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CO-PROMOTION AGREEMENT

Promotion Agreement

CO-PROMOTION AGREEMENT | Document Parties: MILLENNIUM PHARMACEUTICALS, INC | MLNM and OBI's Affiliate Ortho Biotech Products, LP | ORTHO BIOTECH INC You are currently viewing:
This Promotion Agreement involves

MILLENNIUM PHARMACEUTICALS, INC | MLNM and OBI's Affiliate Ortho Biotech Products, LP | ORTHO BIOTECH INC

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Title: CO-PROMOTION AGREEMENT
Governing Law: Massachusetts     Date: 3/1/2007
Industry: Biotechnology and Drugs     Sector: Healthcare

CO-PROMOTION AGREEMENT, Parties: millennium pharmaceuticals  inc , mlnm and obi's affiliate ortho biotech products  lp , ortho biotech inc
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Exhibit 10.22

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote omissions.

CO-PROMOTION AGREEMENT

 by and between

MILLENNIUM PHARMACEUTICALS, INC.

and

ORTHO BIOTECH INC.

Dated:  October 25, 2006




TABLE OF CONTENTS

PAGE

ARTICLE I DEFINITIONS; CONSTRUCTION; TERM

1

 

 

1.1

Definitions.

1

 

 

 

 

 

1.2

Construction.

1

 

 

 

 

 

1.3

Term.

2

 

 

 

 

ARTICLE II PRE-COMMENCEMENT ACTIVITIES

2

 

 

 

2.1

Generally.

2

 

 

 

 

 

2.2

Co-Promotion Plan.

3

 

 

 

 

 

2.3

Training Plan and Activities.

5

 

 

 

 

 

2.4

Core Promotional Materials.

6

 

 

 

 

ARTICLE III CO-PROMOTION

7

 

 

 

3.1

Rights and Obligation to Co-Promote; Combined Use with Doxil ®

7

 

 

 

 

 

3.2

Reach and Frequency; Minimums.

8

 

 

 

 

 

3.3

Sales Representatives.

10

 

 

 

 

 

3.4

Promotional Materials.

10

 

 

 

 

 

3.5

Product Sales.

11

 

 

 

 

 

3.6

Product Recall and Withdrawal.

12

 

 

 

 

 

3.7

Product Return.

12

 

 

 

 

 

3.8

Product Medical Inquiries.

12

 

 

 

 

 

3.9

Additional Activities.

12

 

 

 

 

ARTICLE IV GOVERNANCE

14

 

 

 

4.1

Steering Committee.

14

 

 

 

 

 

4.2

Co-Promotion and Marketing Committee.

14

 

 

 

 

ARTICLE V COMPENSATION

15

 

 

 

5.1

Call Costs Payments.

15

 

 

 

 

 

5.2

Variable Costs.

15

 

 

 

 

 

5.3

Commissions.

17

 

 

 

 

 

5.4

Tail Payment.

18

 

 

 

 

 

5.5

Payment Terms.

19

 




 

5.6

Late Payments.

19

 

 

 

 

 

5.7

Promotion Expenses.

20

 

 

 

 

 

5.8

Tax Matters.

20

 

 

 

 

ARTICLE VI ADVERSE EVENT REPORTING; FIELD REPORTS; PRODUCT COMPLAINTS, GOVERNMENTAL COMMUNICATIONS; STATE REPORTING.


20

 

 

 

6.1

Adverse Events.

20

 

 

 

 

 

6.2

Field Reports.

20

 

 

 

 

 

6.3

Field and Efficacy.

20

 

 

 

 

 

6.4

Product Complaints.

21

 

 

 

 

 

6.5

MLNM Responsibility.

21

 

 

 

 

 

6.6

OBI Communications.

21

 

 

 

 

 

6.7

OBI Cooperation.

21

 

 

 

 

ARTICLE VII AUDIT RIGHTS

22

 

 

 

7.1

Audit Right Period.

22

 

 

 

 

 

7.2

Compliance With Laws.

22

 

 

 

 

 

7.3

Compliance with Agreement.

22

 

 

 

 

 

7.4

Payment Audit.

22

 

 

 

 

ARTICLE VIII TERMINATION

23

 

 

 

8.1

Termination.

23

 

 

 

 

 

8.2

Termination for Change in Applicable Laws.

24

 

 

 

 

 

8.3

Effect of Termination.

25

 

 

 

 

 

8.4

Right of First Negotiation.

27

 

 

 

 

ARTICLE IX RESTRICTIVE COVENANTS

27

 

 

 

9.1

Acknowledgement.

27

 

 

 

 

 

9.2

Confidentiality.

28

 

 

 

 

 

9.3

Non-Solicitation.

29

 

 

 

 

 

9.4

Non-Competition.

29

 

 

 

 

ARTICLE X INTELLECTUAL PROPERTY

29

 

 

 

10.1

The Product.

29

 

 

 

 

 

10.2

Ownership of Intellectual Property Rights.

29

 

 

 

 

 

10.3

No Right or License.

30

 




 

ARTICLE XI REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS.

30

 

 

11.1

Representations of Authority.

30

 

 

 

 

 

11.2

Consents.

30

 

 

 

 

 

11.3

No Conflict.

30

 

 

 

 

 

11.4

Enforceability.

30

 

 

 

 

 

11.5

Sales Representatives.

31

 

 

 

 

 

11.6

Certain Compliance Matters.

31

 

 

 

 

 

11.7

Debarment; Exclusion.

32

 

 

 

 

 

11.8

MLNM Employees.

32

 

 

 

 

 

11.9

Disclaimer.

32

 

 

 

 

ARTICLE XII INDEMNIFICATION

33

 

 

 

12.1

General Indemnification.

33

 

 

 

 

 

12.2

Product Liability.

33

 

 

 

 

 

12.3

Notice and Control of Litigation.

34

 

 

 

 

ARTICLE XIII DISPUTE RESOLUTION

34

 

 

 

13.1

Escalating; Decision Making Authority.

34

 

 

 

 

 

13.2

Arbitration.

35

 

 

 

 

 

13.3

Jury Trial.

38

 

 

 

 

 

13.4

Attorneys’ Fees.

38

 

 

 

 

ARTICLE XIV MISCELLANEOUS

38

 

 

 

14.1

Compliance with Laws.

38

 

 

 

 

 

14.2

Choice of Law.

38

 

 

 

 

 

14.3

Equitable Remedies.

39

 

 

 

 

 

14.4

Notices.

39

 

 

 

 

 

14.5

Severability.

40

 

 

 

 

 

14.6

Force Majeure Event.

40

 

 

 

 

 

14.7

Captions.

40

 

 

 

 

 

14.8

Integration.

41

 

 

 

 

 

14.9

Independent Contractors; No Agency.

41

 

 

 

 

 

14.10

Submission to Jurisdiction.

41

 

 

 

 

 

14.11

Assignment; Successors.

41

 

 

 

 

 




 

14.12

Publicity.

42

 

 

 

 

 

14.13

No Consequential or Punitive Damages.

42

 

 

 

 

 

14.14

Performance by Affiliates.

42

 

 

 

 

 

14.15

Amendments; Waivers.

42

 

 

 

 

 

14.16

Third Party Beneficiaries.

43

 

 

 

 

 

14.17

Further Assurances; Cooperation.

43

 

 

 

 

 

14.18

Survival.

43

 

 

 

 

 

14.19

Cumulative Remedies.

43

 

 

 

 

 

14.20

Execution in Counterparts; Facsimile Signatures.

44

 

 

 

 

Appendix A Definitions

47

 

 

 

Appendix B Co-Promotion Plan

56

 

 

 

Appendix C Training Plan

57

 

 

 

Appendix D Terms and Conditions Applicable to Product Orders

58

 




CO-PROMOTION AGREEMENT

This CO-PROMOTION AGREEMENT (this “Agreement” ) dated October 25, 2006 (the “Effective Date” ), is entered into by and between MILLENNIUM PHARMACEUTICALS, INC. a Delaware corporation ( “MLNM” ) and ORTHO BIOTECH INC., a New Jersey corporation ( “OBI” ).  MLNM and OBI are generically referred to in this Agreement individually as a “Party” and collectively as the “Parties ”.

WHEREAS, MLNM and OBI’s Affiliate Ortho Biotech Products, L.P. (“ Ortho Biotech ”) are parties to that certain Collaboration, Distribution and Licensing Agreement made effective as of June 30, 2003 (as amended from time to time, the “Collaboration and License Agreement” ), pursuant to which MLNM and Ortho Biotech agreed to globally develop MLNM’s proprietary drug, VELCADE ®  (bortezomib) for Injection (the “Product” ) to be administered by injection for the treatment of multiple myeloma and in other tumor type indications;

WHEREAS, OBI has significant experience in the marketing and promotion of drugs (including drugs administered by injection) for the treatment of cancer and serious, cancer-related, chronic illnesses; and

WHEREAS, MLNM wishes to engage OBI to Co-Promote (as hereinafter defined) the Product in the Co-Promotion Territory (as hereinafter defined) and OBI wishes to be so engaged subject to and upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and undertakings contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION; TERM

1.1                                Definitions.   Capitalized terms used in this Agreement have the meanings assigned in Appendix A .

1.2                                Construction.  Except where the context requires otherwise, whenever used, the singular includes the plural, the plural includes the singular, the use of any gender is applicable to all genders and the word “or” has the inclusive meaning represented by the phrase “and/or.”  Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days.  The headings of this Agreement are for convenience of reference only and do not define, describe, extend or limit the scope or intent of this Agreement or the scope or intent of any provision contained in this Agreement.  The term “including” or “includes” as used in this Agreement means including or includes “without limiting” or “without limitation.”  The wording of this Agreement shall be deemed to be the wording mutually chosen by the Parties and no rule of strict construction shall be applied against either Party.




1.3                                Term.

1.3.1                         This Agreement shall commence on the Effective Date and shall continue in full force and effect until December 31, 2008, unless extended or earlier terminated as hereinafter set forth.  The period beginning on the Effective Date and ending on December 31, 2006 is referred to as the “Pre-Commencement Period .   The period beginning on January 1, 2007 and ending on December 31, 2008, as may be extended by any Extension Term(s) and as may be earlier terminated pursuant to this Agreement, is referred to as the “Co-Promotion Term .

