Document:

Exhibit 10.1

 

EXHIBIT 10.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Execution Copy

SERVICE AGREEMENT

     This service agreement (the “Agreement”) is made as of November 3, 2006 (the “Effective Date”)
by and between VENTIV COMMERCIAL SERVICES, LLC (d/b/a inVentiv Commercial Services, LLC), a New
Jersey limited liability company (“Ventiv”) and SANTARUS, INC., a Delaware corporation (“Client”).
Ventiv and Client may each be referred to herein as a “Party” and collectively as the “Parties”.

     1. The Services – As consideration for the compensation to be paid by Client to Ventiv
as set forth in Exhibit A, Ventiv shall perform the services and obligations as set forth
in this Agreement (collectively, the “Services”):

     (a) Project Team Personnel – The RTAMs, Project Manager, National Project Director and
Ventiv Sales Representatives described below are collectively referred to herein as the “Project
Team.”

          (i) Sales Reps. Ventiv shall provide Client with a field force of Ventiv employees that shall
consist of one hundred forty (140) full-time dedicated sales representatives (the “Ventiv Sales
Representatives”), who shall be dedicated to marketing and promoting the pharmaceutical products
listed on Exhibit B (hereinafter, “Products” or “Client’s Products”). In the event Client
desires for Ventiv to promote a Product other than those listed on Exhibit B, Client shall
provide Ventiv with as much advance written notice as possible and if the addition of the
Product(s) requires Ventiv to incur additional costs for reporting, training or sample
accountability which are not captured by the terms described herein, Ventiv shall promptly provide
Client with a proposal setting forth the increased costs if any, associated with the addition of
the Product(s). Client shall have the option of accepting the Ventiv proposal. [***].

          (ii) RTAMs, Project Manager and National Project Director. Ventiv shall provide four (4)
full-time dedicated Regional Training Administrative Managers (“RTAMs”) to manage the Ventiv Sales
Representatives, one (1) full-time dedicated Project Manager, and one (1) half-time National
Project Director, each of whom shall be an employee of Ventiv. While assigned to the Project Team,
the National Project Director may provide similar services to third parties. During the Term or
any Additional Term (if applicable), the National Project Director shall not perform services for a
third party, or work on any project, involving antacid products, H2 blocker products, proton pump
inhibitor products or any other acid-reducing agent products (each, a “Competing Product”), other
than providing services in connection with Client’s Products pursuant to this Agreement.

          (iii) Both parties agree to negotiate in good faith the terms and conditions of including a
full-time dedicated data analyst on Client’s project (“Data Analyst”), who shall be a Ventiv
employee. The Data Analyst would provide data support services relating to both the existing Total
Data Solutions (“TDS”) services provided to Client by Ventiv or its affiliate, as well as this
Agreement, including: maintaining alignments and sales organization structure, prescriber customer
maintenance, territory call and prescriber Target plan maintenance, third-

***Certain
information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.

 

 

party data loading, data extracts, report generation/creation, sales force automation support, and
other duties agreed upon by the Parties.

          (iv) The Project Team (except for the National Project Director) will be exclusively dedicated
to Client’s Products and as such, will only market, promote or support the Client’s Products during
the Term or any Additional Term (if applicable).

     (b) Recruitment – Ventiv shall be responsible to recruit, re-recruit (replace) and
provide candidates for Ventiv Sales Representatives and other Project Team personnel on a timely
basis. Ventiv shall permit Client’s participation in the recruitment and hiring process; however,
the Parties understand and agree that members of the Project Team are Ventiv employees and as such
all decisions regarding hiring of Project Team members shall be made by Ventiv.

          (i) Sales Rep Qualifications. All Ventiv Sales Representatives shall meet the minimum
qualification and experience profile set forth in Exhibit C (“Sales Rep Qualifications”),
unless Client waives such Sales Rep Qualifications in writing on a case-by-case basis. Client may
modify the Sales Representative Qualifications upon written notice to Ventiv.

          (ii) Reallocated Reps; Recruiting Fee. From the Effective Date of this Agreement and until
[***], Ventiv shall present to Client at least one hundred fifty (150) potential Ventiv Sales
Representatives that are already pharmaceutical sales representatives employed by Ventiv
(“Reallocated Reps”) for inclusion as Ventiv Sales Representatives on the Project Team. Client
shall pay Ventiv a recruiting fee of $[***] (“Recruiting Fee”) for each Ventiv Sales Representative
that is not an employee of Ventiv and must be hired by Ventiv to satisfy either (A) the initial
scale-up requirement for one hundred forty (140) full-time dedicated Ventiv Sales Representatives
or (B) increases in the number of Ventiv Sales Representatives requested by Client in excess of one
hundred forty (140). [***].

          (iii) Initial Scale-Up Timeline. Ventiv shall complete the following recruiting and training
events on or before the indicated dates:

	 	 	 
	[***]:

	 	Present one hundred fifty (150) Reallocated Reps.
	 
	 	 
	[***]:

	 	Complete recruiting and hiring of at least one hundred (100) Ventiv Sales
Representatives, four (4) RTAMs and one (1) Project Manager.
	 
	 	 
	[***]:

	 	Provide for Client training at least one hundred (100) Ventiv Sales
Representatives, four (4) RTAMs and one (1) Project Manager that have completed
Ventiv Training.
	 
	 	 
	[***]:

	 	Complete recruiting and hiring for full Project Team, including at least one
hundred forty (140) Ventiv Sales Representatives that have completed

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	 	Ventiv Training and are available to begin Client
training.

          (iv) Short-Time Hires. For each Project Team member for which Client has paid a Recruiting
Fee under the terms of this Agreement (including in connection with initial scale-up of the sales
force as set forth in Section 1(b)(ii), a Backfill Conversion as set forth in Section 12 and
increases in the sales force beyond one hundred forty (140) Ventiv Sales Representatives) [***].

          (v) Vacancies. Ventiv shall notify Client within one (1) business day of notice of any new
vacancy in the Project Team. Client shall have the option to elect whether to backfill such
vacancy(ies) within five (5) days of receiving notice of a vacancy. Ventiv shall fill any
vacancies within [***] days of Client’s instruction to do so. In the event that the average
vacancy rate of the Ventiv Sales Representatives exceeds the threshold set forth in Exhibit
A, Client shall receive a credit based on the Daily Vacancy Credit described in Exhibit
A.

          (vi) Leaves of Absences. In the event a leave of absence (“Leave of Absence”) by a Ventiv
Sales Representative exceeds thirty (30) days, Ventiv shall administer a tele-detailing program and
sample fulfillment plan that is consistent with the Territory Tactical Plan for the open position
so long as the Leave of Absence continues [***]. The sample fulfillment plan shall be mutually
agreed upon by the Parties. Client may require by written notice Ventiv to fill an open position
with a new Ventiv employee in the event a Leave of Absence by a Ventiv Sales Representative exceeds
twelve (12) weeks (or such longer time as required by applicable federal or state law). If Ventiv
has not filled the open position within [***] days of Client providing notice to Ventiv to fill
such position, such open position shall be treated as a vacancy for all purposes of this Agreement
beginning on the [***] day from the day Client provided Ventiv with the notice.

     (c) Implementation – In addition to the recruitment and employment of the Project Team
as set forth above, Ventiv shall:

          (i) train the Ventiv Sales Representatives and RTAMs (the “Ventiv Training”) to ensure each
Ventiv Sales Representative and RTAM is:

                    (A) trained by the end of the Required Training Period and at least annually thereafter on
compliance with all applicable health care laws, regulations and guidelines, including but not
limited to the Federal Food, Drug and Cosmetic Act (“FDCA”), the Prescription Drug Marketing Act of
1987 (“PDMA”), the PhRMA Code on Interactions with Healthcare Professionals, the Department of
Health and Human Services OIG Guidance and federal anti-kickback statute, and applicable state law
requirements (collectively, the “Applicable Requirements”);

                    (B) trained by the end of the Required Training Period, and as needed thereafter, on
Applicable Requirements regarding sampling and accountability for sampling;

                    (C) trained by the end of the Required Training Period, and as needed

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thereafter, on Ventiv employment policies, human resources policies and other general training
related to employment by Ventiv;

                    (D) trained by the end of the Required Training Period, and as needed thereafter, on use of
hardware and software necessary for the performance of the Services herein, including the sales
force automation systems and Ventiv Portal as described in that certain Services Agreement for TDS,
dated July 9, 2004, as amended, by and between the Parties (the “TDS Agreement”), as well as
Client’s email and Microsoft Office systems (collectively, the “Applicable Systems”); and

                    (E) trained by the end of the Required Training Period, and as needed thereafter, on expense
reporting procedures and requirements.

For purposes of this Agreement, the “Required Training Period” shall mean a period of two (2) weeks
following the hiring and/or assignment to the Project Team of a Ventiv Sales Representative or RTAM
(unless otherwise agreed to in writing in advance by Client). In no event shall Ventiv permit a
Ventiv Sales Representative or RTAM to begin performing sales services in the field until such
Ventiv Training has been completed. Client will provide Product-specific training as described in
Section 4(a)(v) below.

          (ii) administer program and process procedures, as developed by Ventiv on request of Client,
to ensure the Project Team members are able to access and utilize Client’s systems;

          (iii) customize and administer marketing and promotion program processes as Client may from
time-to-time request;

          (iv) track and administer marketing and promotion program performance parameters, goals and
metrics established by Client; and

          (v) implement the Territory Tactical Plan (as defined in Section 1(i)(A)(2)) as established,
modified and maintained by Client for use by the Ventiv Sales Representatives in detailing Client’s
Products, which includes a [***] (as defined in Section 1(i)(A)(1)).

     (d) Deployment – Ventiv shall deploy the Ventiv Sales Representatives throughout the
Territory (as defined below in Section 1(j)) and provide each with all compensation and necessary
support for the Ventiv Sales Representatives to maximize their promotion and marketing efforts of
the Products solely for the benefit of Client. Deployment shall include:

          (i) the administration, payment and/or provision by Ventiv to Project Team members of all
salary and benefits, and of bonuses consistent with the bonus plan sales goals established by
Client (determined using measurement procedures established by Client and based upon attainment
reports to be provided by Client);

          (ii) timely turnover training and re-recruiting (within [***] days of Client’s written
instruction to fill a vacancy as set forth in Section 1(b)(v));

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          (iii) timely provision, administration and maintenance of all laptop computers, handheld PDAs,
software and printers for use by Project Team members which shall be configured to enable transfer
of all Data (as defined in Section 1(f)) to Client’s systems, and implement procedures to
facilitate integration of Project Team members’ equipment with Client’s systems and modifications
thereof. The Parties acknowledge that Client may from time-to-time update, modify or change its
systems, and Ventiv agrees to maintain compatibility with Client’s systems, [***];

          (iv) timely provision, administration and maintenance of fleet automobiles for use by Project
Team members in accordance with Ventiv’s fleet policy (see Exhibit D );

          (v) timely provision, administration and maintenance of office supplies and operational
support;

          (vi) initial and subsequent sales territory alignment of Ventiv Sales Representatives based on
the territory zip code alignment provided by Client and/or Client modifications of alignment;

          (vii) arranging for sample storage and provision of sample storage units;

          (viii) sample auditing and reconciliation;

          (ix) arranging for receipt and storage of promotional material by Ventiv Sales
Representatives; and

          (x) delivery of any reports as provided for in Section 1(f) below.

