<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1999
REGISTRATION NO. 333-62679
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ACCREDO HEALTH, INCORPORATED
(Exact name of registrant as specified in its charter)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 8099 62-1642871
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
1640 CENTURY CENTER PARKWAY, SUITE 101
MEMPHIS, TN 38134
(901) 385-3688
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------
DAVID D. STEVENS
CHIEF EXECUTIVE OFFICER
ACCREDO HEALTH, INCORPORATED
1640 CENTURY CENTER PARKWAY, SUITE 101
MEMPHIS, TN 38134
(901) 385-3688
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
STEVEN L. POTTLE, ESQ. JOHN J. EGAN III, P.C.
ALSTON & BIRD LLP GOODWIN, PROCTER & HOAR LLP
ONE ATLANTIC CENTER EXCHANGE PLACE
1201 WEST PEACHTREE STREET BOSTON, MA 02109-2881
ATLANTA, GA 30309-3424 (617) 570-1000
(404) 881-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of this prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be borne by the
Company in connection with the issuance and distribution of the securities being
registered hereby, other than underwriting discounts and commissions. The
Company is paying all of these expenses in connection with the issuance and
distribution of the securities.
<TABLE>
<S> <C>
SEC Registration Fee............................................ $ 25,774
NASD Filing Fee................................................. 7,000
Nasdaq Original Listing Fee.....................................
Accountants' Fees and Costs.....................................
Legal Fees and Costs............................................
Printing and Engraving Costs....................................
Blue Sky Fees and Costs.........................................
Transfer Agent and Registrar fees...............................
Insurance Premium Associated with Registration..................
Miscellaneous...................................................
---------
Total....................................................... $1,500,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Amended and Restated Certificate of Incorporation provides
that the Company shall, to the fullest extent permitted by Section 145 of the
DGCL, as amended from time to time, indemnify its officers and directors.
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agents in connection with the defense or settlement of any action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability.
The Company's Amended and Restated Certificate of Incorporation contains a
provision which eliminates, to the fullest extent permitted by the DGCL,
director liability for monetary damages for breaches of the fiduciary duty of
care or any other duty as a director.
The Company intends to purchase a policy of director's and officer's
insurance that would in certain instances provide the funds necessary for the
Company to meet its indemnification obligations under its Amended and Restated
Certificate of Incorporation.
II-1
<PAGE>
Reference is hereby made to Section of the Underwriting Agreement, the form
of which is filed as Exhibit 1.1 hereto, in which the Company has agreed to
indemnify the Underwriters and certain other persons against certain
liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the Company's original capitalization, on May 31, 1996
the Company sold to Welsh, Carson, Anderson & Stowe VII, L.P. ("WCAS VII") and
certain of its affiliates an aggregate of 4,972,534 shares of Common Stock for
$14,917,602 and an aggregate of 248,624 shares of Series A Preferred Stock for
$24,862,400. In addition, certain other investors acquired 27,466 shares of
Common Stock for $82,398 and 1,376 shares of Series A Cumulative Preferred Stock
for $137,600.
In connection with the Company's acquisition of Southern Health Systems,
Inc. ("SHS") on May 31, 1996, Messrs. Grow, Kimbrough and Stevens (in addition
to certain other holders of SHS common stock) exchanged their shares of SHS
common stock for 19,560, 12,225 and 61,125 shares of the Company's Common Stock,
respectively, and 978 shares, 611 shares and 3,056 shares of the Series A
Preferred Stock, respectively.
In order to finance the acquisition of Hemophilia Health Services, Inc.
formerly known as Horizon Health Systems, Inc. ("HHS") and to provide working
capital, the Company issued $10.0 million in Senior Subordinated Notes to WCAS
VII and certain of its affiliates on June 4, 1997. In connection with the
issuance of the Senior Subordinated Notes, the Company issued an aggregate of
400,000 shares of Common Stock to the holders of the Senior Subordinated Notes.
Furthermore, as a condition to the acquisition of HHS and the appointment of
Kyle J. Callahan to the Company's Board of Directors, Mr. Callahan acquired
41,667 shares of the Company's Common Stock for $250,002 on October 1, 1997.
In connection with the appointment of Kenneth J. Melkus to the Company's
Board of Directors, Lauren Melkus acquired 41,667 shares of Common Stock for
$250,002 on October 27, 1997.
In connection with the appointment of Kenneth R. Masterson to the Company's
Board of Directors, the Company sold 34,000 shares of Common Stock to Mr.
Masterson for $204,000 on July 24, 1998 pursuant to a subscription agreement
entered into by Mr. Masterson in April 1998.
Except as otherwise noted, all issuances of securities described above were
made in reliance on the exemption from registration provided by Section 4(2) of
the Securities Act of 1933, as amended, as transactions by an issuer not
involving a public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) Exhibits
<TABLE>
<C> <S>
+1.1 Form of Underwriting Agreement
3.1 Form of Amended and Restated Certificate of Incorporation of the Registrant
3.2 Form of Amended and Restated Bylaws of the Registrant
+4.1 Form of Common Stock Certificate
+5.1 Opinion of Alston & Bird LLP with respect to validity of Common Stock
+10.1 Employment Agreement dated May 31, 1996 between the Company and David D. Stevens
+10.2 Employment Agreement dated May 31, 1996 between the Company and John R. Grow
+10.3 Employment Agreement dated May 31, 1996 between the Company and Joel R.
Kimbrough
+10.4 Employment Agreement dated June 5, 1997 between the Company and Kyle J. Callahan
+10.5 Employment Agreement dated July 10, 1998 between the Company and Thomas W. Bell
Jr.
10.6 Form of Accredo Health 1999 Long-Term Incentive Plan
10.7 Form of Accredo Health 1999 Employee Stock Purchase Plan
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
+10.8 Nova Holdings, Inc. and its Subsidiaries Stock Option and Restricted Purchase
Plan, as amended and restated
+10.9 Note Purchase Agreement dated June 4, 1997 among the Company, Welsh, Carson,
Anderson & Stowe VII, L.P. and certain other investors
+10.10 Registration Rights Agreement dated May 31, 1996 among the Company, Welsh,
Carson, Anderson & Stowe VII, L.P. and certain other investors
+10.11 Amendment Number One to the Registration Rights Agreement dated October 27, 1997
among the Company, Welsh, Carson, Anderson & Stowe VII, L.P. and certain other
investors
+10.12 Amendment Number Two to the Registration Rights Agreement dated July 24, 1998
among the Company, Welsh, Carson, Anderson & Stowe VII, L.P. and certain other
investors
+10.13 Subscription and Exchange Agreement dated May 31, 1996 among the Company and
certain purchasers and exchanging shareholders
+10.14 Stock Purchase Agreement dated May 31, 1996 among Le Bonheur Health Systems,
Inc., Southern Health Systems, Inc., the Company and Welsh, Carson, Anderson &
Stowe VII, L.P.
+10.15 Modification Agreement dated May 31, 1996 among Le Bonheur Health Systems, Inc.,
Southern Health Systems, Inc., Nova Holdings, Inc. and Welsh, Carson Anderson &
Stowe VII, L.P.
+10.16 Non-Disclosure and Non-Competition Agreement dated May 31, 1996 by and among Le
Bonheur Health Systems, Inc., PharmaThera, Inc., Welsh, Carson, Anderson & Stowe
VII, L.P., Southern Health Systems, Inc., Nova Factor, Inc. and Nova Holdings,
Inc.
+10.17 Stock Purchase Agreement dated as of June 5, 1997 among Dianne R. Martz, A.B.
Charlton, III, the Company and Horizon Health Systems, Inc.
+10.18 Non-Disclosure and Non-Compete Agreement dated as of June 5, 1997 by and among
Horizon Health Systems, Inc., the Company and Dianne R. Martz
+10.19 Grant Agreement dated as of June 5, 1997 by and between Kyle Callahan and the
Company
+10.20 Subscription and Restriction Agreement dated as of June 5, 1997 by and between
the Company and Kyle Callahan
+10.21 Consulting and Transition Agreement dated as of June 5, 1997 by and between
Dianne Martz and Horizon Health Systems, Inc.
+10.22 Letter Agreement dated as of June 3, 1997 from Andrew M. Paul to Kyle Callahan
regarding Mr. Callahan's election to the Board of Directors of the Company
+10.23 Lease Agreement dated September 1, 1994 between Dianne Martz and Horizon Health
Systems, Inc.
+10.24 Addendum to Lease Agreement dated September 1, 1994 amending the square footage
of Premises and annual rental payments
+10.25 Escrow Agreement dated June 5, 1997 among First American National Bank, Nova
Holdings, Inc. and Dianne Martz and A. B. Charlton, III
+10.26 Refunds Payable Escrow Agreement dated June 5, 1997 among First American
National Bank, Nova Holdings, Inc. and Dianne Martz and A. B. Charlton, III
10.27 Contract for the Sale and Distribution of Genentech Human Growth Hormone dated
March 1, 1997 by and between Genentech, Inc. and Nova Factor, Inc. (The Company
has requested confidential treatment of certain portions of this Exhibit.)
10.28 Distribution Agreement dated September 30, 1994 by and between Nova Factor, Inc.
and Genzyme Corporation (The Company has requested confidential treatment of
certain portions of this Exhibit.)
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
+10.29 Amendment No. 1 to Distribution Agreement dated January 1, 1995 by and between
Nova Factor, Inc. and Genzyme Corporation (The Company has requested
confidential treatment of certain portions of this Exhibit.)
+10.30 Second Amended and Restated Distribution Agreement dated July 1, 1994 by and
among PharmaThera, Inc., Nova Factor, Inc. and Genzyme Corporation (The Company
has requested confidential treatment of certain portions of this Exhibit.)
+10.31 Amendment No. 1 to Second Amended and Restated Distribution Agreement dated
September 30, 1994 by and between PharmaThera, Inc., Nova Factor, Inc. and
Genzyme Corporation (The Company has requested confidential treatment of certain
portions of this Exhibit.)
+10.32 Amendment No. 2 to Second Amended and Restated Distribution Agreement dated
January 1, 1995 by and between Nova Factor, Inc. and Genzyme Corporation (The
Company has requested confidential treatment of certain portions of this
Exhibit.)
10.33 Distribution and Services Agreement dated November 1, 1995 by and between
Biogen, Inc. and Nova Factor, Inc. (The Company has requested confidential
treatment of certain portions of this Exhibit.)
+10.34 Amendment No. 1 to Distribution and Services Agreement dated May 17, 1996 by and
between Biogen, Inc. and Nova Factor, Inc. (The Company has requested
confidential treatment of certain portions of this Exhibit.)
+10.35 Addendum and Amendment No. 2 to Distribution and Services Agreement dated May
21, 1997 by and between Biogen, Inc. and Nova Factor, Inc. (The Company has
requested confidential treatment of certain portions of this Exhibit.)
10.36 Addendum and Amendment No. 3 to Distribution and Services Agreement dated July
1, 1997 by and between Biogen, Inc. and Nova Factor, Inc. (The Company has
requested confidential treatment of certain portions of this Exhibit.)
+10.37 Addendum and Amendment No. 4 to Distribution and Services Agreement dated
January 1, 1998 by and between Biogen, Inc. and Nova Factor, Inc. (The Company
has requested confidential treatment of certain portions of this Exhibit.)
+10.38 Loan and Security Agreement dated as of June 5, 1997 among Nova Holdings, Inc.
and its Subsidiaries and NationsBank of Tennessee, N.A. and First Tennessee Bank
National Association
+10.39 Swing Line Note dated December 1, 1997 entered into by Nova Holdings, Inc. with
NationsBank of Tennessee, N.A.
+10.40 ISDA Master Agreement dated August 7, 1997 between NationsBank of Tennessee,
N.A. and Nova Holdings, Inc.
10.41 Texas Health Pharmaceutical Resources Partnership Agreement dated July 1, 1994
(The Company has requested confidential treatment of certain portions of this
Exhibit.)
10.42 Distribution Business Management and Service Agreement dated July 1, 1994 by and
among Southern Health Systems, Inc. and Texas Health Pharmaceutical Resources
(The Company has requested confidential treatment of certain portions of this
Exhibit.)
10.43 Amendment No. 1 to Distribution Business Management and Service Agreement dated
July 1, 1994 by and among Southern Health Systems, Inc. and Texas Health
Pharmaceutical Resources (The Company has requested confidential treatment of
certain portions of this Exhibit.)
10.44 Hemophilia Therapy Pharmacy Management Agreement dated May 9, 1997 by and among
Texas Health Pharmaceutical Resources and Children's Medical Center of Dallas
(The Company has requested confidential treatment of certain portions of this
Exhibit.)
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
+10.45 Amendment No. 1 to Hemophilia Therapy Pharmacy Management Agreement, dated
February 28, 1998, by and among Texas Health Pharmaceutical Resources and
Children's Medical Center of Dallas (The Company has requested confidential
treatment of certain portions of this Exhibit.)
+10.46 Incentive Stock Option Agreement of David Stevens dated May 31, 1996
+10.47 Incentive Stock Option Agreement of Joel R. Kimbrough dated May 31, 1996
+10.48 Incentive Stock Option Agreement of John R. Grow dated May 31, 1996
+10.49 Incentive Stock Option Agreement of Kyle Callahan dated September 3, 1997
+10.50 Non-Qualified Stock Option Agreement of Patrick J. Welsh dated February 9, 1998
+10.51 Non-Qualified Stock Option Agreement of Ken Melkus dated February 9, 1998
+10.52 Incentive Stock Option Agreement of Kyle Callahan dated February 9, 1998
+10.53 Non-Qualified Stock Option Agreement of Andrew M. Paul dated February 9, 1998
+10.54 Non-Qualified Stock Option Agreement of Kenneth R. Masterson dated April 30,
1998
+10.55 Incentive Stock Option Agreement of Thomas W. Bell, Jr. dated July 10, 1998
+10.56 Amendment No. 1 Loan and Security Agreement dated as of August 28, 1998 among
Nova Holdings, Inc., a Delaware corporation, and its Subsidiaries and
NationsBank of Tennessee, N.A. and First Tennessee Bank National Association
+10.57 Loan Agreement dated November 24, 1998 between NationsBank, N.A. and Children's
Hemophilia Services, a California general partnership composed of Children's
Home Care, a California not-for-profit public benefit corporation and Horizon
Health Systems, Inc., a Tennessee Corporation
+10.58 Limited Guaranty dated November 24, 1998 between NationsBank, N.A. and Accredo
Health, Incorporated
+10.59 Promissory Note dated December 24, 1998 between NationsBank, N.A. and Children's
Hemophilia Services
+10.60 Amended and Restated General Partnership Agreement of Children's Home Services
+10.61 Amended and Restated General Partnership Agreement of Children's Hemophilia
Services
+10.62 Growth Hormone Drug Therapy Business Management, Service and Sales Agreement
dated November 10, 1998 between Nova Factor, Inc., a Tennessee corporation, and
Children's Home Services, a California general partnership (The Company has
requested confidential treatment of certain portions of this Exhibit.)
+10.63 Hemophilia Therapy Business Management, Services and Sales Agreement, dated
November 10, 1998 between Horizon Health Systems, Inc., a Tennessee corporation,
and Children's Hemophilia Services, a California general partnership (The
Company has requested confidential treatment of certain portions of this
Exhibit.)
+10.64 Product Supply and Service Agreement dated November 10, 1998 between Nova
Factor, Inc., a Tennessee corporation, and Children's Home Care, a California
non-profit benefit corporation (The Company has requested confidential treatment
of certain portions of this Exhibit.)
+10.65 Distribution and Services Agreement dated August 28, 1998 between Centocor, Inc.
and its affiliates and Nova Factor, Inc. (The Company has requested confidential
treatment of certain portions of this Exhibit.)
+10.66 Amendment No. 2 dated March 2, 1999 to Loan and Security Agreement as amended on
June 5, 1997 among Accredo Health, Incorporated and its Subsidiaries and
NationsBank, N.A. and First Tennessee Bank National Association and NationsBank,
N.A. as Agent
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
+10.67 Amendment No. 1 to Distribution and Service Agreement dated January 11, 1999 by
and between Centocor, Inc. and its Affiliates and Nova Factor, Inc.
21.1 Subsidiaries of the Company
+23.1 Consent of Alston & Bird LLP (included in opinion filed as Exhibit 5.1)
+23.2 Consent of Ernst & Young LLP
+24.1 Power of Attorney (included on the signature page)
+27.1 Financial Data Schedule
</TABLE>
(B) Financial Statement Schedules
Accredo Health, Incorporated
Schedule II--Valuation and Qualifying Accounts
Nova Factor, Inc.
Schedule II--Valuation and Qualifying Accounts
Texas Health Pharmaceutical Resources
Schedule II--Valuation and Qualifying Accounts
Children's Memorial Home Hemophilia Services
Schedule II--Valuation and Qualifying Accounts
Schedules other than those listed above are omitted because they are not
required or are not applicable, or the required information is shown in the
respective financial statements or notes thereto.
- ------------------------
* To be filed by amendment.
+ Previously filed.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the
Representatives of the Underwriters at the closing specified in the underwriting
agreements certificates in such denominations and registered in such names as
required by the Representatives of the Underwriters to permit prompt delivery to
each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Memphis, State of
Tennessee, on April 7, 1999.
