PROMOTION AGREEMENT
BETWEEN
SCHERING CORPORATION
AND
WARNER CHILCOTT PLC
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
TABLE OF CONTENTS
I. DEFINITIONS.........................................................1
II. SCOPE...............................................................3
III. TERM................................................................4
IV. GOVERNANCE OF COLLABORATION.........................................4
V. TRAINING............................................................4
A. Training For Warner Chilcott Sales Trainers.....................4
1. Initial Training.............................................4
2. Additional Training..........................................4
B. Training For Warner Chilcott Sales Force
and Marketing Organization......................................4
1. Initial Training.............................................4
2. Additional Training..........................................5
C. Training Standards..............................................5
VI. WARNER CHILCOTT SALES AND MARKETING OBLIGATIONS
AND RIGHTS.....................................................................5
A. Annual Calls....................................................5
B. Monthly Quota...................................................5
C. Promotional Material............................................6
D. Promotional Expenses............................................6
E. Fraud and Abuse Compliance Plan.................................6
VII. SAMPLES.............................................................6
VIII. SALES FORCE.........................................................7
IX. RECORD KEEPING - WARNER CHILCOTT PROMOTIONAL ACTIVITIES.............7
A. Reports.........................................................7
B. Auditing........................................................7
X. SCHERING MARKETING OBLIGATIONS......................................7
A. Development and Supply of Promotional Material..................7
B. Promotional Expenses............................................8
XI. ADVERSE EXPERIENCES.................................................8
XII. PRODUCT ALERTS, RECALLS AND WITHDRAWALS.............................8
XIII. PRODUCT INQUIRIES...................................................8
A. Medical/Scientific Inquiries....................................8
B. Non-medical/Scientific Inquiries................................8
XIV. PAYMENT/INCENTIVES..................................................9
A. Annual Base Target for Adjusted Net Sales - K-Dur(R)............9
B. Annual Base Target for Adjusted Net Sales - Imdur(R)............9
C. Sales Incentives................................................9
D. Adjusted Net Sales..............................................9
E. Date and Form of Payments.......................................9
XV. TERMINATION........................................................10
XVI. INDEPENDENT CONTRACTOR/PERSONNEL/NON-COMPETE.......................12
A. Independent Contractor.........................................12
B. Responsibility for Employees...................................12
C. No Solicitation................................................13
D. Non-Compete....................................................13
XVII. PRESS RELEASES.....................................................13
XVIII. CONFIDENTIALITY....................................................13
XIX. REPRESENTATIONS, WARRANTIES AND COVENANTS..........................14
XX. INDEMNIFICATION....................................................15
A. Indemnification by Schering....................................15
B. Indemnification by Warner Chilcott.............................15
XXI. IMPROVED PRODUCTS..................................................16
XXII. INSURANCE..........................................................16
A. Requirements...................................................16
B. Certificate of Insurance.......................................16
XXIII. PAYROLL TAXES......................................................16
XXIV. INTELLECTUAL PROPERTY..............................................17
ii
XXV RETURN OF MATERIALS................................................17
XXVI. MISCELLANEOUS......................................................18
A. Force Majeure..................................................18
B. Notices........................................................18
C. Governing Law..................................................18
D. Dispute Resolution.............................................18
E. Assignment.....................................................19
F. Non-Waiver of Rights...........................................19
G. Severability...................................................19
H. Headings.......................................................19
I. Survivability..................................................19
J. Entire Agreement and Amendment.................................20
iii
SCHEDULES AND EXHIBITS
SCHEDULE I
ADVERSE EVENT REPORTING PROCEDURES
SCHEDULE II
DISPUTE RESOLUTION PROCEDURES
EXHIBIT A
PRODUCT EVOLUTION INDEX DEFINITION
PROMOTION AGREEMENT
This Promotion Agreement, effective as of July 1, 1998, is entered into between
SCHERING CORPORATION, a New Jersey corporation, having its offices at 2000
Galloping Hill Road, Kenilworth, New Jersey 07033 ("Schering"), and WARNER
CHILCOTT PLC., an Irish Public Limited Company, having its principal place of
business at Lincoln House, Lincoln Place, Dublin 2, Ireland ("Warner Chilcott").
Schering and Warner Chilcott are sometimes referred to herein individually as a
"Party" and collectively as the "Parties"). References to "Warner Chilcott"
shall include its respective Affiliates (as hereinafter defined).
WHEREAS, Schering is engaged in the promotion, marketing and sale of certain
pharmaceutical products for human therapeutic use; and
WHEREAS, Warner Chilcott is engaged in the promotion, marketing and sale of
various pharmaceutical and health care products; and
WHEREAS, Schering is unable to promote certain of its Products (as defined
herein) with its sales force, and is currently promoting the Products through a
small contract sales force; and
WHEREAS, Schering is desirous of having a larger and properly motivated sales
force promoting the Products; and
WHEREAS, Warner Chilcott has a sales force and is desirous of obtaining
cardiovascular products to promote; and
WHEREAS, Schering and Warner Chilcott desire to cooperate in the promotion,
marketing and sale of certain of the Products in the Territory;
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and
covenants herein contained, the Parties agree as follows:
I. DEFINITIONS
As used in this Agreement, the following initially capitalized terms, whether
used in the singular or plural, shall have the respective meanings set forth
below:
1. The term "Adjusted Net Sales" shall mean Net Sales plus any adjustment
*** in accordance with ss.D of Article XIV.
2. The term "Affiliate" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with a Party to
this Agreement. For purposes of this Agreement, the direct or indirect ownership
of fifty percent (50%) or more of the outstanding voting securities of an entity
or the right to receive fifty percent (50%) or more of the profits or earnings
of an entity shall be deemed to constitute control. Such other relationship as
in fact results in actual control over the management, business and affairs of
an entity shall be deemed to constitute control.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
3. The term " *** Agreement" shall mean the License Agreement between
Schering and *** , effective *** .
4. The term "Call" shall mean a direct interface with a physician that
results in the promoting and/or marketing of the Products.
5. The term "Detail" or "Detailing" shall mean a direct interface with a
physician for the primary or secondary purpose (as opposed to a tertiary purpose
or a reminder detail) of promoting and/or marketing the Products.
6. The term "Effective Date" shall mean July 1, 1998.
7. The term " *** Agreements" shall mean the Master Development and
License Agreement, dated *** and the Development License and Supply Agreement,
dated *** between *** and Warner Chilcott, formerly known as Nale Laboratories,
Ltd., and any amendments thereto.
8. The term "FDA" shall mean the United States Food and Drug
Administration or any successor agency thereto.
9. The term "Fraud and Abuse Plan" shall mean the Schering-Plough
Corporation Fraud and Abuse Compliance Plan for U.S. Promotional Activities,
dated April 1998, and all modifications and/or updates thereto.
10. The term "Imdur(R) Products" shall mean isosorbide mononitrate
products marketed by Schering under the trademark "Imdur(R)".
11. The term "Improved Products" shall mean any enhancement in the
manufacture, formulation, ingredients, preparation, presentation, means of
delivery, dosage or packaging of Imdur(R) Products or K-Dur(R) Products.
Improvement shall also include any new or expanded indications for Imdur(R)
Products or K-Dur(R) Products.
12. The term "ISDN Product" shall mean a product containing as its sole
active ingredient isosorbide dinitrate.
13. The term "ISMN Product" shall mean a product containing as its sole
active ingredient isosorbide mononitrate.
14. The term "K-Dur(R) Products" shall mean sustained release potassium
chloride products marketed by Schering under the trademark "K-Dur(R)".
15. The term "NDA" shall mean a New Drug Application, Product License
Application or its equivalent filed with the FDA seeking approval to market and
sell the Products in the United States.
