELOPMENT, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
15
(ATTACHMENT A)
SALES FORCE WORK ORDER # 8775
EFFECTIVE DATE OF WORK ORDER: DECEMBER 17, 2001
This Sales Force Work Order is entered into between Kos Pharmaceuticals, Inc.
("Kos"), PharmaBio Development, Inc. ("PharmaBio") and Innovex LP ("Innovex"),
pursuant to the Master Services Agreement, having an Effective Date of December
17, 2001, among Kos, Innovex and PharmaBio, and is subject to all the terms and
conditions set forth therein, except as may be otherwise expressly provided
herein.
A. BRIEF DESCRIPTION OF SALES FORCE PROJECT:
Innovex agrees to provide a sales force consisting of 150 Sales Representatives,
8 Field Managers, and 1 national sales manager in connection with the promotion
of Niaspan(R) and Advicor(TM). Innovex will further provide the services of 7
additional Field Managers as set forth herein
B. PROJECT TEAMS:
KOS CONTACT PERSON: XXXX XXXXXXX, NATIONAL SALES MANAGER
ADDRESS: 0000 XXXXXXXX XXX XXXXX 00XX XXXXX
XXXXX, XX 00000
PHONE: 000-000-0000
FAX: 000-000-0000
INNOVEX NAT'L SALES MANAGER: XXX XXXXXXX
ADDRESS: 00 Xxxxxxxxx Xxxx.
XXXXXXXXXX, XX 00000
PHONE: 000-000-0000
FAX: 000-000-0000
Routine correspondence relevant to the operation of the sales force should be
sent to the above-named contact persons. All notices or similar communications
in regard to the terms or a change of terms of this Work Order are to be sent to
the parties named in the Master Services Agreement - Section 16.0 Notices.
C. PROJECT TERM AND KEY DATES:
-------------------------------------------------- ---------------------
Project Start Date December 17, 2001
-------------------------------------------------- ---------------------
Field Manager Start Date January 2, 2002
-------------------------------------------------- ---------------------
Sales Representative Training Start Date January 18, 2002
-------------------------------------------------- ---------------------
Last Day in Field December 31, 2003
-------------------------------------------------- ---------------------
Project End Date December 31, 2003
-------------------------------------------------- ---------------------
"Project Term" shall mean the period of time beginning on the Project Start Date
and ending on the Project End Date.
D. DEFINITIONS
1. "Call(s)" shall mean a visit(s) by a Sales Representative to the office
of a Prescriber during which the Sales Representative performs at least
one Detail.
2. "Day Worked" shall mean a day during which a Sales Representative
details Prescribers, or attends scheduled company training and/or
specifically designated home study and shall consist of not less than 8
consecutive hours of business activity. A "Day Worked" by a Field
Manager shall mean a day during which the Field Manager performs duties
and responsibilities described in the Work Order and shall consist of
not less than 8 consecutive hours of business activity. Days Worked
shall not include days on leave, holidays, sick days or vacations.
3. "Detail" shall mean an interactive face-to-face contact by a Sales
Representative with a Prescriber or the Prescriber's legally empowered
designee, during which a promotional message involving the Product is
given in accordance with the Promotional Program. When used as a verb,
"detail," "details" and "detailed" shall mean to engage in a Detail as
defined herein.
4. "Prescriber" shall mean physicians and other health care professionals
legally authorized to write prescriptions for pharmaceutical products.
5. "Product(s)" shall mean the Kos products specifically identified in the
Work Order or any other product whose promotion and detailing is
assigned to Innovex by mutual agreement with Kos.
6. "Promotional Expense Budget" shall mean the funding and guidelines for
use of such funding that are provided by Kos for use by the Sales Force
when detailing Product.
7. "Promotional Material" shall mean the Product labeling and package
inserts, sales aids and detailing materials, and other promotional
support items provided by Kos to Innovex, for use in promotion of the
Product.
8. "Promotional Program" shall mean the marketing plan, strategy and
promotional message for the Product, which will include use of the
Promotional Material and the Promotional Expense Budget.
9. "Sales Force" shall mean the Sales Representatives, Field Managers, and
National Sales Manager, individually and as a group, that have been
assigned to deliver Details of the Product in accordance with the terms
of this Agreement.
10. "Sales Representative" shall mean an Innovex employee who has been
trained and equipped to detail Prescribers.
