Co-Promotion Agreement - Ligand Pharmaceuticals Inc. and Organon Pharmaceuticals USA Inc.
CO-PROMOTION AGREEMENT
This CO-PROMOTION AGREEMENT (this "Agreement") is entered into and
effective as of this 1st day of January, 2003 (the "Effective Date"), by and
between LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation ("Ligand"),
and ORGANON PHARMACEUTICALS USA INC., a New Jersey corporation ("Co-Promotion
Partner").
RECITALS
WHEREAS, Ligand has exclusive rights to market, sell and distribute the
Product in the United States;
WHEREAS, Co-Promotion Partner is engaged in the business of and has
expertise in, among other things, the promotion to physicians of pharmaceutical
products; and
WHEREAS, Ligand and Co-Promotion Partner desire to work together to promote
the Product in the United States upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall have
the meanings specified in this Section 1 (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references in this Agreement to "Sections" are to
Sections of this Agreement.
"Act" shall mean the United States Federal Food, Drug and Cosmetic Act, as
it may be amended from time to time.
"Affiliate" shall mean, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such Person. A Person shall be
regarded as in control of another Person if such Person owns, or directly or
indirectly controls, more than fifty percent (50%) of the voting securities (or
comparable equity interests) or other ownership interests of the other Person,
or if such Person directly or indirectly possesses the power to direct or cause
the direction of the management or policies of the other Person, whether through
the ownership of voting securities, by contract or any other means whatsoever.
"Agreement" shall mean this Agreement, together with all appendices,
exhibits and schedules referenced herein or attached hereto, and as the same may
be amended or supplemented from time to time hereafter pursuant to the
provisions hereof.
"Applicable Laws and Regulations" shall mean all applicable federal, state
and local laws, regulations, rules or guidelines that govern the services and
transactions contemplated by this Agreement, including without limitation the
Act and the Controlled Drug Substances Act, as the same may be amended from time
to time.
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Certain confidential portions of this Exhibit were omitted by marking such
portions with asterisks (the "Mark"). This Exhibit has been filed separately
with the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 24b-2 under the 1934
Act.
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"Audited Party" shall have the meaning set forth in Section 9.2(a).
"Auditing Party" shall have the meaning set forth in Section 9.2(a).
"Budget" shall mean the annual budget for Shared Costs to be incurred by
both parties in connection with the promotion and marketing of the Product, as
annually prepared by the Commercial Committee and approved by the Steering
Committee and included in each annual Marketing Plan.
"Change of Control" shall mean (a) the acquisition, directly or indirectly,
by any Person or group of related Persons (other than any Person that controls,
is controlled by or is under common control with a party) of beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "34 Act")) of securities
possessing more than fifty percent (50%) of the total combined voting power of a
party's outstanding securities; (b) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total combined voting
power of such party's outstanding securities are transferred to a Person or
Persons different from the Persons holding those securities immediately prior to
such transaction; or (c) the sale, transfer or other disposition of all or
substantially all of such party's assets.
"Commercially Reasonable Efforts" shall mean efforts and resources normally
used by a party for a product owned by it or to which it has rights, which is of
similar market potential at a similar stage in its development or product life,
taking into account issues of safety, efficacy, product profile, the
competitiveness of the marketplace, the proprietary position of the product, the
regulatory structure involved, the profitability of the applicable products, and
other relevant commercial factors.
"Contract Year" shall mean a 12-month period commencing as of January 1 and
ending as of December 31. For the purposes of this Agreement, the first contract
year shall commence on the Effective Date and end on December 31, 2003.
"Co-Promotion Partner" shall have the meaning set forth in the Preamble of
this Agreement.
"Co-Promotion Partner Detail Report" shall have the meaning set forth in
Section 3.2.
"Co-Promotion Partner Trademarks" shall mean the trademark Organon(R), any
other related trademark or service mark containing the word "Organon."
"CRO" shall mean a contract research organization.
"DEA" shall mean the Drug Enforcement Agency, Department of Justice, or any
successor entity thereto.
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"Direct Costs" shall mean all costs, supported by vendor invoices or
accruals per GAAP, that are exclusively incurred for (as opposed to allocated
to) Product (i) advertising and promotion expenses and (ii) market research,
medical affairs, post-approval clinical trials, Phase IV trials and
physician-sponsored clinical trials, CRO and Grant expenses. Examples of direct
advertising and promotion expenses include without limitation promotional
material and goods, symposia, advisory boards, print production/reprints,
advertising agency fees, advertising space, direct mail/spin off, other trade
show expenses, free goods, public relations, Exhibit fees, advocate investigator
meetings, training material and special programs.
"Effective Date" shall have the meaning set forth in the Preamble of this
Agreement.
"Execution Date" shall mean the date on which this Agreement is signed by
the last party to sign below.
"FDA" shall mean the United States Food and Drug Administration or any
successor entity thereto.
"First Position Details" shall mean Product Calls in which the promotional
message involving the Product is presented in the first position and is a
principal topic of discussion and the Product is discussed for the longest
period of time during the contact.
"Force Majeure Event" shall have the meaning set forth in Section 16.10.
"Fully Allocated Costs" shall mean, with respect to a party during any
period, the sum total of costs (excluding Product acquisition costs, which shall
mean all costs relating to the manufacture of the Product for commercial sale)
to such party that are allocable to the Product in accordance with such party's
established and reasonable standard accounting practices and GAAP (in each case,
consistently applied), and inclusive of salary cost (including bonus, benefits
and allowances), and other expenses incurred by or charged to the following
functions: Medical Affairs, and other R & D departments, in each case
specifically limited to post-approval clinical trials, Phase IV trials and
physician-sponsored clinical trials.
"GAAP" shall mean United States generally accepted accounting principles,
as may be amended from time to time.
"Good Manufacturing Practices" shall mean the current standards for
manufacture, as set forth in the Act and applicable regulations and guidelines
promulgated thereunder or successors thereto, as shall be in effect from time to
time during the Term.
"Governmental or Regulatory Authority" shall mean any court, tribunal,
arbitrator, agency, commission, official or other instrumentality of any
government or of any federal, state, county, city or other political subdivision
thereof, including without limitation FDA and DEA.
"Grant" shall mean a payment to a physician, a cooperative group or an
institution for the conduct of clinical trials or medical education.
"Gross Sales" shall mean the amount of sales for Product in the Territory
invoiced by Ligand, its Affiliates, subcontractors and permitted sublicensees to
un-Affiliated third parties.
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"Indemnitee" shall have the meaning set forth in Section 12.3.
"Indemnitor" shall have the meaning set forth in Section 12.3.
"Ligand" shall have the meaning set forth in the Preamble.
"Ligand Detail Report" shall have the meaning set forth in Section 4.4(a).
"Ligand Trademarks" shall mean the trademark Ligand(R), any other related
trademark or service mark containing the word "Ligand."
"Marketing Authorization" shall mean the authorization to sell the Product
in any applicable country as granted by the relevant Governmental or Regulatory
Authorities.
"Marketing Materials" shall have the meaning set forth in Section 5.2(a).
"Marketing Plan" shall mean an annual plan for the promotion, marketing and
sale of the Product as developed pursuant to Section 7.2(b)(i). Each Marketing
Plan shall set forth the manner in which the Product is to be promoted and
marketed during the period to which the Marketing Plan relates and shall
include, at a minimum: (a) subject to Section 3.1(b) and 4.1(b), the minimum
number of quarterly and annual Product Calls and First and Second Position
Details to be provided by each party and targets therefor; (b) Product
positioning, strategy and tactics with supporting advertising and promotional
activity to be undertaken; (c) all budgets for costs to be incurred by either
party in connection with the performance of its obligations hereunder; (d) any
training programs to be conducted; (e) medical and education programs to be
conducted; (f) professional and trade relations activities; (g) any information
to be specifically included in any Co-Promotion Partner Detail Report or Ligand
Detail Report; (h) specifications for the development of Marketing Materials;
and (i) such other information relating to the marketing of the Product as
deemed advisable by the Commercial Committee. Neither party shall make any
material change in any previously approved Marketing Plan without the prior
written approval of the Commercial Committee.
"NDA" shall mean the new drug applications related to the Product,
submitted to the FDA pursuant to provisions of the Act and applicable
regulations related thereto.
"Net Sales" shall mean, for the applicable period, Gross Sales (in
accordance with Ligand's standard accounting principles and GAAP) less the
following:
(a) customs duties or other taxes (excluding income or corporation tax),
directly related to the sale of the Product which are paid by Ligand; and
(b) returns, rebates, chargebacks, allowances for bad debt, and discounts
directly related to the sale of the Product and lawfully allowed.
"Non-Serious Adverse Event" shall mean any adverse drug experience
associated with the use of the Product in humans, whether or not considered
drug-related, which is not a Serious Adverse Event.
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"Other Morphine Product" shall mean a controlled-release oral or
transdermal dosage formulation containing morphine as its sole, active analgesic
ingredient, other than the Product.
"PDMA" shall mean the Prescription Drug Marketing Act, as amended, and the
implementing rules and regulations thereunder.
"Person" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority, or any other form of entity not
specifically listed herein.
"Product" shall mean the 30 mg, 60 mg, 90 mg and 120 mg dosage strengths
(and all other dosage strengths or presentations that may be marketed by Ligand)
of the once daily oral dosage microparticulate formulation, developed by Elan
Corporation plc and Ligand, manufactured on behalf of, and marketed by, Ligand
under the trademark Avinza(R), and having morphine as its sole active
ingredient.
"Product Calls" shall mean face-to-face contacts by a sales representative
with a Target Healthcare Professional during which time the promotional message
involving the Product is presented in the first or second position and is a
principal topic of discussion and the Product is discussed for the longest
period of time during the contact or the second-longest period of time.
"Product Technical Complaint" shall mean any complaint that questions the
purity, identity, potency or quality of the Product, its packaging or labeling
or the compliance of any batch of the Product with Applicable Laws and
Regulations and current Good Manufacturing Practices; any complaint that
concerns any incident that causes the Product or its labeling to be mistaken
for, or applied to, another article; any bacteriological contamination or
significant chemical, physical or other change or deterioration in the Product;
any failure of one or more batches of the Product to meet the specifications
therefor in the NDA; or any complaint or evidence of tampering with the Product.
"Product Trademarks" shall mean the trademark Avinza(R) associated with the
Product, any other related trademark or service mark containing the word
"Avinza" and any other trademark or service mark (whether registered or
unregistered) used on or with the Product or in any Marketing Material (other
than Ligand Trademarks and Co-Promotion Partner Trademarks, as applicable) in
the Territory during the Term.
"Second Position Details" shall mean Product Calls in which the promotional
message involving the Product is presented in the second position and is a
principal topic of discussion and the Product is discussed for the
second-longest period of time during the contact.
"Serious Adverse Event" shall mean any serious and unexpected adverse drug
experience, as defined by FDA in 21 C.F.R. Section 314.80 or Section 312.32,
associated with the use of the Product in humans, whether or not considered
drug-related.
"Shared Costs" shall mean, with respect to a party during any period, the
sum of (i) Direct Costs for such party and (ii) any Fully Allocated Costs for
such party.
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"Steering Committee" shall have the meaning set forth in Section 7.1.
"Strategic Plan" shall mean a five (5)-year rolling strategic plan relating
to the promotion and marketing of the Product, as annually prepared and approved
by the Steering Committee.
"Target Healthcare Professionals" shall mean medical doctors and doctors of
osteopathy that are primary care physicians (i.e., general practitioners, family
practitioners and internal medicine physicians), pain specialists, physical
medicine and rehabilitation specialists, neurologists, anesthesiologists, sports
medicine specialists, or other prescribers of pain management therapeutics, in
each case who are authorized by applicable law to prescribe the Product.
"Term" shall have the meaning set forth in Section 10.1.
"Territory" shall mean the United States of America and its territories.
2. GRANTS OF RIGHTS.
2.1 CO-PROMOTION RIGHTS.
a. CO-PROMOTION. Ligand hereby grants to Co-Promotion Partner, on
an exclusive basis together with Ligand, the right to promote the Product in the
Territory during the Term and the right to provide other Co-Promotion Partner
services, upon and subject to the terms and conditions set forth in this
Agreement.
b. OTHER MORPHINE PRODUCTS. From the Effective Date and for one
year after the end of the Term, neither Co-Promotion Partner nor its Affiliates
shall, without the prior written consent of Ligand, market or sell any Other
Morphine Product in the Territory.
c. OPTION FOR OTHER MORPHINE PRODUCTS.
(i) Subject to paragraph 2.1(b) hereof, Ligand hereby grants
to Co-Promotion Partner the exclusive option to co-promote any Other Morphine
Product newly marketed by Ligand or an Affiliate in the Territory during the
Term, in each case subject to a separate Co-Promotion Agreement containing terms
and conditions that are acceptable to both Ligand and Co-Promotion Partner.
