SERVICE AGREEMENT
Exhibit 10.50
The confidential portions of this
exhibit have been filed separately with the Securities and Exchange Commission
pursuant to a confidential treatment request in accordance with Rule 24b-2 of
the Securities and Exchange Act of 1934, as amended. REDACTED PORTIONS OF
THIS EXHIBIT ARE MARKED BY AN [##].
This
service agreement (the “Agreement”) dated July 1, 2008 (the “Effective Date”) by
and between VENTIV COMMERCIAL SERVICES, LLC, a New Jersey limited liability
company (“Ventiv”) and OBAGI MEDICAL PRODUCTS INC. (OMP), a corporation formed
pursuant to the laws of the state of California (“Client”). Ventiv
and Client may each be referred to herein as a “Party” and collectively as the
“Parties”.
1. The Services - Ventiv
will provide Client with a field force that shall consist of twenty (20)
full-time sales representatives (the “Ventiv Sales Representatives”) who shall
Detail Client’s Products (as defined in Section 2 below) and shall distribute
Product Samples and Product Literature and (at Client’s direction). A
“Detail” means a face-to-face contact by a Ventiv Sales Representative with
Targets (identified by Client) which involves a Product presentation
highlighting the Product features and benefits for its approved
indications. A “Target” means a physician identified and validated by
Client as a potential referral source for the Product. The Ventiv
Sales Representatives shall be managed by Client’s sales managers who report to
Client’s Director of Sales for Dermatology. All administrative
support and oversight of Ventiv Sales Representatives will be managed by the
Ventiv organization through one shared Project Director and one shared Project
Manager (collectively with the Ventiv Sales Representatives, the “Project
Team”). In connection with the promotion of Client’s Product, Ventiv
shall provide the following services (collectively, the
“Services”):
(a) Implementation - (i)
recruit, hire and train the Ventiv Sales Representatives as set forth in Section
3 below, (ii) develop Program procedures, (iii) implementation of the Call Plan
(which shall be established and maintained by Client) for use by the Ventiv
Sales Representatives in Detailing Client’s Products, (iv) customize Program
processes, and (v) establish Program performance parameters, goals and
metrics. “Program” means Client’s program of providing details to
targets in an effort to promote its product.
(b) Deployment - (i)
Deployment of Ventiv Sales Representatives (i.e., provision of:
salary, fleet automobile, laptop computer and handheld PDA (each with sales
force automation software) and Ventiv benefits), (ii) deployment of the shared
Project Director and the shared Project Manager (i.e., provision of:
salary and Ventiv benefits), (iii) office costs/operational supplies; and (iv)
operational support. The Ventiv Sales Representatives target hire
date is August 7, 2008 and deployment date will be on or about August 15, 2008
(the “Deployment Date”).
(c) Meetings – Plan of
Action (POA) meetings, including the initial Product launch meeting scheduled
for the week of August 11, 2008, the venue and agenda for each POA meeting and
the length thereof shall be determined by Client. All POA meeting
expenses reasonably incurred by Ventiv in accordance with Client’s plans for
each POA meeting shall be billed to Client as a pass-through cost (as described
in Exhibit A).
(d) Product Literature;
Promotion - Ventiv shall be responsible for (i) ensuring that only
Product Samples and Product Literature provided by Client are distributed
by the Ventiv Sales Representatives; and (ii) promoting the Product in
compliance with all applicable federal
1
and
state statutes, laws, ordinances, rules and regulations of any governmental
or regulatory authority, including (but not limited to) the HHS Office of
Inspector General (“OIG”) Compliance Program Guidance for Pharmaceutical
Manufacturers, the PhRMA Code on Interactions with Healthcare Professionals, the
Accreditation Council for Continuing Medical Education requirements for
continuing medical education, the American Medical Association Ethical
Guidelines on Gifts to Physicians from Industry, the Federal Food, Drug and
Cosmetic Act (“FDCA”), the Medicare/Medicaid anti-kickback statute, the
Prescription Drug Marketing Act (“PDMA”), the Health Insurance Portability and
Accountability Act, and similar state laws, rules and regulations (collectively,
“Applicable Law”).
(e) The
Territory where the Product will be promoted by Ventiv is certain states
within the United States. Client shall determine such states and
shall provide to Ventiv a list of such states that are included within the
Territory (“Territory Alignment”).
(f) Reports - Ventiv
shall provide Client with standard reports in accordance with Exhibit B attached
hereto. Any customized or “non-standard” reports (i.e., reports
requiring material changes in the nature of the data or formatting) requested in
writing by Client shall be prepared by Ventiv for Client, and unless otherwise
mutually agreed by the Parties in writing, Client shall pay Ventiv [ 1*] per
hour for the preparation of such customized or “non-standard”
reports.
(g) Rx Law
Book. During the Term, Ventiv shall provide Client with access
to Ventiv’s proprietary Rx Law Book. Rx Law Book provides a mechanism
for communicating updated state law information to organizations via a web based
program. The Rx Law Book is an online tool providing desktop access to
individual state laws for the marketing of prescription drug samples. The Rx Law
Book contains rules, regulations and laws for the following: mid-level
practitioner authority, drug sampling laws, theft, loss and additional state
reporting requirements, manufacturer and distributor licensing, pedigrees and
marketing and promotional spend laws. Ventiv shall provide Client
with three usernames and three passwords to the Rx Law Book. Client
understand and agrees that: (A) access to the Rx Law Book is (and at all times
shall remain) the sole property of Ventiv, and (B) access to the Rx Law Book
shall be limited to these three specifically identified Client employees
(and no other Client employees or third parties under any circumstances), and
(C) access to the Rx Law Book shall cease at the end of the Term, and (D) Client
is solely responsible for the acts and omissions of its
employees. During Year One, access to the Rx Law Book is provided by
Ventiv to Client [ 2* ]. If Client decides to continue this service
in Year Two, Client shall pay Ventiv a fixed monthly fee as set forth in Exhibit
A.