2
11. "Target Prescriber" shall mean one of the specifically identified
Prescribers within a Sales Representative's territory to be detailed by
the Sales Representative.
12. "Territory" shall mean the United States. In connection with an
individual Sales Representative, the territory shall be the geographic
area assigned to the individual Sales Representative.
13. "Year One" shall mean the time period beginning on the effective date
of this Work Order and ending on December 31, 2002.
14. "Year Two" shall mean the time period beginning on January 1, 2003 and
ending on December 31, 2003.
E. INNOVEX RESPONSIBILITIES AND OBLIGATIONS
1. SALES FORCE. The Sales Force will be composed of the following minimum
number of Innovex employees:
----------------- --------------------------
NUMBER POSITION TITLE
----------------- --------------------------
150 Sales Representatives
----------------- --------------------------
8 Field Managers
----------------- --------------------------
1 National Sales Manager
----------------- --------------------------
In addition, Innovex shall provide appropriate and sufficient Sales
Management and administrative support.
2. ADDITIONAL PERSONNEL. Innovex shall provide 7 additional Field Managers
(the "7 Managers") to Kos for the period determined by Kos. Kos and
Innovex shall agree on the identity of the 7 Managers. For the services
of the 7 Managers, Kos shall pay the Excess Fee set forth in paragraph
G(2) of this Work Order. Otherwise, Innovex's provision of the 7
Managers shall be subject to same terms and conditions applicable to
the other Field Managers provided by Innovex hereunder. Kos will
provide at least sixty (60) days prior notice of any determination to
cease using the services of any or all of the 7 Managers.
Notwithstanding anything herein to the contrary, Kos shall be permitted
to hire all or any portion of the 7 Managers at any time, and, in such
event, Innovex shall not be required to replace any of the 7 Managers
hired by Kos.
3. RECRUITMENT. Innovex shall be responsible for recruitment and
re-recruitment (replacement) of the Sales Representatives and Field
Managers in accordance with the Sales Force Qualifications described
below. Innovex shall backfill open territories within 30 days of the
date such territory becomes vacant. Innovex shall be responsible for
the cost of recruitment, background checks and drug screens. If Kos
elects to participate in the final selection of members of the Sales
Force, Kos shall approve or disapprove for a good and articulated
reason qualified candidates within five (5) business days after each
qualified candidate is submitted to Kos for final selection. A
"qualified candidate" must meet the Sales Force Qualifications.
3
4. SALES FORCE QUALIFICATIONS. Innovex will exercise best efforts to
recruit from a diverse candidate base. A qualified candidate for Sales
Representatives shall meet the following minimum qualifications:
four-year college degree (B.A., B.S. or equivalent); minimum two years
outside pharmaceutical sales experience. A qualified candidate for
Field Manager shall meet the following minimum qualifications:
four-year college degree (B.A., B.S. or equivalent); minimum two years
outside pharmaceutical sales experience, minimum one year previous
management experience.
5. POSITION DESCRIPTIONS AND DUTIES. Innovex shall manage, supervise and
evaluate the performance of the National Sales Manager, Field Managers
and Sales Representatives in accordance with the responsibilities and
duties identified below. All Sales Force employees shall demonstrate
the following: work ethic and integrity; planning, organizing and
territory management skills; strong interpersonal skills; excellent
communication skills; critical thinking and analysis; problem solving;
decisiveness; sound judgment; customer-focused selling skills; basic
computer skills; ability to listen and learn.
SALES REPRESENTATIVES
o Generate sales within an assigned territory
o Maintain and update current and prospective target physician
profiles
o Keep current with market knowledge and competitive products
o Maintain a professional image for Kos and Kos Products
o Participate in all training and sales meetings
o Plan and organize territory to meet sales and call targets
o Make sales presentations (details) - individual, one-on-one,
in-services
o Maintain sample inventories, distribute samples, comply with sample
accountability procedures and policies, comply with PDMA
o Make complete, accurate and timely submission of all time-keeping,
call activity, sample activity and expense reports
o Compliance with Promotional Program, and proper use of Promotional
Materials and Promotional Expense Budgets
o Participate or coordinate Lunch & Learns, dinner programs, weekend
events, as appropriate
o Have appropriate interaction with co-promotional partners or
counterparts
o Meet the minimum requirements set forth in Attachment B
NATIONAL SALES MANAGER
o Recruit, interview and select Sales Representatives and subordinate
managers
o Handle for Field Managers and oversee for Sales Representatives 120
day and annual performance reviews, personnel issues, discipline and
termination
o Communicate with Kos field/regional managers on regular and timely
basis
o Assist with the planning and delivery of training, and periodic
sales meetings
o Review and approve expense reports; monitor compliance with expense
policies.