(ii) Within fifteen (15) days after Ligand submits an NDA
for or acquires the right to market (whichever occurs earlier) any Other
Morphine Product in the Territory during the Term, Ligand shall provide written
notice to Co-Promotion Partner of such submission or acquisition, identifying
the Other Morphine Product in reasonable detail. Co-Promotion Partner shall have
sixty (60) days after its receipt of such notice to exercise its rights under
Section 2.1(c)(i) by providing written notice thereof (the "Exercise Notice") to
Ligand. During the period (which period shall not exceed one hundred eighty
(180) days or such longer period of time as the parties mutually agree) after
Ligand's receipt of the Exercise Notice, as the case may be, the parties will
negotiate in good faith towards a definitive agreement for the co-promotion of
such Other Morphine Product, after which period the rights under Section
2.1(c)(i) shall no longer be effective with respect to such Other Morphine
Product.
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2.2 RIGHTS TO TRADEMARKS.
a. LICENSES.
(i) Ligand hereby grants to Co-Promotion Partner a
non-exclusive, royalty-free license to use the Product Trademarks solely to
market the Product in the Territory during the Term.
(ii) Ligand hereby grants to Co-Promotion Partner a
non-exclusive, royalty-free license to use the Ligand Trademarks solely in
connection with performing its obligations hereunder. Co-Promotion Partner
hereby grants to Ligand a non-exclusive, royalty-free license to use the
Co-Promotion Partner Trademarks solely in connection with performing its
obligations hereunder.
b. REQUIRED USE AND COMPLIANCE.
(i) Except for the use of the Ligand Trademarks in labeling,
package inserts, Product monographs and packaging for Products, and the Ligand
Trademarks and the Co-Promotion Trademarks in Marketing Materials, each party
shall promote the Product only under the Product Trademarks. Each party shall
ensure that each use by it of the Product Trademarks is accompanied by an
acknowledgement that the Product Trademarks are owned by Ligand. Neither party
shall (A) use the Product Trademarks in a way that might materially prejudice
their distinctiveness or validity or the goodwill of Ligand therein, or (B) use
any trademarks or tradenames so resembling any of the Product Trademarks as to
be likely to cause confusion or deception.
(ii) Ligand shall ensure that each use of the Co-Promotion
Partner Trademarks by it is accompanied by an acknowledgement that the
Co-Promotion Partner Trademarks are owned by Co-Promotion Partner. Ligand shall
not (A) use the Co-Promotion Partner Trademarks in a way that might materially
prejudice their distinctiveness or validity or the goodwill of Co-Promotion
Partner therein, or (B) use any trademarks or tradenames so resembling any of
the Co-Promotion Partner Trademarks as to be likely to cause confusion or
deception.
(iii) Co-Promotion Partner shall ensure that each use of the
Ligand Trademarks by it is accompanied by an acknowledgement that the Ligand
Trademarks are owned by Ligand. Co-Promotion Partner shall not (A) use the
Ligand Trademarks in a way that might materially prejudice their distinctiveness
or validity or the goodwill of Ligand therein, or (B) use any trademarks or
tradenames so resembling any of the Ligand Trademarks as to be likely to cause
confusion or deception.
c. VALIDITY OF TRADEMARKS. Each party acknowledges the validity
of Co-Promotion Partner's right, title and interest in and to the Co-Promotion
Partner Trademarks and the validity of Ligand's right, title and interest in and
to the Ligand Trademarks and the Product Trademarks. The parties shall not have,
assert or acquire any right, title or interest in or to any of Ligand Trademarks
or the Product Trademarks or the goodwill pertaining thereto (in the case of
Co-Promotion Partner), or the Co-Promotion Partner Trademarks or the goodwill
pertaining thereto (in the case of Ligand), except as otherwise explicitly
provided in this Agreement.
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d. NOTICE OF INFRINGEMENT.
(i) Co-Promotion Partner shall give Ligand prompt notice of
any infringement or threatened infringement of any of the Product Trademarks or
the Ligand Trademarks used in connection with the Product, and Ligand shall give
Co-Promotion Partner prompt notice of any infringement or threatened
infringement of any of the Product Trademarks or the Co-Promotion Partner
Trademarks used in connection with the Product.
(ii) Ligand shall determine in its sole discretion what
action, if any, to take in response to the infringement or threatened
infringement of any Product Trademark or Ligand Trademark. Co-Promotion Partner
shall determine in its sole discretion what action, if any, to take in response
to the infringement or threatened infringement of any Co-Promotion Partner
Trademark.
3. RESPONSIBILITIES OF CO-PROMOTION PARTNER.
3.1 PROMOTION BY CO-PROMOTION PARTNER.
a. As of the Execution Date, Co-Promotion Partner shall commence
certain services listed in EXHIBIT F, as mutually agreed upon by the parties.
Commencing April 1, 2003 and continuing throughout the Term, Co-Promotion
Partner shall use its Commercially Reasonable Efforts to market and promote the
Product to Target Healthcare Professionals in the Territory in accordance with
the then-current Marketing Plan (collectively, the "Co-Promotion Partner
Detailing Services"). Subject to Section 3.1(b), the exact number, targeting and
frequency of Product Calls to be provided by Co-Promotion Partner will be
determined by the Commercial Committee and stated in the Marketing Plan.
b. Commencing April 1, 2003 and thereafter during each Contract
Year throughout the Term, Co-Promotion Partner shall complete, subject to pro
rata adjustment for the initial partial year, a minimum of *** Product Calls in
each such Contract Year, of which a minimum of (i) *** Product Calls shall be
delivered to primary care physicians, (ii) *** Product Calls shall be delivered
to high-prescribing physicians specializing in pain management, and (iii) ***
Product Calls shall be delivered to hospitals; provided, however, in the first
three Contract Years, all Product Calls shall be First Position Details and
thereafter, at least *** of all Product Calls shall be First Position Details,
and the remainder shall be Second Position Details. For the avoidance of doubt,
in the first Contract Year, starting April 1, 2003 and ending December 31, 2003,
Co-Promotion Partner shall complete a minimum of *** Product Calls.
(i) In the event that Net Sales for the Contract Year ending
as of December 31, 2005 are less than *** the parties shall negotiate in good
faith a reduction in Co-Promotion Partner's obligations set forth in Section
3.1(b) above; provided that for each Contract Year commencing as of January 1,
2006 and for the remainder of the Term, in each Contract Year Co-Promotion
Partner shall provide no less than *** Product Calls, of which not less than ***
shall be First Position Details, with the balance being Second Position Details.
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(ii) In the event that Net Sales for the Contract Year
ending as of December 31, 2007 are less than *** each party shall have the
right, but not the obligation, to terminate this Agreement as more fully set
forth in Section 10.4.
c. In performing its duties hereunder, Co-Promotion Partner
shall, and shall cause its employees to, comply with all regulatory,
professional and legal requirements, including, without limitation, the FDA's
regulations and guidelines concerning the advertising of prescription drug
products, the American Medical Association's Guidelines on Gifts to Physicians,
the PhRMA Guidelines for Marketing Practices, and the ACCME Standards for
Commercial Support of Continuing Medical Education, which may be applicable to
the services to be provided by Co-Promotion Partner hereunder. No employee of
Co-Promotion Partner shall make any representation, statement, warranty or
guaranty with respect to the Product that is not consistent with current
labeling of the Product or Marketing Materials approved by the Commercial
Committee, that is deceptive or misleading or that disparages the Products or
the good name, goodwill and reputation of Ligand. Co-Promotion Partner shall use
Commercially Reasonable Efforts to ensure that its services hereunder will be
provided in a professional, ethical and competent manner. Notwithstanding
Section 10.2 hereof, Ligand may immediately, upon written notice to Co-Promotion
Partner, terminate this Agreement for any material breach of this Section
3.1(c).
3.2 CO-PROMOTION PARTNER DETAIL REPORTS. Co-Promotion Partner shall
provide Ligand with a report (each a "Co-Promotion Partner Detail Report"),
within thirty (30) calendar days after the end of each calendar quarter included
in the Term (and within such period after the end of the Term), setting forth
the following information regarding the efforts of Co-Promotion Partner's sales
force in promoting and marketing the Product during the preceding quarter (or
part thereof): (i) the number of Product Calls and a breakdown of First Position
Details and Second Position Details made and recorded by Co-Promotion Partner's
standard record keeping procedures based on data recorded by the sales force;
(ii) the names and addresses of the Target Healthcare Professionals called upon;
and (iii) such other information as may be required in the then-current
Marketing Plan. An example of a Co-Promotion Detail Report is attached to this
Agreement as EXHIBIT A. Each such Co-Promotion Detail Report shall be in an
electronic format and in hard copy form. Each Co-Promotion Detail Report shall
be treated as Confidential Information of Co-Promotion Partner pursuant to
Section 11 of this Agreement and shall not be used or disclosed to third parties
without Co-Promotion Partner's prior written approval or direction.
3.3 CO-PROMOTION PARTNER SALES FORCE.
a. Except as agreed by the parties, Co-Promotion Partner shall be
solely responsible for the costs and expenses of establishing, maintaining and
training Co-Promotion Partner's sales force, and conducting Co-Promotion
Partner's other activities under this Agreement; provided, however, that (i)
such Product training shall be conducted in accordance with Section 5.1 and (ii)
the content and strategic direction of any Product training provided by
Co-Promotion Partner that relates specifically to the Product shall be overseen
by the Commercial Committee.
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b. To the extent practicable, all written, electronic and visual
communications provided to any of Co-Promotion Partner's sales representatives
regarding strategy, positioning or selling messages for the Product will be
subject to review and approval by the Commercial Committee.
3.4 SUPPORT SERVICES. Co-Promotion Partner will provide such other
Product-related services from time to time during the Term as are expressly
approved by the Commercial Committee or the Clinical/Regulatory Sub-Committee,
and specified in EXHIBIT F.
4. RESPONSIBILITIES OF LIGAND.
4.1 PROMOTION OF PRODUCT BY LIGAND.
a. Commencing as of the Execution Date and continuing throughout
the Term, Ligand shall use its Commercially Reasonable Efforts to market and
promote the Product to Target Healthcare Professionals in the Territory in
accordance with the then-current Marketing Plan (collectively, the "Ligand
Detailing Services"). The exact number, targeting and frequency of Product Calls
to be provided by Ligand will be determined by the Commercial Committee and
stated in the Marketing Plan.
b. Commencing April 1, 2003 and thereafter during each Contract
Year throughout the Term, Ligand shall complete, subject to pro rata adjustment
for the initial partial year, a minimum of *** Product Calls in each such
Contract Year; provided, however, in the first three Contract Years, all Product
Calls shall be First Position Details and thereafter, at least *** of all
Product Calls shall be First Position Details, and the remainder shall be Second
Position Details. For the avoidance of doubt, in the first Contract Year,
starting April 1, 2003 and ending December 31, 2003, Ligand shall complete a
minimum of *** Product Calls.
(a) In the event that Net Sales for the Contract Year ending
as of December 31, 2005 are less than *** the parties shall negotiate in good
faith a reduction in Ligand's obligations set forth in Section 4.1(b) above;
provided that for each Contract Year commencing as of January 1, 2006 and for
the remainder of the Term, in each Contract Year Ligand shall provide no less
than *** Product Calls, of which not less than *** shall be First Position
Details, with the balance being Second Position Details.
c. In performing its duties hereunder, Ligand shall, and shall
cause its employees to, comply with all regulatory, professional and legal
requirements, including, without limitation, the FDA's regulations and
guidelines concerning the advertising of prescription drug products, the
American Medical Association's Guidelines on Gifts to Physicians, the PhRMA
Guidelines for Marketing Practices, and the ACCME Standards for Commercial
Support of Continuing Medical Education, which may be applicable to the services
to be provided by Ligand hereunder. No employee of Ligand shall make any
representation, statement, warranty or guaranty with respect to the Product that
is not consistent with current labeling of the Product or Marketing Materials
approved by the Commercial Committee, that is deceptive or misleading or that
disparages the Products or the good name, goodwill and reputation of
Co-Promotion Partner. Ligand shall use Commercially Reasonable Efforts to ensure
that its services hereunder will be provided in a professional, ethical and
competent manner. Notwithstanding Section 10.3 hereof, Co-Promotion Partner may
immediately, upon written notice to Ligand, terminate this Agreement for any
material breach of this Section 4.1(c).
