Colorado-Promotion Agreement - Abbott Laboratories Inc. and Sepracor Inc.
Co-Promotion Agreement
Between
Ross Products Division of
Abbott Laboratories Inc.
and
Sepracor Inc.
Dated As Of November 19, 1999
<PAGE>
CONFIDENTIAL
Table of Contents
Article 1. Definitions.......................................................1
Article 2. APPOINTMENT TO CO-PROMOTE.........................................7
2.1 Appointment.......................................................7
2.2 Marketing Committee...............................................8
2.3 Perform the tasks or functions specified in Section 1.31,
Section 1.32, Section 3.6.2, and Section 4.15. 2..................9
Article 3. ABBOTT PROMOTIONAL EFFORTS........................................9
3.1 Abbott Promotional Efforts........................................9
3.2 Product Manager and Sales Force..................................11
3.3 Abbott Representative Training...................................11
3.4 Abbott Representatives' Incentive Compensation...................12
3.5 Requests for Medical Information by Third Parties................12
3.6 Abbott Reports...................................................12
3.7 Other Abbott Costs and Expenses..................................13
Article 4. SEPRACOR RESPONSIBILITIES AND PROMOTIONAL EFFORTS................13
4.1 Pediatric Expanded Approval......................................13
4.2 Maintenance of Product NDA.......................................13
4.3 Product Formulations.............................................13
4.4 Regulatory Responsibilities......................................13
4.5 Patent and Proprietary Protection................................14
4.6 Consultation with Abbott.........................................14
4.7 Product Manufacture..............................................14
4.8 Complaints, Product Defects and Returns..........................15
4.9 Product Supply...................................................15
4.10 Sepracor Promotional Efforts.....................................15
4.11 Product Manager..................................................16
4.12 Sepracor Representative Training.................................16
4.13 Sepracor Representatives' Incentive Compensation.................17
4.14 Requests for Medical Information by Third Parties................17
4.15 Sepracor Reports.................................................17
4.16 Other Sepracor Costs and Expenses................................17
Article 5. LABELING, SAMPLING AND PROMOTIONAL MATERIALS.....................18
5.1 Product Labeling.................................................18
5.2 Sampling.........................................................18
5.3 Development of Sepracor Promotional Materials....................18
5.4 Distribution of Sepracor Promotional Materials...................18
5.5 Identification of Abbott on Sepracor Promotional Materials.......19
5.6 Abbott Product Materials.........................................20
5.7 Identification of Sepracor on Abbott Product Materials...........20
i
<PAGE>
CONFIDENTIAL
Article 6. PRICING, QUOTATIONS, ORDERS, BILLING, COLLECTION AND
SALES TRACKING...................................................21
6.1 Pricing..........................................................21
6.2 Pricing and Rebate Contracts.....................................21
6.3 Quotations and Orders; Billing and Collection....................21
6.4 Electronic Database..............................................21
Article 7. COMPENSATION TO ABBOTT...........................................22
7.1 Commission.......................................................22
7.2 Commission Payment...............................................22
7.3 Audit............................................................22
Article 8. MEDICAL INQUIRIES; NOTIFICATION OF ADVERSE
DRUG EXPERIENCE..................................................23
8.1 Communication....................................................23
8.2 Notification.....................................................23
8.3 Product Report...................................................24
8.4 Product Recall...................................................24
Article 9. OTHER PRODUCTS...................................................24
9.1 Product Rights Ex-U.S............................................24
9.2 Product Rights to Geriatric Market...............................24
9.3 Rights of Negotiation for Other Products.........................25
Article 10. REPRESENTATIONS AND WARRANTIES; COVENANTS........................25
10.1 Mutual Representations and Warranties............................25
10.2 Abbott Covenants.................................................25
10.3 Other Abbott Representations and Warranties......................26
10.4 Other Sepracor Representations and Warranties....................27
10.5 Sepracor Covenants...............................................28
Article 11. INDEPENDENT CONTRACTOR RELATIONSHIP..............................29
Article 12. TERM AND TERMINATION.............................................29
12.1 Initial Term.....................................................29
12.2 Early Termination by Abbott......................................29
12.3 Early Termination by Either Party................................30
12.4 Grace Period.....................................................31
Article 13. CONSEQUENCES OF TERMINATION......................................31
13.1 Confidential Information.........................................31
13.2 Accrued Obligations..............................................31
13.3 Return of Promotional Materials..................................31
13.4 Commission.......................................................32
13.5 Residual Commission..............................................32
13.6 Remedies.........................................................32
ii
<PAGE>
CONFIDENTIAL
13.7 Survival.........................................................32
Article 14. INDEMNIFICATION..................................................33
14.1 Sepracor Indemnification.........................................33
14.2 Abbott Indemnification...........................................34
14.3 Sepracor Indemnification Under Sampling Act......................35
14.4 Abbott Indemnification Under Sampling Act........................36
14.5 Control of Defense...............................................37
14.6 Settlement of Claims.............................................38
Article 15. CONFIDENTIALITY..................................................38
15.1 Definition.......................................................38
15.2 Exceptions to the Definition of Confidential Information.........38
15.3 Confidentiality Obligations......................................39
15.4 Previous Agreement...............................................39
Article 16. PUBLIC ANNOUNCEMENTS.............................................39
16.1 Joint Announcement...............................................39
16.2 Non-Publicity....................................................40
Article 17. TRADEMARKS.......................................................40
17.1 Promotion........................................................40
17.2 Compliance with Laws.............................................40
17.3 No Assertion of Right............................................40
Article 18. FORCE MAJEURE....................................................41
Article 19. ALTERNATIVE DISPUTE RESOLUTION...................................41
Article 20. GENERAL..........................................................41
20.1 Property Interest................................................41
20.2 Assignment.......................................................41
20.3 Headings.........................................................42
20.4 Notices..........................................................42
20.5 Waiver...........................................................43
20.6 Severability.....................................................43
20.7 Governing Law....................................................43
20.8 Counterparts.....................................................43
20.9 Entire Agreement.................................................43
SCHEDULE 1.32. Sample Pediatric Sales Calculation
SCHEDULE 10.4.6. Other Agreements Regarding Product
SCHEDULE 10.4.7. Notices From The FDA
SCHEDULE 19 Alternative Dispute Resolution
iii
<PAGE>
CONFIDENTIAL
CO-PROMOTION AGREEMENT
THIS CO-PROMOTION AGREEMENT (the "Agreement") is entered into as of
November 19, 1999 (the "Effective Date"), by and between Sepracor Inc., having
its principal offices at 111 Locke Drive, Suite 2, Marlborough, Massachusetts
01752 ("Sepracor"), and Abbott Laboratories Inc., through its Ross Products
Division, having its principal offices at 625 Cleveland Avenue, Columbus, Ohio
43215 ("Abbott").
WITNESSETH:
WHEREAS, Sepracor has received FDA approval for an inhalation solution of
levalbuterol hydrochloride which is currently marketed in the United States of
America under Sepracor's trademark, Xopenex(TM);
WHEREAS, Abbott has a well-established and highly trained pediatric sales
force for promoting pharmaceutical products; and
WHEREAS, Sepracor and Abbott wish to enter into this Agreement for Abbott
to co-promote the product(s) described herein in the Territory;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:
Article 1. DEFINITIONS.
For the purposes of this Agreement, the following initially capitalized
terms in this Agreement, whether used in the singular or plural, shall have the
following meanings, unless the context clearly requires otherwise.
1.1 "Abbott" means the Ross Products Division of Abbott Laboratories
Inc., a Delaware corporation.
1.2 "Abbott Diversion Violation" means a violation of the Sampling Act
that is caused by Abbott, its officers, directors, or other
employees or representatives of Abbott in the performance of
Abbott's obligations under this Agreement, which occurs and is
deemed a conviction against Sepracor pursuant to 21 U.S.C.
ss.333(b)(2).
1.3 "Abbott Marks" means the corporate names "Abbott Laboratories" and
"Abbott Laboratories Inc.," the division names "Ross Products
Division" and "Ross Pediatrics," and Abbott's logo "a" and the
"Ross" logo.
1.4 "Abbott Product Materials" means all forms and formats of
information produced by or at the request of Abbott regarding or
describing, in whole or in part, the Product, developed for use in
promoting the Product.
1.5 "Abbott Promotional Efforts" means Abbott's activities to promote
and sell the Product as defined in Article 3 of this Agreement.
1
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.6 "Abbott Representative" means an individual who is an employee
person of Abbott, who has been trained by Abbott to make sales
presentations for Abbott's pediatric pharmaceutical and nutritional
products, and who has been trained pursuant to this Agreement to
make effective sales presentations for the Product.
1.7 "Abbott Targeted Hospitals" means all hospitals classified as Outlet
Subcategory Codes [**] using Drug Distribution Data.
1.8 "ADR" means the alternative dispute resolution process set forth in
Article19.
1.9 "Affiliate" means, with respect to each Party, any legal entity
which, during the Term, controls, is controlled by, or is under
common control with such Party. For purposes of this definition, an
entity shall be deemed to control another entity if it owns or
controls, directly or indirectly, at least fifty percent (50%) of
the voting interest of all equity interests of the other entity (or
other comparable ownership interest for an entity other than a
corporation).
1.10 "Agreement" means this Co-Promotion Agreement executed by both
Parties, as may be amended from time to time in accordance with the
terms and conditions hereof.
1.11 "Approved Indication" for the Product means:
1.11.1 Prevention and/or treatment of bronchospasm in adolescents
12 years of age and older with reversible obstructive airway
disease; or
1.11.2 Any other indications approved by the FDA during the Term.
1.12 "Average Net Selling Price/Dose Vial" means the Net Sales of unit
dose vials of Product during a Sales Quarter, divided by the number
of unit dose vials of Product actually sold during such Sales
Quarter (excluding actual rejections and returns in such Sales
Quarter).
1.13 "Average Net Selling Price/Dose Bottle" means the Net Sales of
multidose bottles of Product during a Sales Quarter, divided by the
number of multidose bottles of Product actually sold during such
Sales Quarter (excluding actual rejections and returns in such Sales
Quarter).
1.14 "cGMP" means current Good Manufacturing Practices, as defined by the
FDA pursuant to applicable statutes and the regulations adopted from
time to time under authority of the Federal Food, Drug and Cosmetics
Act.
1.15 "Commission" means the dollar amount of compensation paid to Abbott
for the Abbott Promotional Efforts and other obligations of Abbott
hereunder, based on Pediatric Sales for any given Sales Year during
the Term, as computed and paid on a quarterly basis.
2
<PAGE>
CONFIDENTIAL
1.16 "Commission Payments" means the quarterly payments made by Sepracor
to Abbott calculated in accordance with the provisions set forth in
Section 7.1.
1.17 "Confidential Information" shall have the meaning set forth in
Section 15.1.
1.18 "Effective Date" means the date first above written in the Preamble
to this Agreement.
1.19 "Extension Term" means the twelve-month period of time following the
end of the Initial Term , which is an extension of the Term in
accordance with the provisions of Section 12.1.1.
1.20 "FDA" means the United States Food and Drug Administration or any
successor entity thereto.
1.21 "Geriatric Market" means the population segment of people age 65
years and older.
1.22 "Initial Term" means the period of time commencing on the Effective
Date and ending on the sixth anniversary of January 1, 2000.
1.23 "Initial Training" means the training of the Abbott Representatives
by Sepracor in accordance with the provisions set forth in Section
3.3.1.
1.24 "Line Extension" shall mean any (a) new formulation or dosage
strength of levalbuterol hydrochloride inhalation solution for use
in a standard nebulization unit, (b) new indication for levalbuterol
hydrochloride inhalation solution, or (c) new packaging or labeling
configurations for levalbuterol hydrochloride inhalation solution.
1.25 "Marketing Committee" means a committee comprised of two (2)
designees of each Party, which shall meet as set forth in Section
2.2 regarding the matters set forth therein.
1.26 "Medical Affairs Liaison" of each Party shall mean a person
appointed by each Party, with notice to the other Party of the name,
address, telephone number and facsimile number for such person, to
facilitate the communications described in Article 8.
1.27 "NDA" means a new drug application (or a supplemental new drug
application) submitted to the FDA for approval of the Product for
commercial sale for indicated uses pursuant to the Federal Food,
Drug, and Cosmetic Act.
1.28 "Net Sales" means the gross amount invoiced by Sepracor or its
Affiliates on sales of a Product in the Territory, less the
following as they specifically relate to the Product:
3
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.28.1 [**] and [**];
1.28.2 [**] or [**] for [**], and [**]
1.28.3 [**] with respect to sales of Product (including [**] or
otherwise [**] the sale of Product, including [**] when
included in the [**] with respect to [**] included in the
[**]
1.28.4 [**] costs incurred in [**] included in the [**]
1.28.5 [**] and [**] or to [**] and [**] and [**] or to [**]
including, [**]
1.28.6 [**] provided that such [**] and are [**]
1.28.7 in the event [**] the Product, then, if possible, the [**]
shall be [**] to which [**], including the Product. In the
event [**] including the Product, [**] shall be [**]
including the Product.
4
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
In addition, the following shall apply for the purposes of
calculating Net Sales: (a) if [**] to a [**] to the [**] of Product
[**] which is the [**] and the [**] which is the [**] for each and
every [**]; (b) if [**] to a [**] by or for such [**] for such
Product shall be [**] or the [**]; and (c) if Product is [**] any
other [**] or any [**] of any [**] to such [**] in connection with
[**] shall be [**] in the [**].
1.29 "Party" means either Abbott or Sepracor and their respective
successors and assigns; and "Parties" is both Abbott and Sepracor,
and their respective successors and assigns.
1.30 "Pediatric Bronchospasm Expanded Approval" means FDA's approval of
Sepracor's NDA for the Product for use in children below age 12 and
at least down to age 4.
