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PROMOTION AGREEMENT

Promotion Agreement

PROMOTION AGREEMENT | Document Parties: MIDDLEBROOK PHARMACEUTICALS, INC. | DoctorDirectorycom, Inc You are currently viewing:
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MIDDLEBROOK PHARMACEUTICALS, INC. | DoctorDirectorycom, Inc

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Title: PROMOTION AGREEMENT
Governing Law: North Carolina     Date: 3/18/2010
Industry: Biotechnology and Drugs     Sector: Healthcare

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EXHIBIT 10.1

PROMOTION AGREEMENT

This Promotion Agreement (“Agreement”) is entered into as of February 3, 2010 (“Effective Date”) by and between MiddleBrook Pharmaceuticals, Inc. (“MBRK”), a Delaware corporation with offices at 7 Village Circle, Suite 100, Westlake, TX 76262 and DoctorDirectory.com, Inc . (“DD”), a South Carolina Corporation, with offices at One Page Avenue, Suite 280, Asheville, NC 28801.

WHEREAS DD provides advertising, promotion and marketing services to pharmaceutical companies that seek to market their products to physicians and other allied medical professionals including nurses, nurse practitioners, and physician assistants; and

WHEREAS MBRK markets prescription drug products, including its product known as MOXATAG ® (“MOXATAG”) to licensed physicians, nurses, nurse practitioners, and physician assistants in the United States (“US”) whose clinical practice is consistent with MOXATAG’s approved labeling; and

WHEREAS MBRK seeks to have MOXATAG promoted to as many licensed US physicians, nurse practitioners and physician assistants whose clinical practice is consistent with MOXATAG’s approved labeling as is possible and practical.

THEREFORE, for good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the Parties agree that DD will promote MOXATAG to certain US physicians and others as identified in this Agreement subject to the terms and conditions as set forth below:

Section 1 — Definitions

The terms as used in this Agreement will have the meanings as follows:

(a)

 

Actual DD Target Segment MOXATAG TRx ” means the total actual number of MOXATAG prescriptions filled in the US during the applicable Promotional Measurement Period and written by DD Target Segment Prescribers as stipulated by the Prescriber Data.

 

(b)

 

Actual DD Target Segment MOXATAG TRx Tablets ” means the average number of tablets contained in all MOXATAG TRx during the applicable Promotional Measurement Period as stipulated by the Prescriber Data including the tablet quantities as reported by IMS NPA weekly EUTRx (tablets) data, multiplied by Actual DD Target Segment MOXATAG TRx.

 

(c)

 

Change of Control ” means the change of control of MBRK, as defined by any of the following events: A) any third party acquires directly or indirectly the beneficial ownership of any voting security of MBRK representing fifty percent (50%) of the total voting power of the then outstanding voting securities of MBRK; B) the consummation of a merger, consolidation, recapitalization, or reorganization of MBRK with or by a third party which

 

 


 

    

 

would result in fifty percent (50%) or more of the total voting power of MBRK stock being transferred to a third party; or C) the stockholders or equity holders of MBRK approve a plan of complete liquidation of MBRK or an agreement for the sale or disposition of all or substantially all the assets of MBRK.

(d)

 

Coupons means those coupons or vouchers provided by MBRK and distributed through a MBRK designee and whose redemption is tracked by a MBRK designee, and redeemed by patients filling MOXATAG prescriptions written by DD Target Segment Prescribers.

 

(e)

 

Cost of Coupon Redemption Amount means the redemption amount and the costs associated with printing and processing those Coupons redeemed during the applicable Promotion Measurement period.

 

(f)

 

Cost of Samples Amount means the cost of manufacturing and delivering (including, without limitation, all applicable freight, packaging and shipping costs) and costs of any third party vendors used in connection with manufacturing and fulfillment of MOXATAG samples.

 

(g)

 

Deposit ” means that amount which MBRK shall deposit with DD upon the Promotion Commencement Date and as subject to the adjustment outlined in Section 5.

 

(h)

 

DD Target Segment Prescribers means the licensed prescribers as defined in EXHIBIT 1.