4
o Monitors compliance with Promotional Program, and proper use of
Promotional Materials and Promotional Expense Budgets
o Monitors compliance with PDMA and sample accountability procedures
o Monitors time-keeping and attendance
FIELD MANAGERS
o Assist with recruitment of Sales Representatives
o Handle initial 120 day and annual performance reviews, personnel
issues, discipline and termination of Sales Representatives
o Review and approve expense reports; monitor compliance with expense
policies
o Conduct quarterly field visits as determined by the Steering
Committee with Sales Representatives in order to: assess and monitor
field activity and work schedules; to monitor and manage field
reporting, including call and sample reporting; to implement
performance or disciplinary plans.
o Communicate with Kos field/regional managers on regular and timely
basis
o Assist with the planning and delivery of training, and periodic
sales meetings, if necessary
o Prepare a Weekly Activity Report (WAR) and submit to Regional
Manager
o Meet the minimum requirements set forth in Attachment B
6. MINIMUM SALES FORCE FIELD REQUIREMENTS. Sales Representatives and Field
Managers shall meet the minimum requirements set forth on Attachment B
hereto.
7. SALES FORCE COMPENSATION; BENEFITS. Innovex shall compensate the Sales
Force employees with a combination of salary and variable incentive
(bonus). Innovex shall establish a target average salary and salary
matrix, which recognizes greater experience and training, and preferred
selection criteria. The terms and conditions of a variable incentive
compensation plan ("Incentive Plan") shall be mutually determined by
Innovex and Kos, including eligibility criteria and performance
targets. The plan may also include incentive awards, such as trips and
prizes. Innovex shall administer the Incentive Plan and pay the
incentive compensation and awards, in accordance with the Incentive
Plan. Sales Force employees shall be eligible to receive from Innovex
an auto allowance, and shall be entitled to participate in the Innovex
employee benefit plans for health and dental care, 401K, employee stock
purchase and stock ownership plans, in accordance with Innovex's
eligibility criteria. Innovex, in its sole judgement after consultation
with Kos, shall determine the dollar value of any incentive award paid
to the Sales Force.
8. TRAINING AND PERIODIC SALES MEETINGS. Innovex shall facilitate the
participation of the Sales Force in Kos's initial training of the Sales
Force, Kos' backfill training of replacement Field Managers and Sales
Representatives and in all follow-up training, including periodic sales
meetings. Kos may request Innovex's further participation in the
delivery of training and Innovex will provide such services on a time
and materials basis as the parties may agree in writing in advance. In
all cases, Innovex shall monitor and observe all Kos training. Innovex
may have Sales Force Members participate in the Innovex Leadership
Development Program, subject to prior approval by Kos of the time and
5
duration of the participation in such program and provided that Sales
Force Members fulfill a minimum threshold of *** Days Worked during
each of Year One and Year Two.
9. PROMOTIONAL ACTIVITIES. Kos shall retain primary responsibility for
developing the promotional activities of the Sales Force. Kos shall
also monitor and manage the promotional activities of the Sales Force.
Innovex shall monitor and manage the promotional activities of the
Sales Force subject to Kos' primary responsibility. Sales
Representatives shall not be permitted to develop, create or use any
other promotional material or literature in connection with the
promotion of the Product. The Sales Representatives will be required to
immediately cease the use of any Promotional Materials when instructed
to do so by Kos. Innovex shall monitor that Promotional Materials are
not changed, (including, without limitation, by underlining or
otherwise highlighting any text or graphics or adding any notes
thereto) by the Sales Representatives. Sales Representatives shall be
required to limit their statements and claims regarding the Product,
including as to efficacy and safety, to those which are consistent with
the Product labels, package inserts and Promotional Materials. The
Sales Representatives shall not be permitted to add, delete or modify
claims of the efficacy or safety in the promotion of the Product, nor
shall the Sales Representatives be permitted to make any untrue or
misleading statements or comments about the Products or any Kos
competitors or competitor products.
