Exhibit 10.6
[REDACTED - OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION AND
IS DENOTED HEREIN BY **.]
COMMERCIALIZATION AGREEMENT
AMONG
PILOT THERAPEUTICS INC.
AND
INNOVEX LP
TABLE OF CONTENTS
PAGE
ARTICLE 1 SERVICES OVERVIEW; INNOVEX EXCLUSIVITY............................1
1.1 Definitions................................................1
1.2 Overview; Pilot Engagement of Innovex......................1
1.3 Innovex Exclusive Rights...................................1
1.4 Retained Rights by Pilot...................................1
ARTICLE 2 COMMITTEES........................................................2
2.1 Joint Marketing Committee ("JMC")..........................2
2.1.1 Formation; Purposes and Principles.........................2
2.1.2 Membership.................................................2
2.1.3 Meetings...................................................3
2.2 Agendas and Minutes for the JMC............................3
2.3 No Authority to Modify Agreement...........................3
ARTICLE 3 MARKETING PLAN; DETERMINATION OF FULLY LOADED COST................4
3.1 Marketing Plan.............................................4
3.2 Plan Contents..............................................4
3.3 Determination of Fully Loaded Cost.........................4
3.3.1 Baseline for Fully Loaded Cost of Sales Force..............5
ARTICLE 4 INNOVEX RESPONSIBILITIES..........................................5
4.1 Covenant to Operate under the Agreement; General Diligence
Requirement................................................5
4.2 Marketing Services.........................................5
4.2.1 Marketing Representative...................................5
4.3 Hiring Sales Force.........................................5
4.4 Fully Dedicated or Syndicated Sales Force..................6
4.5 Training Requirements......................................6
4.6 Innovex Responsibilities...................................6
4.7 Records and Reports Regarding Promotional Activities.......7
4.8 Performance Audits.........................................7
ARTICLE 5 PILOT'S RESPONSIBILITIES AND OBLIGATIONS..........................7
5.1 Regulatory Affairs.........................................7
5.2 Minimum Pre-Launch Marketing Commitment....................7
i.
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5.3 Minimum Sales Force Expenditure...........................7
5.4 Obligation to Provide Samples..............................8
5.5 Sales and Distribution.....................................8
5.5.1 Pricing....................................................8
5.5.2 Booking Sales; Distribution................................8
5.5.3 Product Returns............................................8
5.6 PILOT Responsibilites......................................8
ARTICLE 6 TRAINING; ADVERTISING AND PROMOTIONAL MATERIALS...................8
6.1 Training Programs..........................................8
6.1.1 Content....................................................8
6.1.2 Cost.......................................................9
6.2 Advertising and Promotional Materials......................9
6.2.1 Creation and Use...........................................9
6.2.2 Ownership; FDA Approval....................................9
6.2.3 PILOT Logos................................................9
ARTICLE 7 REGULATORY ISSUES AND COMPLAINTS..................................9
7.1 Ownership of Regulatory Filings and Compliance.............9
7.2 Communication with the FDA and Other Regulatory Agencies..10
7.3 New Developments Relating to Product......................10
7.4 Product Recalls...........................................10
7.5 Adverse Event Reporting Procedures........................10
7.6 Product Inquiries; Complaints.............................10
7.7 Database of Clinical Trial Data...........................11
ARTICLE 8 ACCOUNTING; INVOICING AND PAYMENT................................11
8.1 Accounting................................................11
8.2 Payment Schedule .........................................11
8.3 Payment of Invoices.......................................11
8.3.1 Wiring Instructions.......................................11
8.4 Penalty for Late Payment..................................11
8.5 Record Keeping and Financial Audits.......................11
ii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE 9 REPRESENTATIVES AND COVENANTS ...................................12
9.1 Mutual Authority..........................................12
9.1.1 Corporate Power...........................................12
9.1.2 Due Authorization.........................................12
9.1.3 Binding Agreement.........................................12
9.1.4 Grant of Rights; Maintenance of Agreements................12
9.1.5 Validity..................................................13
9.2 Conformance with Laws.....................................13
9.3 Rights in Product.........................................13
9.4 Record Maintenance........................................13
9.5 Firewall..................................................14
9.6 No Use of Names or Trademarks.............................14
9.7 NDA Filing................................................14
9.8 Independent Contractor....................................14
ARTICLE 10 CONFIDENTIALITY.................................................14
10.1 Confidential Information..................................14
10.2 Ownership of Data; No License.............................14
10.3 Survival................................................. 15
ARTICLE 11 INDEMNIFICATION.................................................15
11.1 Indemnification by PILOT..................................15
11.2 Indemnification by Innovex................................15
11.3 Procedure.................................................15
11.4 No Consequential Damages..................................16
11.5 PILOT Responsibility for Product Description..............16
11.6 Insurance.................................................16
ARTICLE 12 TERM AND TERMINATION............................................16
12.1 Term......................................................16
12.2 Renewal...................................................16
12.3 Material Breach...........................................16
12.4 No Product Launch.........................................17
iii.
TABLE OF CONTENTS
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12.5 Bankruptcy................................................17
12.6 Accrued Rights ...........................................17
12.7 Right to Receive Data.....................................18
12.8 Survival..................................................18
ARTICLE 13 SALES FORCE CONVERSION..........................................18
13.1 Right to Convert Sales Force..............................18
13.2 Transition Plan...........................................18
13.3 PILOT Determination.......................................18
13.4 Proprietary Information...................................18
ARTICLE 14 DISPUTE RESOLUTION..............................................19
14.1 Disputes..................................................19
14.2 Governing Law.............................................19
ARTICLE 15 MISCELLANEOUS...................................................19
15.1 Return of Materials.......................................19
15.2 Nonsolicitation of Employees..............................19
15.3 Entire Agreement; Amendment...............................20
15.4 Force Majeure.............................................20
15.5 Notices...................................................20
15.6 Consents Not Unreasonably Withheld or Delayed.............21
15.7 Maintenance of Records....................................21
15.8 United States Dollars.....................................21
15.9 No Strict Construction....................................21
15.10 Assignment................................................21
15.11 Performance by Affiliates.................................22
15.12 Counterparts..............................................22
15.13 Further Actions...........................................22
15.14 Severability..............................................22
15.15 Ambiguities...............................................22
15.16 Headings..................................................22
15.18 No waiver.................................................22
iv.
TABLE OF CONTENTS
(CONTINUED)
PAGE
EXHIBIT A
DEFINITIONS.........................................................A-1
EXHIBIT B
MARKETING PLAN OUTLINE..............................................B-1
EXHIBIT C
COST ALLOCATION FOR POST-APPROVAL MARKETING ACTIVITIES..............C-1
SCHEDULE I
INNOVEX RESPONSIBILITIES...........................................SI-1
SCHEDULE II
PILOT RESPONSIBILITIES & OBLIGATIONS, PILOT SALES PROJECT.........SII-1
SCHEDULE III
ROLE DEFINITIONS.................................................SIII-1
v.
COMMERCIALIZATION AGREEMENT
THIS COMMERCIALIZATION AGREEMENT (the "Agreement") is made effective as
of the ___ day of June, 2001 (the "Effective Date") by and between PILOT
THERAPEUTICS, INC., a corporation organized and existing under the laws of North
Carolina, having its principal place of business at 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxx-Xxxxx, XX 00000 ("Pilot"), and INNOVEX LP, a New Jersey
limited partnership with its principal place of business at 00 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx, XX 00000 ("Innovex"), each on behalf of itself and its
Affiliates. Pilot and Innovex are sometimes referred to herein individually as a
"Party" and collectively as the "Parties."
In consideration of the following covenants, promises and obligations,
Pilot and Innovex agree as follows.
ARTICLE 1
SERVICES OVERVIEW; INNOVEX EXCLUSIVITY
1.1 DEFINITIONS. Capitalized terms used but not defined in the text of
this Agreement shall have the meanings ascribed to them on Exhibit A hereto.
1.2 OVERVIEW; PILOT ENGAGEMENT OF INNOVEX. Pursuant to this Agreement,
the Parties will collaborate to develop and sustain a market for and promote the
Product (as defined in Exhibit A) in the Territory for all indications. Pilot
shall engage Innovex and/or Innovex Affiliates to provide certain pre- and
post-launch marketing activities ("Marketing Services") and the recruitment,
deployment and management of a dedicated sales force ("Sales Force Services"
and, together with any Marketing Services, "Services") for the Product, all as
provided herein. In recognition of the various undertakings provided to Pilot
herein, Pilot shall pay Innovex (or the Innovex Affiliate as the case may be)
the compensation as set forth herein. While the Parties have allocated their
respective responsibilities under this Agreement, the Parties intend this
program to be broadly collaborative, and seek to achieve consensus-based
decision making to the extent practical, with the common objective of maximizing
the short-term and long-term commercial success of the Product in the Territory,
subject to the terms and conditions of this Agreement.
1.3 INNOVEX EXCLUSIVE RIGHTS. During the Term, Innovex (either itself
or through an Affiliate) shall have the exclusive right to provide Sales Force
Services for the Product in the Territory. If Pilot engages Innovex to perform
Marketing Services hereunder, both pre- and post-launch, advertising and
promotional activities related to the Product in the Territory will be
integrated with field sales activities through the Marketing Plan in accordance
with this Agreement. Innovex shall not have any rights with respect to the
Product outside of the Territory.
1.4 RETAINED RIGHTS BY PILOT. Except as otherwise expressly provided in
Section 1.3, Pilot shall retain all right, title and interest in and to the
Product including, but not limited to, owning all clinical trial data and
designs, protocols, regulatory filings for the Product and data in support
thereof, the Marketing Plan (except that Innovex retains the right to use any
Innovex proprietary materials or information contained therein), and all
manufacturing, distribution of finished products to designated third party
distributor, patent, copyright, trade secret and trademark rights relating to
1.
the Product. No license is granted to Innovex hereunder, either directly or by
implication. Innovex acknowledges that any study sponsored by or under the
direction of Pilot is a proprietary program of Pilot, containing trademarks,
trade secrets and other intellectual property of Pilot, whether or not such
rights are utilized in the marketing, promotion or sale of the Product.