(h) Sample Accountability
- Ventiv shall implement a sampling program (including sample accountability) in
accordance with Exhibit C attached hereto. The sampling program shall
be consistent with applicable federal and state laws, regulations, and
guidelines, including but not limited to the Prescription Drug Marketing Act and
its implementing regulations (“PDMA”). Client shall be responsible
for shipment and/or delivery of Product samples and Product literature to the
Ventiv Sales Representatives. Ventiv will validate a current list of
licensed practitioners and validate additions and changes. Client is
responsible for taking all
action
required or suggested by the Food and Drug Administration (“FDA”), including but
not limited to: reporting of adverse events, confirming all returned samples
and, where applicable, notifying the FDA, and all supplemental communications
with respect to any of the above.
(i) Ventiv
shall further provide sample management and sample accountability services for
certain of Client’s sales representatives (collectively, with the Ventiv Sales
Representatives, the “Sales Representatives” and each Ventiv or Client sales
representative individually, a “Sales Representative”). The fees for
such services are set forth on Exhibit A attached hereto.
2. The Product; Right to Sell;
Market - Client’s Product is SoluCLENZ Rx Gel (Benzoyl Peroxide, 5%)
(the “Product”). As of the Effective Date, Client represents and
warrants that the Product trademarks are owned by or licensed to Client, and
that the Product is either owned by Client and/or that Client has all lawful
authority necessary to market and sell the Product. This Agreement
does not constitute a grant to Ventiv of any property right or interest in the
Products or the trademarks owned by or licensed to Client and/or any other
intellectual property rights which Client owns now or in the
future. Ventiv recognizes the validity of and the title to all of
Client’s owned or licensed trademarks, trade names and trade dress in any
country in connection with the Products, whether registered or
not. Client represents to Ventiv that neither the trademarks, trade
names or trade dress referenced above, nor the promotion of the Products by
Ventiv, infringe on any intellectual property or product marketing rights of any
other person.
3. Training - The
training responsibilities of the Parties are as follows:
(a) Ventiv
shall be responsible for training members of the Project Team concerning:
compliance with Applicable Law, sales force automation training, expense
management and training concerning fleet policies, Ventiv’s sample management
policies and procedures , Ventiv human resource policies, procedures and
administration and other applicable Ventiv internal human resource and general
compliance policies and procedures. Ventiv shall further
provide Client’s sales representatives with PDMA and Office of Inspector General
compliance training.
(b) Client
has responsibility for training members of the Project Team concerning
selling skills, all Product specific information including Product complaint
handling procedures, applicable specific Client health care compliance policies
and Client customer service policies and procedures, Client’s code of conduct,
orientation to Client’s business, and adverse event reporting policies and
procedures.
(c) The
Parties agree to work together to mutually determine if, when, and at what cost
additional training shall be provided to members of the Project
Team.
4. Client
Responsibilities
(a) Client
is responsible for:
(i) Identification
of Targets. Client will identify a current list of
licensed
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practitioners. Ventiv
shall validate the list of licensed practitioners provided by
Client. If revalidation of Targets by Ventiv is required due to
modifications or changes made or requested by Client, Ventiv shall provide such
revalidation services. Client shall pay Ventiv the fees set forth in
Exhibit A, Section III (a) for its performance of validation
services,
(ii) Establishment
and maintenance of a call plan for use by the Ventiv Sales Representatives in
Detailing Client’s Product (the “Call Plan”),
(iii) Providing
Ventiv with a Territory Alignment,
(iv) Production
and shipment of Product samples and Product Literature to the Ventiv Sales
Representatives in accordance with Applicable
Law,
(v) Informing
Ventiv promptly of any changes which Client believes are necessary or
appropriate in the Product Literature or in information used by the Ventiv Sales
Representatives concerning the Product in order to be in compliance with
Applicable Law,
(vi) Responding
timely to any inquiry concerning a Product from any licensed
practitioner,
(vii) Providing
all training as set forth in Section 3 (b) above,
(viii) Taking
all action required by the Food and Drug Administration (“FDA”), (including but
not limited to reporting of adverse events, confirming all returned Product
samples and, where applicable, notifying the FDA), and for making all
supplemental communications with respect to any of the above.
(b) Notwithstanding
anything to the contrary set forth herein, the Program pursuant to which Ventiv
is performing the Services is Client’s Program and as such, Client is
responsible for ensuring, and Client represents and warrants, that the Program
complies with Applicable Law. Ventiv is responsible for ensuring, and
further, Ventiv represents and warrants, that its implementation of the Program
pursuant to which the Ventiv Sales Representatives are performing the Services
shall comply with Applicable Law.
5. Ventiv Compensation -
Ventiv shall receive compensation for the Services provided hereunder as set
forth in Exhibit A attached hereto and made a part hereof.
6. Confidentiality; Ownership
of Property (a) During the performance of the Services contemplated by
this Agreement, each Party may learn confidential, proprietary, and/or trade
secret information of the other Party (“Confidential
Information”). The Party disclosing Confidential Information shall be
referred to as the “Disclosing Party” and the Party receiving Confidential
Information shall be referred to as the “Receiving Party.”
Confidential
Information means any information, unknown to the general public, which is
disclosed by the Disclosing Party to the Receiving Party under this
Agreement. Confidential Information includes, without
limitation, technical, trade secret, commercial and financial
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information
about the Disclosing Party’s (i) research or development; (ii) marketing plans
or techniques, contacts or customers; (iii) organization or operations; (iv)
business development plans (i.e., licensing,
supply, acquisitions, divestitures or combined marketing); (v) products
(including but not limited to Rx Advantage and Rx Law Book), licenses,
trademarks, patents, other types of intellectual property or any other
contractual rights or interests (including without limitation processes,
procedures and business practices involving trade secrets or special know-how)
and (vi) in the case of Ventiv, the names, addresses, phone numbers, e-mail
addresses and work assignments of Ventiv employees, and in the case of Client,
the names, addresses, phone numbers, e-mail addresses and work assignments of
Client employees. The Receiving Party shall neither use nor disclose
Confidential Information of the Disclosing Party for any purposes other than
those specifically allowed by this Agreement.