“Deployment” or “Deployment Date” means the date on which the initial Ventiv Sales Representatives
are assigned to the Project Team. The Parties anticipate that the Deployment Date will occur on
December 1, 2006.

     (e) Meetings – All meetings between Client and the Project Team shall be on the dates,
and at the times and places as determined by Client and provided to the Project Team in writing.
So long as Client has requested that members of the Project Team attend such meetings, Client will,
subject to compliance with Ventiv’s travel policy (such policy to be agreed to by the Parties in
writing), reimburse for such travel costs and expenses as described for pass-through costs in
Exhibit A for the Project Team members to be present at such meetings.

     (f) Data and Reports – Ventiv shall ensure that the Ventiv Sales Representatives are
enabled to transfer all data collected by the Applicable Systems for synchronization with Client’s
systems, including call frequency, Target calls, sampling, distribution of promotional items,
identification of promotional meeting attendees, prescriber information and validation, and state
reporting (collectively, “Data”). “Data” shall also include any other data related to Client’s
Products generated by the Project Team or Client during the Term and any Additional Term (as
applicable) of the Agreement. Ventiv Project Team members shall utilize and have access to

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Client’s reporting platform (e.g., the “Ventiv Portal”) at no additional cost to Client, and
Ventiv shall maintain the appropriate licenses for the Project Team members to synchronize with and
access the Applicable Systems during the Term and any Additional Term (as applicable) of the
Agreement. In the event Client is no longer operating under the TDS Agreement the Parties will
cooperate in good faith to maintain access and synchronization with Client’s systems (including
agreeing in good faith on any increased costs required for such activities). In addition, Ventiv
shall provide Client on a monthly basis, or sooner if requested by Client, with the following
reports:

	 	(i)	 	Expense Report (GELCO System)
	 
	 	(ii)	 	RTAMs Activity Log Summary
	 
	 	(iii)	 	Days in Field Report
	 
	 	(iv)	 	Roster of Project Team
	 
	 	(v)	 	Others as agreed to by the parties in writing

Any customized or “non-standard” reports (i.e., reports outside of the scope of the services
provided by the Data Analyst herein) requested by Client in writing shall be prepared by Ventiv for
Client and Client shall pay Ventiv [***] Dollars ($[***]) per hour for the preparation of such
customized or “non-standard” reports.

     (g) Sample Accountability – On Client’s behalf, Ventiv shall implement and maintain a
sampling and sample accountability program (the “Sampling Program”), in compliance with all
Applicable Requirements. The terms of the Sampling Program are set forth more fully in Exhibit
E. Client shall be responsible for shipment of Product samples and literature to the Ventiv
Sales Representatives in accordance with the PDMA and shall confirm and provide substantiation
(electronically or hardcopy) of such shipments to Ventiv within twenty-four (24) hours. Ventiv
will reconcile such information and will investigate all discrepancies. Ventiv will provide Client
with a report of all sampling irregularities investigations (including, without limitation,
falsifications, diversions, losses or thefts) immediately upon discovery thereof. Client is
responsible for taking all action required by the U.S. Food and Drug Administration (“FDA”) with
respect to sampling Products, including but not limited to, confirming all returned Product samples
received from Ventiv at the end of the Term or any Additional Term (as applicable) or in connection
with any termination of a Ventiv Sales Representative and notifying the FDA of any sampling
irregularities, and all supplemental communications with respect thereto, and Ventiv and Project
Team members shall reasonably cooperate as requested by Client.

     (h) Product Literature; Promotion – In accordance with Section 3 below, Ventiv shall
ensure that:

          (i) only samples and Product Literature approved and provided by Client are distributed by the
Ventiv Sales Representatives;

          (ii) promoting and marketing of the Products is done in a manner that complies in

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all respects with the Applicable Requirements;

          (iii) it will cooperate with Client to conduct any necessary recalls of the Products and/or
Product Literature;

          (iv) the Ventiv Sales Representatives, RTAMs and Project Manager exclusively promote, market
and support Client’s Products during the Term and any Additional Term (as applicable); and

          (v) the National Project Director does not promote or market a Competing Product.

     (i) Management; Duties – Ventiv shall manage, supervise, and evaluate the performance
of the Ventiv Sales Representatives, RTAMs, Project Manager and National Project Director in
accordance with the responsibilities and duties identified below.

          (A) Ventiv Sales Representatives shall:

                    (1) Each work a minimum of [***] days per calendar year (which shall include field days and
time spent attending Client meetings but is exclusive of Leaves of Absences (to the extent such
Leaves of Absences are treated like vacancies pursuant to Section 1(b)(vi)), vacation, holidays,
sick days and Ventiv meeting days) (or applicable pro-rata portion thereof) in performing the
activities under this Agreement (the “[***]”);

                    (2) Plan and organize assigned territory to meet call audience, including: (i) a call activity
minimum, (ii) attainment of monthly reach and frequency goals pursuant to the Territory Tactical
Plan, and (iii) implement other activities related to the Territory Tactical Plan. The Territory
Tactical Plan means product presentations, sampling and promotional programs in accordance with
Client’s marketing plan while utilizing sales skills as trained by Client on Targets according to
call frequency, call routing and call minimums;

                    (3) Consistently deliver a tailored product message and differentiating Client’s Products from
competitors to Targets;

                    (4) Maintain and update current and prospective Target profiles and generate complete and
consistent call records (including call notes) on sales interactions;

                    (5) Successfully participate in all training and sales meetings including plan of action
meetings;

                    (6) Maintain a professional image for Client and Client’s Products;

                    (7) Maintain sample inventories, distribute samples, comply with sample accountability
procedures and policies and comply with PDMA;

                    (8) Report all field activities and expenditures in a manner that is

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timely, accurate, and honest, and in accordance with policies and procedures for the applicable
reporting systems; and

                    (9) Comply with marketing and promotional programs, Applicable Requirements, and proper use of
promotional materials and promotional expense budgets.

     (B) RTAMs shall:

                    (1) Coordinate closely with the individual contact person(s) identified by Client, including
regular conference calls, weekly contact reports, and other activities requested by such
contact(s);

                    (2) Ensure that Ventiv Sales Representatives successfully complete Client’s training;

                    (3) Assist Ventiv to recruit, re-recruit, interview and hire Ventiv Sales Representatives with
Client’s involvement as described in Section 1(b) above;

                    (4) Minimize turnover through selection process and create a positive work environment.
Assist Ventiv’s efforts to fill an empty territory within thirty (30) days of vacancy, unless
otherwise agreed upon by Client;

                    (5) Make regular field visits to develop and motivate Ventiv Sales Representatives for
attainment of sales objectives in accordance with Territory Tactical Plan; to assess and monitor
field activity and work schedules; and to monitor and manage field reporting of Ventiv Sales
Representatives, including call and sample reporting;

                    (6) Assist Ventiv to monitor compliance with the Applicable Requirements, including but not
limited to, PDMA and sample accountability procedures;

                    (7) Work with Ventiv’s human resources department to handle all Ventiv employees employment
related issues and actions, including performance reviews, personnel issues, hiring, discipline and
termination of Ventiv Sales Representatives, including promptly addressing all performance or
disciplinary issues while keeping Client’s sales management informed at all times;

                    (8) Work closely with Client’s contact person(s) providing regular reports and updates,
including but not limited to, monthly field contact plan, personnel development plans, call and
routing performance, business development plans; and

                    (9) Assist Ventiv in achieving all contract performance goals and objectives as established by
this Agreement per geographical assignment and manage expenses included with geographic
responsibility.

          (C) Project Manager shall perform such duties as are set forth on Exhibit F attached
hereto.

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          (D) National Project Director shall perform such duties as are set forth on Exhibit F
attached hereto.

     (j) Territory – The territory where the Product will be promoted and marketed by the
Ventiv Sales Representatives will be the United States (the “Territory”). The Ventiv Sales
Representatives shall contact, personally visit, solicit, and provide product presentations of the
Products to prescribers, pharmacists and other healthcare professionals located in the Territory
that are identified by Client as potential referral sources for the Products (each a “Target” and
collectively, the “Targets”).

2. The Products; Ventiv’s Right to Promote; Market; Additional Product Opportunities –
Ventiv shall promote Products as set forth on Exhibit B (which may be amended from time to
time in writing by Client) under trademarks owned by or licensed to Client. Client represents to
Ventiv that Client either owns the Products or Client has lawful authority necessary to market and
sell the Products in the Territory. This Agreement does not constitute a grant to Ventiv of any
property right or interest in the Products or the trademarks owned by or licensed to Client and/or
any other intellectual property rights which Client owns or controls now or in the future. This
Agreement does not authorize Ventiv or Project Team members to contract for sale of Products, or to
obligate Client to sell Products. As between Client and Ventiv, Client shall have the sole right,
in Client’s discretion, to price Product, sell Product and book sales thereof. Ventiv will use
good faith efforts to provide Client with information about access to new products which would be
complimentary to Client’s existing commercial strategy and that could potentially be included in
this Agreement.

3. Compliance with Requirements; Representations; Warranties –

     (a) Ventiv shall ensure that:

          (i) promotional messages are in accordance with Client’s instructions and consistent with
FDA-approved product labeling;

          (ii) all Applicable Requirements are followed by the Project Team members;

          (iii) it is responsible for storing, handling, and maintaining records for all samples
following receipt of such samples by Ventiv from Client; and

          (iv) it shall not alter, modify, or otherwise change any label, labeling, advertisement,
sample, promotional material or other materials provided to it by Client without Client’s prior
written permission.

          (b) Ventiv shall promptly (and, in any event, within twenty-four (24) hours) notify Client in
the event it becomes aware of any:

          (i) falsification of drug sample requests, receipts or records;

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          (ii) diversion of drug samples, or any loss or theft or sale of samples;

          (iii) reports of adverse events from use of the Products;

          (iv) legal action against any of its employees relating to pharmaceutical manufacture or
marketing (including any allegation or conviction of any employee of violation of any law involving
the sale, purchase, or trade of any drug sample or the offer to sell, purchase or trade a drug
sample);

          (v) alteration of any materials provided by Client;

          (vi) communication with FDA or other governmental agency about the activities covered by this
Agreement and/or the Products; and

          (vii) any other matter that may relate to a potential or actual violation the Applicable
Requirements.

     (c) In any interaction with or investigation by any governmental agency regarding the
activities covered by this Agreement, Ventiv shall (subject to compliance with laws, rules,
regulations and court orders) take no action on its own, but shall coordinate with Client and
follow Client’s directions with respect to communications with such agencies.

     (d) In addition to the audit rights set forth in Section 5(b), once per year or more
frequently when necessary during the Term, Client shall have the right to conduct an audit or
investigation to ensure that the activities covered by this Agreement are in compliance with
Applicable Requirements. Any such audit shall be conducted by Client or Client’s designated
third-party auditor (subject to reasonable confidentiality restrictions approved in advance by
Ventiv) and Client shall be solely responsible for all costs and fees associated with such audit.
Subject to Section 6 hereof and compliance with laws and court or regulatory orders, Ventiv shall
cooperate with Client in any such audit or investigation, and Client shall have access to all
relevant facilities, records and employees of Ventiv.