ARTICLE 2
COMMITTEES
2.1 JOINT MARKETING COMMITTEE ("JMC").
2.1.1 FORMATION; PURPOSES AND PRINCIPLES. The JMC, subject to
Pilot's tie-breaking vote, shall have overall responsibility for the success of
the matters related to the Product in the Territory as established by this
Agreement, including without limitation: (i) to review and approve the pre- and
post-launch Marketing Plan as well as any other matters required for the sales
and promotion of the Product in the Territory, except to the extent that certain
matters are solely the responsibility of a single Party under this Agreement;
(ii) to determine the overall strategy for marketing, promotion and sales of the
Product in the Territory; (iii) to advise, provide input and determine strategy
for future clinical and/or marketing studies; (iv) to plan and coordinate the
Parties' activities hereunder related to sales and marketing of the Product in
the Territory; (v) to adopt and approve plans and budgets for the services under
this Agreement, including the Marketing Plan, consistent with the maximization
of short-term and long-term profits derived from the sale of the Product in the
Territory and any other activities related to sales and marketing of the Product
in the Territory that the JMC deems appropriate to achieve the Parties'
objectives under this Agreement; (vi) to request the creation of sales, pricing,
and financial reports pertaining to pre- and post-launch Marketing Services and
other marketing activities that may be provided by third parties, and to review
such reports in preparation for making recommendations; (vii) facilitate the
flow of information among the Parties, including coordinating sales activity
with manufacturing schedules and distribution; and (viii) to resolve disputes of
the Parties, subject to Article 14. Without limiting the generality of the
foregoing provisions, all (a) territory alignment, mapping and optimization
services proposed to be provided by Innovex hereunder and (b) regional or
district meetings of all or any portion of the Sales Force proposed to be called
or held by Innovex hereunder, including the locations and budgets therefor, must
be approved in advance by the JMC.
2.1.2 MEMBERSHIP. The JMC will be comprised of an equal number
of Pilot and Innovex representatives, not exceeding four representatives of each
Party unless otherwise mutually agreed. The JMC shall be chaired by a
representative of Pilot. Pilot will have the tie-breaking vote on all JMC
decisions (but, for the avoidance of doubt, Pilot shall not be entitled to use
such tie-breaking vote to unilaterally amend the Agreement or to establish (i)
the "Pre-Launch Sales Forecast," (ii) the sales force size, or (iii) the budget
for "Sales and Marketing Expenses" and the resulting "Commitment Amount" (all
such terms are as defined in the Investment Agreement). To the extent the JMC is
not unanimous with respect to any of the matters set forth in clauses (i-iii)
above, the process outlined in Section 3.3 of the Investment Agreement shall be
followed. Either Party may appoint, substitute or replace members of the JMC to
serve as their representatives upon notice to the other Party. The Parties shall
appoint the initial members of the JMC within twenty (20) days after the
Effective Date.
2.
2.1.3 MEETINGS. The JMC shall meet in person, by video or by
teleconference (as mutually agreed by the Parties from time to time) on a
quarterly basis or more frequently as may be agreed upon, to exercise its
responsibilities as set forth in Section 2.1.1 of this Agreement, and to review
the progress of the Parties in performing the functions and obligations under
this Agreement. All reasonable labor, travel and related costs actually incurred
by Innovex representatives to attend JMC meetings will be reimbursed by Pilot in
accordance with budgets to be approved by the JMC or otherwise approved by
Pilot. Location of meetings shall be determined by Pilot and shall be at Pilot
headquarters in Winston-Salem or Innovex headquarters in New Jersey, or at such
other locations as may be mutually agreed by the Parties. In order for a meeting
of the JMC to be convened, such meeting must include at least one (1) committee
member of each Party and, provided this condition is met, any action agreed upon
by all JMC members present at such meeting shall be deemed to be duly and
validly taken by the JMC and shall have the same force and effect as if taken
unanimously by the entire JMC.
2.2 AGENDAS AND MINUTES FOR THE JMC. Unless otherwise decided by the
JMC, each Party will use reasonable efforts to disclose to the chair all
proposed agenda items along with appropriate background or supporting
information at least twenty (20) working days in advance of a JMC meeting. The
chair use reasonable efforts to will present an agenda with appropriate
background or supporting information at least ten (10) working days in advance
of a JMC meeting. At each meeting of the JMC, the JMC shall select a secretary
who will prepare, within five (5) working days after each meeting (whether held
in person, by video or by telecommunication), the minutes reporting in
reasonable detail the actions taken or to be taken by the JMC, or its designees,
the attendees, the status of goals and achievements as well as issues requiring
resolution, and resolutions of previously reported issues, which minutes shall
be signed by one of the JMC representatives from each of the Parties.
2.3 NO AUTHORITY TO MODIFY AGREEMENT. The JMC shall have no authority
to amend or waive compliance with the terms and conditions of this Agreement, or
to approve actions of the Parties which are inconsistent with this Agreement.
Any such amendments and waivers or actions shall be implemented by means of
Section 15.3.
ARTICLE 3
MARKETING PLAN; DETERMINATION OF FULLY LOADED COST
3.1 MARKETING PLAN. The principal mechanism by which the Parties
coordinate their sales and marketing activities will be a Marketing Plan, to be
prepared and periodically updated as set forth below. Within two (2) months
after the Effective Date, the JMC shall approve the Marketing Plan. A draft
Marketing Plan shall be prepared by members of the JMC or its designees, and
submitted to the JMC for approval. The initial Marketing Plan will cover the
remainder of calendar year 2001 through the first year following Product Launch.
Periodically thereafter, but no less frequently than annually (according to a
schedule to be established by the JMC), the JMC shall be responsible for causing
the preparation or updating, and approving, the Marketing Plan. Each Marketing
Plan shall include at least a two (2) year projection of Product plans and
budgets.
3.2 PLAN CONTENTS. Each Marketing Plan shall include a review of the
marketplace, marketing objectives, strategies, and supporting tactics (with
respective costs, timing, and
3.
responsibilities), clinical support plans, marketing study plans for future
clinical and/or marketing studies, Sales Force effort, pricing, inventory
requirements and distribution plans for the Product, together with sales,
revenue and expense forecasts for Product sales in the Territory. The content of
the Marketing Plan shall be determined by the JMC, but shall generally be in a
form consistent with the outline attached hereto as Exhibit B, and shall include
among other items the overall level of anticipated field sales resource
commitments.
3.3 FULLY LOADED COST; WORK ORDERS. Innovex Marketing Services and
Sales Force Services under this Agreement shall be payable by Pilot on the basis
of the "Fully Loaded Cost" of such activities, except that, notwithstanding
anything in this Section 3.3 or elsewhere in this Agreement to the contrary, the
Fully Loaded Cost for Sales Force Services (and the maximum amounts payable
hereunder for such Sales Force Services by Pilot) shall be as set forth in
Section 3.3.1). Fully Loaded Cost means the usual and customary fee charged by
Innovex (or the Innovex Affiliate, as the case may be) to Third Parties under a
fee for service arrangement for the type of services rendered by it pursuant to
this Agreement (such fee to be based on services of comparable volume and
comparable quality), inclusive of the service provider's customary profit margin
for such volume and quality of service. Fully Loaded Cost shall be adjusted on
an annual basis for increases caused by cost of living increases, merit salary
increases and similar financial adjustments necessary to maintain continuity of
the personnel and resource commitments. Prior to Innovex providing any Services
hereunder, the Parties shall execute a Work Order setting forth the Services to
be provided. The Parties shall update such Work Order as needed to reflect
changes in the Services being provided and/or changes in the usual and customary
fees charged by Innovex and Innovex Affiliates. The Parties shall agree in
advance on any new or revised type or volume of services, or changes to the
pricing of such services, by executing an appropriate Change Order.
3.3.1 INITIAL SALES FORCE; DETERMINATION OF FULLY LOADED COST.
Conditional upon the prior written approval of the JMC, (i) Innovex will provide
to Pilot the Sales Force beginning in January 2002 (the anticipated Sales Force
Commencement Date) and continuing for 5 years and (ii) the Sales Force will
consist initially of ** Sales Representatives and reasonable and necessary
management and administrative support (including 5 Field Managers). The Fully
Loaded Costs shall be $** annually for each Sales Representative and
$ ** annually for each Field Manager, based upon the Sales Force Services to
be provided as set forth on Exhibit C. These Fully Loaded Costs shall be
increased annually (on each anniversary of the Sales Force Commencement Date) by
4% or by a percentage increase equal to the percentage increase in the Consumer
Price Index (all products) during the most recently completed calendar year, and
otherwise only as a result of a change in the scope of the Sales Force Services
from that set forth on Exhibit C or the size of the Sales Force or a significant
and material delay in the Sales Force Commencement Date. The JMC may advance or
delay the Sales Force Commencement Date or change the size of the Sales Force as
necessary. In the event a Syndicated Sales Force is recommended by the JMC,
pursuant to Section 4.4 of this Agreement, the Fully Loaded Cost shall be
determined by Innovex (not to exceed the amounts set forth above, as adjusted as
set forth above), and Pilot shall be responsible for the entirety of such Fully
Loaded Cost, except for such portions of the Fully Loaded Cost as may be
contractually undertaken by one or more third parties with the consent of
Innovex, which consent shall not be unreasonably withheld.
4.