1.31 "Pediatric Market" means pediatricians identified by Medical
Education number (a list of such pediatricians to be agreed to by
the Marketing Committee and amended from time to time, as
appropriate), general and family physician practitioners with high
birth practices identified by Medical Education number (a list of
such physicians to be agreed to by the Marketing Committee and
amended from time to time, as appropriate), and Abbott Targeted
Hospitals, and clinics, mail-order and staff model health
maintenance organizations for the purpose of pediatric care;
provided, however, that all pediatric allergists and pediatric
pulmonologists are excluded from the Pediatric Market; further,
provided, however, that Abbott shall have a right of first refusal
to add pediatric allergists, pediatric pulmonologists, or both, to
the Pediatric Market in the event that during the Term, Sepracor
decides that it would like sales personnel other than Sepracor
Representatives to promote Product to pediatric allergists,
pediatric pulmonologists, or both, as appropriate, and in such case,
expansion of the Pediatric Market to include one or both of
pediatric allergists and pediatric pulmonologists shall be discussed
by the Marketing Committee.
1.32 "Pediatric Sales" means sales of Product by Sepracor and its
Affiliates, as calculated by adding (a) the product determined by
multiplying the Average Net Selling Price/Dose Vial or Average Net
Selling Price/Dose Bottle during an applicable period by the number
of unit dose vials or multidose bottles of Product, as appropriate,
sold during such period through pediatricians identified by Medical
Education number (a list of such pediatricians to be agreed to by
the Marketing Committee and amended from time to time, as
appropriate), and those general and family physician practitioners
with high birth practices identified by Medical Education number (a
list of such physicians to be agreed to by the Marketing Committee
and amended from time to time, as appropriate), that are dispensed
by retail drug stores (independent, chains, food and mass
merchandise stores), clinics, and mail-order and staff model health
maintenance organizations (determined by multiplying the number of
prescriptions generated by such pediatricians and general and family
practitioners and so dispensed
5
<PAGE>
CONFIDENTIAL
(using Xponent data) by the average number of unit dose vials per
pediatric script (which is equal to the unit dose ratio (the
numerator of which is the total milliliter volume of the Product
dispensed in unit dose vials to fill pediatric prescriptions, and
the denominator of which is dose size in milliliters) divided by the
number of unit dose vial prescriptions written by pediatricians) or
by the average number of multidose bottles per pediatric script
(which is equal to the multidose ratio (the numerator of which is
the total milliliter volume of the Product dispensed in multidose
bottles to fill pediatric prescriptions, and the denominator of
which is the bottle volume in milliliters) divided by the number of
multidose bottle prescriptions written by pediatricians) , as
appropriate, (using the National Prescription Audit), and (b)
pediatric purchases of Product by hospitals, which shall be
calculated by multiplying the number of unit dose vials or multidose
bottles of Product, as appropriate, sold to Abbott Targeted
Hospitals during an applicable period as reported by Drug
Distribution Data by the Average Net Selling Price/Dose Vial or
Average Net Selling Price/Dose Bottle, as appropriate, during such
period and by the fraction equal to the number of unit dose vials or
multidose bottles, as appropriate, prescribed by pediatricians in
the retail segment (as reported by the National Prescription Audit)
divided by the number of all unit dose vials or multidose bottles,
as appropriate, prescribed in the retail segment (as reported by the
National Prescription Audit) during such period. For example
purposes only, a mock sample calculation of Pediatric Sales is set
forth in Schedule 1.32 hereto.
1.33 "Product" means Sepracor's levalbuterol hydrochloride inhalation
solution, a pharmaceutical product for human use, currently marketed
under the Trademark. Product shall include any Line Extensions.
1.34 "Purchasers" means any person or entity purchasing the Product,
including, but not limited to, wholesalers, distributors and
Sepracor customers.
1.35 "Residual Commission" means a Commission paid by Sepracor to Abbott
following of the Term as set forth in Section 13.5.
1.36 "Sales Quarter" means each period of three (3) consecutive months
during the Term; provided, however, that the first Sales Quarter
shall be the partial Sales Quarter beginning on the date that the
first Abbott Representatives begin Abbott Promotional Efforts and
ending on December 31, 1999. The second Sales Quarter shall begin on
January 1, 2000, with successive Sales Quarters being each
successive three (3)-month period thereafter.
1.37 "Sales Year" means a period of twelve (12) consecutive calendar
months during the Term commencing on January 1, 2000, and each
anniversary thereof.
1.38 "Samples" means small quantities of the Product offered for
evaluation.
6
<PAGE>
CONFIDENTIAL
1.39 "Sampling Act" means the Prescription Drug Marketing Act of 1988, as
amended from time to time, and any regulations promulgated
thereunder.
1.40 "Sepracor" means Sepracor Inc., a Delaware corporation.
1.41 "Sepracor Diversion Violation" means a violation of the Sampling Act
that is caused by Sepracor, its officers, directors, or other
employees or representatives of Sepracor in the performance of
Sepracor's obligations under this Agreement, which occurs and is
deemed a conviction against Abbott pursuant to 21 U.S.C.
ss.333(b)(2).
1.42 "Sepracor Marks" means the corporate names "Sepracor Inc.," and
"Sepracor", and the Trademark and other tradenames and logos of
Sepracor.
1.43 "Sepracor Promotional Efforts" means all of Sepracor's activities to
promote and sell the Product as defined in Section 4.10 of this
Agreement.
1.44 "Sepracor Promotional Materials" means original printed matter,
including printed literature and reprints, or original graphic
matter relating or referring to the Product, that is provided by
Sepracor to Abbott for use by the Abbott Representatives in Abbott
Promotional Efforts.
1.45 "Sepracor Representative" means an individual who is an employee of
Sepracor or contract sales person retained or engaged by Sepracor,
who has been trained by Sepracor to make effective sales
presentations for the Product.
1.46 "Term" means the period of time from the Effective Date until the
expiration or early termination of this Agreement in accordance with
its terms and conditions. In any event, the Term of this Agreement
shall not be longer than seven (7) years from the January 1, 2000.
1.47 "Territory" means the fifty (50) states of the United States of
America, the District of Columbia, and all United States territories
and possessions, but excluding Puerto Rico.
1.48 "Third Party" means a party other than Abbott, Sepracor, or their
Affiliates.
1.49 "Trademark" means the statutory United States of America trademark
Xopenex(TM) for the Product, in the Territory, and any other
trademark under which the Product is marketed during the Term in the
Territory.
Article 2. APPOINTMENT TO CO-PROMOTE.
2.1 Appointment. Sepracor hereby appoints Abbott as the exclusive
co-promoter of the Product to the Pediatric Market in the Territory
for the Term, except as set forth in Section 4.10.1 below. Sepracor
and Abbott hereby agree that Sepracor and Abbott, and their
respective Representatives, shall be the sole
7
<PAGE>
CONFIDENTIAL
commercial promoters of the Product to the Pediatric Market in the
Territory for the Term, subject to the terms and conditions of this
Agreement. Sepracor shall retain all other rights exclusively to
promote Product, and all other Sepracor prescription and
non-prescription pharmaceutical and non-pharmaceutical products.
2.2 Marketing Committee. Immediately following the Effective Date,
Abbott and Sepracor shall each appoint two (2) representatives on
behalf of their respective companies to serve as the "Marketing
Committee", and the Marketing Committee shall meet within thirty
(30) calendar days of the Effective Date. The Marketing Committee
shall:
2.2.1 Discuss preferred pricing for the Product and the strategy
for implementing such pricing, and develop the strategy for
marketing and distributing the Product in the Pediatric
Market in the Territory;
2.2.2 Establish forecasted Pediatric Sales of Product for each
individual Sales Year in advance of such Sales Year, showing
anticipated Pediatric Sales for each calendar month during
such Sales Year;
2.2.3 Establish Product promotion goals for the Pediatric Market
in the Territory and the preferred means to attain such
goals, and review and establish a plan for the distribution
of the Sepracor Promotional Materials and Abbott Product
Materials;
2.2.4 Provide advice and guidance regarding budget, scope and
extent of the Abbott Promotional Efforts; provided, however,
Abbott shall make all strategic decisions with respect to
Abbott Promotional Efforts and budget for the Abbott
Promotional Efforts, which strategic decisions shall be
consistent with the terms of this Agreement;
2.2.5 Provide advice and guidance regarding budget, scope, and
extent of the Sepracor training of Abbott Representatives;
provided, however, Abbott shall make all strategic decisions
with respect to training of Abbott Representatives (other
than with respect to the Initial Training), which decisions
shall be in accordance with the terms of this Agreement; and
further provided, however, Sepracor shall make all strategic
decisions with respect to training of Sepracor
Representatives;
2.2.6 Serve as an advisory panel to address any matter either
Party brings before the Marketing Committee pursuant to the
terms and conditions of this Agreement;
2.2.7 Meet at least once during each Sales Quarter to discuss
matters assigned to the Marketing Committee. Marketing
Committee
8
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
meetings shall be held at mutually agreed upon dates, times
and places, or by conference call;
2.2.8 Serve as a conduit for the exchange of information and input
relating to the further development of the Product by
Sepracor pursuant to Section 4.1, for the purpose of
Sepracor seeking the Pediatric Bronchospasm Expanded
Approval; provided, however, that appropriate technical
personnel of each Party shall attend any Marketing Committee
meeting where subject matter relating to this Subsection
2.2.8 is on the meeting agenda; and
2.3 Perform the tasks or functions specified in Section 1.31, Section
1.32, Section 3.6.2, and Section 4.15. 2.
Decisions of the Marketing Committee shall be by a vote of either four (4)
to zero (0) or three (3) to one (1). In the event that such a decision
cannot be reached on any matter or issue before the Marketing Committee,
the matter or issue shall first be referred to a panel consisting of one
(1) senior management designee from each Party. If the matter or issue is
not decided by the panel, Sepracor shall unilaterally decide the matter or
issue.
Article 3. ABBOTT PROMOTIONAL EFFORTS.
3.1 Abbott Promotional Efforts.
Abbott Promotional Efforts shall be as follows:
3.1.1 Abbott Representatives. Abbott shall use its reasonable
commercial efforts to promote the Product to the Pediatric
Market for sale in the Territory through Abbott
Representatives [**]. With Sepracor's prior written
approval, which approval shall not be unreasonable withheld,
Abbott may carry out any of its Abbott Promotional Efforts
through Affiliates of Abbott or temporary contract
resources, which shall be bound by all terms and conditions
of this Agreement. Subject to the provisions of Section
12.4, commencing in December 1999, Abbott shall promote the
Product to the Pediatric Market in the Territory . Abbott
Promotional Efforts shall include:
3.1.1.1 Promotion to Pediatricians. Abbott shall use their
[**] pediatric sales force, including a minimum of
[**] Abbott Representatives[**], and Abbott
Representatives shall provide a minimum of [**] on
an [**] in the Pediatric Market ([**] will be part
of such [**] and will be [**]), wherein [**] of the
[**], and a minimum of [**] of the [**] in the
[**].
3.1.1.2 Promotion to Abbott Targeted Hospitals. Abbott
shall use [**] Abbott Representatives [**]
(referred to herein
9
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
as "Abbott [**] Representatives"), [**] Abbott
Targeted Hospitals, wherein at each such Abbott
Targeted Hospital, [**] is the [**] and such [**]
shall include [**] of the [**]. On an annual basis,
Abbott [**] Representatives shall provide a minimum
of [**] is the [**], and a minimum of [**] of the
[**] by Abbott [**] Representatives [**] in the
[**]. Additionally, from the Effective Date through
December 31, 2000, Abbott shall use reasonable
commercial efforts to utilize [**] its existing
Abbott Representatives who are academic specialty
representatives (referred to herein as "Abbott
Academic Representatives") [**] academic Abbott
Targeted Hospitals wherein at each such academic
Abbott Targeted Hospital, [**], and such [**] shall
include [**] of the [**]. Beginning January 1,
2001, Abbott shall use [**] Abbott Academic
Representatives [**] Abbott Targeted Hospitals. On
an annual basis, from the Effective Date through
December 31, 2000, Abbott shall use reasonable
commercial efforts to have Abbott Academic
Representatives [**] is the [**] and a minimum of
[**] of the [**] Abbott Academic Representatives
shall be [**] in the [**]. Beginning on January 1,
2001, on an annual basis, Abbott Academic
Representatives [**] is the [**] and a minimum of
[**] of the [**] Abbott Academic Representatives
shall be [**] in the [**].
3.1.2 Calling Cycle and Call Tracking. In performing Abbott
Promotional Efforts, Abbott shall use reasonable commercial
efforts to ensure that the calling cycle of Abbott
Representatives during a Sales Year is distributed
throughout that Sales Year in a manner that reflects the
seasonality of the Approved Indications and the fluctuating
demand for Product during the course of the Sales Year. [**]
including [**], and will [**] on a [**]. Unless otherwise
agreed by the Parties [**] including [**], and [**] and
beginning [**] will [**] on a [**] with a [**]. Abbott, in
its discretion, may promote the Product through additional
Abbott Representatives from time to time, provided they
receive appropriate training with respect to promoting the
Product.
3.1.3 Manner of Promotion Abbott shall perform Abbott Promotional
Efforts taking into consideration the advice, guidance and
decisions of the Marketing Committee, and Abbott shall
perform in accordance with all applicable federal, state and
local laws, rules, and regulations of the Territory,
including, but not limited to, the Federal Food, Drug and
Cosmetic Act. Abbott shall not be in default of any
obligation hereunder as a result of any administrative or
judicial determination
10
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
that either Sepracor Promotional Material or Sepracor's
advertisements for the Product violates:
3.1.3.1 The approved Product labeling; or
3.1.3.2 Any applicable federal, state or local laws, rules,
and regulations of the Territory.