<TABLE>
<S> <C> <C>
ACCREDO HEALTH, INCORPORATED
By: /s/ DAVID D. STEVENS
-----------------------------------------
David D. Stevens
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities indicated on April 7, 1999.
SIGNATURE TITLE
- ------------------------------ ---------------------------
/s/ DAVID D. STEVENS Chief Executive Officer and
- ------------------------------ Chairman of the Board of
David D. Stevens Directors
* President and Director
- ------------------------------
John R. Grow
Senior Vice President and
/s/ JOEL R. KIMBROUGH Chief Financial Officer
- ------------------------------ (principal financial and
Joel R. Kimbrough accounting officer)
* Senior Vice President and
- ------------------------------ Director
Kyle J. Callahan
* Director
- ------------------------------
Patrick J. Welsh
* Director
- ------------------------------
Andrew M. Paul
* Director
- ------------------------------
Kenneth J. Melkus
* Director
- ------------------------------
Kenneth R. Masterson
/s/ JOEL R. KIMBROUGH
------------------------------
Joel R. Kimbrough
By:ATTORNEY-IN-FACT
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. EXHIBIT INDEX NUMBERED PAGE
- --------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
+1.1 Form of Underwriting Agreement
3.1 Form of Amended and Restated Certificate of Incorporation of the Registrant
3.2 Form of Amended and Restated Bylaws of the Registrant
+4.1 Form of Common Stock Certificate
+5.1 Opinion of Alston & Bird LLP with respect to validity of Common Stock
+10.1 Employment Agreement dated May 31, 1996 between the Company and David D. Stevens
+10.2 Employment Agreement dated May 31, 1996 between the Company and John R. Grow
+10.3 Employment Agreement dated May 31, 1996 between the Company and Joel R.
Kimbrough
+10.4 Employment Agreement dated June 5, 1997 between the Company and Kyle J. Callahan
+10.5 Employment Agreement dated July 10, 1998 between the Company and Thomas W. Bell
Jr.
10.6 Form of Accredo Health 1999 Long-Term Incentive Plan
10.7 Form of Accredo Health 1999 Employee Stock Purchase Plan
+10.8 Nova Holdings, Inc. and its Subsidiaries Stock Option and Restricted Purchase
Plan, as amended and restated
+10.9 Note Purchase Agreement dated June 4, 1997 among the Company, Welsh, Carson,
Anderson & Stowe VII, L.P. and certain other investors
+10.10 Registration Rights Agreement dated May 31, 1996 among the Company, Welsh,
Carson, Anderson & Stowe VII, L.P. and certain other investors
+10.11 Amendment Number One to the Registration Rights Agreement dated October 27, 1997
among the Company, Welsh, Carson, Anderson & Stowe VII, L.P. and certain other
investors
+10.12 Amendment Number Two to the Registration Rights Agreement dated July 24, 1998
among the Company, Welsh, Carson, Anderson & Stowe VII, L.P. and certain other
investors
+10.13 Subscription and Exchange Agreement dated May 31, 1996 among the Company and
certain purchasers and exchanging shareholders
+10.14 Stock Purchase Agreement dated May 31, 1996 among Le Bonheur Health Systems,
Inc., Southern Health Systems, Inc., the Company and Welsh, Carson, Anderson &
Stowe VII, L.P.
+10.15 Modification Agreement dated May 31, 1996 among Le Bonheur Health Systems, Inc.,
Southern Health Systems, Inc., Nova Holdings, Inc. and Welsh, Carson Anderson &
Stowe VII, L.P.
+10.16 Non-Disclosure and Non-Competition Agreement dated May 31, 1996 by and among Le
Bonheur Health Systems, Inc., PharmaThera, Inc., Welsh, Carson, Anderson & Stowe
VII, L.P., Southern Health Systems, Inc., Nova Factor, Inc. and Nova Holdings,
Inc.
+10.17 Stock Purchase Agreement dated as of June 5, 1997 among Dianne R. Martz, A.B.
Charlton, III, the Company and Horizon Health Systems, Inc.
+10.18 Non-Disclosure and Non-Compete Agreement dated as of June 5, 1997 by and among
Horizon Health Systems, Inc., the Company and Dianne R. Martz
+10.19 Grant Agreement dated as of June 5, 1997 by and between Kyle Callahan and the
Company
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. EXHIBIT INDEX NUMBERED PAGE
- --------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
+10.20 Subscription and Restriction Agreement dated as of June 5, 1997 by and between
the Company and Kyle Callahan
+10.21 Consulting and Transition Agreement dated as of June 5, 1997 by and between
Dianne Martz and Horizon Health Systems, Inc.
+10.22 Letter Agreement dated as of June 3, 1997 from Andrew M. Paul to Kyle Callahan
regarding Mr. Callahan's election to the Board of Directors of the Company
+10.23 Lease Agreement dated September 1, 1994 between Dianne Martz and Horizon Health
Systems, Inc.
+10.24 Addendum to Lease Agreement dated September 1, 1994 amending the square footage
of Premises and annual rental payments
+10.25 Escrow Agreement dated June 5, 1997 among First American National Bank, Nova
Holdings, Inc. and Dianne Martz and A. B. Charlton, III
+10.26 Refunds Payable Escrow Agreement dated June 5, 1997 among First American
National Bank, Nova Holdings, Inc. and Dianne Martz and A. B. Charlton, III
10.27 Contract for the Sale and Distribution of Genentech Human Growth Hormone dated
March 1, 1997 by and between Genentech, Inc. and Nova Factor, Inc. (The Company
has requested confidential treatment of certain portions of this Exhibit.)
10.28 Distribution Agreement dated September 30, 1994 by and between Nova Factor, Inc.
and Genzyme Corporation (The Company has requested confidential treatment of
certain portions of this Exhibit.)
+10.29 Amendment No. 1 to Distribution Agreement dated January 1, 1995 by and between
Nova Factor, Inc. and Genzyme Corporation (The Company has requested
confidential treatment of certain portions of this Exhibit.)
+10.30 Second Amended and Restated Distribution Agreement dated July 1, 1994 by and
among PharmaThera, Inc., Nova Factor, Inc. and Genzyme Corporation (The Company
has requested confidential treatment of certain portions of this Exhibit.)
+10.31 Amendment No. 1 to Second Amended and Restated Distribution Agreement dated
September 30, 1994 by and between PharmaThera, Inc., Nova Factor, Inc. and
Genzyme Corporation (The Company has requested confidential treatment of certain
portions of this Exhibit.)
+10.32 Amendment No. 2 to Second Amended and Restated Distribution Agreement dated
January 1, 1995 by and between Nova Factor, Inc. and Genzyme Corporation (The
Company has requested confidential treatment of certain portions of this
Exhibit.)
10.33 Distribution and Services Agreement dated November 1, 1995 by and between
Biogen, Inc. and Nova Factor, Inc. (The Company has requested confidential
treatment of certain portions of this Exhibit.)
+10.34 Amendment No. 1 to Distribution and Services Agreement dated May 17, 1996 by and
between Biogen, Inc. and Nova Factor, Inc. (The Company has requested
confidential treatment of certain portions of this Exhibit.)
+10.35 Addendum and Amendment No. 2 to Distribution and Services Agreement dated May
21, 1997 by and between Biogen, Inc. and Nova Factor, Inc. (The Company has
requested confidential treatment of certain portions of this Exhibit.)
10.36 Addendum and Amendment No. 3 to Distribution and Services Agreement dated July
1, 1997 by and between Biogen, Inc. and Nova Factor, Inc. (The Company has
requested confidential treatment of certain portions of this Exhibit.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. EXHIBIT INDEX NUMBERED PAGE
- --------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
+10.37 Addendum and Amendment No. 4 to Distribution and Services Agreement dated
January 1, 1998 by and between Biogen, Inc. and Nova Factor, Inc. (The Company
has requested confidential treatment of certain portions of this Exhibit.)
+10.38 Loan and Security Agreement dated as of June 5, 1997 among Nova Holdings, Inc.
and its Subsidiaries and NationsBank of Tennessee, N.A. and First Tennessee Bank
National Association
+10.39 Swing Line Note dated December 1, 1997 entered into by Nova Holdings, Inc. with
NationsBank of Tennessee, N.A.
+10.40 ISDA Master Agreement dated August 7, 1997 between NationsBank of Tennessee,
N.A. and Nova Holdings, Inc.
10.41 Texas Health Pharmaceutical Resources Partnership Agreement dated July 1, 1994
(The Company has requested confidential treatment of certain portions of this
Exhibit.)
10.42 Distribution Business Management and Service Agreement dated July 1, 1994 by and
among Southern Health Systems, Inc. and Texas Health Pharmaceutical Resources.
(The Company has requested confidential treatment of certain portions of this
Exhibit.)
10.43 Amendment No. 1 to Distribution Business Management and Service Agreement dated
July 1, 1994 by and among Southern Health Systems, Inc. and Texas Health
Pharmaceutical Resources (The Company has requested confidential treatment of
certain portions of this Exhibit.)
10.44 Hemophilia Therapy Pharmacy Management Agreement dated May 9, 1997 by and among
Texas Health Pharmaceutical Resources and Children's Medical Center of Dallas
(The Company has requested confidential treatment of certain portions of this
Exhibit.)
+10.45 Amendment No. 1 to Hemophilia Therapy Pharmacy Management Agreement dated
February 28, 1998 by and among Texas Health Pharmaceutical Resources and
Children's Medical Center of Dallas (The Company has requested confidential
treatment of certain portions of this Exhibit.)
+10.46 Incentive Stock Option Agreement of David Stevens dated May 31, 1996
+10.47 Incentive Stock Option Agreement of Joel R. Kimbrough dated May 31, 1996
+10.48 Incentive Stock Option Agreement of John R. Grow dated May 31, 1996
+10.49 Incentive Stock Option Agreement of Kyle Callahan dated September 3, 1997
+10.50 Non-Qualified Stock Option Agreement of Patrick J. Welsh dated February 9, 1998
+10.51 Non-Qualified Stock Option Agreement of Ken Melkus dated February 9, 1998
+10.52 Incentive Stock Option Agreement of Kyle Callahan dated February 9, 1998
+10.53 Non-Qualified Stock Option Agreement of Andrew M. Paul dated February 9, 1998
+10.54 Non-Qualified Stock Option Agreement of Kenneth R. Masterson dated April 30,
1998
+10.55 Incentive Stock Option Agreement of Thomas W. Bell, Jr. dated July 10, 1998
+10.56 Amendment No. 1 Loan and Security Agreement dated as of August 28, 1998 among
Nova Holdings, Inc., a Delaware corporation, and its Subsidiaries and
NationsBank of Tennessee, N.A. and First Tennessee Bank National Association
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. EXHIBIT INDEX NUMBERED PAGE
- --------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
+10.57 Loan Agreement dated November 24, 1998 between NationsBank, N.A., and Children's
Hemophilia Services, a California general partnership composed of Children's
Home Care, a California not-for-profit public benefit corporation and Horizon
Health Systems, Inc., a Tennessee Corporation
+10.58 Limited Guaranty dated November 24, 1998 between NationsBank, N.A. and Accredo
Health, Incorporated
+10.59 Promissory Note dated December 24, 1998 between NationsBank, N.A. and Children's
Hemophilia Services
+10.60 Amended and Restated General Partnership Agreement of Children's Home Services
+10.61 Amended and Restated General Partnership Agreement of Children's Hemophilia
Services
+10.62 Growth Hormone Drug Therapy Business Management, Service and Sales Agreement
dated November 10, 1998 between Nova Factor, Inc., a Tennessee corporation, and
Children's Home Services, a California general partnership (The Company has
requested confidential treatment of certain portions of this Exhibit.)
+10.63 Hemophilia Therapy Business Management, Services and Sales Agreement dated
November 10, 1998 between Horizon Health Systems, Inc., a Tennessee corporation,
and Children's Hemophilia Services, a California general partnership (The
Company has requested confidential treatment of certain portions of this
Exhibit.)
+10.64 Product Supply and Service Agreement dated November 10, 1998 between Nova
Factor, Inc., a Tennessee corporation, and Children's Home Care, a California
non-profit benefit corporation (The Company has requested confidential treatment
of certain portions of this Exhibit.)
+10.65 Distribution and Services Agreement dated August 28, 1998 between Centocor, Inc.
and its affiliates and Nova Factor, Inc. (The Company has requested confidential
treatment of certain portions of this Exhibit.)
+10.66 Amendment No. 2 dated March 2, 1999 to Loan and Security Agreement as amended on
June 5, 1997 among Accredo Health, Incorporated and its Subsidiaries and
NationsBank, N.A. and First Tennessee Bank National Association and NationsBank,
N.A. as Agent
+10.67 Amendment No. 1 to Distribution and Service Agreement dated January 11, 1999 by
and between Centocor, Inc. and its Affiliates and Nova Factor, Inc.
21.1 Subsidiaries of the Company
+23.1 Consent of Alston & Bird LLP (included in Opinion filed as Exhibit 5.1)
+23.2 Consent of Ernst & Young LLP
+24.1 Power of Attorney (included on the signature page)
+27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
+ Previously filed.
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ACCREDO HEALTH, INCORPORATED
-------------------------------
The name of the Corporation (which is hereinafter referred to as the
Corporation) is "Accredo Health, Incorporated."
The original certificate of incorporation was filed with the Secretary
of State of the State of Delaware on May 24, 1996, under the name "Nova
Holdings, Inc.," and an amendment was filed with the Secretary of State of the
State of Delaware on August 28, 1998 changing the Corporation's name to Accredo
Health, Incorporated.
This Amended and Restated Certificate of Incorporation has been duly
proposed by resolutions adopted and declared advisable by the Board of Directors
of the Corporation, duly adopted by the stockholders of the Corporation by
written consent in accordance with Section 228 of the General Corporation Law of
the State of Delaware (the "DGCL"), and duly executed and acknowledged by the
officers of the Corporation in accordance with Sections 103, 242 and 245 of the
DGCL.
The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is:
ACCREDO HEALTH, INCORPORATED
ARTICLE II
REGISTERED AGENT
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is Corporation
Service Company.
<PAGE>
ARTICLE III
PURPOSES
The purposes for which the Corporation is formed are to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "DGCL").
ARTICLE IV
CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 37,800,000 shares, consisting of
(a) 300,000 shares of Series A Cumulative Preferred Stock, $1.00 par value
("Series A Preferred"), (b) 5,000,000 shares of preferred stock, $1.00 par
value, which shares shall be issued from time to time in one or more series, at
the discretion of the Board of Directors (the "Undesignated Preferred Stock"),
(c) 30,000,000 shares of Common Stock, $.01 par value ("Common Stock"), and (d)
2,500,000 shares of Non-Voting Common Stock, $.01 par value (the "Non-Voting
Common Stock"). Cross references in each Subdivision A through D of this ARTICLE
IV refer to the Sections within such Subdivision unless otherwise indicated.
The following is a statement of the designations, and the powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, in respect of each class of stock of the Corporation:
A. SERIES A CUMULATIVE PREFERRED STOCK
1. DIVIDENDS.
(a) The holders of shares of Series A Preferred shall be
entitled to receive dividends at the rate of $8.00 per share per annum, and no
more, payable when and as declared by the Board of Directors of the Corporation
and out of funds legally available for the payment thereof. Such dividends shall
be cumulative and shall accrue from the date of issue whether or not declared
and whether or not there are any funds of the Corporation legally available for
the payment of dividends. Accrued but unpaid dividends shall not bear interest.
The Board of Directors of the Corporation may fix a record date for the
determination of holders of Series A Preferred entitled to receive payment of a
dividend declared thereon, which record date shall be no more than 60 days prior
to the date fixed for the payment thereof.
(b) As long as any shares of Series A Preferred shall remain
outstanding, in no event shall any dividend be declared or paid upon, nor shall
any distribution be made upon, any Junior Capital Stock, other than a dividend
or distribution payable solely in shares of Common Stock of the Corporation, nor
shall any shares of Junior Capital Stock be purchased or redeemed by the
Corporation, nor shall any moneys be paid to or made available for a sinking
fund for the purchase or redemption of shares
2
<PAGE>
of any Junior Capital Stock, unless, in each such case, (i) full cumulative
dividends on the outstanding shares of Series A Preferred shall have been
declared and paid and (ii) any arrears or defaults in any mandatory redemption
of shares of Series A Preferred shall have been cured; PROVIDED, however, that
this Section l(b) shall not apply to any repurchase by the Corporation of shares
of its Common Stock pursuant to the terms of any employment agreement, stock
rights agreement, stock purchase plan, stock option plan or similar arrangement
between the Corporation and its employees. For purposes hereof, the term "Junior
Capital Stock" means any shares of capital stock of the Corporation, including
the Corporation's Common Stock and Non-Voting Common Stock, other than shares of
the Corporation's capital stock permitted to rank on a parity with or senior to
the Series A Preferred pursuant to Section 3 hereof.
2. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Preferred then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, before any payment
shall be made to the holders of shares of any Junior Capital Stock by reason of
their ownership thereof, an amount equal to $100 per share of Series A
Preferred, as the case may be, plus all accrued but unpaid dividends thereon
(whether or not declared), and no more. If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its stockholders (after making all
distributions to which holders of capital stock ranking senior to the Series A
Preferred shall be entitled) shall be insufficient to pay the holders of shares
of Series A Preferred the full amount to which they shall be entitled pursuant
to this Section 2(a), the holders of shares of Series A Preferred, and any other
shares ranking on a parity therewith, shall share ratably in any distribution or
the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares of
Series A Preferred held by them upon such distribution if all amounts payable on
or with respect to such shares were paid in full.
(b) After the payment of all amounts required to be paid
pursuant to Section 2(a) to the holders of shares of Series A Preferred, and any
other shares ranking on a parity therewith, upon the dissolution, liquidation or
winding up of the corporation, the holders of shares of Junior Capital Stock
then outstanding shall share in any distribution of the remaining assets and
funds of the Corporation in the manner provided by law, in the Certificate of
Incorporation of the Corporation, as amended, or as provided in any pertinent
Certificate of Designation of the Corporation, as the case may be.
(c) Neither the merger or consolidation of the Corporation
into or with any other corporation, nor the sale of all or substantially all the
assets of the Corporation, shall be deemed to be a liquidation, dissolution or
winding up of the corporation for purposes of this Section 2 (unless in
connection therewith the liquidation of the corporation is specifically
approved).
3
<PAGE>
3. VOTING. Except as provided herein or by law, holders of Series A
Preferred shall not have any voting rights. So long as shares of the Series A
Preferred are outstanding, without the consent of the holders of at least the
majority of the Series A Preferred at the time outstanding given in person or by
proxy, either in writing or at a special meeting called for that purpose at
which the holders of the Series A Preferred shall vote separately as a class,
the Corporation may not (i) effect or validate the amendment, alteration or
repeal of any provision hereof which would adversely affect the dividend,
voting, redemption or liquidation rights of the Series A Preferred set forth
herein, or (ii) create or authorize any additional class or series of stock
ranking senior to or on a parity with the Series A Preferred as to dividends or
as to rights upon mandatory redemption, liquidation, dissolution or winding up;
increase the authorized number of shares of the Series A Preferred or of any
other class or series of capital stock of the Corporation ranking senior to or
on a parity with the Series A Preferred as to dividends or as to rights upon
mandatory redemption, liquidation, dissolution or winding up, whether any such
creation or authorization or increase shall be by means of amendment hereof,
merger, consolidation or otherwise; or issue additional shares of Series A
Preferred in excess of the number of shares authorized herein.
4. OPTIONAL REDEMPTION. Shares of Series A Preferred may be redeemed in
whole or from time to time in part at any time (in amounts which shall aggregate
1,000 shares or any higher integral multiple of 1,000 shares), at the option of
the Corporation, at the redemption price of $100 per share plus all accrued but
unpaid dividends thereon (whether or not declared) as of the date fixed for
redemption (the "Redemption Price"). If the Corporation redeems less than all
outstanding shares of Series A Preferred, whether pursuant to this Section 4 or
Section 5 hereof, such redemption shall be made ratably among the holders of
Series A Preferred.
5. MANDATORY REDEMPTION.
(a) On May 31, 2004, the Corporation shall redeem, at the
Redemption Price, all of the shares of Series A Preferred then outstanding.
(b) Subject to the prior rights of any holders of the
Corporation's indebtedness, upon the consummation of any underwritten public
offering of the Corporation's common stock registered pursuant to the Securities
Act of 1933, as amended, the Corporation shall apply any net cash proceeds of
such sale received by it to redeem, at the Redemption Price, shares of Series A
Preferred then outstanding.
(c) In the event of a consolidation or merger of the
Corporation with or into any other corporation (other than a merger in which the
Corporation is the surviving corporation and which will not result in more than
50% in voting power of the equity securities of the Corporation having general
voting power outstanding immediately after the effective date of such merger
being owned beneficially other than by persons who were the beneficial owners of
such equity securities immediately prior to such merger, in
4
<PAGE>
substantially the same proportions) (a "Change of Control"), or in the case of a
sale of all or substantially all of the assets of the Corporation as an entirety
to any other person (a "Sale of Assets"), the Corporation shall, at least 35
days prior to the effective date of any such change of Control or Sale of
Assets, give notice thereof to the holder or holders of Series A Preferred in
the manner described in Section 6(a) below. In the event that within 30 days
after the receipt of such notice, any holders of Series A Preferred elect, by
written notice to the Corporation, to have any or all of their Series A
Preferred redeemed, the Corporation shall redeem the same at the Redemption
Price not later than the day prior to the effective date of such Change of
Control or Sale of Assets.
6. PROCEDURE FOR REDEMPTION.
(a) For purposes of this Section 6, the term "Redemption Date"
means any date on which the corporation elects or is required to redeem shares
of Series A Preferred pursuant to Sections 4 or 5. At least 20 days (and not
more than 60 days) prior to any Redemption Date (except in the case of a notice
given in connection with a Change of Control or Sale of Assets as provided in
Section 5(c) above, which notice shall be given at least 35 days prior to such
Change of Control or Sale of Assets), written notice (a "Redemption Notice")
shall be mailed, by first class or registered mail, postage prepaid, to each
holder of record of Series A Preferred, at his or its address last shown on the
records of the transfer agent of the Series A Preferred (or the records of the
corporation, if it serves as its own transfer agent), notifying such holder of
the Redemption Date, the Redemption Price, (except in the case of a redemption
pursuant to Section 5(c) above) the total number of shares to be redeemed and
the number of shares to be redeemed from such holder, and calling upon such
holder to surrender (in the case of a redemption pursuant to Section 5(c) above,
if such holder elects to have shares redeemed pursuant thereto) to the
Corporation, in the manner and at the place designated, his or its certificate
or certificates representing the shares to be redeemed. In order to facilitate
the redemption of the Series A Preferred, the Board of Directors may fix a
record date for the determination of holders of the Series A Preferred, not more
than 60 days nor less than 10 days prior to the Redemption Date.
(b) If the Redemption Notice is being sent by the Corporation
pursuant to Section 5(c) above, then, in addition to the information required to
be included in the Redemption Notice pursuant to Section 6(a) above, the
Redemption Notice shall also state:
(i) that the Redemption Notice is being sent pursuant
to Section 5(c) hereof;
(ii) the parties to and the terms of the transaction
or transactions resulting in the Change of Control or Sale of Assets;
and
(iii) such other information as the Corporation in
its sole discretion deems appropriate.
5
<PAGE>
(c) On or prior to any Redemption Date, all holders of shares
of Series A Preferred whose shares are to be redeemed in whole or in part on
such date shall surrender their certificates representing such shares to the
Corporation, in the manner and at the place designated in the Redemption Notice,
and against such surrender the Redemption Price of such shares shall be paid to
the order of the person, whose name appears on each such certificate as the
owner thereof. Each surrendered certificate shall be canceled, provided that if
less than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares. From and after
any Redemption Date, unless there shall have been a default in payment of the
Redemption Price, all rights of the holders of the shares of Series A Preferred
designated for redemption in the Redemption Notice (or otherwise designated by
the holders thereof for redemption pursuant to Section 5(c) above) as holders of
such shares of Series A Preferred (except the right to receive the Redemption
Price without interest against surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.
(d) If the funds of the Corporation legally available for
redemption of Series A Preferred on any Redemption Date are insufficient to
redeem the full number of shares of Series A Preferred required by Section 5 to
be redeemed on such date, those funds which are legally available shall be used
to redeem the maximum possible number of such shares of Series A Preferred
ratably from each holder whose shares are otherwise required to be redeemed. At
any time thereafter when additional funds of the Corporation become legally
available for the redemption of Series A Preferred, such funds will be used, at
the end of the next succeeding fiscal quarter, to redeem the balance of the
shares which the Corporation was theretofore obligated to redeem, ratably on the
basis set forth in the preceding sentence.
7. REACQUIRED SHARES. Any shares of Series A Preferred, which are
redeemed or otherwise acquired by the Corporation in any manner whatsoever shall
be retired and canceled promptly after the acquisition thereof and the number of
authorized shares of Series A Preferred shall be reduced accordingly.
B. UNDESIGNATED PREFERRED STOCK
After the Series A Preferred has been redeemed in full, the
Undesignated Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is authorized, after redemption in full of the
Series A Preferred, to provide for the issuance of shares of Undesignated
Preferred Stock in series and, by filing a certificate pursuant to the DGCL
(hereinafter referred to as a "Preferred Stock Designation"), to establish from
time to time the number of shares to be included in each such series, and to fix
the designation, powers, privileges, preferences and rights of the shares of
each such series and the qualifications, limitations and restrictions thereof.
The authority of the
6
<PAGE>
Board of Directors with respect to each series shall include, but not be limited
to, determination of the following:
(i) the designation of the series, which may be by
distinguishing number, letter or title;
(ii) the number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise provided in the
Preferred Stock Designation) increase or decrease (but not below the number of
shares thereof then outstanding);
(iii) whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative;
(iv) the rate of any dividends (or method of determining such
dividends) payable to the holders of the shares of such series, any conditions
upon which such dividends shall be paid and the date or dates or the method for
determining the date or dates upon which such dividends shall be payable;
(v) the price or prices (or method of determining such price
or prices) at which, the form of payment of such price or prices (which may be
cash, property or rights, including securities of the same or another
corporation or other entity) for which, the period or periods within which and
the terms and conditions upon which the shares of such series may be redeemed,
in whole or in part, at the option of the Corporation or at the option of the
holder or holders thereof or upon the happening of a specified event or events,
if any;
(vi) the obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise and the
price or prices at which, the form of payment of such price or prices (which may
be cash, property or rights, including securities of the same or another
corporation or other entity) for which, the period or periods within which and
the terms and conditions upon which the shares of such series shall be redeemed
or purchased, in whole or in part, pursuant to such obligation;
(vii) the amount payable out of the assets of the Corporation
to the holders of shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation;
(viii) provisions, if any, for the conversion or exchange of
the shares of such series, at any time or times at the option of the holder or
holders thereof or at the option of the Corporation or upon the happening of a
specified event or events, into shares of any other class or
7
<PAGE>
classes or any other series of the same or any other class or classes of stock,
or any other security, of the Corporation, or any other corporation or other
entity, and the price or prices or rate or rates of conversion or exchange and
any adjustments applicable thereto, and all other terms and conditions upon
which such conversion or exchange may be made;
(ix) restrictions on the issuance of shares of the same series
or of any other class or series, if any; and
(x) the voting rights, if any, of the holders of shares of the
series.
C. COMMON STOCK
1. DIVIDENDS. The holders of shares of Common Stock shall be entitled
to receive such dividends as from time to time may be declared by the Board of
Directors of the Corporation, subject to the provisions of the Series A
Preferred and to the provisions of the Preferred Stock Designation of any
Undesignated Preferred Stock.
2. LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made to holders of Series A Preferred of the full amounts to which
they shall be entitled, the holders of Common Stock shall be entitled, to the
exclusion of the holders of Series A Preferred, to share ratably according to
the number of shares of Common Stock held by them in all remaining assets of the
Corporation available for distribution to its stockholders, subject to the
provisions of the Preferred Stock Designation of any Undesignated Preferred
Stock.
3. VOTING. Each holder of Common Stock shall be entitled to one vote
per share.
D. NON-VOTING COMMON STOCK
1. VOTING RIGHTS. The holders of shares of Non-Voting Common Stock
shall not be entitled to vote on any matter to be voted on by the stockholders
of the Corporation.
2. DIVIDENDS. No payment of dividends or distributions shall be made to
the holders of shares of Non-Voting Common Stock unless and until the holders of
shares of preferred stock receive any preferential amounts to which they are
entitled under the provisions of the Series A Preferred or under the provisions
of the Preferred Stock Designation of any Undesignated Preferred Stock. Subject
to the limitation set forth in the preceding sentence of this Section 2, the
holders of shares of Non-Voting Common Stock shall be entitled to receive such
dividends and distributions as may be declared upon such shares of Non Voting
Common Stock, from time to time by a resolution or resolutions adopted by the
Board of Directors. Such dividends shall be equal in amount per share to
dividends declared on Common Stock; provided, however, that in the event that
the
8
<PAGE>
holders of Common Stock receive a dividend payable in shares of Common Stock or
other securities convertible into or exchangeable for shares of Common Stock,
then holders of Non-Voting Common Stock shall receive a number of shares of
Non-Voting Common Stock or of such other securities which is equal to the number
of shares of Non-Voting Common Stock or such other securities which they would,
but for this proviso, have received pursuant to this Section 2.
3. LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation after payment or
provision for payment of the debts and liabilities of the Corporation and
payment to holders of Series A Preferred of the full amounts to which they shall
be entitled, all remaining assets of the Corporation shall be shared pro rata
among the holders of the Common Stock and the Non-Voting Common Stock available
for distribution to its stockholders, to the exclusion of the holders of the
Series A Preferred, based upon the number of shares held by them, subject to the
provisions of the Preferred Stock Designation of any undesignated Preferred.
4. CONVERSION.
(a) RIGHT TO CONVERT. Subject to the terms and conditions of
this Section 4, the holder of any share or shares of Non-Voting Common Stock
shall have the right, at its option, at any time, to convert any such shares of
Non-Voting Common Stock (except that upon any liquidation, dissolution or
winding up of the Corporation the right of conversion shall terminate at 5:00
p.m. (New York City time) on the last business day preceding the date fixed for
payment of the amount distributable on Non-Voting Common Stock) into an equal
number of fully paid and nonassessable whole shares of Common Stock; provided,
however, that such conversion will not be permitted hereunder, and the
Corporation shall not be required to convert any shares of Non-Voting Common
Stock into Common Stock, to the extent that, at the date upon which such
conversion is deemed to take place as provided in Subsection 4(b) below, the
WCAS Group (as hereinafter defined) would, but for the limitation contained in
this proviso, hold, or otherwise have voting control over, in aggregate, more
than 49% of the voting securities of the Corporation outstanding at such time,
after taking into account the shares of Common Stock issuable upon such
conversion. Such rights of conversion shall be exercised by the holder thereof
by giving written notice to the Secretary of the Corporation that the holder
elects to convert a stated number of shares of Non-Voting Common Stock into
Common Stock and by surrender of a certificate or certificates for the shares so
to be converted to the Corporation at its principal office (or such other office
or agency of the Corporation as the Corporation may designate by notice in
writing to the holder or holders of Non-Voting Common Stock) at any time during
its usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
(b) ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED.
Promptly after the receipt of the written notice referred to in Subsection 4(a)
and surrender of the certificate or certificates for the share or shares of
Non-Voting Common Stock eligible to
9
<PAGE>
be converted under Subsection 4(a), the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Non-Voting Common Stock. To the extent permitted by law, such
conversion shall be deemed to have been effected at 5:00 p.m. (New York City
time) on the date on which such written notice shall have been received by the
Corporation and the certificate or certificates for such share or shares shall
have been surrendered as aforesaid, and at such time the rights of the holder of
such share or shares of Non-Voting Common Stock shall cease, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
(c) FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION.
Fractional shares may be issued upon conversion of Non-Voting Common Stock into
Common Stock. No payment or adjustment shall be made upon any conversion on
account of any cash dividends on the Common Stock issued upon such conversion.
At the time of each conversion, the Corporation shall pay in cash an amount
equal to all dividends accrued and unpaid on the shares surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in Subsection 4(b) above. In case the number of shares of Non-Voting
Common Stock represented by the certificate or certificates surrendered pursuant
to Subsection 4(a) exceeds the number of shares converted, the Corporation
shall, upon such conversion, execute and deliver to the holder thereof, at the
expense of the Corporation, a new certificate or certificates for the number of
shares of Non-Voting Common Stock represented by the certificate or certificates
surrendered which are not to be converted.
(d) SUBDIVISION OR COMBINATION OF STOCK. In case the
Corporation shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares, then the Non-Voting Common Stock shall be
proportionately subdivided, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, then the number
of shares of Non-Voting Common Stock immediately prior to such combination shall
be proportionately reduced. Upon any such event, the Corporation shall give
written notice thereof, by first class mail, postage prepaid, addressed to each
holder of shares of Non-Voting Common Stock at the address of such holder as
shown on the books of the Corporation.
(e) REORGANIZATION OR RECLASSIFICATION. If any capital
reorganization or reclassification of the capital stock of the Corporation or
any consolidation or merger of the Corporation with another corporation, or the
sale of all or substantially all its assets to another corporation, shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provisions shall be made whereby each holder
of a share or shares of Non-Voting Common Stock shall thereafter have the right
10
<PAGE>
to receive, upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Common Stock immediately theretofore receivable
upon the conversion of such share or shares of Non-Voting Common Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of Common Stock equal to
the number of shares of such stock immediately theretofore so receivable had
such reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the number of
shares of Common Stock issuable upon conversion of Non-Voting Common Stock)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon such conversion. In
the event of a merger or consolidation of the Corporation as a result of which a
greater or lesser number of shares of common stock of the surviving corporation
are issuable to holders of Common Stock outstanding immediately prior to such
merger or consolidation, the number of shares of Common Stock issuable upon
conversion of Non-Voting Common Stock in effect immediately prior to such merger
or consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of all outstanding shares of Common Stock. The
Corporation will not effect any such consolidation, merger or sale, unless prior
to the consummation thereof the successor corporation (if other than the
Corporation) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume, by written instrument executed and mailed
or delivered to each holder of Non-Voting Common Stock at the last address of
such holder appearing on the books of the Corporation, the obligation to deliver
to such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to receive.