     (e) Ventiv represents and warrants and further confirms that it is responsible for:

          (i) Ventiv and each of the Project Team members have not been debarred or convicted of any
violation of law involving the sale, purchase, or trade of any drug sample or other pharmaceutical
product and it shall provide prompt notice to Client upon discovery of any such debarment or
conviction during the Term or any Additional Term (as applicable);

          (ii) its implementation of the program pursuant to which the Project Team is performing the
Services shall strictly adhere to all Applicable Requirements;

          (iii) all Data which originates from Ventiv, reports and other materials and documents to be
prepared by Ventiv and submitted to Client pursuant to this Agreement do not violate any copyright
or other intellectual property right of any third party;

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          (iv) the Services will be performed in a professional manner consistent with generally
accepted industry standards and in accordance with all Applicable Requirements;

          (v) it shall use commercially reasonable efforts to ensure that no deliverable, including the
Data, provided pursuant to hereto which is delivered in electronic format will contain any virus or
computer software code, routines or devices designed to disable, damage, impair, erase, deactivate,
or electronically repossess such deliverable or other software or data;

          (vi) it is under no obligation or restriction nor will it assume any such obligation or
restriction which would in any way interfere or be inconsistent with, or present a conflict of
interest concerning, the Services to be furnished by Ventiv or the obligation undertaken by Ventiv
pursuant to this Agreement and it further agrees that it shall be compliant with the requirements
of its standard operating procedure Control of Confidentiality and Non-Disclosure of Client
Information (in substantially the form previously provided to Client) when handling Client
Confidential Information;

          (vii) ensuring that all Project Team members comply with all Applicable Requirements; and

          (viii) ensuring that the average number of Ventiv Sales Representatives employed by Ventiv for
this Agreement does not fall below [***] of the total number of Ventiv Sales Representatives
required to be employed hereunder in an applicable quarter (as calculated and described on
Exhibit A attached hereto and in accordance with Section 1(b)(vi) hereof, but excluding
vacancies associated with Client requested Conversions with Backfills for the initial [***] days
and any other vacant positions with respect to which Client has requested that Ventiv not fill the
vacancy).

4. Client Responsibilities – (a) Client represents and warrants and further confirms that
it is responsible for:

          (i) establishment, modification and maintenance of the sales and marketing plan, the Territory
Tactical Plan, identification of Targets, and Territory alignment in accordance with Applicable
Requirements;

          (ii) storing, handling, and maintaining records for all samples prior to receipt of such
samples by Ventiv;

          (iii) providing sales direction, and promotional and marketing communications to the Ventiv
Sales Representatives in accordance with Applicable Requirements;

          (iv) manufacture and production of Product samples and distribution thereof to Ventiv Sales
Representatives in accordance with Applicable Requirements;

          (v) production and distribution of Product literature to Ventiv Sales Representatives in
accordance with Applicable Requirements;

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          (vi) providing Product-specific training, training for implementation of Client’s marketing
programs, sales skills, procedures and policies for ordering Product samples, interfacing with
Client’s systems and infrastructure, and other Product-specific or program-specific processes and
policies established by Client as well as additional training at Client’s discretion (all in
compliance with Applicable Requirements);

          (vii) design of the sales goals objectives and measurement procedures for the bonus plan for
the Ventiv Sales Representatives and RTAMs at the target amounts set forth in Exhibit A;

          (viii) all communications with the FDA or other governmental agency concerning the Products;

          (ix) ensuring there are a sufficient number of Client managers to provide sales direction to
the Ventiv Sales Representatives;

          (x) ensuring all Client employees interacting with Project Team members comply with all
Applicable Requirements;

          (xi) costs associated with validation of state licenses of practitioners; and

          (xi) using good faith efforts to cooperate with Ventiv to achieve the timelines set forth in
Sections 1(b)(iii) and 1(b)(v).

     (b) Client shall notify Ventiv in the event it becomes aware of any:

          (i) diversion of drug samples, or any loss or theft or sale of samples by a Ventiv Sales
Representative;

          (ii) serious adverse events from use of the Products;

          (iii) legal action relating to the marketing of the Product which specifically relates to the
Services covered by this Agreement;

          (iv) communication with FDA or other governmental agency which specifically relates to the
Services covered by this Agreement; and

          (v) any other matter that relates to a potential or actual violation the Applicable
Requirements by a member of the Project Team.

     (c) All pricing and managed care formulary decisions relating to the Products shall be made by
Client at Client’s discretion. Ventiv acknowledges that Client utilizes, and may continue to
utilize, sales representatives for the Products other than the Ventiv Sales Representatives.
Client retains the right to promote and market the Products, and shall have the right to accompany
any Project Team members when promoting and marketing the Products. Client shall have the right to
establish, and from time-to-time amend, all messaging guidelines

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applicable to the Project Team and its own sales representatives.

5. Ventiv Compensation — Ventiv shall receive compensation for the Services provided
hereunder as set forth in Exhibit A attached hereto.

     (a) Billing Terms

          (i) Within [***] business days after the end of each month, Client will be invoiced for the
fixed fees due hereunder for the previous month. Credits for Short-Time Hires (as described in
Section 1(b)(iv)) and Daily Vacancy Credits (as described in Exhibit A) will be calculated
on a quarterly basis and applied to the bill for the month following the applicable quarter.
Credits for Incentive Fees shall be applied as described in Exhibit A.

          (ii) All pass-through costs will be invoiced to Client at actual cost as incurred by Ventiv.
[***]. By the 15th of each month, Ventiv will submit an invoice reflecting pass-through
costs, including reasonable detail and appropriate documentation to support such pass-through
costs, including a report for expenses processed through GELCO.

          (iii) Invoices are due within thirty (30) days of receipt by Client. Unless subject to a
Dispute Notice (as described below), any payments due hereunder which are not paid within thirty
(30) days of receipt of the invoice by Client are subject to a finance charge of 1.5% monthly,
applied to the outstanding balance due. If Client disputes any portion of an invoice, Client shall
promptly notify Ventiv in a writing setting forth in detail the nature and extent of such dispute
(a “Dispute Notice”) and both parties shall work in good faith to resolve the matter quickly.
Undisputed portions of an invoice shall be paid in accordance with the terms hereof. If needed,
Ventiv will re-invoice the charges at which point Client shall pay the corrected invoice unless
Client continues to dispute the revised invoice. Within twenty (20) business days of delivery to
Ventiv of the Dispute Notice, management representatives from both Parties shall meet to resolve
any dispute regarding an invoice. The Parties agree that disputes regarding invoices shall be
resolved by the Parties within a commercially reasonable period of time.

     (b) Accounting Records

     Ventiv will maintain true and complete financial records relating to the Services performed
under this Agreement, including pass-through costs in connection with the Services. At Client’s
sole cost (up to once per year during the Term and for two years thereafter) Client or Client’s
authorized agent (subject to reasonable confidentiality restrictions agreed to in writing by
Ventiv) will have the right to audit, at any reasonable time during normal business hours and upon
at least ten (10) business days prior written notice to Ventiv, on a confidential basis, such
records for the purpose of verifying the amounts charged under this Agreement. Any such audit
shall be conducted by Client in such a manner so as to ensure no interference with Ventiv’s
business operations. Should any audit conducted pursuant to this paragraph (b) reveal material
discrepancies (i.e., a discrepancy of at least five percent (5%)) in the financial records
relating to the Services, Ventiv shall reimburse Client for the costs of such audit, promptly
credit or refund Client any applicable fees that are due based on such discrepancy, and Client may
perform another audit during the same one-year period .

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13

 

6. Confidentiality; Ownership of Property (a) During the performance of the Services
contemplated by this Agreement, each Party may learn confidential, proprietary, and/or trade secret
information of the other Party (“Confidential Information”). The Party disclosing Confidential
Information shall be referred to as the “Disclosing Party” and the Party receiving Confidential
Information shall be referred to as the “Receiving Party.”

     Confidential Information means any information, unknown to the general public, which is
disclosed by the Disclosing Party to the Receiving Party under this Agreement. Confidential
Information includes, without limitation, technical, trade secret, commercial and financial
information about either Party’s (a) research or development; (b) marketing plans or techniques,
contacts or customers; (c) organization or operations; (d) business development plans (i.e.,
licensing, supply, acquisitions, divestitures or combined marketing); (e) Products, licenses,
trademarks, patents, other types of intellectual property or any other contractual rights or
interests (including without limitation processes, procedures and business practices involving
trade secrets or special know-how); and (f) the names, addresses, phone numbers and work
assignments of individual Ventiv or Client employees. The Receiving Party shall neither use or
disclose Confidential Information from the Disclosing Party for any purpose other than is
specifically allowed by this Agreement.

     (b) Upon the expiration or termination of this Agreement and upon written request from the
Disclosing Party, the Receiving Party shall return to the Disclosing Party all tangible forms of
Confidential Information, including any and all copies and/or derivatives of Confidential
Information made by either Party or their employees as well as any writings, drawings,
specifications, manuals or other printed or electronically stored material based on or derived
from, Confidential Information. Any material or media not subject to return must be destroyed.
The Receiving Party shall not disclose to third parties any Confidential Information or any
reports, recommendations, conclusions or other results of work under this Agreement without prior
written consent of an officer of the Disclosing Party. The obligations set forth in this Section
6, including the obligations of confidentiality and non-use shall be continuing and shall survive
the expiration or termination of this Agreement and will continue for a period of five (5) years.

     (c) The obligations of confidentiality and non-use set forth herein shall not apply to the
following: (i) Confidential Information at or after such time that it is or becomes publicly
available through no fault of the Receiving Party; (ii) Confidential Information that is already
independently known to the Receiving Party as shown by prior written records; (iii) Confidential
Information at or after such time that it is disclosed to the Receiving Party by a third party with
the legal right to do so; (iv) Confidential Information required to be disclosed pursuant to
applicable laws or regulations, judicial process, court order or administrative request, provided
that the Receiving Party shall so notify the Disclosing Party sufficiently prior to disclosing such
Confidential Information as to permit the Disclosing Party to seek a protective order or other
confidential treatment. In the event Client is required by law to provide this Agreement to the
Securities and Exchange Commission, Client shall first provide Ventiv with an opportunity to redact
sensitive commercial, privileged or proprietary information and Client shall request confidential
treatment thereof.

14

 

     (d) All materials, documents and data supplied to either Party during the Term of this
Agreement, including but not limited to sales force automation software, report designs, and
training materials shall be the sole and exclusive property of the originator of those materials
and developments. Data is and shall remain the sole and exclusive property of Client. Each Party
agrees to hold all such property and developments, confidential in accordance with this Section 6
of the Agreement.

     (e) Ventiv shall ensure that each Project Team member signs and complies with the
confidentiality requirements of Ventiv’s Employment Policies Agreement (in substantially the form
previously provided to Client).

7. Independent Contractors (a) Ventiv, in performance of services under this Agreement,
is acting as a contract service provider, and will not be considered a partner, co-venturer or
joint-venturer with Client. Neither Ventiv nor any of its employees shall be considered an
employee of Client and neither Ventiv nor any of its employees shall be entitled to receive any
Client employee benefits.

     (b) Ventiv shall be exclusively responsible for: paying the wages of; providing workers’
compensation, health, disability, or other similar benefits for; providing unemployment or other
similar insurance for; and withholding income or other similar taxes or Social Security tax for,
any Ventiv employee who is assigned to the Project Team and provides the Services under this
Agreement. Ventiv shall obtain and maintain all permits and business licenses it needs to perform
services under this Agreement.