 

(i)

 

Early Termination Fee means that amount equal to the most recent month’s Promotion Fee prior to termination, multiplied by the number of unexpired months remaining in the current year of the Agreement.

 

(j)

 

End of Agreement Fee ” means the fee, in addition to any other amounts due, payable to DD (when this Agreement is terminated as further described in Section 18(f)) that is equal to two (2) times the last month’s Promotional Fee earned by DD during the last month of the Agreement.

 

(k)

 

FDA means the federal Food and Drug Administration.

 

(l)

 

Gross Margin Per Tablet means the Gross Margin calculated in accordance with GAAP and which excludes those non-recurring and unusual items that the Parties agree are not resulting from activities under this Agreement (“GM Adjustment Items”) divided by the actual number of MOXATAG tablets (as report by IMS Health Rx data) during the applicable Promotional Period. By way of example, these GM Adjustment Items where appropriate may include inventory write-offs, changes to prior period reserve balances or foreign exchange gains or losses. MBRK agrees to provide a summary of any GM Adjustment Items to DD. The calculation of Gross Margin Per Tablet will be based on U.S. sales of MOXATAG only. For periods after September 30, 2010, if the Gross Margin per Tablet is less than $3.50, the Parties agree to re-evaluate the viability of the Agreement and if deemed necessary will use commercially reasonable efforts to re-negotiate an amendment to the Agreement.

 

 


 

(m)

 

Gross Margin Per TRx means the Gross Margin per MOXATAG Rx as calculated in accordance with GAAP and which exclude GM Adjustment Items. The calculation of Gross Margin Per TRx will be based on U.S. sales of MOXATAG only. For the period from the Effective Date through September 30, 2010, the Gross Margin per TRx shall be $36.50.

 

(n)

 

Intellectual Property Rights means any and all patents, copyrights, trade secrets, trademarks, and any and all other intellectual property rights or interests.

 

(o)

 

Medical Professionals ” means licensed nurses, nurse practitioners, and physician assistants.

 

(p)

 

MOXATAG ” means the prescription drug known as MOXATAG ® (amoxicillin extended-release) Tablets 775 mg, approved by the FDA, having NDC numbers 110442-142-03 and 110442-142-02 which is marketed in the US, including currently and subsequently approved formulations, strengths, concentrations and delivery mechanisms.

 

(q)

 

MOXATAG Labeling ” shall mean (a) the FDA-approved full prescribing information for MOXATAG, including any required patient information, and (b) all labels and other written, printed or graphic matter upon any container, wrapper or any package insert or outsert utilized with or for MOXATAG.

 

(r)

 

Parties ” means DD and MBRK collectively.

 

(s)

 

Prescriber Data ” means the prescriber data supplied by a nationally recognized prescription data provider where permitted under federal and state law, which is currently provided to MBRK by IMS Health.

 

(t)

 

Promotion Commencement Date ” means the first day of the month in which DD commences its promotion of MOXATAG under this Agreement.

 

(u)

 

Promotion Fees ” means the Promotion Fees payable to DD by MBRK for the promotion services provided under this Agreement as is calculated by and stipulated in Section 5, which represent fair market value for such services.

 

(v)

 

Promotional Materials ” shall mean all MBRK-approved and available sales representative training materials and all MBRK-approved and available written, printed, graphic, electronic, audio or video matter, including, but not limited to, journal advertisements, sales aids, formulary binders, reprints, direct mail, direct-to-consumer advertising, Internet postings, broadcast advertisements and sales reminder aids (for example, scratch pads, pens and other such items), in each case created by a party or on its behalf and used or intended for use by DD and MBRK in connection with any promotion of MOXATAG hereunder, or disease state or indication for which MOXATAG is approved for treatment but excluding MOXATAG Labeling.

 

(w)

 

Promotional Measurement Period ” means that month during which prescription activity for MOXATAG is measured.

 

(x)

 

Territory ” shall mean the US, including all US territories, possessions and protectorates.

 

(y)

 

Up-Front Payment means the one-time payment of $50,000 to be made by MBRK to DD upon execution of this Agreement.

