<PAGE>
EXHIBIT 10.8
CONFIDENTIAL MATERIAL APPEARING IN THIS
DOCUMENT WAS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION IN ACCORDANCE WITH RULE
24b-2, PROMULGATED UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION WAS REPLACED WITH
ASTERISKS.
CO-PROMOTION AGREEMENT
THIS CO-PROMOTION AGREEMENT ("Agreement")
is entered into as of July 14, 2004
("Effective Date") by and between Cardinal
Health PTS, LLC, with an office at
7000 Cardinal Place, Dublin, Ohio 43017 and
Bone Care International, Inc.,
having a principal place of business at
Bone Care Center, 1600 Aspen Commons,
Middleton, Wisconsin 53562 ("BCI")
hereinafter collectively referred to as the
"Parties".
RECITALS
WHEREAS,
Cardinal Health's Pharmaceutical Technologies and Services
("PTS") segment offers, among other things,
health care marketing services,
including without limitation, medical
education, marketing, and contract sales
services; and
WHEREAS,
BCI owns a pharmaceutical product called Hectorol(R) which is
currently available in 0.5 mcg capsule and
2.5 mcg capsule dosage forms for the
following indications, respectively:
secondary hyperparathyroidism in Stage 3-4
Chronic Kidney Disease; and secondary
hyperthyroidism in Stage 5 Chronic Kidney
Disease (CKD); and
WHEREAS,
BCI has recently received approval of the 0.5 mcg dosage form;
and
WHEREAS,
BCI wants to generate increased demand for Hectorol(R) 0.5 mcg
capsules through increased medical
education, Product Detailing, and other
marketing of the 0.5 mcg Product; and
WHEREAS,
Cardinal Health's PTS segment will provide a certain level of
healthcare marketing services, including a
contract sales force and promotional
services, at its own expense in exchange
for a share of Quarterly Net Sales
(defined below) of the 0.5 mcg Product,
subject to the terms and conditions
provided in this Agreement; and
WHEREAS,
BCI will commit to a certain level of spending on promotion, at
its own expense, in order to supporting the
marketing of the 0.5 mcg Product and
to induce Cardinal Health to enter into
this Agreement, subject to the terms and
conditions provided herein.
NOW, THEREFORE, in consideration of the
mutual covenants, terms and conditions
set forth below, the Parties agree as
follows:
<PAGE>
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following
terms when used in this Agreement and the
attached schedules shall, except where the
context otherwise requires, have the
following meanings:
(a)
"Act" means the
Federal Food, Drug and Cosmetic Act, as amended, and
the regulations promulgated thereunder from
time to time.
(b)
"Affiliate"
means any corporate or non-corporate business entity
that controls, is controlled by, or is
under common control with a party to this
Agreement. A corporation or non-corporate
business entity shall be regarded as
in control of another corporation if it
owns or directly or indirectly controls
at least forty percent (40%) of the voting
stock of the other corporation, or
(i) in the absence of the ownership of at
least forty percent (40%) of the
voting stock of a corporation or (ii) in
the case of a non-corporate business
entity, if it possesses directly or
indirectly, the power to direct or cause the
direction of the management and policies of
such corporation or non-corporate
business entity, as applicable.
(c)
"Applicable
Laws" means all federal, state and local laws, rules,
regulations, guidances, ordinances
applicable to the obligations of a party
under this Agreement.
(d)
"Cardinal
Promotional Spend" means collectively the total amount
spent by Cardinal Health in connection with
promotion of the Product as set
forth on Schedule 3.1 and Schedule 5.1, as
such amounts are amended from time to
time upon the mutual written agreement of
the Parties or as otherwise set forth
in this Agreement.
(e)
"Confidential
Information" shall have the meaning set forth in
Section 9.2.
(f)
"Contract Sales
Services" means those services provided by Cardinal
Health pursuant to Article 5 of this
Agreement.
(g)
"Coordinators"
shall have the meaning set forth in Section 13 of
Schedule 5.3.
(h)
"Co-Promote Fee"
has the meaning set forth in Section 6.1.
(i)
"Damages" shall
have the meaning set forth in Section 12.1.
(j)
"Direct
Expenses" shall have the meaning set forth in Section
4.5(a).
(k)
"FDA" means the
United States Food and Drug Administration and any
successor agency having substantially the
same functions.