1.3.2                         The Co-Promotion Term may be extended for two (2) additional successive one (1) year periods (each, an “Extension Term” ) by mutual written agreement of the Parties.  Prior to the expiration of this Agreement, unless earlier terminated in accordance with Article 8, and in the event the sum of the aggregate Net Sales of the Product in 2007 and the Annualized Net Sales in 2008 exceed [**] Dollars ($[**]), the Parties shall negotiate in good faith as set forth in this Subsection 1.3.2 the extension of this Agreement for one (1) additional year.  Each Extension Term shall be governed by the terms and conditions set forth in this Agreement except (a) to the extent that such terms and conditions are amended as mutually agreed to in writing by the Parties, and (b) the payment provisions set forth in Article V hereof and as referenced elsewhere in this Agreement, shall be subject to re-negotiation for each Extension Term.  In the event that a Party wishes to enter into an Extension Term, it shall notify the other Party in writing at least three (3) months prior to the expiration of the Co-Promotion Term.  Following receipt of such notice by the other Party, the Parties shall negotiate the financial terms applicable to the proposed Extension Term in good faith for a period of less than sixty (60) days.  In the event that the Parties fail to reach agreement on the payment provisions prior to the expiration of the Co-Promotion Term, then the Agreement shall expire upon expiration of the Co-Promotion Term then in effect without further extension at such time.

ARTICLE II

PRE-COMMENCEMENT ACTIVITIES

2.1                                Generally.   During the Pre-Commencement Period, the Parties shall complete the activities described in Sections 2.2 through 2.4 below.  In the event that, following all commercially reasonable efforts of both Parties, all such activities have not been completed on or prior to the commencement of the Co-Promotion Term, then, so long as the Minimum Pre-Commencement Activities have been completed on or prior to the commencement of the Co-Promotion Term, the Parties shall proceed as otherwise contemplated by this Agreement and shall continue to use all commercially reasonable efforts to complete the remainder of the activities that were supposed to have been completed during the Pre-Commencement Period as soon as practicable, but in no event later than March 31, 2007.   In the event that the Minimum Pre-Commencement Activities have not been fully performed on or prior to the commencement of the Co-Promotion Term, then the Parties shall proceed in accordance with the following Sections 2.1.1 and 2.1.2.

2.1.1                         The Pre-Commencement Period shall be extended automatically to January 29, 2007 provided that the Steering Committee shall convene on or before December 31, 2006 to review the activities completed by the Parties to date and shall assign clear

2




responsibilities and deadlines to each Party, as applicable, to facilitate completion of the Minimum Pre-Commencement Activities by January 29, 2007.  OBI may not commence Co-Promotion of the Product until the Minimum Pre-Commencement Activities have been completed unless otherwise agreed upon by the Steering Committee.

2.1.2                         In the event the Minimum Pre-Commencement Activities are fully performed by January 29, 2007 but all activities described in Sections 2.2 through 2.4 below have not been completed, the Steering Committee shall convene on or before such date to review the activities completed by the Parties to date and shall assign clear responsibilities and deadlines to each Party, as applicable, to facilitate completion of such activities as soon as reasonably practicable but no later than March 31, 2007.

2.2                                Co-Promotion Plan.  The Parties shall develop and complete a plan to Co-Promote the Product in the Co-Promotion Territory (the “Co-Promotion Plan” ). The Parties shall amend and update the Co-Promotion Plan semi-annually during each calendar year or more frequently as determined by the Steering Committee.  The Co-Promotion Plan, as the same may be amended and updated from time to time, shall be approved by the Co-Promotion and Marketing Committee and incorporated into this Agreement as Appendix B .  Each Party shall use all commercially reasonable efforts to complete the Co-Promotion Plan within sixty (60) days of the Effective Date, but in any event, subject to Section 2.1.1 and 2.1.2 of this Agreement, prior to the commencement of the Co-Promotion Term.  The Co-Promotion Plan shall include, without limitation, the Target List, Call Plan and Call Reporting and Review Requirements as described further in this Section 2.2.

2.2.1                         Target List . MLNM shall provide to OBI, for review by and consultation with OBI, a list of First Position Targets and Second Position Targets (collectively, the “Target List” ) no later than [**] days following the Effective Date, which Target List shall be incorporated into the Co-Promotion Plan.  The Target List shall include only health care professionals [**] or any other indications for the Product that are approved in the Co-Promotion Territory during the Co-Promotion Term.  OBI shall bring to the attention of the Co-Promotion and Marketing Committee any prescribers of the Product known to OBI who are not MLNM Targets.  MLNM may, in consultation with the Co-Promotion and Marketing Committee, update the Target List semi-annually during each calendar year or more frequently as determined by the Co-Promotion and Marketing Committee; provided, however, that a change in the identity of more than [**] percent ([**]%) of the First Position Targets or [**] percent ([**]%) of the Second Position Targets on the Target List shall require the mutual agreement of the Parties.

2.2.2                         Call Plan .  OBI shall develop a plan for Calling on the MLNM Targets (the “Call Plan” ) and update the Call Plan at least semi-annually during each calendar year or more frequently as OBI may determine.  The Call Plan and each update thereto shall be subject to review, input and approval by the Co-Promotion and Marketing Committee and shall be incorporated into the Co-Promotion Plan following approval by the Co-Promotion and Marketing Committee. The Call Plan shall be consistent with the requirements of Section 3.2.1.  OBI shall provide all Sales Representatives with a copy of the applicable Call Plan.

2.2.3                         Call Reporting and Review Requirements .  The Co-Promotion and Marketing Committee shall develop reporting and review requirements whereby OBI shall

3




provide MLNM with reports regarding execution of the Call Plan by OBI so that MLNM may monitor execution of the Call Plan by OBI (the “Call Reporting and Review Requirements” ).

(a)                                   The Call Reporting and Review Requirements shall be incorporated into the Co-Promotion Plan and shall provide, inter alia that:

(i)                                      During the Co-Promotion Term, within [**] days of the end of each calendar month, OBI shall provide a final detailed report to MLNM summarizing the Call activity for such calendar month (each such report, a “Monthly Call Report” ).  Each Monthly Call Report shall include with respect to each Call made by the Sales Representatives (1) the date of the Call; (2) the MLNM Target (including identifying information mutually agreed upon by the Parties in the Co-Promotion Plan); (3) the location of the Call; (4) message information to the extent available in the OBI call reporting system; (5)  account information to the extent available in the OBI call reporting system (including identifying information mutually agreed upon by the Parties in the Co-Promotion Plan); (6) identification of Sales Representative who performed the Call; (7) position of the Product detail (i.e., First Position Call or Second Position Call), and (8) any other information agreed to by the Parties.  OBI shall provide such Monthly Call Report to MLNM in an electronic format mutually agreed to by the Parties;

(ii)                                   During the Co-Promotion Term, within [**] days after the end of each calendar quarter, OBI shall provide a final detailed report to MLNM summarizing the Call activity for such quarter and indicating for each MLNM Target, the number of First Position Calls and Second Position Calls by month achieved by OBI during such quarter with respect to such First Position Target and such Second Position Target, as applicable (each such report a “Quarterly Call Report” ).  OBI shall provide such Quarterly Call Report to MLNM in an electronic format mutually agreed upon by the Parties.

(iii)                                OBI shall provide MLNM with copies of all significant communications relating to the Product and this Agreement made by OBI to its Co-Promotion Representatives (including, without limitation, emails and Product specific information) within such time frames and by such means as are specified in the Co-Promotion Plan; and

(iv)                               At MLNM’s written reasonable request, made not less than [**] Business Days prior to the applicable event, MLNM shall have the right to monitor the performance of Sales Representatives in a mix of geographical territories through (1) [**] relating to this Agreement and (2) [**] (including, without limitation, [**].   MLNM shall also have the right, upon written request made to OBI from time to time, to review the results of [**] agreed upon by the Parties to evaluate the knowledge of the Sales Representatives with respect to the Product, the Promotional Materials and the Call Plan and the performance of Calls by the Sales Representatives.

(b)                                  MLNM, as part of the Co-Promotion Plan, shall within [**] Business Days following the public release of its quarterly results, provide to OBI Product sales data (for e.g., in vials, by account, by month) to the extent available, in a form selected by MLNM that will permit the manipulation and analysis of the data.  OBI shall be permitted to use such data for the sole purpose of planning Co-Promotional activities set forth under this Agreement.  MLNM will in its sole discretion, provide additional reports or data as may become

4




available to MLNM to assist OBI in planning Co-Promotional activities under this Agreement.  For each MLNM Target, MLNM will provide to OBI to the extent available the number of calls by MLNM sales representatives received over the calendar quarter [**] days after the end of each quarter.     MLNM makes no representation or warranty as to the accuracy or completeness of such call activity data.

2.3                                Training Plan and Activities.   The Parties shall develop a training plan (the “Training Plan” ) with respect to their performance pursuant to this Agreement and the Co-Promotion Plan pursuant to which (a) MLNM shall provide initial and supplementary training pursuant to this Agreement to OBI personnel who are designated by OBI as trainers of the other Co-Promotion Representatives (the “OBI Trainers” ) with respect to their performance pursuant to this Agreement and the Co-Promotion Plan, and (b) OBI Trainers shall provide initial and supplementary training to the other Co-Promotion Representatives.  Each Party shall use all commercially reasonable efforts to complete the Training Plan within [**] days of the Effective Date and shall incorporate the same into this Agreement as Appendix C .  The Training Plan shall include, without limitation, the following obligations of the Parties:

2.3.1                         OBI shall provide a sufficient number of OBI Trainers to train all of the Sales Representatives.  The OBI Trainers shall be selected by OBI and have prior experience in selling oncology therapeutics similar to those otherwise used by OBI for its own products.

2.3.2                         MLNM shall provide one (1) copy of training materials to OBI for use solely in connection with (a) the training of the OBI Trainers and (b) the training of the other Co-Promotion Representatives by the OBI Trainers pursuant to the Training Plan.  OBI shall have the right to reproduce such training materials and provide copies of the same to the OBI Trainers and the Co-Promotion Representatives for use in connection with their training pursuant to the Training Plan.

2.3.3                         On or prior to December 31, 2006 MLNM shall complete its training of the OBI Trainers with respect to (a) sales and scientific materials regarding the disease state information on multiple myeloma and (b) use of the Product in the approved indication for multiple myeloma in the Co-Promotion Territory.