Upon
the expiration or termination of this Agreement, the Receiving Party shall
return to the Disclosing Party or destroy all tangible forms of Confidential
Information, including any and all copies and/or derivatives of Confidential
Information made by the Receiving Party or its employees, as well as any
writings, drawings, specifications, manuals or other printed or electronically
stored material that contains, Confidential Information. In the
event that any material or media is destroyed pursuant to the previous sentence,
upon written request from the Disclosing Party, an officer of the Receiving
Party shall certify to the Disclosing Party in writing such
destruction. The Receiving Party shall not disclose to third
parties any Confidential Information or any reports, recommendations,
conclusions or other results of work under this Agreement without prior consent
of an officer of the Disclosing Party. The obligations set
forth in this Section 6, including the obligations of confidentiality and
non-use shall be continuing and shall survive the expiration or termination of
this Agreement and will continue for a period of two (2) years from the date of
expiration or termination.
The
obligations of confidentiality and non-use set forth herein shall not apply to
the following: (i) Confidential Information at or after such time that it is or
becomes publicly available through no act or omission of the Receiving Party;
(ii) Confidential Information that is already independently known to the
Receiving Party as shown by prior written records; (iii) Confidential
Information at or after such time that it is disclosed to the Receiving Party on
a non-confidential basis by a third party with the legal right to do so; (iv)
Confidential Information required to be disclosed pursuant to judicial process,
court order or administrative request, provided that the Receiving Party shall
so notify the Disclosing Party sufficiently prior to disclosing such
Confidential Information as to permit the Disclosing Party to seek a protective
order or to otherwise limit such disclosure.
(b) All
property, materials and documents supplied to the Receiving Party during the
Term of this Agreement, including but not limited to report designs and sales
training materials, shall be and remain the sole and exclusive property of the
Disclosing Party. Each Receiving Party agrees to hold all such
property, materials and documents confidential in accordance with this Section 6
of the Agreement.
7. Independent
Contractors - Ventiv and its directors, officers and employees (including
the Ventiv Sales Representatives) are at all times independent contractors with
respect to Client. No Ventiv Sales Representative shall be deemed to
be an employee or agent of Client.
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(a) Ventiv
is solely responsible for withholding federal, state, or local income tax or
other payroll tax of any kind on behalf of its employees. Ventiv
employees are not eligible for, are not entitled to, and shall not participate
in any of Client’s benefit plans or programs, including but not limited to, any
pension plan, welfare plan, profit sharing plan or any other “employee pension
benefit plan”, or insurance plan or any other “employee welfare benefit plan” or
“employee benefit plan” (as those terms are defined by the Employee Retirement
Income Security Act of 1974, as amended) or any other plan, program, fringe,
award, bonus, perquisite or other benefit (such as, but not limited to, vacation
and holiday pay) incident to employment offered from time to time by
Client. Ventiv is responsible for the payment of all required payroll
taxes, whether federal, state, or local in nature, including, but not limited to
income taxes, Social Security taxes, Federal Unemployment Compensation taxes,
and any other fees, charges, licenses, or similar payments required by
law.
(b) Notwithstanding
Section 7(a) above, Ventiv shall not be responsible for any cost to the extent
attributable to: (i) actions by Client that caused Project Team member to be
reclassified as an employee of Client, (ii) discriminatory acts of Client, and
(iii) any benefits payable under any employee benefit plan (as such term is
defined Section 3(3) of ERISA), and any other incentive compensation, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements that may be sponsored at any time by Client or any of
its affiliated entities that cause any Ventiv employee to be reclassified as an
employee of Client.
8. Non-Solicitation; Ventiv
Personnel; Performance (a) Except as otherwise set forth
below, Client may not solicit for employment any Project Team member during the
Term of this Agreement or within one (1) year after the termination of this
Agreement without the prior written approval of Ventiv, which may be withheld by
Ventiv in its sole and absolute discretion. For clarity, if Client
hires an employee of Ventiv as a result of such employee’s response to a public
advertisement or general recruitment procedures not targeted at that employee,
such hiring shall not constitute a breach of this Section 8 by
Client.
(b) Client
agrees during the Term of this Agreement and for one (1) year thereafter not:
(i) to provide any contact information (including name, address, phone number or
e-mail address) concerning any Ventiv Sales Representative to any third party
which provides or proposes to provide contract sales services to Client, or (ii)
to actively assist in any other way such a third party in soliciting for
employment a Ventiv Sales Representative. Client shall pay or cause
the third party to pay Ventiv [ 3*] for each Ventiv employee so employed or
retained as liquidated damages for breach of this Section. Ventiv
agrees during the Term of this Agreement and for one (1) year thereafter not:
(i) to provide any contact information (including name, address, phone number or
e-mail address) concerning any Client sales representative to any third party
contract sales service entity, or (ii) to actively assist in any other way such
a third party in soliciting for employment a Client sales
representative. Ventiv shall pay or cause the third party to pay
Client [ 4* ] for each Client sales representative so employed or retained
as liquidated damages for breach of this Section.
(c) If
Client believes in good faith that the performance of any Ventiv
Sales
Representative
is unsatisfactory or is not in compliance with the provisions of this Agreement,
Client shall notify Ventiv and Ventiv shall promptly address the performance or
conduct of such person in accordance with its internal human resource
policies. In the event that Client determines in good faith that a
Ventiv Sales Representative has violated any Applicable Law, regulation or
policy, Client shall notify Ventiv. Ventiv shall promptly address the
issue and take all appropriate action (including but not limited to termination
of such employee) provided all such action shall be in accordance with Ventiv’s
internal human resource policies.
(d) Ventiv
may not solicit for employment any Client employee during the Term of this
Agreement or within one (1) year after the termination of this Agreement without
the prior written approval of Client, which may be withheld by Client in its
sole and absolute discretion. For clarity, if Ventiv hires an
employee of Client as a result of such employee’s response to a public
advertisement or general recruitment procedures not targeted at that employee,
such hiring shall not constitute a breach of this Section 8 by
Ventiv.
9. Indemnification (a)
Ventiv shall indemnify and hold Client, its officers, directors, agents and
employees harmless from and defend against any and all third party liabilities,
losses, proceedings, actions, damages, claims or expenses of any kind, including
costs and reasonable attorneys’ fees which result from (i) any negligent or
willful acts or omissions by Ventiv, its agents, directors, officers, or
employees, or (ii) any material breach of this Agreement by Ventiv, its agents,
directors, officers or employees.
