CollaGenex Pharmaceuticals, Inc.,
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and
Innovative Customer Solutions, Ltd.
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Consulting and Contract Service Agreement
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This CONSULTING AND CONTRACT SERVICE AGREEMENT (the "Agreement") is made
and entered into as of the 1st day of February 1997, by and between CollaGenex
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Innovative
Customer Solutions, Ltd., an Ohio limited liability company ("ICS").
RECITALS:
WHEREAS, Company is the licensee of certain patent rights to Periostat
("Periostat") for which the Company is currently seeking approval from the
United States Food and Drug Administration (the "FDA"); and Company may also
enter into co-promotional or licensing agreements with other pharmaceutical
companies for other products (the "Products"); and that Company plans to sell
both Periostat and the Products (collectively the "Dental Products") in the
United States;
WHEREAS, ICS has the necessary expertise to develop and implement the
appropriate marketing, selling and educational programs to assist in the
acceptance of the Dental Products by the dental and insurance community;
WHEREAS, the Company desires to retain the services ("Services") of ICS to
(but not limited to) i) develop marketing plans for the sale and distribution of
the Dental Products ii) provide a contract dental sales organization for the
sale of the Dental Products iii) establish certain necessary third party
relationships that will be helpful to establish the Dental Products within the
dental community.
WHEREAS, ICS desires to provide Services to the Company.
NOW, THEREFORE, in consideration of the mutual terms and covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Purpose. Company shall engage ICS on a non-exclusive basis to render
advice and services in assisting Company to market and sell the Dental Products
to the dental community.
2. Duties of ICS. ICS shall provide Company with services as specified
below, provided that ICS shall not be required to undertake duties not
reasonably within the scope of the services in which ICS is generally engaged.
In the performance of these duties, ICS shall provide Company with the benefit
of its best judgment and efforts.
ICS's duties shall include, but will not necessarily be limited to, the
following:
a. Brand management for Periostat (see Exhibit A, Section 1);
b. Development, implementation and management of a contract sales
organization for Dental Products (see Exhibit A, Section 2). It
is understood that a sales representative contracted by ICS to
sell Dental Products will not sell products other than Dental
Products to the dental community;
c. The establishment and leverage of third party relationships that
will assist with the acceptance of Periostat by the dental and
insurance communities;
d. The development and production of marketing materials and
advertising programs for the Dental Products as requested by the
Company.
ICS agrees that in order to accomplish the forgoing duties, it will provide
its best efforts to develop and implement the programs and procedures set forth
on Exhibit "A" attached hereto.
3. Term. The term of this Agreement shall commence on February 1, 1997 and
shall continue in accordance with details listed in Exhibit A, or termination of
this Agreement by Company or ICS in accordance with paragraph 7.
4. Fees and Expenses.
a. Fees. ICS shall receive the fees set forth below upon the
submission of appropriate invoices for services performed
pursuant to Section 2 and Exhibit A, Sections 1 and 2. Invoices
shall be payable within 30 days of receipt by CollaGenex.
i) Periostat Brand Management (see Exhibit A, Section 1 for
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details)
Retainer: $6,000 per month for a period of twelve months.
Development costs: The development of marketing materials, as
approved by Company, will be billed monthly at $80 per effort
hour.
ii) Products Brand Management (see Exhibit A, Section 1 for
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details)
Fee: $80 per effort hour, up to a maximum of 20 hours/quarter.
iii) Contract Sales Effort (see Exhibit A, Section 2 for details)
Project establishment fee: $20,000 due on signature of this
Agreement.
Contract compensation: $43/contact hour billable monthly in
accordance with actual hours implemented the previous month, and
consistent with the action plan approved by Company, for
Periostat and up to an additional three (3) Products.
iii) Dental Insurance Initiative
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Company commitment: Company agrees that it will advise ICS of its
intention to implement the dental insurance initiative no later
than March 31st 1997.
Project establishment fee: $20,000 due at date of commitment.