     (c) Ventiv and its directors, officers, employees and all members of the Project Team are at
all times independent contractors with respect to Client. Client shall not be responsible for the
acts of Ventiv or the acts of its officers, agents and employees while performing the Services
whether on Client premises or elsewhere (unless such acts are specifically directed or authorized
by Client).

     (d) Notwithstanding anything to the contrary set forth in this Section 7, Ventiv shall not be
responsible for any cost, however, attributable to: (i) any actions by Client in excess of the
actions described and contemplated by this Agreement that may cause a Ventiv employee to be
reclassified as an employee of Client, (ii) any unlawful or discriminatory acts of Client, and
(iii) any benefits payable under any Client employee benefit plan (as such term is defined Section
3(3) of ERISA), and any other incentive compensation, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar fringe or employee
benefit plans, programs or arrangements (collectively, the “Benefit Plans”) that may be sponsored
at any time by Client or any of its affiliates but only to the extent the language of the Benefit
Plans specifically causes a Ventiv employee to be reclassified as an employee of Client.

8. Non-solicitation (a) Except with respect to Client’s conversion of Project Team
members, which shall be governed by Section 12 below, Client may not employ or retain any Ventiv
employee [***] during the Term of this Agreement or within one (1) year after the termination of
this Agreement without the prior written approval of Ventiv, which may be withheld by Ventiv in its
sole and absolute discretion. Ventiv agrees that it may not employ or retain any Client employee
during the Term of this Agreement or within one (1) year after

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

15

 

termination of this Agreement without prior written approval of Client, which may be withheld by
Client in its sole and absolute discretion.

     (b) Each party agrees during the Term of this Agreement and for one (1) year thereafter not
to: (i) provide contact information (i.e., name, address, phone number or e-mail address)
concerning any other Party’s employee to any third party for the purpose of placing such employee
with the third party, or (ii) actively assist (in any other way) such a third party in employing or
retaining the other Party’s employee. For breach of this Section 8(b), the breaching Party shall
pay or cause the third party to pay the non-breaching Party $[***] for each employee so employed or
retained by the third party, as liquidated damages.

     (c) The provisions of Section 8 shall not apply with respect to either Party’s employees or
independent contractors who seek employment from the other Party on their own initiative, such as,
but not limited to, in response to a Party’s general vacancy announcement or advertisement.

9. Indemnification (a) Ventiv shall indemnify and hold Client, its officers, directors,
agents and employees (the “Client Indemnitees”) harmless from and defend against any and all third
party liabilities, losses, proceedings, actions, damages, claims or expenses of any kind, including
costs and reasonable attorneys’ fees which result from (i) any reckless, negligent or willful acts
or omissions by Ventiv, its agents, directors, officers, or employees, (ii) acts or omissions
outside the scope of the Services to be provided by Ventiv or the Project Team pursuant to this
Agreement, or (iii) any material breach of this Agreement by Ventiv, its agents, directors,
officers or employees.

     Ventiv shall not be obligated to indemnify, defend or hold the Client Indemnitees harmless to
the extent Client is obligated to indemnify, defend and hold the Ventiv Indemnitees harmless
pursuant to Section 9(b) below.

     (b) Client shall indemnify and hold Ventiv, its officers, directors, agents, and employees
(the “Ventiv Indemnitees”) harmless from and defend against any and all third party liabilities,
losses, proceedings, actions, damages, claims or expenses of any kind, including costs and
reasonable attorneys’ fees which result from (i) any reckless, negligent or willful acts or
omissions by Client, its agents, directors, officers or employees, (ii) any material breach of this
Agreement by Client, its agents, directors, officers, or employees, (iii) any claims that Client or
a Product directly or indirectly infringes any patent, copyright, trademark or trade secret owned
by or licensed to such third party; or (iv) any product liability claims related to Client’s
Products, whether arising out of warranty, negligence, strict liability (including manufacturing,
design, warning or instruction claims) or any other product liability Product based state or
federal statutory claim.

     Client shall not be obligated to indemnify, defend or hold the Ventiv Indemnitees harmless to
the extent Ventiv is obligated to indemnify, defend and hold the Client Indemnitees harmless
pursuant to Section 9(a) above.

     (c) Any indemnity available hereunder shall be dependent upon the Party seeking indemnity
providing prompt notice to the indemnitor of any claim or lawsuit giving rise to the

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16

 

indemnity provided, however, that failure to comply with this notice requirement shall not reduce
the indemnitor’s indemnification obligation except to the extent that the indemnitor is prejudiced
as a result. Thereafter, the indemnitor shall have control over the handling of the claim or
lawsuit, and the indemnitee shall provide reasonable assistance to the indemnitor in defending the
claim. The indemnitee may participate, at its own cost, in the handling of the claim.

10. Term — The Agreement shall be in effect as of the Effective Date and shall remain in
effect until the second anniversary of the Deployment Date (such period, together with any renewals
or extensions, referred to as the “Term”), unless terminated sooner by either Party pursuant to
Section 11 below. Client shall have the right to extend this Agreement for up to two (2)
additional one-year periods (each an “Additional Term”) provided the compensation to be paid by
Client to Ventiv for such Additional Term is agreed upon and set forth in a written agreement
between the Parties to be executed at least sixty (60) days prior to the end of the Term (or
Additional Term).

11. Termination — (a) This Agreement may be terminated by Ventiv or Client by providing
the other Party with written notice as follows:

                         (i) by Ventiv, if any payment to Ventiv not subject to a Dispute Notice has not been paid by
Client when due and such payment is not made within thirty (30) days from the date of written
notice to Client of such nonpayment; or

                         (ii) by Client, effective any time after the first anniversary of the Deployment Date, for
Client’s convenience, upon sixty (60) days prior written notice to Ventiv; or

                         (iii) by Client, effective prior to the first anniversary of the Deployment Date for Client’s
convenience, upon sixty (60) days prior written notice to Ventiv; provided that in such event
Client shall pay Ventiv either: (A) $[***] in the event the actual termination date is prior to the
[***] month anniversary of the Deployment Date, (B) $[***] in the event the actual termination date
is on or after the [***] month anniversary of the Deployment Date but prior to the [***] month
anniversary of the Deployment Date, or (C) $[***] in the event the actual termination date is on or
after the [***] month anniversary of the Deployment Date but prior to the one year anniversary of
the Deployment Date; or

                         (iv) by either Party, in the event that the other Party has committed a material breach of
this Agreement and such breach has not been cured within thirty (30) days of receipt of written
notice from the non-breaching Party of such breach; or

                         (v) by either Party, in the event that the other Party has become insolvent or has been
dissolved or liquidated, filed or has filed against it, a petition in bankruptcy and such petition
is not dismissed within sixty (60) days of the filing, makes a general assignment for the benefit
of creditors; or has a receiver appointed for a substantial portion of its assets.

          (b) Upon the effective date of such termination, the Parties shall have no further
obligation to each other (other than those set forth in Sections 3(b)(i)-(iii) and (vi), 3(c),
4(b)(i)

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17

 

and (iii)-(iv), 5, 6, 7, 8, 9, 11 and 13), except that Client shall pay the amounts set forth
or provided for in Exhibit A of this Agreement through the actual date of termination and
Ventiv shall continue to perform the Services through the actual date of termination.

12. Conversion and Conversion Fees. Notwithstanding Section 8 above, Client may solicit,
employ and/or retain Ventiv Sales Representatives and RTAMs, without obligation to pay the
liquidated damages penalty set forth in Section 8 above, in accordance with the following:

     (a) Conversions with No Backfill. Client may solicit, employ or retain Ventiv Sales
Representatives and RTAMs and elect not to have Ventiv backfill (i.e., not hire a replacement for)
the vacated positions (a “No Backfill Conversion”) provided that: (i) such conversion does not
occur prior to the three month anniversary of the Deployment Date, and (ii) Client provides at
least [***] days’ prior written notice to Ventiv of any such No Backfill Conversion. In the event
the Client implements a No Backfill Conversion during the Term, Client shall pay to Ventiv a
finder’s fee payable within thirty (30) days of conversion to the extent set forth in the following
table for Ventiv Sales Representatives and/or RTAMs that are employed by Client:

	 	 	 	 	 	 	 
	 	 	[***]	 	[***]	 	[***]	 	 
	 	 	months after	 	months after	 	months after
	 	 	Deployment	 	Deployment	 	Deployment
	Charges for No Backfill Conversion	 	Date*	 	Date	 	Date
	 
	Per Ventiv Sales Representative

	 	$[***]
	 	$[***]
	 	$[***]
	Per RTAM

	 	$[***]
	 	$[***]
	 	$[***]

 

			
	 	 	*Client’s requests for No Backfill Conversions during this period shall not exceed [***]% of the
total Project Team during such period.

     (b) Conversions with Backfill. Client may solicit, employ or retain Ventiv Sales
Representatives and RTAMs and elect to have Ventiv backfill (i.e., hire a replacement for) the
vacated positions (a “Backfill Conversion”). Client shall provide at least thirty (30) days’ prior
written notice to Ventiv of such Backfill Conversions. In the event the Client implements a
Backfill Conversion during the Term, and subject to Subsection 12(c) below, the Client shall pay to
Ventiv within [***] days of conversion a finder’s fee for Ventiv Sales Representatives and/or RTAMs
that are employed by Client equal to $[***] per RTAM and $[***] per Ventiv Sales Representative
participating in such Backfill Conversion to cover the costs of recruiting, providing the Ventiv
Training and any other applicable costs associated with such new Ventiv employees.

     (c) No finder’s fee shall be due from Client to Ventiv for conversions effective after [***]
months from the Deployment Date.

     (d) Client understands and agrees that Ventiv cannot guarantee that any Ventiv Sales
Representative or RTAM will agree to participate in a Conversion.

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18

 

13. Miscellaneous (a) Each Party represents to the other that the execution, delivery and
performance of this Agreement by such Party has been duly authorized by all requisite corporate
action; that the Agreement constitutes the legal, valid, and binding obligation of such Party,
enforceable in accordance with its terms (except to the extent enforcement is limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally and by
general principles of equity); and that this Agreement and performance hereunder does not violate
or constitute a breach under any organizational document of such Party or any contract, other form
of agreement, or judgment or order to which such Party is a party or by which it is bound.

     (b) Each Party undertakes to maintain appropriate general liability insurance in commercially
reasonable amounts with financially capable carriers, including in the case of Client, product
liability insurance in the amount of at least $[***] million, and in the case of Ventiv, auto
liability insurance in amount of at least $2 million. Ventiv shall also maintain appropriate
workers’ compensation insurance, employer’s liability insurance and crime insurance in commercially
reasonable amounts for its employees. In addition, upon written request, each Party will provide
the other with evidence of coverage complying with this Section.

     (c) Neither Ventiv nor Client may assign this Agreement or any of its rights, duties or
obligations hereunder without the other Party’s prior written consent, provided, however, that
either Ventiv or Client may assign its rights, duties and obligations as part of an acquisition of
substantially all of the assets or business of Ventiv or Client, as the case may be, so long as the
acquirer: (i) is a financially capable business entity with financial resources and business
capabilities that are at least as extensive as the Party being acquired, (ii) expressly assumes in
writing this Agreement and those rights, duties and obligations set forth herein and (iii) is not a
competitor of the non-acquired Party. A competitor of Ventiv shall mean a company providing
contract sales force services and a competitor of Client shall mean a company with a Competing
Product.

