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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 1996 0-23490
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VIVUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-3136179
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
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545 MIDDLEFIELD ROAD, SUITE 200, MENLO PARK, CALIFORNIA 94025
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(415) 325-5511
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
SECURITIES REGISTERED PURSUANT TO 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $.001
PAR VALUE
------------------------
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. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of February 28, 1997, the aggregate market value of the voting stock
held by non-affiliates of the Registrant was $632,342,107 (based upon the
closing sales price of such stock as reported by The Nasdaq Stock Market on such
date). Shares of Common Stock held by each officer, director, and holder of 5%
or more of the outstanding Common Stock on that date have been excluded in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
As of February 28, 1997, the number of outstanding shares of the
Registrants' Common Stock was 16,426,606.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Items 6, 7 and 8 of Form 10-K is
incorporated by reference from the Registrant's annual report to security
holders furnished pursuant to Rule 14a-3 (the "Annual Report"). Certain
information required by Items 10, 11, 12 and 13 of Form 10-K is incorporated by
reference from the Registrant's proxy statement for the 1997 Annual
Stockholders' Meeting (the "Proxy Statement"), which will be filed with the
Securities and Exchange Commission within 120 days after the close of the
Registrant's fiscal year ended December 31, 1996.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from the
discussion in the Proxy Statement captioned "Record Date and Share Ownership."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information required by this item is incorporated by reference from
the discussion in the Proxy Statement captioned "Certain Transactions and
Reports."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. FINANCIAL STATEMENTS
Financial statements have been incorporated by reference to the
Registrant's Annual Report.
2. FINANCIAL STATEMENT SCHEDULES
Schedules have been omitted because the information required to be
set forth therein is not applicable or is shown in the consolidated financial
statements or notes thereto incorporated by reference herein.
3. EXHIBITS
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# 3.1 Certificate of Incorporation of the Company, as currently in effect
3.2 Form of Amended and Restated Certificate of Incorporation of the Company,
to be filed immediately following the Company's Annual Meeting of
Stockholders if the stockholders approve Proposal 2 in the Company's Proxy
# 3.3 Bylaws of the Registrant, as amended
* 4.1 Specimen Common Stock Certificate of the Registrant
* 4.2 Registration Rights, as amended
** 4.3 Form of Agreement Not to Sell by and between the Registrant and certain
shareholders and option holders
* 4.4 Form of Preferred Stock Purchase Warrant issued by the Registrant to
Invemed Associates, Inc., Frazier Investment Securities, L.P. and Cristina
H. Kepner
+++ 4.5 Amended and Restated Preferred Shares Rights Agreement dated as of June 18,
1996, by and between Vivus, Inc. and First Interstate Bank of California,
including the Certificate of Designation, the form of Rights Certificate
and the Summary of Rights attached thereto as Exhibits A, B and C,
respectively
*+ 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 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
*+ 10.5 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
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*+ 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
* 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 C. 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-sublease by and among the Registrant, Argonaut Technologies, Inc.,
ESCAgenetics Corp. and Tanklage Construction Co. dated January 31, 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
###+ 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
### 10.25 Menlo McCandless Office Lease made as of August 30, 1996 by and between
Registrant and McCandless - Triad
### 10.26 Sublease Agreement made as of August 22, 1996 by and between Registrant and
Plant Research Technologies
++ 10.27 Distribution Agreement made as of January 22, 1997 between the Registrant
and Janssen Pharmaceutica International, a division of Cilag AG
International
10.28 Lease Agreement made as of January 1, 1997 between the Registrant and
Airport Associates
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10.29 Lease Amendment No. 1 as of February 15, 1997 between Registrant and
Airport Associates
10.30 Lease Agreement by and between 605 East Fairchild Associates, L.P. and
Registrant dated as of March 7, 1997
11.1 Computation of net loss per share
13.1 Portions of the 1996 Annual Report to Security Holders
** 16.1 Letter regarding change in independent public accountants
21.2 List of Subsidiaries
23.1 Consent of Independent Public Accountants
24.1 Power of Attorney (See "Power of Attorney")
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, filed with
the Commission on February 24, 1996, as amended.
** Incorporated by reference to the same-numbered exhibit filed with the
Registrant's Registration Statement on Form S-1 No. 33-90390, filed with
the Commission on March 16, 1995, as amended.
*** 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 10-Q for the quarter ended March 31,
1996, as amended.
## Incorporated by reference to the same numbered exhibit filed with the
Registrant's Current Report on Form 8-K filed with the Commission on May 31,
1996, as amended.
### Incorporated by reference to the same-numbered exhibit filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996.
+++ Incorporated by reference to exhibit 99.1 filed with the Registrant's
Registration Statement on Form 8-A No. 0-23490, filed with the Commission
on June 24, 1996.
+ Confidential treatment granted.
++ Confidential treatment requested.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.,
a Delaware Corporation
By: /s/ DAVID C. YNTEMA
------------------------------------
David C. Yntema
Vice President of Finance and Chief
Financial Officer (Principal
Financial
and Accounting Officer)
Date: December 4, 1997
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EXHIBIT 10.27
DISTRIBUTION AGREEMENT
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TABLE OF CONTENTS
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1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. GRANT OF DISTRIBUTION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Janssen No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Sales Outside Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 VIVUS No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. DEVELOPMENT AND MARKETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Joint Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Regulatory Approvals/MAAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Marketing Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4.2 VIVUS Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Exchange of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Adverse Experiences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. COMMERCIALIZATION AND PROMOTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Janssen Commercialization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1.1 Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1.2 Failure to Sell. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1.3 Subsequent Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. PRODUCT SUPPLY AND DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Product Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Samples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 [*]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3.1 Timing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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5.3.2 [*]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3.3 [*]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3.4 [*] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3.5 [*] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3.6 [*]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Forecasts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5.1 Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5.2 Form of Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Product Rejection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 VIVUS Cost of Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Shortage of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10.1 Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10.2 Joint Manufacturing Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 Modification of Specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Initial Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Transfer Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2.1 Sale Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2.2 Samples and Obsolete Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12
6.2.3 [*] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
6.3 Discounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.4 Sales Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Provisional Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5.1 Product Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 Reconciliation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6.1 Product Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6.2 Timing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 China Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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6.8 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.10 U.S. Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Nondisclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Disclosure to Subdistributors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Terms of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.4 Clinical Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5 Product Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. PATENT PROSECUTION AND LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Ownership of Inventions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Maintenance of Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2.1 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2.2 Extensions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.3 Infringement by Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.4 Third Party Infringement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.5 Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.6 Status of Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9. TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Display. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.2 License. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.3 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.4 Recordation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.5 Approval of Promotional Materials/Quality Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.6 Termination of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.7 Trademark Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.8 Trademark Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1 Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2.1 Payment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2.2 Material Non-Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2.3 Bankruptcy Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
10.2.4 Termination by VIVUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2.5 Termination by Janssen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11. RIGHTS AND DUTIES UPON TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.2 Sale of Remaining Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12. WARRANTIES, REPRESENTATIONS, AND INDEMNIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1 General Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1.1 Duly Organized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1.2 No Third Party Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.2 Representations and Warranties of VIVUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.2.1 VIVUS Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.2.2 Good Manufacturing GMP Standards/Regulatory Standards. . . . . . . . . . . . . . . . . . . . . 22
12.3 Indemnification by Janssen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.4 Indemnification by VIVUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.5 Patent Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.1 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.2 Governing Law and Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.3 Janssen Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.4 Waiver of Breach25
13.5 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.7 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.10 No Partnership or Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.11 Third Party Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.12 Limited Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.13 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE> 6
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (hereinafter "Agreement"), made as of the
22nd day of January, 1997 ("Effective Date"), between VIVUS International
Limited, a company organized under the laws of Bermuda and having a place of
business at Clarendon House, Church Street, Hamilton, Bermuda ("VIVUS"), a
wholly-owned subsidiary of VIVUS, Inc., a Delaware corporation ("VIVUS, Inc."),
and Janssen Pharmaceutica International, a division of Cilag AG International,
and having its registered office at Kollerstrasse 38, CH-6300, Zug.,
Switzerland ("Janssen").
RECITALS
A. VIVUS has developed a Product for the transurethral delivery
of alprostadil for the treatment of erectile dysfunction (as defined below, the
"Product").
B. Janssen desires to obtain from VIVUS certain distribution
rights, [*], for such Product in the Territory (as defined below) and VIVUS is
willing to grant to Janssen such rights on the terms and conditions set forth
below.
AGREEMENT
1. DEFINITIONS
1.1 "Affiliates" shall mean (i) any corporation, firm, partnership
or other entity, whether de jure or de facto, which directly or indirectly
owns, is owned by or is under common ownership with a party hereto to the
extent of at least fifty percent (50%) of the equity (or such lesser percentage
which is the maximum allowed to be owned by a foreign corporation in a
particular jurisdiction) having the power to vote on or direct the affairs of
the entity or, irrespective of such equity ownership, having the power to
direct or control the management of such entity, and (ii) any person, firm,
partnership, corporation or other entity actually controlled by, controlling or
under common control with such party.
1.2 [*] delivery transurethrally to treat male erectile
dysfunction. It is understood that, as used herein, the [*].
1.3 [*] It is understood that [*] shall not include standard,
commercially available [*].
1.4 "First Commercial Sale" shall mean, with respect to each
Product in each country, the first bona fide, arm's length sale of such Product
in such country by or under authority of Janssen or its Subdistributors.
1.5 "Foil Pouch Package Form" shall mean Product in finished
dosage form, including its cap, packaged into an individual foil pouch. The
pouches with a minimum of information to the extent required to satisfy
regulatory requirements throughout the Territory with respect to markings that
must appear on the pouch itself, provided that VIVUS shall not be obligated [*]
as applicable [*]. Notwithstanding the foregoing, [*]
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1.6 "MAA" shall mean a marketing authorization application filed
by or under authority from Janssen with the requisite health regulatory
authority of any country of the Territory requesting approval for
commercialization of a Product for a particular indication in such country. It
is understood that MAA does not include applications for pricing or
reimbursement approval.
1.7 "MAA Approval" shall mean, with respect to each country of the
Territory for a particular Product, approval of the MAA filed in such country
by the health regulatory authority in such country that is the counterpart of
the U.S. FDA. It is understood that MAA Approval does not include pricing or
reimbursement approval. In any event, MAA Approval shall be deemed to have
occurred in a country with respect to a Product no later than the date of the
First Commercial Sale of such Product in such country by or under authority of
Janssen or its Subdistributors.
1.8 "Major Country" shall mean The People's Republic of China or
Canada.
