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FFIS CO-PROMOTION AGREEMENT

Promotion Agreement

FFIS CO-PROMOTION AGREEMENT | Document Parties: CRITICAL THERAPEUTICS, INC | DEY, INC | DEY, LP | FFIS CO You are currently viewing:
This Promotion Agreement involves

CRITICAL THERAPEUTICS, INC | DEY, INC | DEY, LP | FFIS CO

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Title: FFIS CO-PROMOTION AGREEMENT
Governing Law: New York     Date: 8/9/2007
Industry: Biotechnology and Drugs     Sector: Healthcare

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Exhibit 10.4

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

FFIS CO-PROMOTION AGREEMENT

by and between

DEY, L.P.

and

CRITICAL THERAPEUTICS, INC.

JUNE 25, 2007

 

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THIS FFIS CO-PROMOTION AGREEMENT (the "Agreement" or "FFIS Agreement") is made

as of June 25, 2007 ("Effective Date") by and between CRITICAL THERAPEUTICS,

INC., a corporation organized and existing under the laws of the State of

Delaware and having its principal offices at 60 Westview Street, Lexington, MA

02421 ("CRTX" ) and DEY, L.P., a limited partnership organized and existing

under the laws of the State of Delaware and having its principal offices at 2751

Napa Valley Corporate Drive, Napa, CA 94558 ("DEY").

WITNESSETH

WHEREAS, the Parties desire that CRTX engages in the Promotion (as hereinafter

defined) of the Product (as hereinafter defined) in the Territory (as

hereinafter defined) in the Field (as hereinafter defined) for a certain period

of time and the Parties also desire to coordinate CRTX's activities regarding

the Product with those of DEY, all of which shall be subject to the terms and

conditions of this Agreement;

WHEREAS, the Parties have previously entered in to that certain Co-Promotion and

Marketing Services Agreement regarding Zileuton products, effective March 13,

2007 (the "Zileuton Co-Promotion Agreement"), as well as that certain Binding

Letter Agreement by and between Dey, L.P. and Critical Therapeutics, Inc.

effective March 13, 2007, as amended (the "Binding Letter Agreement"), which

Binding Letter Agreement is superseded by this Agreement,

NOW, THEREFORE, in consideration of the foregoing statements and the mutual

agreements and covenants herein contained, and for other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, the

Parties agree as follows:

AGREEMENT

ARTICLE 1

DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms, where

used in the singular or plural, shall have the respective meanings set forth

below:

 

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1.1 "Act" means the United States Food, Drug, and Cosmetic Act of 1938, as

amended, and the rules and regulations promulgated thereunder, or any successor

act, as the same shall be in effect from time to time.

1.2 "Adverse Event(s)" means adverse drug experiences, as defined by 21 CFR

312.32 or 314.80, relating to a Product. "Serious Adverse Event(s)" means a

serious Adverse Event, as defined by 21 CFR 312.32 or 314.80, relating to a

Product. For purposes of Section 6 of this Agreement, the use of the phrase

"Adverse Event" is intended to include Serious Adverse Event(s).

1.3 "Affiliate" means (i) any corporation, association or other entity of which

more than fifty percent (50%) of the voting securities or other ownership

interests representing the voting equity, the voting stock or general

partnership interest are owned, controlled or held, directly or indirectly, by a

Party; or (ii) any corporation, association or other entity which, directly or

indirectly, owns, controls or holds more than fifty percent (50%) of the voting

securities or other ownership interests representing the voting equity, the

voting stock or, if applicable, the general partnership interest, or the right

to of a Party.

1.4 "Alliance Manager" shall have the meaning set forth in Section 3.1.

1.5 "Annual Retail Baseline Units" or "ARBU" means, for each Year, the number of

Retail Units of Product forecasted to be sold by DEY through retail sales

channels in such Year that are based solely on detailing by DEY's sales force

only (and no detailing by CRTX's sales force), as set forth in Schedule 1.5

attached.

1.6 "Applicable Laws" means all applicable federal, state and local laws,

statutes, rules, regulations and ordinances.

1.7 "Applicable Tier 1 Retail Units" shall have the meaning set forth in Section

5.1(2).

1.8 "Applicable Tier 2 Retail Units" shall have the meaning set forth in Section

5.1(3).

 

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1.9 "Binding Letter Agreement" shall have the meaning set forth in the Recitals.

1.10 "Business Day" means any day that is not a Saturday or a Sunday or a day on

which the NASDAQ Global Market is closed.

1.11 "Calendar Quarter" means each of the three month periods ending March 31,

June 30, September 30 and December 31, provided that the first Calendar Quarter

shall commence as of the Detail Commencement Date and end on (i) December 31,

2007 if the Detail Commencement Date is on or after October 1, 2007 or (ii)

September 30, 2007 if the Detail Commencement Date is on or prior to September

30, 2007.