2.3.4                         The Parties shall jointly develop assessment materials to allow MLNM to test the performance of OBI Trainers and each OBI Trainer shall be required to receive an individual minimum score of [**] percent ([**]%) under such tests before he or she initiates training of Co-Promotion Representatives.

2.3.5                         OBI shall ensure that the OBI Trainers train the Co-Promotion Representatives in accordance with the Training Plan.  Prior to January 29, 2007, OBI shall also ensure, through training assessments jointly developed by the Parties for such purpose, but administered by OBI, that each Co-Promotion Representative receives training regarding (a) the Product, (b) the disease state(s) for which the Product is indicated in the Co-Promotion Territory and (c) the Calls to be conducted by the Co-Promotion Representatives that meets current standards of OBI applicable to other pharmaceutical products promoted by OBI, as well as applicable industry standards for comparable pharmaceutical products.  OBI shall provide MLNM with reasonable advance notice and opportunity to attend and participate in activities

5




related to the training of the Co-Promotion Representatives pursuant to and in accordance with the Training Plan.

2.3.6                         MLNM shall provide supplementary training to OBI Trainers as deemed necessary and appropriate by MLNM during the Co-Promotion Term including without limitation training regarding any newly approved indication for the Product or emerging Product safety information.  OBI shall cause the OBI Trainers to provide initial training in accordance with the Training Plan to any additional or replacement Co-Promotion Representatives and supplementary training to other Co-Promotion Representatives as deemed necessary and appropriate by OBI during the Co-Promotion Term.

2.3.7                         Each Party shall be responsible for ensuring that all of its personnel involved in the activities set forth under this Agreement, complies with all Applicable Laws.  Each Party shall ensure that all of its personnel involved in the Co-Promotion receives such compliance training regarding Applicable Laws in a manner consistent with all applicable pharmaceutical industry standards.

2.4                                Core Promotional Materials.

2.4.1                         Prior to the commencement of the Co-Promotion Term, MLNM shall develop a set of Promotional Materials for the purposes of this Agreement for use during the Co-Promotion Term (the “Core Promotional Materials” ).  The Core Promotional Materials shall be subject to timely review and approval in accordance with MLNM standard operating procedures by duly authorized representatives of each Party’s designated promotional review team at a joint meeting of such representatives.  The Parties shall ensure that any Core Promotional Materials to be used by Co-Promotion Representatives comply with each Party’s applicable regulatory compliance policies.  For purposes of clarification, subject to Section 11.5.4, nothing in this Agreement shall restrict MLNM’s right to independently undertake any promotional or marketing activities with respect to the Product, or to develop and use Promotional Materials for the purposes of promoting and marketing the Product, in each case in the Co-Promotion Territory and its territories and possessions.

2.4.2                           The Core Promotional Materials shall contain the logos with appropriate prominence of both MLNM and OBI with designation of OBI as co-promoting the Product in the Co-Promotion Territory.  The location and statement of the OBI logo shall be as mutually agreed upon by the Parties.  MLNM may revise, update or develop additional  Core Promotional Materials from time to time during the Co-Promotion Term subject to the review and approval process described above.  The Core Promotional Materials shall also be subject to revision by MLNM during the Co-Promotion Term as deemed necessary and appropriate by MLNM based on (a) changes in the Product Label and Insert or (b) suggestions, requirements or mandates of the FDA or other Governmental Authorities and/or Applicable Law.

2.4.3                         MLNM shall provide OBI with copies of the Core Promotional Materials in the quantities requested by OBI from time to time during the Co-Promotion Term to perform its obligations pursuant to this Agreement and subject to the In Kind Payment set forth in Section 5.2.2.  MLNM shall ship such copies to OBI to one distribution center designated by OBI.

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ARTICLE III

CO-PROMOTION

3.1                                Rights and Obligation to Co-Promote; Combined Use with Doxil ®

3.1.1                         Subject to the terms and conditions of this Agreement, MLNM grants to OBI the co-exclusive right with MLNM, and OBI hereby accepts the obligation, to Co-Promote the Product within the Co-Promotion Territory during the Co-Promotion Term. OBI shall have the non-exclusive right and obligation subject to the applicable terms and conditions set forth in Section 9.8 of the Collaboration and License Agreement to use the VELCADE ®  mark to the extent necessary for OBI to fulfill its Co-Promotion obligations under this Agreement.  Any rights of MLNM not expressly granted to OBI hereunder with respect to the co-promotion of the Product in the Co-Promotion Territory or otherwise related to the Product shall be retained by MLNM in accordance with the terms of this Agreement and the Collaboration and License Agreement.

3.1.2                         Subject to the terms and conditions of this Agreement, upon receipt by OBI or its Affiliates, as applicable, of notice of acceptance by the FDA of OBI’s or its Affiliate’s sNDA filing for the marketing and sale of Doxil ®  for use in combination with the Product for treatment of multiple myeloma (the “Combination sNDA Filing” ), OBI and its Affiliates hereby grant to MLNM: (a) a non-exclusive right and license to promote in the Co-Promotion Territory and its territories and possessions the use of the Product in combination with Doxil ® in accordance with the United States package insert for Doxil ® , (b) a non-exclusive right and license to use the Doxil ®  trademark solely in connection with the marketing and sales of the Product in the Co-Promotion Territory and its territories and possessions for use in combination with Doxil ® , (c) a non-exclusive right to use all Doxil ® Data (as defined below) in connection with the marketing and sales in the Co-Promotion Territory and its territories and possessions of the Product for use in combination with Doxil ® , and (d) a non-exclusive right to include such combination as a new use on the Product Label and Insert and full prescribing information for the Product in the Co-Promotion Territory and its territories and possessions by cross-referencing the Doxil ®  label (or any data contained or referenced in any submissions or applications made by OBI or its Affiliates for the marketing approval of such combination by the FDA) in any submissions or applications which MLNM may make to the FDA with respect to such new use (the “Doxil ®  License” ).  During the term of this Agreement, the Doxil ®  License shall be royalty-free and fully paid-up.  In the event this Agreement is terminated pursuant to Sections 8.1.1, 8.1.2(a), (b) (solely in the event the basis of such termination is a material breach by OBI), (c), (d), (e), (g) or (h), or Section 8.2, the Doxil ®  License shall survive such termination and shall be  royalty-free, fully paid-up, perpetual and irrevocable.    If this Agreement is terminated pursuant to Section 8.1.2(b) in the event the basis of such termination is a material breach by MLNM or pursuant to Section 8.1.2(f), the Doxil ® License shall not survive unless if, on the applicable effective date of termination of this Agreement under such sections, the FDA has accepted MLNM’s sNDA filing for the marketing and sale of the Product for use in combination with Doxil for treatment of multiple myeloma, in which case, the Doxil ® License shall survive and be royalty-free, fully paid-up, irrevocable and perpetual; provided, however, if the FDA does not approve the sNDA such license shall terminate. MLNM shall have no right to transfer, assign or

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sublicense its rights under the Doxil ®  License during the term of this Agreement and following its termination except:  (x) MLNM may assign its rights under the Doxil ®  License to a Third Party in connection with an assignment of this Agreement by MLNM to such Third Party pursuant to Section 14.11, and (y)  MLNM may sublicense its rights under the Doxil ®  License to a Third Party in connection with a license to Commercialize (as defined in the Collaboration and License Agreement) the Product in the Co-Promotion Territory that is granted by MLNM to such Third Party (to the extent permitted under the Collaboration and License Agreement).   For purposes of this Section 3.1.2, “ Doxil ®  Data ” shall mean any data relating to Doxil ®  submitted by OBI or its Affiliate to FDA in the Combination sNDA Filing and any data submitted by OBI or its Affiliate to FDA to update, support or supplement the product label for Doxil ® .  OBI and its Affiliates agree to promptly disclose and provide to MLNM any Doxil ® Data provided to the FDA and, upon MLNM’s request from time to time, all Doxil Data and any other data contained or referenced in the Combination sNDA Filing and any updates thereto, to the extent such information and data is available at the time of each such request.  Notwithstanding anything to the contrary herein, OBI makes no representation or warranty to MLNM relating to (A) MLNM’s ability to obtain FDA approval of the use of the Product in combination with Doxil ® , or (B) OBI’s and its Affiliate’s ability to obtain FDA approval of the Combination sNDA Filing.  MLNM shall ensure (1) that all statements and claims related to Doxil ® , including as to efficacy and safety, are consistent with and in strict compliance with the Doxil ® label and insert and all Applicable Laws, including the Act, and (2) that all comments about Doxil ®  and OBI are truthful, accurate and in strict compliance with Applicable Laws.    In addition, at any time during and after the Co-Promotion Term when such combination is not included on the Product Label and Insert, MLNM shall ensure that all statements and claims related to Doxil ®  are consistent with messaging approved in advance by the Co-Promotion and Marketing Committee pursuant to Section 4.2.1 (or otherwise approved by OBI in writing).  MLNM shall ensure and require that any permitted assignees and permitted sublicensees of the Doxil ®  License comply with the foregoing requirements.  Any rights of OBI not expressly granted to MLNM hereunder with respect to Doxil ®  shall be retained by OBI.  OBI shall cause its Affiliates promptly after execution of this Agreement to enter into a fully paid up, royalty-free trademark license with MLNM consistent with the terms of this Section 3.1.2 and any other agreements necessary to effect the grants made under this Section 3.1.2, each in a form mutually acceptable to both Parties.

3.2                                Reach and Frequency; Minimums.

3.2.1                         During the Co-Promotion Term, OBI shall execute a Call Plan which shall direct its Sales Representatives to complete [**] per month within the Measurement Period for each First Position Target and [**] per month within the Measurement Period for each Second Position Target (collectively, the “Call Standard” ). During each Measurement Period, OBI shall use commercially reasonable efforts to cause its Sales Representatives to conduct Calls in accordance with the Call Plan; provided, however, that neither any failure of OBI to use such commercially reasonable efforts nor any failure to meet the Call Standard shall constitute a breach of this Agreement or otherwise entitle MLNM to terminate this Agreement; and provided, further, that in no event shall this proviso limit the rights of MLNM to terminate under Section 3.2.4.