16. The term "Net Sales" shall mean the amounts recorded under Generally
Accepted Accounting Principles in the books and records of Schering, its
Affiliates or sub-licensees as gross
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
2
sales of the Products to unaffiliated third parties (whether an end-user, a
distributor or otherwise) and exclusive of intra-company transfers or
intra-company sales in the Territory, less normal and customary deductions from
such gross amounts, also determined in accordance with Generally Accepted
Accounting Principles, including:
a. normal and customary trade, cash and quantity discounts,
allowances and credits;
b. credits or allowances actually granted for damaged goods, returns
or rejections of the Products and retroactive price reductions;
c. sales or similar taxes (including duties or other governmental
charges levied on, absorbed or otherwise imposed on the sale of the
Products including, without limitation, value added taxes or other
governmental charges otherwise measured by the billing amount, when
included in billing);
d. all charge back payments, discounts and rebates (whether mandated
or otherwise) granted to managed health care organizations or to federal,
state and local governments, their agencies, and purchasers and
reimbursers or to trade customers, including but not limited to,
wholesalers and chain and pharmacy buying groups and charge back payments,
discounts and rebates (whether mandated or otherwise) charged by national
or local government; and
e. commissions paid to third parties other than sales personnel and
sale representatives or sales agents; but specifically excluding any
amounts paid or payable under the *** Agreement.
17. The term " *** " shall mean the regular *** monthly report of ***
reported in months of *** .
18. The term "Product Evolution Index" shall be defined as set forth in
Exhibit A.
19. The term "Products" shall mean Imdur(R) Products and K-Dur(R)
Products.
20. The term "Promotional Spending" shall mean the costs of journal
advertising, direct-to-consumer advertising, samples, phase IV and
pharmacoeconomic programs, but shall specifically exclude (i) the costs and
expenses associated with the sales force and (ii) distribution costs of
promotional materials and samples.
21. The term "Territory" shall mean the mainland United States of America
and Hawaii, excluding Puerto Rico.
II. SCOPE
Schering hereby grants Warner Chilcott the right to promote, market and sell the
Products within the Territory pursuant to the terms and conditions of this
Agreement and the marketing plans developed by Schering with the joint goal of
achieving maximum market penetration and sales of the Products. Warner Chilcott
shall use commercially reasonable efforts to promote the Products in the
Territory and otherwise perform its obligations under the Agreement.
Notwithstanding the above grant, Schering reserves the right to supplement the
promotion of the Products. This Agreement is also subject to the *** Agreement.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
3
III. TERM
The term of this Agreement shall commence on July 1, 1998 and continue for a
period of *** , unless sooner terminated pursuant to Article XV. Schering may
terminate *** upon *** days written notice.
IV. GOVERNANCE OF COLLABORATION
Schering shall prepare the annual marketing and promotion plan for the Products
and have authority over marketing matters relating to the promotional programs,
content and format of all promotional material except as otherwise expressly
specified in this Agreement. Schering shall have sole responsibility for the
pricing of the Products. Warner Chilcott shall be exclusively responsible for
the management, organization, compensation and discipline of its own employees.
Schering shall be responsible for the production, distribution and invoicing of
the Products. Schering shall be responsible for interactions with the Food and
Drug Administration and other regulatory bodies on matters involving the
Products. Warner Chilcott shall be responsible for selecting the target audience
from amongst high prescribing primary care physicians and cardiovascular
specialists as ranked by NDC Health Information Services based on their actual
utilization of Imdur(R), K-Dur(R) and competitive products, and for providing
Detailing to such physicians and specialists. Schering shall be responsible for
contact with managed care purchasing organizations and have sole responsibility
for all marketing and sales decisions in connection therewith, including, but
not limited to, Product pricing.
V. TRAINING
A. Training For Warner Chilcott Sales Trainers
1. Initial Training. Schering shall initially train Warner Chilcott's
sales trainers ("Warner Chilcott Trainers") and provide all available training,
educational and promotional materials, and sales aids to the Warner Chilcott
Trainers. The Parties agree to schedule such training sessions at mutually
acceptable times; provided, however, that the training sessions shall be
completed on or before August 30, 1998. Except for training materials and costs
of Schering training personnel, Warner Chilcott shall pay for all of the costs
and expenses associated with the training, including the costs of travel,
lodging, and meals for the Warner Chilcott Trainers.
2. Additional Training. During the term of the Agreement, Schering will
provide additional training on an as-needed basis, if it is determined by
Schering, at its sole discretion, that such training is necessary. In the event
of such additional training, Schering will provide all available training,
educational and promotional materials, and sales aids to the Warner Chilcott
Trainers. The Parties agree to schedule the additional training sessions at
mutually acceptable times. Except for training materials and costs of Schering
training personnel, Warner Chilcott shall pay for all of the costs and expenses
associated with the training, including the costs of travel, lodging, and meals
for the Warner Chilcott Trainers.
B. Training for Warner Chilcott Sales Force and Marketing Organization
1. Initial Training. Warner Chilcott Trainers will train Warner Chilcott's
sales force and
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
4
marketing organization pursuant to the training guidelines approved by Schering
and using the training, educational and promotional material, and sales aids
supplied by Schering. Warner Chilcott will ensure that each member of its sales
force and marketing organization has the necessary training, educational and
promotional material and sales aids for the training. Warner Chilcott agrees to
complete the training sessions within thirty (30) days of the completion of
Schering's training of the Warner Chilcott Trainers. Warner Chilcott shall pay
for all of the costs and expenses associated with such training.
2. Additional Training. During the term of the Agreement, Warner Chilcott
Trainers will provide (a) follow-up training to Warner Chilcott's sales force
and marketing organization on an annual basis, (b) training, on an as-needed
basis, to any sales and marketing employees who are hired after the initial
training sessions are completed, and (c) training to Warner Chilcott's sales
force and marketing organization when there has been a significant development
related to a Product, including, without limitation, a change to a Product's
labeling, the entry of a new competitive product to the market, or a significant
regulatory action affecting a Product, a competitive product or the class.
Warner Chilcott shall pay for all of the costs and expenses associated with such
training.
C. Training Standards
Warner Chilcott shall ensure that Warner Chilcott Trainers and sales and
marketing personnel have met the standards required by Schering for successful
completion of the sales training programs. Schering will provide Warner Chilcott
with the training standards and, if requested by Schering, Warner Chilcott will
provide written verification that Warner Chilcott Trainers and sales and
marketing personnel have met such standards. In the event that certain Warner
Chilcott employees do not meet such minimum standards, Schering may provide
additional training to such employees at Warner Chilcott's expense, including
the costs of training materials, travel, lodging, and meals of Warner Chilcott's
employees.
VI. WARNER CHILCOTT SALES AND MARKETING OBLIGATIONS AND RIGHTS
A. Annual Calls
Warner Chilcott shall provide *** calls directed to primary care physicians and
specialists allocated as follows:
Contract Year 1:.. ***
Contract Year 2:.. ***
Contract Year 3:.. ***
*Monthly average will be lower during the first half of the year but will be
made up in the second half of the year.
B. Monthly Quota
Beginning September 1, 1998, Warner Chilcott shall provide, on average, not less
than *** calls per month and shall distribute promotional material and/or
samples on each Call. Two (2)
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
5
Products shall be Detailed on each Call. Warner-Chilcott shall give first and
second Detail to these two (2) Products. Schering will decide which Product will
be in first and which Product will be in second position. Warner Chilcott's
failure to meet the monthly quota for any month shall not be considered a
material breach. Warner Chilcott's failure to meet the monthly quota for two
consecutive months shall be considered to be a material breach that is subject
to cure in accordance with Article XV.
Schering and Warner Chilcott will jointly establish the standards to be utilized
for monitoring Call quality. Each Party will independently monitor and audit
Call quality to ensure that such standards are being consistently met. If the
standards are not met, the Parties will meet to discuss a corrective action plan
and Warner Chilcott shall be responsible for implementing such plan.