3.1.4 Distribution of Sepracor Promotional Materials. As part of
the Abbott Promotional Efforts, and in accordance with
Sections 5.3 and 5.4 hereof, Abbott Representatives shall
distribute Sepracor Promotional Materials to the Pediatric
Market, potential and existing Purchasers, and others to
whom the Abbott Representatives make Abbott Promotional
Efforts in the Territory.
3.1.5 Compliance with Sampling Act. Abbott shall distribute
Samples only in strict conformance with the Sampling Act.
3.2 Product Manager and Sales Force. Abbott shall assign a Product
manager, who is an Abbott Representative, to oversee and manage the
Abbott Promotional Efforts in the Territory. At all times during the
Term, Abbott shall maintain a sales force of Abbott Representatives
to promote the Product to the Pediatric Market throughout the
Territory.
3.3 Abbott Representative Training.
3.3.1 Initial Training. Sepracor shall be responsible for the
Initial Training of the Abbott Representatives in the
co-promotion of the Product. The format and content of the
Initial Training shall be agreed upon by the Parties.
Initial Training will begin with home training of Abbott
Representatives in late November/early December 1999.
Sepracor shall also provide Initial Training to the Abbott
Representatives who are territory managers in December 1999,
and to Abbott Representatives at Abbott's regional sales
meetings during January 2000, at agreed upon times and
places. In addition, Sepracor shall provide training to
Abbott Representatives at Abbott's national sales meetings
in March 2000, at agreed upon times and places. Abbott shall
use its commercially reasonable efforts to ensure that all
Abbott Representatives who may initially promote the Product
attend the Initial Training. [**] at such training. For
purposes of Initial Training, Sepracor shall supply sales
force training materials in sufficient quantities to train
the Abbott Representatives. [**] with the printing of the
training materials for Initial Training of the Abbott
Representatives. Sepracor shall consult with Abbott
regarding the appropriate levels of sales force training
materials and shall assist Abbott in Abbott's initial
start-up efforts.
11
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3.3.2 Additional Training. Following the Initial Training,
Sepracor shall provide training to and consult with the
Abbott Representatives on an on-going basis in the promotion
of the Products, upon mutual agreement of the Parties. The
Marketing Committee shall determine the frequency, scope and
attendees for subsequent training sessions. Subject to the
Marketing Committee's determination, such on-going training
shall include, but not be limited to, training sessions
[**] for purposes of remedial training, education on
current developments, new uses or indications, and new
Sepracor marketing materials or programs; the time
dedicated to, and the nature of, such training being
subject to approval by Abbott. Each Party shall [**]
agreed upon by the Parties. Abbott and Sepracor shall
[**] for such additional training of Abbott
Representatives.
3.4 Abbott Representatives' Incentive Compensation. Abbott, in its sole
discretion and at its expense, shall compensate the Abbott
Representatives for promoting the Product in an appropriate manner
to reflect individual Abbott Representative's efforts in performing
the Abbott Promotional Efforts in the Territory; provided, however,
that Abbott's compensation of Abbott Representatives, including
compensation, incentive compensation, bonuses, and prizes, shall be
consistent with Abbott satisfying its obligations under this
Agreement. During the Term, Abbott, at its expense, shall award
incentive compensation, bonuses or prizes to Abbott Representatives
for achieving goals for volume of Product sales.
3.5 Requests for Medical Information by Third Parties. In the event
Abbott's Medical Affairs Liaison receives inquiries from third
parties which relate to the efficacy, safety or other medical issues
regarding the Product, Abbott's Medical Affairs Liaison shall direct
such inquiries within two (2) business days of such Medical Affairs
Liaison's receipt of such inquiry to Sepracor's Medical Affairs
Liaison, unless such inquiry is of a routine nature and the response
is clearly set forth in the Product labeling. Within a reasonable
time period following the Effective Date, Sepracor's Medical Affairs
Liaison shall supply Abbott's Medical Affairs Liaison with
Sepracor's standard responses to questions of a routine nature
directed to Sepracor with respect to the Product.
3.6 Abbott Reports.
3.6.1 Reports on Promotion Efforts. Subject to the provisions of
Section 12.4, not later than [**] days after the end of each
Sales Quarter during the Term, Abbott shall supply Sepracor
with a report summarizing the Abbott Promotional Efforts
during such period in a manner which
12
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
permits Sepracor to evaluate Abbott's compliance with its
obligations regarding Abbott Promotional Efforts [**] made,
[**] of the [**] during the Sales Quarter, unless otherwise
agreed by the Parties in writing.
3.6.2 Format of Reports. The Marketing Committee shall determine
the format, content, and detail of reports required by this
Section.
3.7 Other Abbott Costs and Expenses. Except as otherwise specifically
stated in this Agreement, Abbott shall be solely and exclusively
responsible for all costs and expenses relating to or arising from
marketing, promotion (including distribution of Samples, Sepracor
Promotional Materials, and Abbott Product Materials), and sale of
Product incurred by Abbott, its Affiliates, and their employees and
agents.
Article 4. SEPRACOR RESPONSIBILITIES AND PROMOTIONAL EFFORTS.
4.1 Pediatric Expanded Approval. At its sole expense, Sepracor shall use
good faith reasonable efforts in connection with the further
development of the Product, including the conduct of clinical
trials, for the purpose of obtaining Pediatric Bronchospasm Expanded
Approval, and shall take all regulatory actions necessary to file
the NDA or sNDA for such Pediatric Bronchospasm Expanded Approval by
[**]
4.2 Maintenance of Product NDA. During the Term, Sepracor shall use its
reasonable commercial efforts to maintain, at Sepracor's sole cost
and expense, all NDA's which the FDA has granted as of the Effective
Date or during the Term.
4.3 Product Formulations. Sepracor shall be solely responsible for the
formulation, indications, labeling and packaging for the Product.
Sepracor may change any formulation, labeling, and/or packaging at
its own discretion with thirty (30) days prior written notice to
Abbott, unless such change requires pre-approval by the FDA, in
which case Sepracor shall obtain Abbott's prior written approval
which shall be promptly given and not unreasonably withheld.
Sepracor shall be responsible for the cost of such changes and the
cost to change any and all Sepracor Promotional Materials.
4.4 Regulatory Responsibilities. Subject to its obligations set forth in
Sections 4.1 and 4.2, Sepracor shall have responsibility at its sole
discretion for all regulatory submissions and other matters
regarding the Product, including without limitation the Approved
Indications, filing of all NDAs and other applications relating to
the Product. Sepracor shall promptly communicate with Abbott
regarding all significant matters communicated between Sepracor and
the FDA that relate to the foregoing or to the promotion, sale or
use of the Product.
13
<PAGE>
CONFIDENTIAL
4.5 Patent and Proprietary Protection. Sepracor shall have
responsibility at its sole discretion for prosecuting and
maintaining all patent applications and patents relating to the
Product, as well as all trademark applications and trademarks
relating to the Trademark and any other Sepracor Marks, service
marks, copyrights and other intellectual property relating to the
Product. Sepracor shall use its reasonable commercial efforts to (a)
maintain in the Territory its patents and Sepracor Marks relating to
the Product and (b) prosecute in good faith in the Territory its
patent applications relating to the Product. Sepracor shall use its
reasonable commercial efforts to enforce patents relating to the
Product against Third Parties who infringe those patents in the
Territory. Any compensatory damages derived from enforcement of any
patents relating to Product shall be used to first reimburse
Sepracor for its costs and expenses relating to such enforcement,
with any remaining compensatory damages to be treated as Net Sales.
A proportion of such Net Sales will be deemed Pediatric Sales
subject to the Commission set forth in Section 7.1(a), and this
proportion will be determined by calculating the average proportion
of Pediatric Sales to Net Sales over the four Sales Quarters
preceding the award of compensatory damages. Any punitive damages,
exemplary damages, or other enhanced damages shall be retained
solely by Sepracor.
4.6 Consultation with Abbott. Sepracor agrees to consult with Abbott,
upon Abbott's reasonable request, regarding regulatory matters,
patent and trademark strategy, and other related matters to a
reasonable extent to maximize Pediatric Sales; provided, however,
that Sepracor shall retain responsibility for all such matters at
its sole discretion as provided in this Article 4.
4.7 Product Manufacture. Sepracor shall manufacture, or have
manufactured, the Product, in accordance with cGMP and the
specifications for the Product as approved by the FDA, and shall be
responsible for all quality assurance issues arising therefrom.
Sepracor shall be responsible for all manufacture, labeling,
packaging and distribution of the Product in the Territory, and
shall comply with all applicable federal laws, rules, and
regulations regarding the same.
14
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
4.8 Complaints, Product Defects and Returns. Abbott shall notify
Sepracor within two (2) business days of any Product complaints
received by Abbott. As between Sepracor and Abbott, Sepracor shall
be responsible for all manufacturing defects in Product. In
addition, Sepracor shall be responsible for addressing all customer
complaints regarding any alleged manufacturing defects of any
Product. Sepracor shall be responsible for handling and covering the
cost of all recalls and returns of Product and replacement of
defective Product. Abbott, its Affiliates, officers, directors,
employees or agents shall in no way be responsible for any defects
or damages with respect to Product, or its shipment or delivery,
provided, however, that Abbott shall be responsible for Samples
delivered to Abbott from and after the time Abbott or its agents or
representatives takes delivery of such Samples (except for defects
in the Samples or packaging thereof present prior to delivery to
Abbott).
4.9 Product Supply. At all times during the Term, Sepracor shall sell
and supply sufficient quantities of the Product to meet the
requirements of Purchasers in the Pediatric Market in the Territory.
Sepracor shall notify Abbott in writing of any Product manufacturing
difficulties which cause or may cause shortages of Product within
fifteen (15) business days of Sepracor's becoming aware of such
manufacturing difficulties. If Sepracor is unable to fill in a
timely manner all orders for Product in the Pediatric Market in the
Territory because a
Product is out of stock, Sepracor shall distribute available Product
among all customers on a fair and practical basis, keeping in mind
the best interests of the Parties. Sepracor shall immediately notify
Abbott if Sepracor anticipates delays in the shipment of Product to
Purchasers.
4.10 Sepracor Promotional Efforts.
Sepracor Promotional Efforts shall be as follows:
4.10.1 Sepracor Representatives. Sepracor shall use its reasonable
commercial efforts to promote the Product to the Pediatric
Market for sale in the Territory through the Sepracor
Representatives. Notwithstanding anything to the contrary in
this Agreement, the Parties agree that Sepracor and the
Sepracor Representatives retain the right to promote the
Product to Abbott Targeted Hospitals, [**] pediatricians
prescribing albuterol (referred to herein as [**]) in the
Territory, and to any other portion of the Pediatric Market
that Abbott and Sepracor may mutually agree upon, it being
agreed that Abbott and Abbott Representatives shall have the
sole right to promote the Product to pediatricians other
than those in the [**] in the Territory and the co-exclusive
right to promote the Product to Abbott Targeted Hospitals
and pediatricians in the [**] in the Territory.
15
<PAGE>
CONFIDENTIAL
4.10.2 Continued Promotional Activity. Sepracor shall promote
Product during the Term in the Territory at least as
diligently as it had prior to the Effective Date; provided,
however, that Sepracor shall be permitted to cease any and
all contract sales force activity at its sole discretion.
During the Term, Sepracor shall advertise the Product for
Approved Indications to the Pediatric Market in the
Territory in substantially the same manner as Sepracor
advertised the product prior to the Effective Date,
including, but not limited to, continuing to place
advertisements in quality medical journals.
4.10.3 Manner of Promotion. Sepracor shall perform Sepracor
Promotional Efforts taking into consideration the advice,
guidance and decisions of the Marketing Committee, and
Sepracor shall perform in accordance with all applicable
federal, state and local laws, rules, and regulations of the
Territory, including, but not limited to, the Federal Food,
Drug and Cosmetic Act. Sepracor shall be responsible for and
shall indemnify Abbott, its Affiliates, officers, directors,
employees and agents, in accordance with and subject to
Section 14.1, for any liability or expense that may arise as
a result of any administrative or judicial determination
that either a Sepracor Promotional Material or Sepracor's
advertising for the Product to the Pediatric Market in the
Territory violates:
4.10.3.1 The approved Product labeling; or
4.10.3.2 Any applicable federal, state or local laws, rules,
and regulations of the Territory.
4.10.4 Distribution of Sepracor Promotional Materials. Sepracor
Representatives shall distribute Sepracor Promotional
Materials to potential and existing Purchasers of Product
and others to whom the Sepracor Representatives promote the
Product.
4.10.5 Compliance with Sampling Act. Sepracor shall distribute
Samples only in strict conformance with the Sampling Act.
4.11 Product Manager. Sepracor shall assign a Product manager, who is a
Sepracor Representative, to oversee and manage the Sepracor
Promotional Efforts in the Territory
4.12 Sepracor Representative Training. Sepracor shall be responsible for
the training of all Sepracor Representatives in the co-promotion of
the Product. Sepracor shall supply, at Sepracor's cost, sales force
training materials to train the Sepracor Representatives.
Sepracor shall continue to train and consult with the Sepracor
Representatives on an on-going basis in the promotion of the
Products.
16
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
4.13 Sepracor Representatives' Incentive Compensation. Sepracor, in its
sole discretion and at its expense, shall compensate the Sepracor
Representatives for promoting the Product in an appropriate manner
to reflect individual Sepracor Representatives efforts in promoting
the Product in the Territory. Sepracor, at its expense, shall award
incentive compensation, bonuses or prizes to Sepracor
Representatives for achieving goals for volume of Product sales.
4.14 Requests for Medical Information by Third Parties. In the event
Sepracor's Medical Affairs Liaison receives inquiries from third
parties which relate to the efficacy, safety or other medical issues
regarding the Product, Sepracor's Medical Affairs Liaison shall
prepare standard responses to questions of a routine nature directed
to Sepracor with respect to the Product and shall use the standard
responses in addressing inquiries.