10. PROJECT REPORTS. Innovex shall provide Kos a monthly Project report,
both electronically and in hard copy, which shall include: (i)
headcount, reported nationally, by region/district; vacancy rates,
turnover, personnel transfers to Kos, status of recruitment/hiring;
(ii) Project status, milestones, and progress toward achieving
objectives; and (iii) financial accountability, tracking expenses
against budget.
11. REPORTING BY SALES REPRESENTATIVES. Sales Representatives shall be
required to report all field activities and expenditures in a manner
that is timely, accurate and honest, and in accordance with policies
and procedures for the applicable reporting systems. Innovex Field
Managers shall routinely reinforce the importance of compliance with
the reporting guidelines and policies (e.g. sample accountability, call
reporting, promotional budget expenditures, travel expenses). Newly
hired Sales Representatives shall receive training on the reporting
systems, guidelines and policies during the initial sales training
program
12. RECEIPT FOR KOS PROPERTY. Upon delivery of palm tops to members of the
Sales Force, Kos will receive signed receipts in substantially the form
attached hereto as Exhibit 2. Innovex will also receive a copy of each
receipt.
13. PDMA AND SAMPLE ACCOUNTABILITY. The Sales Force shall be responsible
for strict adherence to the PDMA and the Kos sample accountability
policies and procedures. Innovex shall provide immediate assistance to
Kos in connection with investigation of discrepancies, thefts,
significant losses and suspected falsification of sample records.
Innovex agrees to produce any written sample records that are
maintained by Innovex, within two business days after Kos request
6
14. MANAGEMENT AND DISCIPLINE OF THE SALES FORCE. Innovex shall be
responsible for managing the Sales Force, subject to Kos' primary
management responsibility for the promotional activities of the Sales
Force, and provided that Kos maintains the right to raise concerns
regarding employee performance or misconduct with Innovex. Innovex has
sole authority to remove employees from the Sales Force. In conformance
with Innovex policy, Innovex shall provide appropriate employee
counseling and discipline, up to and including termination, to Sales
Force members who violate employment rules and who are otherwise
under-performing their job responsibilities, including failing to meet
performance criteria established for the Kos Sales Force from time to
time. Innovex will promptly follow-up on any reports made by Kos of
Sales Force member non-compliance and will apply such counseling or
discipline as may be warranted in Innovex's sole judgement.
F. KOS RESPONSIBILITIES AND OBLIGATIONS
1. PROMOTIONAL PROGRAM AND PROMOTIONAL MATERIALS. Kos shall be responsible
for providing a Promotional Program, Promotional Materials and
Promotional Expense Budget that (i) will not involve the counseling or
promotion of a business arrangement that violates federal or state law;
(ii) will be in compliance with the AMA Guidelines on Gifts to
Physicians from Industry; and (iii) shall not require or encourage the
Sales Representatives to offer, pay, solicit or receive any
remuneration from or to Prescribers to induce referrals or purchase of
Kos Product. Kos shall be responsible for providing written guidelines
for proper use of the Kos's Promotional Expense Budget.
2. TRAINING AND PERIODIC SALES MEETINGS.
Kos shall be responsible for the following:
o Programming, materials and facilities for initial Sales Force
training. Prior to the Sales Representatives' first day in
territory, Kos shall provide Innovex, at Innovex's sole expense,
with one day designated for Innovex training regarding personnel
management, compensation and benefits and field administration.
o Programming, materials and facilities for periodic sales meetings or
product launch meetings as designated by Kos.
3. PDMA AND SAMPLE ACCOUNTABILITY. Samples of the Kos Products shall be
distributed to the Sales Representatives in quantities and in a manner
determined by Kos and at Kos's expense. Kos shall have primary
responsibility for compliance with the requirements of the FDA Final
Rule implementing the PDMA (21 CFR Parts 203 & 205), including, but not
limited to (a) a sample accountability and tracking system for use by
the Sales Representatives; (b) verification of licensed practitioners;
(c) annual physical inventories and reconciliation reports; (d)
monitoring and investigation of discrepancies, significant losses,
thefts and falsification of sample records; (e) notification and
reporting to FDA; (f) a sample distribution security and audit system,
including conducting random and for cause audits of sales
representatives by personnel independent of the sales force; and (g)
training the Sales Force regarding the foregoing. Kos and Innovex shall
7
cooperate in connection with PDMA compliance investigations and audits;
provided, however, that Kos compensates Innovex for such cooperation on
a time and materials basis. Kos will provide to Innovex for review and
comment, a copy of any PDMA compliance report in connection with the
Sales Force, prior to filing with the FDA. Kos will provide Innovex
with results of annual Sales Representative sample inventories. Kos
shall be responsible for the cost of independent random audits of
Innovex Representatives, to be coordinated with Innovex.