C. Promotional Material
Warner Chilcott shall use only promotional materials supplied by Schering, at
Schering's expense, to market the Products. All such material shall be used only
for the purposes contemplated by this Agreement, and shall, at Schering's
option, be promptly destroyed or returned to Schering upon termination of the
Agreement, obsolescence of the promotional material, and/or at the request of
Schering. Warner Chilcott shall ensure that none of the promotional material for
the Products is modified, changed, or altered. Each Party shall promote the
Products in strict adherence to all applicable legal and regulatory
requirements; provided, however, that Schering shall be solely responsible for
the content of the promotional materials.
D. Promotional Expenses
Warner Chilcott shall have the right, but not the obligation, to spend its own
funds to promote the Products. Plans for such expenditures shall be submitted to
Schering at least thirty (30) days prior to being made and Schering shall have
the right to review and approve the plans.
E. Fraud and Abuse Compliance Plan
All Warner Chilcott sales force personnel providing services pursuant to this
Agreement shall be subject to and shall be required to abide by the Fraud and
Abuse Plan, including, without limitation, the promotional spending and limits
and accounting obligations set forth therein. In executing this Agreement,
Warner Chilcott acknowledges that it has received a copy of the Fraud and Abuse
Plan and that it will ensure that all Warner Chilcott sales force personnel
providing services pursuant to this Agreement will be trained on the specific
provisions of the Fraud and Abuse Plan and abide by it. Any failure by Warner
Chilcott to train, monitor and/or enforce compliance with the Fraud and Abuse
Plan will be deemed a material breach for which this Agreement shall, without
other action or notice, immediate terminate unless such breach is subject to
cure in accordance with Article XV.
VII. SAMPLES
Schering will provide samples of Products to Warner Chilcott *** . Schering will
supply samples in a sufficient quantity to allow the Warner Chilcott sales force
to sample at a rate that is agreed to by the Parties. Warner-Chilcott shall be
responsible for sample accountability including,
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
6
but not limited to, storing, handling and distributing such samples provided to
its sales force in accordance with package inserts, and relevant laws and
regulations. Warner Chilcott shall be responsible for keeping records related to
samples in compliance with the requirements of the Prescription Drug Marketing
Act and other relevant laws and regulations.
VIII. SALES FORCE
Warner Chilcott shall provide at least *** fully-trained, full-time Warner
Chilcott sales representatives to Detail the Products. Warner Chilcott will
ensure that the minimum required number of sales representatives are provided at
all times. Warner-Chilcott shall be responsible for sales force call reporting
and administration. Warner Chilcott will provide Schering marketing personnel
reasonable access to Warner Chilcott's sales representatives.
IX. RECORD KEEPING - WARNER CHILCOTT PROMOTIONAL ACTIVITIES
A. Reports
Warner Chilcott shall provide Schering with a summary report documenting that
the Details required in Articles VI have been completed ("Warner Chilcott
Detailing Reports"). The Warner Chilcott Detailing Reports shall be in a form
acceptable to Schering and agreed to by the Parties. Warner Chilcott shall
provide such additional reports reasonably required by Schering for the conduct
of Warner Chilcott's obligations under this Agreement.
B. Auditing
Warner Chilcott shall maintain accurate and complete records of all contracts,
papers, correspondence, copybooks, accounts, invoices, and/or other information
in Warner Chilcott's possession relating to this Agreement, including, but not
limited to, all records necessary to support the Warner Chilcott Detailing
Reports and all records relating to promotional expenditures (collectively,
"Records"). The Records shall be maintained in accordance with recognized
commercial accounting practices and retained during the term of this Agreement
and thereafter for a period of two (2) years. Warner Chilcott agrees to permit
Schering to examine and audit the Records at no charge to Schering. Such audit
will be conducted, at Schering's expense, by a public accountant to whom Warner
Chilcott consents, such consent not to be unreasonably withheld. Only one such
audit may be conducted each year. No information other than as to the
correctness of the reported information and the amount and nature of any
discrepancies shall be supplied to Schering by such accountant.
X. SCHERING MARKETING OBLIGATIONS
A. Development and Supply of Promotional Material
Schering shall have ultimate responsibility for the development of all
advertising and promotional programs and the creation of promotional material
and sales aids in accordance with Article IV. Appropriate promotional material
will contain language reflecting that the Products are being promoted by Warner
Chilcott and Schering. Schering shall supply Warner Chilcott with adequate
quantities of promotional, sales, and advertising literature in order to allow
Warner Chilcott to
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
7
meet its obligations under this Agreement. Schering shall be responsible for
ensuring that such material complies with the Federal Food, Drug and Cosmetic
Act and all other applicable laws and regulations, as amended from time to time,
and relevant regulations and guidelines promulgated thereunder; provided,
however, that Schering shall not be responsible for any material that does not
comply with such laws, regulations, and guidelines as a result of Warner
Chilcott's unauthorized alteration of any materials provided to Warner Chilcott
by Schering pursuant to this Agreement.
B. Promotional Expenses
Schering has sole discretion as to the level of Promotional Spending for the
Products during the term of this Agreement.
XI. ADVERSE EXPERIENCES
Each Party shall promptly report to the other Party any information regarding
adverse events related to the use of the Products in accordance with the Adverse
Event Reporting Procedures (as may be amended from time to time upon mutual
agreement) set forth in Schedule I and incorporated herein by reference. Failure
to do so will be deemed a material breach for which this Agreement shall,
without other action or notice, immediate terminate unless such breach is
subject to cure in accordance with Article XV.
XII. PRODUCT ALERTS, RECALLS AND WITHDRAWALS
Schering shall be responsible for making any decisions regarding issuance of
product alerts, Dear Doctor letters, etc., product recalls or product
withdrawals. Schering shall keep Warner Chilcott apprised of major developments
regarding any such issues, consider any comments from Warner Chilcott, and
notify Warner Chilcott before any decisions in this area are made public. Except
as required by law, Warner Chilcott shall not initiate contact with the FDA on
these or any other matters related to the Products, and shall immediately notify
Schering of any contact from the FDA related to the Products and to the extent
practicable notify Schering before any such interaction with the FDA occurs.
Schering shall pay for the costs associated with such product alerts, recalls
and withdrawals with the exception of any events that are caused by Warner
Chilcott's negligence or willful misconduct. In such events, the costs of such
product alerts, recalls and withdrawals shall be borne by Warner Chilcott, but
only to the extent caused by Warner Chilcott's negligence or willful misconduct.
XIII. PRODUCT INQUIRIES
A. Medical/Scientific Inquiries
Warner Chilcott shall direct all medical and scientific inquiries relating to
the Products to Schering's Medical Department.
B. Non-Medical/Scientific Inquiries
Warner Chilcott shall direct all other inquiries relating to the Products to the
Schering Customer
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
8
Service Center or as directed by Schering.
XIV. PAYMENT/INCENTIVES
For the services provided under this Agreement, Schering shall pay sales
incentives to Warner Chilcott calculated in accordance with the following:
A. Annual Base Target for Adjusted Net Sales - K-Dur(R)
1998 ***
1999 ***
2000 ***
2001 ***
B. Annual Base Target for Adjusted Net Sales - Imdur(R)
1998 ***
1999 ***
2000 ***
2001 ***
C. Sales Incentives
1. *** of Adjusted Net Sales up to the Annual Base Target for K-Dur(R).
2. *** of Adjusted Net Sales up to the Annual Base Target for Imdur(R).
3. *** of Adjusted Net Sales over the Base Targets for Imdur(R) and
K-Dur(R) as outlined below in ss.D of this Article.