4.15 Sepracor Reports.
4.15.1 Reports on Promotion Efforts. Subject to the provisions of
Section 12.4, not later than [**] days after the end of each
Sales Quarter during the Term, Sepracor shall supply Abbott
with a report summarizing the Sepracor Promotional Efforts
to the Pediatric Market in the Territory during such period.
4.15.2 Format of Reports. The Marketing Committee shall determine
the format, content, and detail of reports required by this
Section.
4.15.3 Pediatric Sales Tracking. Within [**] days of Sepracor's
receipt, after each applicable Sales Quarter, of all data
from external sources necessary to calculate the Commission,
Sepracor shall provide to Abbott (a) total gross invoice
amount of Product for the Sales Quarter, (b) total Net Sales
for the Sales Quarter, and (c) a reconciliation of Net Sales
to Pediatric Sales for the Sales Quarter. In addition, for
each Sales Year, within [**] days of Sepracor's receipt,
after the fourth Sales Quarter in a Sales Year, of all data
from external sources necessary to calculate the Commission,
Sepracor shall provide to Abbott a reconciliation of total
gross invoiced amount to Net Sales (including total amounts
for each of the components set forth in Section 1.28 used by
Sepracor in calculating Net Sales from the total gross
invoiced amount) for each Sales Quarter in the Sales Year.
4.16 Other Sepracor Costs and Expenses. Except as otherwise specifically
stated in this Agreement, Sepracor shall be solely and exclusively
responsible for all costs and expenses relating to or arising from
marketing, promotion (including distribution of Samples, Sepracor
Promotional Materials, and Abbott Product Materials), and sale of
Product incurred by Sepracor, its Affiliates, and their employees
and agents.
17
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Article 5. LABELING, SAMPLING AND PROMOTIONAL MATERIALS.
5.1 Product Labeling. All Product labeling decisions shall be made by
Sepracor, and Sepracor shall have sole responsibility therefor.
Product labels and packaging shall not bear any Abbott Marks or any
other Abbott identifying material.
5.2 Sampling. Except as otherwise provided in this Agreement, Sepracor,
[**], shall produce all Samples for use in the promotion of the
Product. Samples shall be marked "Sample - Not for Sale."
Sepracor shall establish the guidelines for sampling, and
shall consult with Abbott with respect thereto. Sepracor shall
supply such quantities of Samples to Abbott as Abbott and Sepracor
mutually agree is appropriate in connection with Abbott Promotional
Efforts. Each party shall bear its own cost of distribution of
Samples to the Pediatric Market. Sepracor shall [**] to the
production of [**]. [**] from any [**] for the [**]; provided,
however, [**] shall not be [**] during any 12-month period (from
April through March) thereafter; and, provided further, in the [**]
pursuant to [**] for the first twelve (12) months. Abbott shall
track Sample distribution and provide to Sepracor all reports
relating the sampling that Sepracor may require in order to comply
with applicable laws, rules, or regulations.
5.3 Development of Sepracor Promotional Materials. Except as otherwise
provided in this Agreement, Sepracor, at its cost and expense
(including any agency fees), shall develop Sepracor Promotional
Materials for Abbott's use in the promotion of the Product. Sepracor
shall consult with Abbott with respect to the development of
Sepracor Promotional Materials. Abbott shall have an opportunity to
review the Sepracor Promotional Materials and make suggestions
regarding format and content. Abbott shall provide Sepracor with any
objections to or suggestions regarding format or content of Sepracor
Promotional Materials for Abbott's use within thirty (30) calendar
days of delivery to Abbott of any proposed Sepracor Promotional
Materials. If in the opinion of Abbott's counsel any Sepracor
Promotional Material may conflict with any law, rule or regulation
in the Territory, and if Abbott so informs Sepracor in writing
within the thirty (30) day period, Abbott shall not be required to
distribute or pay any share of expenses relating to such Sepracor
Promotional Material. If Abbott does not notify Sepracor within the
thirty (30) day period, the Parties shall [**] the direct
out-of-pocket costs of printing and reprinting any Sepracor
Promotional Materials for distribution by Abbott's Representatives.
In any event, Abbott Representatives shall not be required to
distribute Sepracor Promotional Materials which, in the opinion of
Abbott's counsel, conflicts with any law, rule or regulation in the
Territory.
5.4 Distribution of Sepracor Promotional Materials. In connection with
the Abbott Promotional Efforts, Abbott Representatives shall
distribute Sepracor Promotional Materials to the Pediatric Market.
Sepracor shall consult with
18
<PAGE>
CONFIDENTIAL
Abbott with respect to the distribution of Sepracor Promotional
Materials. Sepracor shall supply such quantities of Sepracor
Promotional Materials to Abbott as Abbott and Sepracor mutually
agree is appropriate in connection with Abbott Promotional Efforts.
5.5 Identification of Abbott on Sepracor Promotional Materials. During
the Term and subject to the provisions of this Agreement, Abbott
Marks and Sepracor trade names and logos shall be jointly presented
on Sepracor Promotional Materials and Sepracor's advertising of the
Product for the Pediatric Market in the Territory. Certain Abbott
Marks, as agreed in writing by the parties, shall be displayed on
all Sepracor Promotional Materials (other than such materials in
existence as of the Initial Training date of Abbott Representatives)
for distribution by Abbott Representatives with substantially equal
prominence and frequency as Sepracor's trade names and logos.
Sepracor shall not distribute any printed promotional materials
relating to pediatric use of Product, other than Sepracor
Promotional Materials, to the Pediatric Market in the Territory.
5.5.1 Limited License to Abbott Marks. Abbott hereby grants to
Sepracor a limited non-exclusive license, without payment of
any royalty or licensing fees, to the Abbott Marks solely
for the purposes of developing, producing, and using the
Sepracor Promotional Materials for the Product and
advertisements for the Product to the Pediatric Market in
the Territory during the Term, and in accordance with the
terms of this Agreement.
5.5.2 Sepracor's Use of Abbott Marks. All uses of the Abbott Marks
shall be approved in advance by Abbott. Abbott shall retain
all rights to the Abbott Marks and Abbott's copyrights,
trademarks, and logos, which shall remain Abbott's sole
property, free of any claims thereon or thereto by Sepracor.
Sepracor agrees that all Product advertising bearing the
Abbott Marks shall contain appropriate legends, markings and
notices as mutually agreed upon by the Parties. Sepracor
shall place the following legend "___ is a trademark of
Abbott Laboratories" on each Product or Promotional Material
which bears the Abbott Marks.
5.5.3 Abbott's Retention of Rights to the Abbott Marks. All
goodwill associated with the Abbott Marks inure solely to
the benefit of Abbott. Sepracor shall notify Abbott in
writing of any infringements or imitations by third parties
of the Abbott Marks which may come to Sepracor's attention.
5.5.4 Discontinuation of Use of Abbott Marks. Upon termination or
expiration of this Agreement, Sepracor shall discontinue all
use of the Abbott Marks
19
<PAGE>
CONFIDENTIAL
5.6 Abbott Product Materials. In addition to Sepracor Promotional
Materials developed and prepared by Sepracor, Abbott may
develop, at its expense, Abbott Product Materials, to be used
by Abbott in connection with Abbott Promotional Efforts. Prior
to distribution to Abbott Representatives or others, Abbott
shall give Sepracor the opportunity to review the Abbott
Product Materials and make suggestions regarding format and
content, and shall not print or distribute any Abbott Product
Materials prior to receiving Sepracor's written approval.
Sepracor shall use reasonable efforts to review and approve
the Abbott Product Materials within thirty (30) days after
receipt of proposed Abbott Product Materials. Sepracor shall
submit any such Abbott Product Material to FDA, as may be
required by law or regulation. In the event of any change to
any Product formulation, labeling, or packaging which requires
a change in any Abbott Product Materials, after notice from
Sepracor of any such change, Abbott shall revise, and receive
Sepracor's approval on all such revisions, on all Abbott
Product Materials affected by such change before any further
distribution of any affected Abbott Product Materials. The
cost and expense of modifications to Abbott Product Materials
shall be borne by Abbott. Abbott shall retain all rights,
including copyrights, to the Abbott Product Materials, except
with respect to any Sepracor Marks, which shall remain
Sepracor's sole property, free of any claims thereto by
Abbott. Abbott shall use any Abbott Product Materials
containing the Trademark or Sepracor Marks only in connection
with the promotion of the Product to the Pediatric Market in
the Territory. Abbott shall have no obligation to pay any
royalties or other compensation to Sepracor on the use of the
Sepracor Marks used in the Abbott Product Materials. During
the Term, Sepracor may use, at its expense, the Abbott Product
Materials in connection with Sepracor's promotion of the
Product to the Pediatric Market in the Territory. After the
Term, Sepracor shall have a royalty-free non-exclusive license
to use Abbott Product Materials, exclusive of any Abbott Marks
or any other Abbott intellectual property that may appear or
is described therein, and to make and use derivative works
thereof.
5.7 Identification of Sepracor on Abbott Product Materials. During
the Term and subject to the provisions of this Agreement,
Abbott Marks and Sepracor Marks shall be jointly presented on
Product advertising developed by Abbott and Abbott Product
Materials. Sepracor Marks shall be displayed on all Abbott
Product Materials with substantially equal prominence as
Abbott Marks.
5.7.1 Limited License to Sepracor Marks. Sepracor hereby
grants to Abbott a limited non-exclusive license,
without payment of any royalty or licensing fees, to
Sepracor Marks, solely for the purposes of developing,
producing, using the Abbott Product Materials for the
Product and advertisements for the Product to the
Pediatric Market in the Territory during the Term, and
in accordance with the terms of this Agreement.
20
<PAGE>
CONFIDENTIAL
5.7.2 Abbott's Use of Sepracor Marks. All uses of the Sepracor
Marks by Abbott shall be approved in advance by
Sepracor. Sepracor shall retain all rights to Sepracor
Marks, and Sepracor's copyrights, trademarks, and logos,
which shall remain Sepracor's sole property, free of any
claims thereon or thereto by Abbott. Abbott agrees that
all Product bearing the Sepracor Marks shall contain
appropriate legends, markings and notices as mutually
agreed upon by the Parties. Abbott shall place the
following legend "___ is a trademark of Sepracor Inc."
on each item which bears the Sepracor Marks.
5.7.3 Sepracor's Retention of Rights to the Sepracor Marks.
All goodwill associated with the Sepracor Marks inure
solely to the benefit of Sepracor. Abbott shall notify
Sepracor in writing of any infringements or imitations
by third parties of the Sepracor Marks which may come to
Abbott's attention.
5.7.4 Discontinuation of Use of Sepracor Marks. Upon
termination or expiration of this Agreement, Abbott
shall discontinue all use of the Sepracor Marks.
Article 6. PRICING, QUOTATIONS, ORDERS, BILLING, COLLECTION AND SALES TRACKING.
6.1 Pricing. Sepracor shall consider the recommendations of the
Marketing Committee in developing strategies for the pricing, sale
and distribution of Product for the Pediatric Market in the
Territory. Sepracor shall, in its sole discretion, determine prices
and terms of sale to Purchasers for Product, and may change such
prices following at least thirty (30) days prior written notice to
Abbott. Abbott shall not change any pricing or grant any discounts
or rebates on any Product without the prior written consent of
Sepracor.
6.2 Pricing and Rebate Contracts. Sepracor shall be a party and
signatory to any and all pricing and rebate contracts with
Purchasers for or regarding the sale of Product.
6.3 Quotations and Orders; Billing and Collection. Sepracor shall have
sole responsibility for the preparation and delivery of all
quotations and offers of prices hereunder, for the acceptance and
fulfillment of all orders, and for the
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
6.4 invoicing and collection of amounts due from Purchasers. Sepracor
shall use reasonable efforts in its collection activities.
6.5 Electronic Database. Sepracor shall utilize a computerized system
accurately to account for all Product orders and assist with Net
Sales tracking as set forth in Section 4.15.3. The system shall be
capable of reporting: (a) gross invoiced dollar and unit sales on a
daily basis, (b) Net Sales on a monthly basis, and (c) the
components of the reconciliation of total gross invoiced amounts to
Net
21
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Sales and Net Sales to Pediatric Sales. Sepracor shall assure
appropriate back-up and information storage for its system.
Article 7. COMPENSATION TO ABBOTT.
7.1 Commission. (a) In consideration of Abbott's efforts hereunder,
Sepracor shall pay Abbott a Commission on Pediatric Sales in
accordance with this Article 7. The Commission shall be based upon
Pediatric Sales of Product for each Sales Year in the Territory
using the following incremental Commission rates: (i) on those
annual Pediatric Sales up to and including [**], the commission rate
is [**]; (ii) on the incremental annual Pediatric Sales over [**]
and up to and including [**], the commission rate is [**]; and (iii)
on the incremental annual Pediatric Sales over [**], the commission
rate is [**].
(b) Commencing April 1, 2000, and ending June 30, 2001, if the
Commission received by Abbott in any Sales Quarter does not
exceed [**], Sepracor shall reimburse the difference between
[**] and the Commission received by Abbott for such Sales
Quarter. The calculation and payment of such difference shall
occur within fifteen (15) days of Sepracor's receipt, after
each applicable Sales Quarter, of all data from external
sources necessary to calculate the Commission.
7.2 Commission Payment. Sepracor shall pay the Commission for each Sales
Quarter on or prior to [**] days after Sepracor's receipt, after
each applicable Sales Quarter, of all data from external sources
necessary to calculate the Commission .