Retainer: $15,000 per month for a total period of twelve months.
The twelve month period will begin on the later of the date of
commitment or 6 months prior to Company's best estimate for
Periostat launch.
Additional Services: Insurance Initiative services provided prior
to the commitment date will be charged at a per diem rate of $700
plus expenses.
b. Expenses. The Company agrees to reimburse ICS for all reasonable
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travel and other related expenses incurred in connection with the
performance of its Contract Brand Management and Dental Insurance
Initiative duties subject to the following conditions:
i) Aggregate expenses during the term of this Agreement will
not exceed $48,000 without express permission from Company.
ii) Prior to the reimbursement of any expense, ICS shall provide
the Company with a summary of such expense. Expense
summaries will be provided via an expense report designated
by the Company.
iii) Expense reimbursements shall be made at the end of each
month during the term of this Agreement; provided, the
expense report is received by the Company not less than 10
days prior to the date for reimbursement.
iv) Prior approval by the Company is required for expenses
anticipated to be in excess of $4,000 per month.
ICS may provide Company with additional services if requested by Company
and approved by ICS. ICS and Company shall agree on a mutually acceptable fee
for any additional services provided to Company by ICS.
5. Independent Contractor. ICS shall provide its best efforts to perform
all services hereunder as an independent contractor and not as an employee of
Company or any affiliate thereof. It is expressly understood and agreed that ICS
shall have no authority to act, represent or bind Company or any affiliate
thereof in any manner, except as may be agreed expressly by Company in writing
from time to time. As an independent contractor, ICS recognizes and agrees that
no federal, state or FICA withholdings will be made by Company on ICS's behalf
and that ICS shall be solely responsible for payment of all taxes of any type
attendant to Company's payments pursuant to Section 4.
6. Confidentiality. ICS acknowledges that during the term of this
Agreement, ICS may have access to information, knowledge and/or financial data
of Company which is of a secret or confidential nature. ICS agrees that it shall
not disclose and shall not permit the disclosure of such information during the
term hereof or at any time thereafter. Company acknowledges that during the term
of this Agreement, Company may have access to information, knowledge and/or
financial data of ICS which is of a secret or confidential nature. Company
agrees that it shall not disclose and shall not permit the disclosure of such
information during the term hereof or at any time thereafter. ICS shall not use
the secret or confidential information of the Company for purposes other than
carrying out its duties specified hereunder.
7. Early Termination. This Agreement can be terminated by Company by 60-day
written notice if FDA action results in a delay in Periostat approval beyond
January 1998.
Company has the right to terminate the Agreement or any one or more of the
duties under Section 2 of this Agreement for any reason upon 90 days prior
written notice to ICS.
Either party has the right to terminate this contract if either party fails to
provide its best efforts to perform any of the material duties set forth in
Section 2 and Exhibit A, or breaches any of its material obligations set forth
in this Agreement. If said party does not cure such failure to perform within 90
days after receiving notice, the other party shall have the right to terminate
this agreement.
Project establishment fees and retainers paid to ICS up to the time of
termination are non-refundable. Fees and expenses will be pro-rated to date of
termination.
8. Modification of Deliverables and Time Lines. This contract is written
under the assumption that the timing of Periostat's FDA approval will allow for
market entry around January 1, 1998. If during the course of this Agreement it
becomes apparent that market entry will take place either prior to or
significantly later than January 1, 1998, while the number of months of
contracted service will remain the same, deliverables, priorities, time lines
and payment schedules can be re-negotiated to optimally meet launch needs. The
foregoing shall not prohibit the Company from terminating this agreement in
accordance with the first paragraph of section 7 of this agreement.
