Exhibit 10.7
AMENDMENT NO. 1 TO
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
This Amendment is entered into as of November 4, 1996 by Mallinckrodt
Medical, Inc., a Delaware corporation having offices at 000 XxXxxxxxx Xxxxxxxxx,
Post Office Xxx 0000, Xx. Xxxxx, Xxxxxxxx 00000 ("Mallinckrodt"), and Molecular
Biosystems, Inc., a Delaware corporation having offices at 00000 Xxxxxx Xxxxxx
Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("MBI").
PREAMBLE
A. Mallinckrodt and MBI are parties to an Amended and Restated
Distribution Agreement dated as of September 7, 1995 ("ARDA"). Capitalized
terms which are not defined in this Amendment have the same meanings that they
have in ARDA.
B. Section 3.03(a) of ARDA requires MBI to use reasonable efforts to
enter into the Nycomed License Amendment with Nycomed in order to obtain
Nycomed's ALBUNEX rights in the Nycomed Territory and, if successful, to
transfer those rights to Mallinckrodt on the terms agreed to in a Nycomed
Territory Amendment.
C. MBI and Nycomed have entered into Amendment No. 3 to License and
Cooperative Development Agreement, dated as of October 24, 1995 (the "Nycomed
License Amendment"), pursuant to which MBI reacquired substantially all of
Nycomed's ALBUNEX rights in the Nycomed Territory.
X. Xxxxxxxxxxxx and MBI desire to enter into the Nycomed Territory
Amendment, as contemplated by Section 3.03 of ARDA, pursuant to the provisions
of Section 16.07 of ARDA, and to amend ARDA in certain other respects.
Now, therefore, in consideration and their mutual promises, the parties
agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Amendment, and as used in ARDA as amended by this
Amendment, the following terms have these meanings:
(a) AGGREGATE NET SALES, as used in Section 2.9 of this Agreement,
means the sum of Mallinckrodt's Net Sales of each Separate Product plus the
net sales (calculated in the same manner as Mallinckrodt's Net Sales) of
all other sellers of the Separate Product in question.
(b) ARDA is defined in the Paragraph A of the Preamble to this
Amendment. Unless
otherwise qualified, references to ARDA in this Amendment mean ARDA prior
to its amendment by this Amendment.
(c) CLINICAL REVIEW is defined in Section 2.16(1) of ARDA (as amended
by Article 3 of this Amendment).
(d) COMPETITIVE PRODUCT means, in respect of particular Related
Albunex Products, an IN VIVO contrast agent for ultrasound imaging which is
approved for sale in the Index Country by a third party for substantially
the same indication or indications for which the Related Albunex Products
are approved for sale. The term "Competitive Product" includes all
finishes of the product.
(e) CURRENT PRODUCT means ALBUNEX with substantially the same
specifications and other characteristics approved for sale in the United
States as of October 1, 1996, regardless of the indication for which it is
approved for used.
(f) XX. XXXXXXXXX means Xxxxxx X. Xxxxxxxxx, M.D., or, as the context
may require, his designee for payments under the Xxxxxxxxx License.
(g) EFFECTIVE DATE, as used in this Amendment (but not as used in
ARDA), means the date that this Amendment is signed by both parties.
(h) XXXXXXXXX LICENSE means the Restated License Agreement, dated as
of June 1, 1989, between MBI and Xx. Xxxxxxxxx, as amended by a letter
agreement dated June 14, 1994 (relating to Xx. Xxxxxxxxx'x designation of a
different payee for MBI's payments).
(i) FS means ALBUNEX described as "FS069" in the second full
paragraph of Section 1.04 of ARDA.
(j) INDEX COUNTRY means France, Germany, Italy, Spain or the United
Kingdom or, collectively, all of the remaining countries in the Nycomed
Territory.
(k) JOINT MARKETING TEAM is defined in Section 2.16(e) of ARDA (as
amended by Article 3 of this Amendment).
(l) MARKETING REVIEW is defined in Section 2.16(2) of ARDA (as
amended by Article 3 of this Amendment).
(m) NYCOMED LICENSE AMENDMENT is defined in Paragraph C of the
Preamble to this Amendment.
(n) PRIMARY MEASUREMENT PERIOD means, in respect of any Related
Albunex Products, (i) the first to occur of:
(1) the period of 12 consecutive calendar months beginning with
the month
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which is the same number of months following the month of the first
commercial sale of any Related Albunex Product as the number of months
by which the month of the first commercial sale of a Competitive
Product preceded the month of the first commercial sale of the Related
Albunex Product, or
(2) the period of 12 consecutive calendar months beginning with
the month following the month of the first commercial sale of any
Related Albunex Product if, at the time of such sale, there have been
no commercial sales of any Competitive Product, and
(ii) each of the next two successive periods of 12 consecutive calendar
months. For purposes of clause (i)(1), each whole or partial month shall
count as one month.
(o) RELATED ALBUNEX PRODUCTS means, in respect of an Index Country,
all Albunex Products for a particular indication, of any vial size, which
are sold or offered for sale in that Index Country. For purposes of this
definition only, the term "Albunex Products" does not include Albunex
Products consisting of the Current Product or Infoson.
(p) SECONDARY MEASUREMENT PERIOD means, in respect of any Primary
Measurement Period, the period of six consecutive calendar months beginning
with the calendar month following the month in which, pursuant to Section
3.02B(b) of ARDA, MBI requests such period to start.