 

 


 

Section 2 — Term

This Agreement shall commence as of the Effective Date and shall continue in full force and effect for an initial term of three (3) years from the Promotion Commencement Date, divided into three one-year periods. Unless terminated in accordance with the provisions of Section 18, this Agreement shall automatically renew for each subsequent one-year term.

Section 3 — Obligations of DD

3.1 DD will promote MOXATAG to DD Target Segment Prescribers using its full suite of promotion solutions where DD and MBRK deem appropriate, including but not limited to DD’s a)
eSampling Platform, b) eLearning / eDetailing, c) Educational Email, d) Direct-to-Physician Bulletin Services, e) Physician Portal Promotions, f) Patient Portal Promotions, g) Direct Mail Advertising, h) Coupon Promotions, i) Consumer Condition Content, j) Search Engine Marketing and k) Mini Web Site Promotions where appropriate and with prior written approval from MBRK. MBRK shall have final approval as to the promotion solutions utilized by DD in the promotion of MOXATAG and DD will not deploy any promotion solution without such approval from MBRK. Such promotion solutions are as listed in EXHIBIT 4. In the event that the Parties mutually agree on the provision of additional services beyond those listed in EXHIBIT 4, such additional promotional solutions shall be approved by MBRK and additional Appendices numbered sequentially (1, 2, 3, 4 etc.) setting forth in detail the additional services shall be duly signed by authorized representatives of the Parties and attached to EXHIBIT 4 and incorporated herein. The services contained in EXHIBIT 4 and any related modifications thereto represent those services that are reasonably necessary to accomplish the promotion of MOXATAG. No services shall be provided by DD, or paid for by MBRK, except as agreed to in writing by the Parties.

3.2. Notwithstanding any other provision of this Agreement, all Promotional Materials relating to MOXATAG that will be utilized by DD, as well as the use and placement of such Promotional Materials, are subject to written approval by MBRK prior to such use. DD agrees to provide draft and final versions of all Promotional Materials to MBRK for MBRK’s review and approval prior to DD’s use of such Promotional Materials, provided such materials are developed or modified by DD. MBRK has the authority to perform the final review of all Promotional Materials developed by DD. All Promotional Materials are subject to MBRK’s legal, medical and regulatory review and approval process. DD agrees to make all the necessary changes and/or modifications requested by MBRK. DD shall not use Promotional Materials for any purpose outside of this Agreement without prior written authorization from MBRK.

3.3. Notwithstanding any other provision of this Agreement, all MOXATAG sample request forms (hereinafter “Sample Request Forms”) utilized by DD to document a prescriber’s request for MOXATAG samples are subject to written approval by MBRK. DD agrees to provide draft and final versions of all Sample Request Forms to MBRK for MBRK’s review and approval prior to DD’s use of such Sample Request Forms. MBRK has the authority to perform the final review of all Sample Request Forms developed by DD or used in conjunct. All Sample Request Forms are subject to MBRK’s legal, medical and regulatory review and approval process. DD agrees to make all the necessary changes and/or modifications requested by MBRK. DD shall not use Sample Request Forms for any purpose outside of this Agreement without prior written authorization from MBRK.

 

 


 

3.4. Notwithstanding any other provision of this Agreement, DD shall not offer or provide any item to a DD Target Segment Prescriber, without prior written approval by MBRK. The provision of any items shall be subject to MBRK’s legal, medical and regulatory review and approval process. In the event that MBRK authorizes the provision of items of nominal value to a DD Target Segment Prescriber, DD shall track and record the item provided, the associated value, the date of the transaction, and the recipient DD Target Segment Prescriber, including his or her credentials and the state in which he or she is licensed, where possible.

