1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------------- -----------------------
Commission File Number: 0-23490
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VIVUS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-3136179
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification Number)
545 MIDDLEFIELD ROAD, SUITE 200 MENLO PARK, CA 94025
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(415) 325-5511
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At August 8, 1996, 16,162,434 shares of common stock were outstanding.
Exhibit index on page 28
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
A former consultant to the Company has claimed that he is the inventor
of certain technology disclosed in two of the Company's patents. The former
consultant further claims that the Company defrauded him by allegedly failing to
inform him that it intended to use and patent this technology and by failing to
compensate him for the technology in the manner allegedly promised. On May 28,
1996, the Company filed a complaint for declaratory judgment against the former
consultant in the United States District Court for the Northern District of
California, which seeks a declaration from the court that the former consultant
is not an inventor of any of the technology disclosed in the patent. On July 17,
1996, the former consultant filed a lawsuit which seeks to have two of the
Company's patents declared invalid on the grounds that they fail to list him as
an inventor. In a separate matter, on April 10, 1996, the licensors in an
agreement by which the Company acquired a patent license filed a lawsuit in a
Texas State court that alleges that they were defrauded in connection with the
renegotiation of the license agreement between the Company and the licensors. On
May 8, 1996, the action was removed to the United States District Court for the
Western District of Texas. In addition to monetary damages, the licensors seek
to return to the terms of the original license agreement. The Company has
conducted a review of the circumstances surrounding these two matters and
believes that the allegations are without merit. Although the Company believes
that it should prevail, the uncertainties inherent in litigation prevent the
Company from giving any assurances about the outcome of such litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of stockholders was held on May 16, 1996. Matters voted on at
that meeting were: (i) a proposal to amend the bylaws to provide for a variable
number of directors from five (5) to seven (7), with the number initially set at
six (6); (ii) the election of the Company's directors; (iii) a proposal to
approve the reincorporation of VIVUS, Inc. from California to Delaware, and (iv)
a proposal to confirm the appointment of Arthur Andersen LLP as the independent
public accountants of the Company for fiscal year 1996. Tabulation for each
proposal and individual director were as follows:
Proposal I To amend the bylaws to provide for a variable number of
directors from five (5) to seven (7), with the number to be
initially set at six (6).
FOR AGAINST ABSTAIN NON-VOTE
---------- ------- ------- --------
11,037,691 142,959 8,448 153,163
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Proposal II To elect six directors to serve until the next Annual Meeting
of Stockholders and until their successors are duly elected and
qualified
NOMINEE FOR WITHHELD
-------------------- ---------- --------
Richard L. Casey 11,296,383 45,878
Samuel D. Colella 11,296,833 45,428
Brian H. Dovey 11,296,433 45,828
Peter Barton Hutt 11,288,383 53,878
Virgil A. Place, M.D. 11,296,333 45,928
Leland F. Wilson 11,296,433 45,828
Proposal III To approve the reincorporation of VIVUS, Inc. from California
to Delaware.
FOR AGAINST ABSTAIN NON-VOTE
---------- ------- ------- ---------
8,342,424 409,544 27,843 2,562,450
Proposal IV To confirm the appointment of Arthur Andersen LLP
as the independent public accountants of the Company
for fiscal year 1996.
FOR AGAINST ABSTAIN NON-VOTE
---------- ------- ------- --------
11,323,502 11,487 7,272 0
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits (in accordance with Item 601 of Regulation S-K)
3.1 Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
*+10.1 Assignment Agreement by and between Alza Corporation and
the Registrant dated December 31, 1993
*+10.2 Memorandum of Understanding by and between Ortho
Pharmaceutical Corporation and the Registrant dated
February 25, 1992
*10.3 Assignment Agreement by and between Ortho Pharmaceutical
Corporation and the Registrant dated June 9, 1992
*+10.4 License Agreement by and between Gene A. Voss, M.D., Allen
C. Eichler, M.D., and the Registrant dated December 28,
1992
*+10.5A License Agreement by and between Ortho Pharmaceutical
Corporation and Kjell Holmquist AB dated June 23, 1989
*+10.5B Amendment by and between Kjell Holmquist AB and the
Registrant dated July 3, 1992
*10.5C Amendment by and between Kjell Holmquist AB and the
Registrant dated April 22, 1992
*+10.5D Stock Purchase Agreement by and between Kjell Holmquist
AB and the Registrant dated April 22, 1992
*+10.6A License Agreement by and between Amsu, Ltd., and Ortho
Pharmaceutical Corporation dated June 23, 1989
*+10.6B Amendment by and between Amsu, Ltd., and the Registrant
dated July 3, 1992
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*10.6C Amendment by and between Amsu, Ltd., and the Registrant
dated April 22, 1992
*+10.6D Stock Purchase Agreement by and between Amsu, Ltd., and
the Registrant dated July 10, 1992
*10.7 Supply Agreement by and between Paco Pharmaceutical
Services, Inc., and the Registrant dated November 10, 1993
*+10.8 Agreement by and among Pharmatech, Inc., Spolana Chemical
Works AS, and the Registrant dated June 23, 1993
*10.9 Master Services Agreement by and between the Registrant
and Teknekron Pharmaceutical Systems dated August 9, 1993
*10.10 Lease by and between McCandless-Triad and the Registrant
dated November 23, 1992, as amended
***10.11 Form of Indemnification Agreements by and among the
Registrant and the Directors and Officers of the
Registrant
**10.12 1991 Incentive Stock Plan and Form of Agreement, as
amended
*10.13 1994 Director Option Plan and Form of Agreement
*10.14 Form of 1994 Employee Stock Purchase Plan and Form of
Subscription Agreement
*10.15 Stock Restriction Agreement between the Company and Virgil
A. Place, M.D. dated November 7, 1991
*10.16 Stock Purchase Agreement between the Company and Leland F.
Wilson dated June 26, 1991, as amended
*10.17 Letter Agreement between the Registrant and Leland F.
Wilson dated June 14, 1991 concerning severance pay
*10.18 Letter Agreement between the Registrant and Paul Doherty
dated January 26, 1994 concerning severance pay
**10.19 Guaranteed Maximum Price Contract by and between the
Registrant and Marshall Contractors, Inc. dated January
27, 1995
**10.20 Sub-lease by and among the Registrant, Argonaut
Technologies, Inc., ESCAgenetics Corp. and Tanklage
Construction Co. dated March 13, 1995
****+10.21 Distribution Services Agreement between the Registrant and
Synergy Logistics, Inc. (a wholly-owned subsidiary of
Cardinal Health, Inc.) dated February 9, 1996
****+10.22 Manufacturing Agreement between the Registrant and CHINOIN
Pharmaceutical and Chemical Works Co., Ltd. dated December
20, 1995
+ 10.23 Distribution and Services Agreement between the Registrant
and Alternate Site Distributors, Inc. dated July 17, 1996
*****+10.24 Distribution Agreement made as of May 29, 1996 between the
Registrant and Astra AB
******11.1 Computation of net loss per share
******27.1 Financial Data Schedule
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* Incorporated by reference to the same-numbered exhibit filed with the
Registrant's Registration Statement on Form S-1 No. 33-75698.
** Incorporated by reference to the same-numbered exhibit filed with the
Registrant's Registration Statement on Form S-1 No. 33-90390.
*** Incorporated by reference to the same-numbered exhibit filed with the
Registrant's Form 8-B filed with the Commission on June 24, 1996
**** Incorporated by reference to the same-numbered exhibit filed with the
Registrant's Quarterly Report on Form 10Q for the quarter ended March
31, 1996.
***** Incorporated by reference to the same numbered exhibit filed with the
Registrant's Current Report on Form 8-K/A filed with the Commission on
June 21, 1996.
****** Incorporated by reference to the same numbered exhibits filed
with the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996.
+ Confidential treatment granted.
(b) Reports on Form 8-K
The following reports on Form 8-K have been filed during the quarter
for which this report is filed:
(i) On May 31, 1996, the Company filed a Current Report on Form 8-K
("Form 8-K") to report that on May 29, 1996, VIVUS International Limited, a
wholly owned subsidiary of the Company, entered into a distribution agreement
(the "Distribution Agreement") with Astra AB. Simultaneously with the filing of
Form 8-K, the Company requested confidential treatment for the Distribution
Agreement.
(ii) On June 21, 1996, the Company filed Amendment No. 1 to Form
8-K/A solely for the purpose of filing a revised version of the Distribution
Agreement, which omitted only those portions for which confidential treatment
had been granted.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIVUS, Inc.
Date: November 19, 1996 /s/ DAVID C. YNTEMA
----------------- ---------------------------
David C. Yntema
Chief Financial
Officer
/s/ LELAND F. WILSON
---------------------------
Leland F. Wilson
President and Chief
Executive Officer
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VIVUS, INC.
INDEX TO EXHIBITS
Exhibit Description
- ------- ---------------------------------------------------
3.1 Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
10.23 Distribution and Services Agreement between the
Registrant and Alternate Site Distributors, Inc.
dated July 17, 1996
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EXHBIT 3.1
CERTIFICATE OF INCORPORATION
OF
VIVUS, INC.