(b) Client
shall indemnify and hold Ventiv, its officers, directors, agents, and employees
harmless from and defend against any and all third party liabilities, losses,
proceedings, actions, damages, claims or expenses of any kind, including costs
and reasonable attorneys’ fees which result from (i) any negligent or willful
acts or omissions by Client, its agents, directors, officers or employees, (ii)
any material breach of this Agreement by Client, its agents, directors,
officers, or employees, or (iii) the Product, including any product liability
claims, whether arising out of warranty, negligence, strict liability (including
manufacturing, design, warning or instruction claims) or any other product based
statutory claim.
(c) Any
indemnity available hereunder shall be dependent upon the Party seeking
indemnity providing prompt notice to the indemnitor of any claim or lawsuit
giving rise to the indemnity provided, however, that failure to comply with this
notice requirement shall not reduce the indemnitor’s indemnification obligation
except to the extent that the indemnitor is prejudiced as a
result. Thereafter, the indemnitor shall have control over the
handling of the claim or lawsuit, and the indemnitee shall provide reasonable
assistance to the indemnitor in defending the claim. The indemnitee
may participate, at its own cost, in the handling of the claim.
10. Term - The Agreement
shall be in effect as of the Effective Date and shall remain in effect until the
day prior to the second anniversary of the
Deployment Date (the “Term”). The period from the Effective Date through
the day prior to the first anniversary of the Deployment Date shall be referred
to herein as “Year One” and the period from the first anniversary of the
Deployment Date through the end of the Term shall be referred to herein as “Year
Two”. Thereafter, this Agreement will renew for additional periods of one year
each (each an “Additional Term”), upon written agreement by the Parties to be
executed at least ninety (90)
7
days
prior to the end of the Term. The terms and conditions (including,
but not limited to, compensation to Ventiv) for any Additional Term must be
agreed upon and set forth in the written agreement between the
Parties.
11. Termination -
(a) This Agreement may be terminated by Ventiv or Client by providing
the other Party with written notice as follows:
(i) by
Ventiv, if payment to Ventiv by Client is not made when due and following
receipt of written notice from Ventiv to Client advising of such nonpayment (the
“Non-Payment Notice”), Client either: (a) within ten (10) days of its receipt of
the Non-Payment Notice, fails to provide written notice to Ventiv acknowledging
the amount due and confirming its obligation to pay; or (b) does not pay the
amount due within fifteen (15) days from the date of the Non-Payment Notice;
or
(ii) by either
Party, in the event that the other Party has committed a material breach of this
Agreement and such breach has not been cured within sixty (60) days of receipt
of written notice from the non-breaching Party describing such breach and
demanding its cure; or
(iii) by either
Party, in the event that the other Party has become insolvent or has been
dissolved or liquidated, filed or has filed against it, a petition in bankruptcy
and such petition is not dismissed within sixty (60) days of the filing, makes a
general assignment for the benefit of creditors; or has a receiver appointed for
a substantial portion of its assets;
(iv) by
Client, on or before the first anniversary of the Deployment Date, by providing
Ventiv with at least [ 5* ] prior written notice of termination, in the event
that (A) the Product is withdrawn from the market; (B) Client experiences a
significant Product supply or distribution disruption; (C) Client merges with or
is acquired by a third party, or a third party acquires substantially all of
Client’s business that relates to the Product; or (D) Client is subject to FDA
action directly impacting the Product and/or Client’s ability to manufacture the
Product which, in the sound and reasonable business judgment of Client,
materially adversely impacts Client’s purposes and the objectives to be achieved
under this Agreement; or
(v) by either
Party, by providing the other Party with at least [ 6* ] prior written notice of
termination; provided however, under no circumstances shall the actual
termination date pursuant to this clause (v) be prior to the one year
anniversary of the Deployment Date.
(b) In
the case of: (i) any termination of this Agreement by Client or Ventiv under
Section 11 of this Agreement (other than termination by Client pursuant to
Section 11(a)(ii) or (iii) or termination by Ventiv pursuant to Section
11(a)(v)), or (ii) upon Client conducting a No Backfill Conversion (as set forth
in Section 12 below), or (iii) at the end of the Term (or any Additional Term,
if applicable), Client shall (in addition to all other payment obligations under
this Agreement) promptly reimburse Ventiv: the amount due any lessor or rental
agent of the equipment leased or owned by Ventiv and provided exclusively to
Project Team members solely for use in performing the Services (i.e., automobiles,
laptops, handheld PDA’s, etc. (collectively,
the
“Equipment”)), for any early termination of the lease or rental
agreement. Ventiv shall make a good faith effort to mitigate Client’s
liability for such amount due by attempting to reassign the Equipment for use in
connection with services being provided by Ventiv to a third party; however,
Ventiv makes no guaranty with respect to its ability to mitigate such Client
liability. In addition, Client may elect to either: (xi) in the event
the Equipment is owned by Ventiv, transfer the Equipment to Client and pay an
amount equal to the net book value (if any) of the Equipment on the books of
Ventiv at the time of the transfer event, or in the event the Equipment is
subject to a lease or finance lease, the Equipment may be transferred to Client
(subject to the last sentence of this Section 11 (b), and Client shall assume
the responsibility for all further payments due (including costs associated with
the transfer), or (ii) pay Ventiv the net loss to Ventiv on such Equipment as
determined by the difference between the net book value of such Equipment and
the actual net price received by Ventiv for the disposal of such Equipment, plus
any amounts due by Ventiv in connection with the lease or rental termination and
costs associated with the disposal of said Equipment. Any proposed
transfer of Equipment shall be subject to Client establishing its own
relationship and credit with the entity that Ventiv contracted with to lease or
rent such Equipment.
(c) Upon
the effective date of such termination, the Parties shall have no further
obligation to each other (other than those obligations set forth in Sections 6,
7, 8 (b), 9, 11(b) and (c), and 13), except that Client shall pay the amounts
set forth or provided for in Exhibit A of this Agreement which have been accrued
as of the actual date of termination.