4. SALES DATA. Kos shall be solely responsible for obtaining historic and
ongoing sales data regarding Kos Products. Kos shall be solely
responsible to pay any applicable per representative fee required by
any third party, including, but not limited to, any fee imposed by the
American Medical Association.
5. PRODUCTIVITY REPORTS. Kos shall provide Innovex with the data necessary
to produce productivity reports for the Sales Force similar to the
productivity reports Kos compile on their own sales activities. Kos
shall make all reasonable efforts to deliver to Innovex the data with
the same frequency and with the same speed as such are received and
distributed by Kos with regard to their own sales forces.
6. CALL REPORTING SYSTEM AND COMPUTERS. Kos shall be responsible for
providing a call reporting system and equipping Sales Representatives
with palm top hardware and software necessary to carry out the
Promotional Program. Kos shall bear the cost of the hardware and
software, including appropriate licenses, upgrades, access to
data/replication lines, help desk support, and training of the Sales
Force in proper use of the call reporting system and palm tops.
7. BUSINESS CARDS; DETAIL BAGS. Kos shall supply the Sales Force with
business cards, the content of which shall be subject to approval by
Innovex, such approval not to be unreasonably withheld. Kos shall
supply the Sales Force with detail bags.
8. SALES FORCE TRAVEL EXPENSES. Kos shall be responsible for the following
Sales Force travel, lodging and meal expenses, when necessary and
actually incurred by the Sales Force (in the amounts authorized in a
mutually agreed Sales Force travel expense budget):
o Travel expenses of Sales Force Members to participate in recruitment
interviews with Kos at Kos' request
o Travel expenses of Sales Force in connection with all training and
periodic sales meetings outside their respective territory
o All Sales Representative overnight business travel approved by Kos
o All other Innovex travel expenses incurred in furtherance of the
Project and requested by Kos
o Such other expenses as agreed
G. FEES AND PASS-THROUGH EXPENSES
1. SALES FORCE FEES. PharmaBio shall pay Innovex a Fee for the Sales Force
as they may agree.
8
2. EXCESS FEES. For the services of the 7 Managers, Kos shall pay Innovex
an Excess Fee for each Day Worked by one of the 7 Managers as follows:
(i) in Year One, $*** per Day Worked; (ii) in Year Two, $*** per Day
Worked.
3. HIRING OF SALES FORCE MEMBERS. During Year One, Kos shall not solicit,
recruit, or hire any Sales Force member, except that Kos may hire any
or all of the 7 Managers at any time. During Year Two, Kos may solicit,
recruit, or hire any Sales Force member, provided that Innovex shall
not be required to replace any member of the Sales Force who becomes
employed by Kos during Year Two, and the minimum requirements set forth
in Attachment B shall be adjusted accordingly. After Year Two, Kos
shall be permitted to hire, without payment of any additional
consideration, members of the Sales Force at any time and from time to
time. Notwithstanding the foregoing, Kos shall not solicit, recruit, or
hire any Sales Force member following any termination of this Master
Agreement prior to the end of the Project Term.
4. PAYMENT SCHEDULE. Innovex shall provide Kos a copy both electronically
and in hard copy on a monthly basis of invoices for all Excess Fees and
Pass-Through Expenses, which shall be payable by Kos. Each invoice
shall be accompanied by a detailed expense report and supporting
documentation. At the end of each calendar month, Innovex shall provide
a schedule of the total number of Days Worked by each of the 7
Managers.
5. EXPENSE ALLOCATION CHART. The financial responsibility of Innovex
and/or PharmaBio and Kos for expenses and costs of Sales Force
operation shall be allocated in accordance with the terms of this Work
Order, which are summarized for illustrative purposes in the "Sales
Force Expense Allocation" chart (Attachment A).
In Witness Whereof, Kos, PharmaBio, and Innovex have caused this Work Order
#8775 to be duly executed on their behalf by their authorized representatives
and made effective as of Effective Date of Work Order appearing above.