ARTICLE I
The name of the corporation is VIVUS, Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of shares of stock to be
designated, respectively, Common Stock, $0.001 par value, and Preferred Stock,
$0.001 par value. The total number of shares that the Corporation is authorized
to issue is 35,000,000 shares. The number of shares of Common Stock authorized
is 30,000,000. The number of shares of Preferred authorized is 5,000,000.
The Preferred Stock may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue duly adopted by
the board of directors (authority to do so being hereby expressly vested in the
board). The board of directors is further authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such series of Preferred
Stock. The board of directors, within the limits and restrictions stated in any
resolution or resolutions of the board of directors originally fixing the number
of shares constituting any series, may increase or decrease (but not below the
number of shares in any such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that series.
The authority of the board of directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and the number
of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series
shall be declared and paid, or set aside for payment, whether dividends at
the rate so determined shall be cumulative or accruing, and whether the
shares of such class or series shall be entitled to any participating or
other dividends in addition to dividends at the rate so determined, and if
so, on what terms;
(c) the right or obligation, if any, of the corporation to redeem
shares of the particular class or series of Preferred Stock and, if
redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
2
(e) the terms and conditions, if any, upon which shares of such class
or series shall be convertible into, or exchangeable for, shares of capital
stock of any other class or series, including the price or prices or the
rate or rates of conversion or exchange and the terms of adjustment, if
any;
(f) the obligation, if any, of the corporation to retire, redeem or
purchase shares of such class or series pursuant to a sinking fund or fund
of a similar nature or otherwise, and the terms and conditions of such
obligation;
(g) voting rights, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series of
Preferred Stock;
(h) limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred
Stock; and
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the board of directors of the
corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the General
Corporation Law of the State of Delaware as the same exists or as may hereafter
be amended, a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII, nor
the adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article VII, shall eliminate or reduce the effect of this
Article VII, in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article VII, would accrue or arise,
prior to such amendment, repeal, or adoption of an inconsistent provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or converted
pursuant to the terms hereof, the shares so converted or redeemed shall not
revert to the status of authorized but unissued shares, but instead shall be
canceled and shall not be re-issuable by the Corporation.
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ARTICLE IX
Holders of stock of any class or series of this corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting is
required pursuant to Sections 2115 and/or 301.5 of the California Corporations
Code, in which event each such holder shall be entitled to as many votes as
shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and the holder may cast all of such votes for a
single director or may distribute them among the number of directors to be voted
for, or for any two or more of them as such holder may see fit, so long as the
name of the candidate for director shall have been placed in nomination prior to
the voting and the stockholder, or any other holder of the same class or series
of stock, has given notice at the meeting prior to the voting of the intention
to cumulate votes.
ARTICLE X
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the corporation shall be designated in the Bylaws of
the corporation.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Bylaws of the corporation shall so provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Bylaws of the corporation.
ARTICLE XII
No action shall be taken by the stockholders of the corporation except at
an annual or special meeting of the stockholders called in accordance with the
Bylaws of the corporation, and no action shall be taken by the stockholders by
written consent.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE XIV
The name and mailing address of the incorporator are:
Marnia Nichols, Esq.
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
The undersigned incorporator hereby acknowledges that the above Certificate
of Incorporation of VIVUS, Inc. is her act and deed and that the facts stated
therein are true.
Dated: May 16, 1996
/s/ MARNIA NICHOLS
--------------------------------------
Marnia Nichols
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EXHIBIT 3.2
BYLAWS
OF
VIVUS, INC.
(A DELAWARE CORPORATION)
2
BYLAWS OF
VIVUS, INC.
(A DELAWARE CORPORATION)
TABLE OF CONTENTS
ARTICLE I -- CORPORATE OFFICES........................................................ 1
1.1 REGISTERED OFFICE............................................................ 1
1.2 OTHER OFFICES................................................................ 1
ARTICLE II -- MEETINGS OF STOCKHOLDERS................................................ 1
2.1 PLACE OF MEETINGS............................................................ 1
2.2 ANNUAL MEETING............................................................... 1
2.3 SPECIAL MEETING.............................................................. 1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS............................................. 2
2.5 NOTIFICATIONS OF NOMINATIONS AND PROPOSED BUSINESS........................... 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE................................. 3
2.7 QUORUM....................................................................... 3
2.8 ADJOURNED MEETING; NOTICE.................................................... 3
2.9 VOTING....................................................................... 3
WAIVER OF NOTICE............................................................. 4
2.10
RECORD DATE FOR STOCKHOLDER NOTICE; VOTING................................... 4
2.11
PROXIES...................................................................... 4
2.12
ORGANIZATION................................................................. 4
2.13
LIST OF STOCKHOLDERS ENTITLED TO VOTE........................................ 5
2.14
ARTICLE III -- DIRECTORS.............................................................. 5
3.1 POWERS....................................................................... 5
3.2 NUMBER OF DIRECTORS.......................................................... 5
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS..................................... 5
3.4 RESIGNATION AND VACANCIES.................................................... 5
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE..................................... 6
3.6 REGULAR MEETINGS............................................................. 6
3.7 SPECIAL MEETINGS; NOTICE..................................................... 6
3.8 QUORUM....................................................................... 7
3.9 WAIVER OF NOTICE............................................................. 7
ADJOURNMENT.................................................................. 7
3.10
NOTICE OF ADJOURNMENT........................................................ 7
3.11
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING............................ 7
3.12
FEES AND COMPENSATION OF DIRECTORS........................................... 8
3.13
APPROVAL OF LOANS TO OFFICERS................................................ 8
3.14
ARTICLE IV -- COMMITTEES.............................................................. 8
4.1 COMMITTEES OF DIRECTORS...................................................... 8
4.2 MEETINGS AND ACTION OF COMMITTEES............................................ 9
4.3 COMMITTEE MINUTES............................................................ 9
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ARTICLE V -- OFFICERS................................................................. 9
5.1 OFFICERS..................................................................... 9
5.2 ELECTION OF OFFICERS......................................................... 9
5.3 SUBORDINATE OFFICERS......................................................... 9
5.4 REMOVAL AND RESIGNATION OF OFFICERS.......................................... 9
5.5 VACANCIES IN OFFICES......................................................... 10
5.6 CHAIRMAN OF THE BOARD........................................................ 10
5.7 PRESIDENT.................................................................... 10
5.8 VICE PRESIDENTS.............................................................. 10
5.9 SECRETARY.................................................................... 10
CHIEF FINANCIAL OFFICER...................................................... 10
5.10
ARTICLE VI -- INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS.....
11
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.................................... 11
6.2 INDEMNIFICATION OF OTHERS.................................................... 11
6.3 INSURANCE.................................................................... 12
ARTICLE VII -- RECORDS AND REPORTS.................................................... 12
7.1 MAINTENANCE AND INSPECTION OF RECORDS........................................ 12
7.2 INSPECTION BY DIRECTORS...................................................... 12
7.3 ANNUAL STATEMENT TO STOCKHOLDERS............................................. 12
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS............................... 12
7.5 CERTIFICATION AND INSPECTION OF BYLAWS....................................... 13
ARTICLE VIII -- GENERAL MATTERS....................................................... 13
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING........................ 13
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS.................................... 13
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED............................ 13
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES............................. 13
8.5 SPECIAL DESIGNATION ON CERTIFICATES.......................................... 14
8.6 LOST CERTIFICATES............................................................ 14
8.7 TRANSFER AGENTS AND REGISTRARS............................................... 14
8.8 CONSTRUCTION; DEFINITIONS.................................................... 14
ARTICLE IX -- AMENDMENTS.............................................................. 15
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BYLAWS
OF
VIVUS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
CORPORATE OFFICES
1.1 Registered Office
The registered office of the corporation shall be fixed in the certificate
of incorporation of the corporation.
1.2 Other Offices
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings
Meetings of stockholders shall be held at any place within or outside the
State of Delaware designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 Annual Meeting
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such designation,
the annual meeting of stockholders shall be held on the third Tuesday of May in
each year at 10:00 a.m. However, if such day falls on a legal holiday, then the
meeting shall be held at the same time and place on the next succeeding full
business day. At the meeting, directors shall be elected, and any other proper
business may be transacted.
2.3 Special Meeting
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the stockholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of stockholders called by action of the board of directors may be held.