12. Conversion and Conversion
Fees. The Client may hire Ventiv Sales Representatives in
accordance with the following:
(a) Conversion
with No Backfill. Notwithstanding anything to the contrary in Section
8, Client may solicit, employ or retain Ventiv Sales Representatives (with no
backfill of the vacated positions – a “No Backfill Conversion”) provided that:
(i) such conversion may not occur prior to the first anniversary of the
Deployment Date, and (ii) Client provides at least [ 7* ] prior written notice
to Ventiv of a proposed No Backfill Conversion. In the event the
Client wishes to implement a No Backfill Conversion during the Term, the Client
shall pay to Ventiv a finder’s fee according to the following
table:
|
Charges
for No Backfill Conversion
|
After
First Anniversary of Deployment Date
|
After
Second Anniversary of Deployment Date
|
|
Per
Ventiv Sales Representative
|
[
8* ]
|
[
9* ]
|
(b) Conversion
with Backfill. Notwithstanding anything to the contrary in Section 8,
Client may solicit, employ or retain Ventiv Sales Representatives (with Ventiv
backfilling the vacated positions – a “Backfill Conversion”); provided that
Client provides at least [ 10* ] prior written notice to Ventiv of a proposed
Backfill Conversion. In the event Client wishes to implement a
Backfill Conversion during the Term, the Client shall pay to Ventiv a fee in
the
amount of
[ 11* ] for
recruiting, hiring and training fees associated with each backfill Ventiv Sales
Representative.
(c) Client
understands and agrees that Ventiv cannot guarantee that any Ventiv Sales
Representative will agree to participate in a No Backfill Conversion or a
Backfill Conversion (as applicable; each of these may be referred to herein as a
“Conversion”).
(d) In
the event Client implements a Conversion and the converted Ventiv Sales
Representative had been provided with use of a fleet automobile leased, rented
or owned by Ventiv, and Client wishes to commence an arrangement with the fleet
vendor to assume such cars (and all associated costs and liabilities) under
Client’s name, the converted Ventiv Sales Representative may only continue to
have access to such automobile following the Conversion if Client either: (i)
registers the fleet automobile under its name; or (ii) ensures that Ventiv
remains named as an additional insured under Client's automobile insurance
policies until such time as the vehicle is registered in Client’s name (which
shall occur no later than six (6) months following the Conversion). The Parties
understand and agree that it is solely Client’s obligation to ensure one of the
above actions are taken and Client shall be responsible for indemnifying,
defending and holding Ventiv harmless for all damages resulting from Client’s
failure to take such action. The Parties further agree that, on the
effective date of the Conversion, Client shall destroy the Ventiv insurance
card(s) in the fleet vehicle(s) of the converted Ventiv Sales
Representative.
13. Miscellaneous (a) Each
Party represents to the other that the execution, delivery and performance of
this Agreement by such Party has been duly authorized by all requisite corporate
action; that the Agreement constitutes the legal, valid, and binding obligation
of such Party, enforceable in accordance with its terms (except to the extent
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors’ rights generally and by general principles of equity); and
that this Agreement and performance hereunder does not violate or constitute a
breach under any organizational document of such Party or any contract, other
form of agreement, or judgment or order to which such Party is a party or by
which it is bound.
(b) Each
Party undertakes to maintain appropriate insurance in commercially reasonable
amounts with financially capable carriers, including in the case of Client
product liability insurance in the amount of at least [ 12* ]. Each
Party shall name the other Party as an additional insured on all liability
insurance coverage. In addition, upon written request, each Party
will provide the other with evidence of coverage complying with this
Section.
(c) Neither
Ventiv nor Client may assign this Agreement or any of its rights, duties or
obligations hereunder without the other Party’s prior written consent, provided,
however, that without the prior written consent of the other Party, either
Ventiv or Client may assign its rights, duties and obligations to an affiliated
company or as part of an acquisition of Ventiv or Client, as the case may be, so
long as the affiliate or acquirer (i) is a financially capable business entity
and (ii) expressly assumes in writing the rights, duties and obligations of the
assignor Party under this Agreement.
(d) This
Agreement supersedes all prior arrangements and understandings between the
Parties related to the subject matter of this Agreement.
(e) Noncompliance
with the obligations of this Agreement (other than payment obligations) due to a
state of force majeure, the laws or regulations of any government, regulatory or
judicial authority, war, civil commotion, destruction of facilities and
materials, fire, flood, earthquake or storm, labor disturbances, shortage of
materials, failure of public utilities or common carriers, and any other causes
beyond the reasonable control of the applicable Party, shall not constitute a
breach of contract.
(f) If
any provision of this Agreement is finally declared or found to be illegal or
unenforceable by a court of competent jurisdiction, both Parties shall be
relieved of all obligations arising under such provision, but, if capable of
performance, the remainder of this Agreement shall not be affected by such
declaration or finding.
(g) This
Agreement, including any attachments or exhibits entered into hereunder,
contains all of the terms and conditions of the agreement between the Parties
with respect to the subject matter herein described, and constitutes the
complete understanding of the Parties with respect thereto. No
modification, extension or release from any provision hereof shall be affected
by mutual agreement, acknowledgment, acceptance of contract documents, or
otherwise, unless the same shall be in writing signed by both Parties and
specifically described as an amendment or extension of this
Agreement.
(h) This
Agreement and all aspects of the relationship between the Parties hereto shall
be construed enforced and governed in accordance with the laws of either the
State of California or the State of New Jersey, depending on the venue of such
action, without regard to its conflicts of law principles. In the
event Client commences any lawsuit, action or other proceeding arising out of
this Agreement (an “Action”), the Action shall be filed in the state or federal
courts located in the State of New Jersey. In the event Ventiv
commences an Action, such Action shall be filed in the state or federal courts
located in the State of California. Ventiv and Client irrevocably
submit to the exclusive jurisdiction of the state or federal courts as set forth
in this Section 13(h).
(i) This
Agreement may be executed by original or facsimile signature in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same
document.
(j) Any
notices required or permitted under this Agreement shall be given in person or
delivered by first class, certified mail or reputable courier service (such as
FedEx or DHL) to:
Ventiv:
Ventiv
Commercial Services, LLC
000
Xxxxxxxxxx Xxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer
11
with a
copy to:
Xxxxxx,
XxXxxxxxxx & Xxxxxx, P.A.