D. Adjusted Net Sales
***
E. Date and Form of Payments
Schering shall make any payments owed to Warner Chilcott under ss.ss.C.1 and C.2
of this Article within *** days of the end of each calendar quarter, provided
that Schering receives the reports of Warner Chilcott's Detailing efforts
required in Article IX within the specified time frame. Any payment adjustments
for ss.ss.C.1 and C.2 required as a result of *** will be made in the payments
for ss.C.3 of this Article for the corresponding period. For 1998, based on the
annual targets, Schering shall make any payments owed to Warner Chilcott under
ss.C.3 of this Article for Imdur(R) and K-Dur(R) on or before *** Schering shall
settle all remaining payments within *** days of receipt of *** for
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
9
the period. Thereafter, for Imdur(R), for purposes of calculating amounts owed
to Warner Chilcott, if any, pursuant to ss.C.3 of this Article, beginning ***
and continuing for the duration of this Agreement, quarterly base targets shall
be *** per calendar quarter, and Schering shall make payments to Warner Chilcott
of any such amounts owed within *** days of the end of each calendar quarter;
Schering shall settle all remaining payments within *** days of receipt of ***
for the period. For K-Dur(R), Schering shall continue to make any payments owed
to Warner Chilcott under ss.C.3 of this Article on an annual basis through the
year *** and, in *** , the base target for the *** period *** through *** shall
be *** ,and Schering shall make payments to Warner Chilcott of any such amounts
owed on or before *** Schering shall settle all remaining payments within ***
days of receipt of *** for the period
Beginning July 1, 1998. Schering will provide to Warner Chilcott monthly Net
Sales information by the twentieth (20th) working day of the following month,
and the month ending *** for the Products by the twelfth (12th) working day
after receipt of this information from the outside third-party vendor. Such
information shall include the gross sales of such Products together with the
items deducted from gross sales to arrive at Net Sales. For a period of two (2)
years of receiving such information, Warner Chilcott may audit the underlying
sales and other accounting records on which such Schering information is based.
Such audit may be conducted, at Warner Chilcott's expense, by a public
accountant to whom Schering consents, such consent not to be unreasonably
withheld. Only one such audit may be conducted for each year of this Agreement.
No information other than as to the correctness of the reported information and
the amount and nature of any discrepancies shall be supplied to Warner Chilcott
by such accountant.
All payments shall be made in U.S. dollars, remitted to Warner Chilcott at the
address designated by Warner Chilcott. A final reconciliation for each contract
period shall be made within nine (9) months of the date of termination of this
Agreement and a payment made by Schering or Warner Chilcott, as the case, may
be, within fifteen (15) days of the reconciliation.
XV. TERMINATION
A. If either Party or its Affiliates materially breaches this Agreement,
the other Party may, in its sole discretion, waive the default in writing;
however, if such Party does not elect to waive the default, it shall notify the
defaulting Party in writing of the default and allow the defaulting Party thirty
(30) days from such notification to correct the default. If at the end of said
thirty (30) days the default remains uncorrected, the aggrieved Party may
terminate this Agreement by giving written notice of termination to the
defaulting Party.
B. If Schering uncovers in two separate audits conducted pursuant to
Article IX, that the number of Details in any one (1) year reported by Warner
Chilcott to Schering under ss.A of Article IX was overstated by *** or more,
Schering shall have the right to terminate this Agreement on thirty (30) days
notice.
C. In the event of a direct or indirect change in Control (as hereinafter
defined) of Warner Chilcott or Schering, the non-changing Party shall have the
right for a period of ninety (90) days from the closing or completion of any
arrangement or agreement resulting in such changed con-
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
10
trol to terminate this Agreement upon written notice or continue the performance
of this Agreement thereafter. In the latter event, however, the changed Party
and its successor shall remain responsible, jointly and separately, for the
performance of this Agreement. As used herein "Control" shall mean possession of
the power to direct or cause the direction of the management and policies of the
changed Party or any of its direct or indirect shareholders or other owners,
whether through the ownership of voting securities or other ownership interest,
by contract or otherwise.
D. Warner Chilcott, at its sole discretion, may terminate this Agreement
in its entirety upon thirty (30) days written notice to Schering if (i) the FDA
withdraws or suspends marketing approval of any Product covered by this
Agreement; (ii) Schering voluntarily withdraws any Product covered by this
Agreement from the market; or (iii) the FDA restricts use of any Product covered
by this Agreement such that a significant loss of sales occurs. In the event
Warner Chilcott does not terminate the entire Agreement under this ss.D, the
remaining Schering Product shall be entitled to the first Detail.
E. Either Party may terminate this Agreement upon written notice to the
other (i) upon the filing or institution of bankruptcy, reorganization,
liquidation or receivership proceedings by the other Party; (ii) upon an
assignment of a substantial portion of the other Party's assets for the benefit
of creditors; or (iii) if a substantial portion of the other Party's business is
subject to attachment or similar process; provided, however, that in the case of
any involuntary bankruptcy such right to terminate will become effective only if
the other Party consents to the involuntary bankruptcy or such proceeding is not
dismissed within 60 (sixty) days after its filing.
F. In the event Warner Chilcott by virtue of its gross negligence and/or
willful misconduct in advertising and/or promoting the Products either
materially jeopardizes or harms Schering's NDAs or materially harms the
commercial value or the commercial reputation of the Products or Schering, then
Schering may, in addition to any other remedies or rights available to it at law
or equity, and not in derogation of any of it's rights to indemnity (as set
forth herein), terminate all of Warner Chilcott's rights under this Agreement
covering the Products. The phrase "jeopardizes or harms" an NDA, as used in this
provision, includes, but is not limited to, the following serious types of
issues:
(i) a government seizure of the Products;
(ii) a government indictment of Warner Chilcott or its employees
based upon sales, marketing or other conduct of Warner Chilcott or its
employees involving the Products; and
(iii) a consent decree or assurance or voluntary discontinuance or
similar civil and/or criminal settlement agreement entered into between
Warner Chilcott and the federal or state government which involves the
Products and relates to conduct of Warner Chilcott or its employees which
is not in compliance with or alleged by such government not to be in
compliance with federal and/or state laws and regulations impacting drug
labeling, advertising and promotion including, without limitation, the
Prescription Drug Marketing Act, the Federal anti-kickback statute (42
U.S.C.A. 1320a-7b, et seq.), the Omnibus Budget Reconciliation Act and the
Veteran's Administration Bill, and other similar laws enacted in the
future in the United States or in countries and territories outside the
United States, together with all amendments, extensions and regulations
promulgated thereto, and any state analogs thereof.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
11
G.
***
H. Schering shall have the right to terminate this Agreement upon written
notice for (i) any failure by Warner Chilcott to comply with any federal, state
or local law, rule and/or regulation relating to its services or obligations
under this Agreement; or (ii) a government indictment of Warner Chilcott or its
employees.
I. Termination of this Agreement shall not relieve the Parties of any
liability which accrued hereunder prior to the effective date of such
termination nor preclude either Party from pursuing all rights and remedies it
may have hereunder or at law or in equity with respect to any breach of this
Agreement nor prejudice either Party's right to obtain performance of any
obligation provided for in this Agreement which expressly survives termination.
XVI. INDEPENDENT CONTRACTOR/PERSONNEL/NON-COMPETE
A. Independent Contractor
Warner Chilcott agrees that, in its relationship with Schering under this
Agreement, it is acting in the capacity of an independent contractor and that it
has no authority to represent or act on behalf of Schering without Schering's
prior written consent. Accordingly, Warner Chilcott shall not hold itself out to
third persons as purporting to act on behalf of, or serving as the agent of,
Schering, and it is not authorized to enter into any agreements, whether oral or
written, on Schering's behalf.
Warner Chilcott agrees that performance by Warner Chilcott, its employees,
and/or agents of Warner Chilcott's obligations hereunder shall be in compliance
with all applicable municipal, state and federal laws, rules and regulations.
Schering shall assume no liability for any damages which may result from Warner
Chilcott's negligence or from the performance of its obligations hereunder.