ARTICLE 4
INNOVEX RESPONSIBILITIES
4.1 COVENANT TO OPERATE UNDER THE AGREEMENT; GENERAL DILIGENCE
REQUIREMENT. Innovex shall use commercially reasonable efforts to market and
sell the Product in the Territory in accordance with the Marketing Plan, the
Promotional Materials, this Agreement and all applicable laws, rules and
regulations. Except as expressly set forth in this Agreement, the criteria for
Innovex performance shall be consistent with the usual and customary industry
standards for sales and marketing projects of similar size and scope and shall
be according to performance metrics to be established by mutual agreement of the
Parties prior to creation of the Sales Force and monitored by the JMC.
4.2 MARKETING SERVICES. In accordance with the criteria established in
Section 4.0 of the Investment Agreement, Innovex (and its Affiliates within the
Quintiles Commercialization Group, North America) will be given the first and
preferred opportunity to negotiate with Pilot to provide marketing services
outlined in the Marketing Plan. Pilot shall have the final authority in regard
to selection of Innovex or a third party to provide marketing services (provided
that any such marketing services provided by Innovex shall be "Marketing
Services" hereunder). Innovex shall provide certain pre- and post-launch
marketing services on a fee-for-service basis, charging the Fully Loaded Cost,
in accordance with the Marketing Plan approved by the JMC. Pre- and post-launch
Marketing Services shall include the Fully Loaded Cost for Innovex to provide a
Marketing Representative, as defined herein. Pilot may not retain any third
party to provide marketing services unless Pilot has received a proposal for
such marketing services from Innovex or an Innovex Affiliate (or written notice
from Innovex that Innovex will not provide such marketing services); provided,
that this condition is expressly subject to Innovex's obligation to provide such
proposal as soon as practicable after receiving notice that Pilot desires such
marketing services (but, in any event, within a reasonable and customary period
after receiving such notice). Subject to the foregoing, prior to Pilot retaining
any third party to provide marketing services, Pilot shall present to Innovex
the proposed specifications to be assigned to and prices to be charged by the
third party and Innovex or the relevant Innovex Affiliate shall be given a
reasonable opportunity to revise its proposal. So long as the pricing
(including, without limitation, the timing of expected payments from Pilot) and
capabilities (including, without limitation, the ability to meet Pilot's
timeline) of Innovex or the relevant Innovex Affiliate are competitive to those
of the proposed third party, as determined by Pilot in its reasonable
discretion, then Innovex or the Innovex Affiliate shall be awarded the business.
4.2.1 MARKETING REPRESENTATIVE. An initial activity of the JMC
will be the approval of an Innovex employee as the primary marketing
representative for the Product (the "Marketing Representative") to coordinate
and/or commence Marketing Services and other marketing activities, including
participation with and supporting the JMC members in the design of the pre- and
post-launch Marketing Plan. Innovex will recommend for Pilot's approval a
qualified employee for this role, who shall be assigned full-time, unless
otherwise agreed by the JMC. The Marketing Representative shall aggressively
drive marketing and related pre- and post-launch recommendations. As
appropriate, the Marketing Representative will recommend to the JMC when
additional resources are needed, on a dedicated or non-dedicated basis, to
optimize marketing results. As a component of pre-launch marketing activities,
the Marketing Representative will
5.
recommend to the JMC solutions on a variety of ancillary relationships,
including, but not limited to distribution relationships. Within 12-18 months
following Product Launch (as determined by Pilot), the Marketing Representative
position will be held by an employee of Pilot, either by Pilot hiring the
Innovex employee that then holds the Marketing Representative position, or by
hiring a new Pilot employee to be approved by the JMC.
4.3 HIRING SALES FORCE. Innovex shall hire, train and maintain the
Sales Force for promotion of the Product in the Territory on the terms and
conditions of this Agreement, which shall be completed at least one (1) month in
advance of the date of the expected Launch (as communicated by the JMC to
Innovex in writing at least four (4) months in advance of the expected Launch).
The hiring standards for the members of the Sales Force shall be established by
the JMC. The Innovex Sales Force(s) size will be determined by the JMC from time
to time.
4.4 FULLY DEDICATED OR SYNDICATED SALES FORCE. During the Term, the
only activity of the Sales Force shall be the marketing and promotion of the
Product in the Territory, unless otherwise approved in advance by the JMC. The
Sales Force shall be composed of full-time employees of Innovex. The JMC may
recommend using the P2 and/or P3 positions to promote non-conflicting compounds
or devices, subject to Pilot consent, which consent shall not be unreasonably
withheld; provided, that Pilot shall have the first option to place Pilot's
non-conflicting products, or non-conflicting products Pilot identifies or
acquires, in the P2 and P3 positions as the positions may become available
during the Term (as defined in Section 12.1). In the event Pilot exercises its
right to use the P2 and/or P3 positions, the cost charged to Pilot for such
positions shall be not more than the Fully Loaded Cost (determined pursuant to
Sections 3.3 and 3.3.1), subject to a reasonable discount to the extent the
product in either or both of such positions is complementary to the Product as
determined in the good faith discretion of the JMC, or as otherwise agreed by
Innovex and Pilot.
4.5 TRAINING REQUIREMENTS. Innovex shall train all Innovex Personnel in
accordance with Article 6 hereof.
4.6 INNOVEX RESPONSIBILITIES. Without limitation a partial list of
responsibilities of Innovex in providing Sales Force Services are set forth on
Schedule I to this Agreement.
4.7 RECORDS AND REPORTS REGARDING PROMOTIONAL ACTIVITIES. Innovex shall
promptly provide to Pilot such information regarding ongoing sales and marketing
activities as relate to the plans and budgets hereunder as Pilot may reasonably
request and which are reasonably available to Innovex. Additionally, Innovex
will keep complete and accurate records of all presentations made by the Sales
Force in accordance with Innovex's customary call reporting procedures
(including names of physicians, dates of presentation and general response to
such presentations) as well as other activities carried out pursuant to the
Marketing Plan. Innovex will make all such records available to Pilot during
regular business hours and upon reasonable notice, and will, within fifteen (15)
days of the end of each month, provide Pilot a monthly report on sales force
activity. Innovex will maintain such records for three (3) years following the
period to which they relate. The record-keeping and access requirements of this
Section 4.7 shall survive the termination of this Agreement for a two (2) year
period.
4.8 PERFORMANCE AUDITS. Pilot shall have the right to audit Innovex's
performance of obligations as set forth in this Article 4, including other
provisions as described in the Schedules
6.
attached hereto (generally describing the activities of the Parties) for the
purpose of evaluating and monitoring conformance with the terms and conditions
of this Agreement. Such audits shall occur during regular business hours and
upon reasonable notice, shall not interfere with Innovex activities, and shall
be conducted at Pilot's sole expense. In the event an outside auditor is hired
to conduct an audit pursuant to this Section 4.8, such auditor shall be
reasonably acceptable to Innovex and expressly subject to the same
confidentiality provisions as apply to the Parties hereunder.
ARTICLE 5
PILOT'S RESPONSIBILITIES AND OBLIGATIONS
5.1 REGULATORY AFFAIRS. Pilot shall have the responsibilities for
regulatory affairs set forth in Article 7, and shall keep the JMC informed
generally on the status and conduct of all clinical development activities
related to the Product in the Territory. Pilot shall inform Innovex of its
estimated date of Product Launch, and in particular shall provide such date for
purposes of Innovex's establishment of the Sales Force under Section 4.3.
5.2 MINIMUM PRE-LAUNCH MARKETING SERVICES COMMITMENT. USE OF LOAN
PROCEEDS. Pilot shall spend a minimum of $1,200,000 on pre-launch marketing
activities (whether through Innovex or otherwise), or such lesser amount as may
be approved unanimously by the JMC. For the avoidance of doubt, the fees and
expenses for such pre-launch marketing activities may be paid by Pilot through
advances under its loan from PharmaBio.
5.3 MINIMUM SALES FORCE EXPENDITURE. Pilot shall be responsible for
purchasing and maintaining Sales Force Services from Innovex and Innovex
Affiliates in an amount equal to the "Minimum Sales Force Level," as defined in
the Investment Agreement; provided that the sole remedy for Pilot's failure to
maintain the Minimum Sales Force Level shall be as provided in the Investment
Agreement.
5.4 OBLIGATION TO PROVIDE SAMPLES. Pilot will provide to Innovex for
distribution the quantity and configuration of Samples as determined appropriate
by the JMC to support the Sales Force Services, consistent with the Marketing
Plan and forecasts.
5.5 SALES AND DISTRIBUTION.
5.5.1 PRICING. Pilot, with the advice of the JMC, shall set
all prices and commercial terms for the sale of the Product in the
Territory.
5.5.2 BOOKING SALES; DISTRIBUTION. Pilot shall be responsible
for booking sales, fulfilling orders, and shall warehouse and
distribute the Product and perform all related services.
5.5.3 PRODUCT RETURNS. Pilot shall be responsible for handling
Product returns. The Innovex Sales Force shall provide assistance as
reasonably requested by Pilot, to the extent consistent with the normal
activities of pharmaceutical sales personnel. Product returns shall
7.
promptly be shipped to the facility responsible for shipment of such
Product lot or such other location as may be designated by Pilot in
writing.
5.6 ADDITIONAL PILOT RESPONSIBILITIES. Without limitation, a partial
list of Pilot responsibilities are set forth on Schedule II attached to this
Agreement.
ARTICLE 6
TRAINING; ADVERTISING AND PROMOTIONAL MATERIALS
6.1 TRAINING PROGRAMS.
6.1.1 CONTENT. Innovex will develop, subject to JMC approval
(not to be unreasonably withheld), initial and ongoing training programs for the
Sales Force during the Term. Each member of the Sales Force shall be required to
successfully complete such training program before providing services under this
Agreement. The Parties shall mutually agree to a minimum training standard and
pass rate, to be monitored by the JMC. Innovex shall maintain records of such
training for each individual. Innovex agrees to utilize such training programs
on an ongoing basis. Initial training shall be carried out at a time which is
set by the JMC and which is prior to but reasonably near the date on which
Product Launch is expected. As additional Sales Representatives are added under
this Agreement, training will be given to groups of the newly selected Sales
Representatives. In addition to Product and selling skills training, training
programs shall include requirements of the Food, Drug and Cosmetic Act,
Medicare/Medicaid Anti-Fraud and Abuse Act, and other applicable laws, rules,
regulations and policies.