ACCEPTED AND AGREED TO BY:
KOS PHARMACEUTICALS, INC. INNOVEX LP
BY: INNOVEX AMERICA HOLDING
COMPANY, ITS GENERAL PARTNER
/s/ XXXXXX XXXXX /s/ XXXXX X. OVERS
------------------------------------- ------------------------------------
By: Xxxxxx Xxxxx By: Xxxxx X. Overs
Title: President and COO Title: Chief Financial Officer
Date: December 17, 2001 Date: December 17, 2001
PHARMABIO DEVELOPMENT, INC.
/s/ XXXXXX X. XXXXXX
------------------------------------
By: Xxxxxx X. Xxxxxx
Title: President
Date: December 17, 2001
9
ATTACHMENT A TO SALES FORCE WORK ORDER
SALES FORCE EXPENSE ALLOCATION
December 2001/Project # 8775
------------------------------------------------------------------------ ---------------- ------------------ ---------------
CATEGORY INNOVEX/ PASSTHROUGH KOS
PHARMA BIO EXPENSES DIRECT
DIRECT EXPENSES
EXPENSES
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Salary, including payroll taxes, for Sales Representatives, Field X
Managers, National Sales Manager
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Incentive compensation (bonus) for Sales Representatives, Field X
Managers, National Sales Manager, including payroll taxes
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Benefits package, including (401k), ESOP, ESPP, medical, dental, Rx, X
vacation, holidays
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Auto Costs in territory, including monthly allowance, mileage reimbursement,
parking and tolls. X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Basic Business Expenses in territory, including phone, paper supplies, postage
and voice mail. X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Business Cards & Detail Bags X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Call Reporting & Sample Accountability X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Palm tops for Sales Representatives, including software, helpdesk X
support, data/replication lines
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Computers for DMs, including software, helpdesk support, X
data/replication lines
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Infrastructure support (operations, HR, finance, legal) X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Liability Insurance: employment, workers comp, E & O, CGL, auto X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Recruitment and re-recruitment, includes drug screens, background and X
motor vehicle checks
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Meetings: Kos national, regional and district meetings; product X
launches
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Promotional Expense Budget (access money) X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Promotional Program and Promotional Materials (sales aids) X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Promotional marketing expenses, including sales data X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Samples, including distribution to Sales Representatives X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Training program, materials and facilities; initial and follow-up X
------------------------------------------------------------------------ ---------------- ------------------ ---------------
Travel Expenses (air, hotel, meals, T&E) for Sales Reps, Field
Managers, National Sales Manager
* Interviewing with Kos X
* Training X
* All overnight business travel outside
respective territories or X
districts and requested by Kos X
* Innovex project related travel requested by Kos
------------------------------------------------------------------------ ---------------- ------------------ ---------------
10
ATTACHMENT B TO SALES FORCE WORK ORDER #8775
MINIMUM SALES FORCE FIELD REQUIREMENTS APPENDIX
A. Innovex Minimum Requirements:
(i) Commencing April 1, 2002, in the event that during any calendar quarter
Innovex maintains less than an average of 150 but more than 143 Sales
Representatives performing Calls as required under paragraph B below for each
required Day Worked during such quarter, then during the next quarter Innovex
shall be required to cause its Sales Representatives to provide an additional
number of Calls equal to the number of Calls required to be but not performed
during such preceding quarter.
(ii) Commencing April 1, 2002, in the event that during any calendar quarter
Innovex maintains less than an average of 143 Sales Representatives performing
Calls as required under paragraph B below for each required Day Worked during
such quarter, then Innovex shall be in breach of the Master Agreement and shall
be required to institute a Corrective Action Plan in accordance with paragraph E
below. The number of Days Worked required to be performed by a Sales
Representative during any calendar quarter shall be calculated based on the
number of days during such quarter that Kos is open for business, subject to an
approved leave of absence with respect to such Sales Representative. A leave of
absence is approved if the Sales Representative has the right to such leave
under law (FMLA, ADA, etc.), such leave is available under existing Innovex
policy as set forth in the Innovex Field Employee's Guide, or such leave is
approved by the Steering Committee.
