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EXCLUSIVE CO-PROMOTION AGREEMENT
This Exclusive Co-Promotion Agreement (the "Agreement" ), is entered into effective as of February 14, 2011 (the "Effective Date" ), by and between QUINNOVA PHARMACEUTICALS, INC. , a Delaware corporation, having an address of 411 South State Street, Third Floor, Newton, Pennsylvania 18940 ( "QUINNOVA" ), and OCULUS INNOVATIVE SCIENCES, INC ., a Delaware corporation, having an address of 1129 North McDowell Boulevard, Petaluma, California 94954 ( "OCULUS" ).
In consideration of the foregoing premises, and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
As used in this Agreement, the following definitions shall apply:
1.1 An "Affiliate" of a person or entity means any individual, sole proprietorship, firm, partnership, corporation, trust, joint venture or other entity, whether de jure or de facto , which, directly or indirectly, controls, is controlled by or is under common control with such person or entity. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the policies and management of a person or entity, whether by the ownership of stock, by contract or otherwise.
1.2 "Promote" or "Promotion" means the Promotion of the Product(s) through Quinnova’s sales forces in the Territory.
1.3 "Detail" (or "Details" and "Detailing" ) shall mean the activity ordinarily and customarily undertaken by a sales representative during a face-to-face sales call on Target Professionals with prescribing authority to provide information on the use, safety, effectiveness, contraindications, side effects, warnings and other relevant characteristics of the Product, in a fair and balanced manner consistent with the requirements of the Good, Drug and Cosmetic Act, as amended, including, but not limited to, the regulations of 21 CFR Part 202, and using, as necessary or desirable, Promotional Materials.
1.4 "FDA" shall mean the United States Food and Drug Administration or any successor entity.
1.5 “Field” means the marketing and promotion of the Products for chronic wound care sold to podiatrists in the Territory.
1.6 "GAAP" means generally accepted accounting principles in the United States.
1.7 "Gross Sales" means the total amount of revenue recognized for the Products on a GAAP basis by Oculus. It is calculated by multiplying the number of units sold times the price per unit..
1.8 "Marketing Plan" shall have the meaning provided in Section 2.4(b) hereof.
1.9 "Net Sales" shall mean Gross Sales less:
(iii) allowances including bad debts;
(iv) wholesale distributor charges; and
(v) cost of goods sold for samples in excess of the mutally agreed sampling plan further described in Section 3(b).
Net Sales shall be determined in accordance with Oculus’ standard accounting methods and GAAP.
1.10 “ Products” shall means the prescription Products set forth on Exhibit A as same may be amended for time to time.
1. 11 "Product Labeling" shall mean the FDA’s approved language specific to a Product’s use.
1.12 "Promotion" means those activities, including without limitation, provision of marketing materials, recommendations, congresses, opinion leader management, physicians meetings, professional education, detailing, advertising and distributing samples of Products normally undertaken by a pharmaceutical company’s sales force to implement marketing plans and strategies aimed at encouraging the appropriate use of a product. When used as a verb, “Promote” shall mean to engage in Promotion.
1.13 "Promotional Materials" shall mean all Product information, resources and education items used or intended for use by the Sales Force in connection with any Detailing of the Products hereunder, but excluding the Product Labeling.
1.14 "Oculus Trademarks" shall mean all trademarks, trade names, brand names, logos and designs, whether registered or not, used during the Term in connection with the identification, promotion, marketing or sale of the Products.
1.15 "Regulatory Approvals" shall mean any approvals (including, but not limited to, the 510(k) approval, labeling approvals), product, and/or establishment licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, which are necessary for the commercial manufacture, use, storage, importation, transport, Promotion or sale of a Product in the United States.
1.16 "Sales Force" shall mean the Quinnova sales force involved in the detail of the Products.
1.17 “Target List” means the list of customers identified by Quinnova as their customers, which is agreed to by Oculus.
1.18 “Target Professionals” shall mean a podiatrist who is legally authorized to prescribe the Products.
1.19 "Term" shall have the meaning provided in Section 8.1 hereof.