7.3 Audit. If Abbott, in its reasonable judgment, determines that an
audit of Sepracor's relevant books and records is necessary to
verify Pediatric Sales of Product, then upon notice to Sepracor
Abbott shall have the right, at Abbott's cost and expense, to have a
nationally recognized independent certified public accounting firm
reasonably acceptable to Sepracor perform an audit of all relevant
books and records of Sepracor for the sole purpose of verifying the
Commissions payable as provided in this Agreement for no more than
the three preceding years; provided, however, that as part of any
audit on behalf of Abbott, Abbott's auditors must rely on Sepracor's
independent certified public accounting firm as to the details and
underlying data utilized in the calculation of Net Sales, although
Abbott's auditors may review the details of the calculation of Net
Sales from gross invoice amounts for the sole purpose of verifying
the reasonableness of such calculation and to determine whether the
calculation is consistent with the terms of Section 1.28 of this
Agreement. Any such audit shall be conducted during Sepracor's
normal business hours, at Sepracor's facilities, at a mutually
agreed upon date and time. This right may not be exercised more than
once in any calendar year, and once a calendar year is audited it
may not be reaudited, provided that if there is a material disputed
issue as to any audited year, such year, the two (2) preceding years
and any
22
<PAGE>
CONFIDENTIAL
subsequent year may be reaudited solely as to material disputed
issue until such time as the dispute is resolved. An issue shall be
deemed to be a material disputed issue if it results in an
underpayment of Commission to Abbott for the period under review of
more than five percent (5%). The independent certified public
accounting firm shall disclose to Abbott only information relating
solely to the accuracy of the Commission provided to Abbott and
Commission Payments made to Abbott under this Agreement, and such
information shall be subject to the provisions of Article 15. If
such audit reveals that Sepracor has under-reported aggregate annual
Pediatric Sales to Abbott: (a) by five percent (5%) or less,
Sepracor shall pay all past due Commissions within thirty (30) days
following completion of the audit, or (b) by more than five percent
(5%), Sepracor shall pay all past due Commissions plus interest
thereon at the rate of ten percent (10.0%) simple interest per
annum, plus all reasonable costs of Abbott's audit, within thirty
(30) days following completion of the audit.
Article 8. MEDICAL INQUIRIES; NOTIFICATION OF ADVERSE DRUG EXPERIENCE.
8.1 Communication. Within thirty (30) days after the Effective Date,
each Party shall appoint its Medical Affairs Liaison to communicate
with the other with regard to information required pursuant to this
Article 8. Either Party may change its Medical Affairs Liaison by
notice to the other Party. Sepracor shall be solely responsible for
(a) addressing all medical inquiries from Purchasers and Abbott
Representatives with respect to side effects of the Product, (b)
investigating any adverse drug experience or adverse event matters,
and (c) reporting any adverse drug experience to the FDA.
8.2 Notification. During the Term, Abbott shall give Sepracor notice as
set forth in this Section 8.2 of any adverse drug experience, as
defined in 21 C.F.R. ss. 314.80, associated with the Product as to
which Abbott obtains information in accordance with the following:
8.2.1 Any adverse drug experience information obtained by Abbott
shall be reported to Sepracor's Medical Affairs Liaison, by
telephone or by facsimile within three (3) working days
after Abbott's initial receipt of any such information;
provided, however, any report of a serious unlabeled event
or any report of a death shall be reported by telephone and
facsimile to Sepracor's Medical Affairs Liaison within
twenty-four (24) hours after Abbott's receipt of the
information;
8.2.2 Abbott shall maintain a record of the adverse drug
experience reports received by Abbott to assist Sepracor in
complying with 21 C.F.R. ss. 314.80 , including:
8.2.2.1 A copy of the drug experience report;
23
<PAGE>
CONFIDENTIAL
8.2.2.2 The date the report was received; and
8.2.2.3 The date the report was provided to Sepracor.
8.2.3 Sepracor shall keep Abbott reasonably informed of adverse
drug experience, as defined in 21 C.F.R. ss. 314.80,
associated with the Product in a manner and with details
sufficient to facilitate Abbott's performance hereunder.
8.2.4 Sepracor will provide Abbott with a copy of quarterly safety
reports for Product and fifteen-day alert reports for
Product which Sepracor reports to the FDA.
8.3 Product Report. If, during the Term, Sepracor determines it is
necessary to issue a report to Sepracor Representatives with respect
to the medical efficacy or side effects of the Product, Sepracor
shall also provide such report to Abbott's Medical Affairs Liaison
within two (2) business days of its issuance to the Sepracor
Representatives, which report Abbott shall immediately distribute to
Abbott Representatives.
8.4 Product Recall. In the event any Product is recalled by the FDA or
Sepracor in the Territory, Sepracor shall be responsible for all
expenses relating to such recall and for all activities to be
performed relating to such recall. Prior to any such recall,
Sepracor shall advise Abbott of the situation. Sepracor shall
provide Abbott with a prepared statement, subject to Abbott's
approval, for use in response to inquiries regarding the Product
recall which Abbott shall provide to Abbott Representatives
promoting the Product. Abbott and the Abbott Representatives and
Sepracor and the Sepracor Representatives shall use such prepared
statement to respond to any inquiries received with regard to the
Product recall and shall not make any other statement regarding the
recall.
Article 9. OTHER PRODUCTS.
9.1 Product Rights Ex-U.S. In the event Sepracor desires to have an
entity other than Sepracor, or a Sepracor Affiliate market, sell,
distribute, or promote the Product to the Pediatric market in any
country outside the Territory, Sepracor shall give Abbott first
notice of the opportunity to have Abbott market, sell, distribute,
promote, co-promote or co-market the Product to the Pediatric Market
in such country through aright of first negotiation for not more
than thirty (30) calendar days after Sepracor's notice to Abbott
hereunder.
9.2 Product Rights to Geriatric Market. In the event Sepracor desires to
have an entity other than Sepracor or a Sepracor Affiliate market,
sell, distribute, or promote the Product specifically for use by the
Geriatric Market in the Territory (and, if Abbott and Sepracor enter
into any agreement with respect to the Geriatric Market in the
Territory, in any country outside the Territory), Sepracor shall
give Abbott first notice of the opportunity to have Abbott market,
sell, distribute, promote, co-promote or co-market the Product for
use by the
24
<PAGE>
CONFIDENTIAL
Geriatric Market in the Territory (and, if Abbott and Sepracor enter
into any agreement with respect to the Geriatric Market in the
Territory, in such country outside the territory) through a right of
first negotiation for not more than thirty (30) calendar days after
Sepracor's notice to Abbott hereunder.
9.3 Rights of Negotiation for Other Products. In the event that Sepracor
markets a pharmaceutical product containing levalbuterol as an
active ingredient other than Product (meter-dose inhaler or CFC-free
pulmonary formulation; oral formulation of the Product), or a
pharmaceutical product containing R,R-formoterol as an active
ingredient, for the Pediatric Market in the Territory, and Sepracor
desires to have an entity other than Sepracor or a Sepracor
Affiliate market, co-market, sell, distribute, promote or co-promote
such pharmaceutical product to the Pediatric Market in the
Territory, Sepracor shall provide notice ("Other Product Notice) to
Abbott prior to any discussions with or proposals to any party other
than Sepracor's Affiliates, and Abbott shall have a right of first
negotiation with respect to the rights to market, co-market, sell,
distribute, promote or co-promote such pharmaceutical product to the
Pediatric Market in the Territory through a right of first
negotiation for not more than thirty (30) calendar days after
Sepracor's notice to Abbott hereunder. As of the date of the Other
Product Notice, Sepracor shall make available to Abbott the
following information relating to the product identified in the
Other Product Notice: development plan; patent applications and
other patent information; relevant material portions of FDA
submissions; summary clinical trial and study information or final
study reports, where appropriate.
Article 10. REPRESENTATIONS AND WARRANTIES; COVENANTS.
10.1 Mutual Representations and Warranties. Each Party hereby represents
and warrants to the other Party as of the Effective Date that:
10.1.1 Such Party has the full power and authority to enter into
and perform this Agreement;
10.1.2 The person(s) signing this Agreement on its behalf has been
properly authorized and empowered to enter into this
Agreement; and
10.1.3 No consents or approvals which such Party has not previously
obtained are necessary for such Party to enter into this
Agreement and perform all of such Party's obligations
hereunder.
10.2 Abbott Covenants. Abbott hereby covenants during the Term that:
10.2.1 This Agreement shall not conflict with any other Abbott
contractual obligation.
10.2.2 Abbott shall perform its obligations hereunder in accordance
with all applicable federal, state and local laws, rules,
and regulations of the Territory; provided, however, Abbott
shall not be in default of the
25
<PAGE>
CONFIDENTIAL
terms and conditions of this Agreement if Abbott violates
any applicable federal, state or local laws, rules or
regulations in the Territory as a result of Abbott's use of
or reliance on the Sepracor Promotional Materials, Sepracor
Product labeling, Sepracor Product advertising or use of
Sepracor Marks.
10.2.3 Abbott shall not take any action or fail to take any action
which is in conflict with any of the representations and
warranties made by Abbott in Sections 10.1 and 10.3.
10.2.4 All uses of the Abbott Marks in Sepracor Promotional
Materials or Abbott Product Materials shall not violate any
applicable laws, rules, and regulations in the Territory.
10.2.5 Abbott, and its agents or representatives shall maintain
adequate insurance to cover any loss or damage with regard
to Samples in the possession of Abbott, or its agents or
representatives.
10.2.6 Abbott, and its agents or representatives shall ensure that
inventory of Samples in the possession of Abbott, or its
agents or representatives, is properly managed to ensure
that Samples are distributed on a first-in, first-out basis.
10.3 Other Abbott Representations and Warranties. Abbott hereby
represents and warrants to Sepracor, as of the Effective Date that:
10.3.1 Abbott is the sole and exclusive owner of all right, title
and interest in and to the Abbott Marks.
10.3.2 To the best of Abbott's knowledge, as of the Effective Date,
there are no patents or trademarks owned by third parties
which would be infringed by the manufacture, marketing,
sale, distribution, import, export or use of Abbott Marks in
the Territory.
10.3.3 There are no suits, claims, or proceedings pending against
Abbott or any of its Affiliates in any court or by or before
any governmental body or agency with respect to Abbott Marks
which may limit any Sepracor Promotional Efforts or Abbott
Promotional Efforts or create any liability to Sepracor; and
to the best of Abbott's knowledge, no such actions, suits,
or claims have been threatened against Abbott or any of
Abbott's Affiliates.
10.3.4 Prior to the Effective Date, Abbott has not entered into any
agreement which could limit Abbott in the performance of
their obligations under this Agreement.
10.3.5 Prior to the Effective Date, Abbott has not received any
notice from the FDA of any violation of the Sampling Act or
any other law, rule or
26
<PAGE>
CONFIDENTIAL
regulation which could limit Sepracor or Abbott in the
performance of their respective obligations under this
Agreement.
10.4 Other Sepracor Representations and Warranties. Sepracor hereby
represents and warrants to Abbott, as of the Effective Date that:
10.4.1 Sepracor has the sole and exclusive right to market, promote
and sell, or license others to market, promote and sell, the
Product under the Trademark within the Territory.
10.4.2 To the best of Sepracor's knowledge, as of the Effective
Date, there are no patents or trademarks owned by Third
Parties which would be infringed by the manufacture,
marketing, sale, distribution, import, export or use of the
Product or its Trademark in the Territory, and Sepracor has
not received any notification from a Third Party claiming
that the manufacture, marketing, sale, distribution, import,
export or use of the Product or its Trademark in the
Territory would infringe a patent or trademark owned by a
Third Party.
10.4.3 There are no suits, claims, or proceedings pending against
Sepracor or any of its Affiliates in any court or by or
before any governmental body or agency with respect to the
Product, the Trademark or Sepracor marks which may limit any
Abbott Promotional Efforts or create any liability to
Abbott; and to the best of Sepracor's knowledge, no such
actions, suits, or claims have been threatened against
Sepracor or any of Sepracor's Affiliates.
10.4.4 Sepracor has obtained and is the owner of the NDA for the
Approved Indication under Section 1.11.1 and Sepracor's
officers have no knowledge of any pending FDA actions to
revoke or withdraw such Approved Indication under the NDA.
27
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
10.4.5 Sepracor's net sales of the Product in the Territory in
calendar year 1999 through September 30, 1999, were
approximately [**].
10.4.6 Prior to the Effective Date, except as set forth in Schedule
10.4.6, Sepracor has not entered into any agreement
regarding the Product which could limit Sepracor or Abbott
in the performance of their respective obligations under
this Agreement.
10.4.7 Prior to the Effective Date, except as set forth in Schedule
10.4.7, Sepracor has not received any notice from the FDA of
any violation of the Sampling Act or any other law, rule or
regulation which could limit Sepracor or Abbott in the
performance of their respective obligations under this
Agreement;
10.4.8 Sepracor is the sole and exclusive owner of all right, title
and interest in and to the Sepracor Marks.
10.5 Sepracor Covenants. Sepracor hereby covenants during the Term that:
10.5.1 This Agreement shall not conflict with any other Sepracor
contractual
obligation.
10.5.2 Sepracor shall perform its obligations hereunder in
accordance with all applicable federal, state and local
laws, rules and regulations of the Territory; provided,
however, Sepracor shall not be in default of the terms and
conditions of this Agreement if Sepracor violates any
applicable federal, state or local laws, rules or
regulations in the Territory as a result of Sepracor's use
of or reliance on the Abbott Product Materials, Abbott
Product advertising or use of Abbott Marks.
10.5.3 Sepracor shall manufacture or have manufactured the Product
in accordance with cGMP, Product specifications, all FDA
approved labeling, and all other applicable federal, state
and local laws, rules and regulations.
10.5.4 Sepracor shall prepare keep and maintain its financial
statements and related schedules and records in accordance
with Generally Accepted Accounting Principles (GAAP).
10.5.5 Sepracor shall not take any action or fail to take any
action which is in conflict with any of the representations
and warranties made by Sepracor in Section 10.1 or 10.4.
10.5.6 Sepracor's database referenced in Section 6.4 shall not be
damaged or corrupted as a result of the passage of time from
December 31, 1999 to January 1, 2000.