1
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2.4 Notice of Stockholders' Meetings
All notices of meetings of stockholders shall be sent or otherwise given in
accordance with Section 2.6 of these bylaws not less than ten (10) (or, if sent
by third-class mail pursuant to Section 2.6 of these bylaws, thirty (30)) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the stockholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
2.5 Notifications of Nominations and Proposed Business.
Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,
(a) nominations for the election of directors, and
(b) business proposed to be brought before any stockholder meeting may
be made by the Board of Directors or proxy committee appointed by the Board
of Directors or by any stockholder entitled to vote in the election of
directors generally if such nomination or business proposed is otherwise
proper business before such meeting. However, any such stockholder may
nominate one or more persons for election as directors at a meeting or
propose business to be brought before a meeting, or both, only if such
stockholder has given timely notice in proper written form of his intent to
make such nomination or nominations or to propose such business. To be
timely, such stockholder's notice must be delivered to or mailed and
received by the Secretary of the corporation not less than thirty-five (35)
days nor more than sixty (60) days prior to the meeting; provided, however,
that in the event that less than forty-five (45) days notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the day on
which such notice of the date of the meeting was mailed or such public
disclosure was made. To be in proper form, a stockholder's notice to the
Secretary shall set forth:
(i) the name and address of the stockholder who intends to make the
nominations or propose the business and, as the case may be, of the
person or persons to be nominated or of the business to be proposed;
(ii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;
(iv) such other information regarding each nominee or each matter
of business to be proposed by such stockholder as would be required to
be included in a proxy statement filed pursuant to the proxy rules of
the Securities and Exchange Commission had the nominee been nominated,
or intended to be nominated, or the matter been proposed, or intended to
be proposed by the Board of Directors; and
(v) if applicable, the consent of each nominee to serve as director
of the corporation if so elected.
The Chairman of the meeting shall refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.
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2.6 Manner of Giving Notice; Affidavit of Notice
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 Quorum
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 Adjourned Meeting; Notice
When a meeting is adjourned to another time and place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 Voting
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the articles of incorporation or
these bylaws, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder and stockholders shall not be entitled to
cumulate their votes in the election of directors of with respect to any matter
submitted to a vote of the stockholders.
Notwithstanding the foregoing, if the stockholders of the corporation are
entitled, pursuant to Sections 2115 and 301.5 of the California Corporations
Code, to cumulate their votes in the election of directors, each such
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes that such stockholder normally
is entitled to cast) only if the candidates'
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names have been properly placed in nomination (in accordance with these bylaws)
prior to commencement of the voting, and the stockholder requesting cumulative
voting has given notice prior to commencement of the voting of the stockholder's
intention to cumulate votes. If cumulative voting is properly requested, each
holder of stock, or of any class or classes or of a series or series thereof,
who elects to cumulate votes shall be entitled to as many votes as equals the
number of votes that (absent this provision as to cumulative voting) he or she
would be entitled to cast for the election of directors with respect to his or
her shares of stock multiplied by the number of directors to be elected by him,
and he or she may cast all of such votes for a single director or may distribute
them among the number to be voted for, or for any two or more of them, as he or
she may see fit.
2.10 Waiver of Notice
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.11 Record Date For Stockholder Notice; Voting
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section 8.1
of these bylaws.
2.12 Proxies
Every person entitled to vote for directors, or on any other matter, shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date unless the proxy provides for a longer period. A proxy shall
be deemed signed if the stockholder's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
2.13 Organization
The president, or in the absence of the president, the chairman of the
board, or, in the absence of the president and the chairman of the board, one of
the corporation's vice presidents, shall call the meeting of the
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stockholders to order, and shall act as chairman of the meeting. In the absence
of the president, the chairman of the board, and all of the vice presidents, the
stockholders shall appoint a chairman for such meeting. The chairman of any
meeting of stockholders shall determine the order of business and the procedures
at the meeting, including such matters as the regulation of the manner of voting
and the conduct of business. The secretary of the corporation shall act as
secretary of all meetings of the stockholders, but in the absence of the
secretary at any meeting of the stockholders, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
2.14 List of Stockholders Entitled to Vote
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 Powers
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation and these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 Number of Directors
The board of directors shall be not less than five (5) nor more than seven
(7) members. The exact number of directors shall be six (6) until changed,
within the limits specified above by a bylaw amending this Section 3.2 duly
adopted by the board of directors or by the stockholders. The indefinite number
of directors may be changed, or a definite number may be fixed without provision
for an indefinite number, by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 Election and Term of Office of Directors
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Each director, including a director elected or appointed to fill
a vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
3.4 Resignation and Vacancies
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
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Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or
by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the
directors elected by such class or classes or series thereof then in
office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 Place of Meetings; Meetings by Telephone
Regular meetings of the board of directors may be held at any place within
or outside the State of Delaware that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not stated
in the notice or if there is no notice, at the principal executive office of the
corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 Regular Meetings
Regular meetings of the board of directors may be held without notice if
the times of such meetings are fixed by the board of directors. If any regular
meeting day shall fall on a legal holiday, then the meeting shall be held next
succeeding full business day.
3.7 Special Meetings; Notice
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
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Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 Quorum
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 3.10
of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and other applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.9 Waiver of Notice
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
3.10 Adjournment
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
3.11 Notice of Adjournment
Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four (24) hours. If
the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 Board Action by Written Consent Without a Meeting
Any action required or permitted to be taken by the board of directors may
be taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board.
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3.13 Fees and Compensation of Directors
Directors and members of committees may receive such compensation, if any,
for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 Approval of Loans to Officers
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
ARTICLE IV
COMMITTEES
4.1 Committees of Directors
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have and may exercise all
the powers and authority of the board, but no such committee shall have the
power of authority to:
(a) amend the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing
for the issuance of shares of stock adopted by the board of directors as
provided in Section 151(a) of the General Corporation Law of Delaware, fix
the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets
of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same
or any other class or classes of stock of the corporation);
(b) adopt an agreement of merger or consolidation under Sections 251
or 252 of the General Corporation Law of Delaware;
(c) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets;
(d) recommend to the stockholders a dissolution of the corporation or
a revocation of a dissolution; or
(e) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power
or authority to declare a dividend, to authorize the issuance of stock, or
to adopt a certificate of ownership and merger pursuant to Section 253 of
the General Corporation Law of Delaware.
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4.2 Meetings and Action of Committees
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
4.3 Committee Minutes
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 Officers
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, one or more vice presidents, one or
more assistant secretaries, one or more assistant treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 5.3 of
these bylaws. Any number of offices may be held by the same person.
5.2 Election of Officers
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws,
shall be chosen by the board, subject to the rights, if any, of an officer under
any contract of employment.
5.3 Subordinate Officers
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 Removal and Resignation of Officers
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
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5.5 Vacancies in Offices
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 Chairman of the Board
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 President
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 Vice Presidents
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
president or the chairman of the board.
5.9 Secretary
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors and stockholders. The minutes shall show the time and place of each
meeting, whether regular or special (and, if special, how authorized and the
notice given), the names of those present at directors' meetings or committee
meetings, the number of shares present or represented at stockholders' meetings,
and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
5.10 Chief Financial Officer
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including
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accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital, retained earnings, and shares. The books of account shall at all
reasonable times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 Indemnification of Directors and Officers
The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware as the same now exists or may hereafter
be amended, indemnify any person against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding in which such person was or is a party or is threatened to be made
a party by reason of the fact that such person is or was a director or officer
of the corporation. For purposes of this Section 6.1, a "director" or "officer"
of the corporation shall mean any person (i) who is or was a director or officer
of the corporation, (ii) who is or was serving at the request of the corporation
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees) incurred
by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director of officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be exclusive
of any other rights which such person may have or hereafter acquire under any
statute, provision of the corporation's Certificate of Incorporation, these
bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 Indemnification of Others
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of
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this Section 6.2, an "employee" or "agent" of the corporation (other than a
director or officer) shall mean any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.3 Insurance
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 Maintenance and Inspection of Records
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 Inspection by Directors
Any director shall have the right to examine (and to make copies of) the
corporation's stock ledger, a list of its stockholders and its other books and
records for a purpose reasonably related to his or her position as a director.
7.3 Annual Statement to Stockholders
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 Representation of Shares of Other Corporations
The chairman of the board, if any, the president, any vice president, the
chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
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7.5 Certification and Inspection of Bylaws
The original or a copy of these bylaws, as amended or otherwise altered to
date, certified by the secretary, shall be kept at the corporation's principal
executive office and shall be open to inspection by the stockholders of the
corporation, at all reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 Record Date for Purposes Other Than Notice and Voting
For purposes of determining the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any other lawful
action (other than action by stockholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
stockholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the General Corporation Law of Delaware.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution.
8.2 Checks; Drafts; Evidences of Indebtedness
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 Corporate Contracts and Instruments: How Executed
The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 Stock Certificates; Transfer; Partly Paid Shares
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by, the chairman or vice-chairman
of the board of directors, or the president or vice-president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
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Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 Special Designation on Certificates
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.6 Lost Certificates
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 Transfer Agents and Registrars
The board of directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, each of which shall be an incorporated bank
or trust company -- either domestic or foreign, who shall be appointed at such
times and places as the requirements of the corporation may necessitate and the
board of directors may designate.
8.8 Construction; Definitions
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the
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generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both a
corporation and a natural person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote or by the board of directors of
the corporation. The fact that such power has been so conferred upon the
directors shall not divest the stockholders of the power, nor limit their power
to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.
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EXHIBIT 10.23
DISTRIBUTION AND SERVICES AGREEMENT
This Agreement is made July 17, 1996, between VIVUS, Inc., a California
corporation ("VIVUS") and Alternate Site Distributors, Inc., a California
corporation ("ASD").