721 Route
202-206
X.X. Xxx
0000
Xxxxxxxxxx,
Xxx Xxxxxx 00000-0000
Attention:
Xxxxx Xxxxxxxx, Esq.
Client:
Obagi
Medical Products Inc.
000
Xxxxxx Xxxxx
Xxxx
Xxxxx, XX 00000
Attn:
Xxxxxxx Xxxx
with a
copy to:
Obagi
Medical Products Inc.
000
Xxxxxx Xxxxx
Xxxx
Xxxxx, XX 00000
Attn:
General Counsel
or to
such other address or to such other person as may be designated by written
notice given from time to time during the Term of this Agreement by one Party to
the other.
WHEREFORE,
the Parties hereto have caused this Agreement to be executed by their duly
authorized representatives.
|
VENTIV
COMMERCIAL SERVICES, LLC
|
|
By: _________________________
Name:
Title:
|
|
OBAGI
MEDICAL PRODUCTS INC.
|
|
By: _________________________
Name:
Title:
|
12
EXHIBIT
A
COMPENSATION
- FIXED FEES, PASS-THROUGH COSTS,
MISCELLANEOUS
FEES AND BILLING TERMS
I. FIXED
FEES
Base Fee
Client
shall pay Ventiv [ 13* ] as a base fee associated with performance of
the Services as defined in section 1 of the agreement.
Fixed Monthly
Fee
(a) Commencing
upon the Deployment Date, Client shall pay Ventiv a Fixed Monthly Fee as
follows:
|
Period
|
Fixed
Monthly Fee
|
|
PHASE
I
|
|
|
Deployment
Date through end of August 2008
|
[
14* ]
|
|
September
2008
|
[
15*]
|
|
PHASE
II
|
|
|
October
2008
|
[
16*]
|
|
November
2008
|
[
17* ]
|
|
December
2008
|
[
18* ]
|
|
PHASE
III
|
|
|
January
2009 through July 2009
|
[
19* ]
|
|
August
2009 through July 2010
|
[
20* ]
|
Phases
defined as follows:
|
§
|
PHASE
I: Acquisition and education of professional sales
force.
|
|
§
|
PHASE
II: Increase in professional sales force
productivity.
|
|
§
|
PHASE
III: Full maturation of professional sales force in the product
and channel.
|
Included
in the Fixed Monthly Fee are Ventiv’s Performance Fees (as set forth in Section
IV below). Such Performance Fee amounts will be reconciled as set
forth in Section IV below.
(b) Commencing
upon the Deployment Date, Client shall pay Ventiv a fixed monthly fee of [ 21* ]
in Year One (and [ 22* ] in Year Two) for its provision of sample management and
sample accountability services for up to thirty-five (35) Client employed sales
representatives. This fee includes costs associated with Ventiv’s
conducting physical audits. In the event Client requests that Ventiv
provide sample management and sample accountability services for more than
thirty-five (35) Client employed sales representatives, the Parties shall agree
upon revised pricing for Ventiv’s provision of such sample management and sample
accountability services.
(i) The
sample management and sample accountability services to be provided by Ventiv
for the Client sales representatives do not include sample
closeouts. In the event Client desires for Ventiv to provide sample
closeout services for the Client sales representatives, the Parties shall agree
(in writing) on the fee to be paid by Client to Ventiv for Ventiv’s performance
of such services.
II. PASS-THROUGH
COSTS
In
addition to the Fixed Monthly Fee, certain expenses incurred by Ventiv pursuant
to the Services will be charged to Client on a pass-through
basis. These expenses will be billed to Client at Ventiv’s actual,
reasonable out-of-pocket cost, and will be supported by written documentation of
such costs. Pass-through costs may include:
|
|
-
|
Interview
expenses for sales rep candidates
|
|
|
-
|
Bonuses
for the Ventiv Sales Representatives at [ 23* ] of base target (plus
applicable employer portion of taxes). Ventiv to provide Client with bonus
amounts for final approval.
|
|
|
-
|
Ventiv
Sales Representatives travel in
accordance with Client’s policies provided to Ventiv in advance and in
writing
|
|
|
-
|
Costs
for initial training meetings and POA Meetings; provided that such
meetings are approved by Client and conducted in accordance with Client’s
instructions
|
- Marketing
costs incurred pursuant to the Program
- Third
party data acquisition costs which have been pre-approved by Client
|
|
-
|
Reconciliation
of fuel charges to the extent the national average for a gallon of
gasoline varies by greater or less than [ 24* ] from the assumed price per
gallon of [ 25* ]
|
|
|
-
|
All
travel, phone, postage, printing and office expenses associated Ventiv’s
provision of sample management services (including audits) to the Ventiv
Sales
|
* Subject
to confidential treatment request
14
|
|
Representatives
and Client’s sales representatives (as set forth in this Exhibit A,
Section I (b)).
|
III. MISCELLANEOUS
SERVICES
(a) Physician Validation
Services - Ventiv shall provide this service and Client shall pay Ventiv
a one time set up fee of [ 26* ] plus ongoing fees of [ 27* ] per physician
record for auto-matches of physician records and [ 28* ] per record for manual
matches of physician records against a current list of state license
numbers.
(b) Rx Law Book - Ventiv
shall provide this service at [ 29* ] in Year One. In the event
Client desires to continue to receive this service in Year Two, Client shall pay
Ventiv a monthly fee of [ 30* ] per month.
IV. PERFORMANCE
FEES
Included
in the Fixed Monthly Fee (set forth in Section I above) are monthly accruals
that total the following annual performance fees. The Parties
will reconcile performance fees within thirty (30) days of the end of each
applicable period, based upon achievement of (or failure to achieve) the
performance objectives.
|
Period
|
At Risk Target (“Performance
Fee”)
|
|
Year
One
|
[
31* ]
|
|
Year
Two
|
[
32* ]
|
The
Performance Fee will be based on achieving the performance objectives which
shall be agreed upon by the Parties in writing no later than thirty (30) days
following the Deployment Date. Amounts owed to or from Ventiv
pursuant to this section shall be paid or credited within thirty (30) days of
the reconciliation referenced above.