1.9 "Net Sales" shall mean [*] from sales of Product [*] less
deductions [*] for:
(a) [*];
(b) [*];
(c) [*];
(d) [*];
(e) [*] and
(f) [*].
The amounts described in (a) and (b) above shall be deducted only to the extent
they are stated separately on the invoice and paid by the buyer, or to the
extent reflected on Janssen's books in accordance with GAAP. [*]
1.10 "Patents" shall mean all patents and patent applications
(including continuations, continuations-in-part, divisions, patents of
addition, reissues, renewals, and extensions) which are or become owned by
VIVUS or VIVUS Inc., or to which VIVUS or VIVUS Inc. has, now or in the future,
the right to grant licenses and distribution rights, which generically or
specifically claim Product, a process for manufacturing Product, an
intermediate used in such process or a use of Product. With respect to any
such patents or applications which VIVUS or VIVUS Inc. acquires or has acquired
from a Third Party, the same shall be included within the "Patents" hereunder
to the extent that VIVUS or VIVUS Inc. has the right to license the same
hereunder.
1.11 [*] meeting the applicable [*].
1.12 "Product(s)" shall mean the VIVUS "MUSE" Product for which an
NDA has been approved in the U.S. as of the Effective Date for any indications
(hereinafter "First Product"), and any other product useful to treat male
erectile dysfunction in humans for any indications which is both delivered
locally to the penis and contains alprostadil, and that is owned or controlled
by VIVUS or VIVUS Inc or their Affiliates controlled by VIVUS or VIVUS, Inc.
1.13 "Specifications" shall have the meaning set forth in Section
5.7 below.
1.14 "Subdistributor" shall mean any Affiliate or Third Party to
whom Janssen has granted the right, directly or indirectly, to distribute
Product and such Affiliate or Third Party is responsible for marketing and/or
promotion of such Product within its distribution territory, but does not
include wholesalers and resellers of Product who do not engage in any marketing
or promotion of the Product.
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1.15 "Territory" shall mean Canada, Mexico (including those
Caribbean Islands listed in Exhibit A hereto) South Africa, The Peoples
Republic of China, South Korea, Taiwan, Malaysia, Indonesia, Philippines, Hong
Kong (including Macau) and Singapore (including Brunei), Thailand, Vietnam,
Myanmar, Cambodia and Laos. The initial Janssen Subdistributors responsible
for each country within the Territory are listed in Exhibit A.
1.16 "Third Party(ies)" shall mean any party other than Janssen,
VIVUS and their Affiliates.
1.17 "VIVUS Alternative Trademark" shall mean a Trademark other
than the VIVUS Trademark which VIVUS has designated and the parties agree to
use with the Product in those countries in the Territory where the VIVUS
Trademark is not used.
1.18 "VIVUS Cost of Goods" shall mean [*] calculated in accordance
with U.S. GAAP and VIVUS' then prevailing standard procedures for calculating
Cost of Goods as reflected in VIVUS' audited financial statements, [*].
1.19 "VIVUS Know-How" shall mean all methods, procedures, data and
information in tangible form owned or controlled by VIVUS [*].
1.20 "VIVUS Trademark" shall mean the "MUSE" Trademark which VIVUS
has used in connection with the Product. The VIVUS Trademark will be used in
connection with the Product in the Territory unless the Parties agree otherwise
or unless otherwise provided herein. Each Party agrees that it will consider,
in good faith, a request by the other Party to use a VIVUS Alternative
Trademark.
2. GRANT OF DISTRIBUTION RIGHTS
2.1 Appointment. VIVUS hereby grants to Janssen the exclusive
(even as to VIVUS) right to package, label, distribute and market Product for
sale in and sell Product in the Territory for all indications, with the right
to grant subdistribution rights to subdistributors (Affiliates or otherwise)
who distribute other Janssen ethical pharmaceutical products, subject to all
the other terms and conditions of this Agreement. Janssen may subdistribute
Products through other subdistributors with VIVUS' prior written approval.
Notwithstanding anything herein to the contrary, Janssen and each
subdistributor shall market, promote, sell and otherwise distribute Product in
accordance with all applicable laws and regulations. VIVUS reserves all rights
not expressly granted herein.
2.2 Janssen No Conflict. During the term of this Agreement,
Janssen agrees that neither Janssen nor its Affiliates will develop, market or
distribute any products in the Territory for the treatment or prevention of
erectile dysfunction other than Products; provided that with VIVUS' prior
approval, Janssen may develop, market or distribute within the Territory
products for the treatment of erectile dysfunction that are complementary with
Products and that do not involve the transurethral delivery, local injection,
local topical application or other local delivery of a drug substance.
2.3 Sales Outside Territory. Subject to applicable laws and
regulations, Janssen agrees to take reasonable efforts to prevent Janssen or
its subdistributors from, directly or indirectly, offering for sale, selling,
or otherwise transferring Product for use outside the Territory. Likewise,
subject to
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<PAGE> 9
applicable laws and regulations, VIVUS agrees to take reasonable efforts to
prevent VIVUS (except for through Janssen), its Affiliates or Third Parties
from, directly or indirectly, offering for sale, selling, or otherwise
transferring Product for use within the Territory.
2.4 Licenses. Subject to the terms and conditions of this
Agreement, VIVUS hereby grants to Janssen an exclusive, royalty-free, license,
without the right to grant or authorize sublicenses, under Patents and VIVUS
Know-How to package, label, distribute, market and sell Product in the
Territory during the term of this Agreement.
2.5 VIVUS No Conflict. VIVUS agrees that it will grant no rights
in the Territory to Third Parties which would conflict with the rights granted
to Janssen herein, except as permitted by Janssen.
3. DEVELOPMENT AND MARKETING
3.1 Joint Board. Promptly after the Effective Date the parties
shall establish a Joint Development and Marketing Board ("JDMB") to oversee the
regulatory activities relating to the Product in the Territory, review and
discuss overall plans for the commercialization and marketing of the Product,
coordinate the exchange of information between the parties regarding the
marketing and sale of Product in the Territory and to undertake and/or approve
such other matters as are provided for the JDMB under this Agreement. The JDMB
will consist of up to three (3) representatives from each party. The JDMB
shall meet at least quarterly during the first two (2) years after the
Effective Date at mutually agreeable locations outside the United States or, if
mutually agreeable, by teleconference and thereafter as necessary. Decisions
of the JDMB shall be by unanimous approval; provided, however, if the JDMB
cannot reach agreement on a matter, either party may refer the dispute to the
Chief Executive Officer of VIVUS and the President of Janssen-Ortho, Canada,
who shall meet promptly and negotiate in good faith to resolve any such dispute
within 30 days of any such referral. If despite such good faith efforts, the
parties are unable to resolve such dispute, [*].
3.2 Development. The JDMB will discuss the design and
implementation of clinical trials for Product in the Territory. For at least
the First Product in each country of the Territory and further Products that
Janssen intends to distribute hereunder at its discretion Janssen or its
Subdistributor shall, at their sole expense, carry out the remaining
preclinical and clinical development of the Products for the Territory to
achieve MAA Approval and shall keep the JDMB reasonably informed of its
activities. [*] Janssen shall not conduct, or authorize, encourage, assist or
contract with any Third Party to conduct any clinical testing of a Product
without VIVUS' prior approval, not unreasonably withheld, but subject to VIVUS'
right under Section 3.1 above to control the design and protocols of any such
clinical testing.
3.3 Regulatory Approvals/MAAs. For at least the First Product in
each country of the Territory and further Products that Janssen intends to
distribute hereunder at its discretion, Janssen shall be responsible, at its
sole expense, for filing MAAs for each Product in the Territory up to and
including MAA Approval and thereafter maintain such MAA Approvals. All such
activity shall be done in full consultation with the JDMB. Janssen shall use
reasonable efforts to obtain such MAA
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<PAGE> 10
Approvals for the First Product as soon as practicable in each country within
the Territory, consistent generally with the efforts it makes for its other
important products. In connection with Janssen's filing of MAAs, VIVUS shall
provide Janssen with a copy in English or translations already completed by
VIVUS, of all available information and data required to prepare appropriate
regulatory submissions affecting approval to market or of product pricing.
Without limiting the foregoing, in the event that filing for the necessary MAAs
with the appropriate regulatory agency in any country within the Territory
requires access to VIVUS' new drug application for the Product filed with the
U.S. FDA ("NDA"), VIVUS shall at its option (i) to the extent legally possible
in such country, file the MAA on behalf of Janssen, in which case Janssen shall
reimburse VIVUS' reasonable out-of-pocket expenses related to such filing, or
(ii) provide the NDA to Janssen solely for the purpose of making such MAA
filing. VIVUS agrees to reasonably assist Janssen in responding to any
questions raised by the regulatory authorities. This support may include, but
not be limited to, attending meetings with Janssen and local regulators in
North America to address specific aspects of the Product as part of the review
process. [*] All MAA filings will be in the name of VIVUS and Janssen except
where otherwise required by local law. Janssen shall ensure that of all
registration and regulatory approvals are assigned back and sole ownership
transferred to VIVUS promptly upon termination of Janssen's distribution rights
with respect to the Product in such country to the extent permitted by
applicable laws.
3.4 Marketing Plans.
3.4.1 General. Janssen shall prepare reasonably detailed
marketing plans for the Territory, generally including country- by-country
plans, such plans to include plans related to the prelaunch, launch, promotion
and sale of Product, and which plans shall be shared with the JDMB (the
"Marketing Plans"). The Marketing Plans shall be designed to fulfill Janssen's
undertakings pursuant to Section 4.1 below. Notwithstanding anything herein to
the contrary, subject to Section 3.1 above, the Marketing Plan for Canada
except for pricing shall be subject to approval by the JDMB. Subject to the
provisions of this Agreement, and subject to compliance with the Marketing
Plans, Janssen shall have full control and authority of commercialization of
Product in the Territory and implementation of the Marketing Plans, at
Janssen's expense. Janssen shall implement the Marketing Plans, and the JDMB
will review the progress of Janssen's marketing efforts under the Marketing
Plans. Janssen agrees to keep the JDMB informed of the activities of Janssen
and its Subdistributors with respect to Products in the Territory. VIVUS
agrees to keep the JDMB informed of key marketing strategies or plans that it
has developed or experiences that it has gained in marketing the Product
outside the Territory to the extent VIVUS has the right to do so.