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4.2 MANUFACTURE, SHIPMENT, ETC. OF THE PRODUCT.
a. As between Ligand and Co-Promotion Partner, Ligand (and/or its
Affiliates) shall have the sole responsibility for the sale, manufacture,
shipment, distribution, warehousing, billing, order confirmation of the Product
and for the collection of receivables resulting from sales of the Product in the
Territory, and for recording of Product sales in its books of account. If for
any reason Co-Promotion Partner receives orders for Products, Co-Promotion
Partner shall forward such orders to Ligand (or if directed by Ligand to
Ligand's wholesalers) as soon as practicable.
b. Ligand shall manufacture, ship, distribute and warehouse, or
cause to be manufactured, shipped, distributed and warehoused the Product in
accordance with Applicable Laws and Regulations, the NDA and Good Manufacturing
Practices. Ligand shall use its Commercially Reasonable Efforts to ensure that
adequate quantities of the Product are available to meet the anticipated demand
for the Product during the Term. Ligand shall promptly notify Co-Promotion
Partner, in writing, of any material shortage in supply occurring at the
distribution, wholesale and/or retail level during the Term, and any actions
Ligand intends to take to correct same.
c. If Product supply is interrupted (other than for reasons
outside of Ligand's control, which reasons shall include without limitation any
quota in allowable supply imposed by the DEA, any Force Majeure Event and any
action or inaction by Co-Promotion Partner constituting a breach of the
provisions of this Agreement or a violation of Applicable Laws and Regulations)
so as to prevent for two (2) calendar months or more the filling of wholesale
orders essential to meet patient prescription demand representing fifty percent
(50%) or more of overall demand for the Product, then as compensation to
Co-Promotion Partner, Ligand shall pay to Co-Promotion Partner an amount equal
to the average compensation paid to Co-Promotion Partner in the previous two (2)
calendar quarters in which there was no interruption, prorated based upon the
number of days that the Product interruption continues, retroactive to the first
day of the interruption, net of payments otherwise due and payable for Products
supplied during the same period. Ligand shall make such payments to Co-Promotion
Partner on a monthly basis for so long as the interruption shall continue, up to
a maximum of six (6) monthly payments. Payments shall revert to those otherwise
payable to Co-Promotion Partner under this Agreement at such time as the
interruption is corrected. In the event that market interruption lasts for more
than six (6) months (including for reasons outside of Ligand's control, which
reasons shall include without limitation any quota in allowable supply imposed
by the DEA, any Force Majeure Event and any action or inaction by Co-Promotion
Partner constituting a breach of the provisions of this Agreement or a violation
of Applicable Laws and Regulations), this shall be considered a material breach
of the Agreement, and either party hereto may, in its sole discretion, terminate
this Agreement as set forth in Section 10.2(a) or Section 10.3(a), as
applicable.
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d. Ligand will use Commercially Reasonable Efforts to identify a
second-source supplier for the Product, and apply for approval of such
second-source supplier to applicable Governmental or Regulatory Authorities by
December 31, 2006.
e. Co-Promotion Partner may make recommendations to the
Commercial Committee from time to time regarding pricing strategies for the
Product in the Territory during the Term. The Commercial Committee may make
recommendations from time to time to Ligand regarding pricing strategies for the
Product during the Term. Notwithstanding recommendations received from the
Commercial Committee, Ligand shall have the sole authority to determine the
price of the Product during the Term, including price increases and decreases
and the timing thereof, which increases or decreases shall be commercially
reasonable.
4.3 LIGAND SALES FORCE.
a. Except as agreed by the parties, Ligand shall be solely
responsible for the costs and expenses of establishing, maintaining and training
Ligand's sales force, and conducting Ligand's other activities under this
Agreement; provided, however, that (i) such Product training shall be conducted
in accordance with Section 5.1 and (ii) the content and strategic direction of
any Product training provided by Ligand that relates specifically to the Product
shall be coordinated with the Commercial Committee.
b. To the extent practicable, all written, electronic and visual
communications provided to any of Ligand's sales representatives regarding
strategy, positioning or selling messages for the Product will be subject to
review and approval by the Commercial Committee.
4.4 LIGAND DETAIL AND SALES REPORTS.
a. Ligand shall provide Co-Promotion Partner with a report (each
a "Ligand Detail Report"), within thirty (30) calendar days after the end of
each calendar quarter included in the Term (and within such period after the end
of the Term), setting forth the following information regarding the efforts of
Ligand's sales force in promoting and marketing the Product during the preceding
quarter (or part thereof): (i) the number of Product Calls and a breakdown of
First Position Details and Second Position Details made and recorded by Ligand's
standard record keeping procedures based on data recorded by the sales force;
(ii) the names and addresses of the Target Healthcare Professionals called upon;
and (iii) such other information as may be required in the then-current
Marketing Plan. An example of a Ligand Detail Report is attached to this
Agreement as EXHIBIT B. Each such Ligand Detail Report shall be in an electronic
format and in hard copy form. Each Ligand Detail Report shall be treated as
Confidential Information of Ligand pursuant to Section 11 of this Agreement and
shall not be used or disclosed to third parties without Ligand's prior written
approval or direction.
b. Ligand shall provide Co-Promotion Partner with a report (each,
a "Ligand Sales Report") within forty five (45) calendar days after the end of
each calendar quarter included in the Term (and within such period after the end
of the Term) setting forth the Gross Sales and Net Sales in the Territory for
such calendar quarter (or part thereof). An example of a Ligand Sales Report is
attached to this Agreement as EXHIBIT C. Each such Ligand Sales Report shall be
provided to Co-Promotion Partner either by facsimile or transmitted
electronically, in each case with a confirmation copy sent by mail. Each Ligand
Sales Report shall be treated as Confidential Information of Ligand pursuant to
Section 11 of this Agreement and shall not be used or disclosed to third parties
without Ligand's prior written approval or direction.
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c. Ligand shall provide Co-Promotion Partner with an interim
report on a weekly basis setting forth the Gross Sales and Net Sales in the
Territory for the previous week. Each such weekly report shall be provided to
Co-Promotion Partner either by facsimile or transmitted electronically, in each
case with a confirmation copy sent by mail. Each such weekly report shall be
treated as Confidential Information of Ligand pursuant to Section 11 of this
Agreement and shall not be used or disclosed to third parties without Ligand's
prior written approval or direction.
4.5 SUPPORT SERVICES. Ligand will provide such other Product-related
services from time to time during the Term as it determines to be necessary or
advisable.
5. TRAINING AND MARKETING MATERIALS.
5.1 TRAINING.
a. Each of the parties agrees to make its sales representatives
available for Product training with respect to the marketing and sale of the
Product. Ligand shall, subject to the Commercial Committee's approval, be
responsible for developing and, if applicable, conducting Product training
programs for each of Co-Promotion Partner's and Ligand's sales forces.
Co-Promotion Partner shall participate in conducting such Product training to
the extent requested by Ligand or the Commercial Committee. As between the
parties hereto and except as expressly provided otherwise elsewhere in this
Agreement, Ligand shall own all right, title and interest in Product training
materials developed hereunder.
b. Product training shall be carried out at a time which is
mutually acceptable to the parties. As additional members are added to the
parties' respective sales forces responsible for marketing the Product, training
will be given to groups of the newly added members. Each party shall decide
where the Product training of its sales representatives will occur and, unless
the Commercial Committee decides otherwise, will absorb the costs of
transporting, housing and maintaining their respective personnel for such
training.
5.2 MARKETING MATERIALS.
a. All sales, promotion and advertising materials, regardless of form
("Marketing Materials"), relating to the Product shall be developed under the
direction of the Commercial Committee, subject to Ligand's review and approval.
Co-Promotion Partner shall participate in conducting such development to the
extent requested by Ligand or the Commercial Committee. As between the parties
hereto and except as expressly provided otherwise elsewhere in this Agreement,
Ligand shall own all right, title and interest in all Marketing Materials.
b. After the Execution Date, whenever Marketing Materials are
presented and described to the medical communities (including, for example, the
physician, pharmacy, governmental, reimbursement and hospital sectors), the
parties will be presented and described as joining in the promotion of the
Product in the Territory. All Marketing Materials approved by the Commercial
Committee after the Execution Date will state this arrangement and will display
the names and logos of the parties with equal prominence, as permitted by
applicable law.
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5.3 NON-SOLICITATION OF EMPLOYEES. The parties hereby agree that,
throughout the Term and for a period of one year immediately thereafter, neither
will, directly or indirectly, solicit for employment any employee of the other
party (or of the other party's designee); provided, however, that the hiring of
employees who respond to general advertisements for employment (not targeted to
employees of the other party or their designee) shall not be deemed to violate
the foregoing provision.
6. CERTAIN REGULATORY MATTERS.
6.1 LICENSES. Each party hereto shall, at its sole cost and expense,
maintain in full force and effect all necessary licenses, permits and other
authorizations required by law, regulation, ordinance or statute to carry out
its duties and obligations under this Agreement.
6.2 REGULATORY RESPONSIBILITY.
a. COMMUNICATION AND FILINGS WITH GOVERNMENTAL OR REGULATORY
AUTHORITIES. As between the parties, all regulatory matters regarding the
Product, including without limitation, all filings in connection therewith,
shall be the obligation and responsibility solely of Ligand, subject to the
participation by Co-Promotion Partner as requested by the Clinical/Regulatory
Sub-Committee. Co-Promotion Partner shall not without the consent of Ligand or
unless so required by applicable law (and then only pursuant to the terms of
this Section 6.2), correspond or communicate with any Governmental or Regulatory
Authority, whether within the Territory or otherwise, concerning the Products or
otherwise take any action concerning any authorization or permission under which
the Products are sold or any application for the same. Furthermore, Co-Promotion
Partner shall, immediately upon receipt of any communication from any
Governmental or Regulatory Authority relating to the Product, forward a copy or
description of the same to Ligand and respond to all inquiries by Ligand
relating thereto. If Co-Promotion Partner is advised by its counsel that it must
communicate with any Governmental or Regulatory Authority, then Co-Promotion
Partner shall so advise Ligand immediately and, unless prohibited by applicable
law, provide Ligand in advance with a copy of any proposed written communication
with any Governmental or Regulatory Authority and comply with any and all
reasonable direction of Ligand and the Clinical/Regulatory Sub-Committee
concerning any meeting or written or oral communication with any Governmental or
Regulatory Authority. Notwithstanding the foregoing, Ligand shall promptly
provide Co-Promotion Partner with copies of all communications received from any
Governmental or Regulatory Authority concerning the Product or any Marketing
Materials and shall promptly submit to Co-Promotion Partner copies of all
communications and filings concerning the Product or any Marketing Materials
made to any Governmental or Regulatory Authority during the Term.
b. LABELING AND MARKETING MATERIALS. The Clinical/Regulatory
Sub-Committee shall coordinate strategy and policy for obtaining any necessary
Governmental or Regulatory Authority approvals of any labeling, package inserts,
Product monographs, packaging for the Products and Marketing Materials, and for
determining whether the same requires Governmental or Regulatory Authority
approval, subject to Ligand's review and approval. As between the parties, all
filings and communications with Governmental or Regulatory Authorities in
connection therewith shall be the obligation and responsibility solely of
Ligand. No Product labeling, package inserts, Product monographs, packaging for
the Products or Marketing Materials may be used or distributed by Co-Promotion
Partner unless such labeling, package inserts, Product monographs, packaging for
the Products or Marketing Materials have been approved in advance by Ligand.
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6.3 EFFICACY AND SAFETY INFORMATION. Ligand shall furnish Co-Promotion
Partner with efficacy and safety information reasonably requested by
Co-Promotion Partner to assist Co-Promotion Partner in promoting the Product to
Target Healthcare Professionals in the Territory, including without limitation
relevant clinical and safety data included in the NDA for the Product and
additional information, if any, related to the efficacy and safety profile of
the Product since the Product's approval by the FDA. Except for that information
that is to be disclosed to Target Healthcare Professionals in connection with
providing Product Calls, such information shall be treated as Confidential
Information of Ligand pursuant to Section 11 of this Agreement and shall not be
disclosed to third parties without Ligand's prior written approval or direction.
6.4 NOTICE OF ADVERSE EVENTS. Each party shall promptly notify the
other party of any event(s) that materially affect(s) or could materially affect
the marketing of the Product, including without limitation adverse drug
reactions and governmental inquiries. Serious Adverse Events for the Product
learned of by Co-Promotion Partner shall be submitted in writing to Ligand
within two (2) business days from the date of learning thereof by Co-Promotion
Partner. Non-Serious Adverse Events for the Product learned of by Co-Promotion
Partner shall be submitted in writing to Ligand no more than five (5) business
days from the date of learning thereof by Co-Promotion Partner. As between the
parties, Ligand shall have the sole responsibility for reporting and responding
to such events to applicable Governmental or Regulatory Authorities; provided,
that Co-Promotion Partner may take such actions (including issuing such reports)
as it determines is required by applicable law. For all Serious Adverse Events
and Non-Serious Adverse Events, Co-Promotion Partner and its professional sales
representatives shall not make any statement or give any opinion (written or
verbal) to anyone that could be reasonably construed as an admission of fault on
Ligand's part or a promise that Ligand will compensate anyone.
6.5 PRODUCT TECHNICAL COMPLAINTS AND RECALLS.
a. If Co-Promotion Partner becomes aware of any Product Technical
Complaint concerning the Product, Co-Promotion Partner shall submit a written
report of such complaint, along with a sample of the Product involved in the
complaint, if available, to Ligand within two (2) business days of receipt of
such notice by Co-Promotion Partner; provided, however, that such time period
relating to any such complaint involving tampering with the Product shall be one
(1) business day.