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3.2.2                         In the event OBI fails, during any Measurement Period, to achieve the Call Standard, OBI shall, in any event, cause its Sales Representatives to conduct Calls with (a) a Reach of not less than [**] percent ([**]%) of First Position Targets and not less than [**] percent ([**]%) of Second Position Targets, and (b) a Minimum Frequency of not less than [**] Calls within the Measurement Period for Reached First Position Targets and not less than [**] Calls within the Measurement Period for Reached Second Position Targets.  The aforementioned Reach and Minimum Frequency requirements are referred to, collectively, as the “Minimum Commitment” . For purposes of subsections 3.2.2 through 3.2.4 of this Agreement: (x) “ Minimum Frequency ” means, with respect to a Measurement Period, the ratio determined by dividing (i) the aggregate number of Calls made to Reached First Position Targets or Reached Second Position Targets (as the case may be) in such Measurement Period by (ii) the number of Reached First Position Targets or Reached Second Position Targets (as the case may be) in such Measurement Period; (y) a “ Reached First Position Target ” means, with respect to a Measurement Period, a First Position Target who received at least [**] during such Measurement Period; and (z) a “ Reached Second Position Target ” means, with respect to a Measurement Period, a Second Position Target who received at least [**] during such Measurement Period.  With respect to a particular MLNM Target, no more than [**] Calls to such MLNM Target in a calendar month and no more than [**] Calls to such MLNM Target in a Measurement Period shall be included in the numerator of the calculation of Minimum Frequency, provided, that, with respect to First Position Targets, such Calls shall be First Position Calls.  For purposes of calculating Reach and Minimum Frequency to a Second Position Target, a Call may be a First Position Call or a Second Position Call.

3.2.3                         In the event that OBI does not meet the Minimum Commitment during a Measurement Period (a “Non-Performing Period” ), then any Commission Payments due to OBI under Section 5.3 for the calendar year during which the Non-Performing Period occurred shall be reduced by [**] percent ([**]%).  In the event one or more than one Non-Performing Periods occurs in a calendar year, then any Commission Payments due to OBI under Section 5.3 for such calendar year shall be reduced by [**] percent ([**]%) multiplied by the number of Non-Performing Periods in such calendar year.

3.2.4                         In the event [**] Non-Performing Periods occur during the Co-Promotion Term (whether occurring consecutively or not), such event shall be deemed to be an “ OBI Non-Performance Breach ” and (a) MLNM shall not be obligated to pay OBI any Call Cost Payments with respect to the [**] Non-Performing Period or any Variable Cost Payments with respect to the [**] Non-Performing Period, (b) Commission Payments for the calendar year in which the [**] Non-Performing Period occurs shall be reduced as set forth in Section 3.2.3 and (c) MLNM shall have the right to terminate this Agreement pursuant to Section 8.1.2(a) at any time within one-hundred and eighty (180) days after the occurrence of such Non-Performance Breach.  In the event MLNM does not elect to terminate this Agreement pursuant to Section 8.1.2(a) and additional Non-Performing Period(s) occur after the [**] Non-Performing Period, the provisions of this Section 3.2.4 shall apply to such Non-Performing Period(s) without taking into account the one-hundred and eighty (180) day period set forth in clause (c) above.

3.2.5                         Notwithstanding anything to the contrary in this Agreement, termination of this Agreement by MLNM pursuant to Section 8.1.2(a) (together with the modification to MLNM’s payment obligations as described in Sections 3.2.3 and 3.2.4 above and the

9




Termination Fee pursuant to Section 8.3.2(a)) shall be the sole and exclusive remedy of MLNM for any Losses of MLNM caused by or arising as a result of OBI’s failure to satisfy the Minimum Commitments.  MLNM shall not have the right to terminate this Agreement pursuant to Section 8.1.2(b) (relating to material breach) on the basis of OBI’s failure to satisfy the Minimum Commitments in one or more Measurement Periods which failure is a basis for termination by MLNM pursuant to Section 8.1.2(a).

3.3                                Sales Representatives.

3.3.1                         OBI shall not use any contract sales organizations or other Third Parties to satisfy any or all of its obligations under this Agreement.  Subject to Section 11.8, MLNM at its discretion may use a contract sales organization to supplement its employee sales force.

3.3.2                         At all times during the Co-Promotion Term, OBI shall use all commercially reasonable efforts to deploy a sales force (the “OBI Sales Force” ) of at least approximately the same number (the “Current Sales Force Size” ) of sales representatives as are in the OBI oncology field sales force on the Effective Date.  The OBI Sales Force shall be responsible for Co-Promoting the Product in accordance with this Agreement and the Co-Promotion Plan.  Such responsibilities shall be in addition to but not to the exclusion of the promotion of Doxil ®  and Procrit ® on behalf of OBI.  During the Co-Promotion Term, OBI shall promptly notify MLNM at least [**] days in advance, to the extent practical but in no event later than the first of the following occurrences, of (a) the implementation of any reduction in the OBI Sales Force to less than [**] percent ([**]%) of the Current Sales Force Size or (b) the removal of one or more of the aforementioned products (Doxil ®  and Procrit ® ) from the group of products that the OBI Sales Force is engaged to promote or the addition of one or more products to their promotional activities.  In addition, as soon as practicable but no later than [**] days after such notification to MLNM, OBI shall provide the Steering Committee with a written plan that demonstrates that OBI shall continue to direct the OBI Sales Representatives  to meet the Call Standard  following such reduction in the Sales Force and/or change in the product mix.  In the event that OBI fails to meet the Call Standard, and does not satisfy the Minimum Commitment in the first full Measurement Period occurring after notification of such sales force reduction or product mix change, an OBI Non-Performance Breach shall be deemed to have occurred and such Measurement Period shall be treated as the [**] Non-Performing Period under Section 3.2.4 if, at any time prior to such first full Measurement Period, there is one or more Non-Performing Period.

3.3.3                         OBI shall provide appropriate incentives that are competitive in the marketplace to its Co-Promotion Representatives to optimize OBI’s Co-Promotion of the Product in accordance with Applicable Laws.  Such incentives shall include, without limitation, attributing not less than [**] percent ([**]%) of the total target incentive compensation that may be earned by each Sales Representative to his or her efforts towards Co-Promotion of the Product in the Co-Promotion Territory.  OBI shall be solely responsible for providing compensation and benefits due to the Co-Promotion Representatives.

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3.4                                Promotional Materials.

3.4.1                         All electronic and physical advertising, promotional, educational, training and communication materials for marketing and advertisement of the Product in the Co-Promotion Territory including, without limitation, detail aids, file cards, premium items, reprints, booth panels and any other promotional support items (collectively, the “Promotional Materials” ) shall be developed, produced and revised solely by or at the direction of MLNM, provided, however that the Core Promotional Materials shall be developed and revised as set forth in Section 2.4.  Promotional Materials include Core Promotional Materials.

3.4.2                         In the event that there are certain MLNM Promotional Materials other than the Core Promotional Materials that OBI considers useful in its Co-Promotion of the Product, such as MLNM’s Patient Starter Kit, OBI shall notify the Co-Promotion and Marketing Committee.  If approved by such committee, MLNM shall provide such other Promotional Materials to OBI and charge OBI an amount equal to MLNM’s direct cost.  OBI shall pay to MLNM such amounts within [**] days after OBI’s receipt of an invoice for such amounts.

3.4.3                         OBI shall provide sales direction, training and communications to all Co-Promotion Representatives on a basis and in a manner that is consistent with the Product Label and Insert and Promotional Materials that OBI received pursuant to this Agreement.  OBI shall, and shall cause its Sales Representatives to (a) only use such Promotional Materials provided by MLNM in connection with the Co-Promotion of the Product, (b) ensure that all statements and claims related to the Product, including as to efficacy and safety, are consistent with and in strict compliance with the Product Label and Insert and such Promotional Materials, and all Applicable Laws, including the Act, (c) ensure that all comments about the Product, Product competition, other products and MLNM are truthful, accurate and in strict compliance with Applicable Laws, and (d) not change such Promotional Materials in any respect.  Without limitation to the foregoing, OBI shall not, and shall not cause or permit its Sales Representatives to make any untrue or misleading statements or comments about the Product, and/or take any action that jeopardizes, or could reasonably be expected to jeopardize the goodwill or reputation of MLNM or its products.

3.5                                Product Sales.

3.5.1                         MLNM shall have the sole right and responsibility for establishing and modifying the terms and conditions of the sale of the Product within the Co-Promotion Territory, including (a) the price at which the Product shall be sold, (b) whether the Product shall be subject to trade or quantity discounts, (c) whether any discount shall be provided for payments on accounts receivable, (d) whether the Product shall be subject to rebates, returns and allowances or retroactive price reductions, (e) the channels of distribution of the Product, (f) whether credit is to be granted or refused in connection with any sale of Product, and (g) discussions with Government Authorities regarding Product pricing or reimbursement.

3.5.2                         MLNM shall provide Sales Representatives with general information related to the placement of orders for the Product by health care professionals with prescribing authority in the Co-Promotion Territory.  OBI shall not, and shall not permit its Sales Representatives to, solicit or accept orders for the Product but rather, shall promptly direct any orders that it receives and cause its Sales Representatives to promptly direct any orders they may receive to MLNM or to its sole distributor, MillenniumDirect™, or any other such distributor as

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designated by MLNM.  MLNM shall cause its sole distributor to accept all orders for the Product within the Co-Promotion Territory at pricing determined by MLNM in its sole discretion and subject to MLNM’s standard terms and conditions.  Such standard terms and conditions as in effect on the Effective Date are attached as Appendix D to this Agreement and MLNM shall provide any modification thereto to OBI as soon as practicable but no later than within [**] days after the effectiveness of such modifications, along with a corresponding update to Appendix D .  MLNM shall be solely responsible for responding to requests from MLNM Targets for individual patients who need the Product but are unable to afford it.  OBI shall promptly direct any such requests that it receives and cause its Sales Representatives to promptly direct any such requests that they may receive to MLNM.

3.6                                Product Recall and Withdrawal.   Recalls and withdrawals of the Product shall be handled in accordance with the Collaboration and License Agreement.  In the event that MLNM decides to conduct a recall in the Co-Promotion Territory in accordance with the Collaboration and License Agreement, MLNM shall advise OBI with respect to any actions to be taken by OBI in connection with the recall.