3.4.2 VIVUS Approval. Any claim, message or other material
part of promotional materials, Samples, advertising and materials for training
sales representatives with respect to Product, relating to uses, properties,
efficacy or positioning of Product, which has not previously been approved or
used by VIVUS or VIVUS Inc. in its own promotional or training activities,
shall be provided by Janssen to VIVUS along with an English translation
thereof, as applicable, and subject to review and approval by VIVUS prior to
the use by Janssen and its Subdistributors. VIVUS shall use reasonable efforts
to complete any such review and respond to Janssen within fourteen (14) days
from notification by Janssen to VIVUS of the relevant matter.
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<PAGE> 11
3.5 Exchange of Information. Each party shall keep appropriate
records relating to the activities contemplated by this Article 3, and shall
report to the other party on the status of such activities on a regular basis.
The parties shall exchange data and information relating to Product development
to the extent reasonably necessary or appropriate, and each party shall have
the right to use such information received from the other in connection with
exercising its rights and performing its obligations under this Agreement. In
fulfilling its obligations to report or exchange information under this Article
3, delivery by a party in writing to a member of the JDMB of the other party
will be considered sufficient.
3.6 Adverse Experiences. With respect to adverse drug experiences
relating to the Product, the parties shall report to the appropriate regulatory
authorities in the countries in which the Product is being developed or
commercialized, in accordance with the appropriate laws and regulations of the
relevant countries and authorities and Janssen shall ensure that its
Subdistributors comply with such reporting obligations. Such reporting
activities within the Territory shall be coordinated by the JDMB where time and
law permit. A party shall simultaneously with reporting any adverse drug
experience relating to the Product to the appropriate regulatory authorities of
any country or learning that a Third Party has reported an adverse drug
experience relating to the Product to an appropriate regulatory authority of
any country, report such adverse drug experience to the other party. As soon
as is reasonable after the Effective Date, VIVUS will report to Janssen any
adverse drug experience relating to the Product of which it is aware that has
been reported to the appropriate regulatory authorities of any country.
4. COMMERCIALIZATION AND PROMOTION
4.1 Janssen Commercialization.
4.1.1 Diligence. Janssen shall [*] (a) to launch the First
Product in each country in the Territory as soon as possible after obtaining
MAA Approval for such Product; and (b) after the First Commercial Sale of a
Product in a country, to achieve high volume sales of Product in such country.
Without limiting the foregoing, Janssen agrees to spend within the Territory on
promotion of the First Product, [*] after the First Commercial Sale of the
First Product in the first Major Country.
4.1.2 Failure to Sell. If Janssen fails to launch the
First Product in any country in the Territory [*] from the date of MAA Approval
for such Product in such country, then such country shall cease to be part of
the Territory for all purposes of this Agreement, and all rights to package,
label, market, sell and distribute Product in such country shall revert to
VIVUS. In countries where price approval of the First Product is required,
then the requirement for launch [*] after MAA Approval in the case where the
failure to launch is due to lack of price approval at a level no greater than
the price charged in other countries of the Territory and Janssen is exerting
reasonable efforts to obtain such price approval. In addition, if Janssen
decides, in its sole discretion, not to launch the First Product or not to
continue sales of at least one Product in any particular or all countries on
the terms of this Agreement Janssen may [*] cancel the launch or discontinue
sales in such country or countries and such country or countries shall cease to
be part of the Territory for all purposes of this Agreement, and all rights to
package, label, market, sell and distribute Product in such country shall
immediately revert to VIVUS. In the event a [*]
4.1.3 Subsequent Products. With respect to each Product
after the First Product (a "Subsequent Product"), Janssen shall, in its sole
discretion, within six (6) months of the approval of
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<PAGE> 12
an NDA in the United States or its equivalent in a country of European Union
for such Subsequent Product (i) file the appropriate MAAs necessary to market
and distribute such Subsequent Product in at least each of the Major Countries
and one (1) of Mexico, South Korea or Taiwan and use reasonable efforts to
obtain MAA Approvals for such Subsequent Product as soon as practicable in each
such country; or (ii) pay to VIVUS all amounts due for such Subsequent Product
under the appropriate clause of Section 6.1 that would otherwise be due upon
MAA Approval in both of the Major Countries and in Mexico; provided, however,
in the event that Janssen elects not to perform either (i) or (ii) above, then
such Subsequent Product shall be excluded from the definition of Product for
all purposes under this Agreement, including without limitation Sections 2.1
and 2.4 above, and VIVUS (itself or through an Affiliate or Third Party) shall
have the right to package, label, distribute, market and sell such Subsequent
Product in the Territory.
4.2 Training. VIVUS will provide a one-time training in English
for Janssen's English speaking sales and marketing management personnel with
respect to the Product at a first location of Janssen's choosing in the far
east and a second location of Janssen's choosing in Canada and will provide to
Janssen training materials for the Product prepared by VIVUS for use in
training VIVUS Inc.'s U.S. sales representatives. Janssen may copy any
training materials provided by VIVUS for future training programs conducted by
Janssen in connection with the marketing and sales of the Product hereunder.
Janssen will at all times ensure that its sales force is fully trained with
respect to the Product.
5. PRODUCT SUPPLY AND DISTRIBUTION
5.1 Product Supply. Subject to the terms and conditions of this
Article 5 (including Section 5.10 below) VIVUS shall supply Janssen with
Product for the Territory, in Foil Pouch Package Form or such other form as
mutually agreed, and Janssen shall exclusively purchase its requirements from
VIVUS, during the term of the Agreement, [*]. Janssen shall prepare all such
Product in final packaged form including without limitation all product
labeling and other package inserts and materials required by the applicable
regulatory agencies. [*].
5.2 Samples. VIVUS shall supply Janssen with quantities of
Product sales samples ("Promotional Samples"), and with quantities of Product
reasonably necessary for Janssen to conduct clinical trials ("Clinical Trial
Samples") and quality assurance testing to verify that lots of Product supplied
by VIVUS meet the applicable Specifications ("QA Samples") (collectively,
"Samples"), all in such amounts as are mutually agreed. Such Product shall be
supplied in Foil Pouch Package Form or such other form as mutually agreed.
Janssen shall prepare all such Product in final packaged form, except QA
Samples utilized by Janssen.
5.3 [*]. The parties acknowledge and agree that for legal and/or
business reasons it may become desirable to conduct certain [*] as set forth in
this Section 5.3.
5.3.1 Timing. Although the parties may mutually agree to
undertake such activities earlier, [*] beginning five (5) years after the First
Commercial Sale of a Product [*]. It is understood, however, that [*] with
respect to a Product prior to the eighth anniversary of the First Commercial
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<PAGE> 13
Sale of such Product in the Territory, [*] under this Section 5.3 with respect
to such Product. To the extent that the [*] does not otherwise undertake or
arrange for such additional [*] shall have the right to undertake such
additional [*] under the terms of this Section 5.3.
5.3.2 [*]. Promptly following mutual agreement [*] in
accordance with Section 5.3.1 above, [*] reasonable specifications). In
addition, [*]. In connection with the [*] the cost of the travel and lodging
[*] cost to purchase the [*] necessary to produce [*] shall remain the property
of VIVUS, and shall [*]. [*] under this Section 5.3.2, [*].
5.3.3 [*]. At such time as the [*], in accordance with this
Article 5. As used in this Section 5.3, [*].
5.3.4 [*] agrees to use diligent efforts to protect against
and prevent the unauthorized use and disclosure of the [*]. Without limiting
the foregoing, [*] in an appropriate [*] for the purposes of this Section 5.3,
and shall obtain [*]. Upon the expiration or any termination [*] that such
request has been satisfied. In addition, in such event, upon request by [*]. In
no event shall [*] for any purpose not expressly authorized under this Section
5.3, without [*] prior written approval.
5.3.5 [*] a worldwide, irrevocable, royalty-free,
non-exclusive license, with the right to grant and authorize sublicenses, under
any and all [*] to make, use, sell, import, export and otherwise distribute
products and otherwise exploit such [*], and have the foregoing performed on its
behalf by one or more third parties. For purposes of this Section 5.3.5 the
term [*] shall mean [*] pursuant to this Section 5.3; which [*]. [*] shall not
[*] shall promptly notify [*] and, as reasonably requested by [*] with
information and documentation necessary for [*].
5.3.6 [*]. Upon mutual agreement [*] in accordance with
Section 5.3.1 above, [*] in accordance with the terms of this Section 5.3
during the term of this Agreement for so long as [*] will be used solely for
this purpose.
5.4 Forecasts. During the term of this Agreement, at least [*]
prior to the start of [*], Janssen shall provide VIVUS with [*] of the [*]
under Section 5.3 above, [*]. Each forecast shall indicate [*]. Each
forecast will also [*].
5.5 Orders.
5.5.1 Orders. Together with each forecast provided under
Section 5.4 above (the [*]), Janssen shall place its [*] order with VIVUS for
delivery in [*] of that quantity of Product, [*], reflected for [*] in the [*].
For ordering purposes, the forecast for [*]. Also, the forecasts for [*],
respectively, as each rolls to [*]. VIVUS shall accept such orders from
Janssen, subject to the remaining terms and condition of this Agreement,
provided that VIVUS shall not be obligated to accept orders to the extent the
quantity ordered exceeds the quantities forecasted for [*], but shall use good
faith efforts to fill orders for such excess quantities from available
supplies. All orders placed hereunder shall be for [*] or as otherwise
mutually agreed.
5.5.2 Form of Order. Janssen's orders shall be made
pursuant to a written purchase order which is in a form mutually acceptable to
the parties, and shall provide for shipment in accordance with reasonable
delivery schedules as may be agreed upon from time to time by VIVUS
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<PAGE> 14
and Janssen. VIVUS shall use all reasonable efforts to notify
Janssen within five (5) days from receipt of an order of its ability to fill
any amounts of such order in excess of the quantities that VIVUS is obligated
to supply. No terms contained in any purchase order, order acknowledgment or
similar standardized form shall be construed to amend or modify the terms of
this Agreement and in the event of any conflict, this Agreement shall control
unless expressly agreed in writing.
5.6 Delivery. Subject to Section 5.10 below, with respect to
exact shipping dates, VIVUS shall use its best efforts to ship quantities of
Product ordered in accordance with Section 5.5 above on the dates specified in
Janssen's purchase orders ("Shipping Date") submitted and accepted in
accordance with Section 5.5 above. Product will be delivered F.C.A. (Incoterms
1990) shipping point designated by VIVUS. The shipping packaging shall be in
accordance with good commercial practice with respect to protection of the
Product during transportation. As of the Shipping Date, [*] Product to be
shipped to Janssen hereunder, unless otherwise mutually agreed.