9. Indemnification. Company hereby agrees to indemnify ICS and hold it
harmless from any and all claims (including but not limited to product liability
claims for the Dental Products), liabilities, losses, actions, suits, or
proceedings, at law or in equity that it may incur or with which it may be
threatened by reason of its acting pursuant to the terms of this agreement, and
in connection herewith, to indemnify ICS any and all expenses (including
attorney's fees) or costs of resisting any such action, suit or proceeding or
resisting any such claim; provided, however, that the provisions of this
paragraph shall not apply in the event of any claim, liability, loss, action,
suit or proceeding resulting from the breach by ICS of any provision of this
Agreement or from its negligence or willful misconduct or from its actions not
authorized by the Company or pursuant to the terms of this agreement, or from
representations made by ICS concerning the Company not authorized by the
Company.
ICS hereby agrees to indemnify Company and hold it harmless from any and all
claims, liabilities, losses, actions, suits, or proceedings, at law or in equity
that it may incur or with which it may be threatened by reason of the negligent
actions or willful misconduct of ICS or representations made by ICS concerning
the Company not authorized by the Company; and in connection herewith, to
indemnify Company for any and all expenses (including attorney's fees) or costs
of resisting any such action, suit or proceeding or resisting any such claim;
provided, however, that the provisions of this paragraph shall not apply in the
event of any claim, liability, loss, action, suit or proceeding resulting from
the breach by the Company of any provision of this Agreement or from its
negligence or willful misconduct.
10. Marketing Obligation. ICS shall advise Company promptly concerning any
market information that may come to the attention of ICS respecting Company,
Dental Products, Company's market position or the continued competitiveness of
Dental Products in the marketplace, including charges, complaints or claims by
any customer or other persons about Company or Dental Products. ICS shall confer
from time to time, at the request of Company, on matters relating to market
conditions, sales forecasting and product planning. ICS shall not misrepresent
or disparage Company or Dental Products in any way to any customer or any other
third party. ICS agrees that it shall not make any representation of Company or
Dental Products unless such representation is authorized by Company.
11. Miscellaneous.
a. This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successor, legal
representatives and assigns;
b. This agreement may be executed in any number of counter parts,
each of which together shall constitute one and the same original
document;
c. No provision of this agreement may be amended, modified or
waived, except in writing signed by the parties hereto;
d. This Agreement shall be construed in accordance with and governed
by the laws of Ohio.
e. ICS will provide, without restriction, copies of the account
profiles which pertain to the sales of Dental Products for which
Company has contracted ICS to provide sales services. Account
profiles are records of information describing individual
accounts called on by ICS representatives in the course of acting
on the Company's behalf. Profiles will minimally include name,
address of such accounts, names of key contact people within the
accounts, and a history of ICS' interactions with that account
while in Company's service. In developing and modifying the
account profiles, ICS agrees not to breach any agreement with any
third party or infringe the proprietary rights of any third
party.
ICS agrees to provide the company with the most recent version of
any such account profiles upon the request of Company. While ICS
has full responsibility for the development and modification of
the account profiles, it is intended that there will be full
cooperation between ICS and Company with respect to such
development and modification and that there will be a free flow
of information between ICS and Company in order to promote
development of commercially useful account profiles. During the
term of this Agreement and upon the termination of this agreement
for any reason, Company shall be entitled to retain and use,
without any limitation upon such use, the most recent version of
account profiles. Upon any such termination, ICS shall deliver to
Company the complete and most recent versions of the account
profiles pertaining to Company's contracted services.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as the day and year first written above:
For ICS: For Company:
By: /s/Walter Deinees By: /s/BM Gallagher
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Name: Walter Deinees Name: BM Gallagher
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Date: Jan 30, 1997 Date: Jan 28, 1997
Exhibit A
Section 1
Dental Products Brand Management
1. Periostat
ICS will be contracted for a total of 12 months beginning February 1, 1997 to
provide all planning and implementation of marketing activities necessary to
optimize Periostat launch.
Objective:
Revise and implement marketing plan for Periostat to optimize sales.
Supporting activities:
Activities will include but are not limited to:
1. The development and production of marketing materials and
advertising programs.