Background Information
A. VIVUS is, among other things, in the business of manufacturing,
selling, and distributing pharmaceutical and therapeutic products in the United
States.
B. ASD is, among other things, in the business of purchasing
pharmaceutical products for resale to alternate care markets, including to
physician offices, and in the business of providing telemarketing to physicians
and providing customer service to physicians and manufacturer's sales
representatives.
C. VIVUS desires to engage ASD (as limited pursuant to the terms of
Section 2 below), for various services relating to its Products (as such term is
defined in Appendix A attached hereto) including its first advanced
pharmacological and therapeutic product and application system for the treatment
of erectile dysfunction known as MUSE(R) (aplprostadil) ("MUSE") as (1) its
primary agent on a non-exclusive basis for distribution and reporting of all
samples (as such term is defined in Appendix A attached hereto) which VIVUS
shall provide in its sole discretion for distribution in the United States, (2)
its primary agent on a non-exclusive basis for storage, distribution and
reporting of all promotional and literature marketing materials developed by
VIVUS for the Products which VIVUS shall provide in its sole discretion for
distribution in the United States, (3) its primary telemarketing agent on a
non-exclusive basis in the United States, and (4) an agent for servicing 1-800
customer service line(s) to be accessed by U.S. physicians and VIVUS's U.S.
sales representatives for the Products. VIVUS also desires to identify ASD to it
called on physician practices in the United States for Products as a
competitively priced, full service physician supplier for VIVUS's trade
pharmaceutical products listed in Exhibit A, and such other products that may be
added to Exhibit A by VIVUS and ASD from time to time. All services to be
performed by ASD are described in this Agreement, and are to be performed upon
the terms and conditions set forth in this Agreement.
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Statement of Agreement
VIVUS and ASD (the "Parties") hereby acknowledge the accuracy of the
above background information and agree as follows:
1. Definitions. Except as otherwise provided in this Agreement,
capitalized terms used herein shall have the respective meanings assigned
thereto in Appendix A for all purposes hereof (all definitions shall be equally
applicable to both singular and plural forms of the terms defined.)
2. Appointment. (a) Upon the terms and conditions described in this
Agreement, VIVUS hereby appoints ASD: (i) as its primary agent on a
non-exclusive basis for distribution of Samples to physicians as selected and
approved by VIVUS in the United States, (ii) as its primary agent on a
non-exclusive basis for storage of Marketing Materials for the Products and
distribution, at VIVUS's direction, to physicians in the United States and to
VIVUS's U.S. sales representatives, (iii) as its primary telemarketing agent on
a non-exclusive basis for outbound telemarketing for the Products at VIVUS's
direction to physician practices in the United States, (iv) an agent for
servicing a dedicated VIVUS U.S. customer service operation including VIVUS
owned 1-800 inbound telephone service line(s) to be accessed by U.S. physicians
and VIVUS's U.S. sales representatives. ASD will be a purchaser of Products for
resale to physicians in the United States. VIVUS will identify ASD as a
competitively priced, physician supply alternative for Products and a full
service supply alternative for other physician product and supply needs. This
identification of ASD as a supplier will be provided by VIVUS so long as ASD
represents a competitive, full service (as described in this Section 2) supply
source for the Products. Notwithstanding the foregoing, VIVUS may elect to
appoint other specialty distributors as qualified VIVUS customers for the
purchase of Products for resale to physician practices.
(b) The Services shall be performed in accordance with the following
agreed upon terms and conditions and in accordance with the implementation
timing prescribed in this Agreement and as developed by the joint project team
formed by the Parties. The services described in clause (i), (ii), (iii), and
(iv)of Subparagraph 2(a) above are hereinafter referred to collectively as the
"Services". ASD agrees to use it best efforts to provide the Services and
undertake its other obligations under this Agreement.
(c) Samples. VIVUS will supply Samples at no charge to ASD as
determined by a forecast developed by VIVUS based on a thirty (30) calendar
days' forecasted utilization rate. ASD will warehouse and inventory Samples at
ASD's current distribution
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facility located at 1851 Monetary Lane, Carrollton, TX until its planned
distribution facility to be located in Louisville, KY is opened and fully
operational (the "ASD Facility"). Should ASD begin warehousing operations for
VIVUS at the Carrollton facility, the specific timing of such relocation to the
Louisville facility will be mutually agreed upon by the Parties, with the
objective of minimizing disruption of the Services. ASD shall visually inspect
each shipment of the Samples for external container or package damage or loss in
transit (based upon records provided to ASD from VIVUS) and notify VIVUS when
damage or loss has occurred promptly following discovery by ASD of such damage
or loss. ASD will store all Samples in full compliance with VIVUS's storage and
handling specifications, which are attached hereto as Exhibit B to this
Agreement. Such requirements may be supplemented or amended from time to time by
VIVUS with prior reasonable notice to ASD and ASD's prior approval.
(d) VIVUS shall pay all costs and expenses of delivery for the Samples
to the ASD Facility. VIVUS shall retain title to all Sample inventory until the
Samples are received by physicians selected to receive such Samples, at which
time title shall rest in the party to which the Samples are shipped.
(e) Sample orders will be directed to ASD from VIVUS sales
representatives via telephone, fax, or electronic media and from VIVUS-selected
physicians contacted by ASD, at the direction of VIVUS, through outbound
telemarketing or via mail, e.g. VIVUS developed Business Reply Cards. ASD will
ship Samples after receiving any order that complies with the Requirement(s) of
Law. Standard Operating Procedures ("SOPs") will be developed by ASD and
approved by VIVUS relative to inventory storage and tracking, inventory
handling, inventory variances, disposition of rejected or expired Samples, order
acceptance, fulfillment, and reporting.
(f) ASD will assemble Sample orders on a daily basis rotating inventory
on a First to Expire, First Out ("FEFO") basis. Sample orders will be shipped
via next day air in compliance with SOPs and product handling requirements as
set forth in the attached Exhibit B, to be received by the recipient within 48
hours of a lawful Sample order being received by ASD that complies with
applicable SOPs. ASD will provide proof of delivery or freight claims processing
in the event of lost or damaged shipments.
(g) ASD will provide inventory tracking through its information systems
and will comply with all lot traceability, FEFO rotation, expired product
disposition, and recalls. However, all costs and expenses incurred by ASD
involving product recalls and disposition of Products or Samples because of a
lapse or pending lapse of its expiration date will be for the exclusive account
of VIVUS and billed by ASD as such costs and expenses are incurred. Additional
systems reporting in both electronic and
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hard-copy format will be developed by the Parties and will include, among other
reports, territory activity tracking for both sampling and sales and any
reporting necessary, access to ASD's information systems, however, such access
shall be pursuant to procedures set forth, from time to time, in writing by ASD,
and ASD's internal SOPs for financial and compliance reporting. ASD will provide
VIVUS validation prior to commencement of Sample storage and fulfillment. ASD
will provide VIVUS, on an ongoing basis, remote access, pursuant to procedures
set forth, from time to time, in writing by ASD, into its information systems
for review of VIVUS records and activity.
(h) Marketing Materials. VIVUS will ship all Marketing Materials at no
charge to ASD for storage at the ASD Facility. VIVUS will provide ASD with
sufficient notice of each quantity of Marketing Materials shipped to ASD. Under
normal operating conditions, ASD shall visually inspect each external package of
the Marketing Materials for external damage or loss in transit and notify VIVUS
when damage or loss has occurred promptly following discovery by ASD of such
damage or loss. ASD will store Marketing Materials in compliance with VIVUS's
storage and handling specifications. Such requirements may be supplemented or
amended from time to time by VIVUS with reasonable prior notice to ASD and its
prior approval, which approval shall not be unreasonably withheld.
(i) VIVUS shall pay all costs and expenses of delivering the Marketing
Materials to the ASD Facility. For those Marketing Materials directed to
physicians, VIVUS shall retain title to Marketing Materials inventory until the
Marketing Materials are shipped at VIVUS's direction, at which time title shall
rest in the party to which the Marketing Materials are shipped.
(j) Marketing Materials orders will be directed to ASD by VIVUS sales
representatives or other authorized VIVUS marketing personnel via telephone,
fax, or electronic media. The bulk of the Marketing Materials will be
distributed to VIVUS sales representatives in individualized monthly shipments.
Other Marketing Materials will be shipped to physicians upon request by VIVUS or
by the physicians contacted by ASD, at VIVUS's direction, through outbound
telemarketing. Periodic special shipments will be made to supply convention
requirements or other special marketing needs as specified by VIVUS. SOPs will
be developed by ASD and approved by VIVUS relative to storage, fulfillment and
reporting of Marketing Materials.
(k) VIVUS will provide ASD order fulfillment timing requirements and
all reporting requirements. ASD will ship Marketing Materials utilizing ground
transportation, unless otherwise directed by VIVUS. ASD will establish a
separate manifest system for shipment of Marketing Materials. ASD will
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perform proof of delivery or freight claims processing in the event of lost or
damaged shipments of Marketing Materials.