28
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
10.5.7 All uses of the Sepracor Marks in Sepracor Promotional
Materials and Abbott Product Materials shall not violate any
applicable laws, rules and regulations in the Territory.
Article 11. INDEPENDENT CONTRACTOR RELATIONSHIP. The parties agree that they are
independent contractors. Neither party nor any employee of such party is an
employee, officer, agent, partner, business representative, or legal
representative of, or joint venturer with, the other party. Neither party has
authority to assume any obligation on behalf of the other party and shall not
hold out to third parties that it has any authority to do so; thus, neither
party shall take any action that might mislead or confuse third parties in this
regard. Unless otherwise provided herein, each party shall be responsible for
its own expenses and shall not incur expenses for the other party's account
unless expressly authorized in writing to do so by the other party.
Article 12. TERM AND TERMINATION.
12.1 Initial Term. This Agreement shall commence as of the Effective Date
and shall continue for a period of six (6) years from January 1,
2000 ("Initial Term"):
12.1.1 Subject to extension for an additional twelve (12) months
(the "Extension Term") in the event Pediatric Bronchospasm
Expanded Approval does not occur before [**]; and
12.1.2 Subject to any earlier termination of the Initial Term or
any Extension Term as set forth in Section 12.2 or Section
12.3.
12.2 Early Termination by Abbott. This Agreement may be terminated by
Abbott upon written notice to Sepracor prior to the expiration of
the Term or the Extension Term in the event:
12.2.1 Pediatric Sales Threshold. Pediatric Sales of Product in the
Territory to the Pediatric Market do not exceed [**] during
calendar year 2000;
12.2.2 Approved Indication. On or before [**], Sepracor has not
received Pediatric Bronchospasm Expanded Approval,
provided, however, that in such event Abbott shall only
have the right to terminate under this Section 12.2.2 by
giving written notice thereof to Sepracor on or before
[**] or
12.2.3 Price Threshold. The average for any two consecutive
calendar quarters of the actual Average Net Selling
Price/Dose Vial of the Product is less than [**]; or
12.2.4 One Year's Notice. At any time after December 31, 2000, upon
one year's prior written notice without cause.
29
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
12.3 Early Termination by Either Party. This Agreement may be terminated
by either Party upon written notice to the other Party prior to the
expiration of the Term or the Extension Term as follows:
12.3.1 Material Breach. Ninety (90) days after notice from one
Party to the other Party that the receiving Party has
committed a material breach of this Agreement and at the end
of such ninety (90)-day period the receiving Party has not
cured or has not diligently, continuously, and in good faith
attempted to cure the described breach, with clear evidence
that such breach shall be cured within a period of an
additional sixty (60) days following the initial ninety
(90)-day period; provided, however, that the period for sure
shall be tolled during the pendency of an ADR initiated
pursuant to Article 19 to resolve whether such material
breach occurred; further provided, however, that Sepracor
shall not be in material breach for late payment if the
reason for late payment is lack of timely availability to
Sepracor of audit or survey data needed to make calculations
of Commissions.
12.3.2 Force Majeure. Either Party giving ninety (90) days' prior
notice to the other Party if an event of Force Majeure as
described in Article 18 continues for more than six (6)
months. Termination pursuant to the application of this
Section shall not be deemed termination due to a material
breach of this Agreement by either Party.
12.3.3 Bankruptcy. Either Party giving notice to the other Party in
the case of any adjudication of bankruptcy or insolvency,
appointment of a receiver by a court of competent
jurisdiction, assignment for the benefit of creditors, or
institution of liquidation proceedings by or against the
other Party. Termination pursuant to the application of this
Section shall not be deemed termination due to a material
breach of this Agreement by either Party.
12.3.4 Price Established by Law. If any national or federal
legislation or regulation in the Territory shall establish a
maximum price which can be charged for the Product, which
price is less than [**] of the immediately preceding month's
average selling price per unit of Product, either Party may
give the other Party notice of termination at least ninety
(90) days prior to the effective date of termination.
12.3.5 Conviction. If either Party, or one of its corporate
officers who is involved in the activities and business
arrangements set forth in this Agreement, shall be convicted
in any court of a violation of law, or found liable in a
civil action, from which no appeal can be taken, under
circumstances that materially negatively affect the rate of
reimbursement and eligibility for reimbursement with state
and government agencies that provide reimbursement for the
use of the
30
<PAGE>
CONFIDENTIAL
Product by Purchasers, then ninety (90) days after notice
from the other Party this Agreement shall terminate.
12.3.6 Merger/Acquisition. In the event a Third Party acquires
control of a Party, or all or substantially all of the
assets or stock of a Party is acquired by a Third Party,
through purchase, merger, consolidation or otherwise
(collectively referred to herein as an "Acquisition Event"),
the acquired Party will send the other Party written notice
of the Acquisition Event, and by no later than thirty (30)
days following the other Party's receipt of such notice, if
in the reasonable business judgment of the other Party such
Acquisition Event would have an adverse impact on the
co-promotion arrangement established by this Agreement, the
other Party may terminate this Agreement upon thirty (30)
days written notice to the acquired Party.
12.4 Grace Period. The Parties hereby agree that from the Effective Date
through March 31, 2000 (the "Grace Period"), while each Party will
use reasonable commercial efforts to satisfy its obligations under
this Agreement, a Party's failure to completely satisfy its
obligations under Section 3.1.1, Section 3.1.2, Section 3.6, Section
4.10.1, Section 4.10.2, or Section 4.15, as appropriate, during the
Grace Period shall not constitute a material breach of the
Agreement.
Article 13. CONSEQUENCES OF TERMINATION.
13.1 Confidential Information. In the event of expiration or termination
of this Agreement for any reason, both Parties shall cease using all
Confidential Information, as defined in Section 15.1, supplied by
the other Party. Upon either Party's request, the other shall return
to its owner all written and/or tangible Confidential Information,
except for one archive copy that may be retained by the legal
department of a Party solely for the purpose of determining any
continuing obligations. Both Parties and their Affiliates shall
continue to be bound by the provisions of Article 15 for a period of
five (5) years after the expiration or termination of this Agreement
or ten (10) years after the execution of this Agreement, whichever
is later.
13.2 Accrued Obligations. Termination of this Agreement shall not relieve
the Parties of any liability which accrued prior to the effective
date of such termination, nor prejudice either Party's right to
obtain performance of any obligation provided for in this Agreement
which expressly survives termination.
13.3 Return of Promotional Materials. Upon termination or expiration of
this Agreement: (a) Abbott shall, at Sepracor's election and
expense, either destroy or return to Sepracor all Sepracor
Promotional Materials relating to the Product then in Abbott's
possession; and (b) Sepracor shall, at Abbott's election and
expense, either destroy or return to Abbott all Abbott Product
Materials then in Sepracor's possession.
31
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
13.4 Commission. If this Agreement is terminated prior to the expiration
of the Term or any Extension Term, then the applicable Commission
for the Product for the Sales Year in which such termination
occurred shall be the product of (a) the Pediatric Sales during such
Sales Year, and (b) a blended Commission rate determined by
annualizing the Pediatric Sales during such Sales Year.
13.5 Residual Commission. The Parties acknowledge and agree that in the
Territory, through the Abbott Promotional Efforts, Abbott will
enhance the Product and the goodwill associated with the Product,
Trademarks and other property of Sepracor. Therefore, upon
expiration of this Agreement or early termination of this Agreement
(a) by Abbott [**] or (b) by Sepracor [**] or (c) by or on behalf of
Sepracor [**], Sepracor shall pay to Abbott the Residual Commission
for a period of [**] immediately following any such early
termination or expiration of the Term in an amount equal to:
13.5.1 For the [**] period after such termination or expiration of
the Term, the Residual Commission shall be equal to [**] of
the Pediatric Sales during such 12-month period;
13.5.2 For the [**] period after such termination or expiration of
the Term, the Residual Commission paid shall be an amount
equal to [**] of the Pediatric Sales during such 12-month
period; and
13.5.3 For the [**] period after such termination or expiration of
the Term, the Residual Commission paid shall be an amount
equal to [**] of the Pediatric Sales during such 12-month
period.
Sepracor shall pay the Residual Commission in quarterly installments
due within fifteen (15) days after Sepracor's receipt, after the
last day each applicable quarter, of all data from external sources
necessary to calculate the Residual Commission during the three (3)
periods of twelve (12) months.
13.6 Remedies. Excepting any award granted pursuant to Article 19,
neither Party shall be liable to the other Party for any
compensation, reimbursement, damages for loss of prospective profits
on anticipated revenue, or on account of expenses incurred,
investments made, leases, commitments, or any other obligations
incurred in connection with this Agreement as a result of any
termination of this Agreement according to the terms of this
Agreement or by reason of non-renewal of the Term. In any event,
neither Party shall be liable to the other Party for any exemplary,
indirect, incidental, or consequential damages.
13.7 Survival. Upon termination of this Agreement or expiration of the
Term, each Party shall provide to the other Party the reports and
information necessary to calculate the Commission and any Residual
Commission and compensation to Sepracor Representatives and Abbott
Representatives. Without limitation, the
32
<PAGE>
CONFIDENTIAL
following Articles or Sections shall survive termination of this
Agreement or expiration of the Term for a period of five (5) years
(unless otherwise stated in such Article or Section): Article 1
(Definitions), Article 10 (Representations and Warranties and
Covenants), Article 13, Article 14, Article15, Article17, Article19
and Sections 20.1, 20.4 and 20.7.
Article 14. INDEMNIFICATION.
14.1 Sepracor Indemnification. Except as may be otherwise provided
herein, Sepracor shall defend, indemnify and hold Abbott, its
Affiliates, their successors and assigns, and all of their officers,
directors, employees and representatives harmless from and against
all suits, claims, liabilities, costs, damages, judgments and other
expenses (including, but not limited to, reasonable legal expenses)
suffered or incurred in connection with:
14.1.1 Sepracor's breach of any of the Sepracor representations,
warranties, covenants or other terms or conditions of this
Agreement;
14.1.2 A claim arising from the promotion of the Product or use of
the Trademark or Sepracor Marks in Sepracor Promotional
Materials or Abbott Product Materials;
14.1.3 Any patent infringement claim arising from the manufacture,
marketing, promotion, importation, sale or use of the
Product;
14.1.4 Any claim (including, but not limited to claims made with
respect to Sepracor advertising, Sepracor training of Abbott
Representatives or Sepracor Promotional Materials) made by a
Third Party against Abbott, its Affiliates, their successors
or assigns, or their officers, directors, employees or
representatives relating to the Product or the manufacture,
marketing, promotion, importation, sale or use of the
Product, including, but not limited to, death or personal
injury; or
14.1.5 The negligence, recklessness or willful misconduct on the
part of Sepracor, its officers, directors, employees, agents
(except to the extent Abbott may be deemed an agent of
Sepracor by operation of law) or representatives with
respect to the Product or Samples, or in the performance of
the Agreement;
provided, however, that Sepracor shall not be required to defend,
indemnify or hold harmless Abbott, its Affiliates, their successors
and assigns, or their officers, directors, employees or
representatives with respect to any claim arising out of or
resulting from (a) the negligence, recklessness, or willful
misconduct of Abbott, its Affiliates, their successors and assigns,
or their officers, directors, employees or representatives in the
performance of their obligations hereunder, or (b) any breach by
Abbott of this Agreement. For purposes of this Section, Abbott shall
not be considered negligent if such claim arises in connection with
Abbott's performance under this Agreement, so long
33
<PAGE>
CONFIDENTIAL
as such performance was in accordance with the terms of this
Agreement; nor shall Abbott be considered negligent for purposes of
this Section, if (a) such claim arises with respect to content of
Sepracor's advertising, Sepracor Promotional Materials, Product
labeling or other materials provided to Abbott by Sepracor as long
as such Sepracor Promotional Materials are used in their original
form and Abbott has distributed or employed such Sepracor
Promotional Materials or other such materials as directed herein, or
(b) such claim arises with respect to the Abbott Promotion Efforts
by Abbott Representatives performed in accordance with direction,
goals, or strategy for promoting Product described in this
Agreement.
14.2 Abbott Indemnification. Except as may be otherwise provided herein,
Abbott shall defend, indemnify and hold Sepracor, its Affiliates,
their successors and assigns, and all of their officers, directors,
employees and representatives harmless from and against all suits,
claims, liabilities, costs, damages, judgments and other expenses
(including, but not limited to, reasonable legal expenses) suffered
or incurred in connection with:
14.2.1 Abbott's breach of any Abbott representations, warranties,
covenants or terms or conditions of this Agreement;
14.2.2 A claim arising from Sepracor's use of the Abbott Marks in
Sepracor Promotional Materials or Abbott Product Materials;
14.2.3 Any claim arising out of or in connection with Abbott's
promotion of Product not in accordance with direction,
goals, or strategy for promoting Product pursuant to this
Agreement; or
14.2.4 The negligence, recklessness or willful misconduct on the
part of Abbott, its officers, directors, Abbott
Representatives, and other Abbott employees, agents, or
representatives with respect to the Product or Samples, or
in the performance under this Agreement;
provided, however, that Abbott shall not be required to defend,
indemnify, or hold harmless Sepracor, its Affiliates, their
successors and assigns, or their officers, directors, employees or
representatives with respect to any claim arising out of or
resulting from (a) the negligence, recklessness, or willful
misconduct of Sepracor, its Affiliates, their successors and
assigns, or their officers, directors, employees or representatives
in the performance of their obligations hereunder or (b) any breach
by Sepracor of this Agreement. For purposes of this Section, Abbott
shall not be considered negligent if such claim arises in connection
with Abbott's performance under this Agreement so long as such
performance was in accordance with the terms of this Agreement; nor
shall Abbott be considered negligent for purposes of this Section,
if (a) such claim arises with respect to the content of Sepracor's
advertising, the Sepracor Promotional Materials, Product labeling or
other materials provided to Abbott by Sepracor as long as such
Sepracor Promotional Materials are used in their
34
<PAGE>
CONFIDENTIAL
original form and Abbott has distributed or employed such Sepracor
Promotional Materials or such other materials as directed herein, or
(b) such claim arises with respect to Abbott Promotional Efforts by
Abbott Representatives performed in accordance with direction and
teachings of the training described in this Agreement.