3.7                                Product Return.   MLNM shall have the sole responsibility and right to accept, either directly or indirectly, any request to return Product in the Co-Promotion Territory.  OBI shall not solicit the return of any Product and shall promptly notify MLNM of any returned Product received by OBI by contacting the MLNM Medical Drug Information Call Center at 1-866-VELCADE or as may otherwise be reasonably directed by MLNM from time to time.  Any Product returned by OBI shall be accompanied by a fully completed return form provided by MLNM and shall be shipped by OBI to a facility designated by MLNM.  All reasonable shipping costs of OBI in connection with any Products returned by OBI to MLNM in the Co-Promotion Territory shall be reimbursed by MLNM.

3.8                                Product Medical Inquiries.

3.8.1                         MLNM shall have the exclusive right to respond to all questions or requests for information about the Product made by any medical professionals or any other person to OBI or its Sales Representatives that (a) are not appropriate, per Applicable Laws, for a response to be made by a Sales Representative, (b) if appropriate per Applicable Law for a response to be made by a Sales Representative, warrant a response beyond the knowledge or understanding of such Sales Representatives, or (c) are beyond the scope of the Core Promotional Materials (all such questions or requests being referred to as “Product Medical Inquiries” ).  OBI shall direct its Sales Representatives to direct all Product Medical Inquiries within [**] of their receipt thereof to the MLNM Medical Drug Information Call Center at 1-866-VELCADE or as may otherwise be reasonably directed by MLNM from time to time.  In no event shall OBI respond to, or permit its Sales Representatives to respond to any Product Medical Inquiry.

3.9                                Additional Activities.   OBI shall not be prohibited from undertaking promotional activities with respect to the Product that are in excess of those for which OBI is responsible under this Agreement and the then current Co-Promotion Plan, provided that such excess promotional activities (a) are not inconsistent with this Agreement or the then current Co-Promotion Plan, (b) are approved by the Co-Promotion and Marketing Committee, (c) are in

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compliance with Applicable Laws and industry guidance, including, without limitation, the Accreditation Council for Continuing Medical Education Standards for Support of Continuing Medical Education, the American Medical Association Guidelines on Gifts to Physicians from Industry, the Pharmaceutical Research and Manufacturers of America Code on Interactions with Healthcare Professionals,  (d) do not involve the development or use of additional promotional materials, (e) are undertaken and performed at the sole cost and expense of OBI, and (f) MLNM receives a report within [**] days of the end of each calendar month during which such activities are undertaken, describing such activities, including but not limited to, call information, frequency and other items identified by the Co-Promotion and Marketing Committee.

[Remainder of page intentionally left blank.]

 

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ARTICLE IV
GOVERNANCE

4.1      Steering Committee.

4.1.1        Formation; Purpose .  Simultaneously with the execution of this Agreement, the Parties shall establish a Steering Committee (the “Steering Committee” ) which shall: (a) oversee the activities to be undertaken by the Parties during the Pre-Commencement Period as described in Article II of this Agreement, (b) oversee the Co-Promotion activities to be under taken by the Parties during the Co-Promotion Term; (c) endeavor to resolve disputes of the Co-Promotion and Marketing Committee referred to the Steering Committee pursuant to Section 13.1.1.

4.1.2        Membership .         The Steering Committee shall consist of no more than six (6) members and no less than two (2), half of whom shall be management level employees of MLNM who are appointed by MLNM and half of whom shall be management level employees of OBI who are appointed by OBI.  Each Party shall promptly fill any vacancy created by the resignation or removal of any members appointed by such Party.  Either Party may remove and replace any of its members with or without cause at anytime by prior written notice to the other Party.

4.1.3        Meetings; Voting .   The Steering Committee shall meet at such times as determined by the Parties but not less than once per calendar quarter at locations designated on an alternate basis by the Parties.  Each Party shall bear its own costs associated with the attendance of its appointees at the meetings.  MLNM shall designate one of its appointees as the Chair of the Steering Committee.  The committee shall operate by consensus with each Party having one (1) vote on the Steering Committee.

4.2      Co- Promotion and Marketing Committee.

4.2.1        Formation; Purpose .  Prior to the commencement of the Co-Promotion Term, the Steering Committee shall establish a Co-Promotion and Marketing Committee (the “Co-Promotion and Marketing Committee” ) which shall be responsible for (a) the development, implementation and oversight of the activities of the Parties under the Co-Promotion Plan, (b) sharing relevant market information (e.g., market research) with each other to the extent permissible under Applicable Laws, (c) assessing and recommending mutually advantageous propositions for the Parties that MLNM may adopt in its sole discretion, and (d) ensuring consistent messaging regarding the combination of the Product with Doxil ®  consistent with the terms of Section 3.1.2, and discussing the messaging regarding the combination of the Product with doxorubicin in relapsed multiple myeloma.  OBI and MLNM shall share all proposed messaging and market research regarding the combined use of the Product with Doxil ® with the committee to enable it to discharge its responsibility pursuant to subpart (d) above.

4.2.2        Membership .         The Co-Promotion and Marketing Committee shall consist of an equal number of members appointed by each Party, which number shall be mutually agreed to by the Parties.  Each member shall be a senior sales and marketing employee of the Party appointing such member.  Each Party shall promptly fill any vacancy created by the resignation

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or removal of any members appointed by such Party.  Either Party may remove and replace any of its members with or without cause at anytime by prior written notice to the other Party.

4.2.3        Meetings; Voting .   The Co-Promotion and Marketing Committee shall meet at such times as determined by the Parties but not less than once per calendar quarter at locations designated alternately by each Party.  Each Party shall bear its own costs associated with the attendance of its appointees at the meetings.  Each Party shall designate one of its appointees to act as a liaison with the global commercialization team, i.e. the GCT as defined and established pursuant to the Collaboration and Licensing Agreement.  The committee shall operate by consensus with each Party having one (1) vote on the Co-Promotion and Marketing Committee.  Any disagreement of the committee shall be referred to the Steering Committee for attempted resolution.

4.2.4        Working Groups . The Co-Promotion and Marketing Committee may establish working groups to oversee particular projects or activities of such committee and each working group shall be constituted and shall operate as determined by such committee.

ARTICLE V
COMPENSATION

In consideration of OBI’s Co-Promotion of the Product in accordance with the terms of this Agreement and subject to the terms and conditions of this Agreement, MLNM shall provide compensation to OBI as set forth below in this Article V.

5.1      Call Costs Payments.

5.1.1        “Call Costs” means an amount equal to [**] Dollars ($[**]) with respect to each First Position Call and [**] Dollars ($[**]) with respect to each Second Position Call.  Beginning on January 1, 2008, each Call Cost shall be increased or decreased by the percentage increase or decrease in the applicable CPI as of the then most recent annual period ending December 31 over the level of such CPI on December 31, 2006.

5.1.2        In addition to the other amounts payable pursuant to this Article V, MLNM shall pay OBI [**] percent ([**]%) of each Call Cost (the “Call Cost Payment” ) with respect to each Call made by Sales Representatives to Co-Promote the Product to MLNM Targets in accordance with the Call Plan up to a maximum amount equal to (a) [**] Dollars ($[**]) per calendar quarter in each of 2007 and 2008 for all First Position Targets and (b) [**] Dollars ($[**]) per calendar quarter in 2007 and 2008 for all Second Position Targets.  Beginning on January 1, 2008, the maximum amounts set forth under subsections (a) and (b) above with respect to Call Cost Payments for 2008 shall be increased or decreased by the percentage increase or decrease in the applicable CPI as of the then most recent annual period ending December 31 over the level of such CPI on December 31, 2006.

5.2      Variable Costs. In addition to the other amounts payable pursuant to this Article V, MLNM shall also make the following payments to OBI (collectively referred to as “Variable Cost Payments” ):

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5.2.1        Incentive Compensation .  Quarterly payments of [**] Dollars ($[**]) with respect to each of 2007 and 2008 for incentive compensation (the “Incentive Payments” ) for those OBI sales personnel who are directly involved in the Co-Promotion provided that OBI submits a report of total Variable Cost Payments due in accordance with Section 5.5.2 of this Agreement.  OBI shall use the Incentive Payments in accordance with Section 3.3.3 of this Agreement.

5.2.2        Core Promotional Materials .  An “in-kind” payment of up to [**] Dollars ($[**]) (the “In Kind Payment” ) in each of 2007 and 2008 in Core Promotional Materials to be used by the Sales Representatives.  This payment shall be calculated using the “direct costs” of MLNM to produce such Core Promotional Materials.  The cost of any Core Promotional Materials in excess of the In Kind Payment in either 2007 or 2008 must be agreed to by the Co-Promotion and Marketing Committee.  If approved, the amount in excess of the In Kind Payment shall be shared equally by the Parties unless otherwise agreed by the Co-Promotion and Marketing Committee.  The In Kind Payment may not be applied towards the cost of Promotional Materials requested by OBI other than Core Promotional Materials pursuant to Section 2.4.3.  OBI shall pay its share of the production costs for the copies of the Core Promotional Materials provided by MLNM in excess of the In Kind Payment within [**] days of invoice from MLNM.

5.2.3        Co-Promotion Manager .  [**] Dollars ($[**]) in each of 2007 and 2008 to reimburse OBI its actual, out-of-pocket costs of a fully dedicated employee of OBI who is at a director level or above, to oversee and manage OBI’s day-to-day operations under this Agreement (the “Co-Promotion Manager” ). The foregoing amounts shall be pro-rated if the Co-Promotion Manager is directly involved in these activities only for partial Measurement Periods.

5.2.4        Field Sales Training .  MLNM shall reimburse OBI for actual, out-of-pocket incremental costs incurred by OBI as a result of training activities of  Co-Promotion Representatives that are for the purposes of training related exclusively to the Co-Promotion of the Product in connection with the Training Plan (i.e. no reimbursement shall be due in connection with training activities that are only partially related to the Co-Promotion of the Product or outside of the Training Plan) in the following amounts:

(a)           Up to an amount not to exceed [**] Dollars ($[**]) in 2006; provided, however, to the extent that MLNM performs any of OBI’s obligations with respect to training activities per the Training Plan in 2006, including, without limitation, the production of training binders in order to timely complete the required activities under the Co-Promotion Plan, then the costs incurred by MLNM in performing OBI’s obligations, shall be deducted from the $[**];

(b)           Up to an amount not to exceed [**] Dollars ($[**]) in 2007; and

(c)           Up to an amount not to exceed [**] Dollars ($[**]) in 2008.