5.7 Product Rejection. If the Product, [*] supplied by VIVUS
under this Agreement fail to conform at the time of delivery to the applicable
specifications, a current copy of which is attached hereto as Exhibit B (as
reasonably modified from time to time by VIVUS according to Section 5.11 below,
"Specifications") or if as to such Product, [*], VIVUS fails to meet the GMP
Standards/Regulatory practices as warranted in Section 12.2.2, Janssen shall
promptly notify VIVUS after its discovery of non-conformity and Janssen shall
present reasonable evidence to VIVUS of such nonconformity. VIVUS shall
replace, at no additional expense to Janssen, such non-conforming Product with
new Product which does conform with the Specifications. VIVUS may analyze any
unit of Product rejected by Janssen for nonconformity and if it is objectively
established that the Product was conforming, then Janssen shall be responsible
for payment for any such units of Product. VIVUS shall give Janssen written
instructions as to how Janssen should, at VIVUS' expense, dispose of any
non-conforming material, and such instructions shall comply with all
appropriate governmental requirements. With respect to any Products, [*] that
do not conform to the applicable Specifications, Janssen shall not have the
right to return the same if such non-conformity could have been detected upon
reasonable inspection when first delivered and Janssen fails to identify and
notify VIVUS of the non-conformity within forty-five (45) days after receipt by
Janssen of the goods. In such event Janssen shall be responsible to purchase
such goods, and the price thereof shall be the same as accidentally destroyed
units under Section 6.2.2 below.
5.8 Suppliers. Without limiting VIVUS' responsibility under this
Agreement, VIVUS shall have the right at any time, to satisfy its supply
obligations to Janssen hereunder, either in whole or in part through
arrangements with Third Parties engaged to perform services or supply
facilities or goods in connection with the manufacture, testing, and/or
packaging of Product, [*]. VIVUS shall ensure that all such facilities comply
with applicable regulations and will give Janssen written notice sufficiently
in advance of any such arrangement to determine whether such arrangement would
require changes to an MAA Approval application filed in the Territory. VIVUS
shall bear the costs related to changing the MAA Approval application required
as a result of any such change in manufacturing arrangements. As a matter of
routine supply, VIVUS shall supply Product to Janssen for the Territory from a
single manufacturing facility.
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5.9 VIVUS Cost of Goods. VIVUS shall keep complete and accurate
records of VIVUS Cost of Goods, such records to be in a form required under
U.S. Generally Accepted Accounting Principles (GAAP), consistently applied.
Janssen shall have the right, to the extent payments were made to VIVUS on the
basis of VIVUS Cost of Goods, at Janssen's expense, through a certified public
accountant or other representative acceptable to VIVUS, to examine such records
during regular business hours during the life of this Agreement and for one (1)
year after its termination; provided, however, that such examination shall not
take place more often than once a year and shall not cover such records for
more than the preceding three (3) years and provided further that such
accountant shall report to Janssen only as to the accuracy of the records. If
such examination reveals that VIVUS has over reported the VIVUS Cost of Goods
by more than [*] for the period of the examination then VIVUS shall promptly
reimburse Janssen for its out-of-pocket costs related to such examination plus
interest at [*] on any amounts over paid to VIVUS hereunder due to such over
reporting. In any case if either party discovers a miscalculation of VIVUS
Cost of Goods the parties shall correctly calculate such amount and make all
necessary and appropriate adjustments to amounts paid and/or payable hereunder.
5.10 Shortage of Supply.
5.10.1 Allocation. In the event that VIVUS is unable to
supply both worldwide requirements of Product and quantities ordered by Janssen
under Section 5.5 above due to force majeure or otherwise, VIVUS shall allocate
the quantities of Product that VIVUS has in inventory, and that VIVUS is able
to produce, so that Janssen receives at least its proportional share of
available supplies as determined based on reasonable forecasts of Janssen,
VIVUS, VIVUS Inc. and VIVUS' other distributors. SUCH ALLOCATION SHALL BE
JANSSEN'S SOLE REMEDY FOR VIVUS' FAILURE TO SUPPLY TO JANSSEN QUANTITIES OF
PRODUCT VIVUS IS OTHERWISE OBLIGATED TO SUPPLY UNDER THIS ARTICLE 5. During
such periods as supply of Product is subject to allocation pursuant to this
Section 5.10, VIVUS agrees to use its best efforts to resolve the situation
within a reasonable amount of time.
5.10.2 Joint Manufacturing Team. Without limiting the
provisions of Section 5.10.1 above, if at any time VIVUS becomes unable to
supply, or becomes aware that it will be unable to supply, quantities of
Product ordered by Janssen in accordance with Section 5.5 above VIVUS shall
promptly notify Janssen in writing. In such event, at Janssen's request, the
parties shall establish a committee (the "Joint Manufacturing Team") consisting
of two (2) representatives from each party and the Joint Manufacturing Team
shall immediately convene to address such shortage, including locating
alternative suppliers and facilities to increase production and identifying
other actions necessary to resolve the shortage. VIVUS agrees to disclose to
the Joint Manufacturing Team current production capacity for the Product and
the total sales orders and forecasts for worldwide requirements for Product for
[*] (as defined in Section 5.4 above) for Janssen, VIVUS, VIVUS Inc. and Third
Party distributors without disclosing the identity of Third Parties. Subject
to Section 6.9.1(b) of that certain Distribution Agreement between VIVUS and
Astra AB dated May 29, 1996, VIVUS agrees to implement all measures established
by the Joint Manufacturing Team to remedy the shortage; and if the Joint
Manufacturing Team is unable to agree upon the appropriate measures, and the
Chief Executive Officer of VIVUS and the President of Janssen-Ortho Canada are
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<PAGE> 16
unable to agree on how to resolve the problem after negotiating in good faith,
VIVUS agrees to implement any reasonable suggestions made by Janssen's senior
executive for resolving the shortage. In any event, both parties agree to
respond with the level of speed and diligence commensurate with the severity of
the shortage.
5.11 Modification of Specifications. VIVUS may, from time to time,
with the approval of Janssen, not unreasonably withheld, reasonably modify the
Specifications attached as Exhibit B. Notice of such modifications to the
Specifications must be sufficiently in advance to determine whether such
modifications would require changes to an MAA application filed in the
Territory. Where such modifications requires changes to the MAA application
for any Product [*], then VIVUS will be responsible for the costs associated
with such modifications.
6. PAYMENTS
6.1 Initial Payments. In consideration of the costs incurred by
VIVUS in connection with the research and development of the Product and in
exchange for the exclusive rights granted herein, Janssen shall pay VIVUS the
following non-refundable fees:
(a) Five Million Dollars ($5,000,000) upon the Effective
Date;
(b) [*] payable as follows: [*] of the Major Countries
and [*] of Mexico, South Korea or Taiwan.
(c) [*] payable as follows: [*] of the Major Countries
and [*] of Mexico, South Korea or Taiwan.
(d) [*] payable as follows: [*] of the Major Countries
and [*] of Mexico, South Korea or Taiwan.
(e) [*] payable as follows: [*] of the Major Countries
and [*] of Mexico, South Korea or Taiwan.
(f) For purposes of determining if a Product is a
different Product for which payments may be due under this Section 6.1, each
Product shall be deemed a different Product if such Product contains an active
ingredient different from (i.e., in addition to) that contained in previous
Products for which payments for MAA Approval have already been made to VIVUS
hereunder. VIVUS is under no obligation to develop or market any follow on
products to the First Product.
Notwithstanding clauses (c), (d) and (e) above, in the event that [*] in a
country [*] after First Commercial Sale of the First Product in the Territory,
[*] for each month beginning on the date [*] such that no payment shall be due
upon [*].
6.2 Transfer Price.
6.2.1 Sale Units.
(a) For units of Product supplied by VIVUS under
Section 5.1 above, Janssen shall pay to VIVUS a price per unit equal to a
percentage of the Net Sales price of such Product with such percentage based on
the total Annual Net Sales volume in each region calculated as set forth below
(the "Transfer Price"): [*]
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(b) For purposes of calculating the foregoing, [*] equal the following
based upon the particular region:
Region
China [*]
Canada
All other countries together
(c) Notwithstanding the foregoing:
(i) Beginning two (2) years after the
first Commercial Sale of the first Product in a
particular region, for all annual Net Sales [*] Net
Sales [*].
(ii) [*] 1 the price per unit to be paid
to VIVUS for units of Products [*] shall not be less
than [*] provided that in any event, with respect to
[*].
(d) As used herein:
(i) "Annual Net Sales" shall mean [*].
For such purpose, [*].
(ii) [*]:
[*]
[*] and
[*]
In any event, notwithstanding the application of the foregoing formula,
the VIVUS Percentage [*]
(iii) The "Total Gross Profit Margin"
means[*]
6.2.2 Samples and Obsolete Inventory. With respect to
units of Products supplied by VIVUS to Janssen for use as Samples in accordance
with Section 5.2 above, Janssen shall pay to VIVUS for such units an amount
equal to [*] except that a reasonable number of Samples supplied to Janssen to
be used in clinical trials to obtain MAA approval [*]. For purposes of
determining the transfer price to be paid to VIVUS, units of Products [*], and
the transfer price to be paid by Janssen to VIVUS for such units shall [*];
provided the total numbers of such units are within normal and customary levels
[*].
6.2.3 [*] the price paid to VIVUS shall equal VIVUS' cost
calculated in accordance with GAAP and in accordance with VIVUS' then
prevailing standard procedures for calculating Cost of Goods as reflected in
VIVUS' audited financial statements, together with royalties payable to third
parties.
__________________________________
(1) For purposes of example see Exhibit C.
(2) For purposes of example see Exhibit D.
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<PAGE> 18
6.3 Discounting. In the event that Janssen or its Subdistributor
sells Products to a Third Party who also purchases other products or services
from Janssen or its Affiliates, Janssen agrees not to, and to require its
Subdistributors not to, discount the purchase price of the Products to a
greater degree than Janssen or its Subdistributors, respectively, generally
discounts the price of its other products to such customer. For purposes of
this provision "discounting" includes establishing the list price at lower than
Janssen's normal pricing level. Without limiting the foregoing, Janssen agrees
not to, and to require its Subdistributors not to, treat Products in such a
manner that would disadvantage the Product in comparison with other products
offered for sale by Janssen or its Subdistributors.
6.4 Sales Records. Janssen shall keep and require its
Subdistributors to keep complete and accurate records of all Net Sales of
Product on a country-by-country basis. VIVUS shall have the right, at VIVUS'
expense, through a certified public accountant or other representative, to
examine such records during regular business hours provided, however, that such
examination shall not take place more often than once a year and shall not
cover such records for more than the preceding three (3) years. If such
examination reveals an underpayment to VIVUS in excess of [*] for any period
then Janssen shall promptly reimburse VIVUS for the costs of such examination
and pay the underpayment amount plus interest at [*].