14.3 Sepracor Indemnification Under Sampling Act. Without limiting any
other provision herein:
14.3.1 Sepracor shall perform under this Agreement in strict
accordance with the provisions of the Sampling Act.
14.3.2 Sepracor shall defend, indemnify and hold Abbott and
Abbott's officers, directors, employees and sales
representatives harmless from and against all suits, claims,
liabilities, costs, damages, penalties, judgments and other
expenses (including, but not limited to, reasonable legal
expenses) arising out of or resulting from any violations of
the Sampling Act that are caused by Sepracor, its officers,
its directors, Sepracor representatives, and other
employees, agents, or representatives of Sepracor in
performance hereunder.
14.3.3 If the conviction of a Sepracor representative under any
provision referred to in 21 U.S.C. ss.333(b)(2) occurs and
is deemed a Sepracor Diversion Violation for which Sepracor
is required to indemnify Abbott as set forth in Section
14.3.2, then:
14.3.3.1 If a Sepracor Diversion Violation is the first
Abbott violation of the provisions referred to in
21 U.S.C.ss.333(b)(2), then Sepracor shall
indemnify Abbott for any civil penalties incurred
by Abbott under 21 U.S.C.ss.333(b)(2)(A) on
account of such Sepracor Diversion Violation.
However, if, within a 10-year period following
such Sepracor Diversion Violation, Abbott receives
a third conviction for violating a provision
referred to in 21 U.S.C. ss.333(b)(2), Sepracor
shall indemnify Abbott for civil penalties
incurred by Abbott under 21 U.S.C.ss.333(b)(2)(B)
on account of such third conviction, less any
civil penalties incurred by Abbott under 21
U.S.C.ss.333(b)(2)(A) for which Sepracor has
indemnified Abbott hereunder.
14.3.3.2 If a Sepracor Diversion Violation is the second or
third conviction of Abbott for violating the
provisions referred to in 21 U.S.C. ss.333(b)(2)
in any 10-year period, then Sepracor shall
indemnify Abbott for any civil penalties incurred
by Abbott pursuant to 21 U.S.C.ss.333(b)(2)(A) or
(B), as applicable, on account of such Sepracor
Diversion Violation and, in addition, shall pay
Abbott as
35
<PAGE>
CONFIDENTIAL
liquidated damages all reasonable legal,
accounting, and other costs Abbott incurred in
defending any Sepracor Diversion Violation. Such
liquidated damages, together with Sepracor's
payment of all civil penalties incurred by Abbott,
shall be Abbott's sole and exclusive remedy under
this Section 14.3.3.2 notwithstanding any other
provisions of this Agreement.
14.3.3.3 Except pursuant to Section 14.3.2 above or in the
event of Sepracor Diversion Violations, Sepracor
shall not have any obligation or liability of any
kind to Abbott in the event of a fourth or
subsequent violation of the provisions referred to
in 21 U.S.C.ss.333(b)(2) within a ten (10) year
period, regardless of whether one (1) or more of
the first three (3) convictions against Abbott was
an Sepracor Diversion Violation.
14.4 Abbott Indemnification Under Sampling Act. Without limiting any
other provision herein:
14.4.1 Abbott shall perform under this Agreement in strict
accordance with the provisions of the Sampling Act.
14.4.2 Abbott shall defend, indemnify and hold Sepracor and
Sepracor's officers, directors, employees and sales
representatives harmless from and against all suits, claims,
liabilities, costs, damages, penalties, judgments and other
expenses (including, but not limited to, reasonable legal
expenses) arising out of or resulting from any violations of
the Sampling Act that are caused by Abbott, its officers,
its directors, Abbott Representatives, and other employees,
agents, or representatives of Abbott in performance
hereunder.
14.4.3 If the conviction of an Abbott representative under any
provision referred to in 21 U.S.C. ss.333(b)(2) occurs and
is deemed an Abbott Diversion Violation for which Abbott is
required to indemnify Sepracor as set forth in Section
14.4.2, then:
14.4.3.1 If an Abbott Diversion Violation is the first
Sepracor violation of the provisions referred to
in 21 U.S.C.ss.333(b)(2), then Abbott shall
indemnify Sepracor for any civil penalties
incurred by Sepracor under 21
U.S.C.ss.333(b)(2)(A) on account of such Abbott
Diversion Violation. However, if, within a 10-year
period following such Abbott Diversion Violation,
Sepracor receives a third conviction for violating
a provision referred to in 21 U.S.C.ss.333(b)(2),
Abbott shall indemnify Sepracor for
36
<PAGE>
CONFIDENTIAL
civil penalties incurred by Sepracor under 21
U.S.C.ss.333(b)(2)(B) on account of such third
conviction, less any civil penalties incurred by
Sepracor under 21 U.S.C.ss.333(b)(2)(A) for which
Abbott has indemnified Sepracor hereunder.
14.4.3.2 If an Abbott Diversion Violation is the second or
third conviction of Sepracor for violating the
provisions referred to in 21 U.S.C.ss.333(b)(2) in
any 10-year period, then Abbott shall indemnify
Sepracor for any civil penalties incurred by
Sepracor pursuant to 21 U.S.C.ss.333(b)(2)(A) or
(B), as applicable, on account of such Abbott
Diversion Violation and, in addition, shall pay
Sepracor as liquidated damages all reasonable
legal, accounting, and other costs Sepracor
incurred in defending any Abbott Diversion
Violation. Such liquidated damages, together with
Abbott's payment of all civil penalties incurred
by Sepracor, shall be Sepracor's sole and
exclusive remedy under this Section 14.4.3.2
notwithstanding any other provisions of this
Agreement.
14.4.3.3 Except pursuant to Section 14.4.2 above or in the
event of Abbott Diversion Violations, Abbott shall
not have any obligation or liability of any kind
to Sepracor in the event of a fourth or subsequent
violation of the provisions referred to in 21
U.S.C.ss.333(b)(2) within a ten (10) year period,
regardless of whether one (1) or more of the first
three (3) convictions against Sepracor was an
Abbott Diversion Violation.
14.5 Control of Defense. Each party agrees to promptly give the other
party notice of any claim for which indemnification might be sought.
Failure of an indemnified party to provide notice of a claim to the
indemnifying party shall affect the indemnified party's right to
indemnification only to the extent that such failure has a material
adverse effect on the indemnifying party's ability to defend or the
nature or the amount of the indemnified claim, liability, costs,
damages, penalties, judgments and other expenses (referred to in
this Section as "Liability"). The indemnifying party shall have the
right to assume the defense and settlement of any suit or claim
related to the Liability if it has assumed responsibility for the
suit or claim in writing; provided, however, if in the reasonable
judgment of the indemnified party, such suit or claim involves an
issue or matter which could have an adverse impact on the assets of
the indemnified party, or such suit or claim could require the
indemnified party to engage in any activities that would have an
adverse effect on the business operations or good will of the
indemnified party, the indemnified party may waive its rights to
indemnity under this Agreement and control the defense or settlement
thereof, but in no event shall any such waiver be construed as a
37
<PAGE>
CONFIDENTIAL
waiver of any indemnification rights such party may have at law or
in equity. If the indemnifying party defends the suit or claim, the
indemnified party may participate in (but not control) the defense
thereof at its sole cost and expense.
14.6 Settlement of Claims. Neither party may settle or compromise a claim
or action related to an indemnified matter without the written
consent of the other party, if such settlement would impose any
monetary obligation on the other party or require the other party to
submit to an injunction or otherwise limit the other party's rights
under this Agreement; provided that such consent shall not
unreasonably be withheld or delayed, unless such settlement would
have an adverse impact on the assets of the indemnified party, or
such settlement would require the indemnified party to engage in any
activities that would have an adverse effect on the business
operations or good will of the indemnified party.
Article 15. CONFIDENTIALITY.
15.1 Definition. Subject to Section 15.2, "Confidential Information"
shall mean any and all notebooks, documents, memoranda, reports,
files, books, correspondence, customer and other lists, other
written, graphic and computer-stored records, information, data, and
the like, whether in written, graphic, or verbal form, stored now or
hereafter existing during the Term, together with all subsequent
changes and additions of one Party (the "Owner") which was received
directly by the other Party (the "Holder") or the Holder's agents,
officers, or employees, which the Holder shall use, construct,
observe, possess, or control, which affect or relate to the Product
or the business of the Owner solely with regard to the Product,
including but not limited to all information relating to: (a)
marketing, sales, investigations, clinical trials, patient data,
related materials, NDA, IND, copyrights, trademarks, all
applications, submissions, modifications, supplements, permits,
approvals, authorizations, licenses, customer lists, and records, to
the extent all such items listed in this Section are not a matter of
public record; (b) improvements to and inventions made to improve
the Product, whether or not patentable, which Owner, Holder, or
others makes, conceives, learns and/or reduces to practice, either
alone or jointly with each other or with others, directly relating
to the Product; and (c) financial, marketing, sales, billing,
collection, Third Party payment procedures and issues, and customer
data relating to the Product or Owner.
15.2 Exceptions to the Definition of Confidential Information.
Notwithstanding the provisions in Section 15.1, the term
"Confidential Information" shall not include the following:
15.2.1 Information which is now in the public domain or
subsequently enters the public domain without disclosure or
delivery thereof to the public on the part of the Holder in
breach of this Agreement;
38
<PAGE>
CONFIDENTIAL
15.2.2 Information which the Holder receives in good faith from a
Third Party and the Holder has no knowledge of such Third
Party obtaining the information by wrongful means;
15.2.3 Information which has been independently developed by or for
the Holder without reference to the Confidential Information
of the Owner;
15.2.4 Information which has been lawfully received by the Holder
without an obligation of confidentiality from a source other
than the Owner; and
15.2.5 Information which is required to be disclosed by law,
government order or judicial order, but only to the extent
of disclosure to such authorities.
15.3 Confidentiality Obligations. Holder shall use Confidential
Information of the Owner solely for the purposes of this Agreement.
Holder will disclose Confidential Information to Holder's and its
Affiliates' employees, contractors and agents only on a need-to-know
basis. Except for the uses permitted pursuant to the terms of this
Agreement, Holder shall not disclose, make use of, or make available
to any person any portion of the Confidential Information without
Owner's prior written consent. Holder shall take all reasonable
steps to ensure that the Confidential Information of Owner is held
in confidence by Holder, its Affiliates and their employees,
contractors and agents, except for the use permitted pursuant to the
terms and conditions of this Agreement. Upon the termination or
expiration of this Agreement the restrictions against disclosing any
Confidential Information without Owner's prior written consent shall
continue for the period set forth in Section 13.1.
15.4 Previous Agreement. As of the Effective Date, this Agreement shall
supersede the Confidentiality Agreement effective July 1, 1999,
between the Parties as it relates to the Product. Any information
received by either Party with respect to the Product shall hereafter
be governed by the terms and conditions of this Agreement.
Article 16. PUBLIC ANNOUNCEMENTS.
16.1 Joint Announcement. Each Party agrees that prior to any joint
announcement of the Parties with respect to this Agreement, except
as may be required by law, it shall not disclose the substance or
details of this Agreement without the prior written consent of the
other Party; provided, however, nothing contained herein shall be
deemed to prohibit Sepracor from issuing any publicity, press
release or announcement relating to the Product which does not
mention Abbott or refer to this Agreement. In cases in which
disclosure may be required by law, the disclosing Party, prior to
such disclosure, shall notify the non-disclosing Party of the
contents of the proposed disclosure. Consistent with applicable law,
the
39
<PAGE>
CONFIDENTIAL
non-disclosing Party shall have the right to make reasonable changes
to the disclosure to protect its interests. The disclosing Party
shall not unreasonably refuse to include such changes in its
disclosure. Once a joint announcement has been made, neither Party
shall have any obligation of non-disclosure with respect to, but
only to the extent of, information thereby announced.
16.2 Non-Publicity.
16.2.1 The Parties agree that the terms and conditions of this
Agreement are Confidential Information and, unless otherwise
specifically permitted hereby, may not be the subject of any
public announcement or press release by either, unless
permitted by Section 16.1. The Parties agree that upon
execution of this Agreement, a press release approved by
both Parties will be issued. Neither Party may:
16.2.2 Issue or originate any publicity, public announcement, or
news release (written or oral) whether to the public press
or otherwise; or
16.2.2.1 Use the name of the other Party in any publicity,
public announcement, or news release regarding the
Agreement without the prior approval of the other
Party.
16.2.3 There shall be a fourteen (14) day period of review of any
publicity or press release proposed by either Party,
allowing the other Party the opportunity to request and make
changes and to determine approval of such publicity or press
release. This document shall not be filed in any public
office or records without the written approval of the other
Party, including the right of redaction of language to
protect the reviewing Party's confidential and strategic
information and right to review language in any public
filings.
Article 17. TRADEMARKS.
17.1 Promotion. Abbott shall promote the Product in the Territory only
under the Trademark or other such marks as the Parties mutually
agree in writing and using trade names, service marks and devices
approved by Sepracor and only using Sepracor Promotional Materials
or Abbott Product Materials approved by Sepracor pursuant to Section
5.6.
17.2 Compliance with Laws. Abbott shall, when referring to Sepracor Marks
and the Trademark and labels, trade names, trade dress, service
marks or devices, comply with all laws pertaining to trademarks,
service marks, trade dress or other intellectual property rights at
any time in force in the Territory.
17.3 No Assertion of Right. Abbott shall not have, assert or acquire any
right, title or interest in or to the Sepracor Marks, the Trademark
or any part of any label, trade name, trade dress, service mark or
device applied by Sepracor.