1.12 "Call" means an in person contact between a Sales Representative of a Party

and a Detail Target during which a Detail is made to the Detail Target.

1.13 "CFR" means the United States Code of Federal Regulations.

1.14 "Claims" means any suits, claims, actions, demands, complaints, lawsuits or

other proceedings that are brought by any Third Party, including without

limitation product liability claims and claims seeking to recover for personal

injury or death, alleged to have been caused, in whole or in part, by a Product

regardless of the legal theory alleged.

1.15 "Commercial Launch Date" means the date after full FDA approval of the NDA

for FFIS when FFIS has been produced and is released by DEY for purchase by

Third Party wholesalers and/or retailers in the Territory.

1.16 "Commercially Reasonable Efforts" means, with respect to the efforts to be

expended by a Party with respect to any objective, such reasonable, diligent,

good faith efforts to accomplish such objective as such Party would normally use

to accomplish a similar objective under similar circumstances exercising

reasonable business judgment for a product owned by it or to which it has

rights, which product is of similar market potential, taking into account

efficacy, safety, approved labeling, the competitiveness of alternative products

in the marketplace and other relevant factors commonly considered in similar

circumstances.

 

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1.17 "CRTX Indemnified Party" shall have the meaning set forth in Section 11.1.

1.18 "CRTX Trademark(s)" means the trademark and domain names listed on Schedule

1.14, together with all related common law trademark rights of CRTX related

thereto.

1.19 "Current Good Manufacturing Practices" or "GMP" or "cGMP" means the current

good manufacturing practice and standards as provided for (and as amended or

updated from time to time) in applicable ICH Harmonized Tripartite Guidelines

and as defined in Parts 210 and 211 of Title 21 of the CFR, as may be amended

from time to time, or any successors thereto.

1.20 "Detail" means a Call during which relevant characteristics of the Product

are described by the Sales Representative of a Party aimed at encouraging the

appropriate use of the Product and using, if necessary or desirable, the

Promotional Materials. A sample drop shall not be considered a primary or

secondary Detail. When used as a verb, "Detail" shall mean to engage in a

Detail.

1.21 "Detail Commencement Date" means the later of the Commercial Launch Date,

or the date that DEY receives written notice from CRTX indicating that CRTX has

(a) completed its sales force expansion to the size of 40 or more Sales

Representatives and all of whom have completed the FFIS launch training as

contemplated by this Agreement, and (b) that the first Call has been made by

CRTX's Sales Representatives under the terms of this Agreement.

1.22 "Detail Targets" means all office-based physicians and other health care

professionals in the Territory selected by CRTX from the DEY FFIS Target

Universe. For purposes of this Agreement, the "DEY FFIS Target Universe" shall

mean the group of office-based physicians and other health care professionals in

the Territory that DEY uses internally for its Call plan for FFIS, which group

consists of allergists, pulmonologists, internal medicine physicians, and

primary care physicians (excluding pediatricians) who belong to the FFIS Market

Quintile [**] based upon third party data, such as Wolters Kluwer Health. DEY

shall retain the right to modify the DEY FFIS Target Universe from time to time;

provided, however, any such modification shall not affect a previously agreed to

CRTX [**] month Call plan. CRTX will notify DEY of the date of the next CRTX

Call plan period at least [**] days prior to the start date of the

 

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period. DEY, within [**] days after receipt of such notice, will provide the DEY

FFIS Target Universe to a third party retained by CRTX and approved by DEY so

that the third party may use it to assist CRTX with its selection of Detail

Targets for the applicable Call plan. DEY and CRTX acknowledge and agree that

the DEY FFIS Target Universe for the [**] month period starting on the Detail

Commencement Date has been finalized by the parties.

For purposes of this Section, the "FFIS Market Quintile" means the prescriber

quintile based upon the current definition of the FFIS Market used in DEY's Call

plan.

1.23 "DEY Indemnified Party" shall have the meaning set forth in Section 11.2.

1.24 "DEY Patents" shall mean those patents listed on Schedule 1.19 attached.

1.25 "DEY Trademarks" shall mean the trademarks listed on Schedule 1.20

attached.

1.26 "Effective Date" shall have the meaning set forth in the Preamble.

1.27 "FAPI" shall have the meaning set forth in Section 4.3(6).

1.28 "FDA" means the United States Food and Drug Administration and any

successor agency having substantially the same jurisdiction and functions.

1.29 "Field" shall mean the use of the Product as a pharmaceutical product in

humans for the treatment of chronic obstructive pulmonary disease ("COPD") or

other respiratory indications for which DEY has received formal FDA approval.

1.30 "Finished Product" means the formulation of the Product described in the

specifications included in the NDA for such Product (the "FFIS Specifications")

and packaged and labeled and in a form ready for distribution in the Territory.

1.31 "GAAP" means U.S. generally accepted accounting principles.

1.32 "Indemnified Party" shall have the meaning set forth in Section 11.3.