3.5 DD shall use commercially reasonable efforts to promote MOXATAG to DD Target Segment Prescribers and agrees to efficiently perform the services as described in EXHIBIT 4 in compliance with MBRK’s policies and procedures, and all applicable federal and state laws and regulations, including, without limitation, federal and state anti-kickback statutes, regulations contained in 21 CFR (Code of Federal Regulations) as they pertain to promotional activity of an FDA-approved pharmaceutical product and the US Department of Health and Human Services Office of Inspector General’s (“OIG”) Compliance Program Guidance for Pharmaceutical Manufacturers (2003). DD agrees that it shall not directly or indirectly offer, pay or transfer anything of value, in cash or in-kind, to induce DD Target Segment Prescribers to purchase, order, or recommend MOXATAG, nor shall DD exert undue influence on the medical decision-making of DD Target Segment Prescribers.

3.6. Both Parties agree to assign sufficient resources and personnel to discharge their respective responsibilities under this Agreement in a timely manner and at all times operating using a professional standard of work as consistent with industry standards.

3.7. DD shall select and shall have full and complete control of and responsibility for all actions of its agents, affiliates, officers, directors, employees or subcontractors (hereinafter “Representatives”) and none of DD’s Representatives are, or shall be deemed to be, the Representatives of MBRK for any purpose whatsoever by virtue of this Agreement. MBRK has no duty, liability or responsibility of any kind, to or for the acts or omissions of DD or any of DD’s Representatives. DD hereby acknowledges and agrees that DD shall cause each of DD’s Representatives who participate in rendering the services to comply with the terms of this Agreement. DD hereby acknowledges and agrees that DD is responsible for the failure of any of DD’s Representatives to comply with the terms of this Agreement.

3.8. DD shall be responsible for obtaining the necessary contracts and releases with or from all parties whose names, likenesses, testimonials, scripts, musical compositions or similar materials, assets or rights are used in MBRK’s advertising, promotional, publicity or other materials prepared and produced by DD under this Agreement, except where MBRK undertakes to be responsible for obtaining the same. Notwithstanding the foregoing, without the prior written consent of MBRK, DD is not authorized hereunder or otherwise to enter into any contract or agreement in respect of the foregoing with a third party if such contract or agreement, directly or indirectly, imposes any obligations on MBRK.

3.9. All records maintained by DD pertaining to DD’s services to MBRK pursuant to this Agreement shall be provided to MBRK within 48 hours of MBRK’s request. DD shall also make its records and other documents relevant to MBRK and this Agreement available for audit or review by MBRK upon MBRK’s request at a mutually agreed upon time. Upon termination or expiration of this Agreement, if specifically requested by MBRK, DD shall provide originals or copies of such records to MBRK.

 

 


 

Section 4 — Costs to Deliver DD Promotion

All costs incurred by DD to deploy its services to promote MOXATAG to DD Target Segment Prescribers will be the responsibility of DD, except as provided in Section 6.

Section 5 — Up-Front Payment, Deposit and Promotion Fees

5.1. MBRK will pay DD an Up-Front Payment of $50,000 upon execution of this Agreement.

5.2. Additionally, MBRK shall pay a Deposit to DD equal to $100,000 upon the Promotion Commencement Date. Each month the Parties will review the amount of the Deposit and where necessary MBRK will make an additional deposit payment to DD in order to maintain a total Deposit with DD of at least two (2) times the current month’s Promotion Fees. For example, if in a month Promotion Fees are $105,000, then MBRK will increase the Deposit to two (2) times $105,000, equal to $210,000. The Parties agree to meet via conference call within five (5) business days of the end of each month to determine the necessary adjustment, if any, to the Deposit. If it is determined that the Deposit must be increased, within ten (10) business days of the date upon which the new Deposit is determined, MBRK shall send to DD the funds necessary to increase the Deposit. Notwithstanding the above, if during years 2 and 3 of this Agreement, in the event MBRK’s then current annual form 10-K filed with the SEC does not contain an audit opinion that expresses doubt about MBRK’s ability to continue as a going concern, then MBRK’s requirement to maintain a Deposit is waived. In all cases the Deposit amount will be used to settle any outstanding amounts due to DD by MBRK at the end of the Agreement or at the time the Deposit requirement is waived.