6.1.2 COST. The cost of developing and delivering the training
to the Sales Force shall be borne by Pilot. Innovex will charge Pilot its fully
loaded cost for training services.
6.2 ADVERTISING AND PROMOTIONAL MATERIALS.
6.2.1 CREATION AND USE. Pilot shall be responsible for the
development of all Promotional Materials. Such materials shall be
consistent with the Marketing Plan and budgets approved by the JMC. The
Innovex Sales Force shall disseminate only Promotional Materials
provided by Pilot, for use by the Sales Force. Pilot may engage Innovex
or Innovex Affiliates to assist with the development and creation of
Promotional Materials.
6.2.2 OWNERSHIP; FDA APPROVAL. Pilot shall own all rights to,
and title and interest in, the Promotional Material. The final content
of all Promotional Materials and Product-related training materials
shall be the legal responsibility of Pilot, including, but not limited
to, FDA approval thereof if such approval is required.
6.2.3 PILOT LOGOS. All written or visual materials related to
the Product shall display the Pilot logos and Pilot shall be presented
as the sole owner of the Product, except as required by law.
8.
ARTICLE 7
REGULATORY ISSUES AND COMPLAINTS
7.1 OWNERSHIP OF REGULATORY FILINGS AND COMPLIANCE. Pilot will retain
exclusive right, ownership, authority and responsibility for regulatory filings,
compliance with all regulatory requirements and maintenance of all government
agency contacts relating to the Product; the reporting of any adverse drug
reactions to the FDA (to the extent applicable and required by law or
regulation); the filing of Promotional Materials with the FDA (to the extent
applicable and required by law or regulation); the payment of Medicaid and other
governmental rebates which in Pilot's sole judgment are due and owing; the
pricing of the Product for each customer; and compliance with Medicaid best
price law and the Department of Veterans Affairs Act. The development of each
indication and formulation of the Product shall be determined solely by Pilot.
7.2 COMMUNICATION WITH THE FDA AND OTHER REGULATORY AGENCIES. Except as
required by law, Innovex shall not communicate with the Food & Drug
Administration, Office of Inspector General, Health Care Financing
Administration or any state agencies ("Regulatory Agencies") about anything
relating to the Product, except through, or with the consent of Pilot. If
Innovex is required by law to communicate directly with any Regulatory Agency or
if Innovex receives any communication from a Regulatory Agency with respect to
the Product, promotion of the Product, Innovex's performance under this
Agreement or any matter or that could affect Innovex's performance under this
Agreement, Innovex shall promptly notify Pilot. Innovex shall reasonably
cooperate at Pilot's expense with Pilot in all proper respects in all regulatory
matters relating to the Product, including but not limited to preparation for
inspections of Pilot facilities and/or Innovex facilities; provided, however,
that (i) Pilot's obligation to pay any expenses associated with the preparation
or maintenance of Innovex facilities for inspection shall be (i) limited to the
amount of such expenses as are incrementally attributable to an inspection made
by a Regulatory Agency in respect of the Product and (ii) notwithstanding
anything in this Section 7.2 the contrary, Pilot shall have no obligation to pay
any expenses associated with the preparation or maintenance of Innovex
facilities for inspection to the extent the applicable Innovex facilities have
not been maintained in a commercially reasonable manner or at standards
customary in Innovex's industry and, in such event, Innovex shall continue to
have its obligations set forth above. Innovex will provide Pilot with pertinent
records in Innovex's possession (or that can be obtained by Innovex without
unreasonable expense or effort) which may be necessary to implement any recall
or any other corrective action mandated by a Regulatory Agency or implemented by
Pilot, including but not limited to names and addresses for "Dear Doctor"
letters.
7.3 NEW DEVELOPMENTS RELATING TO THE PRODUCT. Pilot will promptly
inform Innovex of the following information relating to the Product in the
Territory: (i) new approved indications; (ii) new approved dosages or
administration regimens; (iii) material new studies by the scientific community
that Pilot becomes aware of which relate to the Product or a competitive product
in its therapeutic class; and (iv) any changes in regulations that Pilot
becomes, or should have become, aware of that affect the Product or Pilot's
obligations with respect to this Agreement. Innovex will promptly inform Pilot
of information relating to changes in regulations that Innovex becomes, or
should have become, aware of that affect Innovex's obligations with respect to
this Agreement. Based on such information, and subject to any federal, state or
local laws and/or regulations, the Parties shall use commercially diligent
efforts to maintain the training materials and Promotional
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Materials supplied to the Sales Force pursuant to this Agreement current with
such new developments or information.
7.4 PRODUCT RECALLS. If either Party believes that a recall of any
Product in the Territory is necessary, such Party shall notify the other Party
promptly. Pilot shall retain sole authority and responsibility for determining
whether a Product recall shall occur. Any Product recall shall occur under the
direction and control of Pilot, and Innovex shall reasonably cooperate in
carrying out any such recall, at Pilot's expense. Pilot shall make available, at
Innovex's request, any records that Innovex might reasonably require to Pilot in
effecting any recall of the Product.
7.5 ADVERSE EVENT REPORTING PROCEDURES. Pilot shall be responsible for
reporting to any governmental agency of adverse events and drug safety issues
related to the use of the Product of which Pilot becomes aware, to the extent
required by law or regulation. Pilot shall advise Innovex of its standard
procedures for the reporting of adverse events, and the Innovex Sales Force
shall comply with such procedures. The Pilot procedures for the reporting of
adverse events shall be included in the training program for the Innovex Sales
Force. Innovex shall report to Pilot within twenty-four (24) hours any adverse
events of which Innovex becomes aware.
7.6 PRODUCT INQUIRIES; COMPLAINTS. Innovex shall promptly notify Pilot
of any complaint, inquiry or (in compliance with Section 7.5) adverse event
relating to the Product in report form providing reasonable detail of such
complaint, event or inquiry. Pilot shall maintain a unified record of all
complaints it receives. Pilot shall be responsible for medical affairs services
and shall respond to inquiries from physicians and health care providers. Pilot
shall advise Innovex of its procedures for handling such inquiries and the
Innovex Sales Force shall be trained by Innovex on such procedures.
7.7 DATABASE OF CLINICAL TRIAL DATA. Pilot shall own and maintain its
own database of clinical trial data accumulated from all clinical trials of the
Product and Pilot shall own and maintain a unified database of complaints and
adverse drug event information for the Product and shall develop and utilize
uniform report forms.
ARTICLE 8
ACCOUNTING; INVOICING AND PAYMENT
8.1 ACCOUNTING. Each Party agrees to calculate all costs and expenses
hereunder using its standard accounting procedures, in accordance with
accounting principles generally accepted in the United States, consistently
applied, to the maximum extent practicable.
8.2 PAYMENT SCHEDULE. Except to the extent any Work Order for Services
includes an advance payment requirement at the time of project startup, not to
exceed 20% of the amount for Sales Force Services or 50% of the amount to be
charged for Marketing Services (subject to Innovex's obligations pursuant to
Section 4.2 with respect to competitiveness) for the one-year period commencing
with acceptance of such Work Order, Innovex will invoice Pilot monthly for
Innovex's actual Fees and Pass-Through Expenses for the preceding calendar month
(each an "Invoice"). Upon termination or expiration of the Services, any fees or
pass-through expenses incurred prior to such termination will be invoiced to
Pilot.
10.
8.3 PAYMENT OF INVOICES. All invoices are strictly net of any taxes
imposed on services, and except as otherwise set forth in this Agreement,
payment in full is due within 10 days of the date Pilot receives the
corresponding funding from PharmaBio in accordance with the Investment
Agreement, except that, to the extent any particular Invoice does not include
any Services for which PharmaBio has a funding obligation under the Investment
Agreement, payment shall be due within 30 days after receipt by Pilot of the
Invoice. All payments shall be made by wire transfer, or otherwise pursuant to
the reasonable written direction of Innovex.
8.3.1 If the method of payment is by direct transfer to the
Innovex bank account, the wire transfer instructions are as follows:
Innovex LP
Accounting Number: 511-4454518
ABA Number: 053 101 121
Branch Banking & Trust Co., Raleigh, NC
Innovex's Federal Employment ID Number is 00-0000000.
8.4 PENALTY FOR LATE PAYMENT. Pilot and Innovex agree that unless there
is a bona fide dispute as to amounts payable hereunder, if payment is not made
within 30 days of the due date of the invoice, interest shall accrue on a daily
basis at the lesser of two percent (2%) above the Prime Rate as announced
periodically by First Union National Bank (or its successor) or the maximum rate
permitted by law on any amount overdue from the date payment became due until
payment is made in full. In any event, such interest penalty shall only be
assessed for undisputed and unpaid amounts.
8.5 RECORD-KEEPING AND FINANCIAL AUDITS. Upon the written request (and
expense) of Pilot, Innovex, but not more than once in each calendar year, shall
permit an independent certified public accountant appointed by Pilot and
reasonably acceptable to Innovex, accompanied by representatives of the
financial department of Pilot, if any, at reasonable times and upon reasonable
notice, to examine only those records as may be necessary to determine
compliance with this Agreement. Pilot shall bear the full cost of the
performance of any such audit, unless such audit discloses a variance of more
than ten percent (10%) from the amount of the original report, royalty or
payment calculation. In such case, Innovex shall bear the full cost of the
performance of such audit. Auditors shall be expressly subject to the same
confidentiality obligations as the Parties are to each other hereunder. This
Section 8.5 shall survive for two (2) years after the termination of this
Agreement.