 

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1.33 "Indemnifying Party" shall have the meaning set forth in Section 11.3.

1.34 "Independent Accountant" shall have the meaning set forth in Section

5.3(1).

1.35 "Losses" means any and all damages, awards, deficiencies, settlement

amounts, defaults, assessments, fines, dues, penalties (including penalties

imposed by any governmental authority), costs, fees, liabilities, obligations,

taxes, liens, losses, and expenses (including court costs, interest and

reasonable fees of attorneys, accountants and other experts) awarded or

otherwise paid or payable to Third Parties.

1.36 "NDA" means a new drug application (as defined in the Act and applicable

regulations promulgated thereunder, as amended from time to time) filed with the

FDA, including any supplements or amendments thereto which may be filed.

1.37 "Net Retail Average Selling Price" shall mean, for any applicable Calendar

Quarter, the average WAC Price per Retail Unit for such Calendar Quarter, less

Rebates and Discounts per Retail Unit for such Calendar Quarter. In the

determination of the Net Retail Average Selling Price, DEY will use Commercially

Reasonable Efforts to allocate the Rebates and Discounts relevant to Product

sales to the retail sales channels (and shall not allocate any Rebates or

Discounts relevant to Product sales to non-retail sales channels in such

amounts).

1.38 "PDE" is the measure of Detail Calls, and shall mean primary detail

equivalents calculated as follows: one primary Call is 1.0 PDE and one secondary

Call is 0.4 PDE.

1.39 "PDMA" means the United States Prescription Drug Marketing Act of 1987, as

amended, or any successor act thereto, and the regulations promulgated

thereunder from time to time.

1.40 "Party" means DEY or CRTX. "Parties" means DEY and CRTX.

1.41 "Patent Office" means the United States Patent and Trademark Office.

1.42 "Product" or "FFIS" means Formoterol Fumarate Inhalation Solution

20mcg/2ml, which is

 

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the subject of DEY's NDA No. 22-007.

1.43 "Product Label(ing)" shall have the same meaning as defined in the Act and

regulations as interpreted by the FDA.

1.44 "Product Quality Complaint" shall mean any legitimate complaint (as

reasonably determined by the Party receiving such complaint) by a Third Party

that (a) questions the purity, identity, potency or quality of the Product, its

packaging, or labeling, or (b) claims that the Product or its labeling is

mistaken for, or applied to, another article or any bacteriological

contamination, or (c) claims a significant chemical, physical, or other change

or deterioration exists in the distributed drug product, or (d) claims a failure

of one or more distributed batches of Product to meet the specifications

thereof.

1.45 "Promotion" means, as regards to the Product, those activities normally

undertaken by a pharmaceutical company to implement promotion plans and

strategies aimed at encouraging the appropriate use of a particular prescription

pharmaceutical product under a common trademark, up to the point of offering a

product for sale. When used as a verb, "Promote" shall mean to engage in such

activities.

1.46 "Promotion Expenses" means all actual out-of-pocket expenses incurred

(i.e., paid or accrued) to a Third Party by or on behalf of DEY in connection

with selling, marketing and Promotion of the Product in the Territory, including

the following (but excluding expenses for Samples purchased by CRTX hereunder,

Third Party market data, such as IMS or Wolters Kluwer Health data purchased by

CRTX, sales forces of CRTX, and salaries for employees of CRTX performing

marketing functions):

(a) marketing, advertising, Promoting, and educational expenses, including

speakers' programs, medical education programs and symposia,

relationships with opinion leaders and professional societies, public

relations and market research;

(b) training and communications materials and detail and visual aids;

 

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(c) Third Party market data from IMS or Wolters Kluwer Health purchased by

DEY;

(d) implementing marketing programs; and,

(e) preparation, storage and distribution of Promotional Materials;

provided, however, that Promotion Expenses shall specifically exclude

salaries and other internal overhead and/or compensation paid to

either Party's employees, including their respective sales forces.

1.47 "Promotion Plan" means a plan established by DEY relating to the Promotion

of the Product.

1.48 "Promotional Materials" means all written, printed or graphic (or in other

media formats) material provided by DEY and intended for use by a Party's Sales

Representatives during a Call, or marketing sponsored speaker programs

including, but not limited to, visual aids, file cards, premium items, clinical

studies reprints, drug information updates and any other promotional support

items or advertising that DEY deems necessary or appropriate in connection with

the Promotion of Product. Promotional Materials shall include only those

materials describing FDA-approved indicated uses, safety, effectiveness,

contraindications, side effects, warnings and other relevant characteristics of

a Product that meet the regulations as outlined in the CFR. Promotional

Materials also includes all sales training materials, however promotional

Materials shall not include any Product packaging or Product labeling or Sample

labeling, or Samples.