     (d) Except for that Mutual Confidentiality Agreement dated January 20, 2003, which shall
continue to apply to communications and exchange of confidential information prior to the Effective
Date of this Agreement, this Agreement supersedes all prior arrangements and understandings between
parties related to the subject matter of this Agreement, including specifically the Letter of
Intent dated October 19, 2006.

     (e) Noncompliance with the obligations of this Agreement (other than payment obligations) due
to a state of force majeure, the laws or regulations of any government, regulatory or judicial
authority, war, civil commotion, destruction of facilities and materials, fire, flood, earthquake
or storm, labor disturbances (other than of such Party’s own employees), shortage of materials,
failure of public utilities or common carriers, and any other causes beyond the reasonable control
of the applicable Party (each, a “Force Majeure Event”), shall not constitute a breach of contract
to the extent such noncompliance is directly caused by the Force Majeure Event and provided that
the Party claiming the excuse shall promptly inform the other Party of the Force Majuere Event and
shall use best efforts to eliminate, cure and/or overcome such Force Majeure Event will all
possible speed.

     (f) If any provision of this Agreement is finally declared or found to be illegal or

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19

 

unenforceable by a court of competent jurisdiction, both parties shall be relieved of all
obligations arising under such provision, but, if capable of performance, the remainder of this
Agreement shall not be affected by such declaration or finding.

     (g) This Agreement, including any attachments or exhibits entered into hereunder, contains
all of the terms and conditions of the agreement between the parties and constitutes the complete
understanding of the parties with respect thereto. No modification, extension or release from any
provision hereof shall be affected by mutual agreement, acknowledgment, acceptance of contract
documents, or otherwise, unless the same shall be in writing signed by the other Party and
specifically described as an amendment or extension of this Agreement.

     (h) This Agreement shall be construed according to the laws of the State of New York. Any
action brought by either Party in connection with this Agreement shall be brought in the state or
federal courts located in the State of New York.

     (i) This Agreement may be executed in any number of counterparts, by manual or facsimile
signatures, each of which, when executed, shall be deemed to be an original and all of which
together shall constitute one and the same document.

     (j) All notices hereunder shall be in writing and shall be delivered in person or by
registered or certified mail, return receipt requested, or sent by a nationally recognized
overnight delivery service or by facsimile, to the applicable Party at its address set forth below
(or at such different address as may be designated by such Party by written notice to the other
Party). All notices by mail shall be deemed delivered upon receipt.

Ventiv:

Ventiv Commercial Services, LLC

200 Cottontail Lane

Somerset, New Jersey 08873

Attention: Terrell G. Herring, President and Chief Executive Officer

with a copy to:

Norris, McLaughlin & Marcus, P.A.

721 Route 202-206

P.O. Box 1018

Somerville, New Jersey 08876-1018

Attention: David Blatteis

Client:

Santarus, Inc.

10590 W. Ocean Air Drive, Suite 200

San Diego, CA 92130

Attention: Jon Hee, VP Commercial Operations

20

 

with a copy to:

Santarus, Inc.

10590 W. Ocean Air Drive, Suite 200

San Diego, CA 92130

Attention: Legal Affairs

[Remainder of Page Intentionally Left Blank]

21

 

     WHEREFORE, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the date first set forth above.

	 	 	 	 	 
	VENTIV COMMERCIAL SERVICES, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Terrell G. Herring	 	 
	 

	 	 
	 	 
	 

	 	Name: Terrell G. Herring

Title: President and CEO	 	 
	 
	 	 	 	 
	SANTARUS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Gerald T. Proehl	 	 
	 

	 	 
	 	 
	 

	 	Name: Gerald T. Proehl 

Title: President and CEO	 	 

22

 

EXHIBIT A

COMPENSATION — FIXED FEES, CREDITS, INCENTIVE FEES AND PASS-

THROUGH COSTS

I. FIXED FEES

     [***]

     [***].

     Recruitment Fee

     Client shall pay Ventiv a recruiting fee of $[***] (“Recruiting Fee”) for each Ventiv Sales
Representative that is not employed by Ventiv immediately prior to working for Ventiv pursuant to
this Agreement only in connection with either (1) the initial scale-up of the sales force to one
hundred forty (140) representatives and (2) increases in the number of Ventiv Sales Representatives
requested by Client in excess of one hundred forty (140).

     Fixed Monthly Fee

     (a) Subject to applicable credits and increases or decreases in the size of the Project Team
(as set forth in Exhibit A, Section I (b) and (c) below), commencing December 1, 2006, Client shall
pay Ventiv a Fixed Monthly Fee in accordance with the following:

	 	 	 
	Period	 	Fixed Monthly
	 	 	Fee
	December 1, 2006 through November 30, 2007 (“Year One”)

	 	$ [***]
	 
	 	 
	December 1, 2007 through November 30, 2008 (“Year Two”)

	 	$ [***]

     (b) Daily Vacancy Credit

     Ventiv shall provide credits to Client in the event staffing levels of Ventiv Sales
Representatives and RTAMs do not meet agreed upon levels, as set forth below. The amount of the
daily credit, on a per Ventiv Sales Representative and per Ventiv RTAM basis is set forth in the
following chart and an example of the vacancy credit calculation is set forth below.

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

23

 

	 	 	 	 	 
	 	 	Daily Vacancy	 	 
	 	 	Credit per Ventiv	 	Daily Vacancy
	 	 	Sales	 	Credit per
	Period	 	Representative	 	Ventiv RTAM
	 
	Year One

	 	$ [***]
	 	$ [***]
	 
	 	 	 	 
	Year Two

	 	$ [***]
	 	$ [***]

     (i) Commencing on the Deployment Date, if in any calendar quarter during the Term (except in
December 2006, which shall be reconciled at the end of such month), the number of Ventiv Sales
Representatives employed falls below [***] of the total number of Ventiv Sales Representatives
required to be employed hereunder, Ventiv shall provide Client with a credit on the following
month’s invoice in an amount as determined in accordance with subsection (b)(ii) below. For
purposes hereof, a vacancy shall be counted for the period commencing on the date the vacancy first
occurs and ending on the date a replacement Ventiv Sales Representative is employed by Ventiv for
this Agreement. For purposes hereof, “employed” means the date on which Ventiv is first obligated
to pay salary and/or benefits to such replacement Ventiv Sales Representative.

     (ii) The following staffing rate calculation is an example used to determine the payment to be
made by Ventiv to Client in accordance with Section I(b)(i) above:

Working Day is defined as any non-weekend day.

Full Staffing: 140 Representatives

Calculation for Q1 2007 (65 Working Days)

Representative days with full staffing = 9,100

Employed Representatives during the quarter:

125 Representatives employed for 65 days in the quarter

10 Representatives employed for 45 days in the quarter

5 Representatives employed for 30 days in the quarter

Staffing Rate Calculation

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	125

10

5
	 	x

x

x
	 	65

45

30
	 	=

=

=
	 	 	8,125

450

150	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Total
	 	 	 	 	 	=
	 	 	8,725	 	 	 
	 	 	Staffing Rate	 	 	 	=	 	 	95.9% 	(8,725/9,100)	 	 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

24

 

If the Staffing Rate is equal to or greater than [***], Ventiv shall not pay Client any amount
pursuant hereto

Understaffing Payment Reduction Calculation for above example

	 	 	 
	Required Staffing Level (percent)
	 	[***]%
	Actual Staffing Level (percent)
	 	[***]%
	 
	 
	Staffing Shortfall (percent)
	 	[***]%
	Direct Variable Cost per Rep per Day
	 	$[***]
	Number of Representatives (full staffing)
	 	[***]
	Number of Working Days in Q1 2007
	 	[***]
	Staffing Shortfall Percentage
	 	[***]%
	Understaffing Credit for Q1 2007
	 	$[***]

The threshold for computing the RTAM vacancy credit is [***]%.

          (iii) For the purposes of calculating the Daily Vacancy Credit, any Ventiv Sales
Representative that is converted pursuant to Section 12 of the Agreement shall not be counted as a
vacancy for purposes of calculating the minimum staffing requirements during the period commencing
on the date of the applicable Ventiv Sales Representative conversion and ending on the earlier to
occur of (30) days following such date or the hire date of the replacement Ventiv Sales
Representative.

     (c) Monthly Fee for Permanent Upsize and Downsize of Project Team

     In the event Client requests that the size of the Project Team be increased or decreased (as
set forth in Section 1(a)(i) of the Agreement), the fixed fees set forth in the chart in this
Exhibit A, Section I (a) shall be adjusted effective as of the date that such Project Team members
are hired for or assigned to Client’s project by Ventiv (in the case of an increase) or the shorter
of 60 days following Client’s notice or the date on which Project Team members otherwise cease
performing Services (in the case of a decrease) on a per Ventiv Sales Representative or per RTAM
basis in accordance with the following:

	 	 	 	 	 
	 	 	Monthly Fee per	 	 	 
	 	 	Ventiv Sales	 	Monthly Fee per	 
	Period	 	Representative	 	Ventiv RTAM	 
	 
	Year One

	 	$ [***]
	 	$ [***]
	 
	 	 	 	 
	Year Two

	 	$ [***]
	 	$ [***]

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

25

 

II. VENTIV INCENTIVE FEES

     In the event Ventiv does not meet the following performance milestones, a portion of Ventiv’s
management fee included in the fixed monthly fee set forth in this Exhibit A, Section I (a) shall
be subject to forfeiture and credited to Client as provided for below. The total amount of the
fixed fee subject to forfeiture during specified periods of the Term is set forth in the following
chart:

	 	 	 
	Period	 	Target Incentive
	 	 	Fee
	 
	Deployment [***]
	 	$      [***]
	 
	 	 
	Incentive Year One (January 1, 2007
through December 31, 2007)
	 	$   [***]
	 
	 	 
	Incentive Year Two (January 1, 2008
through November 30, 2008)
	 	$   [***]

     (a) Deployment — The incentive fee for the Deployment period specified above shall be
allocated in full to the following milestone:

     (i) Deployment. If either (1) at least one hundred (100) Ventiv Sales Representatives
are not available for Client training by [***], or (2) at least one hundred forty (140)
Ventiv Sales Representatives who have completed Ventiv Training are not available for Client
training by [***], Ventiv shall provide a credit to Client of $[***] on Ventiv’s invoice
dated in [***] to Client reflecting the fixed monthly fee.

     (b) Incentive Year One — The incentive fee for Incentive Year One shall be divided
equally (i.e. $[***]) among the following three milestones:

     (i) Turnover. If the turnover of the Ventiv Sales Representatives (excluding
individuals converted to employment by Client as set forth in Section 12) exceeds [***] in
Incentive Year One, Ventiv shall provide a credit to Client of $[***]. Ventiv shall provide
Client with a calculation of the Turnover by no later than sixty (60) days following the end
of Incentive Year One. The credit (if any) shall be reflected on the Ventiv invoice to
Client in the month following the completion of the Turnover calculation.

     (ii) Average Time to Fill Vacancies. If during Incentive Year One the average time to
fill vacant Ventiv Sales Representative positions exceeds [***] days, Ventiv shall provide
a credit to Client of $[***] on the Ventiv invoice to Client in the month following the
completion of calculation determining Average Time to Fill Vacancies in

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

26

 

Incentive Year One. Ventiv shall provide Client with a calculation of such Average
Time to Fill Vacancies by no later than sixty (60) days following the end of Incentive Year
One.