ARTICLE 9
REPRESENTATIONS AND COVENANTS
9.1 MUTUAL AUTHORITY. Each Party represents and warrants to the other
that:
9.1.1 CORPORATE POWER. It is duly organized and validly
existing under the laws of its state or country of incorporation, and has full
corporate power and authority to enter into this Agreement and to carry out the
provisions hereof.
11.
9.1.2 DUE AUTHORIZATION. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
or persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate action.
9.1.3 BINDING AGREEMENT. This Agreement is legally binding
upon it and enforceable in accordance with its terms. The execution, delivery
and performance of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
9.1.4 GRANT OF RIGHTS; MAINTENANCE OF AGREEMENTS. It has not,
and will not during the Term (as defined in Section 12.1), grant any right to
any Third Party which would conflict with the rights granted to the other Party
hereunder or enter any agreement which would impair its ability to perform its
obligations under this Agreement. It has (or will have at the time performance
is due) maintained and will maintain and keep in full force and effect all
agreements necessary to perform its obligations hereunder.
9.1.5 VALIDITY. It is aware of no action, suit or inquiry or
investigation instituted by any governmental agency that questions or threatens
the validity of this Agreement.
9.2 CONFORMANCE WITH LAWS. Innovex and Pilot agree to undertake all of
their respective obligations under this Agreement in material conformance with
all applicable local, state and federal laws and regulations, as amended,
including without limitation the Federal Equal Employment Opportunity Act, the
Fair Labor Standards Act, the Food Drug and Cosmetics Act, Section 1128B(b) of
the Social Security Act, the PDMA, the Medicaid Prescription Rebate Act, the
Veterans Health Care Act of 1992, and similar state laws. By entering into this
Agreement, it is not the intent of the Parties to enter into any financial
relationship or arrangement prohibited under state or federal fraud or abuse
regulations, including, but not limited to Sec. 1128B(b) of the Social Security
Act, and any regulations promulgated thereunder, nor do the Parties hereto have
any belief that the relationship and compensation arrangement provided in this
Agreement are prohibited by law or regulation. Neither Party shall assert
against the other that the compensation arrangement provided in this Agreement
is grounds for voiding the Agreement or rendering the Agreement unenforceable.
If either Party is notified by a state or federal agency, or it is alleged in a
qui tam proceeding, that performance of this Agreement is illegal, neither Party
shall be obligated to continue such performance hereof to the extent such
performance is an alleged violation of law. In such event, the Parties shall
proceed, to extent reasonably practicable, as described in the final sentence of
Section 15.13.
9.3 RIGHTS IN PRODUCT. As of the Effective Date, Pilot warrants and
represents that, it has no knowledge of the existence of any patent or trademark
owned or controlled by anyone other than Wake Forest University (licensor to
Pilot), Pilot or an Affiliate which both covers the Product and would prevent
Pilot from making, using, or selling the Product or would prevent Pilot or
Innovex from promoting or marketing the Product in the Territory. Pilot is not
aware of any patents or trademarks owned by Third Parties which would be
infringed by the promotion or sale of the Product in the Territory. Pilot is not
pursuing any action against any Third Party which Pilot believes infringes its
trademark, copyright or patent relating to the Product. There are no actions,
suits, claims or proceedings pending against Pilot or any of its Affiliates in
any court or before any
12.
agency in the Territory related to alleged patent, trademark, or copyright
infringement in connection with the Product, and to the best of Pilot's
knowledge, no such actions, suits, claims or proceedings have been threatened.
During the Term (as defined in Section 12.1), Pilot will use commercially
reasonable and diligent efforts not to diminish the rights granted to Innovex
herein, including without limitation by not committing or permitting any acts or
omissions which would cause the material breach of any agreements between Pilot
and Third Parties which provide for intellectual property rights applicable to
the development, manufacture, use or sale of the Product in the Territory. As of
the Effective Date, Pilot is in compliance in all material respects with any
such agreements with Third Parties. Without limiting the foregoing, Innovex
expressly acknowledges and agrees that Pilot licenses the intellectual property
rights applicable to the development, manufacture, use and sale of the Product
from Wake Forest University pursuant to a License Agreement dated December 11,
1998, as may be amended from time to time.
9.4 RECORD MAINTENANCE. Innovex will (i) maintain all necessary
personnel and payroll records for Innovex Sales Force and other Innovex
employees providing Marketing Services and Sales Force Services; (ii) compute
their wages and withhold applicable Federal, State, and local taxes and Federal
FICA payments; (iii) remit 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 its employees; and (v) provide for liability and Workers'
Compensation insurance coverage. Without limiting the generality of the
foregoing, Innovex expressly acknowledges and agrees that Pilot shall have no
responsibility, obligation or liability with respect to any of the matters set
forth in this Section 9.4.
9.5 FIREWALL. Innovex represents and warrants that it shall maintain as
confidential, shall keep separate and shall not share with other parts of the
Innovex organization (including any Affiliate of Innovex) that are or may be
engaged in the promotion and/or sales of a competing product, the material and
information supplied and/or generated hereunder for use in accordance with this
Agreement and the promotion and sale of the Product.
9.6 NO USE OF NAMES OR TRADEMARKS. Except as otherwise provided in this
Agreement, neither Party will use the other Party's name in connection with any
publication or promotion without the other Party's prior written consent. Nor
shall either Party use the other Party's corporate or product logo or trademark
in any manner without the other Party's prior written consent.
9.7 INDEPENDENT CONTRACTORS. For the purposes of this Agreement, the
Parties hereto are independent contractors of each other, and nothing contained
in this Agreement shall be construed to place them in the relationship of
partners, principal and agent, employer and employee, licensee and sublicensee
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. Except as provided in Article 13: (a) no provision of this Agreement
shall be deemed to create or imply any contract of employment between Pilot and
any employee of Innovex; (b) all persons performing Services shall be employees
of Innovex, or subcontractors engaged by Innovex with prior consent of Pilot,
and shall not be entitled to any benefits applicable to employees of Pilot; (c)
Innovex shall be responsible for management of all employer obligations in
connection with Innovex employees who perform the Services and (d) Innovex
employees shall remain exclusively under the direct authority and control of
Innovex. The employer obligations of Innovex shall include: (i) human resource
issues, including establishment of employee policies, and administration of
health and benefits plans,
13.
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.
ARTICLE 10
CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION. Innovex and Pilot agree that all
information relating, directly or indirectly, to the Product, or the business
affairs or finances of the other or Affiliates or of any suppliers, agents,
distributors, licensees or customers of the other which comes into possession of
Innovex or Pilot under this Agreement shall be Confidential Information
("Confidential Information"). This Agreement and related documentation shall
also be treated as Confidential Information. Innovex agrees to hold Confidential
Information in strict confidence and disclose it only on a need-to-know basis to
Affiliates, subcontractors and employees who are under a written obligation to
maintain the confidentiality of the information. Notwithstanding the foregoing,
Confidential Information does not include, information:
10.1.1 which can be shown by written documentation to have
been known by the recipient prior to its receipt from the other;
10.1.2 which is public or lawfully becomes generally available
to the public through no fault of the recipient;
10.1.3 which is lawfully acquired from a Third Party without
being made subject to an obligation of confidence by the Third Party provided
such Third Party is not itself under a legal or contractual obligation to keep
such information confidential;
10.1.4 which by mutual agreement is released from a
confidential status; or
10.1.5 which is required to be disclosed under any statutory,
regulatory or judicial requirement, including, but not limited to, any filing
with the Securities Exchange Commission and, in that event, confidentiality will
be preserved and protected to the extent possible and; notice will be provided
to the other Party a reasonable amount of time prior to any such disclosure and
such other Party given a reasonable opportunity to contest or limit such
disclosure.
10.2 OWNERSHIP OF DATA AND INTELLECTUAL PROPERTY; NO LICENSE. It is
expressly agreed that neither Party transfers to the other Party by operation of
this Agreement any patent right or license, copyright or other proprietary
right. All data and information generated or derived by Innovex as the result of
Services performed by Innovex under this Agreement shall be and remain the
exclusive property of Pilot. Pilot 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"). Pilot and Innovex agree that any Innovex
Property or improvements thereto
14.
which are used, improved, modified or developed by Innovex under or during the
Term (as defined in Section 12.1) are the sole and exclusive property of
Innovex.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION BY PILOT. Pilot shall indemnify, defend, save,
protect, and hold harmless Innovex, its Affiliates, and its and their respective
directors, officers, employees, and agents ("Innovex Indemnitees") against any
and all losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys' fees and expenses and court costs) (collectively,
"Losses") resulting or arising from any Third Party claims, actions,
proceedings, investigations or litigation relating to or arising from or in
connection with: (i) the design, development, manufacture, sale, distribution or
use of the Product; (ii) the breach by Pilot of any of its obligations under
this Agreement; (iii) the grossly negligent or willful misconduct of Pilot or
any of its directors, officers, employees or agents; (iv) a violation of any
law, rule or regulation by Pilot relating to this Agreement; (v) the Promotional
Materials or any other materials referred to in Section 6.2; or (vi) the
infringement or violation, or alleged infringement or violation, by Pilot or the
Product of any patents or any copyrights, trademark, trade secret or other
intellectual property rights. Notwithstanding the foregoing, Pilot shall not be
required to indemnify Innovex for any Losses to the extent they arise from (a)
the negligent or willful misconduct of Innovex or any of the Innovex Indemnitees
or (b) Innovex's breach of a material Innovex obligation under this Agreement.