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b. As between the parties, Ligand shall have the sole authority
and responsibility to respond to any Governmental or Regulatory Authorities,
including without limitation the FDA, to respond to Product Technical Complaints
and medical complaints, and to handle all returns, field alerts, recalls or
market withdrawals of the Product in accordance with applicable law, at Ligand's
cost and expense; provided, however, that if any such returns, field alerts,
market withdrawals or recalls of Product are caused solely by actions or
inactions by Co-Promotion Partner constituting a breach of the provisions of
this Agreement or a violation of Applicable Laws and Regulations, Co-Promotion
Partner shall bear all reasonable costs associated with such actions or
inactions in connection therewith. Subject to Section 4.2(c), Ligand shall be
under no liability whatsoever to compensate Co-Promotion Partner or make any
other payment to Co-Promotion Partner for any decision to recall, initiate a
market withdrawal or take any other corrective action with respect to the
Product contemplated in this Section 6.5(b), unless such action results from a
breach of the provisions of this Agreement or a violation of Applicable Laws and
Regulations by Ligand, its sublicensees or subcontractors.
c. Each party shall promptly (but in any case, not later than
forty-eight (48) hours) notify the other party in writing of any order, request
or directive of a court or other Governmental or Regulatory Authority to recall
or withdraw the Product. As between the parties, Ligand shall be solely
responsible for determining whether to issue a recall or withdrawal and for the
cost and expense of any such recall or withdrawal of the Product.
6.6 RETURNS. If any quantities of the Product are returned to
Co-Promotion Partner, Co-Promotion Partner shall immediately notify Ligand and
ship them to the facility designated by Ligand, with any reasonable or
authorized shipping or other documented direct cost to be paid by Ligand.
Co-Promotion Partner, at its option, may advise the customer who made the return
that the Products have been returned to Ligand, but shall take no other steps in
respect of any return without the consent of Ligand.
6.7 GOVERNMENT INSPECTIONS AND INQUIRIES. Upon (a) being contacted by
the FDA or any other Governmental or Regulatory Authority for any regulatory
purpose pertaining specifically to this Agreement or to the Product or (b)
becoming aware of an impending inspection or audit of the facilities or
operations involved in the manufacture, processing, testing or packaging of the
Product, a party shall immediately notify the other party. Co-Promotion Partner
agrees that it shall not respond to any such agency making an inquiry of it
until and only as directed by Ligand; provided, however, that the foregoing
shall not be construed to prevent Co-Promotion Partner in any way from complying
with any Governmental or Regulatory Authority or applicable laws, rules or
regulations. Co-Promotion Partner may permit unannounced regulatory inspections
and respond to the extent necessary to comply with its obligations under
applicable law. Co-Promotion Partner shall allow Ligand to participate in other
inspections to the extent necessary, in the reasonable opinion of Ligand, as
such inspections and responses pertain to the Product, at Ligand's cost and
expense. Ligand agrees that, to the extent it becomes aware of the results,
observations and/or outcome of any inspections or audits of the facilities or
operations involved in the manufacture, processing, testing or packaging of the
Product conducted by Governmental or Regulatory Authorities, including without
limitation the FDA, Ligand will notify Co-Promotion Partner of any such
information as it relates to the Product within three (3) days of obtaining the
information.
6.8 PRODUCT INQUIRIES.
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a. For questions which Co-Promotion Partner and its professional
sales representatives are unable to answer concerning Product identification,
Product ingredients or stability/storage information, Co-Promotion Partner shall
refer such questions to Ligand's Professional Services Department.
b. For medical inquiries, including those related to information
outside of labeling received by Co-Promotion Partner and its professional sales
representatives, Co-Promotion Partner shall refer such inquiries to Ligand's
Medical Affairs Department. As between the parties, all responses to such
inquiries from patients, medical professionals, or other third parties shall be
provided solely by Ligand. Co-Promotion Partner shall provide reasonable
assistance to Ligand, at Ligand's request and expense, in an effort to fully
respond to such communications.
7. MANAGEMENT COMMITTEES. The parties hereto recognize that it is in the
best interests of both parties to maximize the sales of the Product in the
Territory and to coordinate the activities of both parties with respect to the
promotion of the Product in the Territory. Accordingly, the parties hereby
establish the committees and procedures described in this Section 7 to govern
their respective rights and obligations under this Agreement.
7.1 STEERING COMMITTEE.
a. ESTABLISHMENT. The parties hereby establish a committee (the
"Steering Committee"), which shall have as its overall purpose the ultimate
governance of the relationship between the parties hereunder. The Steering
Committee shall consist of three (3) senior-executive representatives of each
party. Members of the Steering Committee shall be employees of the parties, and
shall not be outside consultants, independent contractors or outside legal
counsel, but such Persons are permitted to attend meetings of the committee upon
the consent of both parties. Each party shall be solely responsible for
appointing, removing and filling vacancies among its own representatives.
Co-Promotion Partner shall appoint one of its representatives on the Steering
Committee to serve as the initial chair of the committee, and such person shall
serve in such role until the first anniversary of the Effective Date. On such
date, Ligand shall appoint one of its representatives on the committee to serve
as chair of the Steering Committee, and such person shall serve until the second
anniversary of the Effective Date. Thereafter, on each anniversary of the
Effective Date during the Term, the parties shall continue to alternate in
designating the chairman of the Steering Committee.
b. RESPONSIBILITIES. The Steering Committee shall review the
activities of the Commercial Committee (which shall likewise review the
activities of the Clinical/Regulatory Sub-Committee) and any other committees or
subcommittees formed by it from time to time, and shall:
(i) guide the overall relationship between the parties,
including the strategy, budgeting, major resource allocation and other
high-level matters related to the marketing and regulatory approval of the
Product, including reviewing and approving the Marketing Plan and the Strategic
Plan prepared annually by the Commercial Committee no later than November 1 of
each year (for the Marketing Plan and Strategic Plan applicable to the next
calendar year);
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(ii) make decisions with respect to all issues not
specifically granted to Commercial Committee or Clinical/Regulatory
Sub-Committee; and
(iii) perform the dispute resolution functions set forth in
Section 7.4 hereof.
c. MEETINGS. During the Term of this Agreement, the Steering
Committee shall meet: (i) at least once every six months on a date and at a
location to be agreed to by the parties, and (ii) upon written notice by either
party to the other that a meeting is required or requested, in which case a
meeting will be held within thirty (30) calendar days of such notice on a date
and at a location to be agreed to by the parties, or sooner if warranted by
circumstances. Notice requesting a meeting shall include adequate information
describing the purpose of the meeting. Any meetings of the Steering Committee
shall be held in person or, if an in-person meeting is impracticable, by
videoconference or teleconference. When meetings are held in person, individual
members of the Steering Committee may nonetheless participate by videoconference
or teleconference. If unable to attend in person or by videoconference or
teleconference, an individual member of the Steering Committee may grant a proxy
to another individual member of the Steering Committee in order to act on his or
her behalf on any matter to be acted upon at any meeting of the Steering
Committee. Other representatives of the parties may attend Steering Committee
meetings as non-voting participants. At least one week prior to any meeting of
the Steering Committee, each of the parties shall provide the other party with a
proposed agenda of the matters to be discussed at such meeting. The parties
shall agree, at the first meeting of the Steering Committee, upon procedures for
maintaining meeting minutes.
d. ACTION OF COMMITTEE. The Steering Committee may take action on
a matter at a meeting only if a quorum exists with respect to that matter. The
attendance of at least two (2) members of the Steering Committee of each party
at a meeting shall constitute a quorum for the transaction of business. Each
member of the Steering Committee shall be entitled to cast one (1) vote, either
in person or by proxy, on any matter to be acted upon at any meeting of the
Steering Committee. All decisions made by the Steering Committee shall require a
majority vote by the members of the Steering Committee, either in person or by
proxy. Any action required or permitted to be taken at any meeting of the
Steering Committee may be taken without a meeting if the action is taken by all
members of the Steering Committee. Such action must be evidenced by one or more
written consents describing the action taken and signed by each member of the
Steering Committee. In the event the Steering Committee is unable to achieve a
majority vote on any issue, then the dispute resolution process set forth in
Section 7.4 will be followed with respect to such issue.
7.2 COMMERCIAL COMMITTEE.
a. ESTABLISHMENT. The parties hereby establish a committee (the
"Commercial Committee"), which shall have as its overall purpose the overall
design and coordination of all sales, marketing and distribution activities for
the Product. The Commercial Committee shall consist of five (5) executive
representatives of each party. Members of the Commercial Committee shall be
employees of the parties, and shall not be outside consultants, independent
contractors or outside legal counsel, but such Persons are permitted to attend
meetings of the committee upon the consent of both parties. Each party shall be
solely responsible for appointing, removing and filling vacancies among its own
representatives. Each of the parties shall select a co-chair to provide joint
direction to the committee.
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b. RESPONSIBILITIES. In addition to the specific responsibilities
of the Commercial Committee set forth elsewhere in this Agreement, the
Commercial Committee shall:
(i) By October 1 of each calendar year during the Term,
prepare the Marketing Plan and the Strategic Plan for the next calendar year and
submit such plans to the Steering Committee for approval (provided, however,
that the Commercial Committee shall prepare the Marketing Plan for 2003 and
submit such plan to the Steering Committee for approval within sixty (60) days
after the Execution Date);
(ii) periodically as directed by the Steering Committee
prepare other plans and budgets for approval by the Steering Committee,
including without limitation, an annual budget for Direct Costs;
(iii) be responsible for the execution of such approved
plans and budgets;
(iv) periodically provide written reports to the Steering
Committee comparing actual results to the approved plans and budgets;
(v) approve all training materials and Marketing Materials
to be used in the marketing of the Product;
(vi) oversee and coordinate the efforts of the
Clinical/Regulatory Sub-Committee; and
(vii) perform such other functions as directed by the
Steering Committee.
c. MEETINGS. During the Term of this Agreement, the Commercial
Committee shall meet: (i) at least quarterly on a date and at a location to be
agreed to by the parties, and (ii) upon written notice by either party to the
other that a meeting is required or requested, in which case a meeting will be
held within thirty (30) calendar days of such notice on a date and at a location
to be agreed to by the parties, or sooner if warranted by circumstances. Notice
requesting a meeting shall include adequate information describing the purpose
of the meeting. Any meetings of the Commercial Committee shall be held in person
or, if an in-person meeting is impracticable, by videoconference or
teleconference. When meetings are held in person, individual members of the
Commercial Committee may nonetheless participate by videoconference or
teleconference. If unable to attend in person or by videoconference or
teleconference, an individual member of the Commercial Committee may grant a
proxy to another individual member of the Commercial Committee in order to act
on his or her behalf on any matter to be acted upon at any meeting of the
Commercial Committee. Other representatives of the parties may attend Commercial
Committee meetings as non-voting participants. At least one week prior to any
meeting of the Commercial Committee, each of the parties shall provide the other
party with a proposed agenda of the matters to be discussed at such meeting. The
parties shall agree, at the first meeting of the Commercial Committee, upon
procedures for maintaining meeting minutes.
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d. ACTION OF COMMITTEE. The Commercial Committee may take action
on a matter at a meeting only if a quorum exists with respect to that matter.
The attendance of at least three (3) members of the Commercial Committee of each
party at a meeting shall constitute a quorum for the transaction of business.
Each member of the Commercial Committee shall be entitled to cast one (1) vote,
either in person or by proxy, on any matter to be acted upon at any meeting of
the Commercial Committee. All decisions made by the Commercial Committee shall
require a majority vote by the members of the Commercial Committee , either in
person or by proxy. Any action required or permitted to be taken at any meeting
of the Commercial Committee may be taken without a meeting if the action is
taken by all members of the Commercial Committee. Such action must be evidenced
by one or more written consents describing the action taken and signed by each
member of the Commercial Committee. In the event the Commercial Committee is
unable to achieve a majority vote on any material issue, then the dispute
resolution process set forth in Section 7.4 will be followed with respect to
such issue.
7.3 CLINICAL/REGULATORY SUB-COMMITTEE.
a. ESTABLISHMENT. The Commercial Committee shall establish a
sub-committee (the "Clinical/Regulatory Sub-Committee"), which shall have as its
overall purpose the overall design and coordination of all medical, clinical and
regulatory plans and activities for the Product. The Clinical/Regulatory
Sub-Committee shall consist of three (3) executive representatives of each
party. At least one such representative from each party shall also be a member
of the Commercial Committee. Outside consultants, independent contractors or
outside legal counsel are permitted to attend meetings of the committee upon the
consent of both parties. Each party shall be solely responsible for appointing,
removing and filling vacancies among its own representatives. Each of the
parties shall select a co-chair to provide joint direction to the committee.
b. RESPONSIBILITIES. In addition to the specific responsibilities
of the Clinical/Regulatory Sub-Committee set forth elsewhere in this Agreement,
the Clinical/Regulatory Sub-Committee shall:
(i) provide guidance regarding regulatory communications and
filings, procedures for regulatory review of Marketing Materials and other
materials related to the Product which are subject to review by Governmental or
Regulatory Authorities;
(ii) provide guidance regarding the design and
implementation of Phase IV studies (requested by the Commercial Committee or
otherwise), expanded label or expanded use clinical studies and other
regulatory, clinical or medical affairs relating to the Product; and
(iii) coordinate the joint work of the parties on regulatory
issues relating to the distribution of the Product.