(l)
"Detail" means a
legally compliant, interactive, and face-to-face
visit by a Representative with a Target
Physician during which the FDA-approved
indicated uses, safety, effectiveness,
contraindications, side effects, warnings
and other relevant characteristics of the
Products are described by the
Representative in a fair and balanced
manner consistent with the
2
<PAGE>
requirements of the Act, and using, as
necessary or desirable, the Product
Labeling and the Product Promotional
Materials. "Product Detail" means Detail of
a Product between Target Physician and
Representative. When used as a verb,
"Detail" or "Detailing" shall mean to
engage in a Detail as defined in this
definition.
(m)
"Employee
Selection Period" shall have the meaning set forth in
Section 5.7(d).
(n)
"Fiscal Quarter"
means each successive three month period beginning
on July 1 of each fiscal year, such that
(i) Q1 of a year represents July
through September, Q2 represents October
through December, Q3 represents January
through March, and Q4 represents April
through June, and (ii) fiscal year 2004
begins on July 1 of 2003, fiscal year 2005
begins on July of 2004 and so on.
(o)
"Force Majeure
Event" shall have the meaning set forth in Section
15.11.
(p)
"Forecasted
Quarterly Net Sales" shall be the forecasted Quarterly
Net Sales for a particular Fiscal Quarter,
as set forth on Schedule 6.1.
(q)
"JCC" has the
meaning set forth in Section 2.1 of this Agreement.
(r)
"Indemnitee"
shall have the meaning set forth in Section 12.4.
(s)
"Indemnitor"
shall have the meaning set forth in Section 12.4.
(t)
"Manager" means
any individuals hired by and retained by Cardinal
Health as an employee in a managerial
position over the Representatives.
(u)
"Medical
Education Services" shall mean the services to be provided
by Cardinal Health pursuant to Article 4 of
this Agreement.
(v)
"Medical
Education Standards" shall have the meaning set forth in
Section 4.3.
(w)
"Net Cost" shall
mean the gross amount charged by a supplier, less
all available discounts and allowances
recognized by Cardinal Health, and less
any Cardinal Health discount directly
attributable to BCI.
(x)
"OIG" means the
Office of the Inspector General of the Department of
Health and Human Services.
(y)
"Other Expenses"
shall have the meaning set forth in Section 4.5(b).
(z)
"PDMA" means the
Prescription Drug Marketing Act of 1987, as
amended, and the regulations promulgated
thereunder from time to time.
(aa)
"Product" shall mean
BCI's Hectorol(R) product in the 0.5 mcg dosage
form.
3
<PAGE>
(bb)
"Product Labeling"
means all labels and other written, printed, or
graphic matter provided by BCI including
(i) any container or wrapper utilized
with a Product, or (ii) any written
material accompanying a Product, including,
without limitation, Product package
inserts.
(cc)
"Product Promotional
Materials" means all written, printed or
graphic material provided by BCI, including
Product Labeling, intended for use
by Representatives during a Detail,
including visual aids, file cards, premium
items, clinical studies, reprints, drug
information updates and any other
promotional support items that BCI deems
necessary or appropriate to conduct the
Contract Sales Services. Product
Promotional Materials shall include FDA
approved indicated uses, safety,
effectiveness, contraindications, side effects,
warnings and other relevant characteristics
of each of the Products.
(dd)
"Quarterly Net Sales"
means the gross sales of Product as recorded
by BCI, its Affiliates or its sublicensees
in accordance with Generally Accepted
Accounting Principles ("GAAP") in a
particular Fiscal Quarter, less reasonable
and customary deductions for (i) ordinary
and customary trade discounts in
connection with third party sales, (ii)
sales and excise taxes, customs duties
and compulsory payments to governmental
authorities actually paid or deducted in
connection with such sales, and (iii)
credits given to customers for rejects and
returns of the Product.
(ee)
"Regulatory Authority"
means any governmental regulatory authority
responsible for granting approvals for the
sale or maintaining regulatory
oversight of the Products or the marketing,
reimbursement, or other issues
affecting the Products, including, without
limitation, the FDA.
(ff)
"Representative" and
"Representatives" mean an individual hired by
and retained as an employee of Cardinal
Health to conduct Detailing of Products
in connection with the Contract Sales
Services. As sometimes used in this
Agreement, "Representatives" shall also
include "Managers."
(gg) "Specialty Pharmaceutical
Services" means services rendered by
Cardinal Health pursuant to the
Distribution Services Agreement between Cardinal
Health PTS, LLC (successor by merger to
CORD Logistics, Inc.) and BCI dated Oct.
5, 1999, as amended.
(hh)
"Target" or "Target
Physician" means a physician or other specialist
identified by BCI.
(ii)
"Targeted Employees"
shall have the meaning set forth in Section
5.7(d).
(jj)
"Taxes" shall have the
meaning set forth in Section 6.6.