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5.3       Commissions .   In addition to the other amounts payable pursuant to this Article V, MLNM shall also pay OBI commissions as set forth in this Section 5.3 (the “Commission Payments” ):

5.3.1        With respect to 2007 calendar year Net Sales during the Co-Promotion Term, MLNM shall pay OBI:

[**] percent ([**]%) of that portion of such annual aggregate Net Sales that are greater than [**] Dollars ($[**] shall be referred to as “2007 Baseline”), but are less than or equal to [**] Dollars ($[**]), and

[**] percent ([**]%) of that portion of annual aggregate Net Sales that exceed [**] Dollars ($[**]):

 

2007 Baseline of Annual
Aggregate Net Sales of
Product

Amount of Annual Aggregate
Net Sales of the Product that
Exceed the 2007 Baseline

Commission Fee (as a %
of such Net Sales Above
2007 Baseline)

$[**]

$[**] - $[**]

[**]%

 

Greater than $[**]

[**]%

 

5.3.2        With respect to 2008 calendar year Net Sales during the Co-Promotion Term, MLNM shall pay OBI:

[**] percent ([**]%) of that portion of such annual aggregate Net Sales that are greater than [**] Dollars ($[**] shall be referred to as “2008 Baseline”) but are less than or equal to [**] Dollars ($[**]), and,

[**] percent ([**]%) of that portion of annual aggregate Net Sales that exceed [**] Dollars ($[**]).

2008 Baseline of Annual
AggregateNet Sales of
Product

Amount of Annual Aggregate
Net Sales of the Product that
Exceed the 2008 Baseline

Commission Fee (as a %
of such Net Sales Above
2008 Baseline)

$[**]

$[**] - $[**]

[**]%

 

Greater than $[**]

[**]%

 

5.3.3        Thus, pursuant to Sections 5.3.1 and 5.3.2, Commission Payments on aggregate Net Sales of the Product during the Co-Promotion Term in a calendar year shall be paid at the rate applicable to the portion of Net Sales within each of the applicable defined Net Sales levels during such calendar year.  By way of example:

If, aggregate Net Sales of the Product in 2007 equal $[**], then the commission fees payable to OBI would be calculated by adding U + V = W:

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(a)           Where U equals a Commission Payment of [**]% of that portion of the Net Sales that is greater than the 2007 Baseline  but less than or equal to $[**], which equals [**];

(b)           Where V equals a Commission Payment of [**]% of that portion of Net Sales which exceeds $[**], which equals [**]; and

(c)           W equals $[**].

5.3.4        The 2007 Baseline and the 2008 Baseline shall apply with respect to all Commission Payments based on Net Sales for 2007 and 2008, respectively, including, without limitation, to the extent such Commission Payments are payable  pursuant to Section 8.3.2.  MLNM shall determine when Net Sales occur for purposes of this Article V in a manner consistent with MLNM’s customary and usual accrual procedures, consistently applied.

5.4      Tail Payment.

5.4.1        In addition to the other amounts payable pursuant to this Article V, in the event that the sum of the aggregate Net Sales of the Product during the Co-Promotion Term in 2007 and 2008 exceeds [**] Dollars ($[**]), then additional commissions shall be payable by MLNM to OBI based on Net Sales in 2009 and 2010 (each, a “Tail Payment” ), as follows:

(a)           In the event that Net Sales in 2009 exceed Four Hundred Million Dollars ($[**]), MLNM shall pay OBI a Tail Payment based on Net Sales in 2009 calculated as follows:

Tail Payment = [**], up to an amount not to exceed $[**]; and

(b)           In the event that Net Sales in 2010 exceed [**] Dollars ($[**]), MLNM shall pay OBI a Tail Payment based on Net Sales in 2010 calculated as follows:

Tail Payment = [**], up to an amount not to exceed $[**].

5.4.2        By way of example, in the event that aggregate Net Sales of the Product are $[**].  In such events, the [**] calculated for use in determining the Tail Payments in 2009 and 2010 would be: [**].

5.4.3        No Tail Payment shall be earned or become payable based on Net Sales in 2009 or 2010 if the sum of the aggregate Net Sales in 2007 and 2008 is less than [**] Dollars ($[**].

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5.5      Payment Terms.

5.5.1        With respect to any payments due under Section 5.2.4(a), within [**] days after the end of 2006, OBI shall submit to MLNM a report providing in reasonable detail an accounting of the applicable training costs incurred by OBI in 2006.  Within [**] days following MLNM’s receipt of such report, MLNM shall pay to OBI any undisputed amounts contained in such report.

5.5.2        Subject to Section 3.2, with respect to Call Cost Payments and Variable Cost Payments for each of 2007 and 2008, within [**] days after the end of each quarter, OBI shall submit to MLNM a report providing in reasonable detail an accounting of the total Call Cost Payments and the total Variable Cost Payments due for each quarter of 2007 and 2008 Within [**] days following MLNM’s receipt of such report, MLNM shall pay to OBI any undisputed amounts contained in such report.

5.5.3        Within [**] days after the end of each quarter, MLNM shall submit to OBI a report providing in reasonable detail an accounting of the type and quantity of Core Promotional Materials provided to OBI as In-Kind Payments under Section 5.2.2, as well as the direct costs of MLNM to produce such Core Promotional Materials and to be charged against the amounts permitted under Section 5.2.2.

5.5.4        MLNM shall calculate the Commission Payments payable to OBI for each of 2007 and 2008, if any, and pay the same to OBI within [**] days of the end of the applicable year.  Together with each such payment, MLNM shall submit to OBI a report providing in reasonable detail an accounting of all Net Sales made during such year and the calculation of the applicable Commission Payments.

5.5.5        MLNM shall calculate the Tail Payments payable to OBI for each of 2009 and 2010, if any, and pay the same to OBI within [**] days of the end of the applicable year.  Together with each such payment, MLNM shall submit to OBI a report providing in reasonable detail an accounting of all Net Sales made during such year and the calculation of the applicable Tail Payments.

5.5.6        All payments to be made by one Party to the other Party  pursuant to this Agreement shall be made electronically pursuant to wire transfer instructions provided by the receiving Party to the paying Party, as may be updated from time to time.

5.5.7        Each Party will provide the other Party, to the extent such information is  available, annual estimates of the payments described above in this Section 5.5 to assist the other Party in its accounting practices regarding any payments under this Agreement.

5.6      Late Payments.   Each Party shall pay interest to the other Party on the aggregate amount of any undisputed payments that are not paid on or before the date such payments are due under this Agreement at a rate per annum equal to the lesser of one percent (1%) per month or the highest rate permitted by applicable law, calculated on the number of days such payments are paid after the date such payments are due and compounded monthly.

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5.7       Promotion Expenses.  Except as otherwise expressly set forth in this Agreement, each Party shall bear and be solely responsible for all costs and expenses incurred by it in connection with the promotion of the Product and the performance of its obligations under this Agreement.

5.8      Tax Matters.

MLNM shall make all payments to OBI under this Agreement without deduction or withholding for any Taxes except to the extent that any such deduction or withholding is required by Applicable Law.  Each Party shall otherwise be responsible for its own income taxes and any other Taxes payable by such Party arising under or in connection with this Agreement and shall pay all such Taxes and file any applicable tax returns on a timely basis.   Any tax required to be withheld on amounts payable under this Agreement shall promptly be paid by MLNM on behalf of OBI to the appropriate governmental authority, and MLNM shall furnish OBI with proof of payment of such tax.  Any such tax required to be withheld shall be an expense of and borne by OBI.

ARTICLE VI
ADVERSE EVENT REPORTING; FIELD REPORTS; PRODUCT COMPLAINTS,
GOVERNMENTAL COMMUNICATIONS; STATE REPORTING.

6.1      Adverse Events.   OBI shall, and shall cause each of its Sales Representatives to provide notice to MLNM within [**] of the time it, he or she becomes aware of an Adverse Event associated with use of the Product (whether or not the reported effect is (a) described in the full prescribing information or the published literature with respect to such Product or (b) determined to be attributable to such Product), or any information in or coming into its, his or her possession or control concerning such Adverse Event by contacting the MLNM Medical Drug Information Call Center at 1-866-VELCADE or by completing the adverse event report form provided by MLNM and submitting such form to MLNM or its designated safety contractor.

6.2      Field Reports.  OBI shall, and shall cause each of its Sales Representatives to, notify MLNM within [**] of the time it, he or she becomes aware of any information that might necessitate the filing by MLNM of a field alert report, as required under 21 C.F.R. §314.81(b)(1) (a “Field Alert” ), as such regulation may be amended from time to time, by contacting the MLNM Call Center at 1-866-VELCADE.

6.3      Field and Efficacy.

6.3.1        OBI shall immediately notify MLNM of any information OBI receives regarding any threatened or pending action by any Governmental Authority that may affect the safety or efficacy claims of the Product or the continued marketing and Co-Promotion of the Product.  Upon receipt of any such information, MLNM may consult with OBI in an effort to arrive at a mutually acceptable procedure for taking appropriate action; provided, however, that

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nothing in this Agreement shall restrict MLNM’s ability to make a timely report of such matter to any Governmental Authority or take other action that it deems to be appropriate or required by Applicable Law.

6.3.2        MLNM shall notify OBI immediately of any formal communication received by MLNM from the FDA regarding any threatened or pending action which may affect the safety or efficacy claims of the Product or the continued marketing and Co-Promotion of the Product in the Co-Promotion Territory.

6.4      Product Complaints.   OBI shall, and shall cause each of its Sales Representatives to, notify MLNM as soon as possible, but no later than [**] of the time it, he or she becomes aware of any Product quality complaint associated with the use of the Product, including but not limited to those Product quality complaints associated with Adverse Events, by contacting the MLNM Medical Drug Information Call Center at 1-866-VELCADE.