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c. MEETINGS. During the Term of this Agreement, the
Clinical/Regulatory Sub-Committee shall meet: (i) at least quarterly on a date
and at a location to be agreed to by the parties, and (ii) upon written notice
by either party to the other that a meeting is required or requested, in which
case a meeting will be held within thirty (30) calendar days of such notice on a
date and at a location to be agreed to by the parties, or sooner if warranted by
circumstances. Notice requesting a meeting shall include adequate information
describing the purpose of the meeting. Any meetings of the Clinical/Regulatory
Sub-Committee shall be held in person or, if an in-person meeting is
impracticable, by videoconference or teleconference. Any action required or
permitted to be taken at any meeting of the Clinical/Regulatory Sub-Committee
may be taken without a meeting if the action is taken by all members of the
Clinical/Regulatory Sub-Committee. Such action must be evidenced by one or more
written consents describing the action taken and signed by each member of the
Clinical/Regulatory Sub-Committee. Other representatives of the parties may
attend Clinical/Regulatory Sub-Committee meetings as non-voting participants. At
least one week prior to any meeting of the Clinical/Regulatory Sub-Committee,
each of the parties shall provide the other party with a proposed agenda of the
matters to be discussed at such meeting. The parties shall agree, at the first
meeting of the Clinical/Regulatory Sub-Committee, upon procedures for
maintaining meeting minutes.
d. ACTION OF COMMITTEE. The Clinical/Regulatory Sub-Committee may
take action on a matter at a meeting only if a quorum exists with respect to
that matter. The attendance of at least two (2) members of the
Clinical/Regulatory Sub-Committee of each party at a meeting shall constitute a
quorum for the transaction of business. Each member of the Clinical/Regulatory
Sub-Committee shall be entitled to cast one (1) vote, either in person or by
proxy, on any matter to be acted upon at any meeting of the Clinical/Regulatory
Sub-Committee. All decisions made by the Clinical/Regulatory Sub-Committee shall
require a majority vote by the members of the Clinical/Regulatory Sub-Committee
, either in person or by proxy. Any action required or permitted to be taken at
any meeting of the Clinical/Regulatory Sub-Committee may be taken without a
meeting if the action is taken by all members of the Clinical/Regulatory
Sub-Committee. Such action must be evidenced by one or more written consents
describing the action taken and signed by each member of the Clinical/Regulatory
Sub-Committee. In the event the Clinical/Regulatory Sub-Committee is unable to
achieve a majority vote on any material issue, then the dispute resolution
process set forth in Section 7.4 will be followed with respect to such issue.
7.4 DISPUTE RESOLUTION.
a. The parties recognize that disputes as to certain matters
delegated to the Steering Committee, Commercial Committee or Clinical/Regulatory
Sub-Committee may from time to time arise during the Term that relate to either
party's rights and/or obligations hereunder. It is the objective of the parties
to establish procedures to facilitate the resolution of disputes arising in such
committees in an expedient manner by mutual cooperation and without resort to
litigation. To accomplish this objective, the parties agree to follow the
procedures set forth in this Section 7.4 if and when a dispute arises with
respect to the actions or decision-making authority delegated to such committees
under this Agreement.
b. Unless otherwise specifically recited in this Agreement, any
disputes arising from any subcommittee formed under this Agreement, including
without limitation, the Clinical/Regulatory Sub-Committee, shall be referred to
the Commercial Committee as soon as reasonably possible after such dispute has
arisen.
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c. If the Commercial Committee is unable to resolve such a
dispute within fifteen (15) days of being requested by the parties to resolve
such dispute, or if any dispute or issue originates within the Commercial
Committee, such dispute or other issue shall be referred to the Steering
Committee as soon as reasonably possible after such dispute has arisen or such
deadlock is reached.
d. If the Steering Committee is unable to resolve such a dispute
or issue within fifteen (15) days after being requested to resolve such dispute
or issue, the dispute or issue shall be referred to the Chief Executive Officers
of Ligand and Co-Promotion Partner for attempted good faith resolution by
negotiations within thirty (30) days after such referral.
e. If the Chief Executive Officers of the parties are unable to
resolve such dispute or issue, then Ligand's Chief Executive Officer shall have
the deciding vote, it being understood and agreed that any such decision shall
be commercially reasonable to both parties, in light of such considerations as
the posture of similar products at similar points in product phase or life
cycle. Notwithstanding the foregoing, Co-Promotion Partner shall not be
obligated to accept any such decision that materially modifies Co-Promotion
Partner's obligations to supply a minimum level of Product Calls as set forth in
Section 3.1 or that would cause Co-Promotion Partner to bear an aggregate annual
amount of Shared Costs that is more than twenty-five percent (25%) above the
annual amount of aggregate Shared Costs to be borne by Co-Promotion Partner as
set forth in the most recently approved Budget.
8. CO-PROMOTION COMPENSATION.
8.1 CO-PROMOTION PAYMENTS. Effective January 1, 2003, within
forty-five (45) days after the end of each calendar quarter during the Term,
Ligand shall pay to Co-Promotion Partner (by wire transfer of immediately
available funds to an account designated by Co-Promotion Partner to Ligand in
writing) an amount equal to the following percentages of Net Sales in the
applicable calendar year:
--------------------------------------------- --------------------------------
CALENDAR YEAR NET SALES TIER PERCENTAGE OF NET SALES TIER
--------------------------------------------- --------------------------------
$0 to $35 million* Zero percent (0%)*
--------------------------------------------- --------------------------------
$0 to $150 million Thirty percent (30%)
--------------------------------------------- --------------------------------
Greater than $150 million, up to $300 Forty percent (40%)
million
--------------------------------------------- --------------------------------
Greater than $300 million, up to $425 Fifty percent (50%)
million
--------------------------------------------- --------------------------------
Greater than $425 million Forty-five percent (45%)
--------------------------------------------- --------------------------------
* only applicable during calendar year 2003.
For the avoidance of doubt, each percentage set forth in the table above applies
only to the portion of calendar year Net Sales shown in the corresponding left
column.
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8.2 COST SHARING. Shared Costs shall be split 50/50 between the
parties for each such calendar quarter during the Term and shall not exceed
previously approved budgeted amounts without the prior written consent of each
party. In the event that one party's aggregate Shared Costs exceed budgeted
amounts, then the other party shall not be obligated to split such additional
Shared Costs, unless the same are expressly approved in writing by both parties.
If Ligand's Shared Costs are in excess of 50% of the parties' combined Shared
Costs in a given quarter, pursuant to this Section 8.2, Ligand shall offset the
difference between its costs and 50% of the combined costs from any payment to
be made to Co-Promotion Partner for such calendar quarter pursuant to Section
8.1; if Co-Promotion Partner's Shared Costs are in excess of 50% of the parties'
combined Shared Costs in a given quarter, pursuant to this Section 8.2, Ligand
shall include the difference between Co-Promotion Partner's costs and 50% of the
parties' combined costs in any payment to be made to Co-Promotion Partner for
such calendar quarter pursuant to Section 8.1. In the event that no payment is
due to Co-Promotion Partner under Section 8.1 for any calendar quarter during
the Term, then the party (if any) whose Shared Costs for such quarter are less
than 50% of the combined Shared Costs for such quarter shall remit the
difference between its costs and 50% of the combined Shared Costs to the other
party within 45 days after the end of such calendar quarter.
8.3 COST REPORTS. Each party shall provide the other with the
following Shared Costs reports within thirty (30) calendar days after the end of
each calendar quarter included in the Term (and within thirty (30) calendar days
after the end of the Term):
a. A report of the party's Direct Costs (each, a "Direct Cost
Report") setting forth the following information relating to the preceding
quarter (or part thereof) and comparisons of such information to the
then-current Marketing Plan and Budget: the party's Direct Costs showing each
specific type of cost included in the definition of Direct Costs separately and
listing the vendor relating to each such cost, if applicable. Each such Direct
Cost Report shall be delivered in a mutually-agreeable electronic format and in
hard copy form. An example of a Direct Cost Report is attached to this Agreement
as EXHIBIT D. Each Direct Cost Report shall be treated as Confidential
Information of the reporting party pursuant to Section 11 of this Agreement and
shall not be disclosed to third parties without the such party's prior written
approval or direction.
b. A report of the party's Fully Allocated Costs (each, a "Fully
Allocated Cost Report") setting forth the following information relating to the
preceding quarter (or part thereof) and comparisons of such information to the
then-current Marketing Plan and Budget: the party's Fully Allocated Costs
showing each specific function involved with Product activities, the amount
allocated to each function and a brief description of the allocation method
used. Each such Fully Allocated Cost Report shall be delivered in a
mutually-agreeable electronic format and in hard copy form. An example of a
Fully Allocated Cost Report is attached to this Agreement as EXHIBIT E. Each
Fully Allocated Cost Report shall be treated as Confidential Information of the
reporting party pursuant to Section 11 of this Agreement and shall not be
disclosed to third parties without such party's prior written approval or
direction.
8.4 END OF TERM PAYMENTS. At the end of the Term, Ligand shall make
payments to Co-Promotion Partner pursuant this Section 8 with respect to the
last portion of a calendar quarter as if the last day of the Term was the last
day of a calendar quarter.
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9. RECORDKEEPING AND AUDITS. The parties recognize that audits and reviews
of records are in the best interests of both parties. The parties shall have the
audit rights specified in this section. Solely for the purposes of Sections 9.1,
9.2 and 9.3 below, Audited Party (as hereinafter defined) shall mean (a) in
reference to Ligand, Ligand, its Affiliates, permitted sublicensees,
subcontractors and contract manufacturers; and (b) in reference to Co-Promotion
Partner, Co-Promotion Partner, its Affiliates and subcontractors.
9.1 MAINTENANCE OF BOOKS AND RECORDS. Each party shall maintain
complete and accurate books and records in sufficient detail, in accordance with
GAAP and all applicable laws, rules, ordinances and regulations, to enable
verification of the performance of such party's obligations under this
Agreement. Such records shall be maintained for a period of twelve (12) months
after the end of the Term or longer if required by applicable law.
9.2 AUDITS.
a. Either Ligand or Co-Promotion Partner (herein, the "Auditing
Party") may demand, no more than once during any calendar year from the
Effective Date until one (1) year following the end of such calendar year, an
audit of the relevant books and records of Co-Promotion Partner or Ligand, as
the case may be (herein, the "Audited Party") in order to verify the Audited
Party's reports on the matters addressed in this Agreement. Upon no less than
fifteen (15) days' prior written notice to the Audited Party, the Audited Party
shall grant reasonable access to members of a nationally recognized independent
public accounting firm selected by the Auditing Party to the relevant books and
records of the Audited Party in order to conduct a review or audit thereof. Such
access shall be permitted during normal business hours. The accounting firm
shall report its conclusions and calculations to the Auditing Party and the
Audited Party; provided, that in no event shall the accounting firm disclose any
information of the Audited Party except to the extent necessary to verify the
Audited Party's reporting and other compliance with the terms of this Agreement
and, at the request of the Audited Party, such accounting firm will execute
appropriate non-disclosure agreements. In the event that the Audited Party is a
subcontractor or sublicensee of Ligand, and is either unwilling or unable to
permit such audit, then Ligand shall provide written assurances to Co-Promotion
Partner, including, but not limited to, certification that (i) an audit was
performed for Ligand by a nationally recognized public accounting firm; and (ii)
the results of such audit either (A) revealed no significant deviations from
Ligand's accounting practices and GAAP or (B) revealed significant deviations
from Ligand's accounting practices and GAAP and the quality and quantity of such
deviations. In the event that the Audited Party is a subcontractor or
sublicensee of Co-Promotion Partner, and is either unwilling or unable to permit
such audit, then Co-Promotion Partner shall provide written assurances to
Ligand, including, but not limited to certification that (i) an audit was
performed for Co-Promotion Partner by a nationally recognized public accounting
firm; and (ii) the results of such audit either (A) revealed no significant
deviations from Co-Promotion Partner's accounting practices and GAAP or (B)
revealed significant deviations from Co-Promotion Partner's accounting practices
and GAAP and the quality and quantity of such deviations. Except as hereinafter
set forth, the Auditing Party shall bear the full cost of the performance of any
such audit.
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b. If as a result of any audit of the books and records of
Audited Party it is shown that the Audited Party's payments to the Auditing
Party under this Agreement with respect to the period of time audited were less
than the amount which should have been paid to the Auditing Party pursuant to
this Agreement, then the Audited Party shall pay to the Auditing Party the
amount of such shortfall within thirty (30) days after the Auditing Party's
demand therefor. If as a result of any audit of the books and records of Audited
Party it is shown that the Audited Party's payments to the Auditing Party under
this Agreement with respect to the period of time audited were more than the
amount which should have been paid to the Auditing Party pursuant to this
Agreement, then the Auditing Party shall pay to the Audited Party the amount of
such overpayment within thirty (30) days after the Audited Party's demand
therefor. In addition, if any amount of underpayment by the Audited Party is
more than ten percent (10%) of the amount which should have been paid to the
Auditing Party pursuant to this Agreement with respect to the period in
question, then the Audited Party shall also reimburse the Auditing Party for its
documented reasonable out-of-pocket costs and expenses incurred in connection
with the audit.