(kk)
"Term" shall have the
meaning set forth in Section 14.1.
(ll)
"Termination Fee"
shall have the meaning set forth in Section
14.4(b).
4
<PAGE>
(mm)
"Training Program"
shall have the meaning set forth in Schedule 5.3,
Section 9(a).
ARTICLE 2
PROJECT MANAGEMENT
2.1 Joint Commercialization
Committee.
(a)
Within thirty
(30) days of the Effective Date of this Agreement, the
Parties shall form a committee to assist in
overseeing and implementing the
sales, marketing and co-promotion of the
Products in accordance with the terms
and conditions of this Agreement ("JCC").
The JCC shall consist of an equal
number of representatives from each Party
and each party will have an equal
number of votes with respect to any
decisions made by the JCC.
(b)
The JCC shall
meet at least once monthly to (i) develop, approve and
amend (as necessary) a marketing plan for
the Product for each year of this
Agreement ("Yearly Marketing Plan"), (ii)
review the status of all sales,
marketing and co-promotion efforts relating
to the Product, (iii) review and
approve strategies, budgets and allocation
of all promotional efforts to be
funded out of the commitments made by each
Party pursuant to Article 3 of this
Agreement, and (iv) make any other
decisions required of the JCC under this
Agreement. JCC meetings shall be held at
mutually agreed upon dates, times, and
places, or by conference call if all
members of the JCC agree.
(c)
The JCC shall
have the authority to request an increase in the
promotional spend incurred by each party
under Article 3. Any such increase
shall only be effective upon the mutual
written agreement of both Parties. The
JCC will have the authority to decrease the
Cardinal Promotional Spend and BCI
Promotional Spend as mutually agreed upon
by the JCC after the first six months
of this Agreement, if the Quarterly Net
Sales for any Fiscal Quarter are ten
percent or more less than the forecast of
Quarterly Net Sales for that quarter,
as set forth on Schedule 6.1. If the JCC
cannot agree upon such decrease, the
Cardinal Promotional Spend and the BCI
Promotional Spend shall automatically
decrease in accordance with the schedule
set forth on Schedule 2.1(c) of this
Agreement.
(d)
In the event the
JCC is unable to reach agreement with respect to
any material issue related to its
obligations under this Article 2, either party
may present the issue to the President of
BCI and the President of the
Healthcare Marketing Services group of
Cardinal Health, who shall negotiate in
good faith to resolve such dispute. Except
as provided in 2.1(c), in the event
they are unable to resolve the dispute
within thirty (30) days of receipt of
substantive written information and
materials relating to the dispute, the final
decision will be made by the President of
BCI. Disagreements which are purely
legal in nature will be handled in
accordance with Section 15.13 of this
Agreement.
2.2 Business Managers. Each
party will provide a business manager to oversee
activities under this Agreement and to act
as a primary contact for day to day
activities under the Agreement.
5
<PAGE>
ARTICLE 3
PROMOTIONAL SPEND
3.1 Cardinal Health. Cardinal
Health shall provide (i) Medical Education
Services and Specialty Pharmaceutical
Services in connection with the Product
and in that regard, shall spend at least
the amounts set forth on Schedule 3.1
during the Term of the Agreement with
respect to such services ("Cardinal
Flexible Promotional Spend"), and (ii)
Contract Sales Services in accordance
with Article 5 and Schedule 5.1.
Appropriation of the Cardinal Flexible
Promotional Spend toward any particular
activity shall be approved by the JCC
substantially in accordance with Schedule
3.1 unless otherwise agreed to by the
Parties in writing.
3.2 BCI. BCI or its designated
agent or subcontractor shall provide a
promotional investment in connection with
the Product and in that regard, shall
spend the amounts set forth on Schedule 3.2
during the Term of the Agreement
("BCI Promotional Spend"). The BCI
Promotional Spend shall be approved by the
JCC substantially in accordance with
Schedule 3.2 unless otherwise agreed to by
the Parties in writing. The Parties agree
that amounts paid to Cardinal Health
under the Distribution Services Agreement
between Cardinal Health PTS, LLC
(successor by merger to CORD Logistics,
Inc.) and BCI dated Oct. 5, 1999, as
amended, for sampling of the 0.5 mcg
Product may count towards satisfaction of
the BCI Promotional Spend as agreed upon by
the JCC.
ARTICLE 4
MEDICAL EDUCATION SERVICES
4.1 Proposals. Cardinal Health
shall perform such medical education and
promotional services as are approved by the
JCC and mutually agreed upon by the
Parties (the "Medical Education Services").