11.2 INDEMNIFICATION BY INNOVEX. Innovex shall indemnify, defend, save,
protect, and hold harmless Pilot, its Affiliates, and its and their respective
directors, officers, employees, and agents (the "Pilot Indemnitees") against any
and all Losses resulting or arising from any Third Party claims, actions,
proceedings, investigations or litigation relating to or arising from or in
connection with: (i) the marketing, promotion or sale of the Product by Innovex
in a manner which violates this Agreement; (ii) the breach by Innovex of any of
its obligations under this Agreement; (iii) the grossly negligent or willful
misconduct of Innovex or any of its directors, officers, employees or agents;
(iv) a violation of any law, rule or regulation by Innovex relating to this
Agreement; or (v) the representations or misrepresentations by Innovex
(including, without limitation, the Innovex Sales Force) relating to the Product
which were not consistent with the labeled claims or Promotional Material.
Notwithstanding the foregoing, Innovex shall not be required to indemnify Pilot
for any Losses to the extent they arise from (a) the negligent or willful
misconduct of Pilot or Pilot Indemnitees; (b) the breach by Pilot of a material
Pilot obligation under this Agreement; (c) a manufacturing or design defect of
the Product; or (d) a strict liability claim arising out of Pilot's failure to
warn.
11.3 PROCEDURE. The Party seeking indemnification hereunder (the
"Indemnified Party") shall (a) promptly notify the Party obligated to indemnify
(the "Indemnifying Party") of any Losses for which the Indemnified Party seeks
indemnification (provided that the failure to so notify shall not affect or
reduce the Indemnifying Party's obligations hereunder, unless the Indemnifying
Party's ability to defend against such Third Party claim, action, proceeding,
investigation or litigation is materially prejudiced by such failure); (b)
cooperate fully with Indemnifying Party and its legal representatives in the
investigation of any matter that is the subject of indemnification; (c) permit
the Indemnifying Party full control over the defense and settlement of any
matter the subject of
15.
indemnification; and (d) not unreasonably withhold its approval of the
settlement of any claim, liability or action by Indemnifying Party covered by
this indemnification provision.
11.4 NO CONSEQUENTIAL DAMAGES. Notwithstanding the Parties' rights and
remedies in equity, neither Party, nor its Affiliates or their respective
directors, officers, employees or agents shall have any liability to the other
for any special, incidental, indirect or consequential damages, including, but
not limited to the loss of opportunity, use, revenue or profit, in connection
with or arising out of this Agreement, or the Services performed by Innovex
hereunder, even if such damages were foreseeable.
11.5 PILOT RESPONSIBILITY FOR PRODUCT DESCRIPTION. Innovex shall not be
liable to Pilot for claims or losses arising out of the statements or
representations of the Innovex Personnel with respect to the Product to the
extent the statements or representations conform to the written or printed
statements or representations made to the Innovex Personnel by Pilot with
respect to the Product or contained in the Product labeling, Promotional
Materials or other material referred to in Section 6.2, provided all such
materials have been approved in advance in writing by Pilot.
11.6 INSURANCE. Innovex and Pilot shall each, at its own cost and
expense, obtain and maintain in full force and effect, insurance during the Term
that is reasonable and customary in light of the activities to be performed by
such Party hereunder, and which is reasonably acceptable to the other Party.
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 Agreement. The certificate must provide that thirty
(30) days prior written notice of cancellation or material change in insurance
coverage will be provided.
ARTICLE 12
TERM AND TERMINATION
12.1 TERM. The term of this Agreement will begin on the Effective Date
and continue until the fifth anniversary of the Sales Force Commencement Date,
unless the Agreement is terminated earlier, or renewed, in accordance with this
Article 12 (together with all renewal Terms as set forth in Section 12.2, the
"Term"). "Year One" shall mean the 12 month period beginning on the Sales Force
Commencement Date; "Year Two" shall mean the 12 month period following Year One;
and so on.
12.2 RENEWAL. This Agreement will terminate at the end of the Term
unless the Parties agree to renew this Agreement . In the event of renewal, this
Agreement shall be extended by 12 months (an "Extension Term"), and thereafter
may be extended in the same manner for successive 12-month periods (each also an
"Extension Term"). The fees for services provided in any Extension Term shall be
the greater of (i) the fully loaded costs charged by Innovex for the prior 12
month period, plus 4%, or (ii) the fully loaded costs charged by Innovex for the
prior 12 month period, plus a percentage increase equal to the percentage
increase in the Consumer Price Index (all products) during the most recently
completed calendar year.
12.3 MATERIAL BREACH. Either Party may terminate this Agreement for
material breach upon thirty (30) days written notice specifying the nature of
the breach, if such breach (i) has not
16.
been substantially cured within the thirty (30) day period or (ii) is not
curable within such 30-day period and the breaching Party has not commenced and
diligently continued during such 30-day period reasonable actions to cure such
breach. During the 15-day cure period for termination due to breach, each Party
will continue to perform its obligations under this Agreement. In addition,
Pilot may terminate this Agreement on 65 days notice upon the termination of the
Investment Agreement.
12.4 NO PRODUCT LAUNCH. Either Party may terminate this Agreement (i)
if Pilot provides written notice to Innovex that it will not market and launch
the Product, and that Pilot has terminated development of the Product, or (ii)
if Product Launch does not occur prior to December 31, 2003.
12.5 BANKRUPTCY. Either Party may terminate this Agreement by written
notice to the other Party, 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 such filing is made by a Third Party, and such filing is not
withdrawn within sixty (60) days of the filing date, 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.
12.6 ACCRUED RIGHTS. Termination of the Agreement for whatever reason
shall not affect the accrued rights of either Innovex or Pilot arising under or
out of this Agreement as of the effective date of such termination. Termination
of this Agreement shall not relieve the Parties of any liability which accrued
hereunder prior to the effective date of such termination nor preclude either
Party from pursuing all rights and remedies it may have hereunder or at law or
in equity with respect to any breach of this Agreement nor prejudice either
Party's right to obtain performance of any obligation. In particular, upon
termination for any reason, Pilot shall (i) pay Innovex all fees for Services
rendered which are due and owing to Innovex because of any completed performance
of Innovex's obligations prior to the effective date of termination, and (ii)
pay all pass-through expenses actually incurred by Innovex prior to the
effective date of termination; and (iii) pay any other costs which have been
expressly identified as being due upon termination.
12.7 RIGHT TO RECEIVE DATA. Upon termination, Pilot shall have the
right to receive from Innovex all data attendant or related to Services or other
sales and marketing activities under this Agreement.
12.8 SURVIVAL. The following provisions shall survive any expiration or
termination of this Agreement indefinitely (unless a time period is specified,
in which case such provision shall survive for the period of time specified):
Sections 1.1, 1.4, 4.7, 4.8, 5.5.3, 6.2.2, 7.1, 7.2, 7.4, 7.5 (last sentence
only), 7.6 (first sentence only), 8.5, 9.4, 9.5, 9.6, 12.6, 12.7, 12.8 and
Articles 10, 11 (except Section 11.6), 13, 14 and 15.
ARTICLE 13
SALES FORCE CONVERSION
13.1 RIGHT TO CONVERT SALES FORCE. Pilot shall have the right to offer
Pilot employment to the Innovex Personnel who are members of the Sales Force at
the end of the Term (including, without limitation, any Extension Term), or
earlier upon a termination of this Agreement by Pilot
17.
under Section 12.3 or 12.5. In the event Pilot desires to convert some or all of
the Sales Force to its employment, it shall provide Innovex notice of such
election at least three (3) months prior to the end of the Term (including,
without limitation, any Extension Term), or with its notice of termination under
Section 12.3 or 12.5, as the case may be. With the notice (or not later than two
weeks thereafter), Pilot will provide a list of Innovex Personnel to whom they
will make job offers. Pilot shall pay Innovex a fee of $** for each member of
the Innovex Personnel who is a member of the Sales Force actually hired by Pilot
and retained by Pilot for 90 days.
13.2 TRANSITION PLAN. In the event Pilot decides to convert the Sales
Force, in accordance with Section 13.1, the Parties shall promptly meet and
determine a transition plan, which shall include a schedule for actions which
will enable a smooth transition date for all Innovex Personnel: (i) who may be
offered employment by Pilot; (ii) who may not be offered such employment; and
(iii) who may decline such offers. Pilot shall identify for Innovex the names of
Innovex Personnel who have elected to accept employment offers from Pilot and
those who have declined an employment offer as soon as reasonably practicable
after Pilot receives notice of such election from the applicable Innovex
Personnel.
13.3 PILOT DETERMINATION. Pilot shall make an independent determination
regarding the qualifications and suitability of Innovex Personnel to be offered
employment by Pilot, and the terms of such offers, if any. No information
contained in the personnel files of Innovex Personnel shall be disclosed to
Pilot, including resumes, applications, performance appraisals or disciplinary
records, or the results of drug screens, motor vehicle or background reports
without the consent of the individual involved. Notwithstanding the foregoing,
Innovex shall notify Pilot of any material violation by any Innovex Personnel of
the PDMA.
13.4 PROPRIETARY INFORMATION. In the event of any Sales Force
conversion under this Article 13, the Innovex Personnel who become employed by
Pilot may continue to use in their employment by Pilot any and all Product
knowledge that they gained while in the employment of Innovex, including without
limitation knowledge regarding Product customers, competition, selling
techniques, and the like.
ARTICLE 14
DISPUTE RESOLUTION
14.1 GOVERNING LAW. Resolution of all disputes arising out of or
related to this Agreement or the performance, enforcement, breach or termination
of this Agreement and any remedies relating thereto, shall be governed by and
construed under the substantive laws of the State of North Carolina, United
States of America, as applied to agreements executed and performed entirely in
the State of North Carolina, without regard to conflicts of law rules.
14.2 INTERNAL REVIEW. In the event that a dispute, difference or
question arises pertaining to any matters which are the subject of this
Agreement (a "Dispute") and either party so requests in writing, prior to the
initiation of any formal legal action, the Dispute will be submitted to the JMC,
which will use its good faith efforts to resolve the Dispute within ten (10)
days. If the JMC is unable to resolve the Dispute in such period, the JMC will
refer the Dispute to the Chief Executive Officers of Pilot and Quintiles
Transnational Corp. For all Disputes referred to the Chief Executive Officers,
18.
the Chief Executive Officers shall use their good faith efforts to resolve the
Dispute within ten (10) days after such referral.