9.3 COMPLIANCE AUDITS. In addition to the access and audit rights of
Ligand and Co-Promotion Partner set forth in Section 9.2, upon reasonable prior
notice from the other party and no more than once during any calendar year
during the Term, each party shall afford to the other party reasonable access
during normal business hours (and at such other times as the parties may
mutually agree) to inspect and audit the relevant books, records and other
information of such party in order to monitor such party's compliance with such
party's Product Call obligations under the applicable Marketing Plan and the
terms of this Agreement, to the extent such party is responsible for the
relevant function as directed by the Commercial Committee or the terms of this
Agreement, and for the purposes of determining compliance with the applicable
rules and regulations of Governmental or Regulatory Authorities and the terms of
this Agreement. Such access shall be available during normal business hours. Any
inspection conducted by either party pursuant to this Section 9.3 shall be at
the sole cost and expense of such party.
10. TERM AND TERMINATION.
10.1 TERM OF AGREEMENT. The term of this Agreement (the "Term") shall
commence as of the Effective Date hereof and shall continue until December 31,
2012, unless terminated sooner or extended pursuant to this Section 10.1. At any
time prior to the fifth (5th) anniversary of the Effective Date, Co-Promotion
Partner shall have the option, exercisable by (a) providing written notice to
Ligand of its intention to exercise such option in accordance with the
provisions of Section 14 hereof and (b) paying an extension fee to Ligand (by
wire transfer of immediately available funds to an account designated by Ligand
in writing) in the amount of seventy-five million U.S. dollars ($75 million), to
extend the Term through November 25, 2017.
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10.2 TERMINATION BY LIGAND.
a. Ligand shall have the right to terminate this Agreement at any
time upon written notice to Co-Promotion Partner if Co-Promotion Partner
materially breaches any of its representations, warranties, covenants or
agreements set forth in this Agreement or otherwise materially defaults in the
performance of any of its duties or obligations under this Agreement, which
breach or default shall not be cured within sixty (60) days after written notice
is given to Co-Promotion Partner specifying the breach or default. For the
avoidance of doubt and without limiting the universe of possible circumstances
that could constitute such a material breach or default, any failure by
Co-Promotion Partner to meet less than ninety-five percent (95%) of its minimum
obligations with respect to Product Calls as set forth in Section 3.1(b) hereof
shall be deemed to be a material breach of this Agreement.
b. To the extent permitted by law, Ligand shall have the right to
terminate this Agreement immediately upon notice to Co-Promotion Partner if
Co-Promotion Partner shall become insolvent, file or consent to the filing of a
petition under any bankruptcy or insolvency law or have any such petition filed
against it which has not been stayed within sixty (60) days of such filing or
have a receiver appointed over any of Co-Promotion Partner's property or assets.
10.3 TERMINATION BY CO-PROMOTION PARTNER.
a. Co-Promotion Partner shall have the right to terminate this
Agreement at any time upon written notice to Ligand if Ligand materially
breaches any of its representations, warranties, covenants or agreements set
forth in this Agreement or otherwise materially defaults in the performance of
any of its duties or obligations under this Agreement, which breach or default
shall not be cured within sixty (60) days after written notice is given to
Ligand specifying the breach or default. For the avoidance of doubt and without
limiting the universe of possible circumstances that could constitute such a
material breach or default, any failure by Ligand to meet less than ninety-five
percent (95%) of its minimum obligations with respect to Product Calls as set
forth in Section 4.1(b) hereof shall be deemed to be a material breach of this
Agreement.
b. To the extent permitted by law, Co-Promotion Partner shall
have the right to terminate this Agreement immediately upon notice to Ligand if
Ligand shall become insolvent, file or consent to the filing of a petition under
any bankruptcy or insolvency law or have any such petition filed against it
which has not been stayed within sixty (60) days of such filing or have a
receiver appointed over any of Ligand's property or assets.
10.4 TERMINATION BY EITHER PARTY. Each party shall have the right to
terminate this Agreement as set forth in Section 3.1(b)(ii). Such termination
right must be exercised by written notice ("Notice") to the other party no later
than March 31, 2008, stating the terminating party's desire to terminate the
Agreement as set forth in Section 3.1(b)(ii) and this Section 10.4. Following
such termination, and effective upon receipt of such Notice, Ligand shall
thereafter, within forty-five (45) days after the end of each calendar quarter
included in the Royalty Term, pay to Co-Promotion Partner (by wire transfer of
immediately available funds to an account designated by Co-Promotion Partner in
writing) an amount in cash equal to nine percent (9%) of Net Sales during such
calendar quarter.
"Royalty Term" shall mean that period of time from the effective date
of the Notice hereunder and continuing until December 31, 2012.
10.5 EFFECTS OF TERMINATION.
a. Neither the termination nor expiration of this Agreement shall
release or operate to discharge either party from any liability or obligation
that may have accrued prior to such termination or expiration. Any termination
of this Agreement as provided herein shall not be an exclusive remedy but shall
be in addition to any remedies whatsoever that may be available to the
terminating party.
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b. Notwithstanding the giving of any notice of termination
pursuant to this Section 10, each party shall continue to fulfill its
obligations under this Agreement at all times until the effective date of any
such termination.
10.6 ACTIONS UPON TERMINATION. Upon the termination or expiration of
this Agreement for any reason, Co-Promotion Partner shall immediately cease all
of its promotional and marketing activities for the Product, discontinue any use
of Ligand Trademarks and Product Trademarks and return to Ligand or destroy all
sales materials, training materials and Marketing Materials for the Product.
After any termination Ligand shall retain the right to use any sales training
and Marketing Materials developed during the term of this Agreement, provided,
however, that Ligand shall have no further right to use Co-Promotion Partner's
name or any Co-Promotion Partner Trademarks or logos in connection therewith.
10.7 SURVIVAL. The representations, warranties, covenants and
agreements of the parties in Sections 1, 9.1, 9.2, 10.4 (in the event of
termination pursuant to such Section) 10.5-10.7 and 11-16 hereof, and all
provisions relating to the ownership of intellectual property rights, shall
survive any expiration or termination of this Agreement. In addition, any
provision of this Agreement that, either from the express language or the
context thereof, is intended to survive any termination or expiration of this
Agreement shall survive any such expiration or termination.
11. CONFIDENTIALITY.
11.1 CONFIDENTIAL INFORMATION. "Confidential Information" as used in
this Agreement shall mean any and all technical and non-technical information
(whether written or oral or otherwise in tangible or intangible form) that is
transmitted or otherwise provided by or on behalf of a party either before, on
or after the date hereof and that may be reasonably understood from notices or
legends, the nature of such information itself or the circumstances of such
information's disclosure to be confidential or proprietary to such party.
"Confidential Information" may include, but is not limited to, patents,
copyrights, trade secrets, information related to or underlying such
intellectual property rights and other proprietary information, techniques,
sketches, drawings, models, inventions, know-how, processes, apparatus,
equipment, algorithms, software programs, software source documents, formulae,
research plans and results, clinical data, experimental work, development,
design details and specifications and other technical information relating to
current, future and proposed products and services, engineering data, financial
information, procurement requirements, purchasing and manufacturing information,
customer lists, business forecasts and sales, marketing and merchandising plans
and information and sales and detail reports delivered pursuant to this
Agreement. "Confidential Information" also includes proprietary or confidential
information of any third party, including Elan, that may disclose such
information to either party in the course of the other party's business.
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11.2 NONDISCLOSURE AND NON-USE OBLIGATIONS. Each party hereto (the
"Recipient") understands that the other party (the "Disclosing Party") and/or
its respective shareholders, directors, officers, employees, Affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents (collectively, "Representatives") have disclosed or
may disclose Confidential Information to the Recipient and its respective
Representatives. Each of the parties, as Recipient, agrees that such Recipient
and its Representatives will not use, disseminate, or in any way disclose any
Confidential Information of the other party, as Disclosing Party, to any person,
firm or business, except to the extent necessary for performance of the
Recipient's obligations hereunder, and under no circumstances will such
Recipient or its Representatives disassemble, reverse engineer, or copy without
the express written consent of the Disclosing Party, any such Confidential
Information. Each of the parties, as Recipient, agrees that such Recipient shall
disclose or cause to be disclosed Confidential Information of the other party,
as Disclosing Party, only to those of such Recipient's Representatives that need
to know such information, and such Recipient certifies that such Recipient's
Representatives have previously agreed, either as a condition to employment or
in order to obtain the Confidential Information of the Disclosing Party, to be
bound by terms and conditions substantially similar to those terms and
conditions applicable to such Recipient under this Agreement. Each of the
parties, as the Recipient, shall cause its Representatives to observe the terms
of this Agreement, and such Recipient shall be responsible for any breach of
this Agreement by any of its Representatives. Each of the parties, as Recipient,
shall and shall cause its Representatives to ensure that all copies, extracts,
summaries or other embodiments of the Confidential Information of the other
party, as Disclosing Party, carry a confidentiality notice similar to that, if
any, with which it was submitted to the Recipient or its Representatives. Each
of the parties, as Recipient, agrees that such Recipient and its Representatives
shall treat all Confidential Information of the other party, as Disclosing
Party, with the same degree of care as such Recipient accords to such
Recipient's own similar Confidential Information, but under no circumstances
less than reasonable care. Each of the parties, as Recipient, shall immediately
give, or shall cause its Representatives to give, notice to the other party, as
Disclosing Party, of any unauthorized use or disclosure of Disclosing Party's
Confidential Information. Each of the parties, as Recipient, agrees to assist
and cause its Representatives to assist the other party, as Disclosing Party, in
remedying any such unauthorized use or disclosure of Disclosing Party's
Confidential Information.
11.3 EXCLUSIONS FROM NONDISCLOSURE AND NONUSE OBLIGATIONS. The
obligations under Section 11.2 of each of the parties, as Recipient (together
with its Representatives), with respect to any portion of the Confidential
Information of the other party, as Disclosing Party, shall not apply to such
Confidential Information or portion thereof that such Recipient can document:
(a) was in or becomes a part of the public domain at or subsequent to the time
such Confidential Information or portion thereof was communicated to such
Recipient or its Representatives by such Disclosing Party or its Representatives
through no improper action or inaction of such Recipient or such Recipient's
Representatives, (b) was in such Recipient's or its Representatives' possession
free of any obligation of confidence at or subsequent to the time such
Confidential Information or portion thereof was communicated to such Recipient
or its Representatives by such Disclosing Party or its Representatives, or (c)
was developed by such Recipient or its Representatives independently of and
without reference to any information communicated to such Recipient or its
Representatives by such Disclosing Party or its Representatives. For purposes of
clause (a) of the foregoing sentence, "public domain" shall mean information
that is reasonably accessible to the public in a written publication, and shall
not include information that is only available through research of published
literature or information the substance of which must be pieced together with
substantial effort from a number of different publications and sources. A
disclosure by either of the parties, as Recipient (together with its
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Representatives), of Confidential Information of the other party, as Disclosing
Party, either (a) in response to a valid subpoena or order by a court or other
governmental body, (b) as otherwise required by law, or (c) as necessary to
establish the rights of either party under this Agreement, shall not be
considered to be a breach of this Agreement by such Recipient or a waiver of
confidentiality for other purposes; provided, however, that such Recipient or
its Representatives shall provide sufficient prior written notice thereof to
such Disclosing Party to enable such Disclosing Party to seek a protective order
or otherwise prevent or limit the extent of such disclosure, and that such
Recipient and its Representatives shall thereafter disclose only such
Confidential Information as is reasonably necessary under the circumstances.
Each of the parties, as Recipient, agrees that the foregoing exceptions are to
be narrowly construed and that its obligations (and those of its
Representatives) under this Agreement are released solely with respect to those
specific portions of the Confidential Information of the other party, as
Disclosing Party, that fall within the foregoing exceptions and not with respect
to related portions, or other combinations or characteristics of, the
Confidential Information of such Disclosing Party.
11.4 OWNERSHIP AND RETURN OF CONFIDENTIAL INFORMATION AND OTHER
MATERIALS. All Confidential Information of each of the parties, as Disclosing
Party, and any Derivatives thereof, whether created by such Disclosing Party or
its Representatives or the other party, as Recipient (or its Representatives),
shall, as between the parties, remain the sole and exclusive property of such
Disclosing Party, and no license or other rights to such Disclosing Party's
Confidential Information or Derivatives is granted or implied hereby. For
purposes of this Agreement, "Derivatives" shall mean: (a) for copyrightable or
copyrighted material, any translation, abridgment, revision or other form in
which an existing work may be recast, transformed or adapted; (b) for patentable
or patented material, any improvement thereon; and (c) for material which is
protected by trade secret, any new material derived from such existing trade
secret material, including new material which may be protected under copyright,
patent and/or trade secret laws.