V. BILLING
TERMS
The Base
Fee set forth in Section I above shall be paid by Client to Ventiv within [ 33*
] business days of the date of execution of this
Agreement. Commencing on the Deployment Date, Client will be billed
monthly in arrears the amount stated above as the Fixed Monthly
Fee. Pass-through costs will be billed to Client at actual cost as
incurred by Ventiv, in accordance with Section II above. Pass-through
costs and other fees (as set forth in Section III above) shall be billed to
Client on a month-to-month basis. Performance Fees shall reconciled
and paid by Client (or credited to Client) within thirty (30) days of
determining whether achievement of the performance goal(s) have been
met. Bonuses for Project Team members (as set forth in
Section
15
II above)
shall be paid by Client to Ventiv within ten (10) days of the Parties reaching
agreement on the actual amount of the bonuses to be paid.
Invoices
are due within thirty (30) days after receipt by Client. If not paid
within 30 days after the date of Client receipt of a given invoice, Ventiv may
assess a finance charge of 1.5% monthly, applied to the outstanding balance
due.
16
EXHIBIT
B
SALES
REPORTS AND ANALYSIS
|
Work
to be performed
|
||||
|
Database
|
Base
assumptions
|
Standard
Annual Frequency
|
Standard
Timing
|
Typical
Turnaround
|
|
Initial
Data Loads
|
Data
provided from one source in basic Ventiv provided layout
|
1
|
3-6
weeks prior to deployment
|
5
business days
|
|
Universe
Deletions
|
Data
provided from one source in basic Ventiv provided layout
|
4
|
Quarterly
|
5
business days
|
|
Universe
Merges
|
Data
provided from one source in basic Ventiv provided layout
|
4
|
Quarterly
|
5
business days
|
|
Universe
Additions
|
Data
provided from one source in basic Ventiv provided layout
|
12
|
monthly
|
5
business days
|
|
Universe
Zip/Terr Changes
|
Standard
(zip code :from territory : to territory) format
|
4
|
Quarterly
|
5
business days
|
|
Minor
realignments (less than 25% of universe changes)
|
Standard
(zip code: from territory: to territory) format
|
4
|
Quarterly
|
10
Business Days
|
|
Target
changes
|
4
|
Quarterly
|
5
business days
|
|
|
Data
Extracts: Physician Universe
|
Format
as agreed upon by Client and Ventiv
|
12
|
monthly
|
|
|
Data
Extracts: CID Data for Physicians
|
Format
as agreed upon by Client and Ventiv
|
12
|
monthly
|
|
|
Data
Extracts to third party vendors
|
standard
format-no charge for setup-per run charge (TBD with
complexity.
|
10
days for initial set up/ run/qc time
thereafter
|
||
17
|
Standard
Reports
|
Base
assumptions
|
Standard
Frequency
|
Standard
Timing
|
Customizable*
|
|
Call
Activity
|
Standard
Format
|
12
|
daily
sweep of communicated data
|
No
|
|
Territory
Summary
|
Customized
to specific activity measurements within set up matrix (calls, Targets
only, reach, frequency, sample distribution)
|
12
|
monthly
(Within 10 business days of close of the month)
|
yes
|
|
Call
Planning
|
To
be requested by Client on an as needed basis, but in no event more
frequently than once per every thirty (30) days. [ 34*
]
|
|||
|
Alignments
and Realignments
|
To be requested by Client on an
as needed basis, but in no event more frequently than once per every
thirty (30) days. [ 35* ]
|
|||
|
Incentive
Compensation
|
To be requested by Client on an
as needed basis, but in no event more frequently than once per every
thirty (30) days. [ 36* ]
|
|||
|
Non-Standard
Reporting
|
[ 37* ]
|
|||
|
Web
Portal Customizations
|
[ 38* ]
|
|||
|
Data
Extract Set Up and Modifications
|
[ 39* ]
|
|||
|
Data
Set up For Third Party Data
|
[ 40* ]
|
|
*All
customizations expedited timeframes or increases to standard frequency of
tasks will be performed at hourly rate.
|
19
EXHIBIT
C
SAMPLING
AND SAMPLE ACCOUNTABILITY
POLICIES
AND PROCEDURES
General
Ventiv
shall cause the Ventiv Sales Representatives to distribute samples of Products
to Targets as part of the detailing activity of the Ventiv Sales
Representatives, under Ventiv’s Sampling Program (the “Sampling Program”) which
complies in all respects with applicable Federal and State law and regulations,
including but not limited to the Prescription Drug Marketing Act, as amended
(“PDMA”) and regulations and guidelines promulgated thereunder. The
Sampling Program is provided in connection with the services being provided by
the Ventiv Sales Representatives, as set forth herein. Any Sampling
Program will be reviewed with and approved (in writing) by Client prior to
implementation it being understood that any Sampling Program shall be
implemented by Ventiv and Ventiv shall be solely responsible for ensuring that
such Sampling Program is compliant with all Applicable Laws. The
Parties agree that Product samples shall not be considered an item of
value. The Parties understand and agree that certain services being
provided by Ventiv pursuant to its provision of the Sampling Program shall also
be provided in connection with the sample management and sample accountability
services being provided by Ventiv for certain of Client’s sales
representatives.
In
connection with the foregoing, Client expressly authorizes Ventiv to distribute
the Product samples during the Term (or any Additional Term) of this
Agreement.
Responsibility for Sample
Distribution and Storage
Client
shall be responsible for initial storage of Product samples while they are in
its possession and for the shipment of samples to the Sales
Representatives. Each Sales
Representative shall be accountable for samples he/she receives (including any
storage of samples).
State License Number for
Targets
Samples
shall be provided only to licensed physicians and other appropriate medical
professionals previously identified by Client. Once per calendar year
(or more frequently as required by the PDMA), a list of Targets utilized by the
Sales Representatives shall be validated by Ventiv against a current list of
state license numbers provided by a recognized vendor as agreed to by the
Parties. All additions, changes and off-list potential Targets shall
be validated by Ventiv.