All such services shall be
specifically set forth in a written
document approved by the JCC, signed by the
Parties, and shall be performed in
accordance with this Agreement.
4.2 Previously Approved
Indications. This Agreement does not cover services
provided by Cardinal Health with respect to
the 2.5 mcg Product or products for
indications approved by the FDA prior to
April 1, 2004.
4.3 BCI Review and Approval of
Medical Education Services. BCI shall be solely
responsible for preparing and reviewing the
content of all materials prepared
for and intended for use in provision of
Medical Education Services and related
materials prior to the performance of such
Medical Education Services. BCI shall
ensure that all materials prepared for and
intended for use in Medical Education
Services and any and all related materials
comply with all Applicable Laws and
all applicable industry standards and
practices generally applicable to the
pharmaceutical industry, including, without
limitation, the research guidelines,
ethics and standards established by the
American Medical Association, the FDA,
the standards and guidelines outlined in
the PhRMA Code, and the standards and
guidelines outlined in the OIG Guidance
(collectively, "Medical Education
Standards"). BCI hereby acknowledges that
Cardinal Health will not conduct a
legal review of the materials prepared for
and intended for use
6
<PAGE>
in the Medical Education Services and/or
related materials and that Cardinal
Health is relying solely on BCI to make
certain that such materials comply with
all Applicable Laws and Medical Education
Standards. BCI personnel who manage
Medical Education Services shall be solely
responsible for insuring that BCI's
counsel have an opportunity to review all
legal issues and matters as BCI may
deem appropriate related to the Medical
Education Services, and shall, upon
request, inform Cardinal Health of the
results of same review either orally or
in writing. Notwithstanding the foregoing,
Cardinal Health shall be solely
responsible for ensuring that the Medical
Education Services are performed in a
manner consistent with Medical Education
Standards and that it shall not deviate
from the scope and content of the Materials
prepared by BCI and intended for use
in the performance of the Medical Education
Services.
4.4 Additional Medical Education
Services. The Parties contemplate that
Cardinal Health may perform additional
Medical Education Services for BCI
relating to the Product that are not part
of the Cardinal Promotional Spend. In
such cases, the Parties shall agree in
writing on the scope of work to be
performed, additional or modified terms,
and discounted payment for such work.
Nothing in this Section 4.4 or in Article 4
or the remainder of this Agreement
obliges either Party to enter into
negotiations with respect to such an
additional agreement, nor do the parties
contemplate that such an additional
agreement shall have any effect on the
other rights or obligations of the
parties under this Agreement.
4.5 Pricing and Payment Terms.
In the event that BCI engages Cardinal Health
to provide Medical Education Services that
are not included in the Cardinal
Promotional Spend, the discounted pricing
and payment terms for such Medical
Education Services shall be as set forth in
proposals mutually agreed to by the
Parties in writing and shall include the
following, unless otherwise agreed to
by BCI and Cardinal Health:
(a)
Direct Expenses.
The Direct Expenses set forth in any proposal for
Medical Education Services represent a good
faith estimate of Direct Expenses to
be incurred by Cardinal Health in the
performance of Medical Education Services.
Notwithstanding the foregoing, BCI shall
reimburse Cardinal Health for all
reasonable out-of-pocket expenses (the
"Direct Expenses") actually incurred by
Cardinal Health in the performance of the
Medical Education Services whether or
not such Direct Expenses actually exceed
the amount estimated in good faith in
any proposal. Direct Expense items shall
include, but not be limited to, the
following:
(1) Travel
(including mileage at the IRS approved rate of 36.5
cents per mile, if travel is by car),
living expenses when authorized by BCI,
and long-distance telephone charges
incurred in the conduct of BCI's business;
(2) Net Cost of
postage, express, courier, overnight and freight
on all shipments of materials, including,
but not limited to proofs, artwork,
videotapes, slides, props, transcriptions,
computer disks, etc., as appropriate
to the timeline and delivery schedule
agreed to by the Parties;
(3) Net Cost of
unusual charges incurred at the special request of
BCI or if necessary to the rendering of
special or abnormal service, or to meet
emergencies, or departure from the regular
routine of business. These charges
must be specified in writing (may be
7
<PAGE>
handwritten at the scene) and signed off by
BCI at the correct signing level or
thereby delegated to by their supervisor;
and
(4)
Reimbursement for the Net Cost of freelance labor use.
BCI shall not be required to reimburse
Cardinal Health for (i) facsimile,
telephone and postage charges incurred in
the normal conduct of business; and
(ii) unapproved Cardinal Health-initiated
travel.
(b)
Other Expenses.