(l) ASD will provide systems reporting including, among others,
inventory tracking and territory activity tracking in a form as agreed to
between VIVUS and ASD.
(m) Telemarketing. ASD will provide, at VIVUS's direction, outbound
telemarketing services for Products: (i) to build pre-launch awareness and
facilitate sales representative access to physicians upon Product Launch, (ii)
to physician practices not called on by VIVUS's U.S. sales representatives, (a
listing of such physicians to be provided in writing by VIVUS to ASD), (iii) to
physicians in vacant VIVUS sales territories, (a list of such vacant territories
and physicians within such territories to be provided in writing by VIVUS to
ASD), (iv) to develop and at least semi-annually refresh physician profiles, and
(v) to conduct market research. In the course of telemarketing activities, ASD
will accept physician orders for Products provided the physician meets the
customer criteria established by ASD.
(n) VIVUS will identify physicians to be telephoned by ASD and the
frequency of such telephone calls, and develop the telescrip messages to which
ASD will deliver regarding the Products. SOPs will be developed by ASD and
approved by VIVUS. ASD will organize the telemarketing staff so that each
telemarketing service representative ("TSR") has primary responsibility for
specific VIVUS territories and physicians.
(o) ASD will provide a telemarketing software system to manage it
telemarketing activities and to be linked with its customer service system.
Systems reports will be developed by the Parties and will include, among others,
activity reports for each physician and sales territory detailing the
telemarketing calls and the resulting activities including Samples, Marketing
Materials and Products shipped.
(p) Customer Service. ASD will develop a customer service organization
to respond to all VIVUS sales representative and physician inquiries regarding
the Products. A central feature of this customer service is a dedicated, VIVUS
owned 1-800 number(s) with an automated response menu covering various options
for inbound calls from physicians and VIVUS sales representatives. Call options
will include, Marketing Materials ordering, Products ordering from ASD, sample
inquiries, information requests, and options for other VIVUS services, not
provided by ASD. Technical questions will be referred to VIVUS for response.
VIVUS will provide ASD, at no cost or expense to ASD, a dedicated Customer
Service line, and related telephone service which will be
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operated by ASD from 7:00 a.m. to 7:00 p.m., Central Standard Time.
(q) Orders for Products to be shipped by ASD shall be accepted by ASD
by phone, mail, or fax. SOPs will be developed by ASD and approved by VIVUS.
(r) Customer Service representatives will have primary responsibility
for a geographic set of VIVUS sales territories and the physicians within those
geographic territories. A database of VIVUS sales representatives and physicians
will be established by ASD including sales representatives and physician
profiles, physician mapping to sales territories, and relating all activities,
namely Samples, Marketing Materials and Products. This database shall be linked
with the telemarketing software. In establishing the physician profiles, ASD
will utilize profile data provided by VIVUS as well as access current physician
profiles maintained by[*].
(s) A component of the customer services provided by ASD, in
conjunction with [*], is the development of a[*] program for VIVUS targeted
physician customers, including the development of a[*]. Any orders of Products
received by [*] will be accepted by [*] and coordinated for shipment with ASD,
conversely, any orders for [*] products and services received by ASD will be
accepted by ASD and coordinated with [*].
(t) During the first four (4) months immediately following Product
Launch, ASD will provide on a weekly basis, and thereafter on a monthly basis,
electronic and hard-copy reports to VIVUS related to, among others, customer
service activities, physician orders, sales by VIVUS sales territory, nature and
frequency of physician inquiries.
(u) Staffing for Services. ASD will recruit and staff the following
positions to provide the Services:
(i) VIVUS Project Manager -- ASD will recruit applicants for
the ASD Facility for a dedicated VIVUS Project Manager. VIVUS will participate
in the interview process and provide input to the ASD selection decision. VIVUS
will also provide training relative to Products, Samples, Marketing Materials,
and Services to be provided. ASD will have primary responsibility for training.
The hiring date will be mutually agreed upon by the parties and is expected to
commence employment no later than July 31, 1996.
(ii) Customer Service Representatives ("CSRs") -- ASD will
recruit[*] CSRS for the ASD Facility. VIVUS will
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participate in the interview process and provide input to the ASD selection
decisions. VIVUS will provide training for the CSRs relative to Products,
Samples, and Marketing Materials. ASD will have primary responsibility for
Customer Service training. The hiring date will be mutually agreed upon by the
Parties and is expected to be approximately[*] prior to Product Launch.
(iii) Telephone Service Representatives ("TSRs") -- ASD will
recruit[*] dedicated TSRs for the ASD Facility for the Products. VIVUS will
participate in the interview process and provide input to the ASD selection
decisions. VIVUS will provide training of TSRs relative to Products, Samples,
Marketing Materials, and telescrips. ASD will have primary responsibility for
telemarketing training. The hiring date will be mutually agreed upon by the
Parties and is expected to be[*] prior to Product Launch.
Warehouse Supervisor: -- ASD will recruit and select one warehouse
employee who will be knowledgeable about the SOPs relating to the storage and
handling of all Products, Samples, and Marketing Materials. The hiring date will
be mutually agreed upon by the Parties and is expected to be approximately [*]
prior to Product Launch.
3. Targeted Physician Supplier. (a) ASD will purchase Products from
VIVUS for resale to physicians. ASD will develop physician marketing materials
relative to its [*] and its [*] services provided in conjunction with [*]. VIVUS
will identify ASD on selected physician marketing materials as its targeted
physician supplier provided that ASD represents a competitive, full service
supply source for the Products. VIVUS will also communicate the [*], full
service capabilities of ASD and [*] by delivering the[*] developed by ASD and
[*] to its called on physicians provided that ASD represents a competitive, full
service supply source for the Products. ASD shall provide VIVUS notice of ASD
price changes on Products and special discount offers on Products at least [*]
prior to the effective date.
(b) ASD will purchase and take title to Products and will maintain an
adequate amount of inventory. ASD will establish the criteria for physicians to
whom it sells and will offer, based upon credit availability for such
physicians, VISA/Master Card as a payment option. Returns will be accepted and
processed according to VIVUS's returned goods policy published for specialty
distributors and which is attached hereto as Exhibit C.
(c) VIVUS may enter into contracts with certain physician practices
that meet volume and other specifications to be defined by VIVUS ("Key Account
Contracts"). Should Key Account Contract customers wish to enter into a prime
vendor arrangement, VIVUS will first offer ASD the opportunity to act as the Key
Account
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Contract's prime vendor. ASD will accept such prime vendor status with such Key
Account Contract customer provided, VIVUS's Key Account Contract customer meets
ASD's requirements to qualify as a new ASD customer. ASD may elect to act as the
Key Account Contract prime vendor for Products and invoice such customer at
VIVUS's Key Account Contract price. Key Account Contracts utilizing ASD as its
prime vendor will be advised by VIVUS to order from ASD in economic shipping
quantities (i.e. shelf cartons or case packs). [*] ASD will submit to VIVUS a
monthly or more frequent electronic report of all sales to Key Account
Contracts. The report shall include at least the following information as to
each sale made to a Key Account Contract:
(i) Key Account Contract Name and DEA number
(ii) VIVUS's contract number
(iii) ASD's invoice number and date
(iv) Product NDC
(v) Units shipped or returned
(vi) ASD's unit cost
(vii) VIVUS's Key Account Contract price
(viii) [*]
(ix) Extended chargeback amount
(x) Total chargeback amount
(d) Upon receipt and approval of ASD's reports submitted, VIVUS shall
issue a credit memo to ASD in the amount of the difference between [*]. VIVUS
will pay such invoiced amounts within [*] from the date of invoice.
4. Performance Criteria. (a) The Parties will mutually agree in writing
upon performance measurements and reporting criteria for each of the Service
categories and for servicing of Products ordered. Subject to the terms of this
Agreement, ASD will use its best efforts to meet such applicable performance
criteria.
(b) To enhance the value of the Services, the Parties shall
cause their respective representatives to meet routinely for performance review
and strategic planning purposes.
5. Fees. As compensation for the Services, VIVUS shall pay ASD, when
due, without notice, demand, counterclaim, setoff, deduction, diminution or
reduction, the fees described below (the "Fees"):
(a) [*]Fees -- Based on [*] Product Launch, VIVUS will
reimburse ASD for the [*] costs incurred at the rate of[*] per [*]for the VIVUS
Project Manager which is expected to be hired up to [*] Product Launch and a
rate of [*] per [*] for additional staffing (one warehouse person, [*] CSRS and
[*] TSRs) expected to be hired [*] Product Launch. Should the timing of hiring
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decisions or the level of staffing requirements change, the [*] fee will be
prorated accordingly; and
(b) Monthly Service Fees -- Monthly service fees accruing as
of the date of this Agreement at[*] rate of [*]; and additional staffing may be
added at the discretion of VIVUS at the fully loaded rates of[*] for each
additional TSR and [*] for each additional CSR);
(c) Samples -- A monthly fee (as compensation for all services
related to Samples) at the rate of [*] per [*]. This fee is all inclusive,
including outbound shipping materials and freight; and
(d) Marketing Materials -- Reimbursement for actual shipping
charges for Marketing Materials shipped [*]; and
(e) Custom Reporting --[*] fee of [*] for any custom reporting
requested by VIVUS to be developed in accordance with SOP's developed by these
Parties. In the event of custom reporting, ASD will provide an estimate of
projected costs to VIVUS prior to the commencement of any work. Upon approval by
VIVUS, work will commence.
