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Exhibit 10.9
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ADDENDUM TO COLLABORATION AGREEMENT
AMONG
MILLENNIUM PHARMACEUTICALS, INC.,
SCHERING CORPORATION
AND SCHERING-PLOUGH, LTD.
This addendum ("Addendum"), to be
retroactively effective as of June 1, 2003
(the "Effective Date"), to the
Collaboration Agreement by and among Millennium
Pharmaceuticals, Inc. ("Millennium"), as
successor in interest to COR
Therapeutics, Inc., Schering Corporation,
("Schering Corp.") and
Schering-Plough, Ltd. ("Schering Ltd."),
dated April 10, 1995, as amended to
date (the "Agreement") is entered into by
and between the parties hereto with
reference to the facts below. Schering
Corp. and Schering Ltd. are referred to
herein collectively as "Schering". Terms
with initial capitals, which are not
specifically defined in this Addendum,
shall have the defined meaning set forth
in the Agreement.
WHEREAS, the
Parties desire to modify the Agreement to provide for the
hiring of an additional field force by
Millennium to be jointly funded by
Schering and Millennium.
NOW, THEREFORE,
in consideration of the foregoing premises and the mutual
covenants and obligations below, the
Parties agree as follows:
1.0 DEFINITIONS
The following capitalized terms used in
this Addendum, whether used in the
singular or plural, shall have the meanings
set forth herein:
1.1 All references in the Agreement to
"COR Therapeutics, Inc." and "COR" shall
hereinafter mean "Millennium
Pharmaceuticals, Inc." and "Millennium",
respectively.
1.2 "ACTUAL 2003 A&P EXPENSES"
shall have the meaning set forth in Section 3.4
of this Addendum.
1.3 "ADDITIONAL FIELD FORCE" shall
mean the additional Sales Representatives
to be hired by Millennium to Co-Promote the
Co-Promoted Products in the United
States pursuant to this Addendum, as well
as the additional managers to be hired
by Millennium to manage such efforts.
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1.4 "ADDITIONAL FIELD FORCE EXPENSES"
shall have the meaning set forth in
Section 3.1 of this Addendum.
1.5 "BUSINESS DEVELOPMENT COSTS" shall
mean reasonable out-of-pocket costs
incurred by members of the Additional Field
Force at regional and local levels
to address new business opportunities or
implementation needs to support local
or regional sales objectives and overall
business expansion.
1.6 "EXISTING 2003 BUDGET" shall have
the meaning set forth in Section 3.4 of
this Addendum.
1.7 "MAXIMUM TRIAL COST" shall have
the meaning set forth in Section 3.3 of
this Addendum.
1.8 "OBJECTIVES" shall have the
meaning set forth in Section 2.4 of this
Addendum.
1.9 "REASONABLE SEVERANCE COSTS" shall
mean reasonable and customary severance
and employment termination costs which in
the aggregate do not exceed an amount
equal to one (1) months salary plus any
accrued and unused vacation or sick
time.
1.10 "TERMINATION DATE" shall mean the date
on which this Addendum expires, or
is terminated, in accordance with Section
4.1 or Section 4.2 of this Addendum,
respectively.
1.11 "TRIAL PERIOD" shall have the meaning
set forth in Section 4.1 of this
Addendum.
2.0 HIRING AND MANAGEMENT OF THE
ADDITIONAL FIELD FORCE
2.1 As of the Effective Date,
Millennium commenced hiring up to a total of [**]
new employees (consisting of Sales
Representatives and managers) that will be
members of the Additional Field Force. All
Sales Representatives who are members
of the Additional Field Force shall be
employees of Millennium and, except as
otherwise expressly set forth in this
Addendum, shall be considered Millennium
Sales Representatives. Millennium shall be
solely responsible for all aspects of
the hiring, management, supervision,
compensation and performance of the
Additional Field Force.