Sample Accountability
Records
Ventiv
shall utilize a security and audit program that includes allowance for all of:
random, for cause and periodic physical inventories of samples delivered to the
Sales Representatives consistent with the PDMA and applicable regulations of the
Food and Drug Administration (“FDA”). In the course of utilizing that
program Ventiv will generate and maintain Inventory Records, Reconciliation
Reports, Summary Report and any other records as required
by Applicable Law. Client shall have the right to review
and audit any such reports.
20
Written Accountability
Policies
Ventiv
will prepare written policies, provide instruction and testing concerning such
policies and (with the cooperation of Client) gather all required information
concerning Sample Accountability issues to assure that Ventiv is in compliance
with the requirements of the PDMA and any state laws covering the sampling
services (if any) provided by Ventiv. Those written policies and
procedures will address: (i) the inventory process, (ii) an inventory schedule,
(iii) the audit process and standards for detecting falsified and incomplete
records, (iv) what is a significant loss and how it is to be identified, (v)
responsibility for notifying the FDA, (vi) system for monitoring samples to
identify the loss or theft of samples and (vii) the standards for storage of
samples and audit of storage sites. Those written policies and
procedures shall be provided to and accepted in writing by Client, and Client
shall have the right to review (and audit compliance with) such policies and
procedures from time to time. In addition, Client shall prepare
written policies and procedures covering shipping of samples by Client and
return of samples, as applicable. Client shall provide Ventiv with a written
copy of Client’s written policies and procedures.
Audit
Services
Ventiv
will develop audit procedures, random selection audits, operational guidelines,
proposed timelines and checklists to allow testing and demonstration of PDMA
compliance. These procedures will include random and for-cause audit
criteria, on-site inventory, inspection of sample storage locations, interviews
of Sales Representatives and reconciliation services and reports. The on-site
inventory of the samples in the possession of a Sales Representative and related
interview of that Sales Representative (with accompanying reconciliation
services and report) shall constitute a “physical audit.” Ventiv
shall conduct physical audits, on a routine basis and as may be requested by
Client, with respect to Sales Representatives with appropriate subsequent
reconciliation of samples provided to that Sales Representative. In
addition to any other physical audits, performed by either Client or Ventiv,
required by the PDMA and/or regulations thereunder and/or by the applicable
written policies and procedures for the sample accountability program, a
physical audit shall be conducted on each Sales Representative upon termination
of employment. Random signature audits will be performed by Ventiv
and the results reported to Client. Client shall have the right
to jointly participate in any audit services conducted by Ventiv pursuant to
this Sample Accountability policy.
Shipment of
samples
Client is
responsible for shipping Product samples directly to the Sales Representatives,
including use of appropriate delivery verification system and confirmation
documentation. A written description of that delivery verification
system and copies of the conformation documentation forms shall be made
available for review. Client shall provide Ventiv with all
PDMA-related information (including lot numbers). Upon written
request from Client, Ventiv shall also provide all information reasonably
necessary to allow Client to verify the receipt of shipped samples.
Ventiv
will receive a copy of all documents confirming shipments of samples to the
Sales Representatives. Ventiv will, in all cases, reconcile the
receipt of samples by each Sales
21
Representative
with the samples shipped to that Sales Representative, based upon the shipping
records provided to it and acknowledgment of delivery provided by the Sales
Representatives. All discrepancies between the sample shipping
records and the acknowledgment of delivery by the Sales Representatives shall be
identified and investigated by Ventiv and provided immediately to Client in
writing. All loss of product and potential loss of product during
shipment to the Sales Representatives shall be investigated by Client, Ventiv
and the applicable Sales Representative. All loss of product as a
loss in transit shall be reported by Client to the FDA as required by
PDMA. Client shall determine the significant loss threshold for loss
in transit and be responsible to report such loss to the FDA.
Returns
Client
shall be responsible for approving all returns of samples for
destruction. All approved returns of samples shall be sent to
Client’s approved Reverse 3PL provider for destruction. Client will
have written confirmation of sample returns promptly after receipt of the
returned sample. The Parties recognize that Ventiv will reconcile
sample data and account for samples based (in part) on the return confirmations
provided by Client. Client shall not remove, destroy or otherwise
impair the availability of the returned samples until it confirms the return of
samples in the quantities reported by the Sales Representative or, if Ventiv has
not begun such confirmation after the passage of thirty (30) days following
notice to Ventiv.
Access to
Records
Ventiv
shall provide Client access to all records in less than twenty-four (24)
hours.
Notification of Client and
of FDA
Upon
Ventiv’s discovery that any Product sample falsifications, losses, diversions or
thefts, Ventiv shall, within twenty-four (24) hours, report such discovery to
Client. Client will be responsible for determining whether a “theft”
or a “significant loss” has occurred under the PDMA. Provided Ventiv has
provided prior notice and all necessary evidence and cooperation to Client
regarding possible sample diversion, falsification of a sample record or theft
or loss of samples, Client shall be responsible for (i) determining whether
there is “reason to believe” that a diversion of a sample or falsification of a
sample record by a Sales Representative has occurred and (ii) reporting the
theft or loss of samples to the FDA. Ventiv shall provide all
necessary support and cooperation to Client regarding these
matters.
Prescription Sample
Identification
Client
shall notify Ventiv of the lot numbers of prescription samples being shipped by
Client in advance of shipment and, in the case of shipment of prescription
samples by Client to the Sales Representatives, such notice shall be given as
far in advance as reasonably possible prior to delivery to the Sales
Representatives. Ventiv will in all cases require the Sales
Representatives to keep written records by lot number of all prescription
samples distributed to licensed practitioners. Ventiv will reconcile
sample data according to product lot numbers.
22
Recalls
Ventiv
shall maintain traceability records at the product code level on samples of the
Product. The decision to conduct and the right to control a recall
shall be solely Client’s. Ventiv shall cooperate fully with Client in
connection with any recall efforts affecting the Product.
Accountability
Training
The
Parties recognize that a Sampling Program will require incremental training in
sample accountability. Ventiv, with the assistance of Client, will
provide, as part of the training, all Ventiv Sales Representatives with training
which addresses sampling matters. Should Ventiv and/or Client
determine that follow-on training is necessary in the future, Client will be
responsible for the reasonable costs associated with such follow-on
training.