6. Fees, expenses and other charges will be billed and
paid according to the following schedule:
(a) [*] Fees incurred up to [*] will be billed before [*] and
all other [*] Fees will be billed on Product Launch, all such [*] Fees will be
due and paid by VIVUS within [*] from date of invoice.
(b) All other Fees will be pre-billed by ASD on the fifteenth
(15th) of the month preceding the Services rendered and VIVUS will pay such fees
within [*] from date of invoice.
(c) Samples Fees will be billed by ASD on the fifteenth (15th)
calendar day of the month for the Samples orders shipped during the preceding
month. VIVUS will pay the Sample Fees within [*] from date of invoice.
(d) All other fees, expenses, costs and charges payable by
VIVUS to ASD not specifically referenced in Section 6 of this Agreement will be
due and payable [*] from the date ASD bills VIVUS.
(e) Any amounts payable by VIVUS pursuant to this Agreement
and not paid when due will be assessed interest (to the extent not prohibited by
applicable law) at the rate of 18% per annum from the date such amount is due
until paid (or at such lesser rate as may be the maximum permitted by applicable
law),
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in each case computed on the basis of a 360-day year of twelve 30-day months.
All Fee amounts will be reviewed by these parties upon the third anniversary of
this Agreement for the purposes of adjusting such Fees to reflect increases in
costs and expenses incurred or expected to be incurred by ASD.
7. Products Pricing and Terms. In addition to the fees provided in
Section 6 above, and in consideration of the full value of the Services provided
by ASD, VIVUS will sell Products to ASD at [*] its list price to Specialty
Distributors. Introductory payment terms (defined as payment terms during the
first six months of Product sales) will be [*] from date of VIVUS's invoice.
Thereafter, VIVUS may elect to change payment terms to [*] from date of VIVUS's
invoice. All other sales terms and conditions will be governed by the VIVUS's
terms and conditions set forth by VIVUS to the specialty distributor class of
trade as set forth in the attached Exhibit D.
8. Term and Termination. (a) The initial term of the agreement (the
"Initial Term") shall begin on the date of the agreement and continue until the
second anniversary of the Product Launch, unless or until terminated sooner
pursuant to the other provisions of this Section. After the Initial Term, this
Agreement shall renew automatically for successive renewal terms of one year
each unless notice of termination is given by any Party at least one hundred and
twenty (120) days prior to the end of the term then in effect, in which case
this Agreement shall terminate at the end of that term. Any reference in this
Agreement to the "term of this Agreement" shall include the initial term and any
such renewal terms.
(b) Either Party shall have the right to terminate this Agreement with
or without cause upon one hundred and twenty (120) days prior written notice. In
the event either party gives written notice of its intent to terminate this
Agreement, VIVUS shall pay ASD, all amounts due and payable ASD and accrued up
to and including the date selected for termination of this Agreement. Any
payments to be made on a monthly basis shall be prorated on the basis of a
30-day month for any fractional portion of a calendar month included in the term
of this Agreement at its commencement or termination.
(c) Either party may terminate this Agreement immediately upon written
notice in the event of: (i) the commencement of a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
either party of its debts under any bankruptcy, insolvency, corporation or other
similar law now or hereafter in effect; or (ii) either party's making a general
assignment for the benefit of creditors, or either party's becoming insolvent,
or either party taking any corporate action to authorize any of the foregoing.
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(d) All accrued payment obligations of the parties under this
Agreement, Sections 9 through 15, inclusive and Sections 17 through 23,
inclusive, of this Agreement shall survive the termination of this Agreement,
and, except as provided elsewhere in this Agreement, no termination of this
Agreement shall affect any obligations or liabilities arising, or based upon
acts or omissions occurring, prior to the date of such termination.
(e) Upon termination of this Agreement, ASD shall return, at VIVUS's
sole cost and expense, all Samples, Marketing Materials, VIVUS records (apart
from ASD records), and other VIVUS owned materials which ASD has in its
possession.
9. Audits. VIVUS shall have the right during normal business hours
(i.e. 8:00 a.m. to 5:00 p.m. local time) at no more than once during any
calendar quarter, upon reasonable prior notice, to: (a) review and audit ASD's
records related to the Services provided, (b) conduct, together with
representatives of ASD, an inventory of the Samples and Marketing Materials at
the ASD Facility, and (c) conduct, together with representatives of ASD, a
facility audit. Should material issues be discovered during such audits which
necessitate ongoing corrective action by ASD or ongoing follow-up action by
VIVUS (including the initiation of additional audits on a more frequent basis
regarding such area(s) of concern) to ensure ASD's compliance with such
corrective action, all such reasonable and directly related expenses will be the
responsibility of ASD.
10. Compliance With Laws. During the term of this Agreement, each party
shall conduct its activities in connection with this Agreement in compliance
with all applicable laws. Specifically, ASD shall comply with all applicable
Requirements of Law related to the storage, handling and distribution of
Samples, and only the cGMP guidelines as set forth in Section 211.142(b),
Section 211.150, Section 211.196 and the Section 211.204, except that ASD shall
have no obligation to perform tests or conduct investigations, all of which will
be the responsibility of VIVUS, of Part 211 (also known as 21 Code of Federal
Regulations, Chapter 1, as such Guidelines and Requirements of Law are
applicable to ASD's activities, and VIVUS shall comply with all applicable
Requirements of Law related to the importation, manufacture, distribution,
labeling, storage, sale and handling of the Products and Samples.
(b) VIVUS agrees and does hereby represent and warrant to ASD
during the term of this Agreement that (1) all Samples and Products, and each
shipment of each, or other delivery now and hereafter made by VIVUS to or on the
order of ASD will not be, at the time of shipment or delivery, adulterated,
misbranded or otherwise prohibited within the meaning of the Act or within the
meaning of any applicable state or municipal law and (2) such
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Samples and Product is not, at the time of shipment or delivery to ASD,
merchandise which may not be introduced or delivered for introduction into
interstate commerce under the provisions of Sections 404 or 405 of the Act, and
(3) all such Samples and Products will be the subject of a duly approved NDA and
may be legally transported or sold under applicable Requirements of Law and
VIVUS guarantees that only those chemicals or sprays, and the amounts of such
chemicals or sprays, approved by Governmental Authority, have been used in any
of the Samples and Products, and (4) all Samples and Products have been duly
approved by all Governmental Authority for commercial sale and shipment within
the United States.
11. Corporate Authority. During the term of this Agreement, each party
continually represents and warrants to the other that: (a) it has full power and
authority to enter into this Agreement and perform and observe all obligations
and conditions to be performed or observed by it under this Agreement without
any restriction by any other agreement or otherwise, (b) the execution, delivery
and performance of this Agreement has been duly authorized by all necessary
corporate action of that Party,(c) this Agreement constitutes the legal, valid
and binding obligation of that Party, (d) no approvals, consents, orders or
authorizations of or designation, registration, declaration or filing with any
Governmental Authority (within, as a part of. or constituting the United States
of America) is required for the sale and distribution of the Samples or the
Products, (e) there is no action, proceeding, or investigation pending or, so
far as each party knows, threatened, which questions the validity of this
Agreement, the patents and licenses related to and for the Samples or the
Products, any actions taken or to be taken pursuant to this Agreement, and (f)
the Samples and the Products, or any part thereof, has been materially adversely
affected in any way as a result of any legislative or regulatory change, or any
revocation of license or right to manufacture, distribute, handle, store, sell
or market any of the Samples or the Products. EXCEPT FOR ANY EXPRESSED
REPRESENTATIONS, WARRANTIES, OR COVENANTS SET FORTH IN THIS AGREEMENT, VIVUS
MAKES NO OTHER WARRANTIES WITH RESPECT TO THE PRODUCTS, EXPRESS, IMPLIED,
STATUTORY OR COMMUNICATION WITH VIVUS, AND VIVUS SPECIFICALLY DISCLAIMS ANY
IMPLIED WARRANTY OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
12. Taxes. VIVUS shall pay when due all Taxes, excluding any personal
property tax associated with ASD's equipment used in connection with the
Services, and other taxes or similar charges now or hereafter imposed upon or as
a result of the Samples and/or the Marketing Materials, none of which have been
included in the fees payable to ASD under this Agreement. ASD shall maintain its
records for use by VIVUS to complete and file returns relating to such Taxes.
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13. Trademarks/Data. Neither Party shall have the right to use the name
of the other Party or the other Party's trademarks, service marks, logos, other
similar marks or data and information in any manner except with the prior
written approval of that Party. Data and information which shall be deemed to
belong to VIVUS will be the data and information related to the Products,
Samples and Marketing Materials. Data and information which shall be deemed to
belong to ASD shall be the data and information related to all goods, products
and services offered and sold by ASD (and not described in Exhibit A or Section
2 above) and all data and information relating to any of ASD's customers and
their respective profiles.