     (iii) Sales Goals. The Sales Goals for Incentive Year One shall be communicated to
Ventiv promptly after being finalized by Client management and shall be consistent with
Client’s own national sales goals. In the event the Sales Goals are not achieved, Ventiv
shall have the ability to earn a proportionate amount of the total incentive fee available
in Incentive Year One (i.e. $[***]). The minimum threshold for achievement of the
Sales Goals shall be [***]%. For example, in the event Ventiv achieves [***]% of the Sales
Goal, Client shall receive a credit of $[***] and if Ventiv achieves [***]% of the Sales
Goal, Client shall receive a credit in the amount of $[***]. In addition, if Ventiv
achieves more than [***]% of the Sales Goal, Client shall pay Ventiv an additional incentive
fee in an amount in proportion to the actual Sales Goal achieved, up to a maximum of [***]%.
For example, in the event Ventiv achieves [***]% of the Sales Goal, Client shall not
receive a credit and if Ventiv achieves [***]% of the Sales Goal, Client shall pay Ventiv
$[***] ([***]% of $[***]). If Ventiv achieves [***]% (or more) of the Sales Goal, Client
shall pay Ventiv $[***]. In addition, in the event Client adds a Product (as set forth in
Section 1(a)(i) of the Agreement), the Parties agree to adjust the Sales Goals in light of
any corresponding changes to Client’s own national sales goals.

     Client shall notify Ventiv concerning achievement of the Sales Goals within 60 days
following the end of Incentive Year One and Incentive Year Two. In connection with such
notification, Client shall provide Ventiv with supporting prescription data received from
one or more nationally recognized independent third party data providers. In addition,
Client shall provide Ventiv with monthly prescription data to allow Ventiv to track Sales
Goal progress.

     Credits from Ventiv to Client for failure to achieve Sales Goals in Incentive Year One
and Incentive Year Two shall be reflected on the Ventiv invoice to Client in the month
following the completion of Sales Goal calculations. Payments from Client to Ventiv for
achievement of greater than [***]% of the Sales Goals in Incentive Year One and Incentive
Year Two shall be made within thirty (30) days following completion of the Sales Goal
calculation.

     Ventiv acknowledges that the Sales Goals thresholds, as well as the actual prescription
results constitute “Confidential Information” of Client and such information is subject to
the requirements set forth in Section 6 of the Agreement.

     (c) Incentive Year Two —  The incentive fee for Year Two shall be divided equally
(i.e. $[***]) among the following three milestones:

     (i) Turnover. If the turnover of the Ventiv Sales Representatives (excluding
individuals converted to employment by Client as set forth in Section 12) exceeds [***] in
Incentive Year Two, Ventiv shall provide a credit to Client of $[***]. Ventiv shall

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

27

 

provide Client with a calculation of the Turnover by no later than sixty (60) days
following the end of Incentive Year Two. The credit (if any) shall be reflected on the
Ventiv invoice to Client in the month following the completion of the Turnover calculation.

     (ii) Average Time to Fill Vacancies. If during Incentive Year Two the average time to
fill vacant Ventiv Sales Representative positions exceeds [***] days, Ventiv shall provide a
credit to Client of $[***] on the Ventiv invoice to Client in the month following the
completion of calculation determining Average Time to Fill Vacancies in Incentive Year Two.
Ventiv shall provide Client with a calculation of such Average Time to Fill Vacancies by no
later than sixty (60) days following the end of Incentive Year Two.

     (iii) Sales Goals. The Sales Goals for Incentive Year Two shall be communicated to
Ventiv promptly after being finalized by Client management and shall be consistent with
Client’s own national sales goals. The calculation of the Sales Goals in Incentive Year
Two, the amount of the credit or payment and the timing of the credit or payment shall be
determined in accordance with Section II (b)(iii) above, except that $[***] shall be used
instead of $[***].

     (d) Nothing in this Exhibit A, Section II shall be construed to limit the rights and remedies
available to either Party for breach of representations, warranties and covenants contained in the
Agreement.

III. PASS-THROUGH COSTS

     In addition to the fixed fees, the expenses described below will be charged to Client on a
pass-through basis. Pass-through costs must be approved in advance by Client in writing pursuant
to the mutually established budget for such costs. These expenses will be billed to Client at
actual cost. The pass-through costs consist of:

	 	-	 	Bonuses for the Ventiv Sales Representatives (inclusive of applicable employer
portion of taxes). The bonuses are targeted at [***] of base salary, premised on an
average annual base salary of [***] dollars ($[***]).
	 
	 	-	 	Bonuses for the RTAMs (inclusive of applicable employer portion of taxes). The
bonuses are targeted at [***] of base salary, premised on an average annual base salary
of [***] dollars ($[***]).
	 
	 	-	 	Non-automobile travel for Ventiv Sales Representatives.
	 
	 	-	 	Food, lodging and other non-automobile travel costs of Ventiv Sales
Representatives to attend all meetings requested by Client, including but not limited
to POA Meetings.
	 
	 	-	 	Marketing and promotional funds, in accordance with budget set by Client, with
reasonable documentation complying with Client’s reimbursement guidelines and policies.
	 
	 	-	 	Following initial ramp up to 140 ventiv Sales Representatives, costs associated
with transfer of fleet automobiles between territories (to the extent such costs are
due to realignment changes initiated by Client)
	 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

28

 

	 
	 	-	 	Other items expressly agreed by Client in writing in advance.

29

 

EXHIBIT B

PRODUCTS

Zegerid® (omeprazole/sodium bicarbonate) Powder for Oral Suspension 20 mg and 40 mg

Zegerid® (omeprazole/sodium bicarbonate) Capsules 20 mg and 40 mg

30

 

EXHIBIT C

SALES REP QUALIFICATIONS

	•	 	BA/BS degree required and preferably 1 year of pharmaceutical sales experience, or one
year of field based selling experience.

	•	 	Demonstrated track record of success as a sales representative.

	•	 	Strong interpersonal, oral and written communication skills required.

	•	 	Expertise in various computer software programs including Word, Excel and PowerPoint
required.

	•	 	Willingness to travel up to 60% (dependent on geography) – air travel and automobile, as
required.

31

 

EXHIBIT D

VENTIV FLEET POLICY

[***]

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

32

 

EXHIBIT E

SAMPLING AND SAMPLE ACCOUNTABILITY

POLICIES AND PROCEDURES

General

     Ventiv, acting as a contract sales organization on Client’s behalf, shall utilize a
prescription drug sampling program (the “Sampling Program”) for the sampling of Client’s Products
by Ventiv Sales Representatives. The Sampling Program shall comply in all respects with
applicable Federal and State laws and regulations, including but not limited to the Federal
Prescription Drug Marketing Act of 1987, as amended (“PDMA”) and the regulations and guidelines
promulgated thereunder. The Parties will reasonably cooperate from time to time to the extent
necessary to ensure compliance with the applicable legal and regulatory requirements.

Responsibility for Sample Distribution and Storage

     The Sampling Program provides for the distribution of Product samples by Client directly to
the Ventiv Sales Representatives. Client shall be responsible for production and distribution in
accordance with applicable legal requirements, including, without limitation, the PDMA. Ventiv
Sales Representatives shall be responsible for appropriate receipt, handling and storage of
Client’s samples including maintaining appropriate security while in their possession. Client
shall retain all risk of loss with respect to samples of the Products, unless such loss directly
results from Ventiv’s actions, or the acts or omissions of the Ventiv Sales Representatives.

Sampling of Practitioners

     Ventiv shall follow Client’s policies and procedures as they relate to sampling of validated
physicians (with the understanding that Client will be conducting the actual validation of
physicians).

Sample Accountability Records

     Ventiv shall design and implement a security and audit program that includes allowance for
random, for cause and periodic audits to include physical inventories of Product samples delivered
to the Ventiv Sales Representatives consistent with the PDMA and applicable regulations. Ventiv
will generate inventory records, reconciliation reports and summary reports as required by the FDA
regulations

Written Accountability Policies and Procedures

     Ventiv will prepare written policies and procedures as required under FDA regulations and
provide training and instruction to Ventiv Sales Representatives and RTAMs on the policies and
procedures. The written policies and procedures will address: (i) the inventory process, (ii) an
inventory schedule, (iii) the audit standards for detecting falsified and incomplete records, (iv)
what is a significant loss and how it is to be identified, (v) responsibility for notifying the
FDA, (vi) system for monitoring samples to identify the loss or theft of samples and (vii) the
standards

33

 

for storage of samples. Ventiv shall make available to Client from time to time as reasonably
requested by Client a written copy of Ventiv’s written policies and procedures.

     The Client shall provide written policies and procedures for the distribution of Product
samples to Ventiv Sales Representatives. These procedures shall include the process for return of
unused samples and relevant procedures for destruction of samples. Client shall provide Ventiv
with a written copy of Client’s written policies and procedures and Ventiv shall be responsible for
ensuring that the Ventiv Sales Representatives and RTAMs comply with such policies and procedures.

Audit Services

     Under the Sampling Program, Ventiv will develop audit procedures including random selection
audits, operational guidelines, proposed timeliness and checklists to demonstrate PDMA compliance
to performance requirements regarding security functions. These procedures will include random and
for-cause audit criteria, on-site inventory, inspection of sample storage locations, interviews of
Ventiv Sales Representatives and reconciliation services and reports. The on-site inventory of the
samples in the possession of a Ventiv Sales Representative and related reconciliation services and
report shall constitute a “physical audit”. In addition to any other physical audits, performed by
Ventiv, required by the PDMA and/or regulations thereunder and/or by the applicable written
policies and procedures for the Sampling Program, a physical audit shall be conducted on each
Ventiv Sales Representative upon termination of the Agreement, or termination of employment by
Ventiv or reassignment from Client’s project during the Term of the Agreement. Random practitioner
signature audits will be performed by Ventiv and the results reported to Client.

Shipment of samples

     Client shall distribute Product samples directly to the Ventiv Sales Representatives. Client
shall be responsible for those shipments, including using appropriate delivery verification and
confirmation systems and documentation. Client shall provide Ventiv with a written description of
that delivery verification system. Client shall provide Ventiv with all PDMA-related information
concerning shipped samples as required by FDA regulations (including lot numbers). This
information will be delivered utilizing the existing shipment and returns electronic file that is
currently produced on a daily basis and processed by Ventiv. Client shall also provide all
information reasonably necessary to allow Ventiv Sales Representatives to verify the receipt of
shipped samples.

     Ventiv Sales Representatives will utilize the sales force automation system to acknowledge
delivery of samples which will allow Ventiv to confirm shipments of samples by Client to the Ventiv
Sales Representatives. Ventiv will reconcile the receipt of samples by each Ventiv Sales
Representative with the samples shipped to such person, based upon the shipping records provided to
it and acknowledged of delivery provided by the Ventiv Sales Representatives. All discrepancies
between the sample shipping records and the acknowledgment of delivery by the Ventiv Sales
Representatives shall be identified by Ventiv and reported to Client within five (5) days of
discovery. All significant losses or thefts or the potential for significant loss or theft of
samples shall be investigated by Ventiv. To the extent

34

 

Client uses a third party vendor to provide any shipping and/or delivery verification
services, Client shall insure that the third party vendor is compliant with all applicable Federal
and State laws, including the PDMA and the regulations of the FDA.