B. Responsibility for Employees
Neither Party shall have any responsibility for the hiring, firing or
compensation of the other
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
12
Party's employees or for any employee benefits. No employee or representative of
a Party hereto shall have any authority to bind or obligate the other Party to
this Agreement for any sum or in any manner whatsoever or to create or impose
any contractual or other liability on the other Party without said Party's
written approval.
Warner Chilcott shall be responsible for all field force expenses, including but
not limited to, salaries, incentives, travel and all other employment expenses
of its employees. Each Party shall be totally responsible for the payment of any
and all taxes applicable to the performance by its employees hereunder.
C. No Solicitation
During the term of this Agreement and for a period of *** thereafter, neither
Party shall directly or indirectly solicit for employment or otherwise retain
any employee of the other Party without obtaining the prior written consent of
the non-soliciting Party, provided that the foregoing shall not prevent either
Party from soliciting or hiring any such employee (i) who contacts the
soliciting Party on his or her own initiative, without any solicitation by that
Party, (ii) responds to any public advertisement placed by the soliciting Party
or its agents, (iii) responds to any inquiry from a search firm retained by the
soliciting Party so long as such search firm was not specifically requested by
the soliciting Party to contact such employee or (iv) has been terminated by the
non-soliciting Party prior to commencement of employment discussions between the
soliciting Party and such employee.
D. Non-Compete
During the term of this Agreement, neither Warner Chilcott nor its Affiliates
shall promote, market, sell or otherwise distribute any branded product
containing potassium in any salt.
XVII. PRESS RELEASES
Neither Party shall issue any press releases or other public announcements
relating to the arrangement contemplated by this Agreement without providing the
other Party with an opportunity to review and comment. Warner Chilcott shall not
issue any press releases or other public announcements relating to the Products
without Schering's prior written approval.
XVIII. CONFIDENTIALITY
From the Effective Date and for a period of ten (10) years from the termination
of this Agreement, neither Party nor its Affiliates shall use Confidential
Information (as defined below) furnished by the other Party for any purpose
inconsistent with this Agreement and each Party shall treat Confidential
Information furnished by the other Party as if it were its own proprietary
information and shall not disclose it to any third party other than its
Affiliates or consultants (who are previously bound to the confidentiality
provisions set forth herein) without the prior written consent of the other
Party who furnished such information. For the purposes of this Article,
"Confidential Information" shall mean information, whether written, oral or in
any other form, pertaining to the businesses, processes, plans, and products of
a Party or its Affiliates, including without limitation, information developed
and acquired as part of this Agreement and marketing/market
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
13
research information and financial and pricing information, which is not
generally ascertainable from public or published information, regardless of
whether such information was provided pursuant to the terms of this Agreement,
by request of the other Party or in any other manner. When confidential
information is disclosed in a manner other than in writing, it must be reduced
to writing and transmitted to the receiving Party within ten (10) days of such
initial disclosure.
A Party shall be relieved of its obligations with respect to a specific item of
Confidential Information if such Confidential Information (i) was known to or
developed by the Party receiving it prior to receipt from the disclosing Party;
(ii) was at the time of disclosure to the Party receiving it generally available
to the public or became generally available to the public through no fault
attributable to the Party receiving it; (iii) was made available to the Party
receiving it for its use or disclosure from any third party who was at the time
of transmitting it not under a non-disclosure obligation to the other Party; or
(iv) is required by law, regulation, rule, act or order of any governmental
authority or agency to be disclosed by the receiving Party; provided, however,
that the receiving Party (a) gives the disclosing Party sufficient advance
written notice to permit it to seek a protective order or other similar order
with respect to such Confidential Information and (b) thereafter discloses only
the minimum information required to be disclosed in order to comply, whether or
not a protective order or other similar order is obtained by the disclosing
Party.
This Agreement supersedes the Confidentiality Agreement between the Parties,
effective June 3, 1998. All information as defined in that agreement and
exchanged between the Parties under that agreement shall be deemed Confidential
Information and shall be subject to the terms of this Article.
XIX. REPRESENTATIONS, WARRANTIES AND COVENANTS
In entering into this Agreement and for the entire term of this Agreement, each
Party represents, warrants and covenants that: (i) it is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation; (ii) it has full power and corporate authority to enter into and
perform under this Agreement; (iii) all corporate actions necessary to authorize
execution and delivery of this Agreement and to carry out its obligations
hereunder have been duly taken; and (iv) it shall obtain and maintain all
licenses, permits or other authorizations necessary to perform its obligations
hereunder and shall fully cooperate in obtaining any governmental approvals
necessary to implement this Agreement. Schering further represents that its
entering into this Agreement does not conflict with the terms of any other
agreement, including the *** Agreement. Warner Chilcott further represents and
warrants that: (i) it will maintain the sales force, marketing staff and other
personnel and resources necessary to carry out its obligations under this
Agreement; (ii) it will fully comply with all laws, rules and/or regulations
relating to the advertising, promotion and sampling of the Products; (iii)
neither it nor any of its sales force personnel who will perform services under
this Agreement have been debarred pursuant to the Federal Food, Drug and
Cosmetic Act, or excluded from a federal health care program; (iv) it shall
perform its obligations under this Agreement in a professional and workmanlike
manner; (v) it will fully comply with all applicable federal, state and local
laws, rules and/or regulations in the performance of its obligations under this
Agreement; and (vi) it is not a party to any oral or written contract or
understanding with any third party that is inconsistent with this Agreement
and/or its performance hereunder or that will in any way limit or conflict with
its ability to fulfill the terms of
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
14
this Agreement and that it will not enter into any such agreement during the
term of this Agreement. No representation or warranty is given hereunder by
Warner Chilcott with respect to the *** Agreements.
XX. INDEMNIFICATION
A. Indemnification by Schering
Schering shall indemnify, protect, and hold Warner Chilcott, its employees,
officers, directors, shareholders, and agents ("Warner Chilcott Indemnitees")
harmless against any and all claims, damages, costs, expenses, lawsuits, and
liabilities (including reasonable attorneys fees and expenses) by parties other
than Schering arising out of or resulting from (i) breach of any representation,
warranty or covenant contained in this Agreement; (ii) inherent properties or
imperfections of the Products; (iii) Schering's failure to manufacture, develop,
and test the Products in accordance with applicable laws and regulations; (iv)
any act, method, or technology employed by Schering in connection with the
Products that infringes, misappropriates or otherwise violates a patent,
copyright, trademark or other proprietary right of a third party; and (v) any
promotional and marketing material provided to Warner Chilcott under this
Agreement. This indemnity shall not apply to any claims, damages, costs,
expenses, lawsuits and liabilities arising from Warner Chilcott's negligence or
willful misconduct with respect to the Detailing, marketing, and promotion of
the Products or the performance of its other obligations under this Agreement.
Warner Chilcott shall promptly notify Schering of any claims or suits for which
it may assert indemnification, and Warner Chilcott shall permit Schering, or its
insurer, at Schering's expense, to assume the defense of any such claims or
suits. Warner Chilcott shall fully cooperate with Schering or its insurer in the
defense of such claims. Warner Chilcott shall not settle or compromise any claim
or suit without the prior written consent of Schering.
B. Indemnification by Warner Chilcott
Warner Chilcott shall indemnify, protect, and hold Schering, its employees,
officers, directors, shareholders, and agents ("Schering Indemnitees") harmless
against any and all clams, damages, costs, expenses, lawsuits, and liabilities
(including reasonable attorneys fees and expenses) by parties other than Warner
Chilcott arising out of or resulting from (i) breach of any representation,
warranty or covenant contained in this Agreement; (ii) Warner Chilcott's failure
to Detail, market, and promote the Products in accordance with applicable laws,
rules and/or regulations including, but not limited to, the Federal Food, Drug
and Cosmetic Act and the regulations thereunder governing the promotion of drug
products; (iii) Warner Chilcott's failure to Detail, market and promote the
Products in a manner consistent with the promotional materials supplied by
Schering; and (iv) any willful misconduct or negligent act or omission of Warner
Chilcott.