11.5 SURVIVAL. The obligations set forth in this Section 11 shall
survive the termination or expiration of this Agreement for a period of five (5)
years.
12. INDEMNIFICATION AND INSURANCE; LIMITATION OF LIABILITY.
12.1 INDEMNIFICATION BY CO-PROMOTION PARTNER. Co-Promotion Partner
shall defend, indemnify and hold Ligand and its Affiliates, and their respective
officers, directors, employees, successors and assigns, harmless from and
against any and all claims, liabilities, losses, costs, actions, suits, damages
and expenses, including reasonable attorney's fees (collectively, "Damages"),
arising out of: (a) any breach by Co-Promotion Partner of any representation,
warranty or covenant contained in this Agreement; (b) any claims by third
parties or other liabilities relating to the performance or nonperformance of
Co-Promotion Partner's obligations under this Agreement; and (c) the
infringement or other violation of any third party trademarks with respect to
the use by the parties of the Co-Promotion Partner Trademarks in connection with
the Product under this Agreement; provided, however, that Co-Promotion Partner
shall not be required to indemnify Ligand with respect to any Damages hereunder
to the extent the same is caused by any negligent act or omission or intentional
misconduct by Ligand or any of its Affiliates or is otherwise covered by
Ligand's indemnification obligation in Section 12.2.
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12.2 INDEMNIFICATION BY LIGAND. Ligand shall defend, indemnify and
hold Co-Promotion Partner and its Affiliates, and their respective officers,
directors, employees, successors and assigns, harmless from and against any and
all Damages arising out of: (a) any breach by Ligand of any representation,
warranty or covenant contained in this Agreement; (b) any personal injury
(including death) and/or property damage resulting from the handling, possession
or use of the Product; and (c) any other liability arising out of the
manufacture, marketing, sale, labeling, distribution or use of the Product,
including without limitation, any actual or alleged infringement of any
trademarks (excepting infringement arising from the use of Co-Promotion Partner
Trademarks as set forth in Section 12.1(c)), know-how, trade secrets, patent
rights or other intellectual property rights of any Person or any violation of
Applicable Laws and Regulations, including any failure to manufacture the
Product in accordance with Good Manufacturing Practice; provided, however, that
Ligand shall not be required to indemnify Co-Promotion Partner with respect to
any Damages hereunder to the extent the same is caused by any negligent act or
omission or intentional misconduct by Co-Promotion Partner or any of its
Affiliates or is otherwise covered by Co-Promotion Partner's indemnification
obligation in Section 12.1.
12.3 CLAIMS PROCEDURES. A party (the "Indemnitee") which intends to
claim indemnification under this Section 12 shall notify the other party (the
"Indemnitor") within a reasonable time in writing of any action, claim or
liability in respect of which the Indemnitee believes it is entitled to claim
indemnification, provided that the failure to give timely notice to the
Indemnitor shall not release the indemnitor from any liability to the Indemnitee
to the extent the Indemnitor is not prejudiced thereby. The Indemnitor shall
have the right, by notice to the Indemnitee, to assume the defense of any such
action or claim within the fifteen (15) day period after the Indemnitor's
receipt of notice of any action or claim with counsel of the Indemnitor's choice
and at the sole cost of the Indemnitor. If the Indemnitor does not so assume the
defense of such claim, the Indemnitee may assume such defense with counsel of
its choice and at the sole cost of the Indemnitor. If the Indemnitor so assumes
such defense, the Indemnitee may participate therein through counsel of its
choice, but at the sole cost of the Indemnitee. The party not assuming the
defense of any such claim shall render all reasonable assistance to the party
assuming such defense, and all reasonable out-of-pocket costs of such assistance
shall paid be for by the party determined ultimately liable. No such claim shall
be settled other than by the party defending the same, and then only with the
consent of the other party which shall not be unreasonably withheld; provided
that the Indemnitee shall have no obligation to consent to any settlement of any
such action or claim which imposes on the Indemnitee any liability or obligation
which cannot be assumed and performed in full by the Indemnitor, and the
Indemnitee shall have no right to withhold its consent to any settlement of any
such action or claim if the settlement involves only the payment of money by the
Indemnitor or its insurer.
12.4 INSURANCE. Each party shall maintain insurance (either through
purchase of a policy from a nationally recognized third party insurer or through
maintenance of a self-insurance program) against such risks and upon such terms
(including coverages, deductible limits and self-insured retentions) as set
forth in EXHIBIT G.
12.5 LIMITATION OF LIABILITY. In no event will either party be liable
in any way in connection with its performance under this Agreement for: (a) any
loss of profit or any other special damages, including, but not limited to,
special, incidental, consequential, or other damages (collectively, "Special
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Damages"); or (b) any amount in excess of an aggregate of fifty million dollars
($50 million), in each case whether arising in contract, tort (including
negligence), strict liability or otherwise. Notwithstanding anything herein to
the contrary, the limitation on liability in the preceding sentence shall not
apply to Ligand's payment obligations contained in Sections 4.2(c), 8.1 and 10.4
hereof or to any liability of either party for death, material personal injury
or property damage, which has been determined by a court of final adjudication
to have been proximately caused by the negligence, recklessness or willful
misconduct of such party or any of its personnel.
13. REPRESENTATIONS AND WARRANTIES.
13.1 BY CO-PROMOTION PARTNER. Co-Promotion Partner represents and
warrants to Ligand that, as of the Execution Date:
a. the execution, delivery and performance of this Agreement by
Co-Promotion Partner does not conflict with, or constitute a breach of or under,
any order, judgment, agreement or instrument to which Co-Promotion Partner is a
party; and
b. the execution, delivery and performance of this Agreement by
Co-Promotion Partner does not require the consent of any Person or the
authorization of (by notice or otherwise) any Governmental or Regulatory
Authority.
13.2 BY LIGAND. Ligand represents and warrants to Co-Promotion Partner
that, as of the Execution Date:
a. the execution, delivery and performance of this Agreement by
Ligand does not conflict with, or constitute a breach of or under, any order,
judgment, agreement or instrument to which Ligand is a party;
b. Ligand has all material licenses, authorizations, permissions,
consents or approvals from any applicable Governmental or Regulatory Authority
or third parties necessary to make, use, sell and offer to sell the Product, and
the execution, delivery and performance of this Agreement by Ligand does not
require the consent of any Person or the authorization of (by notice or
otherwise) any Governmental or Regulatory Authority;
c. the rights granted by Ligand to Co-Promotion Partner hereunder
do not conflict with any rights granted by Ligand to any third party;
d. Ligand has responded to Co-Promotion Partner's reasonable
requests for information regarding the Product, and, to the best of Ligand's
knowledge, Ligand has not withheld information regarding the Product which is
responsive to such requests and which Ligand reasonably deems material, and, to
the best of Ligand's knowledge, any such information was provided to
Co-Promotion Partner promptly following receipt of Co-Promotion Partner's
request and, taken as a whole, was up to date and accurate;
e. to the best of Ligand's knowledge, the manufacture, sale or
import of the Product will not infringe any patents or trademarks of any third
party and, to the best of Ligand's knowledge, no third party is infringing in
the Territory any patent or trademark applicable to the Product;
31
<PAGE>
f. there are no actions, suits, proceedings or claims pending
against Ligand, any of its Affiliates or, to the best of Ligand's knowledge,
third parties from whom Ligand has obtained any intellectual property rights
covering the Product, or, to the best of Ligand's knowledge, threatened against
Ligand, any of its Affiliates or any third party from whom Ligand has obtained
any intellectual property rights covering the Product, at law or equity, or
before or by any court or by any Governmental or Regulatory Authority relating
to the Product, or any matter contemplated herein;
g. Ligand and its Affiliates or, to the best of Ligand's
knowledge, third parties from whom Ligand has obtained any intellectual property
rights covering the Product, have all the rights in all intellectual property
covering the Product required to enable Ligand to make, use, sell and offer to
sell the Product and to grant to Co-Promotion Partner the rights granted herein;
h. Ligand holds all right, title and interest to the Ligand
Trademarks and Product Trademark, and such trademarks are in full force and from
the Execution Date Ligand will use its Commercially Reasonable Efforts to
maintain such trademarks;
i. no patent covering the Product has been declared invalid and
all patents covering the Product are in full force and Ligand will use its
Commercially Reasonable Efforts to maintain such patents;
j. the Restated License and Supply Agreement among Elan
Corporation PLC , Elan Management Ltd. and Ligand Pharmaceuticals Incorporated
has been executed and is in full force and effect, and all of Ligand's
obligations, conditions or commitments thereunder have been completed, including
without limitation, the transfer of title to the Product NDA to Ligand; and
k. from the Execution Date, Product to be distributed by Ligand
will, at the time of shipment by or on behalf of Ligand, not be misbranded or
adulterated under the terms of the Act or comparable state laws.
13.3 EXCEPT AS EXPRESSLY STATED IN THIS SECTION 13, ALL OTHER
WARRANTIES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, INCLUDING A WARRANTY AS TO THE QUALITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OF THE PRODUCT, ARE HEREBY EXCLUDED.
14. NOTICES. Except as otherwise specifically provided herein, any notice
or other documents to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if sent by nationally recognized
overnight courier or confirmed facsimile transmission to a party (followed by
hard copy by mail) or delivered in person to a party at the address or facsimile
number set out below for such party or such other address as the party may from
time to time designate by written notice to the other in accordance with this
Section 14:
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If to Ligand:
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, CA 92121
Attn: General Counsel
Facsimile: (858) 550-1825
with a copy to:
Faye H. Russell, Esq.
Clifford Chance US LLP
3811 Valley Centre Drive, 2nd Floor
San Diego, CA 92130
Facsimile: (858) 720-3501
If to Co-Promotion Partner:
Organon Pharmaceuticals USA Inc.
56 Livingston Avenue
Roseland, NJ 07068
Attn: Michael V. Novinski, President
Facsimile: (973) 422-7287
with a copy to:
Organon Pharmaceuticals USA Inc.
56 Livingston Avenue
Roseland, NJ 07068
Attn: Patrick J. Osinski, Vice President, Business Development
and Government Affairs
Facsimile: (973) 325-4705
Any such notice or other document shall be deemed to have been received by the
addressee simultaneously with the transmission or delivery thereof.
15. DISPUTE RESOLUTION.
15.1 The parties recognize that claims for breach of this Agreement
may arise from time to time arise (other than matters for which decisions or
approvals are taken under Section 7 or rights reserved to Ligand under this
Agreement) ("Dispute(s)"). It is the objective of the parties to establish
procedures to facilitate the resolution of Disputes in an expedient manner by
mutual cooperation and without resort to litigation. To accomplish this
objective, the Parties agree to follow the procedures set forth in this Section
15 if and when a Dispute arises under this Agreement.
33
<PAGE>
15.2 Any Dispute shall be first referred to the President for each
party at any time after such Dispute has arisen and a party believes that there
has been sufficient discussion of the matter prior to such referral. If the
Presidents of Ligand and Co-Promotion Partner cannot resolve the Dispute within
thirty (30) days after being requested by a party to resolve the Dispute, then
either party may, by written notice to the other, invoke the provisions of
Section 15.3.
15.3 In the event of a Dispute not resolved pursuant to Section 15.2,
the parties shall endeavor to settle the dispute by mediation under the
supervision of and in accordance with the CPR Model Mediation Procedures. Unless
otherwise agreed, both parties or each individual party may request the CPR to
appoint an independent mediator. If the dispute has not been resolved by the
means provided herein within one hundred eighty (180) days of the initiation of
such procedure, either Party shall have the right to file a lawsuit to resolve
the dispute; provided, however, if Ligand files such lawsuit, it must be filed
in the courts of New York and if Co-Promotion Partner files such lawsuit, it
must be filed in the courts of California.
16. MISCELLANEOUS PROVISIONS.
16.1 ASSIGNMENT. Neither party shall assign or otherwise transfer its
rights or obligations under this Agreement or any interest herein or right
hereunder without the prior written consent of the other party, and any such
purported assignment, transfer or attempt to assign or transfer any interest
herein or right hereunder shall be void and of no effect; except that each party
may assign all (but not less than all) of its rights and obligations hereunder
to an Affiliate or to the transferee or successor of its assets or securities in
the event of a Change of Control without the prior consent of the other party,
provided that in the case of an assignment to an Affiliate, the assigning party
shall remain responsible for all of its obligations and agreements set forth
herein, notwithstanding such assignment. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
16.2 GOVERNING LAW. This Agreement shall be construed under and in
accordance with, and governed in all respects by, the laws of the State of New
York, without regard to its conflicts of law principles.
16.3 NON-WAIVER. The failure of either party to enforce or to
exercise, at any time or for any period of time, any term of or any right
arising pursuant to this Agreement does not constitute, and shall not be
construed as, a waiver of such term or right, and shall in no way affect that
party's right later to enforce or exercise such term or right.