(q) SEPARATE PRODUCT is defined in Section 2.5 of this Amendment.
ARTICLE 2
NYCOMED TERRITORY AMENDMENT
2.1 IDENTIFICATION. This Amendment constitutes the "Nycomed Territory
Amendment" as that term is defined in Section 3.03(a) of ARDA. As of the
Effective Date, Mallinckrodt's appointment in Section 3.01(c) of ARDA as the
exclusive distributor and exclusive sales representative for ALBUNEX to be sold
in and throughout the Nycomed Territory, and all of the other provisions of ARDA
relating to the parties' respective rights and duties in the Nycomed Territory
(as those provisions may be amended by this Amendment), shall become effective,
without the necessity of any further action by either party.
2.2 UPFRONT PAYMENT. Pursuant to Section 3.1 of the Nycomed License
Amendment, MBI paid $700,000 to Nycomed upon the parties' execution of the
Nycomed License Amendment, and pursuant to Section 3.2 of the Nycomed License
Amendment, MBI paid an additional $2 million to Nycomed on or about March 31,
1996. On December 17, 1996, Mallinckrodt shall pay $2.7 million to MBI by wire
transfer.
2.3 MILESTONE PAYMENTS. Sections 2.17(a) and (b) of ARDA provide that
Mallinckrodt shall pay to MBI "$3 million on the date when the Nycomed Territory
Amendment [I.E., this
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Amendment] becomes effective" and "$4 million upon the first commercial sale of
ALBUNEX in Germany by Mallinckrodt ... for an approved intravenous myocardial
perfusion indication ...." Section 3.3 of the Nycomed License Amendment
provides that MBI shall pay to Nycomed "45% of any amounts in excess of
$2,700,000 received by MBI in either up-front, milestone or similar payments
from third parties" in consideration for MBI's grant of ALBUNEX rights in the
Nycomed Territory. The payments that Mallinckrodt is required to make pursuant
to Sections 2.17(a) and (b) of ARDA will constitute "amounts in excess of
$2,700,000" for purposes of Section 3.3 of the Nycomed License Amendment.
Accordingly:
(a) on December 17, 1996, Mallinckrodt shall pay $3 million to MBI by
wire transfer, pursuant to Section 2.17(a) of ARDA;
(b) on or before January 16, 1997, Mallinckrodt shall pay $1.35
million (or 45% of $3 million) to Nycomed in satisfaction of Nycomed's
claims under Section 3.3 of the Nycomed License Amendment in respect of
Mallinckrodt's payment of $3 million to MBI pursuant to Section 2.17(a) of
ARDA;
(c) within five days after the date of the first commercial sale of
ALBUNEX in Germany by Mallinckrodt or an Affiliate of Mallinckrodt which is
specifically approved for an intravenous myocardial perfusion indication,
Mallinckrodt shall pay $4 million to MBI pursuant to Section 2.17(b) of
ARDA; and
(d) within 30 days after the date of the first commercial sale of
ALBUNEX in Germany by Mallinckrodt or an Affiliate of Mallinckrodt for an
approved intravenous myocardial perfusion indication, Mallinckrodt shall
pay $1.8 million (or 45% of $4 million) to Nycomed in satisfaction of
Nycomed's claims under Section 3.3 of the Nycomed License Amendment in
respect of Mallinckrodt's payment of $4 million to MBI pursuant to Section
2.17(b) of ARDA.
2.4 ROYALTIES TO MBI ON SALES OF INFOSON. Section 2.14 of ARDA deals with
the price to be paid by Mallinckrodt to MBI for ALBUNEX (including Infoson)
manufactured by MBI. ARDA does not deal with royalty payable by Mallinckrodt to
MBI in respect of Mallinckrodt's Net Sales of Infoson manufactured by Nycomed.
Section 7.01(c)(1)(E) of ARDA provides that the royalty payable by Mallinckrodt
to MBI in respect of Mallinckrodt's Net Sales of Infoson manufactured by
Mallinckrodt shall be the royalty agreed on in this Amendment. In regard to
these latter two royalties:
(a) Mallinckrodt shall pay MBI a royalty in respect of Mallinckrodt's
Net Sales of Infoson purchased from Nycomed equal to 40% of the amount
determined by subtracting from Mallinckrodt's gross profits in respect of
such sales the direct selling costs attributable to such sales (but not
including any royalties directly or indirectly payable to Nycomed pursuant
to Section 2.5 of this Amendment or to Xx. Xxxxxxxxx pursuant to Section
2.6 of this Amendment), as Mallinckrodt's gross profits and direct selling
costs are determined using U.S. generally accepted accounting principles.
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(b) Mallinckrodt shall pay MBI a royalty in respect of Mallinckrodt's
Net Sales of Infoson manufactured by Mallinckrodt pursuant to Sections
2.05(c) and 7.01(c)(1)(E) of ARDA equal to 40% of the product determined by
multiplying each Infoson Product's Average Selling Price during the quarter
of sale by the number of vials of that product sold, less the sum of (i)
Mallinckrodt's fully allocated manufacturing cost for that Infoson Product
determined using U.S. generally accepted accounting principles and (ii)
until fully recovered, one-half of Mallinckrodt's Start-up Costs which are
not included in (i); but in no event shall the royalty be less than 15% or
more than 25%. "Infoson Products" shall be determined in the same manner
that Albunex Products are determined under Section 1.05 of ARDA, and the
"Average Selling Price" of Infoson Products shall be determined in the same
manner that the Average Selling Price of Albunex Products is determined
under Section 1.06 of ARDA.