Returns

     Client shall be responsible for providing a procedure for Ventiv Sales Representatives to
return Product samples. Client will confirm all returns of samples by the Ventiv Sales
Representatives. Client will provide Ventiv with written or electronic confirmation of sample
returns within two (2) business days after confirming the receipt by Client of the returned sample.
The Parties recognize that Ventiv will reconcile sample data and account for samples based (in
part) on the return confirmations provided by Client. Client shall not remove, destroy or
otherwise impair the availability of the returned samples until identified discrepancies of
returned quantities have been resolved by Ventiv.

Access to Records

     Ventiv shall provide Client access and opportunity to inspect all documents, records and
inventory required to be kept under the Sampling Program within twenty-four (24) hours.

Notification of Client; of FDA

     Upon Ventiv’s discovery that any Product samples have been lost or stolen, Ventiv shall,
within twenty-four (24) hours, report such theft or loss to Client. Ventiv shall determine whether
a “theft” or a “significant loss” has occurred under the PDMA and the regulations of the FDA after
reviewing all applicable information with regard to such samples. Ventiv will also be responsible
for determining whether there is “reason to believe” that a diversion of a sample or falsification
of a sample record by a Ventiv Sales Representative has occurred. Ventiv will promptly notify
Client of any of the foregoing and provide Client will all applicable information so that Client
can report a theft or loss to the FDA (if necessary) and take any and all actions required by the
FDA or any other governmental or regulatory agency.

Prescription Sample Identification

     Client shall notify Ventiv of the lot numbers of samples being shipped by Client in advance of
shipment. Ventiv shall require that the Ventiv Sales Representatives keep records by lot number of
all samples distributed to licensed practitioners. Ventiv will reconcile sample data according to
product code.

Recalls

     The Parties will maintain such traceability records as may be necessary to permit a recall or
field correction of the Products. The decision to conduct and the right to control a recall shall
be solely Client’s. Ventiv shall cooperate fully with Client in connection with any recall efforts
affecting the Product.

     Accountability Training

35

 

     The Parties recognize that the Sampling Program will require incremental training in sample
accountability. Ventiv will provide all Ventiv Sales Representatives with training which addresses
sampling requirements. Ventiv will consult with Client to assure that the Ventiv Sales
Representatives will use detail bags and report forms which are acceptable to Client. Ventiv will
be responsible for any follow-on training or corrective action training.

36

 

EXHIBIT F

DUTIES OF PROJECT MANAGER AND NATIONAL PROJECT DIRECTOR

Project Manager

	 	•	 	Function as the primary liaison between the National Project Director, Client, Project
Team members and Ventiv internal departments to ensure contract operations meet
requirements.
	 
	 	•	 	Training, managing, communicating, and monitoring the quality of work of Ventiv
employees associated with this project.
	 
	 	•	 	Oversight and management of responsibilities associated with project-related meetings
(up to, and including, transportation).
	 
	 	•	 	Responsible for monitoring parameters and approving payout of incentive compensation
within project guidelines.
	 
	 	•	 	Monitor and approve project-related invoicing.
	 
	 	•	 	Compile and provide marketing and sales reports to Client as requested.
	 
	 	•	 	Communicate to Field/Client/Ventiv Internal/Etc. personnel, as needed.
	 
	 	•	 	Other responsibilities as assigned by the National Project Director.

National Project Director

	 	•	 	Provide coordination and leadership in all phases of day to day operations including
hiring, performance management, training and development, call activity, annual performance
reviews, travel and expense management, fleet management, Sample Accountability, sales
service shipments, POA planning and implementation, SFA and monthly business reviews with
Client management.
	 
	 	•	 	Obtain thorough working knowledge of the Client contractual agreement to provide
recommendations to Client and Ventiv VP.
	 
	 	•	 	Lead monthly advisory calls with field force.
	 
	 	•	 	Predict the needs of Client sales management and provide insight to Ventiv’s VP to
provide a thorough understanding of the issues and potential solutions in advance of the
official Client request.
	 
	 	•	 	Diagnose the issues that affect the efficiencies of the program. Prepare
recommendations for improvement.
	 
	 	•	 	Participate in formulation and administration of policies and programs as they pertain
to the specific needs of Client.
	 
	 	•	 	Recommend solutions to Client issues that maximize revenue and efficiency and minimize
cost to both organizations.
	 
	 	•	 	Work closely with Client Regional Sales Directors, Client VP of Sales and the Project
Team to develop a relationship that will allow for a long-term expanded partnership.
Effectively develop strategic alliances with Client to position and maintain Ventiv as
Client’s vendor of choice.
	 
	 	•	 	Coordinate deliverables for the Client contract including quality reviews.

37

 

	 	•	 	Provide leadership and direction to RTAMs and Ventiv Sales Representatives for smooth
implementation of Client sales initiatives. Additionally, maintain a routine and daily
working relationship with Client Regional Sales Directors in their role of providing daily
Sales & Marketing direction to the field sales force.
	 
	 	•	 	Effectively provide assistance as required to manage working relationships between
Ventiv departments and their Client counterparts.
	 
	 	•	 	Provide day-to-day operational support to Ventiv’s VP as directed and assigned.

38exv4w4

 

EXHIBIT 4.4

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER HEREOF FOR ITS OWN ACCOUNT
FOR INVESTMENT WITH NO INTENTION OF MAKING OR CAUSING TO BE MADE A PUBLIC DISTRIBUTION OF ALL OR
ANY PORTION THEREOF. SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.

Amended Warrant to Purchase

Shares of Common Stock

ARTES MEDICAL, INC.

AMENDED COMMON STOCK PURCHASE WARRANT

Void after June 7, 2009

     Artes Medical, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value
received, Christopher Reinhard (including any successors and assigns, “Holder”), is entitled,
immediately upon or after the date hereof, and subject to the terms set forth below, to purchase
from the Company at any time or from time to time before the earlier of (i) 5:00 PM Pacific time,
on June 7, 2009 or (ii) the closing of (a) the sale, lease, transfer or conveyance of all or
substantially all of the assets of the Company or (b) a consolidation of the Company with, or
merger of the Company with or into, any person (including any individual, partnership, joint
venture, corporation, trust or group thereof) other than a consolidation or merger by the Company
with a subsidiary of the Company in which the Company is the continuing entity (the earlier to
occur of (i) or (ii), the “Expiration Date”) fully paid and nonassessable shares of the Company’s
Common Stock (the “Warrant Shares”), with the number of the Warrant Shares and the exercise price
of the Warrant Shares to be determined as follows:

     (a) Number of Warrant Shares. This Warrant shall evidence the right of the Holder to
purchase up to Six Hundred Fifty Thousand Warrant Shares.

     (b) Exercise Price. The exercise price per Warrant Share (the “Exercise Price”) shall
be an amount equal to One Dollar Twenty Five Cents (U.S. $1.25) per share, subject to adjustment as
provided herein. If the Company should issue, at any time after the date of this Warrant and prior
to the complete exercise of this Warrant, any shares of Common Stock for a consideration per share
less than $1.25 per share, then the Exercise Price for any shares remaining to be exercised under
this Warrant shall be automatically adjusted to the price equal to the price paid per share for
such Common Stock. If the Company should issue, at any time after the date of this Warrant and
prior to the complete exercise of this Warrant, securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly, additional shares of Common Stock (“Common
Stock Equivalents”), the provisions of Section 6 shall apply.

 

 

     (c) Character of Warrant Shares. This Warrant shall evidence the right of the Holder
to purchase shares of Common Stock of the Company.

     As used herein the following terms, unless the context otherwise requires, have the following
respective meanings:

     (a) The term “Common Stock” shall mean the Common Stock of the Company.

     (b) The term “Company” includes any entity which shall succeed to or assume the obligations of
the Company hereunder.

     1. Exercise Date; Expiration. Subject to the provisions of Section 5.3, this Warrant
may be exercised by the Holder for up to 500,000 Warrant Shares at any time or from time to time
before the Expiration Date (the “Exercise Period”). This Warrant may be exercised by the Holder for
up to an additional 150,000 Warrant Shares as follows: the additional shares will vest and become
exercisable at the rate of 3,125 Warrant Shares per calendar month beginning June 30, 2004 or, if
earlier, at any time after the Company has received final marketing approval by the U.S. Food and
Drug Administration for its first product; provided, however, that in the event that the Expiration
Date of this Warrant is caused by any of the events listed in subsections (ii)(a) or (ii)(b) of the
first paragraph of this Warrant, this Warrant will become fully vested and fully exercisable for
all additional 150,000 Warrant Shares immediately prior to the occurrence of such event.

     2. Exercise of Warrant; Partial Exercise. This Warrant may be exercised in full by
the Holder by surrender of this Warrant, together with the Holder’s duly executed form of
subscription attached hereto as Schedule 1, to the Company at its principal office, accompanied by
payment, in cash or by certified or official bank check payable to the order of the Company, of the
aggregate exercise price (as determined above) of the number of Warrant Shares to be purchased
hereunder. The exercise of this Warrant pursuant to this Section 2 shall be deemed to have been
effected immediately prior to the close of business on the business day on which this Warrant is
surrendered to the Company as provided in this Section 2, and at such time the person in whose name
any certificate for Warrant Shares shall be issuable upon such exercise shall be deemed to be the
record holder of such Warrant Shares for all purposes. As soon as practicable after the exercise
of this Warrant, the Company at its expense will cause to be issued in the name of and delivered to
the Holder, or as the Holder may direct, a certificate or certificates for the number of fully paid
and nonassessable full shares of Warrant Shares to which the Holder shall be entitled on such
exercise, together with cash, in lieu of any fraction of a share, equal to such fraction of the
current market value of one full Warrant Share as determined in good faith by the Board of
Directors, and, if applicable, a new warrant evidencing the balance of the shares remaining subject
to the Warrant.

     3. Net Issuance.

          3.1 Right to Convert. Holder shall have the right to pay the Exercise Price in cash or by returning to the Company
owned shares of Company Common Stock valued in accordance with subsections 3.3(1), 3.3(2) and
3.3(3) below. In addition to and without limiting the rights of the Holder under the terms of this
Warrant, the Holder shall have the right to convert this Warrant (the “Conversion Right”) into
Warrant Shares as provided in this Section 3

2

 

at any time or from time to time during the Exercise
Period. Upon exercise of the Conversion Right with respect to shares subject to the Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the Holder (without payment by the Holder
of any exercise price or any cash or other consideration) that number of fully paid and
nonassessable Warrant Shares computed using the following formula:

	 	 	 
	X = 

	Y (A - B)	 
	 

	A	 

     Where X = the number of shares of Warrant Shares to be delivered to the holder

                 Y = the number of Converted Warrant Shares

                 A = the fair market value of one Warrant Share on the Conversion Date (as defined below)

                 B = the per share exercise price of the Warrant (as adjusted to the Conversion Date)

No fractional shares shall be issuable upon exercise of the Conversion Right, and if the number of
shares to be issued determined in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the Holder an amount in cash equal to the fair market value of the
resulting fractional share on the Conversion Date (as defined below). Shares issued pursuant to
the Conversion Right shall be treated as if they were issued upon the exercise of the Warrant.