In addition to those items set forth in a proposal
for Medical Education Services or any other
proposal, BCI shall also reimburse
Cardinal Health for certain costs for
enduring materials and related services,
including but not limited to research
authorized by BCI and incurred through the
efforts of Cardinal Health on behalf of BCI
(the "Other Expenses").
(c)
Discounts.
Cardinal Health shall use commercially reasonable efforts
to obtain all prompt payment, volume,
frequency or other similar discounts from
media and suppliers from which it makes
purchases of Direct Expenses in the
performance of the Medical Education
Services hereunder.
(d)
Vendor/Cardinal
Health Affiliation. In the event that any Medical
Education Services are to be performed or
materials purchased from a supplier in
which Cardinal Health or Cardinal Health
personnel have any financial interest,
disclosure of the relationship shall be
made to BCI and Cardinal Health shall
obtain BCI's prior approval of the
engagement of or purchase from such supplier.
(e)
Advance Payment
for Certain Expenses. In accordance with the
principle that Cardinal Health is not
expected to finance Direct Expenses and
Other Expenses, BCI will be billed and
invoices will be paid so that Cardinal
Health will have such funds in hand before
payment is due to all third party
suppliers, including, but not limited to
airlines, hotels, suppliers of goods
and services purchased on behalf of BCI, at
BCI's request, honoraria, and any
other substantial (more than $1,000)
expenses. All invoices for Direct Expenses
and Other Expenses are payable to Cardinal
Health within (30) days after receipt
by BCI unless otherwise mutually
agreed.
4.6 Audits. A certified public
accounting firm of BCI's choice and acceptable
to Cardinal Health may conduct an annual
audit of Cardinal Health's books,
records and accounts pertaining only to the
Medical Education Services
undertaken for BCI pursuant to this
Agreement and shall certify that such
records are kept in accordance with
generally accepted industry standards
consistently applied and that the
allocation of fees hours to BCI or the
Cardinal Promotional Spend are accurate and
as provided in this Agreement and
the proposal agreed upon by the
Parties.
ARTICLE 5
CONTRACT SALES SERVICES
8
<PAGE>
5.1 Furnishing Representatives.
Cardinal Health shall recruit and hire
Representatives in such numbers as are set
forth on Schedule 5.1 of this
Agreement to engage in Product Detail
activities to Target Physicians in
accordance with the terms of this Agreement
and the attached Schedules. In the
event that BCI engages Cardinal Health to
provide Contract Sales Services at
levels greater than those specified on
Schedule 5.1, the discounted pricing and
payment terms for such additional Contract
Sales Services ("Additional CSO
Services") shall be as set forth in
proposals mutually agreed to by the Parties
in writing which incorporate this Agreement
by reference.
5.2 Assignment of
Representatives. Cardinal Health shall assign
Representatives for the Target Physicians
in such numbers and in such
territories as shall be agreed upon by the
JCC. Each Representative shall make
Product Details on his or her assigned
Target Physicians based on the general
direction given by the JCC. The duties of
such Representatives shall be
exclusively to Detail the Products and
perform other related activities deemed
necessary for the establishment and
maintenance of new and existing customers
for the Products. All Product Details shall
be undertaken consistent with the
Medical Education Standards.
5.3 Scope of Activities. Each of
the Parties shall have the specific duties
set forth in Schedule 5.3, as applicable,
in connection with the Contract Sales
Services.
5.4 Orders for Products. BCI
shall be solely responsible for establishing the
terms and conditions of the sale of the
Products to any third party customers,
including without limitation, the price at
which the Products will be sold,
whether sales of the Products will be
subject to any discounts, the method of
distribution of the Products, and whether
any credit will be granted or refused
in connection with the sale or return of
any Product. Except as otherwise
expressly provided in this Agreement, BCI
or its agent shall be exclusively
responsible for accepting and filling all
purchase orders for the Products,
billing and returns for the Products, and
all other activities in connection
with the sale and delivery of the Products,
other than Detailing. If Cardinal
Health or the Representatives receive an
order for the Products, they shall
immediately transmit such order to BCI for
further handling and communications
with the submitter of the order, including
acceptance or rejection, which shall
be in BCI's sole discretion.