6.5 Provisional Payments.
6.5.1 Product Units. Payments due to VIVUS under Sections
6.2.1 and 6.2.2 and 6.2.3 shall be provisionally made, on a per unit of
Product, [*] basis, as the case may be, within [*] of delivery to Janssen of
each unit of Product, [*]. The provisional payment shall be based on [*]
estimates by the parties of those variables necessary to calculate a
provisional transfer price in accordance with the provisions of the relevant
sections. Such estimates will be made in good faith and shall be consistent
with internal estimates on which the party relies to plan capacity, gauge
performance or plan inventory. [*] prior to the start of any relevant Janssen
accounting year, Janssen and VIVUS will make the estimates and supply to each
other the following data to establish a provisional transfer price for that
entire year.
(a) For Product supplied under 6.2.1, the provisional payment will
be based on the formula:
[*]
where:
[*]
or, the provisional payment will be based on a [*].
(b) For Product supplied under 6.2.2, the provisional payment will
be based on a [*].
(c) [*], the provisional payment will be based on a [*].
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<PAGE> 19
For avoidance of doubt, to the extent the transfer price of a unit of Product
is to be determined based on the [*] for purposes of calculating the
provisional transfer price above.
Janssen [*]. Likewise, Janssen [*].
6.6 Reconciliation.
6.6.1 Product Units. The provisional transfer price under
which Product, and other materials supplied under Section 5.3 above, was
received will be reconciled to the actual transfer price as the required data
is available within sixty (60) days following the end of each Janssen
accounting quarter, provided that VIVUS provides Janssen with the actual cost
of good sold within thirty (30) days of the end of such quarter. In the event
that the provisional payments by Janssen under Section 6.5 above were greater
than the amounts actually due under Section 6.2, Janssen shall be entitled to
credit such excess against future purchases of Product hereunder.
6.6.2 Timing. No reconciliation shall be made under this
Section 6.6 with respect to units for which provisional payments were made
until the end of the quarter in which such units are sold or in the case of
Samples in the quarter they are distributed.
6.7 China Royalty. Janssen agrees to pay to VIVUS a running royalty
of [*], sold by Janssen or its Subdistributors. Notwithstanding the foregoing,
in the event that a non-royalty payment method would, because of changed
circumstances, be more advantageous for either party with respect to Product
[*], the parties agree to discuss in good faith the implementation such other
method; it being understood, however, that neither party would incur any
disadvantage as a result of such other method.
6.8 Payment. Within [*] after the end of each calendar quarter,
Janssen shall provide VIVUS with a true accounting of all payment obligations,
if any, owed in accordance with this Article 6, together with a statement
setting out all details necessary to calculate the amounts actually due
hereunder with respect to Net Sales made in that calendar quarter, including
units of Product sold on a country-by-country basis, gross sales of Product in
that calendar quarter including units of Product sold on a country-by-country
basis, Net Sales in that calendar quarter on a country-by-country basis, all
relevant deductions, and all relevant exchange rate conversions. Any payments
due shall accompany such statement.
6.9 Taxes. The parties hereto acknowledge and understand that as
of the Effective Date, no withholding taxes or similar governmental charges are
required to be withheld on amounts to be paid to VIVUS hereunder. In the event
that after the Effective Date withholding taxes or similar charges are required
by law to be withheld on behalf of VIVUS from amounts due to VIVUS hereunder,
Janssen shall deduct said taxes or charges from amounts due to VIVUS hereunder
and promptly pay the same to the applicable taxing authority; provided, however
that to the extent such withholding taxes or other charges become due as a
result of Janssen's assignment or other transfer of this Agreement to an
Affiliate or otherwise pursuant to Section 13.8 below or other change in the
structure of or the way Janssen does business, Janssen shall gross up all
amounts due to VIVUS
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<PAGE> 20
hereunder so that the amounts paid to VIVUS are not reduced by said taxes or
other charges. Notwithstanding the foregoing, all amounts to be paid to VIVUS
pursuant to Section 6.7 shall not be reduced by any withholding taxes or
similar governmental charges (not including U.S. or Bermuda income tax on
VIVUS' income). In regard to taxes or charges paid on behalf of VIVUS, Janssen
shall furnish VIVUS with proper evidence of the taxes paid.
6.10 U.S. Dollars. All sums due under this Agreement shall be
payable in U.S. dollars. Monetary conversion from the currency of a foreign
country in which Product is sold into United States currency shall be
calculated at the actual average of the buying and selling rates of exchange
for the quarter in which such sales were made as such rates are reported, as of
the last business day of such quarter, by the Wall Street Journal (U.S.,
Eastern Edition).
7. CONFIDENTIALITY
7.1 Nondisclosure. "Confidential Information" means any
information, data, or know-how which the disclosing party treats
confidentially, is in writing and is identified as confidential, or if
disclosed orally is indicated to be confidential at the time of disclosure and
is confirmed in writing as confidential by the disclosing party within
forty-five (45) days after initial disclosure. VIVUS and Janssen shall not
(and shall ensure that its Subdistributors do not) use or reveal or disclose to
Third Parties any Confidential Information received from the other party
without first obtaining the written consent of the disclosing party, except as
may be otherwise provided herein, or as may be required for purposes of
marketing Product or for securing essential or desirable authorizations,
privileges or rights from governmental agencies. This confidentiality
obligation shall not apply to such information which (i) is or becomes a matter
of public knowledge through no fault of the receiving party or its Affiliates
or Subdistributors, or (ii) is already in the possession of the receiving
party, or (iii) is disclosed to the receiving party by a Third Party having the
legal right to do so, or (iv) is subsequently and independently developed by
employees of the receiving party or Affiliates thereof who had no knowledge of
the Confidential Information disclosed, or (v) is required by law to be
disclosed. The parties shall take reasonable measures to assure that no
unauthorized use or disclosure is made by others to whom access to Confidential
Information of the other party is granted.
7.2 Disclosure to Subdistributors. Janssen may, to the extent
necessary, disclose information received from VIVUS to a Subdistributor of
Janssen, provided that each such Subdistributor has agreed in writing to
maintain the confidentiality of such information and not use such information
except as necessary to fulfill the purposes hereunder. Janssen shall be fully
responsible for any breach by its Subdistributors of this Article 7. Janssen
shall immediately notify VIVUS of any unauthorized use or disclosure of VIVUS'
information that it becomes aware of. Without limiting the foregoing, Janssen
shall at its expense, upon request of VIVUS take all other steps necessary to
cease all unauthorized use or disclosure of VIVUS Confidential Information
obtained from Janssen or Subdistributor, or in the event VIVUS takes such
steps, Janssen shall reimburse all reasonable costs related thereto.
7.3 Terms of Agreement. No public announcement or other public
disclosure concerning the existence of or terms of this Agreement shall be
made, either directly or indirectly, by any party to
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<PAGE> 21
this Agreement, except as may be legally required or as may be required for
recording purposes, without first obtaining the written approval of the other
party and Agreement upon the nature and text of such announcement or
disclosure. The party desiring to make any such public announcement or other
disclosure shall provide the other party with a copy of the proposed
announcement or disclosure for review and comment in reasonably sufficient time
prior to public release. Each party agrees that it shall cooperate fully with
the other with respect to all disclosures regarding this Agreement to the
Securities Exchange Commission and any other governmental or regulatory
agencies, including requests for confidential treatment of proprietary
information of either party included in any such disclosure. In addition, each
party agrees not to disclose this Agreement or its terms to Third Parties,
except to professional advisors and potential financing sources and under
conditions that reasonably protect the confidentiality thereof. The parties
will mutually agree upon the contents of a press release (and accompanying Q&A)
which may be issued upon the Effective Date, and thereafter the parties may
publicly disclose information contained in such press release or Q&A without
further approvals.
7.4 Clinical Data. All clinical and preclinical data disclosed by
VIVUS shall be deemed Confidential Information of VIVUS.
7.5 Product Data. Janssen shall not submit for written or oral
publication any scientific or medical manuscript, abstract or the like which
includes data or other information relating to the Product without first
obtaining the prior written consent of VIVUS. The contribution of each party
shall be noted in all publications or presentations by acknowledgment or
coauthorship, whichever is appropriate.
8. PATENT PROSECUTION AND LITIGATION
8.1 Ownership of Inventions. Janssen shall have and retain sole
and exclusive title to all inventions, discoveries and know how ("Inventions")
which are made during the term of this Agreement by Janssen, its employees,
agents, or other Third Parties acting under authority from Janssen working on
matters relating to and made using or comprising a Product and Janssen hereby
grants to VIVUS a non- exclusive, worldwide license, with the right to
sublicense, to such Inventions to make, have made, use and sell products for
any indication.
8.2 Maintenance of Patents.
8.2.1 Filings. As between Janssen and VIVUS, VIVUS shall,
at its expense, have responsibility for filing, prosecution and maintenance of
all Patents in the Territory. Janssen shall have the right to review pending
Patent applications and make recommendations to VIVUS concerning them. VIVUS
will consider in good faith all reasonable suggestions of Janssen with respect
to such pending applications. VIVUS agrees to keep Janssen informed of the
course of Patent prosecution or other proceedings with respect to the Patents
within the Territory. Janssen shall provide such Patent consultation to VIVUS
at no cost to VIVUS. All information disclosed to Janssen under this Section
8.2 shall be deemed Confidential Information of VIVUS. In the event that
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<PAGE> 22
VIVUS does not file or discontinues the prosecution or maintenance of any
Patents in the Territory, then Janssen may, at its expense, choose to continue
the same with the cooperation of VIVUS.
8.2.2 Extensions. Janssen shall have the right but not the
obligation to seek extensions of the terms of Patents in the Territory. At
Janssen's request, VIVUS shall either authorize Janssen to act as VIVUS' agent
for the purpose of making any application for any extensions of the term of
Patents and provide reasonable assistance therefor to Janssen or shall
diligently seek to obtain such extensions, in either event, at Janssen's
expense.
8.3 Infringement by Product. In the event of the institution of
any suit by a Third Party against Janssen for patent infringement involving the
manufacture, use, sale, distribution or marketing of Product anywhere in the
Territory during the term of this Agreement, Janssen shall promptly notify
VIVUS in writing. Janssen shall have the right but not the obligation to
defend such suit against it. Except in the case of a breach under Section
12.5, Janssen will have the right to offset [*] of the out-of-pocket costs of
defending such suit against any sums due VIVUS hereunder; provided that VIVUS
shall have the right to reasonably approve the plan of defense under which such
costs are incurred. VIVUS and Janssen shall assist one another and cooperate
in any such litigation at the other's reasonable request without expense to the
requesting party, and in any event VIVUS may participate in any such suit with
counsel of its choice at its own expense. Without limiting the foregoing,
Janssen may offset from amounts due to VIVUS hereunder [*] of amounts finally
awarded against and paid by Janssen to a Third Party to the extent the same
arise out of the Product's infringement of Third Party patent rights within the
Territory during the term of this Agreement.