16.4 ENTIRE AGREEMENT. This Agreement and any and all documents or
agreements referenced herein contain all of the terms agreed to by the parties
regarding the subject matter of this Agreement and shall supersede any prior
oral or written agreements, understandings or arrangements between them,
including without limitation the Mutual Non-Disclosure Agreement between the
parties dated as of December 13, 2002. This Agreement may not be amended,
modified, altered or supplemented except by means of a written agreement or
other instrument executed by both of the parties hereto. No course of conduct or
dealing between the parties shall act as a modification or waiver of any
provisions of this Agreement.
34
<PAGE>
16.5 SEVERABILITY. In the event that any provision (or portion
thereof) of this Agreement is held to be invalid, illegal or unenforceable by a
court of competent jurisdiction or a Governmental or Regulatory Authority, such
provision (or portion of provision) shall be construed and enforced as if it had
been narrowly drawn so as not to be invalid, illegal or unenforceable and the
validity, legality and enforceability of the enforceable portion of any such
provision and the remaining provisions shall not be adversely affected thereby.
16.6 RELATIONSHIP OF THE PARTIES. The parties hereto are acting and
performing as independent contractors, and nothing in this Agreement creates the
relationship of partnership, joint venture, sales agency or principal and agent.
Neither party is the agent of the other, and neither party may hold itself out
as such to any other Person. All financial obligations associated with each
party's business shall be the sole responsibility of such party.
16.7 NO IMPLIED LICENSES. Each of the parties hereby acknowledges and
agrees that, except as otherwise explicitly provided in this Agreement, such
party shall not by entering into this Agreement have, assert or acquire any
right, title or interest in or to any intellectual property or other proprietary
rights of the other party.
16.8 PUBLIC ANNOUNCEMENTS. The form and content of any public
announcement to be made by one party regarding the execution or existence of
this Agreement, or the subject matter contained herein, shall be subject to the
prior written consent of the other party (which consent shall not be
unreasonably withheld, delayed or conditioned), except as may be required by
applicable law (including, without limitation, disclosure requirements of the
SEC, NYSE, or any other stock exchange or NASDAQ), in which case the other party
shall give the other party reasonable advance notice and review of any such
disclosure. Following the dissemination of such initial public announcement,
neither party (nor any of their respective direct or indirect, majority-owned
subsidiaries) shall issue any press release or make any public announcement with
respect to this Agreement and the transactions contemplated hereby without prior
consultation with the other party, except as may be required by applicable law
upon the advice of counsel. Each party shall use its Commercially Reasonable
Efforts to provide the other party with a reasonable opportunity to first review
the release or other public announcement.
16.9 COUNTERPARTS. This Agreement shall become binding when any one or
more counterparts hereof, individually or taken together, shall bear the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original as against the
party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
16.10 FORCE MAJEURE. Neither party shall be liable to the other party
for any failure to perform as required by this Agreement if the failure to
perform is due to circumstances reasonably beyond such party's control
including, without limitation, any act of God, civil disorder or commotion, act
of aggression, terrorism, fire, explosion, flood, drought, war, sabotage,
embargo, utility failure, material shortage, labor disturbance, national health
emergency, or appropriation of property (each, a "Force Majeure Event"). A party
whose performance is affected by a Force Majeure Event shall take prompt action
using its Commercially Reasonable Efforts to remedy the effects of the Force
Majeure Event.
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<PAGE>
16.11 INTERPRETATION. The parties hereto acknowledge and agree that:
(a) each party and its representatives have reviewed and negotiated the terms
and provisions of this Agreement and have contributed to its preparation; and
(b) the terms and provisions of this Agreement shall be construed fairly as to
each party hereto and not in favor of or against either party, regardless of
which party was generally responsible for the preparation or drafting of this
Agreement.
16.12 CERTAIN EXPENSES AND COMMISSIONS. Except as otherwise expressly
set forth in this Agreement, the parties hereto shall each pay all their costs
and expenses, including legal and accounting fees, incurred in connection with
the preparation, negotiation, execution and delivery of this Agreement,
respective brokerage fees, commissions and finder's fees, if any, and shall
indemnify and hold the other harmless from and against any and all other claims
or liabilities for such costs and expenses, brokerage fees, commissions and
finder's fees incurred by reason of any action taken by any such party.
16.13 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16.14 SUBCONTRACTORS. Each party may use third-party subcontractors in
the performance of their obligations under this Agreement; PROVIDED, HOWEVER,
that neither party may use third party subcontractors in the performance of
their Product Call obligations under this Agreement without the prior written
consent of the other party. In the event that a party appoints a permitted third
party subcontractor, such appointment shall be subject to the confidentiality
provisions of Section 11. In addition, such party shall be solely responsible
and liable to the other party for the performance of said contractor. The party
hiring the subcontractor shall ensure that the subcontractor complies in all
material respects with the requirements of Governmental or Regulatory
Authorities and Applicable Laws and Regulations as it relates to the Product or
otherwise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
36
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Co-Promotion
Agreement as of the last date of a party's signature below.
LIGAND PHARMACEUTICALS INCORPORATED
By: /S/ DAVID E. ROBINSON
------------------------
Name: David E. Robinson
Title: Chairman of the Board, President and
Chief Executive Officer
Date: FEBRUARY 19, 2003
------------------------
ORGANON PHARMACEUTICALS USA INC.
By: /S/ MICHAEL V. NOVINSKI
------------------------
Name: Michael V. Novinski
Title: President
Date: 2/20/03
------------------------
By: /S/ PATRICK J. OSINSKI
------------------------
Name: Patrick J. Osinski
Title: Vice President
Date: 2/20/03
------------------------
[SIGNATURE PAGE TO CO-PROMOTION AGREEMENT]
<PAGE>
EXHIBIT A
Example of Co-Promotion Detail Report
DETAIL REPORT FOR CALENDAR QUARTER ENDED _____________
ACTUAL BUDGET
# #
------ ------
Total # Calls
Product Calls:
First Position Details
Second Position Details
------ ------
TOTAL
====== ======
AVINZA REACH AND FREQUENCY:
YEAR-TO-DATE PRODUCT DETAILS:
MONTH DETAILS
January 20__
February 20__
March 20__
April 20__
May 20__
June 20__
July 20__
August 20__
September 20__
October 20__
November 20__
December 20__
Exhibit A-1
<PAGE>
CALENDAR QUARTER DETAILS BY PAIN SALESFORCE:
DECILE CONTACTS SEEN TOTAL CONTACTS REACH FREQUENCY
10 %
09 %
08 %
07 %
06 %
05 %
04 %
03 %
02 %
Others %
TOTAL %
AVINZA PHYSICIAN CALLS FOR CALENDAR QUARTER ENDED
--------------:
ME NUMBER LAST NAME FIRST NAME CITY STATE POSTAL AMA NUMBER OF
CODE SPECIALTY CALLS
Exhibit A-2
<PAGE>
EXHIBIT B
Example of Ligand Detail Report
DETAIL REPORT FOR CALENDAR QUARTER ENDED _____________
ACTUAL BUDGET
# #
------ ------
Total # Calls
Product Calls:
First Position Details
Second Position Details
------ ------
TOTAL
====== ======
AVINZA REACH AND FREQUENCY:
YEAR-TO-DATE PRODUCT DETAILS:
MONTH DETAILS
January 20__
February 20__
March 20__
April 20__
May 20__
June 20__
July 20__
August 20__
September 20__
October 20__
November 20__
December 20__
Exhibit B-1
<PAGE>
CALENDAR QUARTER DETAILS BY PAIN SALESFORCE:
DECILE CONTACTS SEEN TOTAL CONTACTS REACH FREQUENCY
10 %
09 %
08 %
07 %
06 %
05 %
04 %
03 %
02 %
Others %
TOTAL %
AVINZA PHYSICIAN CALLS FOR CALENDAR QUARTER ENDED
--------------:
ME NUMBER LAST NAME FIRST NAME CITY STATE POSTAL AMA NUMBER OF
CODE SPECIALTY CALLS
Exhibit B-2
<PAGE>
EXHIBIT C
Example of Ligand Sales Report
SALES AND ROYALTY REPORT FOR THE CALENDAR QUARTER ENDED __________
30 MG 60 MG 90 MG 120 MG
----- ----- ----- ------
UNITS (by package size/presentation)
WAC (by package size/presentation)
Gross Sales (Units x WAC)
Deductions/Allowances:*
Customs duties and other taxes
Returns
Bad debt
Managed Care Rebates
Charge backs
Medicaid Rebates
Discounts
Cash
Other
----- ----- ----- ------
Net Sales
===== ===== ===== ======
Royalty: Net Sales $. X % = $
Example: $450mm Net Sales
Royalty = (150mm X 30%) + (150mm X 40%) + (125mm X 50%) + (25mm X 45%)
= 45mm + 60mm + 62.5 + 11.25mm
= 178.75mm
*Deductions/Allowances based on estimates, adjusted periodically to actual
experience.
Exhibit C-1
<PAGE>
EXHIBIT D
Example of Direct Cost Report
DIRECT COSTS REPORT FOR THE CALENDAR QUARTER ENDED __________
EXPENSE CATEGORY VENDOR ACTUAL BUDGET
---------------- ------ ------ ------
ADVERT. & PROMOT. $ $
------ ------
SUB-TOTAL $ $
MARKET RESEARCH $ $
------ ------
SUB-TOTAL $ $
CLINICAL TRIALS* $ $
------ ------
SUB-TOTAL $ $
CRO $ $
------ ------
SUB-TOTAL $ $
GRANTS $ $
------ ------
SUB-TOTAL $ $
*To include Consulting, Outside Services, Clinical Supplies, Lab Services and
Clinical Case Report Forms
Exhibit D-1
<PAGE>
EXHIBIT E
Example of Fully Allocated Cost Report
FULLY ALLOCATED COST REPORT FOR THE CALENDAR QUARTER ENDED __________
FUNCTION/DPT METHOD OF
OR EXPENSE TYPE ALLOCATION ACTUAL BUDGET
--------------- ---------- ------ ------
MEDICAL AFFAIRS $ $
R&D DEPARTMENTS $ $
TOTAL ------ ------
$ $
====== ======
Exhibit E-1
<PAGE>
EXHIBIT F
SERVICES
Brand Management
Market Research
Medical Education/Professional Services
Long Term Care Sales Representatives
National/Regional Account Managers
Trade
GPO/Government Affairs
Contract Administration
Finance--Managed Care
Regional Medical Liaisons
Medical Services
Sales Training (National and Regional)
Exhibit F-1
<PAGE>
EXHIBIT G
INSURANCE
Each party shall, through the purchase of any insurance policy from a recognized
third party insurer or through maintenance of a qualified self insurance
program, obtain and maintain at its own expense during the term of this
Agreement, and for a period of at least one (1) year after the expiration or
termination of this Agreement, all insurance coverage required by law as well as
appropriate and customary insurance coverage to protect against claims or
liabilities, subject to the limitations of Section 12.5 of this Agreement, that
may arise directly or indirectly as a result of such party's performance under
this Agreement. This insurance shall include the following coverage for not less
than the limits specified, or as required by law, whichever is greater:
1) Workers' Compensation & Employers Liability
- Worker's Compensation: Statutory
- Employer's Liability: ***
2) Commercial General Liability
Covering premises, products, completed operations, independent contractors,
personal injury, blanket broad from contractual liability.
-Bodily Injury & Property Damage: *** Combined Single Limit per occurrence
3) Automobile Liability
Covering all owned, non-owned, hired and borrowed vehicles used in the
performance of work under this Agreement
- Bodily Injury & Property Damage: *** Combined Single Limit per occurrence
4) Umbrella / Excess Liability *** Combined Single
(following form) Limit per occurrence
ADDITIONAL COVERAGE
Insurance specified herein shall be minimum requirements; each party is
responsible for providing any additional insurance coverage, or self-insurance,
deemed necessary to protect itself from claims in excess of the minimum
coverage. None of the requirements contained herein as to coverage types or
limits of insurance to be maintained by a party are intended to and shall not in
any manner limit the liability or indemnity obligations of one party to the
other hereunder.
Exhibit G-1
<PAGE>
INSURANCE CERTIFICATES/PROOF OF SELF-INSURANCE
Each party shall deliver to the other upon execution of this Agreement a
Certificate(s) of Insurance evidencing: (i) the insurer(s) affording coverage;
(ii) the effective and expiration dates of the policies; (iii) the limits of
liability per occurrence and in the aggregate; and (iv) that either party shall
be given thirty (30) days advance written notice prior to cancellation,
non-renewal or material change of any policy. Each party shall provide the other
current Certificates of Insurance evidencing renewal of insurance throughout the
term of this Agreement. Upon the request of either party, the other party shall
name the other as an additional insured on applicable policies (excepting
workers compensation).
To the extent either party elects to self-insure, or be a qualified self-insurer
under governing state statutes for any of the insurance coverages mentioned in
this Exhibit G, such party shall provide the other party, throughout the term of
this agreement and for a period of at least one (1) year after the expiration or
termination of this Agreement, with proof of continuing financial responsibility
equal to or greater than the minimum limits of insurance required hereunder.
Exhibit G-2