2.2 Millennium shall maintain the
Additional Field Force as a distinct and
separately identifiable field force from
those of its other employees who
Co-Promote the Co-Promoted Products in the
United States or who manage such
efforts. Millennium shall use commercially
reasonable efforts to avoid
establishing or operating the Additional
Field Force in a manner that reasonably
could be expected to engender
dissatisfaction among Millennium's other Sales
Representatives (and their managers) who
are Co-Promoting the Co-Promoted
Products in the United States, including,
without limitation, setting the
salary, bonus and incentives of the
Additional Field Force at an inappropriate
level as compared to Millennium's other
Sales Representatives and managers.
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2.3 For purposes of clarity and
avoidance of doubt, the Parties acknowledge and
agree that none of the members of the
Additional Field Force are entitled to
participate in any of Schering's or its
Affiliates' employee benefit plans,
including but not limited to the group
health insurance plan, the
Schering-Plough Retirement Plan, the
Schering-Plough Employees' 401K Savings
Plan, the Schering-Plough Employees'
Profit-Sharing Incentive Plan, and the
Schering-Plough Stock Incentive Plan.
Millennium further understands and agrees
that, if any Millennium employee who is a
member of the Additional Field Force
is found to be a common law or statutory
employee of Schering by (i) the
Internal Revenue Service; (ii) any other
taxing authority; (iii) any regulatory
authority; or (iv) a court of law, then
Millennium shall, and shall ensure that
its employees who are members of the
Additional Field Force shall, hereby waive
any right of eligibility which might
thereby accrue to Millennium or such
Millennium employees to participate in the
aforesaid benefit plans of Schering
or its Affiliates.
2.4 The effectiveness of the
Additional Field Force in Co-Promoting the
Co-Promoted Products will be periodically
evaluated by the JSC using parameters
designed to provide an objective
measurement of the benefits of investment in
the Additional Field Force (the
"Objectives"), based upon information to be
obtained through a mutually agreeable
structure and methodology incorporating
the use of a control group (at least during
the Trial Period) and objective data
and information to be obtained by the
Parties, including (i) sales of the
Co-Promoted Products in the United States,
(ii) IMS audits, and/or (iii) data
and information obtained from other Third
Party vendors. The first such
evaluation shall be conducted on or before
February 15, 2004, and evaluations
shall thereafter be conducted within
forty-five (45) days after the close of
each calendar quarter. Although evaluations
will be conducted quarterly, the
test of whether the Objectives have or have
not been met will be determined
based upon the performance of the
Additional Field Force during the entire Trial
Period, or the then current renewal term,
as measured by the then current
Objectives. The initial Objectives to apply
during the Trial Period are set
forth in Exhibit A, attached hereto. The
Objectives to apply during subsequent
periods will be revised and updated at
least once annually, in a manner mutually
agreed by the Parties, with the first such
update to establish the Objectives
for 2005 to be completed on or before
November 30, 2004.
3.0 COST OF THE ADDITIONAL FIELD
FORCE
3.1 Schering shall be responsible for
reimbursing Millennium for [**] percent
([**]%) of the Additional Field Force
Expenses (as defined below); PROVIDED,
HOWEVER, that such obligation shall be
subject to the limitations set forth in
Sections 3.3 and 3.4 of this Addendum, and
to any adjustments under Section 3.7
of this Addendum. "Additional Field Force
Expenses" shall mean all costs
incurred by Millennium to establish,
maintain and operate the Additional Field
Force, including, without limitation,
reasonable recruiting costs, compensation
(salary, bonus, incentives, employee
benefits and Reasonable Severance Costs),
reasonable and customary travel and
entertainment costs, training costs, auto
costs, office equipment costs (such as
laptops, printers, fax machines,
telephones, etc.) and Business Development
Costs. Additional Field Force
Expenses shall not include any of the
following that may be attributable to the
Additional Field Force: (i) capital
expenditures (new facilities, etc.), (ii)
overhead (corporate expense allocations,
etc.), (iii) severance or employment
termination payments in excess of
Reasonable
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Severance Costs. In addition, the following
types of Selling and Promotion
Expenses related to the Additional Field
Force shall not be included in
Additional Field Force Expenses unless
agreed to in writing in advance by
Schering and Millennium: costs of specialty
sales forces (excluding the
Additional Field Force), consultants, home
office personnel and other ancillary
services.
3.1.1
To the
extent that the te