6.5      MLNM Responsibility.

6.5.1        MLNM shall be solely responsible for (a) taking all actions and conducting all communication with all Third Parties in respect of the Product in the United States and its territories and possessions (other than the activities to be performed by OBI in accordance with the terms of this Agreement or the Co-Promotion Plan), including responding to all Product quality complaints in respect thereof, including complaints related to tampering or contamination, and (b) investigating, communicating and processing all Product quality complaints, information it receives under Section 6.3 as it relates to safety and efficacy claims, Adverse Events, and Field Alerts in respect of the Product in accordance with MLNM’s standard procedures, the Pharmacovigilance Agreement entered into by MLNM and Ortho Biotech, dated March 8, 2004, as amended from time to time, and the Quality Agreement entered into by MLNM and Cilag AG, an Affiliate of OBI, dated January 5, 2005, as amended from time to time, as applicable.

6.5.2        MLNM shall be solely responsible for the preparation, submission and prosecution of any application, report, submission and response to any Governmental Authorities in connection with the Product, including reporting Adverse Events and Field Alerts; provided that when feasible, MLNM shall consult with OBI with respect to any such matter and give due consideration to any comments provided by OBI.

6.6      OBI Communications.   Unless required by Applicable Law, OBI shall not communicate directly with any Governmental Authorities regarding the Product or otherwise take any action concerning any application, registration, authorization or approval under which the Product is sold.  OBI shall notify MLNM promptly of any communications with any Government Authorities concerning the Product and shall, to the extent permitted by Applicable Law, attach copies of all such communications to the notice sent.

6.7      OBI Cooperation.  OBI shall, at MLNM’s expense, cooperate with all of MLNM’s reasonable requests and use its reasonable efforts to assist MLNM in connection with (a) preparing any and all such reports with Governmental Authorities, (b) preparing and

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disseminating all such communications with third parties, and (c) investigating and responding to any Product quality complaint or adverse event related to the Product.

ARTICLE VII
AUDIT RIGHTS

7.1      Audit Right Period.   MLNM and OBI each agree that it shall, maintain true and complete books and records with respect to the performance of their obligations hereunder, including without limitation, reports, training assessments, field communications and directions, communications regarding Adverse Events and communications to or from Governmental Authorities, of items underlying all payment calculations, Net Sales and invoices related to this Agreement or the Co-Promotion Plan (the “Books and Records” ).

7.2      Compliance With Laws. Subject to OBI’s right to preserve its attorney-client privilege,, MLNM and/or its authorized agent may, at anytime during the Co-Promotion Term, with prior written notice to OBI and during normal business hours, perform an audit of the Books and Records of OBI for the purpose of verifying compliance with Applicable Laws relating to Federal Health Care Programs, other health care compliance laws and related industry guidelines by OBI in connection with the performance by OBI of its obligations hereunder.  MLNM shall bear the costs of such audit(s).If MLNM reasonably believes after such an audit that OBI is not in compliance with such laws or such industry guidelines, then OBI shall take the necessary steps to correct such non-compliance.

7.3      Compliance with Agreement.  MLNM and/or its authorized agent may, up to [**] in any given calendar year during the Co-Promotion Term with prior written notice to OBI and during a period mutually agreeable to both Parties, perform an audit of the Books and Records of OBI for the purpose of verifying compliance by OBI with this Agreement and the Co-Promotion Plan.  MLNM shall bear the costs of such audit(s).

7.4      Payment Audit.  Each Party will have the right annually at its own expense to have an independent, certified public accountant, selected by such Party and reasonably acceptable to the other Party, review any Books and Records of the other Party in the location(s) where such records are maintained by the other Party upon reasonable notice and during regular business hours and under obligations of confidence, for the sole purpose of verifying the basis and accuracy of payments made under this Agreement within the prior thirty-six (36) month period.  If the review of such Books and Records reveals there was a deficiency or overpayment with respect to any amounts due, then the Party owing payment shall promptly pay to the other Party the full amount of the deficiency or repay the full amount of the overpayment together with interest calculated in the manner provided in Section 5.6.  If any such discrepancies are greater than five percent (5%) of the amounts actually due, the non-reviewing Party shall pay all of the costs of such review.

 

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ARTICLE VIII
TERMINATION

8.1          Termination Except for the provisions expressly stated to survive pursuant to Section 14.18 or in the particular provision, this Agreement shall terminate as follows:

8.1.1        Automatically, effective upon the expiration of the Co-Promotion Term;

8.1.2        Effective thirty (30) days following receipt of the terminating Party’s written termination notice by the non-terminating Party, as applicable:

(a)           By written notice in accordance with Section 3.2.4 from MLNM for an OBI Non-Performance Breach;

(b)           By written notice from the non-breaching Party following a material breach of this Agreement by the other Party (other than an OBI Non-Performance Breach), where such breach is not cured by the other Party within thirty (30) days of written notice of the breach by the non-breaching Party, or if the breach is, by its very nature, not curable, then upon written notice by the non-breaching Party;

(c)           By written notice from MLNM in the event of a Change of Control of MLNM (such notice to be given no later than thirty (30) days following such Change of Control);

(d)           By written notice from OBI in the event of a Change of Control of MLNM where a Competitor is a party to such Change of Control (such notice to be given no later than forty-five (45) days after such Change of Control);

(e)           By written notice from MLNM, in the event that the Collaboration and License Agreement is terminated due to a material breach by OBI, where such breach was not cured within any applicable cure period;

(f)            By written notice from OBI, in the event that the Collaboration and License Agreement is terminated due to a material breach by MLNM, where such breach was not cured within any applicable cure period;

(g)           By three (3) months prior written notice from MLNM at any time following MLNM’s receipt of written notice from OBI that OBI is electing to terminate the Collaboration and License Agreement for convenience in accordance with the terms thereof; and

(h)           By written notice by a Party to the other Party in the event that one of the following events occurs (either, an “Unexpected Market Event” ):

(A)                               If for three (3) consecutive calendar quarters, Net Sales for such quarters are less than threshold sales, where threshold sales equal [**] Dollars ($[**]) for each calendar quarter of 2007 and [**] Dollars ($[**]) for each calendar quarter of 2008; or

 

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(B)                                 The non-terminating Party enters into a corporate integrity agreement with a Governmental Authority that would require the terminating Party to become a party to such agreement or otherwise would subject the terminating Party to such agreement’s terms.

8.1.3        Automatically, effective upon MLNM’s written notice to OBI in the event that MLNM commences withdrawal of the Product from the market in the Co-Promotion Territory for all indications and uses for health or safety reasons or upon termination of the Collaboration and License Agreement by OBI for safety issues pursuant to the terms of Section 12.3(b) thereof.

8.2          Termination for Change in Applicable Laws.   In the event that a Party becomes “At Risk”, then such Party shall be entitled to elect, by written notice to the other Party, to terminate this Agreement effective immediately upon receipt of such notice by the other Party.  A Party shall be “ At Risk ” if:

8.2.1        Such Party receives a final non-appealable determination by a Governmental Authority having jurisdiction with respect thereto, or there is a change in Applicable Law relating to Federal Health Care Programs, in related health care laws or regulations, or in the Act or FDA regulations, which determination or change in such Applicable Law as applied does, or is likely to, based upon the written opinion of legal counsel to the such Party:

(a)           Prohibit the execution, implementation or continuance of this Agreement by such Party or the Co-Promotion of the Product in the manner contemplated by this Agreement; or

(b)           By virtue of this Agreement or the Co-Promotion of the Product in the manner contemplated by this Agreement, result in:

(i)            the revocation of any material state and/or federal general operating license, permit or certificate of such Party; or
(ii)           the subjection of such Party to a significant level of governmental scrutiny or reporting requirements; and

8.2.2        The Parties, using commercially reasonable efforts and acting in good faith to preserve the relationship and the expectations and intent of the Parties hereto, are unable to reach a mutual agreement to amend this Agreement sufficiently to meet the requirements of the determination or change in Applicable Law on or prior to the earlier of (x) the thirtieth (30th) day following the change in Applicable Law, or (y) the effective date, if any, of such change in Applicable Law.

 

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8.3          Effect of Termination.

8.3.1        Materials .  Upon the effective date of termination of this Agreement, other than Sections 8.1.2(a), (e) and (f) which shall take effect immediately upon notice, OBI shall immediately (a) cease, and cause its Co-Promotion Representatives to cease all Co-Promotion of the Product, (b) discontinue the use of any Promotional Materials provided pursuant to this Agreement; and (c) discontinue the use of any MLNM sales data provided hereunder.  OBI shall, as requested by MLNM, either promptly return to MLNM all Promotional Materials, all training materials and all other materials related to the Product provided by MLNM pursuant to this Agreement or the Co-Promotion Plan or certify to MLNM to the destruction of same.  With respect to any information, data or reports provided by MLNM to OBI under this Agreement, including, without limitation, MLNM sales data, upon the effective date of termination of this Agreement, OBI shall remove such information from its internal systems and certify to MLNM to such removal.

8.3.2        Payments .  Upon expiration or termination of this Agreement, the obligations of MLNM to pay OBI any earned and unpaid amounts pursuant to Sections 5.1, 5.2, and 5.3, to make Tail Payments, if payable, pursuant to Section 5.4, and to pay any other earned and unpaid amounts pursuant to any other provision of this Agreement shall survive except as follows:

(a)           In the event that this Agreement is terminated by MLNM pursuant to Section 8.1.2(a) (OBI Non-Performance Breach), then, (i) MLNM’s obligations to pay Call Cost Payments, Variable Cost Payments and Commission Payments shall be modified as set forth in Section 3.2.4, and (ii) OBI shall be obligated to pay MLNM a payment of Ten Million Dollars ($10,000,000) (the “ Termination Fee ”).  For clarity, no Call Cost Payments, Variable Cost Payments, nor Commission Payments shall be earned after the effective date of termination.  In such event no Tail Payment shall be due or paid.

(b)           In the event this Agreement is terminated by MLNM pursuant to Section 8.1.2(b) (i.e. a material uncured breach by OBI), then MLNM shall be obligated to (i) make Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination and (ii) the Pro-Rata Commission. For clarity, no Call Cost Payments, Variable Cost Payments, nor Commission Payments shall be earned  after the effective date of termination.  In such event no Tail Payment shall be due or paid.

(c)           In the event this Agreement is terminated by OBI pursuant to Section 8.1.2(b) (i.e. a material uncured breach by MLNM), then MLNM shall be obligated to make (i) Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination and (ii) the Pro-Rata Commission. For clarity, no Call Cost Payments, Variable Cost Payments, nor Commission Payments shall be earned after the effective date of termination.  In such event no Tail Payment shall be due or paid.