8.4 Third Party Infringement. In the event that VIVUS or Janssen
becomes aware of actual or threatened infringement of a Patent anywhere in the
Territory by the manufacture or sale or use of a Product for the transurethral
delivery of a formulation containing alprostadil to treat or prevent erectile
dysfunction in humans (the "Field"), that party shall promptly notify the other
party in writing. VIVUS shall have the first right but not the obligation to
bring, at its own expense, an infringement action against any Third Party. If
VIVUS does not commence a particular infringement suit within the Field within
[*] of receipt of a request by Janssen to do so, then Janssen, after notifying
VIVUS in writing shall be entitled to bring such infringement action at its own
expense and to include VIVUS as a nominal party plaintiff. VIVUS shall keep
Janssen reasonably informed of its activities during the [*] period. The party
conducting such action shall have full control over its conduct, including
settlement thereof subject to Section 8.6 below. In any event, VIVUS and
Janssen shall assist one another and cooperate in any such litigation at the
other's reasonable request without expense to the requesting party.
8.5 Recovery. VIVUS and Janssen shall recover their respective
actual out-of-pocket expenses, or equitable proportions thereof, associated
with any litigation against infringers undertaken pursuant to Section 8.4 above
or settlement thereof from any resulting recovery made by any party. Any
excess amount of such a recovery shall be shared between Janssen and VIVUS with
Janssen receiving [*] and VIVUS receiving [*] to the extent such recovery
relates to sales in the Territory during the term of this Agreement.
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<PAGE> 23
8.6 Status of Activities. The parties shall keep one another
informed of the status of their respective activities regarding any litigation
or settlement thereof concerning Product within the Territory, provided however
that no settlement or consent judgment or other voluntary final disposition of
any suit defended or action brought by a party pursuant to this Article 8 may
be entered into without the consent of the other party if such settlement would
require the other party to be subject to an injunction or to make a monetary
payment or would otherwise adversely affect the other party's rights under this
Agreement.
9. TRADEMARKS
9.1 Display. All packaging materials, labels and promotional
materials for the Product shall display the VIVUS Trademark (or the VIVUS
Alternative Trademark at Janssen's discretion) as appropriate. The Janssen
trade dress, style of packaging and the like with respect to each Product may
be determined by Janssen so as to be consistent with Janssen's standard trade
dress and style provided that the packaging and related materials shall display
the "VIVUS" tradename in at least ten (10) point logo type.
9.2 License. VIVUS hereby grants to Janssen an exclusive,
royalty-free license, to use the VIVUS Trademark, or the VIVUS Alternative
Trademark in each country of the Territory for the term of this Agreement in
connection with the marketing and promotion of Product as contemplated in this
Agreement. The ownership and all good will from the use of the VIVUS Trademark
and the VIVUS Alternative Trademark shall vest in and inure to the benefit of
VIVUS.
9.3 Registration. VIVUS agrees to file, register and maintain a
registration for the VIVUS Trademark in the countries of the Territory listed
on Exhibit E, as VIVUS is reasonably able under the circumstances, for the term
of this Agreement, at VIVUS' expense, for use with the Product. In the event
that the VIVUS Trademark or VIVUS Alternative Trademark is unavailable for use
with the Product in one or more countries listed on Exhibit E, VIVUS agrees to
choose in consultation with Janssen a VIVUS Alternative Trademark. Where VIVUS
agrees to the use of a VIVUS Alternative Trademark in a country, VIVUS agrees
to file, register and maintain a registration for the VIVUS Alternative
Trademark in such country, for the term of this Agreement, at VIVUS' expense,
for use with the Product in such country.
9.4 Recordation. In those countries where a trademark license
must be recorded, VIVUS will provide and record a separate trademark license
for the VIVUS Trademark and/or VIVUS Alternative Trademark. Janssen shall
cooperate in the preparation and execution of such documents.
9.5 Approval of Promotional Materials/Quality Control. Janssen
shall submit representative promotional materials, packaging, [*] using the
VIVUS Trademark and/or VIVUS Alternative Trademark to VIVUS for VIVUS'
reasonable approval prior to the first use of such items and prior to any
subsequent change or addition to such items, provided that if VIVUS has not
responded within four (4) weeks after such submissions, VIVUS' approval will be
deemed to have been received. For purposes of quality control, Janssen agrees
that for the [*] shall meet sufficient
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*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
<PAGE> 24
standards of quality. In the event that, after review, VIVUS determines that
[*] to meet acceptable standards of quality within a reasonable time.
9.6 Termination of Rights. Janssen's right to use the VIVUS
Trademark and the VIVUS Alternative Trademark shall terminate in each country
of the Territory in which Janssen's rights to distribute the Product expire or
are terminated in accordance with this Agreement. Janssen shall ensure the
cancellation of any Trademark licenses recorded or entered into in such
countries in favor of or by or under authority of, Janssen or its
Subdistributors to the extent legally possible.
9.7 Trademark Indemnity. VIVUS agrees to defend and/or settle any
claim brought against Janssen or its Subdistributor by a Third Party arising
out of or resulting from Janssen or its Subdistributor use of the VIVUS
Trademark or the VIVUS Alternative Trademark or the tradename VIVUS in the
Territory in accordance with the terms and conditions of this Agreement during
the term of this Agreement. VIVUS shall pay all resulting damages or
settlement amounts finally awarded against Janssen or its Subdistributor
(including reasonable attorneys' fees and court costs) which are attributable
to such claim during the term of this Agreement. Notwithstanding the
foregoing, if the VIVUS Trademark or VIVUS Alternative Trademark or the
tradename VIVUS becomes, or in VIVUS' reasonable judgment may become, the
subject of any claim as a result of Janssen or its Subdistributors use thereof
in any country within the Territory, VIVUS may, upon notice to Janssen, request
that Janssen and/or its Subdistributor cease using the VIVUS Trademark or VIVUS
Alternative Trademark or the tradename VIVUS, as applicable, in such country.
Ninety (90) days after such a request by VIVUS, VIVUS' obligation to defend and
settle claims under this Section 9.7 will terminate to the extent any claims,
damages or expenses arise out of or result from use after such ninety (90)-day
period of said VIVUS Trademark or VIVUS Alternative Trademark or the tradename
VIVUS in such country. The termination of VIVUS' obligation to defend and
settle claims is contingent upon VIVUS making available to Janssen, where VIVUS
is obligated to supply, adequate supplies of alternately labeled Product in a
timely manner sufficient to satisfy Janssen's demand therefor after the end of
such ninety (90) day period. After VIVUS' request to cease using a trademark,
upon Janssen's request, VIVUS agrees to register a new trademark for use in the
said country in accordance with Section 9.3 above.
9.8 Trademark Enforcement. In the event that either party becomes
aware that a Third Party is misappropriating or otherwise misusing the VIVUS
Trademark or VIVUS Alternative Trademark, as the case may be, within the
Territory such party shall promptly notify the other party. In which case,
the parties agree to discuss such misappropriation or misuse and cooperate to
develop a reasonable enforcement plan to deal with the same. VIVUS shall bear
[*] and Janssen shall bear [*] of the costs and expenses incurred to bring an
action to enforce the VIVUS Trademark or VIVUS Alternative Trademark, as
appropriate, in accordance with the mutually agreed upon enforcement plan.
Likewise, any recovery from such an action shall be shared between the parties,
with VIVUS receiving [*] and Janssen receiving [*] to the extent such recovery
relates to misappropriation or misuse in the Territory during the term of this
Agreement.
10. TERM AND TERMINATION
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*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
<PAGE> 25
10.1 Expiration. Unless otherwise terminated, this Agreement shall
expire on the date twelve (12) years after the date of First Commercial Sale of
a Product in the Territory. This Agreement may be extended for successive two
(2) year terms by mutual written consent of VIVUS and Janssen at least six (6)
months prior to expiration of the term hereof; provided however that VIVUS nor
Janssen shall not be obligated to approve any such extension and shall have no
liability whatsoever by reason of any failure to agree on any such extension.
10.2 Events of Termination. If any of the following events (an
"Event of Termination") occurs, the party not responsible for such event may
terminate this agreement by notice to the other party:
10.2.1 Payment Obligation. If a party fails to pay any
amount properly due under this Agreement within thirty (30) days following
receipt of written notice of such default by the other party.
10.2.2 Material Non-Performance. If a party defaults in any
other material respect in the performance or observance of any other material
term, covenant or provision of this Agreement, or if any representation by a
party contained in this Agreement proves to have been incorrect in any material
respect when made, resulting in material adverse consequences for the other
party (any such material default or material incorrect representation a
"Material Non-Performance"), and such Material Non-Performance is not cured
within sixty (60) days notice from the non-defaulting party.
10.2.3 Bankruptcy Proceedings. Because each party
acknowledges that the services to be rendered by the other are personal in
nature, inasmuch as the respective capabilities of the parties hereto are
uniquely valuable and that the determination to enter into this Agreement was
based upon the unique ability of the other party to fulfil its respective
obligations hereunder, if (i) such party shall make an assignment of
substantially all of its assets for the benefit of creditors, file a petition
in bankruptcy, petitions or applies to any tribunal for the appointment of a
custodian, receiver or any trustee for such party or substantially all of such
party's assets, or shall commence any proceeding under any dissolution or
liquidation law or statute of any jurisdiction (provided that no entity
succeeds to the business of such party following such dissolution or
liquidation) whether now or hereafter in effect which is not dismissed within
sixty (60) days; or (ii) there shall have been filed any such petition or
application against such party, or any such proceeding shall have been
commenced against such party, in which an order for relief is entered or which
remains undismissed for a period of ninety (90) days or more; or (iii) such
party by an act or knowing failure to act shall indicate such party's consent
to, approval of or acquiescence in, any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
any trustee for such party, or any substantial part of any of such party's
properties, or shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of ninety (90) days or more.
10.2.4 Termination by VIVUS. VIVUS may terminate this
Agreement on a country-by-country basis on thirty (30) days notice if MAA
Approval has not been received in such county within four (4) years from the
Effective Date; provided such notice is given prior to obtaining such MAA
Approvals. In the event that this Agreement is terminated with respect to any
country such
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<PAGE> 26
country shall cease to be within the Territory for all purposes of this
Agreement and the threshold Net Sales levels [*].