          3.2 Method of Exercise. The Conversion Right may be exercised by the Holder by the
surrender of the Warrant at the principal office of the Company together with a written statement
specifying that the Holder thereby intends to exercise the Conversion Right and indicating the
total number of shares under the Warrant that the Holder is exercising through the Conversion
Right. Such conversion shall be effective upon receipt by the Company of the Warrant together with
the aforesaid written statement, or on such later date as is specified therein (the “Conversion
Date”). Certificates for the shares issuable upon exercise of the Conversion Right shall be
delivered to the Holder promptly following the Conversion Date.

          3.3 Determination of Fair Market Value. For purposes of this Section 3, fair market
value of a Warrant Share on the Conversion Date shall mean:

               (1) If traded on a stock exchange, the fair market value of the Common Stock shall be deemed
to be the average of the closing selling prices of the Common Stock on the stock exchange
determined by the Board to be the primary market for the Common Stock over the ten (10) trading day
period (or such shorter period immediately following the closing of an initial public offering)
ending on the date prior to the Conversion Date, as such prices are officially quoted in the
composite tape of transactions on such exchange;

               (2) If traded over-the-counter, the fair market value of the Common Stock shall be deemed to
be the average of the closing bid prices (or, if such information is available, the closing selling
prices) of the Common Stock over the ten (10) trading day period (or such shorter period
immediately following the closing of an initial public offering) ending on

3

 

the date prior to the
Conversion Date, as such prices are reported by the National Association of Securities Dealers
through its NASDAQ system or any successor system; and

               (3) If there is no public market for the Common Stock, then the fair market value shall be
determined by the Board of Directors of the Company in good faith.

     4. Limit on Rights of the Holder upon Exercise. The Holder acknowledges and agrees
that upon the exercise of this Warrant in full or in part, the following provisions shall apply to
the rights of the Holder as a holder of shares of the Company’s capital stock:

          4.1 Market Stand-Off Agreement. During the period of duration specified by the
Company and an underwriter of Common Stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act, the Holder or any
future transferee will not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other than to transferees
or donees who agree to be similarly bound) any securities of the Company held by it at any time
during such period except shares of capital stock included in such registration; provided,
however, that such agreement shall not exceed one hundred eighty (180) days and shall only
apply to the Company’s initial public offering.

          In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions
with respect to the Common Stock of the Holder or any future transferee (and the shares or
securities of every other person subject to the foregoing restriction) until the end of such
period.

     5. Adjustments to Warrant Shares. The number and kind of Warrant Shares (or any
shares of stock or other securities which may be) issuable upon the exercise of this Warrant and
the exercise price hereunder shall be subject to adjustment from time to time upon the happening of
certain events, as follows:

          5.1 Dividends, Distributions, Stock Splits or Combinations. If the Company shall at
any time or from time to time after the date hereof make or issue, or fix a record date for the
determination of holders of Warrant Shares entitled to receive, a dividend or other distribution
payable in additional shares of common or preferred stock (as the case may be), then and in each
such event the exercise price hereunder then in effect shall be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the close of
business on such record date, by multiplying the exercise price hereunder then in effect by a
fraction: (a) the numerator of which shall be the total number of Warrant Shares (assuming the
exercise or conversion into Warrant Shares of all outstanding securities of the Company that are
convertible into Warrant Shares and the conversion of all such Warrant Shares into Common Stock)
issued and outstanding immediately prior to the time of issuance or the close of business on such
record date; and (b) the denominator of which shall be the total number of Warrant Shares (assuming
the exercise or conversion into Warrant Shares of all outstanding securities of the Company that
are convertible into Warrant Shares) issued and outstanding immediately after the time of issuance
or the close of business on such record date. If the Company shall at any time subdivide the
outstanding Warrant Shares, or if the Company shall at any time combine the

4

 

outstanding Warrant
Shares, then the exercise price hereunder immediately shall be decreased proportionally (in the
case of a subdivision) or increased proportionally (in the case of a combination). Any such
adjustment shall become effective at the close of business on the date the subdivision or
combination becomes effective.

          5.2 Reclassification or Reorganization. If the Warrant Shares issuable upon the
exercise of this Warrant shall be changed into the same or different number of shares of any class
or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for in Section 5.1 above, or a
reorganization, merger, consolidation or sale of assets provided for in Section 5.3 below), then
and in each such event the Holder shall be entitled to receive upon the exercise of this Warrant
the kind and amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change, to which a holder of the number of Warrant Shares
issuable upon the exercise of this Warrant would have received if this Warrant had been exercised
immediately prior to such reorganization, reclassification or other change, all subject to further
adjustment as provided herein.

          5.3 Merger, Consolidation or Sale of Assets. If at any time or from time to time
there shall be a capital reorganization of the Warrant Shares or a merger, consolidation or sale of
all or substantially all of the assets of the Company (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 5) of the Company,
then as a part of such reorganization, provision shall be made so that the Holder shall thereafter
be entitled to receive upon the exercise of this Warrant, the number of shares of stock or other
securities or property of the Company, resulting from such reorganization, merger, consolidation or
sale, to which a holder of the number of Warrant Shares issuable upon the exercise of this Warrant
would have received if this Warrant had been exercised immediately prior to such reorganization,
merger, consolidation or sale.

          5.4
Notice of Record Dates; Adjustments. In the event of, at any time prior to the
Expiration Date, the consolidation or merger of the Company with or into
another Company (other than a merger solely to effect a reincorporation of the Company into another
state), or the sale or other disposition of all or substantially all the properties and assets of
the Company in its entirety to any other person, the Company shall provide to the Holder twenty
(20) days advance written notice of such consolidation, merger or sale or other
disposition of the Company’s assets, and this Warrant shall terminate unless exercised
prior to the occurrence of such consolidation, merger or sale or other disposition of the Company’s
assets. The Company shall promptly notify the Holder in writing of each adjustment or
readjustment of the exercise price hereunder and the number of Warrant Shares issuable upon the
exercise of this Warrant. Such notice shall state the adjustment or readjustment and show in
reasonable detail the facts on which that adjustment or readjustment is based.

     6. Treatment of Common Stock Equivalents. For purposes of Section (b) on the first
page of this Warrant:

          6.1 The aggregate maximum number of shares of Common Stock deliverable upon conversion,
exchange or exercise (assuming the satisfaction of any conditions to

5

 

convertibility,
exchangeability or exercisability, including, without limitation, the passage of time, but without
taking into account potential antidilution adjustments) of any Common Stock Equivalents and
subsequent conversion, exchange or exercise thereof shall be deemed to have been issued at the time
such securities were issued or such Common Stock Equivalents were issued and for a consideration
equal to the consideration, if any, received by the Company for any such securities and related
Common Stock Equivalents (excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received by the Company
(without taking into account potential antidilution adjustments) upon the conversion, exchange or
exercise of any Common Stock Equivalents (the consideration in each case to be determined in the
manner provided pursuant to this Warrant).

          6.2 In the event of any change in the number of shares of Common Stock deliverable or in the
consideration payable to the Company upon conversion, exchange or exercise of any Common Stock
Equivalents, other than a change resulting from the antidilution provisions thereof, the Exercise
Price, to the extent in any way affected by or computed using such Common Stock Equivalents, shall
be recomputed to reflect such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon the conversion, exchange or
exercise of such Common Stock Equivalents.

          6.3 Upon the termination or expiration of the convertibility, exchangeability or
exercisability of any Common Stock Equivalents, the Exercise Price, to the extent in any way
affected by or computed using such Common Stock Equivalents, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and Common Stock Equivalents that remain
convertible, exchangeable or exercisable) actually issued upon the conversion, exchange or exercise
of such Common Stock Equivalents.

     7. Replacement of Warrants. On receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its expense will execute
and deliver to the Holder, in lieu thereof, a new Warrant of like tenor.

     8. No Rights or Liability as a Stockholder. This Warrant does not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Company. No provisions hereof,
in the absence of affirmative action by the Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder as
a stockholder of the Company.

     9. Miscellaneous.

          9.1 Transfer of Warrant. This Warrant shall not be transferable or assignable in any
manner and no interest shall be pledged or otherwise encumbered by Holder without the express
written consent of the Company, and any such attempted disposition of this Warrant or any portion
hereof shall be of no force or effect unless such disposition is in compliance with the Purchase
Agreement.

6

 

          9.2 Titles and Subtitles. The titles and subtitles used in this Warrant are for
convenience only and are not to be considered in construing or interpreting this Warrant.

          9.3 Notices. Any notice required or permitted under this Warrant shall be given in
writing.

          9.4 Attorneys’ Fees. If any action at law or in equity is necessary to enforce or
interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs and disbursements in addition to any other relief to which such party may be
entitled.

          9.5 Amendments and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a particular instance
and either retroactively or prospectively), with the written consent of the Company and the holder
of this Warrant. Any amendment or waiver effected in accordance with this Section 9.5 shall be
binding upon the Holder of this Warrant (and of any securities into which this Warrant is
convertible), each future holder of all such securities, and the Company.

          9.6 Severability. If one or more provisions of this Warrant are held to be
unenforceable under applicable law, such provision shall be excluded from this Warrant and the
balance of the Warrant shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.

          9.7 Governing Law. This Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of California, without giving effect to its conflicts of laws
principles.

          9.8 Counterparts. This Warrant may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     10. Holder Acknowledgments and Representations. Holder:

          (a) Acknowledges that prior to the date of this Warrant, he has accepted the positions of
director, and Chairman of the Board of Directors, of the Company, and has had the opportunity to
ask questions and receive all information he deems relevant to the Company and this Warrant.

          (b) Understands this Warrant may constitute a “security” under federal and/or state securities
laws, and represents that he is acquiring the Warrant, together with any Common shares of Common
Stock which may be acquired upon exercise of the Warrant, for his own account for investment
purposes, and not with a view to resale or distribution of all or any portion thereof.

          (c) Acknowledges that the Company is an emerging company subject to all the risks inherent in
such companies including, without limitation, a current weak financial condition and no certainty
of a successful product.

7

 

          (d) Confirms that he has been encouraged to consult with personal legal counsel regarding this
Warrant.

     11. Amendment and Restatement of Prior Warrant. The Company and Holder confirm that
the original Common Stock Purchase Warrant issued to Holder on June 7, 2004 (the “Prior Warrant”)
is hereby amended in its entirety and restated herein. Upon execution and delivery of this
Warrant, all of the terms and conditions set forth in this Warrant shall supersede and replace the
terms and conditions set forth in the Prior Warrant, and the Prior Warrant shall have no further
force or effect.

8

 

Date: June 9, 2006

	 	 	 	 	 	 	 
	 	 	ARTES MEDICAL, INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter C. Wulff
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Peter C. Wulff	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 

[SIGNATURE PAGE TO WARRANT]

9

 

SCHEDULE 1

FORM OF SUBSCRIPTION

(To be signed only on exercise of Warrant)

To: ARTES MEDICAL, INC.

     The undersigned, the holder of the Warrant attached hereto, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and to purchase thereunder,
                    * shares of Common Stock of Artes Medical, Inc., and herewith makes payment of
$                                         therefor, and requests that the certificates for such shares be issued in the name
of, and delivered to                                         , whose address is                                
      .

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	(Signature must conform in all respects to name of
the Holder as specified on the face of the Warrant)
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	(Print Name)
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	 
	 

	 	 
	 

	 	(Address)
	Dated:                                         
	 	 

 

			
	*	 	Insert here the number of shares as to which the Warrant is being exercised.

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