(c) Royalties payable under this Section 2.4 shall be paid pursuant
to the procedures in Sections 7.01(c)(2)(E) and (F) of ARDA.
2.5 ROYALTIES TO NYCOMED. Section 3.5 of the Nycomed License Amendment
provides that, for the remaining term of the Nycomed License Amendment, MBI
shall pay Nycomed a royalty of 2.5% on the first $30 million of the Net Selling
Price of Licensed Products sold in the Nycomed Territory each year and 3.5% on
the Net Selling Price of Licensed Products on sales in excess of $30 million
each year (as "Net Selling Price" is defined in Section 3.5.1 of the Nycomed
License Amendment and "Licensed Product" is defined in Section I.B of the
Nycomed Agreement). Section 3.5 of the Nycomed License Amendment also provides
that "[a] separate royalty shall be payable in respect of each Licensed
Product." For purposes of this Amendment, the following products shall be
considered separate Licensed Products ("Separate Products"): (i) Infoson; (ii)
the Current Product and any substantially similar formulation; (iii) FS and any
substantially similar formulation; and (iv) any other formulation of ALBUNEX
which is not substantially similar to Infoson, the Current Product or FS.
Subject to Section 2.9 of this Amendment, Mallinckrodt shall pay to MBI, for
payment to Nycomed, the following royalty on Net Sales of ALBUNEX in the Nycomed
Territory:
(a) a royalty of 1.5% (= 2.5% x 0.60) on the first $30 million of Net
Sales of each Separate Product each calendar year; and
(b) a royalty of 2.1% (= 3.5% x 0.60) on Net Sales of each Separate
Product each calendar year in excess of $30 million.
Royalties payable under this Section 2.5 shall be paid pursuant to the
procedures in Section 7.01 (c)(2)(E) and (F) of ARDA.
2.6 ROYALTIES TO XX. XXXXXXXXX. Section 5.2 of the Xxxxxxxxx License
requires MBI to pay Xx. Xxxxxxxxx a royalty of 1.25% of the Net Selling Price of
Licensed Products sold by sublicensees of MBI or by an affiliate of any such
sublicensee in any country other than the United States (as "Net Selling Price"
and "Licensed Products" are defined in Sections 1.4 and 1.2, respectively, of
the Xxxxxxxxx License). Subject to Section 2.9 of this Amendment,
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Xxxxxxxxxxxx shall pay to MBI, for payment to Xx. Xxxxxxxxx, a royalty of 0.75%
(= 1.25% x 0.60) on Net Sales of ALBUNEX in the Nycomed Territory. Royalties
payable under this Section 2.6 shall be paid pursuant to the procedures in
Section 7.01(c)(2)(E) and (F) of ARDA.
2.7 SUPPLY AGREEMENT WITH NYCOMED. Section 5 of Nycomed License Amendment
provides that, at MBI's option, MBI and Nycomed shall enter into a supply
agreement for Infoson. If MBI and Mallinckrodt determine that it is advisable
for Mallinckrodt to enter into such an agreement directly with Nycomed, and if
Mallinckrodt or Nycomed deems it necessary or advisable, MBI shall waive its
rights pursuant to Section 5 of Nycomed License Amendment.
2.8 SHIPMENT. MBI shall ship ALBUNEX for sale in the Nycomed Territory in
a commercially reasonable manner from MBI's warehouse to any one site in the
Nycomed Territory designated by Mallinckrodt. Mallinckrodt and MBI shall share
on a 60%-40% basis, respectively, in all shipping costs to any such designated
site and in all labelling costs of such ALBUNEX. Title to the product shipped
shall pass to Mallinckrodt upon shipment from MBI's warehouse.
2.9 SURVIVAL OF ROYALTY AND OTHER OBLIGATIONS.
(a) If Mallinckrodt exercises its manufacturing rights under Section
7.01(c)(1)(A) of ARDA:
(1) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.5
of this Amendment shall be considered modified to provide for a payment to
MBI, in respect of each Separate Product, of a percentage of the royalty
due to Nycomed under Section 3.5 of the Nycomed License Amendment in
respect of that Separate Product. This percentage shall be equal to the
product of (i) the quotient obtained by dividing Mallinckrodt's Net Sales
of the Separate Product by the Aggregate Net Sales of the Separate Product
multiplied by (ii) 100. The parties shall report their respective portions
of the Aggregate Net Sales of each Separate Product to one another for
purposes of calculating the applicable percentage under this Section
2.9(a)(1).
(2) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.6
of this Amendment, shall survive and continue, for as long as a royalty
remains payable by MBI under Section 5.2 of the Xxxxxxxxx License, except
that Mallinckrodt's payments to MBI shall be the entire amount of the
royalty due to Xx. Xxxxxxxxx under 5.2(b) of the Xxxxxxxxx License in
respect of Licensed Products (as "Licensed Products" defined in Section 1.2
of the Xxxxxxxxx License) manufactured and sold by Mallinckrodt in the
Nycomed Territory (as provided in Sections 4.03(a) and 14.04 of ARDA).