10.2.5 Termination by Janssen. Janssen may terminate this
Agreement on [*] notice to VIVUS.
11. RIGHTS AND DUTIES UPON TERMINATION
11.1 Payment. Upon expiration or termination, of this Agreement,
Janssen and VIVUS shall each pay all sums accrued or credits owed hereunder
which are then due.
11.2 Sale of Remaining Inventory. Upon early termination of this
Agreement under Section 10.2 above, Janssen shall notify VIVUS of the amount of
Product Janssen and its Subdistributors then have on hand. Janssen, its
Affiliates and its Subdistributors shall thereupon be permitted to sell that
amount of Product, within the ninety (90) day period following such
termination, subject to the reconciliation under Section 6.6 above and shall
destroy any remaining inventory. Units that are so destroyed shall be treated
as accidentally destroyed units for purposes of Section 6.2.2 above.
11.3 Survival. Upon expiration or termination of this Agreement,
all rights and obligations of the parties under this Agreement shall terminate
except those described in the following:
Article 1, Definitions
Last Sentence of Section 3.3, Regulatory Approvals/MAAs
Section 3.6, Adverse Experiences
Section 5.3.4, [*]
Section 5.3.5, [*]
Section 5.9, VIVUS Cost of Goods
Section 6.4, Sales Records
Section 6.9, Taxes
Article 7, Confidentiality for a period of 10 years
Section 8.1, Ownership of Inventions
Section 8.3, Infringement by Product
Section 8.5, Recovery
Section 9.6, Termination of Rights
Section 9.7, Trademark Indemnity
Article 10, Term and Termination
Article 11, Rights and Duties Upon Termination
Section 12.3, Indemnification by Janssen
Section 12.4, Indemnification by VIVUS
Article 13, General Provisions
It is understood that termination or expiration of this Agreement shall not
relieve a party from any liability which, at the time of such termination or
expiration, has already accrued to the other party or
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*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
<PAGE> 27
which is attributable to a period prior to such termination. Except as
otherwise expressly provided herein, termination of the Agreement in accordance
with the provisions hereof shall not limit remedies which may be otherwise
available in law or equity with respect to a breach hereof that occurred prior
to such termination.
12. WARRANTIES, REPRESENTATIONS, AND INDEMNIFICATIONS
12.1 General Representations. Each party hereby represents and
warrants for itself as follows:
12.1.1 Duly Organized. It is a corporation duly organized,
validly existing and is in good standing under the laws of the jurisdiction of
its incorporation, is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification and failure to
have such would prevent it from performing its obligations under this Agreement
and has all requisite corporate power and authority to conduct its business as
now being conducted, to own, lease and operate its properties and to execute,
deliver and perform this Agreement.
12.1.2 No Third Party Approval. No authorization, consent,
approval, license, exemption of, or filing or registration with, any court or
governmental authority or regulatory body (other than health regulatory
authorities) is required for the due execution, delivery or performance by it
of this Agreement, except as provided herein.
12.2 Representations and Warranties of VIVUS. VIVUS represents and
warrants to Janssen that:
12.2.1 VIVUS Rights. VIVUS has the right to grant the
rights granted in this Agreement and no provision in any third party agreement
to which VIVUS is a party will prevent VIVUS from performing its obligations
under this Agreement.
12.2.2 Good Manufacturing GMP Standards/Regulatory
Standards. All manufacturing and quality control operations utilized by VIVUS
in the manufacture of Product supplied under Sections 5.1 and 5.2 above shall
be carried out according to the procedures and requirements set forth in the
then-current version of the VIVUS Plant Master File with respect to such
Product, and (as to each Product) in accordance with all applicable U.S. rules
governing medical products and or devices in the GMP for medical products
and/or devices and regulations issued by the health regulatory authorities in
the countries of the Territory for which such Product is to be sold as in
effect at the time, provided that the applicable rules and regulations imposed
by the various countries of the Territory are no more burdensome than those
imposed by the U.S. [*] shall be carried out according to the procedures and
requirements set forth in the then-current version of the VIVUS Plant Master
File, and regulations issued by the health regulatory authorities in the
countries of the Territory in which such [*] material is to be used as in
effect at the time, provided that the applicable rules and regulations imposed
by the various countries of the Territory are no more burdensome than those
imposed by the U.S.
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*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
<PAGE> 28
12.3 Indemnification by Janssen. Janssen shall defend, indemnify
and hold harmless VIVUS, its officers, directors, shareholders, employees,
successors and assigns from any loss, damage, or liability, including
reasonable attorney's fees, resulting from any claim, complaint, suit,
proceeding or cause of action against any of them alleging physical injury or
death or otherwise arising out of the administration, utilization and/or
ingestion of Product manufactured, sold or otherwise provided to the injured
party by or under authority of Janssen (or its permitted subdistributor or
contractor); or otherwise with respect to Product supplied to, or sold or
distributed by, Janssen (or its permitted subdistributor or contractor),
provided:
(a) Janssen shall not be obligated under this Section
12.3 if it is shown by evidence acceptable in a court of law having
jurisdiction over the subject matter and meeting the appropriate degree of
proof for such action, that the injury was the result of (i) the gross
negligence or willful misconduct of any employee or agent of VIVUS or (ii) the
supply by VIVUS of Product that fails to meet applicable Specifications;
(b) Janssen shall have no obligation under this Section
12.3 unless VIVUS (i) gives Janssen prompt written notice of any claim or
lawsuit or other action for which it seeks to be indemnified under this
Agreement, (ii) Janssen is granted full authority and control over the defense,
including settlement, against such claim or lawsuit or other action, and (iii)
VIVUS cooperates fully with Janssen and its agents in defense of the claims or
lawsuit or other action; and
(c) VIVUS shall have the right to participate in the
defense of any such claim, complaint, suit, proceeding or cause of action
referred to in this Section 12.3 utilizing attorneys of its choice, at its own
expense, provided, however, that Janssen shall have full authority and control
to handle any such claim, complaint, suit, proceeding or cause of action,
including any settlement or other disposition thereof, to the extent VIVUS
seeks indemnification under this Section 12.3.
12.4 Indemnification by VIVUS. VIVUS shall defend, indemnify and
hold harmless Janssen, its officers, directors, shareholders, employees,
successors and assigns from any loss, damage, or liability, including
reasonable attorney's fees, resulting from any claim, complaint, suit,
proceeding or cause of action by a Third Party against any of them alleging
physical injury or death or otherwise arising out of (a) the administration,
utilization and/or ingestion of Product, sold or otherwise provided to the
injured party by VIVUS (or its permitted subdistributor or contractor other
than by or under authority of Janssen or (b) the supply by VIVUS of Product
that fails to meet applicable Specifications, provided:
(a) VIVUS shall not be obligated under this Section 12.4
if it is shown by evidence acceptable in a court of law having jurisdiction
over the subject matter and meeting the appropriate degree of proof for such
action, that the injury was the result of the gross negligence or willful
misconduct of any employee or agent of Janssen;
(b) VIVUS shall have no obligation under this Section
12.4 unless Janssen (i) gives VIVUS prompt written notice of any claim or
lawsuit or other action for which it seeks to be indemnified under this
Agreement, (ii) VIVUS is granted full authority and control over the defense,
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<PAGE> 29
including settlement, against such claim or lawsuit or other action, and (iii)
Janssen cooperates fully with VIVUS and its agents in defense of the claims or
lawsuit or other action; and
(c) Janssen shall have the right to participate in the
defense of any such claim, complaint, suit, proceeding or cause of action
referred to in this Section 12.4 utilizing attorneys of its choice, at its own
expense, provided, however, that VIVUS shall have full authority and control to
handle any such claim, complaint, suit, proceeding or cause of action,
including any settlement or other disposition thereof, to the extent Janssen
seeks indemnification under this Section 12.4.
12.5 Patent Warranties. To the best of its knowledge as of the
Effective Date, VIVUS represents and warrants that (i) Patents and VIVUS
Know-How are owned or controlled by VIVUS or VIVUS Inc., and are not currently
being infringed by a Third Party in the Territory, and (ii) that the practice
of such rights do not infringe any property right of any Third Party.
13. GENERAL PROVISIONS
13.1 Force Majeure. If either party fails to perform any part of
this Agreement due to any cause beyond the reasonable control of such party,
the party so affected shall, upon giving written notice to the other party, be
excused from such performance, provided that such party shall use its
reasonable efforts to avoid or remove such causes of non-performance and shall
continue performance with the utmost dispatch whenever such causes are removed.
When such circumstances arise, the parties shall discuss what, if any,
modification of the terms of this Agreement may be required in order to arrive
at an equitable solution.
13.2 Governing Law and Arbitration. This Agreement shall be
governed by the laws of the State of California without reference to conflict
of law principles. In the event of any dispute under this Agreement, both
parties shall endeavor to settle such dispute amicably between themselves. In
the event that the parties fail to agree, such dispute shall be settled by
arbitration as follows: Either party may by notice in writing to the other
require any issue in dispute to be submitted to arbitration in accordance with
this Section 13.2. From the date of the notice in writing and until such time
as any matter has been finally settled by arbitration hereunder, the running of
the time periods in which a party must cure a breach of this agreement shall
be suspended as to the subject matter of the dispute. Such notice shall
contain a statement of the arbitrable issue forming the basis of the dispute
and the position of the moving party as to the proper resolution of that issue.
Within thirty (30) days after receipt of such notice, the responding party
shall submit to the moving party a statement of its conception of the
arbitrable issue in question and of its position as to the proper resolution of
that issue. Within thirty (30)-days of the responding party's response, each
party shall appoint an independent arbitrator and give the other party written
notice thereof. In the event a party shall fail to appoint an arbitrator and
provide written notice thereof to the other party within such thirty (30) day
period, an arbitrator shall be appointed for such party by the American
Arbitration Association, as promptly as practicable after request by the other
party. Thereafter, the two (2) appointed arbitrators shall select a third
arbitrator within thirty (30) days after receipt of a list of proposed
arbitrators having expertise in the pharmaceutical industry proposed by the
American Arbitration Association. If the two (2) arbitrators designated by the
parties are unable to agreed on the third arbitrator within
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<PAGE> 30
thirty (30) days, then either party with notice to the other party, may call
for such appointment by the American Arbitration Association of the third
arbitrator. Regardless of the manner of his or her selection, the third
arbitrator shall be one who is qualified by knowledge and experience in the
pharmaceutical field. Each arbitrator shall agree prior to his or her
appointment to hear the dispute promptly and render a decision as soon as
practicable thereafter. The arbitration shall be conducted in English in
Chicago, Illinois, in accordance with the commercial arbitration rules or
successor rules then obtaining of the American Arbitration Association to the
extent not inconsistent with this Section 13.2. The Agreement of two (2) of
the three (3) arbitrators shall be sufficient to render a decision. The
decision of the panel shall be final and binding upon the parties and
enforcement thereof may be obtained in any court of competent jurisdiction.