(f) NOTICE OF ADJUSTMENT. Upon any adjustment made pursuant to
Subsection 4(e), then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to each holder
of shares of Non-Voting Common Stock at the address of such holder as shown on
the books of the Corporation, which notice shall state the stock, securities or
assets issuable upon conversion of the Non-Voting Common Stock resulting from
such adjustment, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
(g) OTHER NOTICES. In case at any time:
(i) the Corporation shall declare any dividend upon
its Common Stock payable in cash or stock or make any other
distribution to the holders of its Common Stock;
(ii) the Corporation shall offer for subscription pro
rata to the holders of its Common Stock any additional shares of stock
of any class or other rights;
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(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with, or a sale of all or
substantially all its assets to, another corporation; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation,
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, addressed to each holder of any shares of
Non-Voting Common Stock at the address of such holder as shown on the books of
the Corporation, (A) at least 20 days' prior written notice of the date on which
the books of the Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, and (B) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 20 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (A) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (B)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
(h) STOCK TO BE RESERVED. The Corporation will at all times
reserve and keep available out of its authorized Common Stock or its treasury
shares, solely for the purpose of issue upon the conversion of the Non-Voting
Common Stock as herein provided such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding shares of Non-Voting
Common Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. The Corporation will take all such action as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Corporation may be
listed. The Corporation will not take any action which results in any adjustment
of the number of shares of Common Stock issuable upon conversion of the
Non-Voting Common Stock if the total number of shares of Common Stock issuable
after such action and upon conversion of the Non-Voting Common Stock would
exceed the total number of shares of Common Stock then authorized by the
Corporation's Certificate of Incorporation.
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(i) NO REISSUANCE OF NON-VOTING COMMON STOCK. Shares of
Non-Voting Common Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.
(j) ISSUE TAX. The issuance of certificates for shares of
Common Stock upon conversion of the Non-Voting Common Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Non-Voting Common
Stock which is being converted.
(k) CLOSING OF BOOKS. The Corporation will at no time close
its transfer books against the transfer of any Non-Voting Common Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Non-Voting Common Stock in any manner which interferes with the timely
conversion of such Non-Voting Common Stock.
(l) TRANSFER OF NON-VOTING COMMON STOCK. Any shares of
Non-Voting Common Stock that are transferred to any Person that is not included
within the WCAS Group shall immediately and automatically convert to Common
Stock, and all conditions of such conversion shall be in accordance with this
Section 4 of this Article IV.D.
(m) DEFINITIONS. Capitalized terms not otherwise defined but
used in this Article IV.D have the meanings set forth below:
"Affiliate" means with respect to any Person, any other Person,
directly or indirectly controlling, controlled by or under common control with
such Person. For the purpose of the above definition, the term "control"
(including with correlative meaning, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the power, directly or indirectly, of the owner to direct or cause the direction
of the management and policies of such Person, whether through the ownership of
voting securities or by contract or otherwise.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"WCAS Group" means Welsh, Carson, Anderson & Stowe VII, L.P., WCAS
Healthcare Capital Partners, L.P. and Affiliates of each of the foregoing.
ARTICLE V
STOCKHOLDER ACTION
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At any time prior to the date on which the Company's registration
statement on Form S-1 filed under the Securities Act of 1933, as amended, is
declared effective by the Securities and Exchange Commission (the "IPO Date") in
connection with an initial underwritten offering to the public of its capital
stock, any action required by law, this Certificate of Incorporation or the
Bylaws of the Company to be taken at a meeting of stockholders of the Company,
may be taken without a meeting pursuant to the terms and conditions of Section
228 of the DGCL. From and after the IPO Date, any action required by law, this
Amended and Restated Certificate of Incorporation or the Bylaws of the Company
to be taken at a meeting of stockholders of the Company, may be taken without a
meeting only if a consent in writing setting forth the action so taken shall be
signed by all stockholders entitled to vote on the action.
ARTICLE VI
BOARD OF DIRECTORS
6.1. POWERS OF THE BOARD OF DIRECTORS. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the
Corporation as provided in and subject to Article X of this Certificate of
Incorporation
(b) determine the rights, powers, duties, rules and procedures
that affect the power of the Board of Directors to manage and direct the
business and affairs of the Corporation, including the power to designate and
empower committees of the Board of Directors, to elect, appoint and empower the
officers and other agents of the Corporation, and to determine the time and
place of, and the notice requirements for, Board meetings, as well as quorum and
voting requirements for, and the manner of taking, Board action; and
(c) exercise all such powers and do all such acts as may be
exercised or done by the Corporation, subject to the provisions of the DGCL this
Certificate of Incorporation, and the Bylaws of the Corporation.
6.2. NUMBER OF DIRECTORS. The number of directors of the Corporation
shall be not less than five (5) or more than twelve (12). The exact number of
directors shall be determined within such minimum and maximum by resolution
adopted by an affirmative vote of at least two-thirds (2/3) of the total number
of directors then in office.
6.3. CLASSIFICATION, TERMS AND ELECTION OF DIRECTORS. The directors of
the Corporation shall be divided by the Board of Directors of the Corporation
into three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. At the first annual
meeting of stockholders of the Corporation after the
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Corporation completes an initial underwritten offering to the public of capital
stock of the Corporation pursuant to a registration statement on Form S-1 filed
under the Securities Act of 1933, as amended (the "First Meeting"), the initial
term of the Class I directors will expire. At the first annual meeting of
stockholders of the Corporation after the First Meeting, the initial term of the
Class II directors will expire. At the second annual meeting of stockholders of
the Corporation after the First Meeting, the initial term of the Class III
directors will expire. At each annual meeting of stockholders of the
Corporation, successors to the class of directors whose term expires at that
annual meeting shall be elected or reelected for a three-year term. Except as
provided in Section 6.5, a director shall be elected by a plurality of the votes
cast by holders of shares of the class of stock represented at the annual
meeting of stockholders at which the director stands for election and entitled
to elect such director.
If the number of directors is changed, any increase or decrease shall
be apportioned by the Board among the classes so as to maintain the number of
directors in each class as nearly equal as possible. In no case shall a decrease
in the number of directors have the effect of shortening the term of an
incumbent director.
Each director shall serve until his or her successor is elected and
qualified or until his or her earlier resignation, retirement, disqualification,
removal from office or death.
6.4 REMOVAL. The entire Board or any individual director may be removed
from office only for cause by the affirmative vote of the holders of at least a
majority of the outstanding shares of capital stock of the Corporation then
entitled to vote at an election of directors. Removal action may be taken at any
stockholders' meeting with respect to which notice of such purpose has been
given, and a removed director's successor may be elected at the same meeting to
serve the unexpired term.
6.5 VACANCIES. A vacancy occurring on the Board, however occurring,
whether by increase in the number of directors, death, resignation, retirement,
disqualification, removal from office or otherwise, may be filled, until the
next stockholder election of the class for which the director shall have been
designated by the affirmative vote of at least two-thirds (2/3rds) of the total
number of directors then remaining in office, though they may constitute less
than a quorum of the Board.
6.6 ELECTION OF DIRECTORS BY HOLDERS OF PREFERRED STOCK.
Notwithstanding any of the foregoing provisions in this Article VI, whenever the
holders of any one or more classes of preferred stock or series thereof issued
by the Corporation shall have the right, voting separately by class or series,
to elect directors at an annual or special meeting of stockholders, the number
of such directors, and the election, term of office, filling of vacancies and
other features of each such directorship, shall be governed by the terms of this
Certificate of Incorporation and any Preferred Stock Designation applicable
thereto, except that such directors so elected shall not be divided into classes
pursuant to this Article VI.
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6.7 AMENDMENT OR REPEAL. Notwithstanding any other provisions of this
Certificate of Incorporation or the Bylaws of the Corporation or any provision
of any law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of capital stock of the Corporation required by law, this Certificate of
Incorporation or any Preferred Stock Designation, the provisions set forth in
this Article VI may not be repealed or amended in any respect unless such action
is approved by the affirmative vote of the holders of not less than two-thirds
(2/3rds) of the outstanding shares of the capital stock of the Corporation then
entitled to vote at an election of directors.
ARTICLE VII
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provisions contained in this Certificate of
Incorporation. Any such amendment, alteration, change or repeal shall require
the affirmative vote of both (a) a majority of the members of the Board then in
office and (b) a majority of the voting power of all of the outstanding shares
of capital stock of the Company then entitled to vote at an election of
directors. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of not less
than two-thirds (2/3rds) of all of the outstanding shares of capital stock of
the Company then entitled to vote at an election of directors shall be required
to alter, amend, adopt any provision inconsistent with or repeal Article V, VI,
VIII or this sentence.
ARTICLE VIII
INDEMNIFICATION
8.1 RIGHT TO INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact:
(a) that he or she is or was a director or officer of the
Corporation, or
(b) that he or she, being at the time a director or officer of
the Corporation, is or was serving at the request of the Corporation as a
director, trustee, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (collectively, "another enterprise" or
"other enterprise"), whether either in case (a) or in case (b) the basis of such
proceeding is alleged action or inaction (x) in an official capacity as a
director or officer of the Corporation, or as a director, trustee, officer,
employee or agent of such other enterprise, or (y) in any other capacity related
to the Corporation or such other enterprise while so serving as a director,
trustee, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent not prohibited by Section 145 of the DGCL
(or any successor provision or
16
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provisions) as the same exists or may hereafter be amended (but, in the case of
any such amendment, with respect to alleged action or inaction occurring prior
to such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including without limitation
attorneys' fees and expenses, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such person
in connection therewith. The persons indemnified by this Article VIII are
hereinafter referred to as "indemnitees." Such indemnification as to such
alleged action or inaction shall continue as to an indemnitee who has after such
alleged action or inaction ceased to be a director or officer of the
Corporation, or director, officer, employee or agent of such other enterprise,
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators. Notwithstanding the foregoing, except as may be provided in the
Bylaws of the Corporation or by the Board, the Corporation shall not indemnify
any such indemnitee in connection with a proceeding (or portion thereof)
initiated by such indemnitee (but this prohibition shall not apply to a
counterclaim, cross-claim or third-party claim brought by the indemnitee in any
proceeding) unless such proceeding (or portion thereof) was authorized by the
Board. The right to indemnification conferred in this Article VIII: (i) shall be
a contract right; (ii) shall not be affected adversely to any indemnitee by any
amendment of this Certificate of Incorporation with respect to any alleged
action or inaction occurring prior to such amendment; and (iii) shall, subject
to any requirements imposed by law and the Bylaws of the Corporation, include
the right to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition.
8.2 RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Article VIII shall not be exclusive of any other
right which any person may have or hereafter acquire under this Certificate of
Incorporation, or any statute, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. The Bylaws of the Corporation may contain
such other provisions concerning indemnification, including provisions
specifying reasonable procedures relating to and conditions to the receipt by
indemnitees of indemnification, provided that such provisions are not
inconsistent with the provisions of this Article VIII.
8.3 AGENTS AND EMPLOYEES. The Corporation may, to the extent authorized
from time to time by the Board, grant rights to indemnification, and to the
advancement of expenses, to any employee or agent of the Corporation (or any
person serving at the Corporation's request as a director, trustee, officer,
employee or agent of another enterprise) or to any person who is or was a
director, officer, employee or agent of any of the Corporation's affiliates,
predecessor or subsidiary corporations or a constituent corporation absorbed by
the Corporation in a consolidation or merger or who is or was serving at the
request of such affiliate, predecessor or subsidiary corporation or of such
constituent corporation as a director, officer, employee or agent of another
enterprise, in each case as determined by the Board to the fullest extent of the
provisions of this Article VIII in cases of the indemnification and advancement
of expenses of directors
17
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and officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board.
ARTICLE IX
LIMITED LIABILITY
No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. If the DGCL is subsequently amended to
further eliminate or limit the liability of a director, then a director of the
Corporation, in addition to the circumstances in which a director is not
personally liable as set forth in the preceding sentence, shall not be liable to
the fullest extent permitted by the amended DGCL. For purposes of this Article
IX, "fiduciary duty as a director" shall include any fiduciary duty arising out
of serving at the Corporation's request as a director of another corporation,
partnership, joint venture or other enterprise, and "personal liability to the
Corporation or its stockholders" shall include any liability to such other
corporation, partnership, joint venture, trust or other enterprise, and any
liability to the corporation in its capacity as a security holder, joint
venturer, partner, beneficiary, creditor or investor of or in any such other
corporation, partnership, joint venture, trust or other enterprise.
ARTICLE X
BYLAWS
The Bylaws may be amended, altered, or changed or repealed and new
Bylaws may be adopted (1) at any annual or special meeting of stockholders by
the affirmative vote of the holders of a majority of the voting power of the
stock issued and outstanding and entitled to vote thereat, provided, however,
that any proposed amendment, alteration, change or repeal of, or the adoption of
any Bylaw by such vote of the stockholders that is inconsistent with, Sections
3, 4, 11 or 12 of Article II or Section 3 of Article III of the Bylaws shall
require the affirmative vote of the holders of not less than two-thirds (2/3rds)
of the voting power of all of the capital stock then outstanding, and provided,
further, however, that, in the case of any such stockholder action at a special
meeting of stockholders, notice of the proposed amendment, alteration, change,
repeal or adoption of the new Bylaw or Bylaws must be contained in the notice of
such special meeting, or (2) by the affirmative vote of a majority of the Board
of Directors; PROVIDED, HOWEVER, that the stockholders entitled to vote may
prescribe that any Bylaw adopted by the stockholders may not be amended,
altered, changed or repealed by the Board of Directors; and PROVIDED, FURTHER,
that no Bylaws hereafter adopted shall invalidate any prior act of the directors
that would have been valid if such new Bylaws had not been adopted.
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IN WITNESS WHEREOF, the undersigned does execute this Amended
and Restated Certificate, this ___ day of April, 1999 on behalf of the
Corporation.
---------------------------------
By:
------------------------------
Title:
---------------------------
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Exhibit 3.2
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
ACCREDO HEALTH, INCORPORATED
----------------------------
INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE
----------------------------
ADOPTED AS OF
MAY 24, 1996
AMENDED AND RESTATED AS OF
APRIL __, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I OFFICES...................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS..................................................1
Section 1. Place of Meetings.........................................................1
Section 2. Annual Meeting............................................................1
Section 3. Special Meetings..........................................................1
Section 4. Notice of Meetings........................................................2
Section 5. List of Stockholders......................................................2
Section 6. Quorum....................................................................2
Section 7. Organization and Procedure................................................2
Section 8. Voting....................................................................3
Section 9. Proxies...................................................................3
Section 10. Inspectors................................................................3
Section 11. Nominations of Directors..................................................4
Section 12. New Business..............................................................6
ARTICLE III BOARD OF DIRECTORS........................................................7
Section 1. Powers....................................................................7
Section 2. Election and Term.........................................................7
Section 3. Number....................................................................7
Section 4. Quorum and Manner of Acting...............................................7
Section 5. Organization Meeting......................................................8
Section 6. Regular Meetings..........................................................8
Section 7. Special Meetings; Notice..................................................8
Section 8. Removal of Directors......................................................8
Section 9. Resignations..............................................................9
Section 10. Vacancies.................................................................9
Section 11. Compensation of Directors.................................................9
Section 12. Action Without a Meeting..................................................9
Section 13. Telephonic Participation in Meetings......................................9
Section 14. Organization..............................................................9
Section 15. Presumption of Assent.....................................................10
ARTICLE IV COMMITTEES................................................................10
Section 1. Committees................................................................10
ARTICLE V OFFICERS..................................................................10
Section 1. Principal Officers........................................................10
Section 2. Election and Term of Office...............................................10
Section 3. Other Officers............................................................11
Section 4. Removal...................................................................11
Section 5. Resignations..............................................................11
</TABLE>
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<TABLE>
<S> <C>
Section 6. Vacancies.................................................................11
Section 7. Chairman of the Board of Directors and Vice Chairman of
the Board of Directors ...................................................11
Section 8. Chief Executive Officer...................................................11
Section 9. President.................................................................12
Section 10. Vice President............................................................12
Section 11. Treasurer.................................................................12
Section 12. Secretary.................................................................12
Section 13. Compensation of Officers..................................................12
Section 14. Execution of Instruments..................................................13
Section 15. Mechanical Endorsements...................................................13
ARTICLE VI INDEMNIFICATION...........................................................13
Section 1. Indemnification Provisions in Certificate of Incorporation................13
Section 2. Indemnification of Employees..............................................13
Section 3. Undertakings for Advances of Expenses.....................................13
Section 4. Claims for Indemnification................................................13
Section 5. Insurance.................................................................14
Section 6. Severability..............................................................14
ARTICLE VII SHARES AND THEIR TRANSFER.................................................14
Section 1. Certificate for Stock.....................................................14
Section 2. Stock Certificate Signature...............................................14
Section 3. Stock Ledger..............................................................15
Section 4. Cancellation..............................................................15
Section 5. Registrations of Transfers of Stock.......................................15
Section 6. Regulations...............................................................15
Section 7. Lost, Stolen, Destroyed or Mutilated Certificates.........................15
Section 8. Record Dates..............................................................16
ARTICLE VIII MISCELLANEOUS PROVISIONS..................................................16
Section 1. Corporate Seal............................................................16
Section 2. Voting of Stocks Owned by the Corporation.................................16
Section 3. Dividends.................................................................16
ARTICLE IX AMENDMENTS................................................................16
</TABLE>
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<PAGE>
BY-LAWS
OF
ACCREDO HEALTH, INCORPORATED
(a Delaware corporation)
---------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Delaware shall
be located in the City of Wilmington, County of New Castle. The Corporation may
establish or discontinue, from time to time, such other offices within or
without the State of Delaware as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be
held at such place or places, within or without the State of Delaware, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for the
election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled to vote shall elect a Board of
Directors and may transact such other proper business as may come before the
meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the stockholders, or
of any class thereof entitled to vote, for any purpose or purposes, may be
called at any time by the Chairman of the Board, if any, or the Chief Executive
Officer or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record not less
than two-thirds of the outstanding shares of stock of the Corporation entitled
to vote at such meeting. Such written request shall state the purpose or
purposes for which such meeting is to be called. The only business which may be
conducted at such a meeting, other than procedural matters and matters relating
to the conduct of the meeting, shall be the matter or matters described in the
notice of the meeting.