14.3 ARBITRATION. If the Parties are unable to resolve disputes under
Section 14.2, then either party can seek binding arbitration to be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, sitting in Raleigh, North Carolina, as in effect at the time of the
arbitration hearing, such arbitration to be completed in a sixty (60) day
period. The arbitration panel will be composed of three arbitrators, one of whom
will be chosen by Pilot, one by Innovex, and the third by the two so chosen. If
both or either of Pilot or Innovex 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 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.
14.4 COSTS. The Parties shall bear their own costs in preparing for and
participating in the resolution of any Dispute, and the costs of mediator(s) and
arbitrator(s) shall be equally divided between the parties.
ARTICLE 15
MISCELLANEOUS
15.1 RETURN OF MATERIALS. At the completion of the services by Innovex
or termination pursuant to Article 12, all materials and all other data owned by
Pilot under this Agreement (including, without limitation, all data and
information generated or derived by Innovex as the result of Services performed
by Innovex under this Agreement), regardless of the method of storage or
retrieval, shall either be delivered to Pilot in such form as is then currently
in the possession of Innovex or disposed of, at the direction and written
request of Pilot unless such materials are otherwise required to be stored or
maintained by Innovex as a matter of law or regulation. The costs associated
with either of the above options shall be paid by Pilot.
15.2 NONSOLICITATION OF EMPLOYEES. Except as otherwise provided herein,
during the Term and for a period of six (6) months thereafter, each Party agrees
that neither it nor any of its Affiliates shall, directly or indirectly,
recruit, solicit or induce any employee of the other Party to terminate his or
her employment with such other Party, without the express written consent from
the other party.
15.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the other
agreements referred to herein (or entered into as of the date hereof) between
the Parties (or between Pilot and PharmaBio), set forth the complete, final and
exclusive agreement and all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto and
supersede and terminate all prior agreements and understandings between the
Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either
19.
oral or written, between the Parties other than as are set forth herein and
therein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties unless reduced to writing and signed
by an authorized officer of each Party.
15.4 FORCE MAJEURE. Both Parties shall be excused from the performance
of their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
to the other Party. Such excused performance shall be continued so long as the
condition constituting force majeure continues. For purposes of this Agreement,
force majeure shall include conditions beyond the control of the Parties,
including without limitation, an act of God, war, civil commotion, labor strike
or lock-out, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe; provided, however, the payment of invoices due and
owing hereunder at the time of the force majeure shall not be delayed by the
payor because of a force majeure affecting the payor.
15.5 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail, postage prepaid, express delivery
service or personally delivered. Unless otherwise specified in writing, the
mailing addresses of the Parties shall be as described below.
For Innovex: Innovex LP
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
Phone: (000) 000-0000
With a copy to: General Counsel
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Phone: (000) 000 0000
For Pilot: Pilot Therapeutics, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
Phone: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
Phone: (000) 000-0000
20.
or to such other destination as either Party may hereafter notify the other
Party in accordance with this section.
15.6 MAINTENANCE OF RECORDS. Each Party shall keep and maintain all
records required of it by law or regulation with respect to the Product and
shall make copies of such records available to the other Party upon request.
15.7 UNITED STATES DOLLARS. References in this Agreement to "Dollars"
or "$" shall mean the legal tender of the United States of America.
15.8 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly
and shall not be strictly construed against either Party.
15.9 ASSIGNMENT. Neither Party may assign or transfer this Agreement or
any rights or obligations hereunder without the prior written consent of the
other, except that a Party may make such an assignment without the other Party's
consent to Affiliates or to a successor to substantially all of the business of
such Party, whether in a merger, sale of stock, sale of assets or other
transaction (including, in the case of Pilot, a successor to substantially all
of the nutraceutical business of Pilot). Any permitted successor or assignee of
rights and/or obligations hereunder shall, in a writing to the other Party,
expressly assume performance of such rights and/or obligations. Any permitted
assignment shall be binding on the successors of the assigning Party. Any
assignment or attempted assignment by either Party in violation of the terms of
this Section 15.10 shall be null and void and of no legal effect.
15.10 PERFORMANCE BY AFFILIATES. Obligations under this Agreement may
be performed by Affiliates of Innovex and Pilot only with the prior consent of
the other Party. In the event any such performance is carried out by Affiliates
with the prior consent of the other Party, each of Innovex and Pilot guarantees
performance of this Agreement by its Affiliates. No Affiliate of a Party may
make decisions inconsistent with this Agreement, amend the terms of this
Agreement or act contrary to its terms in any way.
15.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.12 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
15.13 SEVERABILITY. If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable by any court of competent
jurisdiction from which no appeal can be or is taken, the provision shall be
considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof. The Parties shall make a good faith effort to
replace any
21.
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the Parties when entering this Agreement may be
realized.
15.14 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
15.15 HEADINGS. The headings for each article and section in this
Agreement have been inserted for convenience of reference only and are not
intended to limit or expand on the meaning of the language contained in the
particular article or section
15.16 NO WAIVER. Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, except with respect to an express written and
signed waiver relating to a particular matter for a particular period of time.
[SIGNATURE PAGE TO FOLLOW]
22.
IN WITNESS WHEREOF, the Parties have executed this Agreement in
duplicate originals by their duly authorized officers as of the date and year
first above written.
PILOT THERAPEUTICS, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Print: Xxxxx X. Xxxxxxx
Title: CEO
Date: July 31, 2001
INNOVEX LP
BY: INNOVEX AMERICA HOLDING COMPANY,
ITS GENERAL PARTNER
By: /s/ Xxxxxx X. Love
------------------------
Print: Xxxxxx X. Love
Title: Senior VP, Finance & Technology
Date: June 22, 2001
23.
EXHIBIT A
DEFINITIONS The following terms shall have the following meanings as used in
this Agreement:
1. "AFFILIATE" means, as to any Party, any corporation or business entity
controlled by, controlling, or under common control with such Party.
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.
2. "FDA" means the U.S. Food and Drug Administration.
3. "FIELD MANAGER" means a member of the Sales Force having the
responsibilities set forth on Schedule III for such job title.
4. "FULLY LOADED COST" will have the meaning provided in Section 3.3.
5. "INNOVEX PERSONNEL" means any individual who is performing any part of
the services hereunder on behalf of Innovex.
6. "INVESTMENT AGREEMENT" means the Investment and Royalty Agreement of
even date herewith between PharmaBio and Pilot.
7. "JOINT MARKETING COMMITTEE" or "JMC" means the joint committee formed
pursuant to Section 2.1.
8. "MARKETING PLAN" means a plan detailing the marketing activities to be
performed in respect of the commercialization of the Product, which may
include, by way of example and without limitation, educational
programs, symposia, poster-sessions, seminars for physicians, market
research, pricing studies, development of promotional activities and
advertising agency fees, to the extent allowed by the FDA or under the
Food Drug & Cosmetic Act and its attendant regulations and as may be
allowed by applicable regulatory authorities and the AMA Guidelines on
Gifts to Physicians.
9. "NATIONAL SALES MANAGER" means the leader of the Sales Force having the
responsibilities set forth on Schedule III for such job title.
10. "PDMA" means the Prescription Drug Marketing Act.
11. "PHARMABIO" means PharmaBio Development, Inc.
12. "PRODUCT" means Pilot's proprietary product, PLT 3514, as such name may
change from time to time.
13. "PRODUCT LAUNCH" or "LAUNCH" means the first date upon which the
Product is shipped by Pilot in the United States for commercial sale.
14. "PROJECT ADMINISTRATOR" means the Innovex employee at the headquarters
office who will provide administrative support for the National Sales
Manager.
A-1
15. "PROMOTIONAL MATERIALS" means written materials generated for the
purpose of promotion and sale of the Product, in all cases with the
prior written approval of Pilot.
16. "SALES FORCE" means those Innovex Personnel, including without
limitation Sales Representatives, Field Managers, National Sales
Manager and Project Administrator who promote the Product under this
Agreement.
17. "SALES FORCE COMMENCEMENT DATE" shall mean the first date upon which
Innovex provides Sales Representatives under this Agreement.
18. "SALES REPRESENTATIVE" means an employee of Innovex: who is responsible
for meeting with customers and physicians and others who can buy (or
influence the buying process and decision regarding) the Product. The
responsibilities of a Sales Representative are set forth on Schedule
III.
19. "SAMPLE" means units of Product distributed by Innovex, and for
complimentary distribution to patients by practitioners licensed to
recommend Product, whether packaged as individual samples or as trade
packages.
20. "SYNDICATED SALES FORCE" means a sales force in which the sales
representatives are promoting the products of one company in one or
more the available detail positions (e.g. P1, P2 and/or P3) and another
company(ies) in one or more of the other detail positions.
21. "TERM" shall have the meaning provided in Section 12.1.
22. "TERRITORY" means the United States of America (including Puerto Rico).
23. "THIRD PARTY" means any entity or person other than Innovex or Pilot or
an Affiliate of either of them.