1.49 "Proprietary Information" means any and all scientific, clinical,

regulatory, sales, marketing, financial and commercial information or data,

customer-related materials, know-how, concepts, ideas, trade secrets, expertise,

and all of the foregoing regardless of whether communicated in writing, orally

or by any other means, which is owned and under the protection of one Party and

is provided by that Party to the other Party in connection with this Agreement.

1.50 "Quarterly Retail Base Units" or "QRBU" means, for each Calendar Quarter of

such Year, the Retail Units of Product forecasted by DEY that are based on

detailing by DEY's sales force only and as set forth in Schedule 1.5 attached.

 

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1.51 "Rebates and Discounts" means the following deductions to the extent

actually allowed or taken and not in excess of industry standard amounts and

determined in accordance with GAAP, DEY's revenue recognition policies, and

Applicable Laws:

(a) credits or allowances actually granted for damaged or spoiled Product,

returns, recalls or rejections of Product, and retroactive price

reductions;

(b) normal and customary trade, cash and quantity discounts, allowances

and credits, actually given or allowed, as applicable;

(c) sales, value added, excise or similar taxes actually paid or allowed,

or other governmental charges imposed upon the importation, use or

sale of Product in the Territory;

(d) legally allowed chargebacks, rebates, fees or similar payments to

customers, including, but not limited to, managed health care

organizations, wholesalers, distributors, buying groups, retailers,

health care insurance carriers, pharmacy benefit management companies,

health maintenance organizations, or other institutions or health care

organizations or to federal, state/provincial, local and other

governments, their agencies and purchasers and reimbursers;

(e) credit card processing charges and fees, freight, postage, shipping

and insurance charges relating to delivery of the Product; and,

(f) launch discounts, stocking fees and other discounts actually extended

to wholesalers.

1.52 "Retail Unit" means one vial of Product. "Retail Units" means the vials of

Product sold in the retail channel for a given period of time, as reported in

the script data that DEY purchases from Wolters Kluwer Health or a similar Third

Party.

1.53 "Sales Representative" means a qualified salesperson meeting the

requirements set forth in this Agreement, including, but not limited to Section

4.2 and 4.6 of this Agreement, and who is employed by a Party.

1.54 "Samples" means Product provided without charge to Detail Targets and in

compliance

 

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with Applicable Laws.

1.55 "SEC" means the United States Securities and Exchange Commission and any

successor agency having substantially the same jurisdiction and functions.

1.56 "Term" shall have the meaning set forth in Section 12.1.

1.57 "Territory" means the United States of America (including the District of

Columbia) and all of its territories and possessions now or at any time during

the Term(s).

1.58 "Third Party(ies)" means a person or entity who or which is neither a Party

nor an Affiliate of a Party to this Agreement.

1.59 "WAC Price" means DEY's invoice price per Retail Unit of FFIS to its

wholesalers, which is commonly known as the 'Wholesale Acquisition Cost' as may

also be published in First Data Bank or other Third Party price reporting

agencies.

1.60 "Year" means each consecutive twelve-month period starting January 1 and

ending December 31, provided that the first Year of the Term shall start on the

Effective Date and end on December 31, 2007.

1.61 "Zileuton Co-Promotion Agreement" shall have the meaning set forth in the

Recitals.

Where words and phrases are used herein in the singular, such usage is intended

to include the plural forms where appropriate to the context, and vice versa.

The words "including", "includes" and "such as" are used in their non-limiting

sense and have the same meaning as "including without limitation" and "including

but not limited to". References to Articles, Sections, subsections, and clauses

are to the same with all their subparts as they appear in this Agreement.

"Herein" means anywhere in this Agreement. "Hereunder" and "hereto" means under

or pursuant to any provision of this Agreement.

 

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ARTICLE 2

GRANT OF RIGHTS

2.1 DEY Grant of Co-Promotion Right. Subject to the terms and conditions of this

Agreement, DEY hereby grants to CRTX, in the Territory in the Field and during

the Term, the non-transferable, limited right and license or sublicense (as

applicable) under the DEY Trademarks and the DEY Patents to Promote and Detail

FFIS; provided, however, CRTX's exercise of such rights to Promote and Detail

the Product shall not occur before the Detail Commencement Date. Notwithstanding

anything to contrary in this Section 2.1, DEY reserves all other rights to the

DEY Patents and the DEY Trademarks, including, but not limited to, the right to

Promote and Detail the Product with its sales force in the Territory during the

Term. All use by CRTX of the DEY Trademarks and the DEY Patents shall be under

the control of DEY and subject to DEY quality standards and approvals.

2.2 Access to Information. Subject to the terms and conditions of this

Agreement, each Party shall cooperate in good faith to provide access to and

reasonable assistance with its Proprietary Information and other significant

information of which it becomes aware that may be legally disclosed and that it

reasonably believes may be required for the other to perform its obligations

hereunder.