1.20 "Territory" shall mean the continental United States, its territories and Canada.
1.21 "Third Party" shall mean any entity other than Quinnova or Oculus or an Affiliate of either party.
1.22 "TRx" shall mean total prescriptions of a Product generated by Target Professionals.
2. Promotion of Product .
2.1 Exclusive Grant . During the Term of this Agreement, and subject to the terms and conditions of this Agreement, Oculus hereby grants to Quinnova the exclusive right to Detail, or otherwise Promote, the Products under the Oculus Trademark, in the Field in the Territory, it being acknowledged and agreed that during the Term, Oculus shall not grant to any Third Party similar rights to Detail, or otherwise Promote, the Products in the Field within the Territory. In order to maintain the exclusive right to Detail under this Agreement, Quinnova must attain the Minimum Units to Maintain Exclusivity set forth on Exhibit B for the applicable Calendar Year. If Quinnova fails to achieve the Minimum Units to Maintain Exclusivity in any Calendar Year, then Quinnova shall have the right and option to pay Oculus an amount equal to the net profits Oculus (the difference in units times average net sales price per unit during the period times [ ]*%) would have earned on the difference between the actual number of units sold and the Minimum Units to Maintain Exclusivity (the "Exclusivity Retention Payment" ); and upon Quinnova’s payment of the Exclusivity Retention Payment, the exclusive nature of the Agreement shall continue for an additional Calendar Year. Such grant to Quinnova does not include the right to assign all or any portion of the rights and obligations under this Agreement without Oculus’ prior consent, not to be unreasonably withheld. Notwithstanding the foregoing Oculus and Quinnova acknowledge and agree that Advocos shall continue to market and provide services with respect to the Products in the same manner as heretofore provided by Advocos.
2.2 Quinnova's Obligations .
(a) Quinnova shall support training and deploy, supervise, motivate (through appropriate and customary Quinnova incentives), and direct the Quinnova Sales Force to Detail the Products to the appropriate Targeted Professionals using Promotional Materials supplied by Oculus in accordance with this Agreement.
(b) Quinnova shall be responsible for ensuring that the Detail by the Sales Force of the Product in the Territory and other conduct of Quinnova and the Sales Force is consistent with customary pharmaceutical business practices and in compliance with all applicable laws, rules and regulations.
(c) None of Quinnova’s employees or agents will represent or hold themselves as employees of Oculus at any time.
(d) Except as required by law or regulation, any material information mentioning the Products (i) by name, (ii) by describing the Product, or (iii) via an internet link to the Product, which Quinnova intends to publish, disclose or otherwise distribute must be approved in advance by Oculus, which approval may not be unreasonably withheld.
(e) Quinnova shall pay all costs associated with managing the Detail of the Product by its Sales Force, including without limitation, expenses for reporting of Details, sample accountability, laptops and other Detail reporting equipment and salaries, training and compensation.
* Confidential information redacted and separately filed with the Commission.
(f) During the launch meeting for the Products and any subsequent Quinnova plan of action meetings, live training and direction for the promotion of the Products shall be provided to the Sales Force. The launch meeting shall occur prior to the initiation of the Detailing of the Products by the Sales Force. The launch meeting shall include training on the Products and coordinating effective presentation of the Products with any other products in the Detail. Quinnova shall provide at least fifteen (15) days notice of the launch and each plan of action meeting and shall invite representatives of Oculus to attend.
(g) Quinnova shall cause each sales representative in the Sales Force to have completed prior to his or her deployment both live training on the Product, including training on FDA regulations and other applicable laws, and “Home Study” (as defined below in Section 3.3(e)). Quinnova shall include testing as part of live training and Home Study. Quinnova shall provide verification of completion of training and testing on request of Oculus.
(h) Quinnova’s Sales Force shall Detail each Product to the appropriate Target Professionals and rotate, as appropriate, the Products in a First Position Detail or Second Position Detail during each sales call.
(i) Quinnova shall be responsible for ensuring that all samples of the Products will be stored, managed, and distributed in compliance with all PDMA, FDA, and other regulations and requirements. Quinno