A-2
EXHIBIT B
MARKETING PLAN OUTLINE (EXAMPLE ONLY. JMC MAY USE ITS OWN FORMAT)
I. EXECUTIVE SUMMARY
II. MARKET ANALYSIS
o Market
o Products
o Future Outlook
III. PRODUCT PROFILE
o Product Description
o Indications
o Clinical Experience and Program
o Formulation, Packaging and Administration
IV. SWOT ANALYSIS
V. 5 YEAR SALES FORECASTS
o Units, Dollars, Prescriptions, Market Share
VI. OBJECTIVES
o Awareness
o Communication
o Product Use
o Sales
o Market Share
o Managed Care/Formulary
VII. KEY ISSUES
VIII. STRATEGIES
o Product Positioning
o Audiences
o Sales Force
o Pharmacoeconomics
IX. TACTICS
o Pharmacoeconomics
o Market Research
o Medical Education
o Publication Plan
o Personal Selling Materials / Program
o Clinical Support
o Sales Force Support
B-1
o Sampling
o Managed Care / Formulary
o Territory Sales Force Effort
X. BUDGET FOLLOWING YEAR
XI. TIMELINES
B-2
EXHIBIT C
COST ALLOCATION FOR SALES FORCE SERVICES
==================================================================== ==================== ======================= ============
INNOVEX SALES
FORCE EXPENSES PILOT
CATEGORY INCLUDED IN INNOVEX PASS-THROUGH DIRECT
DAILY FEE EXPENSES EXPENSES
==================================================================== ==================== ======================= ============
Recruitment Advertising X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Auto Costs (allowance, mileage, parking, tolls, etc.) X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Back office, infrastructure X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Distribution of the Samples X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Drug Screens and reference checks X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Equipment: 1) Computer (hard & soft), printer, fax X
2) Detail bags, business cards X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Field Supplies: postage, stationery, printer ink, phone charges X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Forms, reports especially requested by PILOT X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
ITMS (call reporting, voice mail, email) X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Insurance: employment, workers comp, E & O, CGL X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Medical and other benefits X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Meetings:
kickoff meeting X
regional & district meetings; product Launches; initial training.
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Payroll Taxes X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Promotional literature and sales aids, including distribution X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Recruiting (database screening, ad placement); re-recruiting X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Salaries and variable incentive compensation (bonus) X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Sales data X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Samples X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Sample Packaging X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Sample Accountability Program & Systems X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Territory alignment, mapping and optimization X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Trade shows and organized customer events X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Training--production of training materials X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Training--cost of delivery and facilities X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
Travel Expenses (air, hotel & meals) for Sales Force X
*Interviewing X
*Training X
*Field Manager, National Sales Manager, Representatives X
-------------------------------------------------------------------- -------------------- ----------------------- ------------
C-1
SCHEDULE I
INNOVEX RESPONSIBILITIES
1. Innovex will provide the following Innovex Personnel to comprise the
Sales Force:
(A) Sales Representatives (as defined in Schedule III, Section 1);
(B) Field Managers (as defined in Schedule III, Section 2);
(C) National Sales Manager (as defined in Schedule III, Section 3) and
(D) Project Administrator.
2. Innovex will be responsible for recruitment and re-recruitment of the
Innovex Personnel, in accordance with the Innovex 10 step hiring
process. Pilot will not be involved in the interviewing, selection or
hiring of Innovex Personnel.
3. Innovex will only hire qualified Innovex Personnel, defined as meeting
a hiring profile to be established by the JMC.
4. Innovex will manage all employer obligations in connection with the
employment of Innovex Personnel, including, but not limited to,
discipline and termination of employees. Innovex shall provide
administrative resources for Field Managers, and communication between
Innovex and the Innovex Personnel. Pilot will not be involved in the
management or supervision of Innovex Personnel
5. Training: The JMC will be responsible for developing a POA for
training. In accordance with Section 6.1 of the Agreement, Innovex
shall be responsible for developing and providing training for the
Sales Force regarding the Promotional Materials, disease and
therapeutic areas, Product knowledge, Product marketing strategy and
regional management in the Territory, Product recalls, reporting
complaints and adverse events. The training will be conducted in a
manner so as to meet or exceed the minimum training standards agreed to
by the Parties and in accordance with all laws, rules, regulations and
policies, including but not limited to the AMA Guidelines on Gifts to
Physicians.
6. Innovex shall be responsible for equipping the Sales Force with
computer hardware and software needed to carry out the promotion of the
Product. All Innovex Personnel assigned to the Sales Force will receive
a laptop computer and printer with interface cable. Innovex shall be
responsible for appropriate licenses and training, configuration, and
replication/data line access. Innovex shall provide upgrades to
hardware or software as it deems necessary for successful promotion of
the Product. In addition, Innovex shall establish and provide help desk
support for the hardware and software it provides.
7. Innovex will provide the Sales Force the Innovex Territory Management
System ("ITMS") or other comparable sales force automation system and
email/voice mail systems which will include components for call
reporting, expense reporting, physician prescribing, call history,
sales and market-share reporting, customized reports and
SI-1
communications. Innovex shall also provide a sample tracking and
compliance program. These systems and programs shall be of similar
quality and effectiveness to that which Innovex provides to its other
clients. Innovex may subcontract for all or a portion of the sample
accountability services. Innovex will make reasonable efforts to enable
a reasonable number (but not less than four) of Pilot personnel to have
access to and be able to link into the ITMS and email/voicemail systems
used by the Sales Force. Each member of the JMC shall be provided
copies of all information and materials provided to or accessible by
the Sales Force.
8. Innovex shall be responsible for equipping the Field Managers with such
other equipment as needed to carry out the promotion of the Product.
9. All promotional and detailing activities and obligations undertaken by
Innovex Personnel and the Sales Force hereunder shall be performed in
accordance with the Marketing Plan. No Innovex Personnel shall create
Promotional Materials or other written materials relating to the
Product without first submitting those materials to Pilot for and
obtaining Pilot's written approval prior to use. Innovex Personnel and
the Sales Force shall make no statements, claims or undertakings to any
person with whom they discuss or promote the Product that are
inconsistent with the Promotional Materials. Promotional activities
shall be in compliance with all applicable laws, rules, and regulations
and policies. The Innovex Personnel and the Sales Force shall not
offer, pay, solicit or receive any remuneration to or from physicians
or prescribers or health facilities, in order to induce referrals of or
purchase of the Product. The Innovex Personnel and the Sales Force
shall have no direct contact with, nor shall the Innovex Personnel and
the Sales Force be involved with the delivery of the Product to
patients of physicians, other than delivery of Samples directly to
physicians or practitioners authorized to recommend the Product in the
Territory. Innovex shall permit Pilot to accompany Sales
Representatives on sales calls from time to time with reasonable
advance notice.
10. Innovex shall provide monthly project management reports to Pilot in
Innovex's standard form within fifteen (15) business days after the end
of each month.
11. Innovex shall be responsible for organizing and coordinating the
Product Launch meeting, POA meetings and national, regional or district
meetings, subject to instructions from the JMC.
12. Innovex Sales Representatives shall distribute the Samples provided by
Pilot as directed in the Marketing Plan.
Each item on this Schedule 1 is expressly subject to Section 2.1.
SI-2
SCHEDULE II
PILOT RESPONSIBILITIES & OBLIGATIONS
PILOT SALES PROJECT
1. Pilot shall ensure that the Pilot sales, marketing and medical
personnel are fully briefed as to the complementary role of the Innovex
Personnel and ensure cooperation with the Innovex Personnel.
2. Subject to Section 2.1, Pilot shall be responsible for:
o Communications within Pilot and from Pilot to Innovex.
o Handling all aspects of order processing and fulfillment, invoicing
and collection, (may be accomplished through further Agreement with
Innovex or an Affiliate), Product supply, inventory and receivables.
o Pilot Business Cards [If required].
o Cost of all Innovex provided training.
o Cost of establishment of Sales Force Targets, territory alignments,
mapping and optimization; validation of practitioner state license
status.
o Cost of Launch Meetings, initial training, national, regional and
district meetings.
SCHEDULE III
ROLE DEFINITIONS
1. SALES REPRESENTATIVE
RESPONSIBILITIES AND DUTIES:
o Generates sales within an assigned territorial boundaries.
o Maintains current and prospective customer profiles and
information.
o Keeps current with Product, competitor products, and market
knowledge.
o Maintains a professional image for Pilot and the Product at
all times.
o Organizes territory-planning to meet sales and call goals.
o Provides sales presentations: individual one-on-one, groups,
in-services.
o Maintains Sample inventories, distributes Samples, complies
with Sample accountability procedures and policies.
o Participates in all training programs.
o Completes and submits in a timely manner all accountability
and expense reports.
o Monitors that Product is appropriately stocked by local
distribution centers, hospitals and pharmacies.
o Monitors that Product is on hospital formularies.
o Attends trade shows as directed by National Sales Manager.
SKILLS:
o Initiative
o Persuasiveness/Sales ability
o Planning and Organizing
o Individual Leadership/Influencing
o Teamwork/Collaboration
o Motivational Fit
2. FIELD MANAGER
o Attains sales objectives within assigned districts.
o Deploys resources to maximize district sales potential.
o Implements Pilot Product strategies within district.
o Maintains District budgets and accurate records on all sales
activities.
o Makes regular field visits to develop, train, supervise,
motivate and monitor Sales Representative performance;
completes field contact reports.
o Makes final hiring decision; training and evaluation of Sales
Representatives.
o Documents and recommends all disciplinary actions to include
warnings, suspensions, probation, terminations.
o Communicates with Pilot management on a regular basis.
o Submits a formal monthly report to Innovex National Sales
Manager.
o Assists in the planning and delivery of initial training
course.
o Assists in the planning and delivery of POA or trimester
meetings.
SIII-1
o Monitors that Product is on managed care formularies that are
within the Field Manager's district.
3. NATIONAL SALES MANAGER
o Hires, trains develops and evaluates Field Managers.
o Develops, supervises, motivates and monitors performance of
Field Managers.
o Maintains project budgets.
o Monitors days worked and directs Field Managers accordingly.
o Prepares and submits monthly summary report to Innovex and
Pilot management
o Serves as key point of contact for Pilot.
o Approves all Sales Force disciplinary actions.
o Develops initial training program for Sales Representatives
and Field Managers.
o Coordinates POA or trimester meetings; plans and conducts
meetings with Pilot and its region management.
o Coordinates submissions for national managed care formularies.
o Directs coordination of Field Manager and Sales
Representatives to attend trade shows as appropriate.
SIII-2