14. Confidentiality. (a) Each Party acknowledges that as a result of
this Agreement, that each Party shall learn Confidential Information of the
other Party. Neither Party shall disclose any Confidential Information of the
other Party to any person or entity, or use, or permit any person or entity to
use, any of such confidential information, excepting only: (a) disclosures on a
confidential basis to and use by the directors, officers, employees, and agents
of that Party, or its affiliates, who have a reasonable need to know such
information in connection with that Party's performance of this Agreement, and
(b) disclosures which are required by law, or legal process, as reasonably
determined by that Party or its legal counsel, or are made on a confidential
basis to that Party's attorneys, accountants, and other professional advisors in
connection with matters relating to this Agreement. The specific material terms
of this Agreement shall be deemed to be Confidential Information of each Party.
(b) The obligation of confidentiality hereunder shall survive the
termination of this Agreement for a period of three (3) years.
(c) Upon termination of this Agreement (for any reason) each Party
shall promptly: (i) return to the other Party or destroy all documentation and
other materials (including copies of original documentation or other materials)
containing any Confidential Information of the other Party; or (ii) certify to
the other Party, pursuant to a certificate in form and substance reasonably
satisfactory to the other Party, as to the destruction of all such documentation
and other materials.
15. Indemnification. (a) Each Party shall indemnify and hold harmless
the other and their respective Related Parties from and against all claims,
liabilities, losses, damages, costs and expenses (including without limitation
reasonable attorneys' fees) arising directly or indirectly out of any act or
omission of that Party or any failure of that Party to perform and observe fully
all obligations and conditions to be performed or observed
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by that Party pursuant to this Agreement or any breach of any warranty made by
that Party in this Agreement. Further, VIVUS does hereby protect, indemnify and
hold harmless ASD and its related parties from and against all claims,
liabilities, losses, damages, costs and expenses (including without limitation,
attorneys' fees and expenses) imposed upon or incurred by or asserted against
ASD and/or its Related Parties related to or arising from (1) any claim of
patent or copyright infringement and (2) any loss of or damage to property,
accident, injury to or death of a person or persons occurring or arising from
the storage, handling, use, non-use, demonstration, consumption, ingestion,
digestion, manufacture, production and assembly, of the Samples and the Products
and their transportation to ASD, excepting only for claims arising out of the
negligence of ASD or its employees. Further, ASD does hereby agree to protect,
indemnify and hold harmless VIVUS and its related parties from and against all
claims, liabilities, losses, damages, costs and expenses (including without
limitation, attorneys' fees and expenses) imposed upon or incurred by or
asserted against VIVUS and/or its Related Parties related to or arising from any
loss of or damage to property, accident, injury to or death of a person or
persons occurring or arising from the negligence of ASD (or its employees) and
the failure of ASD to substantially comply with written and mutually approved
SOP's and VIVUS directives, excepting here from, any act, negligence or omission
of VIVUS or its Related Parties. NOTWITHSTANDING THE FOREGOING OR ANY OTHER
PROVISION TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY FOR ANY LOST PROFITS, CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN CONNECTION WITH
A BREACH OF THIS AGREEMENT OR ANY EXPENSES, CHARGES, COSTS OR LIABILITIES,
WHETHER FORESEEN OR UNFORESEEN, ARISING FROM OR RELATED TO THE ACT OF
TERMINATING THIS AGREEMENT.
(b) The obligations and liabilities of VIVUS or ASD with respect to ASD
Indemnified Claims or VIVUS Indemnified Claims, respectively, (collectively, the
"Indemnified Claims"), resulting from the assertion of liability by third
parties (each, a "Third Party Claim") shall be subject to the following terms
and conditions:
(i) The party claiming indemnification (the "Indemnified
Person") shall give prompt written notice to the other party of any Third Party
Claim which may give rise to a Third Party Claim against the other party (the
"Indemnifying Person"), stating the nature and basis of said Third Party Claim
and the amount thereof to the extent known. Each Notice of Claim shall be
accompanied by copies of all relevant documentation with respect to such Third
Party Claim, including, without limitation, any summons, complaint or other
pleading which may have been served or written demand or other document or
instrument.
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(ii) If the Indemnifying Person shall acknowledge in a writing
delivered to the Indemnified Persons that the Indemnifying Person shall be
obligated under the terms of its indemnity hereunder in connection with such
Third Party Claim, then the Indemnifying Person shall have the right to assume
the defense of any Third Party Claim at its own expense and by its own counsel
(reasonably satisfactory to the Indemnified Persons); provided, however, that
the Indemnifying Person shall not have the right to assume the defense of any
Third Party Claim, notwithstanding the giving of such written acknowledgment, if
(aa) such Third Party Claim seeks an injunction, restraining order, declaratory
relief or other nonmonetary relief and, if decided adversely, such Third Party
Claim could have a material adverse effect on the financial condition,
properties, assets, liabilities, business, operations or prospects of any of the
Indemnified Persons or (bb) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Persons and the
Indemnifying Person and the former shall have been advised by counsel that there
are one or more legal or equitable defenses available to them which are
different from or additional to those available to the Indemnifying Person, and,
in the reasonable opinion of the Indemnified Persons, counsel for the
Indemnifying Person could not adequately represent the interests of the
Indemnified Persons because such interests could be in conflict with those of
the Indemnifying Person (any Third Party Claim of the type referred to in (aa)
or (bb) being a "Nonassumable Claim").
(iii) If, in accordance with the provisions of the preceding
subparagraph (ii), the Indemnifying Person shall assume the defense of a Third
Party Claim (other than a Nonassumable Claim), the Indemnifying Person shall not
be responsible for any legal or other defense costs subsequently incurred by the
Indemnified Persons in connection with the defense thereof. If the Indemnifying
Person does not exercise its right to assume the defense of such a Third Party
Claim by giving the written acknowledgment referred to in subparagraph (ii)
above or may not assume such defense pursuant to such subparagraph (ii) above,
then the Indemnified Persons may assume such defense and the costs, expenses and
reasonable attorneys' fees incurred shall continue to constitute Losses
hereunder.
(iv) Anything contained herein to the contrary
notwithstanding, neither the Indemnifying Person nor the Indemnified Persons
shall admit any liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the written consent of the other, which consent
shall not be unreasonably withheld. In addition, each of the Indemnifying Person
and the Indemnified Persons shall cooperate and act in a reasonable and good
faith manner to minimize Losses relating to any Third Party Claim.
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(v) The foregoing indemnities shall not extend to any claims
arising out of one or more of: (aa) the incorrectness of any representation or
warranty made by Indemnified Person pursuant to this Agreement; (bb) the failure
by such Indemnified Person to perform or observe any agreement or covenant made
by it in this Agreement; or (cc) the willful misconduct or gross negligence of
such Indemnified Person.
16. Insurance. During the term of this Agreement: (a) each party will
maintain product liability and commercial general liability insurance having a
limit of not less than $1 million, pursuant to one or more insurance policies
with reputable insurance carriers; and (b) VIVUS shall maintain property damage
insurance for the Samples and Marketing Materials located at the ASD Facility or
in transit to or from the ASD Facility. Each party shall designate the other
party as an "additional insured" under all insurance policies referenced in this
paragraph. Prior to the Product Launch and the commencement of Services, each
party shall deliver to the other certificates evidencing such insurance. Neither
party shall cause or permit such insurance to be canceled or modified to
materially reduce its scope or limits of coverage during the term of this
Agreement. Except for any losses resulting from the negligence or intentional
misconduct of ASD (in which case ASD shall be liable for any damage or loss),
VIVUS shall bear all risk of loss or damage with respect to Samples or Marketing
Materials, whether located at the ASD Facility or otherwise. ASD shall bear all
risk of loss or damage with respect to Products purchased by ASD once said
Products are in ASD's possession.
17. Notices. Any notice or other communication required or desired to
be given to any Party under this Agreement shall be in writing and shall be
deemed given when: (a) deposited in the United States mail, first-class postage
prepaid, and addressed to that Party at the address for such Party set forth at
the end of this Agreement; (b) delivered to an express delivery service for
delivery to that Party at that address; or (c) sent by facsimile transmission,
with electronic confirmation, to that Party at its facsimile numbers set forth
at the end of this Agreement. Any Party may change its address or facsimile
number for notices under this Agreement by giving the other Party notice of such
change.
18. Arbitration. Subject to Section 19, below, any and all
disagreements or controversies arising out of or with respect to this Agreement
may, upon mutual agreement, be settled by binding arbitration to be held, and
the award made, in a county located in California, pursuant to the
then-applicable rules of the American Arbitration Association (to the extend not
inconsistent with this Agreement). Each Party shall bear the costs and expenses
of preparing and presenting its case at the arbitration.
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All other costs and expenses of arbitration shall be borne by the Parties as
determined in the Arbitration.