5.3. Additionally, on or before the last day of each month, DD will invoice MBRK for the Promotion Fees due for the prior month. Such Promotion Fees shall be calculated by:

(a) the following formula for the period from the Effective Date through September 30, 2010:

 

(A)

 

the Actual DD Target Segment MOXATAG TRx for the Promotional Measurement Period multiplied by :

 

 

(B)

 

the applicable Gross Margin Per TRx multiplied by:

 

 

(C)

 

50%.

For example : if during the month of March 2010 (a) (A) above was 2,000 TRx and (B) above was $36.50 then MBRK would be remit $36,500.00 to DD.

OR

(b) the following formula for the period from October 1, 2010 through termination of this Agreement:

 

(A)

 

the Actual DD Target Segment MOXATAG TRx Tablets for the Promotional Measurement Period multiplied by :

 

 

(B)

 

the applicable Gross Margin Per Tablet multiplied by:

 

 

(C)

 

50%.

 

 


 

For example : if during the month of November 2010:

 

(A)= 

 

Actual DD Target Segment MOXATAG TRx (5,000) x an average tablet amount for the month of (9.8 tablets)= 49,000

 

 

(B)=  

 

3.65

 

 

(C)=  

 

50%

MBRK would remit $89,425.00 to DD:

These Promotion Fees represent fair market value payment for such services rendered.

The Parties recognize that Promotion Fees are to be settled on a monthly basis which requires the use of an estimated Gross Margin Per Tablet amount until the actual Gross Margin Per Tablet for an applicable quarter can be determined. Accordingly, to facilitate the calculation and settlement of monthly Promotion Fees for periods after September 2010, the Parties agree that the Gross Margin Per Tablet used to settle the monthly Promotion Fees will be that as calculated using the previous calendar quarter’s Gross Margin Per Tablet data and current period’s Actual DD Target Segment MOXATAG TRx . Such Promotion Fees for the three months in any calendar quarter will be subject to a true-up process which will occur by the 15 th of the second month of the following quarter. By way of example, Promotion Fees for each of the months of April, May and June will be settled using the Gross Margin Per Tablet amount that has been calculated for the quarter ended March 31 and will be subject to a true-up process to occur by August 15 with any adjustment to such Promotion Fees being settled between the parties within 15 days thereafter.

5.4 In the event MBRK shall discontinue detailing prescribers in a territory that is not included in the then current DD Target Segment Prescribers set forth in EXHIBIT 1 to this Agreement or any amendments thereto (“New DD Target Segment Prescribers”), the Parties shall negotiate in good faith the Promotion Fee payable to DD should MBRK desire that DD add those New DD Target Segment Prescribers to the DD Target Segment Prescribers.

5.5. The Promotion Fees shall be paid to DD by MBRK fifteen (15) days after the receipt of an invoice from DD by MBRK.

5. 6. The basis for determining the Promotion Fees will be the Prescriber Data provided by MBRK to DD.

5.7. DD agrees to submit invoices to MBRK at the following address:

Attn: Accounts Payable
MiddleBrook Pharmaceuticals, Inc.
7 Village Circle, Suite 100
Westlake, TX 76262

 

 


 

Section 6 — Obligations of MBRK

6.1. Subject to the terms of confidentiality set forth in Section 10, MBRK agrees to make available to DD to the best of its ability the items as stipulated in EXHIBIT 2. These items include the relevant portions of its marketing and communications plan, approved sales promotion materials in electronic format where available, sales and training aids relevant to MOXATAG and promotional items and packages for appropriate licensed physicians, nurses, nurse practitioners and physician assistants. Additionally, MBRK or its authorized designee shall be responsible for the provision of MOXATAG samples in response to a prescriber’s request as documented on a Sample Request Form and MBRK or its authorized vendor shall be solely responsible for sample fulfillment in quantities agreed to by MBRK. At no time shall DD take physical possession of or title to MOXATAG samples.

6.2. Notwithstanding any other provision of this Agreement, MBRK shall have the sole right and authority and in its sole discretion shall take any actions that it deems appropriate with respect to MOXATAG as would normally be done in accordance with accepted business practices and federal and state legal requirements to maintain the authorization and/or ability to market MOXATAG


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