Schering shall promptly notify Warner Chilcott of any claims or suits for which
it may assert indemnification, and Schering shall permit Warner Chilcott, or its
insurer, at Warner Chilcott's expense, to assume the defense of any such claims
or suits. Schering shall fully cooperate with Warner Chilcott or its insurer in
the defense of such claims. Schering shall not settle or compromise any claim or
suit without the prior written consent of Warner Chilcott.
XXI. IMPROVED PRODUCTS
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
15
In the event Schering has improvements or line extensions to be marketed under
the brand names Imdur(R) and K-Dur(R), the Parties agree to negotiate in good
faith for the promotion, marketing and sale of such Improved Products or line
extensions by Warner Chilcott; provided, however, that any agreement between the
Parties for such Improved Products or line extensions shall be subject to the
*** and any other third-party licensing or development agreements regarding
Imdur(R) and K-Dur(R). If good faith negotiations do not lead to an agreement
with respect to such Improved Product or line extension within sixty (60) days
of Schering's notice to Warner Chilcott of such product or extension, then
Schering shall have the right to negotiate with third parties for the promotion,
marketing and sale of such product or extension.
XXII. INSURANCE
A. Requirements
Warner Chilcott shall, at its own cost and expense, obtain and thereafter
maintain in full force and effect the following insurance during the term of
this Agreement:
1. Worker's Compensation Insurance in accordance with the statutory
requirements of the state(s) in which the services are to be performed;
2. Employer's Liability Insurance with a minimum limit of One
Million Dollars ($1,000,000.00);
3. Automobile Liability Insurance covering all owned, non-owned and
hired auto-mobiles, with a minimum One Million Dollars ($1,000,000.00)
combined single limit for bodily injury and property damage per
occurrence; and
4. General Liability Insurance including contractual liability
covering Warner Chilcott's obligations to indemnify Schering under this
Agreement with a minimum One Million Dollars ($1,000,000.00) combined
single limit for bodily injury and property damage per occurrence.
B. Certificate of Insurance
Warner Chilcott shall, within fifteen (15) days of execution of this Agreement,
furnish to Schering a Certificate of Insurance as evidence of the insurance
required in ss.A of this Article, which certificate shall provide for thirty
(30) days prior written notice to Schering in the event of cancellation or any
material change in such insurance.
XXIII. PAYROLL TAXES
Payroll Taxes shall mean both the employer's and employee's portions of all
taxes and payroll withholdings including, without limitation, FICA, FUTA,
Medicare, state unemployment taxes and federal and state income tax
withholdings.
Warner Chilcott shall, for the Warner Chilcott employees that provided or are
providing services to Schering during the term of this Agreement (i) maintain
all necessary personnel and payroll re-
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
16
cords; (ii) compute their wages and withhold applicable Payroll Taxes; (iii)
remit all Payroll Taxes to the appropriate governmental authorities; and (iv)
pay wages and fringe benefits, if any.
Warner Chilcott represents, warrants, and covenants that all Warner Chilcott
employees that are providing services to Schering were (or are) employees of
Warner Chilcott for all purposes and at all times while providing services to
Schering during the term of this Agreement, except for new sales representatives
hired and maintained on Warner Chilcott's behalf by Boron LePore, Inc., for an
initial six (6) month probationary period.
Warner Chilcott shall cooperate with Schering on audits of Schering involving
Payroll Taxes. Upon request from Schering, Warner Chilcott shall promptly
provide to Schering all documentation regarding Payroll Taxes for the Warner
Chilcott employees that provided, or are providing, services to Schering during
the term of this Agreement.
Warner Chilcott shall provide Schering, within thirty (30) days of the end of
each calendar quarter, a letter stating whether or not Warner Chilcott has made
all Payroll Tax payments, report filings, and any other submissions applicable
to the Warner Chilcott employees that provided, or are providing, services to
Schering during such prior calendar quarter. Such letter shall be signed by an
officer of Warner Chilcott with knowledge of all Warner Chilcott Payroll Tax
matters.
Warner Chilcott shall indemnify Schering and hold Schering harmless for all
Payroll Taxes, including penalties and interest if any, applicable to the Warner
Chilcott employees that provided, or are providing, services to Schering during
the term of this Agreement.
Warner Chilcott's obligation under the above provisions shall survive the
termination of this Agreement and remain in full force and effect for a period
of time no less than the applicable statute of limitations period.
XXIV. INTELLECTUAL PROPERTY
All concepts, inventions, ideas, patent rights, data, trademarks and copyrights
which are related to or arise out of or in connection with Warner Chilcott's
work product or the services performed by Warner Chilcott pursuant to this
Agreement, will be the exclusive property of, and all ownership rights shall
vest in, Schering. Warner Chilcott agrees to sign all necessary documents or
take such other actions as Schering may reasonably request in order to perfect
any and all such rights.
XXV. RETURN OF MATERIALS
Warner Chilcott shall, within sixty (60) days of termination or expiration of
this Agreement, promptly deliver and account to Schering for all samples,
training, educational and promotional materials, and sales aids supplied by
Schering.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
17
XXVI. MISCELLANEOUS
A. Force Majeure
Each of the Parties hereto shall be excused from the performance of its
obligations and shall not be liable for damages to the other if such performance
is prevented by circumstances beyond its effective control. Such excuse from
performance shall continue as long as the condition responsible for such excuse
continues and for a thirty (30) day period thereafter. For the purpose of this
Agreement, circumstances beyond the control of a Party which excuse that Party
from performance shall include, but shall not be limited to, acts of God, acts,
regulations or laws of any government, injunction or judgment of any court, war,
civil commotion, destruction of facility or materials by fire, earthquake, storm
or other casualty, labor disturbances, epidemic and failure of public utilities
or common carrier.
B. Notices
All notices required or provided for in this Agreement shall be in writing and
shall be given by certified mail prepaid or facsimile transmission and properly
addressed to the address or fax number of the Party to be served as shown below.
Unless otherwise provided for in this Agreement, notice shall be effective upon
receipt.
If to Schering: If to Warner Chilcott:
Joseph Caso Roger M. Boissonneault
Vice President, Sales & Marketing President and COO
Key Pharmaceuticals Warner Chilcott Inc.
2000 Galloping Hill Road Rockaway 80 Corporate Center
Kenilworth, New Jersey 07033 100 Enterprise Drive
Suite 280
Rockaway, New Jersey 07866
With copy to:
Staff Vice President, Licensing William M. Hartnett, Esq.
Law Dept. Cahill Gordon & Reindel
Schering Corporation 80 Pine Street
2000 Galloping Hill Road New York, New York 10005-1702
Kenilworth, New Jersey 07033
C. Governing Law
This Agreement shall be construed in accordance with the laws of the State of
New Jersey, without giving effect to its conflicts of law rules.
D. Dispute Resolution
In an effort to resolve informally and amicably any claims, controversies,
defaults or disputes
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
18
arising out of or related to the interpretation, performance, or breach of this
Agreement ("Dispute"), each Party shall notify the other Party in writing of any
Dispute hereunder that requires resolution. Such notice shall set forth the
nature of the Dispute, the amount in controversy, if any, and the remedy sought.
The Vice President, Sales & Marketing, of Key Pharmaceuticals and the President
of Warner Chilcott shall meet to investigate, discuss, and seek to settle the
matter between them within thirty (30) days of such notification.
In the event the designated officers are not able to resolve such dispute
through good faith negotiations within such thirty (30) calendar day period,
either Party may invoke the provisions of Schedule II, incorporated herein by
reference, at any time within thirty (30) calendar days following the end of
such thirty (30) calendar day negotiation period.
E. Assignment
Neither Schering nor Warner Chilcott may assign this Agreement or any of their
respective rights or obligations hereunder to any third party without the other
Party's prior written consent, except that either Party may make an assignment
to an Affiliate of such Party.