ARTICLE 3

GOVERNANCE

3.1 Alliance Manager. DEY and CRTX each shall appoint a person (an "Alliance

Manager") to oversee compliance with this Agreement. The Alliance Managers shall

also be the primary contact between the Parties with respect to the reporting of

each Party's activities and performance. Each Party's initial Alliance Manager

is set forth on Schedule 3.1 attached hereto. Each Party shall notify the other

in writing as soon as practicable upon changing its Alliance Manager

appointment.

 

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ARTICLE 4

PROMOTION AND MARKETING ACTIVITIES / PARTY OBLIGATIONS / IP/ TRAINING

4.1 General. Subject to the restrictions of Article 2.1, each Party will

diligently Promote the Product in the Territory during the Term and as of the

Detail Commencement Date, subject to the terms and conditions of this Agreement

and in accordance with its business, legal, medical and scientific judgment and

all Applicable Laws.

4.2 Sales Forces. During the Term and as of the Detail Commencement Date, for

DEY and CRTX, respectively, each Party will provide, at its own expense, a

professional, appropriately-trained sales force to support its obligations under

this Agreement. The sales force of each Party shall remain under the direct and

exclusive authority, supervision and control of that Party at all times during

the Term. For purposes of this Agreement, all members of CRTX's sales force

performing Details on the Product shall be employees of CRTX. DEY shall not be

involved in the interviewing, selection or hiring or the management or

supervision of CRTX's sales force. CRTX shall use Commercially Reasonable

Efforts to ensure that the qualifications of its Sales Representatives meet or

exceed the minimum criteria (including, without limitation, with respect to

education and sales experience) required by CRTX as of the date hereof with

respect to its Sales Representatives detailing products other than the Product.

For purposes of this Agreement, all members of DEY's sales force shall be

employees of DEY. CRTX shall not be involved in the interviewing, selection or

hiring or the management or supervision of DEY's Sales Representatives.

4.3 CRTX Obligations:

(1) During the Term and starting on the Detail Commencement Date, CRTX, at its

expense, shall deliver to Detail Targets at least [**] primary detail

equivalents ("PDEs") of Product Details in at least the secondary position per

full calendar month after the Detail Commencement Date. The frequency of CRTX's

Product Details per full calendar month will be determined by CRTX. A Call in

the tertiary position shall not count toward CRTX's PDE obligations unless the

parties agree otherwise in writing. CRTX will deliver Product Details to at

least [**] Detail Targets per Calendar Quarter.

 

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(2) For all Product Details in Subsection 4.3 (1), only details to Detail

Targets (as defined in Section 1.22 of this Agreement) shall be counted towards

CRTX's PDE requirements.

(3) If and to the extent that CRTX decides to acquire Samples, CRTX, [**], may

acquire from DEY supplies of Samples for DEY-approved sampling activities by

CRTX's Sales Representatives at DEY's [**] of such Samples; provided, however,

CRTX shall have no minimum sampling obligations to meet and CRTX may elect not

to procure or provide Samples. CRTX has the option to perform Product sampling

during the Calls. CRTX also is responsible for the proper storage, handling, and

distribution of any Samples that CRTX orders from DEY. If CRTX notifies DEY that

CRTX intends to perform Product sampling, DEY shall assume costs of shipment of

Samples to one location designated by CRTX.

(4) CRTX, [**], shall acquire from DEY supplies of Promotional Materials for use

by CRTX at DEY's [**] of such Promotional Materials; provided, however, CRTX

shall have no obligation to use any particular Promotional Materials except

those core Promotional Materials mutually agreed to between the Parties.

(5) CRTX's incentive compensation plan for its Sales Representatives detailing

the Product shall reflect the secondary position of the Product, with the goal

of ensuring quality secondary product Details. The plan shall be determined by

CRTX, but CRTX shall consult with DEY and consider suggestions from DEY.

Compensation of such CRTX Sales Representatives shall align with such plan.

(6) During the Term, CRTX shall not, directly or indirectly, manufacture,

Detail, sell, market or promote in the Territory any product (except for Product

during the Term) containing formoterol, including but not limited to

arformoterol, and any salt, enantiomer, and/or derivative thereof ("FAPI") as

one of the active pharmaceutical ingredients if any approved indication of the

product is the same as any approved indication of the Product as of the date

upon which CRTX intends to begin to, directly or indirectly, manufacture,

Detail, sell, market or promote such product in the Territory (the "Limited

Product"). If this Agreement expires or is terminated for any reason, CRTX shall

not, directly or indirectly, manufacture, Detail, sell, market or Promote

 

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any Limited Product in the Territory until one (1) year after such expiration or

termination ("Post-Term Non-Compete Period"); provided, however, this Post-Term

Non-Compete Period shall not apply and shall be void in the event CRTX signs a

definitive agreement to be acquired by or merged with a Third Party that

markets, manufacturers, sells, details or promotes a Limited Product in the

Territory (the "Transaction"); and, instead, the following provision shall apply

(the "Post-Term Non-Promote Period"): CRTX agrees that until the date that is

180 days after the date of the expiration or termination of this Agreement or

the date that is 180 days after the closing date of the Transaction, whichever

occurs sooner, CRTX shall not allow any CRTX Covered Sales Representative (as

defined below) to Detail, market or promote any Limited Product in the Territory

to any office-based physician or other office-based health care professional.