(b) If ARDA, as amended by this Amendment, terminates following notice
from Mallinckrodt pursuant to Sections 14.02(b), (c), or (e) of ARDA, then in
addition to the other effects described in Section 14.03 of ARDA:
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(1) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.4
of this Amendment shall survive and continue until the later of the third
anniversary of the date that the FDA approves an intravenous myocardial
perfusion indication of ALBUNEX for sale in the United States or July 1,
2003.
(2) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.5
of this Amendment shall survive and continue, for as long as a royalty
remains payable by MBI under Section 3.5 of the Nycomed License Amendment,
except that until the latest of (i) the third anniversary of the date that
the FDA approves an intravenous myocardial perfusion indication of ALBUNEX
for sale in the United States, (ii) July 1, 2003 or (iii) termination of
ARDA, the royalty payable by Mallinckrodt on Net Sales of ALBUNEX in the
Nycomed Territory shall be:
(a) on the first $30 million of Net Sales of each Separate
Product for each calendar year, the greater of (i) 1.5% or (ii) 2.5%
minus an amount equal to the royalty payable by Mallinckrodt to MBI
under Section 7.01(c)(1)(B) of ARDA in respect of that Separate
Product; and
(b) on Net Sales of each Separate Product for each calendar year
in excess of $30 million, the greater of (i) 2.1% or (ii) 3.5% minus
an amount equal to the royalty payable by Mallinckrodt to MBI under
Section 7.01(c)(1)(B) of ARDA in respect of that Separate Product.
After such date, Mallinckrodt shall pay MBI a percentage of the royalty due
to Nycomed under Section 3.5 of the Nycomed License Amendment in respect of
each Separate Product. For each Separate Product, this percentage shall be
equal to the product of (i) the quotient obtained by dividing
Mallinckrodt's Net Sales of the Separate Product by the Aggregate Net Sales
of the Separate Product multiplied by (ii) 100. The parties shall report
their respective portions of the Aggregate Net Sales of each Separate
Product to one another for purposes of calculating the applicable
percentage under this Section 2.9(b)(2).
(3) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.6
of this Amendment, shall survive and continue, for as long as a royalty
remains payable by MBI under Section 5.2 of the Xxxxxxxxx License, except
that Mallinckrodt's payments to MBI shall be the entire amount of the
royalty due to Xx. Xxxxxxxxx under 5.2(b) of the Xxxxxxxxx License in
respect of Licensed Products (as "Licensed Products" defined in Section 1.2
of the Xxxxxxxxx License) manufactured and sold by Mallinckrodt in the
Nycomed Territory.
(c) If ARDA, as amended by this Amendment, terminates following notice
from MBI pursuant to Sections 14.02(b), (d), or (f) of ARDA, then in addition to
the other effects described in Section 14.03 of ARDA:
(1) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.4
of this
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Amendment shall survive and continue until the expiration of the last
patent relating to ALBUNEX to expire.
(2) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.5
of this Amendment shall survive and continue, for as long as a royalty
remains payable by MBI under Section 3.5 of the Nycomed License Amendment,
except that Mallinckrodt's payments to MBI shall be a percentage of the
royalty due to Nycomed under Section 3.5 of the Nycomed License Amendment
in respect of each Separate Product. For each Separate Product, this
percentage shall be equal to the product of (i) the quotient obtained by
dividing Mallinckrodt's Net Sales of the Separate Product by the Aggregate
Net Sales of the Separate Product multiplied by (ii) 100. The parties
shall report their respective portions of the Aggregate Net Sales of each
Separate Product to one another for purposes of calculating the applicable
percentage under this Section 2.9(c)(2).
(3) Mallinckrodt's royalty obligation to MBI pursuant to Section 2.6
of this Amendment shall survive and continue, for as long as a royalty
remains payable by MBI under Section 5.2 of the Xxxxxxxxx License, except
that Mallinckrodt's payments to MBI shall be the entire amount of the
royalty due to Xx. Xxxxxxxxx under 5.2(b) of the Xxxxxxxxx License in
respect of Licensed Products (as "Licensed Products" is defined in Section
1.2 of the Xxxxxxxxx License) manufactured and sold by Mallinckrodt in the
Nycomed Territory.
2.10 MBI WAIVERS. If either Mallinckrodt or Nycomed considers it necessary
or advisable, in order to permit Mallinckrodt to enter into an agreement with
Nycomed to assume Nycomed's responsibility for product registration activities
or clinical studies, MBI shall (a) execute the notice required by Section 4.1 of
the Nycomed License Amendment to permit Nycomed to terminate all of its
registration activities and (b) execute the notice required by Section 4.2 of
the Nycomed License Amendment to permit Nycomed to discontinue work on the
clinical studies. In either case, the notice shall be effective as of the date
that Mallinckrodt assumes such responsibility.
2.11 MAINTENANCE OF AMENDMENT. MBI shall take such actions as are
necessary and advisable to maintain the Nycomed License Amendment in force,
including, but not limited to, paying all royalties and other sums due to
Nycomed. MBI shall give Mallinckrodt 10 business days' prior written notice of
any proposed amendment or modification of the Nycomed License Amendment and
shall not enter into any such amendment or modification that adversely affects
Mallinckrodt without Mallinckrodt's prior written consent.