F. Non-Waiver of Rights
Any delay or failure in enforcing a Party's rights under this Agreement or any
waiver as to a particular default or other matter shall not constitute a waiver
of such Party's rights to the future enforcement of its rights under this
Agreement, nor operate to bar the exercise or enforcement thereof or the
exercise of any other right at any time or times thereafter, excepting only as
to an express written and signed waiver as to a particular matter for a
particular period of time.
G. Severability
In the event any all or any part of a provision of this Agreement is declared
illegal, invalid or unenforceable by a court having competent jurisdiction, it
is mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court, provided, however, that in the
event that the terms and conditions of this Agreement are materially altered,
the Parties will, in good faith, re-negotiate the terms and conditions of this
Agreement to reasonably substitute such invalid or unenforceable provisions in
light of the intent of this Agreement.
H. Headings
The headings contained in this Agreement are solely for convenience of reference
and shall not affect or alter the meaning or effect of any provision hereof.
I. Survivability
In addition to any other protection provided under applicable law, the
provisions of Articles XV, XVIII, XIX, XX and XXIII shall survive termination of
this Agreement.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
19
J. Entire Agreement and Amendment
This Agreement, including the Exhibits and Schedules hereto and all covenants,
promises, agreements, warranties, representations, conditions and
understandings, sets forth the complete, final and exclusive agreement between
the Parties and supersedes and terminates all prior and contemporaneous
agreements and understandings between the Parties with respect to the matters
contained herein, whether oral or in writing. This Agreement may be amended,
modified or altered only by an instrument in writing duly executed by the
Parties hereto.
IN WITNESS WHEREOF, the Parties have hereto affixed their authorized signatures
as of the date set forth below.
SCHERING CORPORATION WARNER CHILCOTT PLC
By: /s/ Richard Zahn By: /s/ Roger Boissonneault
--------------------------- ------------------------------
RICHARD ZAHN ROGER BOISSONNEAULT
President President & COO
Date: 7/16/98 Date: 7/15/98
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
20
SCHEDULE I
ADVERSE EVENT REPORTING PROCEDURES
The Parties hereby agree that the following terms will govern disclosures of
each Party to the other with respect to adverse event reporting relating to the
Products.
1. An Adverse Event ("AE") is defined as:
a. Any experience which is adverse, including what are commonly
described as adverse or undesirable experiences, adverse events, adverse
reactions, side effects, or death due to any cause associated with, or
observed in conjunction with the use of a drug, biological product, or
device in humans, whether or not considered related to the use of that
product, occurring in the course of the use of a drug, biological product
or device, associated with, or observed in conjunction with product
overdose, whether accidental or intentional, associated with, or observed
in conjunction with product abuse, and/or associated with, or observed in
conjunction with product withdrawal;
b. Any significant failure of expected pharmacological or biologic
therapeutic action (with the exception of in clinical trials).
2. Serious or Non-Serious is defined as:
a. A Serious AE is one that is life threatening or fatal,
permanently disabling, requires or prolongs in-patient hospitalization or
prolonged hospitalization, or is a congenital anomaly, cancer or overdose.
In addition, End Organ Toxicity, including hematological, renal, hepatic,
and central nervous system AEs may be considered serious. In laboratory
tests in animals, a serious AE includes any experience suggesting
significant risk for human subjects;
b. A Non-Serious AE is any AE which does not meet the criteria for a
Serious AE.
3. Life-threatening is defined as: The patient is at immediate risk of
death from the AE as it occurs.
4. End-Organ Toxicity is defined as: A medically significant event or lab
value change in which a patient may not necessarily be hospitalized or disabled,
but is clinically significant enough to warrant monitoring (e.g., seizures,
blood dyscrasias).
5. Expected or Unexpected is defined as:
a. Expected AE - An AE which is listed in the Investigator's
Brochure for clinical trials, included in local labeling (e.g., Summary of
Agreement Product Characteristics) for marketed drugs or in countries with
no local labeling, in the Corporate Standard Prescribing Document;
b. Unexpected AE - An AE that does not meet the criteria for an
Expected AE or an AE which is listed but differs from that event in terms
of severity or specificity.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
6. Associated with or related to the use of the drug is defined as: A
reasonable possibility exists that the AE was caused by the drug.
7. Unassociated or unrelated to the use of the drug is defined as: A
reasonable possibility exists that the AE may not have been caused by the drug.
8. NDA Holder is defined as: An "Applicant" as defined in 21 CFR 314.3(b),
for regulatory approval of an Agreement Product in any regulatory jurisdiction,
including a holder of a foreign equivalent thereto.
9. IND Holder is defined as: A "Sponsor", as defined in 21 CFR 312.3(b),
of an investigation new drug in any regulatory jurisdiction, including a holder
of a foreign equivalent thereto.
10. Capitalized terms not defined in this Schedule shall have the meaning
assigned thereto in the Agreement.
11. With respect to an Agreement Product, the Parties agree as follows:
a. All initial reports and any follow-up information (oral or
written) for any and all Serious AEs as defined above, (other than with
respect to animal studies) which become known to either Party (other than
from disclosure by or on behalf of the other Party) must be communicated
by telephone, telefax or electronically directly to the other Party and/or
the NDA Holder, IND Holder (individually and collectively referred to as
"Holders") within forty eight hours of receipt of the information. Written
confirmation of the Serious AE received by such Party should be sent to
the other Party and/or the Holders as soon as it becomes available, but in
any event within forty eight hours of initial report of the Serious AE by
such Party;
b. Both Parties shall exchange Medwatch and/or CIOMS forms and other
health authority reports within forty eight hours of submission to any
regulatory agency;
c. All initial reports and follow-up information received for all
Non-Serious AEs for a marketed Agreement Product which becomes known to a
Party (other than from disclosure by or on behalf of the other Party) must
be communicated in writing, by telefax or electronically to the other
Party on a monthly basis, on Medwatch or CIOMs forms (where possible);
d. Each Party shall coordinate and cooperate with the other whenever
practicable to prepare a single written report regarding all Serious
and/or Non-Serious AEs, provided, however, that neither Party shall be
obligated to delay reporting of any AE in violation of applicable law or
regulations regarding the reporting of adverse events.
12. The Parties further agree that:
a. A written report will be forwarded to the other Party within
forty eight hours of receipt by the Party making the report, for AEs for
animal studies which suggest a potential significant risk for humans;
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
2
b. Each Party will give the other Party a print-out or computer disk
of all AEs reported to it and its Affiliates relating to the Agreement
Product within the last year, within 30 days of receipt of a request from
the other Party but not more often than four times a year;
c. If either Party wishes access to AE Reports of the other Party
relating to an Agreement Product, upon request of that Party, the other
Party shall make available its AE records relating to the Agreement
Product (including computer disks) for viewing and copying by the other
Party. The Parties may discuss the transfer of AE Reports by computer
disk;
d. Disclosure of information hereunder by a Party to the other Party
shall continue as long as either Party and/or its Affiliates or designees
continue to clinically test or market an Agreement Product;
e. All written regulatory reports, including periodic NDA, annual
IND, safety updates, or foreign equivalents thereto, etc., shall be sent
by a Party to the other Party within forty eight hours of submission to
the appropriate regulatory agency. The Parties shall agree on a procedure
for preparing these reports.