For purposes of this Section 4.3(6), a "CRTX Covered Sales Representatives"

shall mean a Sales Representative employed by CRTX (or by its acquirer or by a

subsidiary of its acquirer) who, within [**] before the date of the expiration

or termination of this Agreement or the closing date of the Transaction,

whichever occurs sooner, either (i) has been trained on the Product or (ii) has

detailed the Product. The Post-Term Non-Promote Period shall not require CRTX or

CRTX's acquirer to take any particular actions with any Sales Representative who

does not satisfy the CRTX Covered Sales Representative definition. This Section

4.3(6) also shall apply with respect to any combination product containing both

FAPI and Zileuton as active ingredients. Notwithstanding the foregoing, if (i)

this Agreement is terminated by CRTX pursuant to a DEY breach under Section

12.2(2) or (ii) a Third Party AB-rated generic product to the Product enters the

Territory during this Post-Termination Non-Compete Period, both the

Post-Termination Non-Compete Period and the Post-Term Non-Promote Period in this

Section 4.3(6) shall be void; provided, however, DEY and CRTX shall continue to

abide by the provisions of Section 9 of this Agreement after such expiration or

termination.

4.4 DEY Obligations:

(1) DEY is responsible for all Promotion Expenses and the development and

implementation of Promotion Plans for the Product during the Term. During the

Term, DEY is also solely responsible for DEY's sales force expenses, cost of

Samples distributed by DEY's sales force and salaries for its own employees

performing marketing functions, all of which shall be separate from and in

addition to Promotion Expenses (and also includes detail aids,

 

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promotional items, market research), and such shall be DEY's responsibility and

not CRTX's responsibility. CRTX's sales force expenses, printing cost of the

Promotional Materials used by CRTX, and the cost of Samples, if any, distributed

by CRTX's sales force shall also be separate from and in addition to the Product

Promotion Expenses and such be CRTX's responsibility and not DEY's

responsibility.

(2) DEY, at its sole expense, will be responsible for obtaining and maintaining

all applicable FDA regulatory approvals for the Product and for approving and

submitting to FDA all Promotional Materials to be used in the Territory, all as

according to Applicable Laws.

(3) DEY also will be solely responsible for the following:

a) Setting the pricing of the Product covered under this Agreement and

approving Rebates and Discounts to wholesalers, managed care

organizations, or Federal, state or local government programs (e.g.,

Medicare or Medicaid) related to the Product;

b) Developing and implementing managed care strategies;

c) Maintaining its exclusive rights to the Product in the Territory,

other than those granted to CRTX herein;

d) the management and costs of any future clinical research and trials

that DEY elects to conduct, if any, relating to the Product or any

changes in its labeling;

e) Using Commercially Reasonable Efforts to supply and distribute

GMP-compliant Product in accordance with the Product's respective

specifications; and,

f) Using Commercially Reasonable Efforts to supply and ship only to a

single site designated by CRTX sufficient quantities of GMP-compliant

commercial Samples for CRTX's sampling program, as approved by DEY,

which Samples shall be provided at DEY's [**] during the Term;

provided, DEY shall pay for all shipping charges of such Samples to

the site designated by CRTX.

 

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(4) DEY shall use Commercially Reasonable Efforts to provide CRTX with

Promotional Materials and training materials for the performance and supervision

of Calls by a reasonable date prior to the Detail Commencement Date projected by

CRTX. In the case of training materials, a reasonable date shall be the later of

August 1, 2007, or within 15 days after CRTX notifies DEY in writing of the

projected Detail Commencement Date. In the case of Promotional Materials, a

reasonable date shall be the later of September 3, 2007, or within 30 days after

CRTX notifies DEY in writing of the projected Detail Commencement Date. The

Parties agree that timely delivery of such materials is necessary in order for

CRTX to meet the agreed upon Detail Commencement Date. Such Promotional

Materials shall be provided to CRTX by DEY at DEY's [**]. DEY shall be solely

responsible for the preparation, content and method of distribution of the

Promotional Materials to one location designated by CRTX. CRTX's Sales

Representatives shall use only the Promotional Materials provided by DEY in

conducting Calls hereunder and shall not develop, create, or use any other

promotional material or literature, or any other materials of any kind in

connection with the Detailing of the Product. When depleted by CRTX, DEY will

coordinate with CRTX to replenish on a timely basis CRTX's supply of Promotional

Materials, which also shall be sent to one location designated by CRTX. DEY

shall notify CRTX promptly of any inaccuracy or incompleteness of the

Promotional Materials or labeling. Upon such notice, CRTX will advise its Sales

Representatives to cease the use of all of the Promotional Materials or labeling

(or any portion thereof) so identified by DEY and will either destroy or return

such Promotional Materials or labeling to DEY, at DEY's instruction and expense.