2. Recommendation of product pricing.
3. Development and implementation of product distribution plan.
4. Product forecasting.
5. Development of alternative marketing vehicles.
Responsibilities related to alternative sales vehicles:
I. ICS will provide clear rationale, budget, time lines
and expected benefits along with each vehicle/project
recommended.
ii. Company will approve budget & time line
iii. ICS will deliver project on time and within budget
6. Development of materials for, and attendance at, dental
conventions.
7. Development and implementation of sampling program.
8. Development and implementation of compliance program.
9. Development and implementation of professional educational
program, e.g., symposia, speakers' programs.
Deliverables:
1. Provide detailed time and events schedule (Marketing "action
plan") to CollaGenex management for review and approval by
February 10, 1997.
2. Provide hard copy of revised Periostat Marketing Plan by
February 15, 1997.
3. Present Periostat advertising campaign by April 1, 1996
4. Provide monthly summary of activities vs. action plan to
CollaGenex management by the 15th of each month
Fee:
Retainer: $6,000 per month for a period of twelve months due on the first day of
each month. The first payment is due on February 1, 1997.
Development costs: The development of marketing materials, as approved by
Company, will be billed at $80 per effort hour. Payment will be due monthly, on
the first day of each month.
2. Products
Objective:
ICS will be contracted for a total of 12 months, beginning February 1, 1997 to
provide planning and implementation of marketing activities in order to optimize
the contract sales effort associated with the sales of up to 3 Products.
Supporting activities:
It is anticipated that brand management for Products will be limited to the
following activities:
1. Conversion of promotional and detailing material to be more
relevant for a dental audience
2. Development of convention materials appropriate for
exhibition on CollaGenex convention booth
3. Product forecasting
However the exact nature of the activities and services required will only
become apparent when details of the co-promotional contracts are negotiated.
Fee:
For brand management activities related to Products, there will be an additional
charge of $80 per hour, to a maximum of up to 20 hours per quarter.
Exhibit A
Section 2
Contract Sales Force
Scope:
ICS will provide contract sales services for Periostat and up to three (3)
Products. Additional Products will be the subject of addenda to this Exhibit.
1. Start date is targeted for April 1, 1997, however initiation of services is
contingent on securing of co-promotion agreements.
2. Specific products and product mix promoted at project initiation and over the
course of this contract will be determined based on pending co-promotional
agreements and the timing of FDA approval for Periostat. Number of reps. needed
will depend on number and mix of products, desired audience reach and call
frequency and geography. An illustration of rep. requirements and budgets for 6
possible scenarios is given in Table 1 below.
3. Target audience, reach and frequency of calls for each product will be
determined separately for each product as each product becomes available for
promotion. The agreed upon audience, reach and frequency will then be included
as an amendment to this contract.
Services:
1. Creation and implementation of a sales strategy for Dental
Products, integrating alternative sales vehicles to support
field sales activities.
2. Provision of a detailed time, events and costs schedule
(sales "action plan") to CollaGenex management for review
and approval prior to initiation.
3. Creation of sales territories and call plans.
4. Hiring, training, management and compensation of sales
personnel.
5. Call reporting.
6. Provision of ongoing input and insight into sales strategy
and planning process.
7. Monthly forecasts of next months sales activities relative
to sales action plan, quarterly performance reviews and
planning sessions.
Deliverables:
1. For each Dental Product, an action plan will be submitted
documenting product sales strategy, integrating alternative
sales vehicles, and including recommended target audience,
reach and frequency possible within budget. Due before
product launch.
2. Monthly field feedback and performance analysis vs action
plan, including reach, frequency, and sample accountability
for each product in hard copy, due the 15th of the month for
the preceding month.
Fees:
Project establishment fee: $20,000 due on signature of this Agreement.
Contract compensation: $43/contract hour billable monthly in accordance with
actual hours implemented the previous month, and consistent with the action plan
approved by Company, for Periostat and up to an additional three (3) Products.