13. Each Party shall diligently undertake the following further
obligations where both Parties are or will be commercializing the Agreement
Products pursuant to the Agreement and/or performing clinical trials with
respect to an Agreement Product:
a. Upon the Effective Date, each Party shall identify individuals
who shall be responsible for identifying all AE reporting requirements in
all countries of the Territory as set forth in the Agreement, and any
amendments thereto;
b. To immediately consult with the other Party, with respect to the
investigation and handling of any Serious AE disclosed to it by the other
Party or by a third party and to allow the other Party to review the
Serious AE and to participate in the follow-up investigation;
c. To immediately advise the other Party of any Agreement Product
safety communication received from a health authority and consult with the
other Party with respect to any Agreement Product warning, labeling change
or change to an investigator's brochure involving safety issues proposed
by the other Party, including, but not limited to the safety issues agreed
to by the Parties, and to diligently handle, in a timely manner, the
follow-up investigation and resolution of each AE reported to it;
d. To provide the other Party mutually agreed upon audit rights of
its AE reporting system and documentation, upon prior notice, during
normal business hours, at the expense of the auditing Party and under
customary confidentiality obligations;
e. To meet in a timely fashion from time to time as may be
reasonably required to implement the adverse event reporting and
consultation procedures described in this Schedule I, including
identification of those individuals in each Party's Drug Safety group who
will be responsible for reporting to and receiving AE information from the
other Party, and the development of a
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
3
written standard operating procedure with respect to adverse event
reporting responsibilities, including reporting responsibilities to
investigators;
f. Where possible, to transmit all data electronically;
g. To report to each other any addenda, revisions or changes to the
Agreement (e.g., change in territories, local regulations, addition of new
licensors/licensees to the Agreement, etc.) which might alter the adverse
event reporting responsibilities hereunder;
h. To utilize English as the language of communication and data
exchange between the Parties;
i. To develop a system of exchange of documents and information in
the event that the Agreement involves more than two parties;
j. To work together to develop an electronic system to transmit AE
data.
14. The Parties may meet after the Effective Date of the Agreement to
establish a separate agreement for adverse event exchange which will supersede
this Schedule I.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
4
SCHEDULE II
DISPUTE RESOLUTION PROCEDURES
1. Except as otherwise set forth herein, any dispute, controversy or claim
arising out of or relating to the validity, construction, enforceability or
performance of this Agreement, including disputes relating to an alleged breach
or termination of this Agreement shall be settled by binding Alternative Dispute
Resolution ("ADR") in the manner set forth below in this Schedule II; provided,
however, that the neutral referred to below shall give effect to the provisions
of this Agreement and shall not adjust, modify or change the effects of
termination as set forth in Article XV.
2. If a Party intends to begin an ADR to resolve a dispute, such Party
shall provide written notice (the "ADR Request") by certified or registered mail
or properly documented overnight delivery to the other Party informing such
other Party of such intention and the issues to be resolved. The notice shall
explain the nature of the complaint and refer to the relevant sections of the
Agreement upon which the complaint is based. The complaining Party shall also
set forth a proposed solution to the problem, including a suggested time frame
within which the Parties must act.
3. The non-complaining Party must respond in writing within forty-five
(45) calendar days of receiving notice with an explanation, including references
to the relevant provisions of the Agreement and a response to the proposed
solution and suggested time frame for action. The non-complaining Party may add
additional issues to be resolved.
4. Within fifteen (15) business days of receipt of the response from the
non-complaining Party, the Parties shall meet and discuss options for resolving
the dispute. Each Party shall make available all appropriate personnel to meet
and confer with the other Party within the fifteen (15) business day period
following the complaining Party's receipt of the response by the non-complaining
Party.
5. Any and all disputes that cannot be resolved pursuant to Paragraphs 2,
3 and 4 above shall be submitted to a neutral who shall be selected by mutual
agreement of the Parties. If the Parties are unable to agree upon a neutral,
then the neutral shall be selected in accordance with the procedures of the
American Arbitration Association. The neutral shall be an individual who shall
preside over and resolve any disputes between the Parties. The neutral selected
shall be a former judge of a state or federal court and shall not be an
employee, director or shareholder of, or otherwise have any current or previous
relationship with, either Party or its respective Affiliates. The ADR shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association then in effect, subject to the time periods and other
provisions of this Schedule II or as otherwise set forth in this Agreement.
6. Consistent with the time schedule established pursuant to Paragraphs 7
and 8 below, the neutral shall hold a hearing to resolve each of the issues
identified by the Parties and shall render a decision as expeditiously as
possible but in no event more than thirty (30) calendar days af-
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
ter the close of hearings. In rendering the decision the neutral shall rule on
each disputed issue and shall adopt in whole or in part the proposed ruling of
one of the Parties on each disputed issue.
7. During the meeting referred to in Paragraph 4 above, the Parties shall
negotiate in good faith the scope and schedule of discovery, relating to
depositions, document production and other discovery devices, taking into
account the nature of the dispute submitted for resolution. If the Parties are
unable to reach agreement as to the scope and schedule of discovery, the neutral
may order such discovery as the neutral deems necessary. To the extent
practicable taking into account the nature of the dispute submitted for
resolution, such discovery shall be completed within sixty (60) calendar days
from the date of the selection of the neutral. At the hearing, which shall
commence within twenty (20) business days after completion of discovery unless
the neutral otherwise orders, the Parties may present testimony (either live
witness or deposition), subject to cross-examination, and documentary evidence.
To the extent practicable taking into account the nature of the dispute
submitted for resolution and the availability of the neutral, the hearing shall
be conducted over a period not to exceed thirty (30) consecutive business days,
with each Party entitled to approximately half of the allotted time unless
otherwise ordered by the neutral. The hearing shall be held at a place agreed
upon by the Parties. The neutral shall have sole discretion with regard to the
admissibility of any evidence and all other matters relating to the conduct of
the hearing. The neutral shall, in rendering its decision, apply the substantive
laws of the State of New Jersey (regardless of its or any other jurisdiction's
choice of law principles). The decision of the neutral shall be final and not
appealable, except in the case of fraud or bad faith on the part of the neutral
or any Party to the ADR proceeding in connection with the conduct of such
proceedings.
8. At least ten (10) business days prior to the date set for the hearing,
each Party shall submit to each other Party and the neutral a list of all
documents on which such Party intends to rely in any oral or written
presentation to the neutral and a list of all witnesses, if any, such Party
intends to call at such hearing and a brief summary of each witness' testimony.
At least five (5) business days prior to the hearing, each Party must submit to
the neutral and serve on each other Party a proposed findings of fact and
conclusions of law on each issue to be resolved. Following the close of
hearings, the Parties shall each submit such post-hearing briefs to the neutral
addressing the evidence and issues to be resolved as may be required or
permitted by the neutral.
9. Except as otherwise set forth herein, the neutral shall determine the
proportion in which the Parties shall pay the costs and fees of the ADR, and
each Party shall pay its own costs and expenses in connection with such ADR;
provided, however, that if the neutral determines that the action of any Party
was arbitrary, frivolous or in bad faith, the neutral may award such costs and
expenses (including, without limitation, reasonable attorneys' fees) to the
prevailing Party.
10. The ADR proceeding shall be confidential and, except as required by
law, neither Party shall make (or instruct the neutral to make) any public
announcement with respect to the proceedings or decision of the neutral without
the prior written consent of the other Party. The existence of any dispute
submitted by ADR, and the award of the neutral, shall be kept in confidence
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
2
by the Parties and the neutral, except as required in connection with the
enforcement of such award or as otherwise required by applicable law.
11. For the purposes of this Schedule II, the Parties acknowledge their
diversity and agree to accept the jurisdiction of the Federal District Court in
the State of New Jersey for the purposes of enforcing awards entered pursuant to
this Schedule II and for enforcing the agreements reflected in this Schedule II.
12. Nothing contained herein shall be construed to permit the neutral or
any court or any other forum to award punitive, exemplary or any similar
damages. By entering into this Agreement to arbitrate, the Parties expressly
waive any claim for punitive, exemplary or any similar damages. The only damages
recoverable under this Agreement are compensatory damages.
13. The procedures specified in this Schedule II shall be the sole and
exclusive procedures for the resolution of disputes between the Parties which
are expressly identified for resolution in accordance with this Schedule II.
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".
3
EXHIBIT A
***
***Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of the
Securities and Exchange Commission. Omitted portions are indicated by "***".