DEY shall furnish CRTX with corrected Promotional Materials or labeling as soon

as practicable thereafter (such corrected Promotional Materials to be provided

to CRTX at no cost to the extent of materials previously purchased are

unusable). DEY shall be responsible for all interactions with the FDA regarding

approval and /or submission of all Promotional Materials.

(5) DEY shall use Commercially Reasonable Efforts to provide support to CRTX to

enable CRTX to begin Promoting the Product by Commercial Launch Date.

4.5 Intellectual Property. Each of CRTX and DEY shall retain their respective

intellectual property rights, including without limitation, all patents

(including the DEY Patents) and patent applications, copyrights and trademarks

(including the DEY Trademarks), owned by such Party as of the Effective Date or

otherwise arising during the Term and relating to such Party's

 

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respective existing programs and materials in all formats (print, video, audio,

digital, computer, etc.) regarding sales training, patient education and disease

management programs owned or controlled by such Party at the time such materials

are shared with the other Party, as well as any modifications of such programs

each may develop in the future which are not specific to the Product. Except as

otherwise prohibited by Applicable Laws and as otherwise set forth herein, all

Promotional Materials used during the Term, including journal advertising and

sales aids (excluding packaging and FDA approved Product Labeling) may display

the names and logos of CRTX and DEY. Except as otherwise prohibited by

Applicable Laws, and to the extent reasonably practicable, all Promotional

Materials will indicate that the applicable Product is manufactured and sold by

DEY, promoted by DEY and CRTX, and that the CRTX Trademarks are owned by CRTX

and that the DEY Trademarks are owned by DEY. Notwithstanding the foregoing, the

Parties acknowledge and agree that, to the extent DEY may have existing stock of

Promotional Materials as of Detail Commencement Date, DEY shall be permitted to

utilize such stock and to provide such stock to CRTX for use in connection with

its promotional efforts prior to the development and distribution of new

Promotional Materials displaying the names and logos of both CRTX and DEY.

During the Term, all applicable logos, subject to compliance with Applicable

Laws, shall be prominently displayed in accordance with each Party's

specifications and be of similar size to each other on all such materials. Each

Party hereby consents to such use of its name and logo, provided that the other

Party adheres to the agreed upon format and language and, provided further, that

neither Party will acquire any ownership rights in the other Party's name or

logo, or any rights to use the other Party's name or logo beyond those set forth

in this Section 4.5. After expiration of the Term or after the termination of

this Agreement, neither Party will include any of the other Party's names or

logos on any Promotional Materials, except as required by Applicable Laws. If

either party's corporate name or logo should change from what it is at Effective

Date of this Agreement, such Party shall be responsible and reimburse the other

party for all additional expenses in connection with procuring additional stock

of Promotion Materials as a result of such name or logo change.

4.6 Training.

 

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(1) Each Party shall have the responsibility for training its Sales

Representatives with respect to the Promotion of the Product in the Territory,

and each Party will be solely responsible for all costs associated with training

its respective Sales Representatives. During the Term, DEY shall provide CRTX

with such assistance as is reasonably requested by CRTX, and as mutually agreed

to in connection with the training programs to help ensure that the training of

CRTX's Sales Representatives will be consistent with the training provided to

DEY's Sales Representatives regarding the sales of the Product in the Territory.

(2) During the Term, in order for CRTX to meet the projected Detail Commencement

Date, DEY shall provide sufficient quantities of training materials relating to

the Product, including an up-to-date programmed learning unit for "at home"

study. DEY shall supply such materials to one CRTX-designated location by later

of [**], or [**] days after its receipt of written notice of the projected

Detail Commencement Date from CRTX. DEY shall be responsible for the cost of

developing and CRTX shall be responsible for the cost of duplicating such

materials.

(3) All expenses during the Term that are incurred by either Party and

associated with any launch meeting or any training meetings for the Product for

such Party's sales force shall be the responsibility of the Party incurring such

cost. Promptly after the date that CRTX has confirmed the projected Detail

Commencement Date to DEY, CRTX and DEY shall agree on a mutually convenient

schedule that will enable the training of the CRTX sales force in sufficient

time to meet the projected Detail Commencement Date.

(4) In addition to the training referred to above, during the Term, each Party

shall conduct separate training programs for their respective sales force with

respect to the Medicare and Medicaid Anti-Kickback Statute, as set forth at 42

U.S.C. Section 1320(a)-7b(b) and the acts prohibited thereunder, PDMA

regulations, and all other applicable guidances relating to promotion of

Product, including, without imitation, the PhRMA Code on Interactions with

Healthcare Professionals. Upon completion of such additional training, each

sales force member shall be required to sign a certificate acknowledging their

receipt of such training and certifying and acknowledging their attendance at

the training.