ARTICLE 3
AMENDMENT OF ARTICLE 2 OF ARDA
Paragraph 2.16 of ARDA is amended to read as follows:
2.16 JOINT STEERING COMMITTEE. MBI and Mallinckrodt shall establish a
joint
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steering committee (the "Joint Steering Committee"), which shall have two
functions:
(1) to review, on a quarterly basis (or more frequently as requested
by either party), clinical trial programs relating to the development
and regulatory approval of ALBUNEX, with a particular emphasis on
reviewing the design and implementation of clinical trials and any
Investigational Device Exemption or Investigational New Drug
applications to the FDA (including related amendments and other
ancillary filings) and corresponding filings with foreign equivalents
of the FDA ("Clinical Review"); and
(2) to review, on a quarterly basis (or more frequently as requested
by either party), the development and implementation of marketing
plans, strategies and budgets in the Territory, the Additional
Territory and the Nycomed Territory ("Marketing Review").
In respect of Clinical Review, the Committee is intended to provide a
mechanism to enable the parties to share their expertise and concerns
relating to clinical programs, regulatory affairs and cost-effectiveness
and reimbursement issues, and shall have significant authority and
flexibility in determining the objectives, number, design and other
features of clinical trials, with a view to maximizing the return on
development costs and expediting commercialization. In respect of
Marketing Review, the Committee is intended to provide a mechanism to
enable the parties, consistent with the other provisions of this Agreement,
to gather and share marketing and other information that will enable them
to plan and implement marketing strategies designed to accomplish their
mutual goals of (i) obtaining market leadership and maximizing distribution
of ALBUNEX in the Territory, the Additional Territory and the Nycomed
Territory, and in particular countries within each territory, and (ii)
obtaining a superior return on their respective investments while balancing
the expenses of marketing, advertising, selling and distribution against
expected increases in sales and profits. In this regard, the parties
recognize that market conditions in each territory, and in particular
countries within each territory, are constantly changing, and that
Marketing Review is intended to be a dynamic and continuing process.
The Committee shall consist of equal numbers of MBI and Mallinckrodt
representatives (up to a maximum of three representatives from each party)
and shall adopt procedures to govern its activities substantially in the
form described on Appendix 7. The parties shall give prompt written notice
to one another of any changes in their respective representatives on the
Committee.
(a) The Joint Steering Committee shall have the authority to specify
the clinical trials and other activities required to be performed under
Section 2.15(b) and the additional clinical trials required to be performed
under Section 2.15(c), and MBI shall not make any expenditure under either
of those Sections without the Committee's prior authorization. The
Committee shall have no authority regarding the allocation or expenditure
of the $10 million that MBI is required to spend under Section 2.15(d) (or
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any other expenditures by MBI).
(b) The Joint Steering Committee's decisions shall be guided by the
following principles, emphasizing both quality and speed:
(1) it is very important to bring a product to market in the
shortest possible time consistent with the prevailing regulatory
climate (but the quality of the clinical program, including clinical
utility and cost-effectiveness, is equally important);
(2) it is important that clinical studies be conducted and their
results presented in a thorough, well-organized and professional
manner;
(3) the Committee's decisions should be made with a sense of
urgency consistent with the prevailing regulatory climate, applying
the standard of a prudent businessman who has a lead over his
competitors and wants to maintain that lead, and with a view towards
operating by consensus and in a manner intended to emphasize
partnership and a commonality of interests; and
(4) it is important to achieve the broadest possible market
penetration in each significant market at the earliest possible date,
consistent with a responsibly conducted product launch.
(c) In the event of a dispute over a matter relating to Clinical
Review that cannot be resolved by the Committee, MBI and Mallinckrodt shall
attempt to resolve the dispute informally in light of the guiding
principles in Section 2.16(b). If MBI and Mallinckrodt are unable to
resolve the dispute, they shall each designate as a referee an unaffiliated
person with senior-level credentials in the medical, scientific, clinical
and administrative areas relevant to the Committee's activities, and the
two referees shall attempt to resolve the dispute. If they are unable to
do so within a reasonable period, they shall jointly appoint a third person
with similar qualifications to act as an arbitrator. In reaching a
decision, the arbitrator shall take into account such matters as he
considers appropriate, and may require the parties to provide a written
statement or oral presentation in support of their respective positions.
The arbitrator's decision shall be binding on MBI and Mallinckrodt. During
the pendency of the dispute, (i) Mallinckrodt shall not withhold (and
neither the referees nor any arbitrator appointed by them shall have
authority to excuse or delay) any payments due from Mallinckrodt to MBI
under this Agreement and (ii) MBI shall deposit all payments received from
Mallinckrodt under Section 2.15 during the pendency of the dispute in a
segregated account in MBI's name. This account may be invested in
short-term U.S. Treasury obligations or in any other manner approved by
Mallinckrodt (which shall not unreasonably withhold its approval), and MBI
may transfer the earnings to its general operating accounts. MBI and
Mallinckrodt shall each pay the fees and expenses of its own referee and
one-half of the fees and expenses of any arbitrator that the two referees
appoint.