(d)           In the event that this Agreement is terminated by MLNM pursuant to Section 8.1.2(c) (i.e. a Change of Control of MLNM), then MLNM shall be obligated to pay

 

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(i) Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination and (ii) the Pro-Rata Commission and (iii) as applicable, one of the following:  (x) a payment of [**] Dollars ($[**]) if such Change of Control occurs on or before September 30, 2007; or (y) a payment of [**] Dollars ($[**]) if such Change of Control occurs after September 30, 2007 and on or before June 30, 2008; or (z) a payment of [**] Dollars ($[**]) if such Change of Control occurs after June 30, 2008 and on or before December 31, 2008.  For clarity, no Call Cost Payments, Variable Cost Payments, Commission Payments or Tail Payments shall be earned after the effective date of termination.  Notwithstanding anything to the contrary in this Agreement any termination by MLNM pursuant to Section 8.1.2 (c) shall not constitute a breach of this Agreement nor entitle OBI to additional remedies other than those specified in this Section 8.3.2(d).

(e)           In the event that this Agreement is terminated by OBI pursuant to Section 8.1.2(d) (i.e. a Change of Control of MLNM) or Section 8.1.3 of this Agreement, then MLNM shall be obligated to pay the (i) Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination and (ii) the Pro-Rata Commission.  For clarity, no Call Cost Payments, Variable Cost Payments nor Commission Payments shall be earned after the effective date of termination.  In such event no Tail Payment shall be due or paid.

(f)            In the event that this Agreement is terminated by MLNM pursuant to Section 8.1.2(e) (i.e. a termination of the Collaboration and License Agreement for any reason other than a material uncured breach by MLNM), then MLNM shall be obligated to pay (i) Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination and (ii) the Pro-Rata Commission.  For clarity, no Call Cost Payments, Variable Cost Payments nor Commission Payments shall be earned after the effective date of termination.  In such event no Tail Payment shall be due or paid.

(g)           In the event that this Agreement is terminated by OBI pursuant to Section 8.1.2(f) (i.e. a termination of the Collaboration and License Agreement pursuant to a material uncured breach by MLNM) then MLNM shall be obligated to pay (i) Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination and (ii) the Pro-Rata Commission.  For clarity, no Call Cost Payments, Variable Cost Payments,  nor Commission Payments shall be earned after the effective date of termination.  In such event no Tail Payment shall be due or paid.

(h)           In the event that this Agreement is terminated by MLNM pursuant to Section 8.1.2(g) (i.e. termination for convenience of the Collaboration and License Agreement by OBI), then MLNM shall only be obligated to pay Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination.  For clarity, no Call Cost Payments nor Variable Cost Payments shall be earned after the effective date of termination.  In such event no Commission Payments or Tail Payments shall be due or paid.

 

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(i)            In the event that this Agreement is terminated by OBI or MLNM pursuant to Section 8.1.2(h) of this Agreement (i.e. an Unexpected Market Event) or Section 8.2 of this Agreement (i.e. Change in Applicable Laws), then MLNM shall only be obligated to pay Call Cost Payments and Variable Cost Payments (subject to the maximum amounts set forth in Section 5.1 and 5.2) that have been earned or are Non-Cancellable through the effective date of termination.  For clarity, no Call Cost Payments nor Variable Cost Payments shall be earned after the effective date of termination.  In such event no Commission Payments or Tail Payments shall be due or paid..

8.3.3        Liquidated Damages .  The Parties agree that any amounts that either Party may be required to forfeit or pay as a Termination Fee pursuant to Section 8.3.2 are intended to be liquidated damages and not to provide for penalties, that such amounts are a reasonable estimation of the anticipated losses that are likely to be suffered by the applicable Party in the event of a termination of this Agreement based on the circumstances under which they are to be forfeited, and that the actual losses are difficult to ascertain or incapable of estimation at this time.

8.3.4        Non-Exclusive Remedies; Right to Offset .  Except as expressly provided in Section 3.2.5, the consequences set forth in this Section 8.3 are not intended to be the exclusive remedies of the Parties in connection with the breach of or termination of this Agreement.  To the extent not otherwise precluded under Section 14.13 of this Agreement, in the event that a Party terminating this Agreement pursuant to Section 8.1.2(b) or 8.1.2(e) has suffered any losses, costs, expenses, damages or penalties as a result of the actions of the other Party that gave rise to the right of termination, then the terminating Party may offset the amounts of such losses, costs, expenses or penalties against any amounts owed by the terminating Party pursuant to Section 8.3.2.

8.4          Right of First Negotiation .  In the event of termination of this Agreement by MLNM pursuant to Section 8.1.2(a) (OBI Non-Performance Breach), Section 8.1.2(b) (i.e. a material uncured breach by OBI) or by OBI pursuant to Section 8.1.2(d) (i.e. a Change of Control of MLNM), MLNM shall be free to enter into an exclusive or non-exclusive co-promotion agreement with respect to the Product in the Co-Promotion Territory (both as defined in this Agreement) for a period or [**] months thereafter without any further obligation to OBI under Section 6.2 of the Collaboration and License Agreement with respect thereto.

ARTICLE IX
RESTRICTIVE COVENANTS

9.1          Acknowledgement.  The Parties recognize that as a result of their relationship pursuant to this Agreement, each Party shall acquire Confidential Information regarding the business of the other Party which is extremely valuable to that Party and which would be extremely detrimental if used outside the scope of this Agreement.  Such Confidential Information may include information about a Party’s employees and other business relations, in which a Party invests substantial time and resources to develop and maintain.  In recognition of the foregoing, and as material inducement to enter into this Agreement, each Party agrees to be bound by the covenants set forth below in this Article IX.

 

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9.2          Confidentiality.

9.2.1        During the Pre-Commencement Period and the Co-Promotion Term of this Agreement and for a period of [**] years thereafter, each Party agrees to keep in confidence and not to disclose to any Third Party, or use for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement, any Confidential Information of the other Party.  As used herein, “Confidential Information” shall mean all trade secrets or confidential or proprietary information of the disclosing Party designated as such in writing by the disclosing Party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such trade secret or confidential or proprietary information is disclosed by the disclosing Party to the receiving Party.  Notwithstanding the foregoing, (x) sales data provided pursuant to Section 2.2.3(b) and Training Materials provided pursuant to Section 2.3.2 shall constitute Confidential Information under all circumstances and only (y) information which is orally or visually disclosed to the receiving Party by the disclosing Party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information if the disclosing Party, within thirty (30) days after such disclosure, delivers to the receiving Party a written document or documents describing or summarizing such information and referencing the place and date of such oral, visual or written disclosure and the names of the employees or officers of the receiving Party to whom such disclosure was made.  The terms of this Agreement shall be considered Confidential Information hereunder.  The restrictions on the disclosure and use of Confidential Information set forth in the first sentence of this Section 9.2.1 shall not apply to any Confidential Information that:

(a)           was known by the receiving Party prior to disclosure by the disclosing Party hereunder (as evidenced by the receiving Party’s written records or other competent evidence);

(b)           is or becomes part of the public domain through no fault of the receiving Party;

(c)           is disclosed to the receiving Party by a Third Party having a legal right to make such disclosure without violating any confidentiality or non-use obligation that such Third Party has to the disclosing Party; or

(d)           is independently developed by personnel of the receiving Party who did not have access to the Confidential Information (as evidenced by the receiving Party’s written records or other competent evidence).

9.2.2        In addition, if either Party is required to disclose Confidential Information of the other Party by Applicable Law, including without limitation by the rules or regulations of the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States or of any stock exchange or NASDAQ, such Party shall provide prior notice of such intended disclosure to such other Party if possible under the circumstances and shall disclose only such Confidential Information of such other Party as is required to be disclosed.  In addition, either Party may disclose to bona fide potential investors, lenders and acquirors/acquirees, and to such Party’s consultants and advisors, the existence and terms of this Agreement to the extent necessary in connection with a proposed equity or debt financing of

 

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such Party, or a proposed acquisition or business combination, so long as such recipients are bound in writing to maintain the confidentiality of such information in accordance with the terms of this Agreement.

9.2.3        Each Party agrees that it shall provide or permit access to Confidential Information received from the other Party and such Party’s Affiliates and representatives only to the receiving Party’s and the receiving Party’s Affiliates’ employees, consultants, advisors, sublicensees and sub-distributors who in such Party’s reasonable judgment have a need to know such Confidential Information to assist the receiving Party with the activities contemplated by this Agreement and who are subject to obligations of confidentiality and non-use with respect to such Confidential Information similar to the obligations of confidentiality and non-use of the receiving Party pursuant to Section 9.2.1; provided that MLNM and OBI shall each remain responsible for any failure by its and its Affiliates’ respective employees, consultants, advisors and sublicensees and sub-distributors, to treat such Confidential Information as required under Section 9.2.1 (as if such employees, consultants, advisors and sublicensees and sub-distributors were Parties directly bound to the requirements of Section 9.2.1).

9.3          Non-Solicitation.  Each Party shall not, and shall cause its Affiliates who are involved in the performance of this Agreement not to, directly or indirectly solicit for employment any employee of the other Party who has been directly involved in the performance of any obligations of a Party pursuant to this Agreement for a period of [**] after the earlier of (a) the termination or expiration of this Agreement, or (b) the termination of such individual’s employment with the other Party; provided, this non-solicitation restriction shall not apply to the solicitation of or employment of any person pursuant to any general solicitation of employment not specifically directed to any Party’s employees.

9.4          Non-Competition.   During the Co-Promotion Term, (a) OBI shall not promote in the Co-Promotion Territory any pharmaceutical product that is a Competing Product (as defined in the Collaboration and License Agreement) or any other therapeutic for the treatment of multiple myeloma or mantle cell lymphoma, and (b) MLNM shall not promote in the Co-Promotion Territory (i) Aranesp, Epogen or Mircera, or (ii) doxorubicin except that MLNM shall have the right notwithstanding the foregoing (a) to promote the Product for use in combination with any such product and (b) to promote any such product solely as a result in the Change of Control of MLNM.

ARTICLE X
INTELLECTUAL PROPERTY

10.1        The Product.   OBI shall Co-Promote the Produ














 
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