<PAGE>
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of the stock ledger to
prepare and make, at least ten days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in his name. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall be kept and produced at the time
and place of the meeting during the whole time thereof and subject to the
inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the holders of
record of a majority of the issued and outstanding stock of the Corporation
entitled to vote at such meeting, present in person or by proxy, shall
constitute a quorum for the transaction of business, except where otherwise
provided by law, the Certificate of Incorporation or these By-laws. In the
absence of a quorum, any officer entitled to preside at, or act as Secretary of,
such meeting shall have the power to adjourn the meeting from time to time until
a quorum shall be constituted.
SECTION 7. ORGANIZATION AND PROCEDURE.
(a) The Chairman of the Board, or, in the absence of the Chairman of
the Board, the Vice Chairman of the Board, or any other person designated by the
Board of Directors, shall preside at meetings of stockholders. The Secretary of
the Corporation
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shall act as secretary, but in the absence of the Secretary, the presiding
officer may appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall
fix and announce the date and time of the opening and the closing of the polls
for each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in attendance at the invitation of the
chairman and making rules governing speeches and debates. Except to the extent
inconsistent with any rules and regulations adopted by the Board of Directors,
the chairman of the meeting acts in his or her absolute discretion and his or
her rulings are not subject to appeal.
SECTION 8. VOTING. Every stockholder of record who is entitled to vote
shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date. At all meetings of the
stockholders, a quorum being present, all matters shall be decided by majority
vote of the shares of stock entitled to vote held by stockholders present in
person or by proxy, except as otherwise required by law or the Certificate of
Incorporation. Unless demanded by a stockholder of the Corporation present in
person or by proxy at any meeting of the stockholders and entitled to vote
thereat or so directed by the chairman of the meeting or required by law, the
vote thereat on any question need not be by written ballot. On a vote by written
ballot, each ballot shall be signed by the stockholder voting, or in his name by
his proxy, if there be such proxy, and shall state the number of shares voted by
him and the number of votes to which each share is entitled.
SECTION 9. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. A proxy
acting for any stockholder shall be duly appointed by an instrument in writing
subscribed by such stockholder. No proxy shall be valid after the expiration of
three years from the date thereof unless the proxy provides for a longer period.
SECTION 10. INSPECTORS. The Board of Directors by resolution shall, in
advance of any meeting of stockholders, appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated by the Board of Directors
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an
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oath faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspector(s) shall have the
duties prescribed by the Delaware General Corporation Law.
SECTION 11. NOMINATIONS OF DIRECTORS. Nominations of candidates for
election as directors at any annual or special meeting of stockholders may be
made (i) by, or at the direction of, a majority of the Board of Directors or
(ii) by any stockholder of record entitled to vote at such meeting. Except to
the extent otherwise required by law, only persons nominated in accordance with
procedures set forth in this Section 11 shall be eligible for election as a
director at an annual or special meeting.
Nominations, other than those made by, or at the direction of, a
majority of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the Corporation as set forth in this Section 11. To
be timely, a stockholder's notice shall be delivered to, or mailed and received
at, the principal executive offices of the Corporation not less than sixty (60)
days nor more than ninety (90) days prior to the date of the scheduled annual or
special meeting, regardless of postponements, deferrals, or adjournments of that
meeting to a later date; provided, however, that if less than seventy (70) days'
notice or prior public disclosure of the date of the scheduled annual or special
meeting is given or made, notice by the stockholder to be timely must be so
delivered or received no later than the close of business on the tenth (10th)
day following the earlier of the day on which such notice of the date of the
scheduled annual or special meeting was mailed or the day on which such public
disclosure was made. Such stockholder's notice shall be set forth (i) as to each
person whom the stockholder proposes to nominate as a director (a) the name,
age, business address and residence address of such person, (b) the principal
occupation or employment of such person, (c) the class and number of shares of
the Corporation's equity securities which are Beneficially Owned (as defined
below) by such person on the date of such stockholder notice and (d) and any
other information relating to such person that would be required to be disclosed
pursuant to Regulation 13D under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in connection with the acquisition of shares, and pursuant
to Regulation 14A under the Exchange Act, in connection with the solicitation of
proxies with respect to nominees for election as directors, regardless of
whether such person is subject to the provisions of such regulations, including,
but not limited to, information required to be disclosed by Items 4(b) and 6 of
Schedule A of Regulation 14A and information which would be required to be filed
on Schedule B of Regulation 14A with the Securities and Exchange Commission (as
such Items and Schedules are in effect on the date hereof and such additional
information as may be required by those provisions or successor provisions
adopted after the date thereof); and (ii) as to the stockholder giving the
notice (a) the name and address, as they appear on the Corporation's books, of
such stockholder and any other stockholder who is a record or Beneficial Owner
of any equity securities of the Corporation and who is known by such stockholder
to be supporting such nominee(s) and (b) the class and number of shares of the
Corporation's equity securities which are Beneficially Owned and owned of record
by such stockholder on the date of such stockholder notice and the number of
shares of the Corporation's equity securities
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Beneficially Owned and owned of record by any Person known by such stockholder
to be supporting such nominee(s) on the date of such stockholder notice. At the
request of a majority of the Board of Directors any person nominated by, or at
the direction of, the Board of Directors for election as a director at an annual
or special meeting shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. Ballots bearing the names of all the persons who
have been nominated for election as directors at an annual or special meeting in
accordance with procedures set forth in this Section 11 shall be provided for
use at the annual meeting.
A majority of the directors may reject any nomination by a stockholder
not timely made in accordance with the requirements of this Section 11. If a
majority of the directors determines that the information provided in a
stockholder's notice does not satisfy the informational requirements of this
Section 11 in any material respect, the Secretary of the Corporation shall
promptly notify such stockholder of the deficiency in the notice. The
stockholder shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within such period of time, not to
exceed five (5) days, from the date such deficiency notice is given to the
stockholder, as a majority of the directors shall reasonably determine. If the
deficiency is not cured within such period, or if a majority of the directors
reasonably determine that the additional information provided by the
stockholder, together with the information previously provided, does not satisfy
the requirements of this Section 11 in any material respect, then a majority of
the directors may reject such stockholder's nomination. The Secretary of the
Corporation shall notify a stockholder in writing whether his nomination has
been made in accordance with the time and informational requirements of this
Section 11. Notwithstanding the procedure set forth in this Section 11, if the
majority of the directors does not make a determination as to the validity of
any nominations by a stockholder, the presiding officer of the annual or special
meeting shall determine and declare at the annual or special meeting whether a
nomination was not made in accordance with the terms of this Section 11. If the
presiding officer determines that a nomination was not made in accordance with
the terms of this Section 11, he shall so declare at the annual or special
meeting and the defective nomination shall be disregarded.
For the purposes of this Section 11 and Section 12, a person shall be
considered the "Beneficial Owner" of any security (whether or not owned of
record):
(a) with respect to which such person or any affiliate or associate (as
those term are defined under Rule 12b-2 of the General Rules and Regulations
under the Exchange Act) of such person directly or indirectly has or shares (i)
voting power, including the power to vote or to direct the voting of such
securities and/or (ii) investment power, including the power to dispose of or to
direct the disposition of such security;
(b) which such person or any affiliate or associate of such person has
(i) the right or obligation to acquire (whether such right or obligation is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or
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understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, and/or (ii) the
right to vote pursuant to any agreement, arrangement or understanding (whether
or not in writing and whether or not such right is exercisable immediately or
only after the passage of time); or
(c) which is Beneficially Owned within the meaning of (a) or (b) of
this paragraph by any other person with which such first-mentioned person or any
of its affiliates or associates has any agreement, arrangement or understanding
(whether or not in writing), with respect to (x) acquiring, holding, voting or
disposing of such security or any security convertible into or exchangeable or
exercisable for such security, or (y) acquiring, holding or disposing of all or
substantially all of the assets or businesses of the Corporation or a subsidiary
of the Corporation.
SECTION 12. NEW BUSINESS. At an annual or special meeting of
stockholders, only such new business shall be conducted, and only such proposals
shall be acted upon, as shall have been brought before the annual or special
meeting (a) by, or at the direction of, the majority of the Board of Directors
or (b) by any stockholder of the Corporation who complies with the notice
procedures set forth in this Section 12, except to the extent otherwise
requested by law. For the proposal to be properly brought before an annual or
special meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Corporation not less than sixty (60) days nor
more than ninety (90) days prior to the scheduled annual or special meeting,
regardless of any postponement, deferrals or adjournments of that meeting to a
later date, provided, however, that if less than seventy (70) days' notice or
prior public disclosure of the date of the scheduled annual or special meeting
is given or made, notice by the stockholder, to be timely, must be so delivered
or received not later than the close of business on the tenth (10th) day
following the earlier of the day on which such notice of the date of the
scheduled annual or special meeting was mailed or the day on which such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual or special
meeting (a) a brief description of the proposal desired to be brought before the
annual or special meeting and the reasons for conducting such business at the
annual or special meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business and any other
stockholder who is the record or Beneficial Owner of any equity security of the
Corporation known by such stockholder to be supporting such proposal, (c) the
class and number of shares of the Corporation's equity securities which are
Beneficially Owned and owned of record by the stockholder giving the notice on
the date of such stockholder notice and by, any other record or Beneficial
Owners of the Corporation's equity securities known by such stockholder to be
supporting such proposal on the date of such stockholder notice, and (d) any
financial or other interest of the stockholder in such proposal.
A majority of the directors may reject any stockholder proposal not
timely made in accordance with the terms of this Section 12. If a majority of
the directors determine
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that the information provided in a stockholder's notice does not satisfy the
informational requirements of this Section 12 in any material respect, the
Secretary of the Corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall have an opportunity to cure the
deficiency by providing additional information to the Secretary within such
period of time, not to exceed five (5) days from the date such deficiency notice
is given to the stockholder, as the majority of the directors shall reasonably
determine. If the deficiency is not cured within such period, or if the majority
of the directors determines that the additional information provided by the
stockholder, together with information previously provided, does not satisfy the
requirements of this Section 12 in any material respect, then a majority of the
directors may reject such stockholder's proposal. The Secretary of the
Corporation shall notify a stockholder in writing whether his or her proposal
has been made in accordance with the time and information requirements of this
Section 12. Notwithstanding the procedures set forth in this paragraph, if a
majority of the directors does not make a determination as to the validity of
any stockholder proposal, the presiding officer of the annual or special meeting
shall determine and declare at the annual or special meeting whether the
stockholder proposal was made in accordance with the terms of this Section 12.
If the presiding officer determines that a stockholder proposal was not made in
accordance with the terms of this Section 12, he or she shall so declare at the
annual or special meeting and any such proposal shall not be acted upon at the
annual or special meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by law or by
the Certificate of Incorporation, Directors shall be elected at the annual
meeting of stockholders and shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualify, or until they
sooner die, resign or are removed. Except as otherwise provided in the
Certificate of Incorporation, at each annual meeting of stockholders, at which a
quorum is present, the persons receiving a plurality of the votes cast shall be
the Directors. Acceptance of the office of Director may be expressed orally or
in writing, and attendance at a meeting shall constitute such acceptance.
SECTION 3. NUMBER. Except as otherwise provided by the Certificate of
Incorporation, the number of directors constituting the Board of Directors shall
be authorized from time to time exclusively by a vote of a majority of the
voting power of all of the shares of capital stock of the Corporation then
entitled to vote in the election of directors.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided by
law or by the Certificate of Incorporation, the presence of 50% of the whole
Board of Directors shall be necessary to constitute a quorum for the transaction
of business. In the absence of
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a quorum, a majority of the Directors present may adjourn the meeting from time
to time until a quorum shall be present. Notice of any adjourned meeting need
not be given. At all meetings of Directors, a quorum being present, all matters
shall be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law or the Certificate of Incorporation. The
Board of Directors may hold its meetings at such place or places within or
without the State of Delaware as the Board of Directors may from time to time
determine or as shall be specified in the respective notices, or waivers of
notice, thereof.
SECTION 5. ORGANIZATION MEETING. After each annual meeting of
stockholders for the election of Directors, the Board of Directors shall meet
for the purpose of organization, the election of officers and the transaction of
other business. Notice of such meeting need not be given.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such place, within or without the State of Delaware, as shall
from time to time be determined by the Board of Directors. After there has been
such determination, and notice thereof has been once given to each member of the
Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. The Chairman of the Board, if any,
the Chief Executive Officer or a majority of the Directors may call a special
meeting of the Directors at any time by giving each Director (2) days prior
notice. Such notice may be given orally or in writing. If given in writing, such
notice shall be deemed to be effective when received and may be given by any
means, including personal delivery, by mail, or by telegram, telex, or facsimile
transmission. If given by mail, such notice shall also be deemed effective five
days after deposited in the United States mail if mailed with first-class
postage prepaid. Notice may be addressed to a Director's residence or usual
place of business. Each such notice shall state the time and place of the
meeting . Notice of any meeting of the Board of Directors need not be given to
any Director if he shall sign a written waiver thereof either before or after
the meeting, or if he shall be present at the meeting. Unless limited by law,
the Certificate of Incorporation, these By-laws or the terms of the notice
thereof, any and all business may be transacted at any meeting without the
notice thereof having specifically identified the matters to be acted upon.
SECTION 8. EREMOVAL OF DIRECTORS. Except as otherwise provided in the
Certificate of Incorporation, any Director or the entire Board of Directors may
be removed, with or without cause, at any time, by action of the holders of
record of the majority of the issued and outstanding stock of the Corporation
(a) present in person or by proxy at a meeting of holders of such stock and
entitled to vote thereon or (b) by a consent in writing in the manner
contemplated by the Certificate of Incorporation, and the vacancy or vacancies
in the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by written
consent.
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SECTION 9. RESIGNATIONS. Any Director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board, to the Chief
Executive Officer or the Secretary of the Corporation. The resignation of any
Director shall take effect upon receipt of notice thereof or at such later time
as shall be specified in such notice; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 10. VACANCIES. Except as otherwise provided in the Certificate
of Incorporation, any newly created directorships and vacancies occurring in the
Board by reason of death, resignation, retirement, disqualification or removal,
with or without cause, may be filled by the action of the holders of record of
the majority of the issued and outstanding stock of the Corporation (a) present
in person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (b) by a consent in writing in the manner contemplated by the
Certificate of Incorporation. The Director so chosen, whether selected to fill a
vacancy or elected to a new directorship shall hold office until the next
meeting of stockholders at which the election of Directors is in the regular
order of business, and until his successor has been elected and qualifies, or
until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the Board, a
specific sum fixed by the Board plus expenses may be allowed for attendance at
each regular or special meeting of the Board; PROVIDED, HOWEVER, that nothing
herein contained shall be construed to preclude any Director from serving the
Corporation or any parent or subsidiary corporation thereof in any other
capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes or proceedings of the Board or
committee.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the Board
of Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
SECTION 14. ORGANIZATION. The Chairman of the Board, or in the absence
of a Chairman of the Board, the Vice Chairman of the Board, shall preside at
meetings of the Board of Directors; provided that if the Vice Chairman of the
Board is also absent, a member of the Board of Directors selected by the members
present shall preside at such
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meetings. The Secretary of the Corporation shall act as secretary, but in the
absence of the Secretary, the presiding officer may appoint a secretary.