(d) In the event of a dispute over a matter relating to Marketing
Review that cannot be resolved by the Committee, MBI and Mallinckrodt shall
attempt to resolve the dispute
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informally in light of the guiding principles in Section 2.16(b). If MBI
and Mallinckrodt are unable to resolve the dispute, the dispute shall not
be referred to referees or subject to arbitration (under Section 2.16(c),
Section 12.01 or otherwise) and Mallinckrodt's position shall be
controlling (as long as it does not involve any cash expenditure by MBI).
(e) In order to assist the Joint Steering Committee in its Marketing
Review, MBI and Mallinckrodt shall establish a joint marketing team (the
"Joint Marketing Team") to make recommendations to the Joint Steering
Committee regarding the timing, budget, manner and other considerations
relevant to the contemplated product launch of ALBUNEX (including, but not
limited to, the Current Product) in any territory or in a particular
country or countries within any territory. These recommendations may
include the use of co-promotion strategies, if considered appropriate. The
Joint Marketing Team shall consist of equal numbers of MBI and Mallinckrodt
representatives and shall adopt procedures to govern its activities
substantially similar to the procedures adopted by the Joint Marketing Team
to govern its activities. The Joint Marketing Team will engage the
services of an independent marketing consultant to give advice regarding
the product launch of FS in the Territory and the Nycomed Territory. The
consulting firm appointed by the Joint Steering Committee shall have a
national or international reputation. Mallinckrodt shall pay the fees and
expenses of the consulting firm appointed under this Section 2.16(e) but
MBI and Mallinckrodt shall jointly own all reports and studies prepared by
such consulting firm pursuant to its appointment under this Section 2.16.
(f) The authority of the Joint Steering Committee in respect of
Clinical Review shall continue indefinitely but shall cease upon 30 days'
prior written notice from Mallinckrodt or MBI to the other given at any
time after the latest of: (i) the date that ALBUNEX is approved for sale
in the United States and in the European Union for an intravenous
myocardial perfusion indication; (ii) the date that ALBUNEX is approved for
sale in the United States and in the European Union for a radiology
indication; (iii) the date that MBI has expended, in accordance with the
direction of the Joint Steering Committee (by a unanimous vote of its
members), the $10 million that MBI is required to spend under Section
2.15(b) and the $5 million that MBI may be required to spend under Section
2.15(c) (as this latter amount may be increased by agreement of the
parties); or (iv) the date that Mallinckrodt ceases to be the exclusive
distributor and sales representative for ALBUNEX sold in and throughout any
territory (except for sub-distributors appointed by Mallinckrodt or an
Affiliate of Mallinckrodt). The authority of the Joint Steering Committee
in respect of Marketing Review shall continue indefinitely but shall cease
in respect of Marketing Review for any territory on the date that
Mallinckrodt ceases to be the exclusive distributor and sales
representative for ALBUNEX sold in and throughout that territory (except
for sub-distributors appointed by Mallinckrodt or an Affiliate of
Mallinckrodt).
ARTICLE 4
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AMENDMENT OF ARTICLE 3 OF ARDA
4.1 NEW SECTION 3.02B. The following provision is added as Section 3.02B
of ARDA:
3.02B ADDITIONAL QUALIFICATION ON EXCLUSIVITY IN NYCOMED TERRITORY.
Mallinckrodt's appointment under Section 3.01(c) as the exclusive
distributor and exclusive sales representative for ALBUNEX sold in and
throughout the Nycomed Territory is subject to the additional qualification
that:
(1) if one or more Competitive Products are being sold in an
Index Country; and
(2) if Mallinckrodt's sales of Related Albunex Products in that
Index Country during any Primary Measurement Period do not equal or
exceed 100% of the sales in that Index Country of the Competitive
Product having the highest sales (by revenues) during the same period;
and
(3) pursuant to Section 3.02B(b), MBI requests the Secondary
Measurement Period to start; and
(4) if Mallinckrodt's sales of the same Related Albunex Products
during the Secondary Measurement Period, as reported to the Joint
Steering Committee by Mallinckrodt pursuant to Section 3.02B(b) or by
an independent marketing consultant pursuant to Section 3.02B(c), do
not equal or exceed 100% of the sales of the Competitive Product
having the highest sales (by revenues) during the same period,
then MBI shall have the right to require Mallinckrodt to appoint a third
party designated by MBI and approved by Mallinckrodt (whose approval shall
not be unreasonably withheld) as a distributor of the Related Albunex
Products in that Index Country, as provided in Section 3.02B(d).
(a) Mallinckrodt's sales of Related Albunex Products shall be
measured by the aggregate Net Sales during the Primary or Secondary
Measurement Period, as the case may be, of each of the separate Albunex
Products comprising the Related Albunex Products. Sales of Competitive
Products shall be measured in a substantially equivalent manner. If the
necessary information is unavailable to permit sales of Competitive
Products to be measured in a substantially equivalent manner, both
Mallinckrodt's sales and sales of Competitive Products shall be measured
using an alternative methodology acceptable to MBI and Mallinckrodt.