4.7 Other Marketing and Promotion Services.

 

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(1) DEY or its Third Party contractor shall provide reasonable order entry,

customer service, reimbursement management, medical affairs (including reports

for all Adverse Events as set forth herein at Article 6), medical or drug

information, warehousing, physical distribution, invoicing, credit and

collections (including maintaining and enforcing the credit policy applicable to

the Product) production forecasting and other related facilities and services

necessary or desirable for the manufacturing and supply, distribution,

marketing, Promotion and sales of the Product under this Agreement. Such

services shall include contract administration, including handling wholesaler

chargebacks, managed care contracts, federal and state government contracts,

rebate contracts, long-term care contracts, performance-based contracts, and

hospital purchasing contracts. DEY shall book all sales and be exclusively

responsible for accepting and filling purchase orders for Product and for

processing billing and returns with respect to the Product.

(2) DEY will provide CRTX with reasonable access (at DEY's expense for any

additional work that DEY may request) to all medical education and medical or

drug information regarding the Product and FAQs, with respect to the Promotion

of the Product.

(3) In addition to any other reports required by this Agreement, DEY shall

provide to CRTX at no cost to CRTX:

(i) on a monthly basis, within [**] days after the end of each month

beginning or ending during the Term, reports of (A) WAC Price; (B) Rebates

and Discounts; and (C) Net Retail Average Selling Price for the immediately

preceding month;

(ii) on a monthly basis, the number of Retail Units; after DEY has received

the data from Wolters Kluwer Health or a similar Third Party;

(iii) on a monthly basis, complete and accurate records of the actual

number of Sales Representatives in DEY's sales force who, at the end of

each calendar month, are actively Detailing the Product to office-based

physicians and other office-based health care professionals in the

Territory); and,

(iv) such other reports as may be reasonably requested by CRTX in

connection with the performance of the Parties' obligations hereunder.

 

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4.8 Covenants of the Parties.

(1) CRTX covenants that, during the Term, the CRTX sales force shall (i) limit

its claims of efficacy and safety for the Product to those that are consistent

with approved promotional claims and FDA-approved prescribing information for

the Product in the Territory; (ii) not add, delete or modify claims of efficacy

and safety in the Promotion of the Product from those claims of efficacy and

safety that are consistent with the FDA-approved prescribing information; (iii)

use the Promotional Materials in accordance with this Agreement and Applicable

Laws; (iv) Promote the Product in accordance with Applicable Laws; and, (v)

comply with the CRTX code of business conduct and Comprehensive Compliance

Program.

(2) DEY covenants that, during the Term, the DEY sales force shall (i) limit its

claims of efficacy and safety for the Product in the Territory to those that are

consistent with approved promotional claims and FDA-approved prescribing

information for the Product; (ii) not add, delete or modify claims of efficacy

and safety in the Promotion of the Product under this Agreement from those

claims of efficacy and safety that are consistent with the FDA-approved

prescribing information; (iii) use the Promotional Materials in accordance with

this Agreement and Applicable Laws; and (iv) Promote the Product in accordance

with Applicable Laws; and, (v) comply with the DEY Code of Conduct and

compliance program.

ARTICLE 5

FINANCIAL TERMS / PAYMENTS / STATEMENTS

5.1 During the Term and after the Detail Commencement Date, DEY will pay CRTX on

a Calendar Quarter basis a Co-Promotion Fee, which shall be calculated and paid

as follows:

(1) No Co-Promotion fee will be paid with respect to Retail Units sold in

any Calendar Quarter if the number of Retail Units of Product sold in

such Calendar Quarter is less than the QRBU for such Calendar Quarter.

 

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(2) TIER 1: With respect to the number of Retail Units sold during each

Calendar Quarter in excess of the QRBU, but not more than [**] Retail

Units above the QRBU for such Calendar Quarter (the "Applicable Tier 1

Retail Units"), DEY shall pay to CRTX a Co-Promotion Fee for that

Calendar Quarter calculated according to the following formula:

(Applicable Tier 1 Retail Units) x (Net Retail Average Selling

Price for such Calendar Quarter) x [**]%.

(3) TIER 2: With respect to the number of Retail Units sold during each

Calendar Quarter in excess of those Retail Units that are subject to a

Co-Promotion fee under Section 5.1(2) above during such Calendar

Quarter (i.e., in excess of the QRBU for such Calendar Quarter, plus

[**]) (the "Applicable Tier 2 Retail Units"), DEY shall pay to CRTX a

Co-Promotion Fee for that Calendar Quarter calculated according to the

following formula:

(Applicable Tier 2 Retail Units) x (Net Retail Average Selling

Price for such Calendar Quarter) x


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