SECTION 15. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
ARTICLE IV
COMMITTEES
SECTION 1. COMMITTEES. The Board of Directors may, by resolutions
passed by a majority of the members of the Board of Directors, designate members
of the Board of Directors to constitute committees which shall in each case
consist of such number of directors, and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. Any such committee may fix its rules of procedure, determine its manner of
acting and the time and place, whether within or without the State of Delaware,
of its meetings and specify what notice thereof, if any, shall be given, unless
the Board of Directors shall otherwise by resolution provide. Unless otherwise
provided by the Board of Directors or such committee, the quorum, voting and
other procedures shall be the same as those applicable to actions taken by the
Board of Directors. A majority of the members of the Board of Directors then in
office shall have the power to change the membership of any such committee at
any time, to fill vacancies therein and to discharge any such committee or to
remove any member thereof, either with or without cause, at any time.
ARTICLE V
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect a
Chief Executive Officer, a President, a Secretary and a Treasurer, and may in
addition elect a Chairman of the Board, one or more Vice Presidents and such
other officers as it deems fit; the Chief Executive Officer, the President, the
Secretary, the Treasurer, the Chairman of the Board, if any, and the Vice
Presidents, if any, being the principal officers of the Corporation. One person
may hold, and perform the duties of, any two or more of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of the
Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
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SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or the
Chairman of the Board, if any, or the Chief Executive Officer may appoint, such
other officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the Chief Executive Officer may from time to
time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the Board of Directors at any
regular meeting of the Board, or at any special meeting of the Board called for
that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Chairman of the Board, the Chief Executive Officer, or the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD OF DIRECTORS AND VICE CHAIRMAN OF THE
BOARD OF DIRECTORS. The Chairman of the Board of Directors shall preside at all
meetings of the Board of Directors and the stockholders at which he is present.
The Chairman of the Board of Directors shall perform such other duties and have
such other authority and powers as the Board of Directors may from time to time
prescribe. In the absence of the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors shall perform the duties and exercise the
powers of the Chairman of the Board of Directors. The Chairman of the Board of
Directors and Vice Chairman of the Board of Directors shall be appointed by the
Board of Directors and shall serve at the pleasure of the Board of Directors.
SECTION 8. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
be the chief executive officer of the Corporation and, subject to the control of
the Board of Directors, shall in general supervise and control all of the
business and affairs of the Corporation. He shall have authority, subject to
such rules as may be prescribed by the Board of Directors, to appoint agents and
employees of the Corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the Chief Executive
Officer. He shall have authority to sign, execute and acknowledge, on behalf of
the Corporation, all deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments necessary or proper to be
executed in the course of the Corporation's regular business or which shall be
authorized by resolution of the Board of Directors; and except as otherwise
provided by law or the Board of
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Directors, he may authorize the President or any Vice President or other officer
or agent of the Corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general he shall perform all duties
incident to the office of Chief Executive Officer and such other duties as may
be prescribed by the Board of Directors from time to time.
SECTION 9. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall be responsible for supervising and
directing the operation of the Corporation's business, subject to the direction
of the Chief Executive Officer and the Board of Directors. He shall have such
other duties and powers as may be assigned to or vested in him from time to time
by the Board of Directors or Chief Executive Officer. In the absence of the
Chief Executive Officer or his inability to act, the President shall perform the
duties and exercise the authority of the Chief Executive Officer.
SECTION 10. VICE PRESIDENT. Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him by the President or
the Board of Directors.
SECTION 11. TREASURER. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation. He shall
exhibit at all reasonable times his books of account and records to any of the
Directors of the Corporation upon application during business hours at the
office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may-be assigned to him by the Chairman of
the Board of Directors, the Chief Executive Officer or the Board of Directors.
The Treasurer shall give such bond, if any, for the faithful discharge of his
duties as the Board of Directors may require.
SECTION 12. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the Chief Executive Officer or the Board of Directors.
SECTION 13. COMPENSATION OF OFFICERS. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to a Compensation
Committee to determine compensation to designated officers of the Corporation.
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<PAGE>
SECTION 14. EXECUTION OF INSTRUMENTS. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the Chief
Executive Officer, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
SECTION 15. MECHANICAL ENDORSEMENTS. The Chief Executive Officer, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION PROVISIONS IN CERTIFICATE OF INCORPORATION.
The provisions of this Section VI are intended to supplement Article VIII of the
Certificate of Incorporation pursuant to Sections 8.2 and 8.3 thereof. To the
extent that this Section VII contains any provisions inconsistent with said
Article VIII, the provisions of the Certificate of Incorporation shall govern.
Terms defined in such Article VIII shall have the same meaning in this Section
VI.
SECTION 2. INDEMNIFICATION OF EMPLOYEES. The Corporation may by
resolution of its Board of Directors indemnify and advance expenses to its
employees to the same extent as to its directors and officers, as set forth in
the Certificate of Incorporation and in this Section VI of the Bylaws of the
Corporation.
SECTION 3. UNDERTAKINGS FOR ADVANCES OF EXPENSES. If and to the extent
the Delaware General Corporation Law requires, an advancement by the Corporation
of expenses incurred by an indemnitee pursuant to clause (iii) of the last
sentence of Section 8.1 of the Certificate of Incorporation (hereinafter an
"advancement of expenses") shall be made only upon delivery to the Corporation
of an undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under Article VIII of the Certificate of
Incorporation or otherwise.
SECTION 4. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification
under Section 8.1 of the Certificate of Incorporation is not paid in full by the
Corporation within 60 days after it has been received in writing by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be 20 days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense
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of prosecuting or defending such suit. In any suit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and in any suit by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses only upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in Section
145 of the Delaware General Corporation Law (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in Section 145 of the Delaware General
Corporation Law (or any successor provision or provisions), nor an actual
determination by the Corporation (including the Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to have or retain such
advancement of expenses, under Article VIII of the Certificate of Incorporation
or this Section VI or otherwise, shall be on the Corporation.
SECTION 5. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
SECTION 6. SEVERABILITY. In the event that any of the provisions of
this Section VI (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
ARTICLE VII
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the Corporation
shall be entitled to a certificate or certificates, to be in such form as the
Board of Directors shall prescribe, certifying the number of shares of the
capital stock of the Corporation owned by him. No certificate shall be issued
for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such stock
shall be numbered in the order in which they shall be issued and shall be signed
by the Chairman
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of the Board, if any, or the President or any Vice President and by the
Secretary or an Assistant Secretary or the Treasurer of the Corporation, and its
seal shall be affixed thereto. If such certificate is countersigned (1) by a
transfer agent other than the Corporation or its employee, or, (2) by a
registrar other than the Corporation or its employee, the signatures of such
officers of the Corporation may be facsimiles. In case any officer of the
Corporation who has signed, or whose facsimile signature has been placed upon,
any such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary or by
any other officer, employee or agent designated by the Board of Directors of the
name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VII, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VII provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such rules and
regulations as it may deem expedient, not inconsistent with the Certificate of
Incorporation or these Bylaws, concerning the issue, transfer and registration
of certificates for shares of the stock of the Corporation. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
clerks or one or more transfer agents and one or more registrars, and may
require all certificates of stock to bear the signature or signatures of any of
them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. Before
any certificates for stock of the Corporation shall be issued in exchange for
certificates which
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shall become mutilated or shall be lost, stolen or destroyed, proper evidence of
such loss, theft, mutilation or destruction shall be procured for the Board of
Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in the form of a circle and shall bear the name
of the Corporation and words and figures showing that it was incorporated in the
State of Delaware in the year 1996. The Secretary shall be the custodian of the
seal. The Board of Directors may authorize a duplicate seal to be kept and used
by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board of
Directors may authorize any person on behalf of the Corporation to attend, vote
and grant proxies to be used at any meeting of stockholders of any corporation
(except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefore, at any regular or special meeting declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends such sum or sums as the Directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE IX
AMENDMENTS
The Bylaws may be amended, altered, changed or repealed and new Bylaws
may be adopted (1) at any annual or special meeting of stockholders by the
affirmative vote of the holders of a majority of the voting power of the stock
issued and outstanding and entitled to vote thereat, provided, however, that any
proposed amendment, alteration, change or repeal of, or the adoption of any
Bylaw by such vote of the stockholders that is inconsistent with, Sections 3, 4,
11 or 12 of Article II or Section 3 of Article III of the
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Bylaws shall require the affirmative vote of the holders of not less than
two-thirds (2/3rds) of the voting power of all of the capital stock then
outstanding, and provided, further, however, that, in the case of any such
stockholder action at a special meeting of stockholders, notice of the proposed
amendment, alteration, change, repeal or adoption of the new Bylaw or Bylaws
must be contained in the notice of such special meeting, or (2) by the
affirmative vote of a majority of the Board of Directors; PROVIDED, HOWEVER,
that the stockholders entitled to vote may prescribe that any Bylaw adopted by
the Stockholders may not be amended, altered, changed or repealed by the Board
of Directors; and PROVIDED, FURTHER, that no Bylaw hereafter adopted shall
invalidate any prior act of the directors that would have been valid if such new
Bylaw had not been adopted..
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Exhibit 10.6
ACCREDO HEALTH, INCORPORATED
1999 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the Accredo Health, Incorporated 1999
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of Accredo Health, Incorporated (the "Corporation"), by linking the
personal interests of its employees, officers, consultants and directors to
those of Corporation stockholders and by providing such persons with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Corporation in its ability to motivate, attract, and retain
the services of employees, officers, consultants and directors upon whose
judgment, interest, and special effort the successful conduct of the
Corporation's operation is largely dependent. Accordingly, the Plan permits the
grant of incentive awards from time to time to selected employees, officers,
directors, and consultants; provided, however, to the extent necessary to
preserve the employee benefits plan exemption under applicable state blue sky
laws, no non-employee director or consultant of the Corporation will be eligible
to receive Awards under the Plan until such time, if any, as the Corporation's
common stock shall be traded on a national securities exchange or on the Nasdaq
National Market.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of the date upon
which it shall be approved by the Board. However, the Plan shall be submitted to
the stockholders of the Corporation for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the stockholders and if the
stockholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section
<PAGE>
1.1 unless a clearly different meaning is required by the context. The following
words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit Award, Dividend Equivalent
Award, or Other Stock-Based Award, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract,
or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Change in Control" means and includes each of the
following:
(1) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 25%
or more of the combined voting power of the then outstanding
voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding
Corporation Voting Securities"); provided, however, that for
purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
by a Person who is on the Effective Date the beneficial owner
of 25% or more of the Outstanding Corporation Voting
Securities, (ii) any acquisition directly from the
Corporation, (iii) any acquisition by the Corporation, (iv)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, or (v) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (3) of
this definition; or
(2) Individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination
for election by the Corporation's stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
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(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Corporation (a
"Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Corporation Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally
in the election of directors of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Corporation Voting Securities, and (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 25% or more of the combined voting power of the
then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination, and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
(4) Approval by the stockholders of the Corporation
of a complete liquidation or dissolution of the Corporation.
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Corporation" means Accredo Health, Incorporated, a
Delaware corporation.
(h) "Covered Employee" means a covered employee as defined in
Code Section 162(m)(3), provided that no employee shall be a Covered
Employee until the deduction limitation of Code Section 162(m) are
applicable to the Corporation and any reliance period under Code
Section 162(m) has expired, as described in Section 16.15 hereof.
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(i) "Disability" shall mean any illness or other physical or
mental condition of a Participant that renders the Participant
incapable of performing his customary and usual duties for the
Corporation, or any medically determinable illness or other physical or
mental condition resulting from a bodily injury, disease or mental
disorder which, in the judgment of the Committee, is permanent and
continuous in nature. The Committee may require such medical or other
evidence as it deems necessary to judge the nature and permanency of
the Participant's condition. Notwithstanding the above, with respect to
an Incentive Stock Option, Disability shall mean Permanent and Total
Disability as defined in Section 22(e)(3) of the Code.
(j) "Dividend Equivalent" means a right granted to a
Participant under Article 11.
(k) "Effective Date" has the meaning assigned such term in
Section 2.1.
(l) "Fair Market Value", on any date, means (i) if the Stock
is listed on a securities exchange or is traded over the Nasdaq
National Market, the closing sales price on such exchange or over such
system on such date or, in the absence of reported sales on such date,
the closing sales price on the immediately preceding date on which
sales were reported, or (ii) if the Stock is not listed on a securities
exchange or traded over the Nasdaq National Market, the mean between
the bid and offered prices as quoted by Nasdaq for such date, provided
that if it is determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will be
determined by such other method as the Committee determines in good
faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(n) "Non-Qualified Stock Option" means an Option that is not
an Incentive Stock Option.
(o) "Option" means a right granted to a Participant under
Article 7 of the Plan to purchase Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to a
Participant under Article 12, that relates to or is valued by reference
to Stock or other Awards relating to Stock.
(q) "Parent" means a corporation which owns or beneficially
owns a majority of the outstanding voting stock or voting power of the
Corporation. For
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Incentive Stock Options, the term shall have the same meaning as set
forth in Code Section 424(e).
(r) "Participant" means a person who, as an employee, officer,
consultant or director of the Corporation or any Subsidiary, has been
granted an Award under the Plan.
(s) "Performance Unit" means a right granted to a Participant
under Article 9, to receive cash, Stock, or other Awards, the payment
of which is contingent upon achieving certain performance goals
established by the Committee.
(t) "Plan" means the Accredo Health, Incorporated 1999
Long-Term Incentive Plan, as amended from time to time.
(u) "Restricted Stock Award" means Stock granted to a
Participant under Article 10 that is subject to certain restrictions
and to risk of forfeiture.
(v) "Retirement" means a Participant's voluntary termination
of employment with the Corporation, Parent or Subsidiary after
attaining age 55.
(w) "Stock" means the $.01 par value common stock of the
Corporation and such other securities of the Corporation as may be
substituted for Stock pursuant to Article 14.
(x) "Stock Appreciation Right" or "SAR" means a right granted
to a Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of the
date of exercise of the SAR over the grant price of the SAR, all as
determined pursuant to Article 8.
(y) "Subsidiary" means any corporation, limited liability
company, partnership or other entity of which a majority of the
outstanding voting stock or voting power is beneficially owned directly
or indirectly by the Corporation. For Incentive Stock Options, the term
shall have the meaning set forth in Code Section 424(f).
(z) "1933 Act" means the Securities Act of 1933, as amended
from time to time.
(z) "1934 Act" means the Securities Exchange Act of 1934, as
amended from time to time.
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ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board. It
is intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
1934 Act) and "outside directors" (within the meaning of Code Section 162(m) and
the regulations thereunder) to the extent that Rule 16b-3 and, if necessary for
relief from the limitation under Code Section 162(m) and such relief is sought
by the Corporation, Code Section 162(m), respectively, are applicable. However,
the mere fact that a Committee member shall fail to qualify under either of the
foregoing requirements shall not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any time and from time to
time in the discretion of, the Board. During any time that the Board is acting
as administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this Section
4.1) shall include the Board.
4.2 ACTION BY THE COMMITTEE. For purposes of administering the Plan,
the following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Corporation or
any Parent or Subsidiary, the Corporation's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
under the Plan, including but not limited to, the exercise price, grant
price, or purchase price, any restrictions or limitations on the Award,
any schedule for lapse of
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forfeiture restrictions or restrictions on the exercisability of an
Award, and accelerations or waivers thereof, based in each case on such
considerations as the Committee in its sole discretion determines;
(e) Accelerate the vesting or lapse of restrictions of any
outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines;
(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(h) Decide all other matters that must be determined in
connection with an Award;
(i) Establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Plan;
(j) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided herein.
4.4. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
14.1, the aggregate number of shares of Stock reserved and available for Awards
or which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 500,000, of which not more than 10% may be granted as Awards of
Restricted Stock or unrestricted Stock Awards.
5.2. LAPSED AWARDS. To the extent that an Award is canceled,
terminates, expires or lapses for any reason, any shares of Stock subject to the
Award will again be
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available for the grant of an Award under the Plan and shares subject to SARs or
other Awards settled in cash will be available for the grant of an Award under
the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to
the contrary (but subject to adjustment as provided in Section 14.1), the
maximum number of shares of Stock with respect to one or more Options and/or
SARs that may be granted during any one calendar year under the Plan to any one
Participant shall be 500,000. The maximum fair market value (measured as of the
date of grant) of any Awards other than Options and SARs that may be received by
any one Participant (less any consideration paid by the Participant for such
Award) during any one calendar year under the Plan shall be $2,000,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are
employees, officers, consultants or directors of the Corporation or a Parent or
Subsidiary; provided, however, that to the extent necessary to preserve the
employee benefits plan exemption under applicable state blue sky laws, no
non-employee director or consultant of the Corporation will be eligible to
receive Awards under the Plan until such time, if any, as the Corporation's
common stock shall be traded on a national securities exchange or on the Nasdaq
National Market.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock
under an Option shall be determined by the Committee, provided that the
exercise price for any Option shall not be less than the Fair Market
Value as of the date of the grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part. The Committee also shall determine the performance or
other conditions, if any, that must be satisfied before all or part of
an Option may be exercised. The Committee may waive any exercise
provisions at any time in whole or in part based upon factors as the
Committee may determine in its sole discretion so that the Option
becomes exerciseable at an earlier date.
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(c) PAYMENT. The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements), and the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants; provided that if shares of Stock surrendered in payment
of the exercise price were themselves acquired otherwise than on the
open market, such shares shall have been held by the Participant for at
least six months.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a
written Award Agreement between the Corporation and the Participant.