5.5 Representatives' Activity.
Subject to BCI's obligations and
representations and warranties in this
Agreement, any negligent or wrongful act
or omission on the part of the
Representatives (both individually and as a
group) that occur during the Term of this
Agreement and that arise during the
course and within the scope of their
employment with Cardinal Health pursuant to
this Agreement shall be deemed to be
negligent or wrongful acts or omissions of
Cardinal Health; provided, however, that
any acts or omissions of the
Representatives pursuant to the specific
direction, control or supervision of
BCI or its employees or agents (other than
Cardinal Health) shall not be deemed
to be negligent or wrongful acts or
omissions of Cardinal Health. Each party
shall notify the other in writing as
promptly as practicable of any such
material alleged negligent or wrongful acts
or omissions on the part of the
Representatives of which it becomes aware
along with a plan to remedy such acts
or omissions, and BCI shall provide
Cardinal Health with a reasonable
opportunity to remedy such acts or
omissions, and if indicated, to replace the
involved Representatives.
9
<PAGE>
5.6 Vacancies/Turnover. In the
event of a Representative vacancy due to
resignation, reassignment or termination of
a Representative, Cardinal Health
shall use its commercially reasonable best
efforts to fill any such vacancy
within an eight (8) week period. Expenses
for filling such vacancy shall be
included in the cost of the Contract Sales
Services as set forth in Schedule
5.1. In addition, if BCI desires to
interview any candidates, BCI shall bear its
own cost of attending any final interview
conducted by Cardinal Health or the
costs of any separate interview arranged
for by BCI.
5.7 BCI's Termination, Removal,
or Hiring of Representatives.
(a)
BCI agrees not
to hire any Representative, directly or indirectly,
during the first twelve months of the Term
of this Agreement unless this
Agreement is terminated in accordance with
Section 14.2(b) (due to uncured
breach by Cardinal Health), Section
14.2(e), Section 14.4(b), Section 14.5 or
BCI buys out the Contract Sales Service
portion of this Agreement in accordance
with Section 5.7(c). BCI and Cardinal
Health acknowledge that Cardinal Health
would suffer damages upon breach of this
Section and such damages would be
difficult to ascertain and are not
susceptible of ready proof. As a result, the
Parties agree that BCI shall pay Cardinal
Health liquidated damages of $250,000
per representative and $350,000 per Manager
hired by BCI in violation of this
Section.
(b)
If BCI requests
termination or removal from the Program of any
Representative and such Representative is
in fact so terminated or removed by
Cardinal Health, then BCI shall be
responsible for severance and related
expenses for each such Representative so
terminated or removed unless (for a
reason other than BCI's negligence, willful
misconduct or breach of this
Agreement) such termination or removal is
(i) pursuant to the last sentence of
Section 5.5, (ii) due to a failure of the
Representative to comply with the
obligations set forth in Schedule 5.3,
(iii) due to such Representative's
failure to adequately achieve the
performance goals of the Program, or (iv)
failure to comply with all Applicable Laws
and any BCI Detailing requirements
which are consistent with labeled
indications and the guidelines promulgated by
PhRMA and the OIG.. Cardinal Health shall
fill any vacancy created by BCI's
hiring of Representatives or Managers
pursuant to this Section as provided in
Section 5.6. BCI agrees that it will not,
for a period of eighteen (18) months
following termination or removal of a
Representative or Manager in accordance
with this Section, hire, retain or
otherwise solicit, directly or indirectly,
any such Representative or Manager.
(c)
BCI shall have
the right to buy out the Contract Sales Services
portion of this Agreement by hiring the
Representatives as its own employees and
paying to Cardinal Health the Contract
Sales Services Buyout Fee set forth in
Schedule 5.7(c). BCI shall provide Cardinal
Health at least ninety (90) days
notice of a buy out in accordance with this
Section. In the event that this
option is exercised and BCI buys out the
Contract Sales Services portion of this
Agreement, the applicable Co Promote fee
will be reduced in accordance with
Schedule 6.1.
(d)
During the six
(6) month period immediately prior to the end of the
Term, BCI shall identify all those
Representatives BCI desires to hire
(collectively, the "Targeted Employees")
after the completion of the Term and to
negotiate with any Targeted Employee
10
<PAGE>
concerning the terms on which BCI might
hire that Targeted Employee. At the end
of the Term, BCI shall have a period of
thirty (30) days (the "Employee
Selection Period") to hire some or all of
the Targeted Employees. Cardinal
Health agrees not to interfere with BCI's
solicitation and hiring of the
Targeted Employees prior to or during the
Employee Selection Period, and
Cardinal Health will assist BCI in the
transition of Targeted Employees from
Cardinal Health to BCI.
(e)
For a period of
twelve (12) months after the expiration of the
Employee Selection Period: (i) BCI shall
not hire or retain as an employee or as
agent or independent contractor any
Representatives that are not Targeted
Employees or are not actually hired by BCI
during the Employee Selection Period,
and (iii) BCI agrees that it will not, for
a period of twelve months following
the expiration or termination of this
Agreement, hire, retain or otherwise
solicit any Manager of Cardinal Health to
be an employee either of BCI or any of
its Affiliates. Cardinal Health will not
solicit for hire as an employee, agent
or independent contractor any
Representative hired by BCI if such hiring is
allowed by this Section 5.7.