(b) Mallinckrodt shall monitor sales of all Competitive Products, if
any, and shall informally report to the Joint Steering Committee at least
quarterly on sales of Competitive Products and formally report to the
Committee on sales of Competitive Products during each Primary Measurement
Period as soon as the relevant information
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becomes available. If Mallinckrodt's sales of Related Albunex Products in
an Index Country during any Primary Measurement Period, as reported to the
Joint Steering Committee by Mallinckrodt pursuant to this Section 3.02B(b)
or by an independent marketing consultant pursuant to Section 3.02B(c), do
not equal or exceed 100% of the sales in that Index Country of the
Competitive Product having the highest sales (by revenues) during the same
period, MBI may request the Secondary Measurement Period to start by
written notice to Mallinckrodt within 30 days after the Joint Steering
Committee's receipt of Mallinckrodt's report or the report of the
independent marketing consultant, as the case may be. Mallinckrodt shall
report to the Joint Steering Committee on sales of all Competitive Products
during the Secondary Measurement Period as soon as the relevant information
becomes available.
(c) If MBI reasonably questions the accuracy of any report by
Mallinckrodt to the Joint Steering Committee pursuant to Section 3.02B(b),
the Joint Steering Committee shall promptly engage the services of an
independent marketing consultant to review Mallinckrodt's report and
independently determine sales of Competitive Products during the Primary or
Secondary Measurement Period, as the case may be. If the report by the
independent marketing consultant confirms Mallinckrodt's report to the
Joint Steering Committee, MBI shall pay the independent marketing
consultant's fees and expenses; and if the report by the independent
marketing consultant does not confirm Mallinckrodt's report to the Joint
Steering Committee, Mallinckrodt shall pay the independent marketing
consultant's fees and expenses. Each consulting firm appointed by the
Joint Steering Committee shall have a national or international reputation.
(d) MBI's right under this Section 3.02B to require Mallinckrodt to
appoint a third party designated by MBI (and approved by Mallinckrodt) as a
distributor of Related Albunex Products in an Index Country shall become
exercisable, subject to Section 3.02B(e), if and when (i) pursuant to
Section 3.02B(b), Mallinckrodt reports to the Joint Steering Committee, or
(ii) pursuant to Section 3.02B(c), an independent marketing consultant
reports to the Joint Steering Committee, that Mallinckrodt's sales of
Related Albunex Products during the Secondary Measurement Period did not
equal or exceed 100% of the sales of the Competitive Product having the
highest sales (by revenues) during the same period. If MBI's right becomes
exercisable, MBI's right shall remain exercisable for a period of 180 days
and may be exercised at any time during this period by written notice to
Mallinckrodt. If MBI exercises its right:
(1) Mallinckrodt shall promptly negotiate the terms of a
distribution agreement with the third party designated by MBI (and
approved by Mallinckrodt) and shall propose terms generally consistent
with the terms of comparable distribution agreements that Mallinckrodt
has entered into with other parties. Mallinckrodt shall keep MBI
reasonably informed of its negotiations with the third party.
(2) If for any reason any third party that MBI initially or
subsequently designates (and Mallinckrodt approves) fails or refuses
to enter into a distribution agreement with Mallinckrodt on the terms
described in Section 3.02B(d)(1) within
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90 days after Mallinckrodt begins negotiations, MBI shall have the
right, which may be exercised only once in respect of any Index
Country, to designate a new third party (subject to Mallinckrodt's
approval, which shall not be unreasonably withheld) with whom
Mallinckrodt shall be required to negotiate a distribution agreement
in accordance with this Section 3.02B(d).
Any distribution agreement that Mallinckrodt otherwise may be required to
enter into under this Section 3.02B(d) may be entered into by an Affiliate
of Mallinckrodt.
(e) MBI's right under this Section 3.02B to require Mallinckrodt to
appoint a third party designated by MBI (and approved by Mallinckrodt) as a
distributor of Related Albunex Products in an Index Country shall not
become exercisable under Section 3.02B(d) if:
(1) the Related Albunex Products are not substantially
equivalent or superior in their clinical profiles (in terms of safety
and efficacy) to the clinical profile of the Competitive Product
having the highest sales (by revenues) during the Primary Measurement
Period; or
(2) the approval (in respect of both regulatory approval and
pricing approval) for the commercial sale in the Index Country of any
Related Albunex Product did not occur within six months after the
first commercial sale of the Competitive Product having the highest
sales (by revenues) during the Primary Measurement Period; or
(3) Mallinckrodt's appointment under Section 3.01(c) as the
exclusive distributor and exclusive sales representative for ALBUNEX
sold in and throughout the Nycomed Territory has become co-exclusive
pursuant to MBI's exercise of its option under Section 3.02(b) of ARDA
or pursuant to Section 9.01(a) or (b) of ARDA.
4.2 AMENDMENT OF SECTION 3.06(a). Section 3.06(a) of ARDA is amended to
read as follows:
3.06 DUTIES OF MALLINCKRODT. In addition to its other duties
hereunder, Mallinckrodt shall:
(a) Treat ALBUNEX as an important contrast product in the same manner
that Mallinckrodt traditionally prepares for the marketing of and markets
its important contrast line of products for purposes of Mallinckrodt's
pre-marketing, marketing, sales and distribution efforts and expenditures.