The Award Agreement shall include such provisions, not inconsistent
with the Plan, as may be specified by the Committee.
(e) ADDITIONAL OPTIONS UPON EXERCISE. The Committee may, in
its sole discretion, provide in an Award Agreement, or in an amendment
thereto, for the automatic grant of a new Option to any Participant who
delivers shares of Stock as full or partial payment of the exercise
price of the original Option. Any new Option granted in such a case (i)
shall be for the same number of shares of Stock as the Participant
delivered in exercising the original Option, (ii) shall have an
exercise price of 100% of the Fair Market Value of the surrendered
shares of Stock on the date of exercise of the original Option (the
grant date for the new Option), and (iii) shall have a term equal to
the unexpired term of the original Option.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock
shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option shall not be less than the Fair Market Value as
of the date of the grant.
(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse
under the earliest of the following circumstances; provided, however,
that the Committee may, prior to the lapse of the Incentive Stock
Option under the circumstances described in paragraphs (3), (4) and (5)
below, provide in writing that the Option will extend until a later
date, but if the Option is exercised after the dates specified in
paragraphs (3), (4) and (5) below, it will automatically become a
Non-Qualified Stock Option:
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(1) The Incentive Stock Option shall lapse as of the
option expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years
after it is granted, unless an earlier time is set in the
Award Agreement.
(3) If the Participant terminates employment for any
reason other than as provided in paragraph (4) or (5) below,
the Incentive Stock Option shall lapse, unless it is
previously exercised, three months after the Participant's
termination of employment; provided, however, that if the
Participant's employment is terminated by the Corporation for
cause or by the Participant without the consent of the
Corporation, the Incentive Stock Option shall (to the extent
not previously exercised) lapse immediately.
(4) If the Participant terminates employment by
reason of his Disability, the Incentive Stock Option shall
lapse, unless it is previously exercised, one year after the
Participant's termination of employment.
(5) If the Participant dies while employed, or during
the three-month period described in paragraph (3) or during
the one-year period described in paragraph (4) and before the
Option otherwise lapses, the Option shall lapse one year after
the Participant's death. Upon the Participant's death, any
exercisable Incentive Stock Options may be exercised by the
Participant's estate.
Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an
Option after termination of employment, the Option may be exercised
only with respect to the shares that were otherwise vested on the
Participant's termination of employment.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market
Value (determined as of the time an Award is made) of all shares of
Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.00.
(e) TEN PERCENT OWNERS. No Incentive Stock Option shall be
granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the Corporation or any Parent or Subsidiary
unless the exercise price per share of such Option is at least 110% of
the Fair Market Value per share of Stock at the date of grant and the
Option expires no later than five years after the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an
Incentive Stock Option may be made pursuant to the Plan after the day
immediately prior to the tenth anniversary of the Effective Date.
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(g) RIGHT TO EXERCISE. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant or, in
the case of the Participant's Disability, by the Participant's guardian
or legal representative.
(h) DIRECTORS. The Committee may not grant an Incentive Stock
Option to a non-employee director. The Committee may grant an Incentive
Stock Option to a director who is also an employee of the Corporation
or Parent or Subsidiary but only in that individual's position as an
employee and not as a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARS. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has the right
to receive the excess, if any, of:
(1) The Fair Market Value of one share of Stock on
the date of exercise; over
(2) The grant price of the Stock Appreciation Right as
determined by the Committee, which shall not be less than the
Fair Market Value of one share of Stock on the date of grant.
(b) OTHER TERMS. All awards of Stock Appreciation Rights shall
be evidenced by an Award Agreement. The terms, methods of exercise,
methods of settlement, form of consideration payable in settlement, and
any other terms and conditions of any Stock Appreciation Right shall be
determined by the Committee at the time of the grant of the Award and
shall be reflected in the Award Agreement.
ARTICLE 9
PERFORMANCE UNITS
9.1. GRANT OF PERFORMANCE UNITS. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
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9.2. RIGHT TO PAYMENT. A grant of Performance Units gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Units are granted, in
whole or in part, as the Committee shall establish at grant or thereafter. The
Committee shall set performance goals and other terms or conditions to payment
of the Performance Units in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Units
that will be paid to the Participant.
9.3. OTHER TERMS. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Committee at
the time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
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ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to
grant Dividend Equivalents to Participants subject to such terms and conditions
as may be selected by the Committee. Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of Stock subject to an Award, as determined by
the Committee. The Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been reinvested in additional
shares of Stock, or otherwise reinvested.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 14.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made and after taking into account the tax, securities and accounting
effects of such an exchange.
13.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive
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Stock Option or a Stock Appreciation Right granted in tandem with the Incentive
Stock Option exceed a period of ten years from the date of its grant (or, if
Section 7.2(e) applies, five years from the date of its grant).
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and
any applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
13.5. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Corporation or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not cause any Option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, any state or federal tax or securities laws or regulations
applicable to transferable Awards.
13.6. STOCK CERTIFICATES. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
13.7 ACCELERATION UPON DEATH, RETIREMENT OR DISABILITY. Notwithstanding
any other provision in the Plan or any Participant's Award Agreement to the
contrary, upon the Participant's death, Retirement or Disability during his
employment or service as a consultant or director, all outstanding Options,
Stock Appreciation Rights, and other Awards in the nature of rights that may be
exercised shall become fully exercisable and all restrictions on outstanding
Awards shall lapse. Any Option or Stock Appreciation Rights Awards shall
thereafter continue or lapse in accordance with the other provisions of the Plan
and the Award Agreement. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.
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13.8. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise
provided in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Corporation's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.9. ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Corporation of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the 1934
Act, the Committee may in its sole discretion declare all outstanding Options,
Stock Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the consummation of such
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.10. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an
event has occurred as described in Section 13.8 or 13.9 above, the Committee may
in its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.10.
13.11 EFFECT OF ACCELERATION. If an Award is accelerated under Section
13.8 or 13.9, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and
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may be different for different Participants whether or not such Participants are
similarly situated.
13.12. PERFORMANCE GOALS. The Committee may (but need not) determine
that any Award granted pursuant to this Plan to a Participant (including, but
not limited to, Participants who are Covered Employees) shall be determined
solely on the basis of (a) the achievement by the Corporation or a Parent or
Subsidiary of a specified target return, or target growth in return, on equity
or assets, (b) the Company's total shareholder return (stock price appreciation
plus reinvested dividends) relative to a defined comparison group or target over
a specific performance period, (c) the Corporation's, Parent's or Subsidiary's
stock price, (d) the achievement by an individual or a business unit of the
Corporation, Parent or Subsidiary of a specified target, or target growth in,
revenues, net income or earnings per share, (e) the achievement of objectively
determinable goals with respect to service or product delivery, service or
product quality, customer satisfaction, meeting budgets and/or retention of
employees or (f) any combination of the goals set forth in (a) through (e)
above. If an Award is made on such basis, the Committee shall establish goals
prior to the beginning of the period for which such performance goal relates (or
such later date as may be permitted under Code Section 162(m) or the regulations
thereunder) and the Committee may for any reason reduce (but not increase) any
Award, notwithstanding the achievement of a specified goal. Any payment of an
Award granted with performance goals shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied.
13.13. TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Corporation to one of its Parents or Subsidiaries, transfers from a
Parent or Subsidiary to the Corporation, or transfers from one Parent or
Subsidiary to another Parent or Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the
Stock, the authorization limits under Section 5.1 and 5.4 shall be increased
proportionately, and the shares of Stock then subject to each Award shall be
increased proportionately without any change in the aggregate purchase price
therefor. In the event the Stock shall be changed into or exchanged for a
different number or class of shares of stock or securities of the Corporation or
of another corporation, whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, the authorization limits under Section 5.1 and 5.4 shall be
increased proportionately, and there shall be substituted for each such share of
Stock then subject to each Award the number and class of shares into which each
outstanding share of Stock
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shall be so exchanged, all without any change in the aggregate purchase price
for the shares then subject to each Award, or, subject to Section 15.2, there
shall be made such other equitable adjustment as the Committee shall approve.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the
Committee may, at any time and from time to time, amend, modify or terminate the
Plan without stockholder approval; provided, however, that the Board or
Committee may condition any amendment or modification on the approval of
stockholders of the Corporation if such approval is necessary or deemed
advisable with respect to tax, securities or other applicable laws, policies or
regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that, subject to the terms of the
applicable Award Agreement, such amendment, modification or termination shall
not, without the Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination. No termination,
amendment, or modification of the Plan shall adversely affect any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or any eligible participant
shall have any claim to be granted any Award under the Plan, and neither the
Corporation nor the Committee is obligated to treat Participants or eligible
participants uniformly.
16.2. NO STOCKHOLDER RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Corporation or any Parent or Subsidiary shall
have the authority and the right to deduct or withhold, or require a Participant
to remit to the Corporation, an amount sufficient to satisfy federal, state, and
local taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require that any
such withholding requirement be satisfied, in whole or in part, by withholding
shares of Stock having a Fair Market Value on the date of withholding equal to
the amount required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.
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16.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Corporation
or any Parent or Subsidiary to terminate any Participant's employment or status
as an officer, director or consultant at any time, nor confer upon any
Participant any right to continue as an employee, officer, director or
consultant of the Corporation or any Parent or Subsidiary.
l6.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Corporation or any Parent or
Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable law,
each member of the Committee shall be indemnified and held harmless by the
Corporation from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Corporation an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Corporation's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify them or hold
them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall
be taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.
16.8. EXPENSES. The expenses of administering the Plan shall be borne
by the Corporation and its Parents or Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
16.10. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
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16.11. FRACTIONAL SHARES. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Corporation to make payment of awards in Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock paid under the Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, and the
Corporation may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
16.13. GOVERNING LAW. To the extent not governed by federal law, the
Plan and all Award Agreements shall be construed in accordance with and governed
by the laws of the State of Tennessee.
16.14 ADDITIONAL PROVISIONS. Each Award Agreement may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of this
Plan.
16.15 CODE SECTION 162(M). The deduction limits of Code Section 162(m)
and the regulation thereunder do not apply to the Corporation until such time,
if any, as any class of the Corporation's common equity securities is registered
under Section 12 of the 1934 Act or the Corporation otherwise meets the
definition of a "publicly held corporation" under Treasury Regulation
1.162-27(c) or any successor provision. Upon becoming a publicly held
corporation, the deduction limits of Code Section 162(m) and the regulations
thereunder shall not apply to compensation payable under this Plan until the
expiration of the reliance period described in Treasury Regulation 1.162-27(f)
or any successor regulation.
The foregoing is hereby acknowledged as being the Accredo Health,
Incorporated 1999 Long-Term Incentive Plan as adopted by the Board of Directors
of the Corporation on April __, 1999 and approved by the stockholders of the
Corporation on _______________, 1999.
Accredo Health, Incorporated
By:
---------------------------
Its:
---------------------------
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Exhibit 10.7
ACCREDO HEALTH, INCORPORATED
1999 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
ACCREDO HEALTH, INCORPORATED
1999 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I - BACKGROUND...............................................................................1
1.1 Establishment of the Plan..............................................................1
1.2 Applicability of the Plan..............................................................1
1.3 Purpose................................................................................1
ARTICLE II - DEFINITIONS.............................................................................1
2.1 Administrator.........................................................................1
2.2 Board.................................................................................1
2.3 Code..................................................................................1
2.4 Committee.............................................................................1
2.5 Common Stock..........................................................................2
2.6 Compensation..........................................................................2
2.7 Contribution Account..................................................................2
2.8 Corporation...........................................................................2
2.9 Direct Registration System............................................................2
2.10 Effective Date........................................................................2
2.11 Eligible Employee.....................................................................2
2.12 Employee..............................................................................2
2.13 Employer..............................................................................2
2.14 Fair Market Value.....................................................................2
2.15 Offering Date.........................................................................3
2.16 Offering Period.......................................................................3
2.17 Option................................................................................3
2.18 Participant...........................................................................3
2.19 Plan..................................................................................3
2.20 Purchase Date.........................................................................3
2.21 Purchase Price........................................................................3
2.22 Request Form..........................................................................3
2.23 Stock Account.........................................................................3
2.24 Subsidiary............................................................................4
2.25 Trading Date..........................................................................4
ARTICLE III - ELIGIBILITY AND PARTICIPATION..........................................................4
3.1 Eligibility............................................................................4
3.2 Initial Participation..................................................................4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3.3 Leave of Absence.......................................................................4
ARTICLE IV - STOCK AVAILABLE.........................................................................5
4.1 In General.............................................................................5
4.2 Adjustment in Event of Changes in Capitalization.......................................5
4.3 Dissolution, Liquidation, or Merger....................................................5
ARTICLE V. - OPTION PROVISIONS.......................................................................6
5.1 Purchase Price.........................................................................6
5.2 Calendar Year $25,000 Limit............................................................6
5.3 Offering Period Limit..................................................................6
ARTICLE VI - PURCHASING COMMON STOCK.................................................................6
6.1 Participant's Contribution Account.....................................................6
6.2 Payroll Deductions, Dividends..........................................................7
6.3 Discontinuance.........................................................................7
6.4 Leave of Absence; Transfer of Ineligible Status........................................8
6.5 Automatic Exercise.....................................................................8
6.6 Listing, Registration, and Qualification of Shares.....................................8
ARTICLE VII - WITHDRAWALS, DISTRIBUTIONS..............................................................9
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible Status...........9
7.2 In-Service Withdrawals..................................................................9
7.3 Termination of Employment for Reasons Other Than Death..................................9
7.4 Death...................................................................................9
7.5 Registration...........................................................................10
ARTICLE VIII - AMENDMENT AND TERMINATION.............................................................10
8.1 Amendment..............................................................................10
8.2 Termination............................................................................10
ARTICLE IX - MISCELLANEOUS...........................................................................11
9.1 Shareholder Approval...................................................................11
9.2 Employment Rights......................................................................11
9.3 Tax Withholding........................................................................11
9.4 Rights Not Transferable................................................................11
9.5 No Repurchase of Stock by Corporation..................................................11
9.6 Governing Law..........................................................................11
9.7 Shareholder Approval; Registration.....................................................11
</TABLE>
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ACCREDO HEALTH, INCORPORATED
1999 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
BACKGROUND
1.1 ESTABLISHMENT OF THE PLAN. Accredo Health, Incorporated (the
"Corporation") hereby establishes a stock purchase plan to be known as the
"Accredo Health, Incorporated 1999 Employee Stock Purchase Plan" (the "Plan"),
as set forth in this document. The Plan is intended to be a qualified employee
stock purchase plan within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended, and the regulations and rulings thereunder.
1.2 APPLICABILITY OF THE PLAN. The provisions of this Plan are
applicable only to certain individuals who, on or after April 1, 1999, are
employees of the Corporation and its subsidiaries participating in the Plan.
1.3 PURPOSE. The purpose of the Plan is to enhance the proprietary
interest among the employees of the Corporation and its participating
subsidiaries through ownership of Common Stock of the Corporation.
ARTICLE II
DEFINITIONS
Whenever capitalized in this document, the following terms shall have
the respective meanings set forth below.
2.1 ADMINISTRATOR. Administrator shall mean the person or persons (who
may be officers or employees of the Corporation) selected by the Committee to
operate the Plan, perform day-to-day administration of the Plan, and maintain
records of the Plan.
2.2 BOARD. Board shall mean the Board of Directors of the Corporation.
2.3 CODE. Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
2.4 COMMITTEE. Committee shall mean a committee which consists of
members of the Board and which has been designated by the Board to have the
general responsibility for the administration of the Plan. Unless otherwise
designated by the Board, the Compensation Committee of the Board of Directors of
the Corporation shall serve as the Committee administering the Plan. Subject to
the express provisions of the Plan, the Committee shall have plenary authority
in its sole and absolute discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations
<PAGE>
for administering the Plan, and to make all other determinations necessary or
advisable for administering the Plan. The Committee's determinations on the
foregoing matters shall be conclusive and binding upon all persons.
2.5 COMMON STOCK. Common Stock shall mean the common stock, par value
$.01, of the Corporation.
2.6 COMPENSATION. Compensation shall mean, for any Participant, for any
Offering Period, the Participant's gross wages for the respective period,
subject to appropriate adjustments that would exclude items such as non-cash
compensation and reimbursement of moving, travel, trade or business expenses.
2.7 CONTRIBUTION ACCOUNT. Contribution Account shall mean the
bookkeeping account established by the Administrator on behalf of each
Participant, which shall be credited with the amounts deducted from the
Participant's Compensation pursuant to Article VI. The Administrator shall
establish a separate Contribution Account for each Participant for each Offering
Period.
2.8 CORPORATION. Corporation shall mean Accredo Health, Incorporated, a
Delaware corporation.
2.9 DIRECT REGISTRATION SYSTEM. Direct Registration System shall mean a
direct registration system approved by the Securities and Exchange Commission
and by the National Association of Securities Dealers, Inc. or any securities
exchange on which the Common Stock is then listed, whereby shares of Common
Stock may be registered in the holder's name in book-entry form on the books of
the Corporation.