19. Remedies. With respect to the provisions of Section 14 of this
Agreement, each Party acknowledges that in the event of any violation by that
Party of any of the provisions of Section 14 of this Agreement, the other Party
may suffer irreparable harm and its remedies at law may be inadequate.
Accordingly, in the event of any violation or attempted violation of any such
provisions of Section 14 by either Party, the other Party shall be entitled to
petition for a temporary restraining order, temporary and permanent injunctions,
specific performance, and other equitable relief. The rights and remedies of
each Party under this Agreement shall be cumulative and in addition to any other
rights or remedies available to such Party, whether under any other agreement,
at law, or in equity.
20. Governing Law. All questions concerning the validity or meaning of
this Agreement or relating to the rights and obligations of the Parties with
respect to performance under this Agreement shall be construed and resolved
under the laws of the State of California excluding the body of law relating to
conflicts of laws.
21. Severability. The intention of the Parties is to comply fully with
all laws and public policies, and this Agreement shall be construed consistently
with all laws and public policies to the extend possible. If and to the extent
that any court of competent jurisdiction determines that it is impossible to
construe any provision of this Agreement consistently with any law or public
policy and consequently holds that provision to be invalid, such holding shall
in no way affect the validity of the other provisions of this Agreement, which
shall remain in full force and effect.
22. Non-waiver. No failure by either Party to insist upon strict
compliance with any term of this Agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of the other Party shall
affect, or constitute a waiver of, the first Party's right to insist upon strict
compliance, to exercise that option, to enforce that right, or to seek that
remedy with respect to that default or any prior, contemporaneous, or subsequent
default. No custom or practice of the Parties at variance with any provision of
this Agreement shall affect, or constitute a waiver of, that Party's right to
demand strict compliance with all provisions of this Agreement.
23. Force Majeure. If the performance of any part of this Agreement by
either Party shall be affected for any length of time by fire or other casualty,
government restrictions, war, riots, strikes or labor disputes, lock out,
transportation
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delays, electronic disruptions, telecommunication failures, and acts of God, or
any other causes which are beyond the control of the Parties (financial
inability excepted), such Party shall not be responsible for delay or failure of
performance of this Agreement for such length of time, provided, however, that
the obligation of one Party to pay amounts due to any other Party shall not be
subject to the provisions of this Section.
24. Captions. The captions of the various sections of this Agreement
are not part of the context of this Agreement, and are only labels to assist in
locating those sections, and shall be ignored in construing this Agreement.
25. Genders and Numbers. Where permitted by the context, each pronoun
in this Agreement includes the same pronoun in the other genders or numbers and
each noun used in this Agreement includes the same noun in other genders.
26. Complete Agreement. This Agreement contains the entire agreement
between the Parties and supersedes all prior or contemporaneous discussions,
negotiations, representations, warranties, or agreements relating to the subject
matter of this Agreement. No changes to this Agreement shall be made or be
binding on either Party unless made in writing and signed by both Parties. All
schedules, Exhibits, Appendixes referred to in this Agreement are incorporated
herein and made a part hereof as fully as if set forth herein.
27. Successors. Except as set forth in this Section, neither Party
shall have the right to assign this Agreement or any of such Party's rights or
obligations under this Agreement without the prior written consent of the other
Party, which consent shall not be unreasonably withheld. After providing written
notice to ASD, VIVUS may assign this Agreement to a party that succeeds to all
or substantially all of VIVUS's business or assets relating to this Agreement
whether by sale, merger, operation of law or otherwise.
28. Approvals. When this Agreement requires the approval of one or both
of the parties to this Agreement, each and every such approval sought will not
be unreasonably withheld by the party required to provide its approval.
29. Relationship of the Parties. The relationship of the Parties is and
shall be that of independent contractors. This Agreement does not establish or
create a partnership or joint venture among the Parties.
30. Interpretation. The parties have jointly negotiated this Agreement
and, thus, neither this Agreement nor any provision hereof shall be interpreted
for or against any party on
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the basis the party or the party's attorney drafted the Agreement or the
provision at issue.
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This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the respective successors and assigns of the Parties.
VIVUS, INC. ALTERNATE SITE DISTRIBUTORS,
INC.
By: /s/ LELAND F. WILSON By: /s/ STEVEN H. COLLIS
---------------------- ---------------------------
Leland F. Wilson Steven H. Collis
President and CEO VP and General Manager
Address and facsimile number: Address and facsimile number:
545 Middlefield Road, 2340 Trinity Mills Road,
Suite 200 Suite 250
Menlo Park, CA 94025 Carrollton, TX 75006
Attn: President Attn: General Manager
Facsimile (415) 325-5546 Facsimile (214) 416-4848
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APPENDIX A
"Act" means the Federal Food, Drug and Cosmetic Act, Title 21, United States
Code, as amended, and the regulations thereunder.
"Agreement" means this Distribution and Services Agreement dated _________,
1996, by and between VIVUS, Inc., a California Corporation, and Alternate Site
Distributors, Inc., a California Corporation, as may be amended from time to
time pursuant to the terms providing for such amendments.
"cGMP" shall have the meaning of current good manufacturing practices and
guidelines as published by the Federal Food & Drug Administration.
"Confidential Information" shall mean information, data considered confidential
by the party owning such information, whether visual, oral or in written form,
but does not include (1) information which is or becomes public without the
fault or participation of the other party to this Agreement or which is
responsive to legal process or obligation, (2) any information lawfully in the
receiving party's possession prior to the date the receiving party receives the
disclosing party's information, or (3) any information which either party
receives from a third party who rightfully possesses and discloses such
information.
"Drug" shall have the meaning as set forth in Section 321(g)(1) of the Act.
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Marketing Materials" shall mean brochures, booklets, letters and pamphlets
intended to encourage the purchase and/or disbursing of the Products.
"MUSE" shall mean VIVUS's first products and application systems for the
treatment of erectile dysfunction.
"NDA" means a New Drug Application as defined in and contemplated by the Act.
"Person" or "Persons" means any corporation, natural person, firm, joint
venture, partnership, trust, unincorporated organization, government or any
department or agency of any government.
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"Pre-Launch" shall mean that period of time between the date of the Agreement
and the date of Product Launch.
"Product Launch" shall mean the date selected by VIVUS after VIVUS obtains FDA
approval of the Products and upon which ASD is notified by VIVUS that MUSE may
be lawfully available for commercial sale and shipment.
"Product" or "Products" means the pharmaceutical and other products that are a
part of, or added to from time to time, to Exhibit A attached hereto and which
are intended for commercial sale.
"Related Parties" mean the successors, subsidiaries, parent corporations,
affiliates, Directors, employees, agents, representatives, related entities and
assigns of any Person.
"Requirement(s) of Law" means any law (including, without limitation, consumer
law), treaty, rule or regulation or a final and binding determination of an
arbitrator or a determination of a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Sample" or "Samples" means a product (as opposed to the term "Product(s)")
which is not intended to be sold and is labeled as such and is given free of
charge to promote sales.
"SEC" means the Securities and Exchange Commission.
"Taxes" shall mean any and all liabilities, losses, expenses, and costs of any
kind whatsoever that are, or are in the nature of taxes, fees, or other
governmental charges, including interest, penalties, fines and additions to tax
imposed by any Federal, state or local government or taxing authority in the
United States on or with respect to: (a) the Agreement or any related agreements
or any future amendment, supplement, waiver, or consent requested by VIVUS or
any required by the Agreement with respect to the execution, delivery or
performance of any thereof, or the issuance, acquisition or subsequent transfer
thereof, (b) any interest in the Samples or the Marketing Materials, or any part
thereof, (c) the return, acquisition, transfer of title, storage, removal,
replacement, substitution, purchase, acceptance, possession, rejection,
ownership, delivery, non-delivery, use, operation, sale, abandonment,
redelivery or other disposition of any interest in the Samples or the Marketing
Materials or any part thereof; (d) the receipts or earnings arising from any
interest in the Samples or the Marketing Materials or any part thereof; (e) any
payment made pursuant to this Agreement or to any of the Samples or the
Marketing Materials; or (f) otherwise as a result of or by reason of the
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transactions contemplated by this Agreement, excluding, however; taxes imposed
upon ASD that are based upon or measured by gross or net income and any
franchise Taxes of ASD or any personal property taxes for Products owned by ASD.
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EXHIBIT A
List of Products
MUSE alprostadil product line
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EXHIBIT B
VIVUS'S STANDARD OPERATING PROCEDURES
FOR HANDLING AND SHIPPING
SAMPLES
Pursuant to Sections 2(c) and 2(f) of the Distribution and Services
Agreement, Vivus is currently in the process of developing operating procedures
for handling and shipping samples.
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EXHIBIT C
VIVUS RETURNED GOODS POLICY
Pursuant to Section 3(b) of the Distribution and Services Agreement, Vivus
is currently in the process of developing returned goods policy.
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EXHIBIT D
VIVUS TERMS AND CONDITIONS
FOR SPECIALTY DISTRIBUTOR CLASS
OF TRADE
Pursuant to Section 7 of the Distribution and Services Agreement, Vivus is
currently in the process of developing terms and conditions for specialty
distributor class of trade.
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