B. Sales Representative Minimum Requirements:
Sales Representatives shall be required to complete a minimum average of ***
Calls per Day Worked. The number and quality of such Calls shall be measured and
monitored by Kos field audits, as well as independent audits, and shall be
performed in accordance with the standards in place from time to time for the
Kos Sales Force. At least **% of all Calls shall be to Targeted Prescribers or
to licensed prescribers sharing offices with Targeted Prescribers.
C. Field Manager Minimum Requirements:
Field Managers shall be required to spend a minimum of **% of their time with
Sales Representatives in the field. The Field Managers' performance shall be
measured and monitored by Kos field audits, as well as independent audits, and
shall be performed in accordance with the standards in place from time to time
for the Kos Sales Force.
D. Steering Committee Oversight:
The Steering Committee shall monitor Innovex's performance against the Minimum
Requirements set forth herein. The Steering Committee may revise these Minimum
Requirements from time to time in accordance with Section 5.6 of the Master
Agreement.
11
E. Corrective Action Plan:
1. In the event that Kos provides Innovex with notice that it is in breach of
the Master Agreement under paragraph A above for a calendar quarter, then
Innovex shall promptly, but in no event later than 10 days after receipt of such
notice, provide the Steering Committee with a written Corrective Action Plan
reasonably designed to cure the deficiencies in Innovex' performance, including
without limitation the "make-up" of any deficiency in the number of Calls
performed by the Sales Representatives relative to the number of Calls required
under the Master Agreement and the Work Order to be performed by Sales
Representatives during such calendar quarter, within 75 days following Innovex'
receipt of such notice. Any Corrective Action Plan submitted by Innovex shall be
considered by the Steering Committee with reference to the actual performance
levels of comparable Kos sales representatives.
2. In the event that the Steering Committee reasonably fails to approve the
Corrective Action Plan and the parties have completed the dispute resolution
procedures set forth in Section 11.2 of the Investment and Royalty Agreement, or
upon Innovex failing to implement and achieve the goals of the Corrective Action
Plan within such 75 day period, then Kos may provide Innovex with written notice
of Kos' intent to terminate the Master Agreement, which notice shall specify, if
applicable, the nature of the Innovex' failure. Such notice of termination shall
become effective 30 days after Kos' delivery of such notice unless Innovex has
cured any such failure or breach prior to the end of such 30 day period. Any
termination of the Master Agreement under this Attachment B shall be deemed to
be a termination of the Master Agreement under Section 11.2 of the Master
Agreement.
12
EXHIBIT 2 TO SALES FORCE WORK ORDER
RECEIPT FOR CUSTOMER PROPERTY
I acknowledge receipt of the following computer hardware and software from Kos:
Equipment
[List with serial nos.]
Software
[List]
Total Approximate Value $_________ [INSERT VALUE AGREED TO BY INNOVEX & KOS]
I certify that I will use the Kos hardware and software listed above, as well as
any other material provided to me by Kos, solely for the purpose of providing
services for Kos in connection with the Sales Force project, and in accordance
with any applicable directions given by Kos to Innovex. I further certify that I
will not copy or reproduce any of the software listed above without the express
written permission of Kos. I will not install any software that is not
authorized in advance by Kos and Innovex (e.g. AOL, screen savers, etc.). I
acknowledge and understand I may be held personally responsible for loss or
damage which results from misuse, abuse, failure to safeguard or failure to
return the computer, hardware and software.
If I have technical problems with the hardware or software listed above, I will
promptly contact the Kos help desk or technical support services, in accordance
with the instructions provided to me.
I certify that I will return the hardware and software listed above, as well as
all other material provided to me by Kos, when I no longer need it to perform
services on behalf of Kos, or upon request by Kos. Upon termination of my
employment with Innovex, for any reason whatsoever, or if otherwise requested by
Kos or Innovex, I promise to immediately return the computer, hardware and
software.
I further understand that if I fail to immediately return the Kos property when
required or requested to do so, that Innovex and/or Kos may take any lawful
action deemed necessary to recover possession. I agree and give my consent that
Innovex may set off the value of the unreturned property against any amounts
owed to me by Innovex, including salary, bonus compensation and expense
reimbursements, to the full extent permitted by applicable law.
Agreed and Acknowledged, this _____day of _______, 2002.
_______________________________________________(signature)
_______________________________________________(print or type name)
Distribution: Original to Kos
cc: Innovex Field Manager
cc: Sales Representative
13