5.8 No BCI Benefits. Employees
of Cardinal Health and Representatives are not
eligible to participate in any benefits
programs or sales bonuses offered by BCI
to its employees, or in any pension plans,
profit sharing plans, insurance plans
or any other employee benefit plans offered
from time to time by BCI to its
employees, provided that the
Representatives shall be eligible to participate in
BCI sales contests if so requested by BCI
and approved by Cardinal Health.
Cardinal Health acknowledges and agrees
that BCI does not, and will not,
maintain or procure any worker's
compensation or unemployment compensation
insurance for or on behalf of the
Representatives while they are employees of
Cardinal Health. Cardinal Health
acknowledges and agrees that it shall be solely
responsible for paying all salaries, wages,
benefits, bonuses, pension plans,
profit sharing plans and other compensation
or benefits which its employees
(including Representatives) may be entitled
to receive in connection with the
performance of the services hereunder.
ARTICLE 6
FEES
6.1 Co-Promote Fee. In further
consideration of Cardinal Health's efforts and
performance hereunder, BCI shall pay
Cardinal Health a variable percentage of
all Quarterly Net Sales of the Product
during each Fiscal Quarter, as such
percentages are set forth in Schedule 6.1
("Co-Promote Fee") during the Term of
this Agreement. In the event BCI buys out
the Contract Sales Service portion of
this Agreement as provided in Section
5.7(c), BCI shall pay a reduced Co-Promote
Fee as provided in Schedule 6.1.
6.2 Product Supply. BCI shall
use reasonable commercial efforts to maintain an
adequate level of inventory to supply
orders for Product from third party
customers; provided, however, that BCI
shall not be responsible to the extent
any failure to maintain inventory results
from a failure of Cardinal Health to
provide services in accordance with the
terms of a separate manufacturing,
packaging, analytical, distribution or
logistics agreement which are necessary
to release finished Product for commercial
sale.
11
<PAGE>
6.3 Payment. BCI shall pay the
Co-Promote Fee to Cardinal Health within
forty-five (45) days following end of each
Fiscal Quarter ("Co-Promote
Payment").
6.4 Audit. BCI shall include
with each Co-Promote Payment a statement setting
forth in reasonable detail its calculation
of the Co-Promote Payment for the
period covered by such Co-Promote Payment
along with a reconciliation detailing
the reasons for any differences between the
Quarterly Net Sales reported to
Cardinal Health and the revenue reported in
BCI's quarterly SEC 10Q filings.
Cardinal Health or its designee shall be
entitled, upon reasonable advance
notice to BCI, to audit BCI's books and
records relating to the Quarterly Net
Sales for any one or more payments periods
under this Agreement. Cardinal Health
and BCI will attempt in good faith to
settle any dispute within thirty (30) days
after Cardinal Health's delivery of audit
findings to BCI. If such audit reveals
that there is an underpayment of any
amounts owed to Cardinal Health, BCI shall
pay such amounts in full within ten (10)
days of such determination, and if such
amount is in excess of ten percent (10%) or
more of the amount paid by BCI for
any period, BCI shall reimburse Cardinal
Health for all reasonable out-of-pocket
costs incurred in performing such audit.
Cardinal Health's right to perform an
audit in accordance with this Section shall
continue for a period of two years
following termination or expiration of this
Agreement for any reason.
6.5 Price Normalization. BCI
acknowledges that (i) the current wholesale
acquisition cost (WAC) for the 0.5 mcg
Product is $*** per tablet and the
current WAC for the 2.5 mcg product is $***
and (ii) this pricing arrangement
may lead to prescriptions of the 2.5 mcg
Product where a higher daily/weekly
dosage is required. As a result, Cardinal
Health would not realize the full
value of the Co-Promote Fee for sales of
Product under this Agreement.
Notwithstanding the terms of Section 6.1,
in order to account for this pricing
arrangement, the Co-Promote fee shall be
determined in accordance with (a) the
row entitled "Co Promote Fee % (if price
normalization applies)" as set forth in
Schedule 6.1 if the Contract Sales Services
portion of this Agreement is still
in effect or (b) the row entitled "Co
Promote Fee % after Contract Sales Service
Buy Out (if price normalization applies)"
as set forth in Schedule 6.1 if the
Contract Sales Services portion of this
Agreement has been bought out, for each
Fiscal Quarter in which the actual volume
of capsules of the Hectorol 2.5 mcg
product sold in such Fiscal Quarter exceed
by ***% or more the baseline forecast
projected for that Fiscal Quarter as set
forth on Schedule 6.1.