By way of guidance in the interpretation of Mallinckrodt's responsibilities
under this section, Mallinckrodt has informed MBI that it considers ALBUNEX
to have the potential to be a leading product within Mallinckrodt's product
portfolio in terms of its importance to Mallinckrodt's revenues and net
income, and that Mallinckrodt will support the pre-market preparation,
product launch, marketing
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support and distribution of ALBUNEX in a manner that will maximize
Mallinckrodt's return on the product given its potential at the time that
further investment in the product is considered. Mallinckrodt's marketing,
sales and distribution efforts regarding ALBUNEX shall place emphasis on
all relevant clinical indications of ALBUNEX, market segments and
appropriate geographical regions in the Territory, the Additional Territory
and the Nycomed Territory, and the recruitment of medical and scientific
opinion leaders;
4.3 AMENDMENT OF SECTION 3.07. Section 3.07 of ARDA is amended to read as
follows:
3.07 MARKETING.
(a) Promptly after Mallinckrodt's annual marketing and sales plan for
ALBUNEX is approved internally each year, Mallinckrodt shall provide MBI
with an appropriately detailed summary of the plan for MBI's internal use.
(b) Mallinckrodt shall, from time to time and in its sole discretion,
establish the prices at which ALBUNEX shall be sold by it or its
Affiliates. Terms of all sales, including but not limited to credit,
billing and shipments, shall be established by Mallinckrodt in its sole
discretion.
(c) If (i) Mallinckrodt or an Affiliate of Mallinckrodt proposes to
enter into a distribution or other agreement for the sale and distribution
of ALBUNEX with a third party other than a third party designated by MBI
purusant to Section 3.02B (a "Distributor"), (ii) the agreement would
require the Distributor to make upfront payments to Mallinckrodt or its
Affiliate as a condition of being appointed a distributor and (iii) the
agreement would require Mallinckrodt or its Affiliate to pay a commission
(or make other payments) to the Distributor in respect of the Distributor's
sales of ALBUNEX to end users, then:
(1) Mallinckrodt or its Affiliate shall consult with MBI
regarding the allocation between them of the benefit of the upfront
payments and the burden of the commissions (or other) payments;
(2) MBI shall have 30 days from the date that Mallinckrodt or
its Affiliate provides MBI with written notice of the relevant details
in which to give written notice to Mallinckrodt or its Affiliate of
the portion, if any (but in no event exceeding 40% without the written
consent of Mallinckrodt or its Affiliate), of the upfront payments
from the Distributor that MBI elects to have paid over to MBI;
(3) if MBI elects to have Mallinckrodt or its Affiliate pay over
a portion of the upfront payments from the Distributor, Mallinckrodt
or its Affiliate shall do so within 30 days after receipt of the
upfront payments, and MBI shall reimburse Mallinckrodt or its
Affiliate, within 30 days after receipt of written notice of payment,
for the same percentage of each commission (or other) payment that
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Mallinckrodt or its Affiliate pays to the Distributor in accordance
with the terms of the distribution or other agreement; and
(4) if MBI does not elect to have Mallinckrodt or its Affiliate
pay over any portion of the upfront payments, or if MBI fails to
respond within 30 days to the written notice from Mallinckrodt or its
Affiliate of the relevant details, neither Mallinckrodt (or its
Affiliate) nor MBI shall have any obligation to the other in respect
of the upfront and commission (or other) payments.
(d) If (i) Mallinckrodt or an Affiliate of Mallinckrodt enters into a
distribution or other agreement for the sale and distribution of ALBUNEX
with a Distributor, (ii) the agreement requires the Distributor to make
upfront payments to Mallinckrodt or its Affiliate as a condition of being
appointed a distributor and (iii) the agreement does not require
Mallinckrodt or its Affiliate to pay a commission (or make other payments)
to the Distributor in respect of the Distributor's sales of ALBUNEX to end
users, then Mallinckrodt or its Affiliate shall pay 40% of the upfront
payments to MBI within 30 days after receipt of the upfront payments.
(e) If Mallinckrodt or an Affiliate of Mallinckrodt enters into a
distribution or other agreement for the sale and distribution of ALBUNEX
with a third party designated by MBI pursuant to Section 3.02B (a
"MBI-Designated Distributor"), then:
(A) Mallinckrodt or its Affiliate shall pay 40% of the upfront
payments, if any, paid by the MBI-Designated Distributor to MBI within
30 days after receipt of the upfront payments; and
(B)MBI shall reimburse Mallinckrodt or its Affiliate for 40% of
each commission (or other payment), if any, paid to the MBI-Designated
Distributor within 30 days after receipt of written notice of payment
from Mallinckrodt or its Affiliate.
(f) Sections 3.07(c), (d) and (e) shall not apply in respect of any
territory if and when Mallinckrodt is entitled to manufacture ALBUNEX for
sale in that territory pursuant to Section 7.01(c).
ARTICLE 5
MISCELLANEOUS
5.1 INTERPRETATION. As amended by this Amendment, ARDA remains in full
force and effect. In the event of inconsistency or conflict between any
provisions of this Amendment and the provisions of ARDA, the provisions of this
Amendment shall control.
5.2 RESEARCH QUANTITIES. MBI has received requests from researchers and
clinicians for samples of the Current Product. MBI may (but shall not be
required to) fill these requests if doing so is legally permissible as long as
the quantities provided are minimal and intended
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only for non-clinical basic research. MBI shall keep Mallinckrodt promptly and
fully informed of MBI's activities in this regard.
5.3 COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
In witness, the parties have executed this Amendment.
MALLINCKRODT MEDICAL, INC.
By /s/ X.X. Xxxxxxx
------------------------------------
Name: X.X. Xxxxxxx
--------------------------
Title:
--------------------------
MOLECULAR BIOSYSTEMS, INC.
By /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
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