The arbitrators may award costs and expenses, including reasonable attorneys'
fees, to the successful party, as the arbitrators deem appropriate. WITH
RESPECT TO DISPUTES REGARDING AMOUNTS DUE HEREUNDER THE PARTIES AND ARBITRATORS
SHALL USE ALL REASONABLE EFFORTS TO CONCLUDE THE ARBITRATION WITHIN ONE HUNDRED
TWENTY (120) DAYS FROM THE INITIAL NOTICE.
13.3 Janssen Right of Inspection. During the term of this
Agreement, VIVUS shall, upon written request of Janssen, permit Janssen's
authorized representative to inspect (and if reasonably necessary to copy) the
following: (i) all manufacturing and quality control records for all
manufacture of the Product supplied by VIVUS hereunder and (ii) quality control
records of all starting materials used in the manufacture of a Product supplied
by VIVUS hereunder. In addition, during the term of this Agreement, upon the
written request of Janssen, VIVUS shall permit Janssen's authorized
representative to inspect, at mutually agreeable times and during normal
business hours, the facilities where Product is manufactured for delivery to
Janssen hereunder for the purpose of verifying compliance with GMP and other
applicable regulatory standards. VIVUS shall remedy any deficiencies
discovered as a result of such inspections as soon as reasonably possible upon
receipt notice of the same from Janssen.
13.4 Waiver of Breach. The failure of either party at any time to
require performance of any provision hereof shall not affect its rights at a
later time to enforce the same. No waiver by either party of any condition or
term in any one or more instances shall be construed as a further or continuing
waiver of such condition or term or of another condition or term.
13.5 Separability. If any portion of this Agreement is held to be
illegal, void or ineffective, the remaining portions shall remain in full force
and effect and the parties will renegotiate the terms and conditions of this
Agreement to resolve any inequities.
13.6 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties relating to the subject matter hereof and
supersedes all previous writings and understandings. No terms or provisions of
this Agreement shall be varied or modified by any prior or subsequent
statement, conduct or act of either of the parties, except that the parties may
amend this Agreement by written instruments specifically referring to and
executed in the same manner as this Agreement.
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<PAGE> 31
13.7 Approvals. Unless expressly required not to be withheld
unreasonably, it is understood that when approval of either party is required,
such approval may be withheld in such party's sole discretion, without regard
to the reason or basis for withholding such consent.
13.8 Notices. Any notice required or permitted under this
Agreement shall be sent by air mail, postage pre-paid, to the following
addresses of the parties:
VIVUS
VIVUS International Limited
Clarendon House
Church Street
Hamilton, Bermuda
Attention: President
copies to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Kenneth A. Clark
Telephone: (415) 493-9300
Telecopy: (415) 493-6811
Any notice required or permitted to be given concerning this Agreement shall be
effective upon receipt by the party to whom it is addressed or within seven (7)
days of mailing by certified U.S. Mail or by reputable overnight courier
service, receipt confirmed, whichever is earlier.
13.9 Assignment. Neither this Agreement nor any interest hereunder
shall be assignable by either party without the written consent of the other,
except that either party may assign this Agreement and its rights and
obligations hereunder to an Affiliate or to any corporation with which it may
merge or consolidate, or to which it may transfer all or substantially all of
its assets to which this Agreement relates, without obtaining the consent of
the other party; provided that the entity to whom this Agreement is assigned
agrees in writing to be bound by its terms. This Agreement shall be binding
upon and inure to the benefit of the permitted successors in interest of the
respective parties.
13.10 No Partnership or Joint Venture. This Agreement shall not be
deemed to establish a joint venture or partnership between Janssen and VIVUS.
13.11 Third Party Rights. The obligations of VIVUS and the rights
of Janssen under this Agreement shall be subject to and limited by any
agreements pursuant to which VIVUS acquired rights to Patents from a Third
Party.
13.12 Limited Liability. Except in the case of a Third Party claim
against a party hereunder, the parties shall not be liable to each other under
any contract, negligence, strict liability or other legal
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<PAGE> 32
or equitable theory for any incidental or consequential damages for failure to
perform under this Agreement .
13.13 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
JANSSEN PHARMACEUTICA INTERNATIONAL,
A DIVISION OF CILAG AG INTERNATIONAL
BY: /s/ HEINZ SCHMID BY: /s/ ERIK ROMBOUT
---------------------------- -------------------------
Heinz Schmid Erik Rombout
TITLE: General Manager TITLE: Operations Director
------------------------- ----------------------
VIVUS INTERNATIONAL LIMITED
BY: /s/ TERRY NIDA
----------------------------
Terry Nida
TITLE: Vice President
------------------------
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<PAGE> 33
EXHIBIT A
JANSSEN AFFILIATES AND
COUNTRIES OF RESPONSIBILITY
<TABLE>
<S> <C>
Canada Janssen-Ortho Inc.
19 Green Belt Drive
North York, Ontario, Canada M3C IL9
China Xian-Janssen Pharmaceutical Co. Ltd.
5th Floor, Ocean Building
No. 44, Liang Jiu Road
Chao Yang Dist.
100016 Beijing, China
Hong Kong Janssen Pharmaceutical Division
c/o Johnson & Johnson (HK) Ltd.
12th Floor, Tower 3
China Hong Kong City
China Ferry Terminal
33 Canton Road, Tsim Sha Tsui
Kowloon, Hongkong
(Responsible for Macau)
Indonesia Janssen Pharmaceutica Division
c/o P.T. Johnson & Johnson Indonesia
Wisma Mampang, 3rd Floor
Jl. Mapang Prapatan Raya No. 1
Jakarta Selatan, Indonesia
Korea Janssen Korea Ltd
12th Floor, Sungwon Building
141, Samsung-dong, Kangam-ku
Seoul 135-090, Korea
Malaysia Janssen Pharmaceutica
(A div. of Johnson & Johnson Sdn. Bhd.)
Third Floor, Wisma Digital
Jalan Bersatu 13/4
46200 Petaling Jaya
Selangor, Malaysia
(responsible for Malaysia, Singapore, Brunei)
</TABLE>
<PAGE> 34
<TABLE>
<S> <C>
Mexico Janssen Farmaceutica, S.A. de C.V.
Canoa No. 79
Col. Tizapan - San Angel
Delegacion Alvara Obregon
01090 Mexico, D.F. Mexico
(responsible for:
Caribbean Area:
Dominican Republic
Bermuda
Bahamas
Jamaica
Cayman Islands
Trinidad
Haiti
Barbados
Curacao
Aruba
Grenada
Santa Lucia
Antigua
Tortola
Saint Martin
Saint Vincent
Turks and Caicos Islands)
Philippines Janssen Pharmaceutica
A Div. of Johnson & Johnson (Phil.), Inc.
7th Floor Centerpoint Condominium
Julia Vargas Cor. Garnet St.
Ortigas Center, Pasig
Metro Manila, Philippines
South Africa Janssen-Cilag
Janssen House - 2nd Floor
c/o Norwich Close and 5th St.
Santon 2146, Gauteng
South Africa
Taiwan Janssen-Cilag Taiwan
8th Floor, 319, Section 2
Tunhwa South Road
Taipei 106
Taiwan R.O.C.
</TABLE>
<PAGE> 35
<TABLE>
<S> <C>
Thailand Janssen Pharmaceutica Ltd.
1550 Grand Amarin Tower, 11 Fl.
New Petchburi Road
Makasan, Rachtevee
Bangkok 10310
Thailand
(responsible for Thailand, Vietnam, Cambodia, Myanmar and
Laos)
</TABLE>
<PAGE> 36
EXHIBIT B
SPECIFICATIONS
PRODUCT SPECIFICATIONS
The following release specifications are subject to regulatory review and
approval in the Territory. They will be modified as required by regulatory
authorities, and all Product delivered to Janssen must comply with such
modified specifications. Release Specifications
[*]
TEST
Appearance
Identity
Identity
Assay, alprostadil
Uniformity of Dosage
Units
Package Integrity
Sterility
Dissolution
Degradation Products
[*]
*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
<PAGE> 37
EXHIBIT C
EXAMPLE MINIMUM TRANSFER PRICE CALCULATIONS
<TABLE>
<CAPTION>
NET SELLING PRICE
<S> <C> <C> <C> <C> <C>
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
VIVUS [*] [*] [*] [*] [*]
COST [*] [*] [*] [*] [*]
OF [*] [*] [*] [*] [*]
GOODS [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
</TABLE>
<PAGE> 38
EXHIBIT D
EXAMPLE TRANSFER PRICE CALCULATION IN THE CASE
WHERE [*] FORMULA IS IN EFFECT
<TABLE>
<CAPTION>
NET SELLING PRICE
<S> <C> <C> <C> <C> <C>
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
VIVUS [*] [*] [*] [*] [*]
COST [*] [*] [*] [*] [*]
OF [*] [*] [*] [*] [*]
GOODS [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
*Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
</TABLE>
<PAGE> 39
EXHIBIT E
<TABLE>
<CAPTION>
TRADEMARK COUNTRIES
-------------------
Country Mark Status Filing No. Filing Date Class
------- ---- ------ ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Cambodia MUSE Mailed 5
Canada MUSE Allowed 735,175 08/19/93
Canada MUSE Filed 802,814 01/29/96
China MUSE Pending/IR 11/07/96
Hong Kong MUSE Filed 1466/96 02/03/96 5
Indonesia MUSE Filed 02/12/96 5
Korea, South MUSE Filed 1996-3661 01/31/96 5(10)
Laos MUSE Mailed 5
Malaysia MUSE Filed MA/3176/96 03/28/96 5
Mexico MUSE Filed 175835 08/19/93 5
Myanmar MUSE Ordered 5
Philippines MUSE Filed 107779 04/29/96 5
Singapore MUSE Filed 1037/96 01/29/96 5
South Africa MUSE Filed 96/00968 01/26/96 5
Taiwan MUSE Filed 85006304 02/06/96 5
Thailand MUSE Filed 320906 10/30/96 5
Vietnam MUSE Pending/IR 11/07/96 5
</TABLE>