40
<PAGE>
CONFIDENTIAL
Article 18. FORCE MAJEURE. Failure of either party to perform its obligations
under this Agreement (except the failure to make any payment when due) shall not
subject such party to any liability to the other if such failure is caused or
occasioned by act of god, or the public enemy, fire, explosion, flood, drought,
war, riot, sabotage, embargo, strikes, or other labor trouble, failure in whole
or in part, of Sepracor's suppliers to deliver on schedule materials, equipment
or machinery to Sepracor, interruption of or delay in transportation, compliance
with any order, regulation or request of any government of competent
jurisdiction or any officer, department, agency or committee thereof, including
requisition or allocation or establishment of priority, or by compliance with a
request authorized by such governmental authority of any manufacturer for
material to be used by it, which event is beyond the reasonable control of the
Party so failing. The Party suffering an event of force majeure shall
immediately notify the other party and shall use all reasonable efforts to
minimize the damages suffered by both parties. Both Parties shall cooperate in
good faith in order to minimize such damages and, subject to the provisions of
Article 19, reach an agreement as to how to proceed.
Article 19. ALTERNATIVE DISPUTE RESOLUTION. Any controversy or claim arising out
of or relating to this agreement, or the breach thereof, shall first be
submitted to the president of the Ross Products Division of Abbott (or designee)
and the president (or designee) of Sepracor for resolution. If resolution of the
matter is not reached by such individuals, then such dispute shall be resolved
through the alternative dispute resolution described in Schedule 9; provided,
however, each party shall have the right during or before any ADR to seek and
obtain from an appropriate court, remedies to avoid irreparable harm, maintain
the status quo, or preserve the subject matter of the ADR.
Article 20. GENERAL.
20.1 Property Interest. Sepracor shall retain all property interests in
the Product until the point of sale, and in all Samples and Sepracor
Promotional Materials until their distribution by Abbott, or its
representatives or agents. Sepracor shall not assign or transfer any
right or interest in relation to the Product in any manner which
could affect Abbott's ability to exploit its rights under this
Agreement.
20.2 Assignment. Neither Party may assign or transfer any right or
interest under this Agreement without the prior written consent of
the other Party; provided, however, that in the event a Party merges
with a Third Party or sells all or substantially all of its business
unit to which this Agreement relates, that Party may assign this
Agreement to any successor by merger or sale of all or substantially
all of its business unit to which the Agreement relates without the
consent of the other Party; further, provided, however, that in the
event Sepracor sells all or substantially all of its business to
which this Agreement relates to a Third Party in a transaction in
which this Agreement is not transferred to such Third Party by
operation of law, then as part of such transaction the Third Party
shall assume this agreement from Sepracor either (a) with the
condition that it remain in effect for one (1) year following
Sepracor's written notice to Abbott regarding such transaction (the
"Transfer Period"), and upon termination of the Transfer Period, the
Agreement will terminate and the Residual Commission set
41
<PAGE>
CONFIDENTIAL
forth in Section 13.5 shall apply; or (b) without the condition set
forth in (a) above.
20.3 Headings. All headings and titles are for reference purposes only
and shall not in any way affect the meaning or interpretation of
this Agreement.
20.4 Notices.
20.4.1 Methods: All notices or other communications required or
permitted to be given shall be in writing, shall be signed
by an authorized officer of the relevant Party, and given to
the recipient Party by hand delivery; pre-paid mail sent to
that Party, or by facsimile, to the address, as set forth
below, with written proof of receipt. All notices, consents,
approvals, orders, acceptances and requests shall be in
writing addressed to the Parties at the following addresses,
respectively.
20.4.2 Addresses:
If to Sepracor: President
Sepracor Inc.
111 Locke Drive, Suite 2
Marlborough, Massachusetts 01752
Facsimile: 508-357-7492
If to Abbott: President
Ross Products Division
Abbott Laboratories
625 Cleveland Avenue
Columbus, Ohio 43215
Facsimile: 614-624-7030
With a copy to: Senior Division Counsel
Domestic Legal Operations
Abbott Laboratories
625 Cleveland Avenue
Columbus, Ohio 43215
Facsimile: 614-624-3704
20.4.3 Change of Address. A Party may change its address set forth
above by giving a notice in writing, at least five (5)
business days prior to the effective date, to all other
Parties, stating the new address and the effective date of
the change.
20.4.4 Deemed Date of Receipt. Documents sent by prepaid mail shall
be deemed to have been received by the addressee on the
second business day after posting. Facsimile messages shall
be deemed to have been received by the addressee on the date
of transmission, provided that if the transmission is not on
a business day or not before 4:00 p.m. at the
42
<PAGE>
CONFIDENTIAL
location of the recipient's address set forth in Section
20.4.2, then it shall be deemed to have been received by the
addressee on the next succeeding business day after
transmission.
20.5 Waiver. No failure on the part of either Party to exercise, and no
delay in exercising, any right or remedy shall operate as a waiver
of such right or remedy, nor shall any single or partial exercise of
any right or remedy preclude any further or other exercise of such
right or remedy. All rights and remedies under this Agreement are
cumulative and shall not be deemed exclusive of any other rights or
remedies provided by law except as otherwise provided herein.
20.6 Severability. If any Section or portion(s) thereof contained in this
Agreement is declared invalid by any court of competent jurisdiction
or a government agency having jurisdiction, the remainder of this
Agreement, and the application of such provision to persons or
circumstances other than those to which it is held invalid by such
court, shall not be affected thereby, and the Agreement shall remain
in full force and effect. To the extent possible, the Parties shall
reform such invalidated Section or portion(s) thereof in a manner
that will render such provision valid without impairing the Parties'
original intent.
20.7 Governing Law. The laws of the State of Delaware shall govern the
interpretation, performance and enforcement of this Agreement,
without respect to the conflict of laws provisions.
20.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which, when
taken together, shall constitute the Agreement.
20.9 Entire Agreement. This Agreement contains the entire understanding
between the Parties hereto with respect to the subject matter
hereof. This Agreement cannot be amended, except by a writing signed
by all Parties.
IN WITNESS WHEREOF, each of the Parties has by its duly authorized
representative signed and entered into this Agreement as of the day and year
first above written.
ABBOTT LABORATORIES INC. SEPRACOR INC.
By: /s/ Joy Amundson By: /s/ William James O'Shea
-------------------------------------- ---------------------------
Joy Amundson William James O'Shea
President, Ross Products Division President & Chief Operating Officer
43
<PAGE>
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE 1.32
Sample Pediatric Sales Calculation
(For Illustration Purposes Only)
[**]
1
<PAGE>
CONFIDENTIAL
SCHEDULE 10.4.6
Other Agreements Regarding Product
Sales Force Services Agreement between Innovex Inc. and Sepracor Inc.,
effective August 1, 1999.
1
<PAGE>
CONFIDENTIAL
SCHEDULE 10.4.7
Notices From The FDA
1) Untitled letter from the FDA's Division of Drug Marketing, Advertising and
Communications ("DDMAC") dated March 26, 1999.
2) Untitled letter from DDMAC dated May 21, 1999.
1
<PAGE>
CONFIDENTIAL
SCHEDULE 19
ALTERNATIVE DISPUTE RESOLUTION
The Parties recognize that a bona fide dispute as to certain matters may
arise from time to time during the Term which relates to either Party's rights
and/or obligations under the Agreement. To have such a dispute resolved by ADR,
a Party first must send written notice of the dispute to the other Party for
attempted resolution by good faith negotiations between their respective
representatives identified in Article 19 of the Agreement within twenty-eight
(28) calendar days ("Days") after such notice is received (hereinafter "Initial
Period").
If the matter has not been resolved during the Initial Period, or if the
Parties fail to meet within such Initial Period, either Party may initiate an
ADR proceeding as set forth Paragraphs 1.1 to 1.10 below. Each Party, at its
sole cost and expense, shall have the right to be represented by counsel in such
a proceeding.
1.1 To begin an ADR proceeding, a Party shall provide written notice to
the other Party of the issues to be resolved by ADR (the "ADR
Notice") within fourteen (14) Days of expiration of the Initial
Period. Within fourteen (14) Days after its receipt of such ADR
Notice, the other Party may, by written notice to the Party
initiating the ADR, add additional issues to be resolved within the
same ADR.
1.2 Within twenty-one (21) Days following receipt of the original ADR
Notice (the "Selection Period"), the Parties shall select a mutually
acceptable neutral individual ("Neutral Party") to preside in the
resolution of any disputes in this ADR proceeding. If the Parties
are unable to agree on a mutually acceptable Neutral Party within
the Selection Period, the Parties shall request the President of the
Center for Public Resources ("CPR"), 366 Madison Avenue, New York,
New York 10017, to select a Neutral Party pursuant to the following
procedures:
1.2.1 The CPR shall submit to the Parties a list of not less than
five (5) candidates within fourteen (14) Days after receipt of
the request from the Parties, along with a curriculum vitae
for each candidate. No candidate shall be an employee,
director, or shareholder of either Party or any of the
subsidiaries or Affiliates of any Party.
1.2.2 Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
1.2.3 Each Party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference)
and shall deliver the list to the CPR within seven (7) Days
following receipt of the list of candidates. If a Party
believes a conflict of interest exists regarding any of the
candidates, that Party shall provide a written explanation of
the conflict to the CPR along with its list showing its order
of preference for the candidates. Any Party failing to return
a list of preferences on time shall be deemed to have no order
of preference.
1
<PAGE>
CONFIDENTIAL
1.2.4 If the Parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately
shall designate the Neutral Party as the candidate for whom
the Parties collectively have indicated the greatest
preference. If a tie should result between two candidates, the
CPR, in its sole discretion, may designate either candidate.
If the Parties collectively have identified three (3) or more
candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion,
may either:
1.2.4.1 Immediately designate as the Neutral Party the
candidate for whom the Parties collectively have
indicated the greatest preference, or
1.2.4.2 Issue a new list of not less than five (5) candidates,
in which case the procedures set forth in
Subparagraphs 1.2.1 to 1.2.4 above shall be repeated.
1.3 No earlier than twenty-eight (28) Days and no later than fifty-six
(56) Days after selection of the Neutral Party, the Neutral Party
shall hold a hearing to resolve each of the issues identified by the
Parties. The ADR hearing shall take place at a location agreed upon
by the Parties. If the Parties cannot agree, the Neutral Party shall
designate a location other than the principal place of business of
either Party or any of their subsidiaries or Affiliates.
1.4 At least seven (7) Days prior to the ADR hearing, each Party shall
submit the following to the other Party and the Neutral Party:
1.4.1 A copy of all exhibits on which such Party intends to rely in
any oral or written presentation to the Neutral Party;
1.4.2 A list of any witnesses such Party intends to call at the ADR
hearing, and a short summary of the anticipated testimony of
each witness;
1.4.3 A proposed ruling on each issue to be resolved, together with
a request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not
exceed one (1) page per issue.
1.4.4 A brief in support of such Party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20)
pages. This page limitation shall apply regardless of the
number of issues raised in the ADR.
1.4.5 Except as expressly set forth in Subparagraphs 1.4.1 through
1.4.4 above, no discovery shall be required or permitted by
any means, including depositions, interrogatories, requests
for admissions, or production of documents.
2
<PAGE>
CONFIDENTIAL
1.5 The ADR hearing shall be conducted on two (2) consecutive Days and shall
be governed by the following rules:
1.5.1 Each Party shall be entitled to five (5) hours of hearing time to
present its case. The Neutral Party shall be the sole and absolute
judge of whether each Party has had the five (5) hours to which it
is entitled.
1.5.2 Each Party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or
other evidence, to cross-examine witnesses, and to make a closing
argument. Cross-examination of witnesses shall occur immediately
after their direct testimony, and cross-examination time shall be
charged against the Party conducting the cross-examination.
1.5.3 The Party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues
it has raised but also any issues raised by the responding Party.
The responding Party, if it chooses to make an opening statement,
also may address all issues raised in the ADR. Thereafter, the
presentation of regular and rebuttal testimony and documents, other
evidence, and closing arguments shall proceed in the same sequence.
1.5.4 Except for their own direct testimony, witnesses shall be excluded
from all hearings until closing arguments.
1.5.5 Neither affidavits nor settlement negotiations shall be admissible
under any circumstances. As to all other matters, the Neutral Party
shall have sole discretion regarding the admissibility of any
evidence.
1.6 Within seven (7) Days following completion of the ADR hearing, each Party
may submit to the other Party and the Neutral Party a post-hearing brief
in support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any evidence not introduced during the
hearings and shall not exceed ten (10) pages. This page limitation shall
apply regardless of the number of issues raised in the ADR proceeding.
1.7 The Neutral Party shall rule on each disputed issue within fourteen (14)
Days following completion of the ADR hearing. Such ruling may adopt in its
entirety the proposed ruling and remedy of one of the Parties on each
disputed issue, or may adopt one Party's proposed rulings and remedies on
some issues and the other Party's proposed rulings and remedies on other
issues. The Neutral Party shall not issue any written opinion or otherwise
explain the basis of the ruling.
1.8 The Neutral Party shall be paid a reasonable fee plus expenses. The
Neutral Party's fees and expenses , along with the fees and expenses of a
court reporter, and any expenses for a hearing room, shall be split and
paid fifty/fifty (50/50) by the Parties. All other costs and expenses
associated with the ADR shall be borne solely and exclusively by the Party
incurring such costs and expenses.
3
<PAGE>
CONFIDENTIAL
1.9 The rulings of the Neutral Party shall be binding, non-reviewable, and
non-appealable, and may be entered as a final judgment in any court having
jurisdiction.
1.10 Except as provided in Paragraph 1.9 above or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing,
any submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The
Neutral Party shall have the authority to impose sanctions for
unauthorized disclosure of Confidential Information.
4