6.6 Sales, Use and Excise Taxes.
If any state or local government or other
taxing authority determines that sales, use
or excise Taxes ("Taxes") are
applicable to any Cardinal Health services
provided under this Agreement which
are not paid for by Cardinal Health as part
of the Cardinal Promotional Spend,
BCI shall reimburse Cardinal Health for any
such Taxes paid by Cardinal Health
to the appropriate taxing authorities.
6.7 Past Due Amounts. BCI's
failure to timely make any payment to Cardinal
Health under this Agreement (including
without limitation, this Article and
Articles 4 and 5) will constitute a
material breach of this Agreement by BCI.
All amounts owing by BCI to Cardinal Health
pursuant to this Agreement that are
not timely paid by BCI will bear interest
from the due date, at the lower of (i)
one and one-half percent per month, or (ii)
the maximum rate permitted by law.
12
<PAGE>
6.8 Setoff. Without limiting
Cardinal Health's rights under law or in equity,
Cardinal Health and its affiliates, parent
or related entities, collectively or
individually, may exercise a right of
set-off against any and all amounts due to
Cardinal Health from BCI. For purposes of
this Section 6.8, Cardinal Health, its
affiliates, parent or related entities
shall be deemed to be a single creditor.
ARTICLE 7
REGULATORY MATTERS
7.1 Government Agencies. All
communications with Regulatory Authorities,
including the FDA, concerning the Products
shall be the sole responsibility of
BCI. Cardinal Health shall assist BCI with
respect to such communications with
Regulatory Authorities to the extent
requested by BCI. Cardinal Health shall use
its best efforts to provide BCI with any
documents or information reasonably
requested by BCI for purposes of responding
to any communications with
Regulatory Authorities within 72 hours of
BCI's request. Each party shall
promptly notify the other party of any
communication it receives from Regulatory
Authorities concerning the Products or any
services furnished under this
Agreement.
7.2 Maintenance of Records.
Cardinal Health and BCI each agree that throughout
the Term of this Agreement and for a period
of six years after the termination
of this Agreement, each party will maintain
records and otherwise establish
procedures to assure compliance with all
Applicable Laws which relate to the
Detailing and marketing of the
Products.
ARTICLE 8
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 By Cardinal Health. Cardinal
Health represents, warrants, and covenants to
BCI that, as of the date of this Agreement
and during the Term of this
Agreement:
(a)
Cardinal Health
and the Representatives shall perform the Detailing
in a professional and timely manner;
(b)
Cardinal Health
shall comply with all Applicable Laws to the extent
that such laws apply to the performance of
services under this Agreement,
including but not limited to the PDMA, the
Medicare and Medicaid Anti-Kickback
Act (42 U.S.C. Section 1320a-7b(a)), the Civil False
Claims Act (31 U.S.C.
Section 3729(a)), Sections 1128A, 1128B,
and 1877 of the Social Security Act (42
U.S.C. Sections 1320a-7a, -7b, and 1395nn),
the Health Care Fraud Act (18 U.S.C.
Section 1347), the Criminal False Claims
Act (18 U.S.C. Section 287), and the
Health Insurance Portablility and
Accountability Act of 1996, as amended from
time to time, as well as similar applicable
state laws; and
13
<PAGE>
(c)
When on BCI's
premises or on the premises of BCI's customers,
Cardinal Health and the Representatives
shall comply with all of BCI's or BCI's
customer's policies regarding the conduct
of visitors of which Cardinal Health
and the Representatives are aware.
8.2 By BCI. BCI represents,
warrants, and covenants to Cardinal Health that,
as of the date of this Agreement and during
the Term of this Agreement:
(a)
All Product
supplied to Cardinal Health under this Agreement for use
as samples in Details shall be manufactured
and delivered to Cardinal Health in
conformity with the Act, as amended, and
all other Applicable Laws and such
Product shall not be adulterated or
misbranded with the meaning of the Act;
(b)
It shall confirm
that all materials prepared by BCI in accordance
with Section 4.3 will comply with all
Applicable Laws and Medical Education
Standards prior to authorizing Cardinal
Health to perform the Medical Education
Services;
(c)
To its
knowledge, there are no trade secrets or other proprietary
rights of others related to the Products
which would be infringed or misused by
Cardinal Health's performance of this
Agreement;
(d)
BCI shal