2.10 EFFECTIVE DATE. Effective Date shall mean the effective date of
the Plan, which shall be the effective date of the Corporation's registration
statement on Form S-1 filed under the Securities Act of 1933, as amended, with
respect to an initial underwritten offering to the public of capital stock of
the Corporation.
2.11 ELIGIBLE EMPLOYEE. An Employee eligible to participate in the Plan
pursuant to Section 3.1.
2.12 EMPLOYEE. Employee shall mean an individual employed by an
Employer who meets the employment relationship described in Treasury Regulation
Sections 1.423-2(b) and Section 1.421-7(h).
2.13 EMPLOYER. Employer shall mean the Corporation and any Subsidiary
designated by the Committee as an employer participating in the Plan.
2.14 FAIR MARKET VALUE. Fair Market Value of a share of Common Stock,
as of the Effective Date, shall mean the price to the public specified on the
cover page of the final prospectus filed as part of the Corporation's
registration statement on Form S-1
2
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under the Securities Act of 1933, as amended, with respect to an initial
underwritten offering to the public of capital stock of the Corporation. Fair
Market Value of a share of Common Stock, as of any other applicable date, shall
mean (i) if the Common Stock is listed on a securities exchange or is traded
over the Nasdaq National Market, the closing sales price on such exchange or
over such system on such date, or (ii) if the Common Stock is not listed on a
securities exchange or traded over the Nasdaq National Market, the mean between
the bid and offered prices as quoted by Nasdaq for such date, provided that if
it is determined that the fair market value is not properly reflected by such
Nasdaq quotations, Fair Market Value will be determined by such other method as
the Committee determines in good faith to be reasonable.
2.15 OFFERING DATE. Offering Date shall mean the first Trading Date of
each Offering Period.
2.16 OFFERING PERIOD. Offering Period shall mean the six (6) month
periods beginning January 1 and July 1 of each year during which offers to
purchase Common Stock are outstanding under the Plan; provided, however, that
the initial Offering Period shall be the period beginning on the Effective Date
and ending on December 31, 1999. Not withstanding the above, no payroll
deductions shall be taken until the effective date of a registration statement
on Form S-8 filed under the Securities Act of 1933, as amended, covering the
shares to be issued under the Plan.
2.17 OPTION. Option shall mean the option to purchase Common Stock
granted under the Plan on each Offering Date.
2.18 PARTICIPANT. Participant shall mean any Eligible Employee who has
elected to participate in the Plan under Section 3.2.
2.19 PLAN. Plan shall mean the Accredo Health, Incorporated 1999
Employee Stock Purchase Plan, as amended and in effect from time to time.
2.20 PURCHASE DATE. Purchase Date shall mean the last Trading Date of
each Offering Period.
2.21 PURCHASE PRICE. Purchase Price shall mean the purchase price of
Common Stock determined under Section 5.1.
2.22 REQUEST FORM. Request Form shall mean an Employee's authorization
either in writing on a form approved by the Administrator or through electronic
communication approved by the Administrator which specifies the Employee's
payroll deduction in accordance with Section 6.2, and contains such other terms
and provisions as may be required by the Administrator.
2.23 STOCK ACCOUNT. Stock Account shall mean the account established by
the Administrator on behalf of each Participant, which shall be credited with
shares of
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Common Stock purchased pursuant to the Plan and dividends thereon until
distributed in accordance with the terms of the Plan.
2.24 SUBSIDIARY. Subsidiary shall mean any present or future
corporation which is a "subsidiary corporation" of the Corporation as defined in
Code Section 424(f).
2.25 TRADING DATE. Trading Date shall mean a date on which shares of
Common Stock are traded on the Nasdaq National Market, a national securities
exchange or in the over-the-counter market.
Except when otherwise indicated by the context, the definition of any
term herein in the singular may also include the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Each Employee who is an Employee regularly scheduled
to work at least 20 hours each week and at least five months each calendar year
shall be eligible to participate in the Plan as of the later of:
(a) the Offering Date immediately following the Employee's last date of
hire by an Employer; or
(b) the Effective Date.
On each Offering Date, Options will automatically be granted to all
Employees then eligible to participate in the Plan; provided, however, that no
Employee shall be granted an Option for an Offering Period if, immediately after
the grant, the Employee would own stock, and/or hold outstanding options to
purchase stock, possessing five percent or more of the total combined voting
power or value of all classes of stock of the Corporation or any Subsidiary. For
purposes of this Section, the attribution rules of Code Section 424(d) shall
apply in determining stock ownership of any Employee. If an Employee is granted
an Option for an Offering Period and such Employee does not participate in the
Plan for such Offering Period, such Option will be deemed never to have been
granted for purposes of applying the $25,000 annual limitation described in
Section 5.2.
3.2 INITIAL PARTICIPATION. An Eligible Employee having been granted an
Option under Section 3.1 may submit a Request Form to the Administrator to
participate in the Plan for an Offering Period. The Request Form shall authorize
a regular payroll deduction from the Employee's Compensation for the Offering
Period, subject to the limits and procedures described in Article VI. A
Participant's Request Form authorizing a regular payroll deduction shall remain
effective from Offering Period to Offering Period until amended or canceled
under Section 6.3.
4
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3.3 LEAVE OF ABSENCE. For purposes of Section 3.1, an individual on a
leave of absence from an Employer shall be deemed to be an Employee for the
first 90 days of such leave. For purposes of this Plan, such individual's
employment with the Employer shall be deemed to terminate at the close of
business on the 90th day of the leave, unless the individual has returned to
regular employment with an Employer before the close of business on such 90th
day. Termination of any individual's leave of absence by an Employer, other than
on account of a return to employment with an Employer, shall be deemed to
terminate an individual's employment with the Employer for all purposes of the
Plan.
ARTICLE IV
STOCK AVAILABLE
4.1 IN GENERAL. Subject to the adjustments in Sections 4.2 and 4.3, an
aggregate of 135,000 shares of Common Stock shall be available for purchase by
Participants pursuant to the provisions of the Plan. These shares may be
authorized and unissued shares or may be shares issued and subsequently acquired
by the Corporation. If an Option under the Plan expires or terminates for any
reason without having been exercised in whole or part, the shares subject to
such Option that are not purchased shall again be available for subsequent
Option grants under the Plan. If the total number of shares of Common Stock for
which Options are exercised on any Purchase Date exceeds the maximum number of
shares then available under the Plan, the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable; and the balance of the
cash credited to Participants' Contribution Accounts shall be distributed to the
Participants as soon as practicable.
4.2 ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION. In the event of a
stock dividend, stock split or combination of shares, recapitalization or other
change in the Corporation's capitalization, or other distribution with respect
to holders of the Corporation's Common Stock other than normal cash dividends,
an automatic adjustment shall be made in the number and kind of shares as to
which outstanding Options or portions thereof then unexercised shall be
exercisable and in the available shares set forth in Section 4.1, so that the
proportionate interest of the Participants shall be maintained as before the
occurrence of such event. This adjustment in outstanding Options shall be made
without change in the total price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Purchase Price per share;
provided, however, that in no event shall any adjustment be made that would
cause any Option to fail to qualify as an option pursuant to an employee stock
purchase plan within the meaning of Section 423 of the Code.
4.3 DISSOLUTION, LIQUIDATION, OR MERGER. Upon the dissolution or
liquidation of the Corporation, or upon a reorganization, merger, or
consolidation of the Corporation with one or more corporations in which the
Corporation is not the surviving corporation, or upon a sale of substantially
all of the property or stock of the Corporation
5
<PAGE>
to another corporation, the holder of each Option then outstanding under the
Plan shall be entitled to receive at the next Purchase Date upon the exercise of
such Option for each share as to which such Option shall be exercised, as nearly
as reasonably may be determined, the cash, securities, or property which a
holder of one share of the Common Stock was entitled to receive upon and at the
time of such transaction. The Board shall take such steps in connection with
these transactions as the Board deems necessary or appropriate to assure that
the provisions of this Section shall thereafter be applicable, as nearly as
reasonably may be determined, in relation to the cash, securities, or property
which the holder of the Option may thereafter be entitled to receive. In lieu of
the foregoing, the Committee may terminate the Plan in accordance with Section
8.2.
ARTICLE V
OPTION PROVISIONS
5.1 PURCHASE PRICE. The Purchase Price of a share of Common Stock
purchased for a Participant pursuant to each exercise of an Option shall be the
lesser of:
(a) 85 percent of the Fair Market Value of a share of Common Stock on
the Offering Date; or
(b) 85 percent of the Fair Market Value of a share of Common Stock on
the Purchase Date.
5.2 CALENDAR YEAR $25,000 LIMIT. Notwithstanding anything else
contained herein, no Employee may be granted an Option for any Offering Period
which permits such Employee's rights to purchase Common Stock under this Plan
and any other qualified employee stock purchase plan (within the meaning of Code
Section 423) of the Corporation and its Subsidiaries to accrue at a rate which
exceeds $25,000 of Fair Market Value of such Common Stock for each calendar year
in which an Option is outstanding at any time. For purposes of this Section,
Fair Market Value shall be determined as of the Offering Date.
5.3 OFFERING PERIOD LIMIT. Notwithstanding anything else contained
herein, the maximum number of shares of Common Stock that an Eligible Employee
may purchase in any Offering Period is 2,500 shares.
ARTICLE VI
PURCHASING COMMON STOCK
6.1 PARTICIPANT'S CONTRIBUTION ACCOUNT. The Administrator shall
establish a book account in the name of each Participant for each Offering
Period. As discussed in Section 6.2 below, a Participant's payroll deductions
shall be credited to the Participant's Contribution Account, without interest,
until such cash is withdrawn, distributed, or used to purchase Common Stock as
described below.
6
<PAGE>
During such time, if any, as the Corporation participates in a Direct
Registration System, shares of Common Stock acquired upon exercise of an Option
shall be directly registered in the name of the Participant. If the Corporation
does not participate in a Direct Registration System, then until distribution is
requested by a Participant pursuant to Article VII, stock certificates
evidencing the Participant's shares of Common Stock acquired upon exercise of an
Option shall be held by the Corporation as the nominee for the Participant.
These shares shall be credited to the Participant's Stock Account. Certificates
shall be held by the Corporation as nominee for Participants solely as a matter
of convenience. A Participant shall have all ownership rights as to the shares
credited to his or her Stock Account, and the Corporation shall have no
ownership or other rights of any kind with respect to any such certificates or
the shares represented thereby.
All cash received or held by the Corporation under the Plan may be used
by the Corporation for any corporate purpose. The Corporation shall not be
obligated to segregate any assets held under the Plan.
6.2 PAYROLL DEDUCTIONS; DIVIDENDS.
(a) PAYROLL DEDUCTIONS. By submitting a Request Form at any time before
an Offering Period in accordance with rules adopted by the Committee, an
Eligible Employee may authorize a payroll deduction to purchase Common Stock
under the Plan for the Offering Period. The payroll deduction shall be effective
on the first pay period during the Offering Period commencing after receipt of
the Request Form by the Administrator. The payroll deduction shall be in any
whole percentage up to a maximum of ten percent (10%) of such Employee's
Compensation payable each pay period, and at any other time an element of
Compensation is payable. A Participant's payroll deduction shall not be less
than one percent (1%) of such Employee's Compensation payable each payroll
period.
(b) DIVIDENDS. Cash dividends paid on Common Stock which is credited to
a Participant's Stock Account as of the dividend payment date shall be credited
to the Participant's Stock Account and paid to the Participant as soon as
practicable.
6.3 DISCONTINUANCE. A Participant may discontinue his or her payroll
deductions for an Offering Period by filing a new Request Form with the
Administrator. This discontinuance shall be effective on the first pay period
commencing at least 30 days after receipt of the Request Form by the
Administrator. A Participant who discontinues his or her payroll deductions for
an Offering Period may not resume participation in the Plan until the following
Offering Period.
Any amount held in the Participant's Contribution Account for an
Offering Period after the effective date of the discontinuance of his or her
payroll deductions will either be refunded or used to purchase Common Stock in
accordance with Section 7.1.
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<PAGE>
6.4 LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE STATUS. If a Participant
either begins a leave of absence, is transferred to employment with a Subsidiary
not participating in the Plan, or remains employed with an Employer but is no
longer eligible to participate in the Plan, the Participant shall cease to be
eligible for payroll deductions to his or her Contribution Account pursuant to
Section 6.2. The cash standing to the credit of the Participant's Contribution
Account shall become subject to the provisions of Section 7.1.
If the Participant returns from the leave of absence before being
deemed to have ceased employment with the Employer under Section 3.3, or again
becomes eligible to participate in the Plan, the Request Form, if any, in effect
immediately before the leave of absence or disqualifying change in employment
status shall be deemed void and the Participant must again complete a new
Request Form to resume participation in the Plan.
6.5 AUTOMATIC EXERCISE. Unless the cash credited to a Participant's
Contribution Account is withdrawn or distributed as provided in Article VII, his
or her Option shall be deemed to have been exercised automatically on each
Purchase Date, for the purchase of the number of full shares of Common Stock
which the cash credited to his or her Contribution Account at that time will
purchase at the Purchase Price. If there is a cash balance remaining in the
Participant's Contribution Account at the end of an Offering Period representing
the exercise price for a fractional share of Common Stock, such balance shall be
retained in the Participant's Contribution Account for the next Offering Period,
unless the Participant requests that it be refunded, without interest. Any other
cash balance remaining in the Participant's Contribution Account at the end of
an Offering Period shall be refunded to the Participant, without interest. The
amount of cash that may be used to purchase shares of Common Stock may not
exceed the Compensation restrictions set forth in Section 6.2.
If the cash credited to a Participant's Contribution Account on the
Purchase Date exceeds the applicable Compensation restrictions of Section 6.2 or
exceeds the amount necessary to purchase the maximum number of shares of Common
Stock available during the Offering Period, such excess cash shall be refunded
to the Participant. The excess cash may not be used to purchase shares of Common
Stock nor retained in the Participant's Contribution Account for a future
Offering Period.
Each Participant shall receive a statement on an annual basis
indicating the number of shares credited to his or her Stock Account under the
Plan.
6.6 LISTING, REGISTRATION, AND QUALIFICATION OF SHARES. The granting of
Options for, and the sale and delivery of, Common Stock under the Plan shall be
subject to the effecting by the Corporation of any listing, registration, or
qualification of the shares subject to that Option upon any securities exchange
or under any federal or state law, or the obtaining of the consent or approval
of any governmental regulatory body deemed necessary or desirable for the
issuance or purchase of the shares covered.
8
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ARTICLE VII
WITHDRAWALS; DISTRIBUTIONS
7.1 DISCONTINUANCE OF DEDUCTIONS; LEAVE OF ABSENCE; TRANSFER TO
INELIGIBLE STATUS. In the event of a Participant's complete discontinuance of
payroll deductions under Section 6.3 or a Participant's leave of absence or
transfer to an ineligible status under Section 6.4, the cash balance then
standing to the credit of the Participant's Contribution Account shall be--
(a) returned to the Participant, in cash, without interest, as soon as
practicable, upon the Participant's written request received by the
Administrator at least 30 days before the next Purchase Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
7.2 IN-SERVICE WITHDRAWALS. During such time, if any, as the
Corporation participates in a Direct Registration System, shares of Common Stock
acquired upon exercise of an Option shall be directly registered in the name of
the Participant and the Participant may withdraw certificates in accordance with
the applicable terms and conditions of such Direct Registration System. If the
Corporation does not participate in a Direct Registration System, (i) a
Participant may, while an Employee of the Corporation or any Subsidiary,
withdraw certificates for some or all of the shares of Common Stock credited to
his or her Stock Account at any time, upon 30 days' written notice to the
Administrator, and (ii) each Participant shall be permitted only one withdrawal
under this Section during each Offering Period. If a Participant requests a
distribution of only a portion of the shares of Common Stock credited to his or
her Stock Account, the Administrator will distribute the oldest securities held
in the Participant's Stock Account first, using a first in-first out
methodology.
7.3 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH. If a
Participant terminates employment with the Corporation and the Subsidiaries for
reasons other than death, the cash balance in the Participant's Contribution
Account shall be returned to the Participant in cash, without interest, as soon
as practicable. Certificates for the shares of Common Stock credited to his or
her Stock Account shall be distributed to the Participant as soon as
practicable, unless the Corporation then participates in a Direct Registration
System, in which case, the Participant shall be entitled to evidence of
ownership of such shares in such form as the terms and conditions of such Direct
Registration System permit.
7.4 DEATH. In the event a Participant dies, the cash balance in his or
her Contribution Account shall be distributed to the Participant's estate, in
cash, without interest, as soon as practicable. Certificates for the shares of
Common Stock credited to the Participant's Stock Account shall be distributed to
the estate as soon as practicable, unless the Corporation then participates in a
Direct Registration System, in which case,
9
<PAGE>
the estate shall be entitled to evidence of ownership of such shares in such
form as the terms and conditions of such Direct Registration System permit.
7.5 REGISTRATION. Whether represented in certificate form or by direct
registration pursuant to a Direct Registration System, shares of Common Stock
acquired upon exercise of an Option shall be directly registered in the name of
the Participant or, if the Participant so indicates on the Request Form, (a) in
the Participant's name jointly with a member of the Participant's family, with
the right of survivorship, (b) in the name of a custodian for the Participant
(in the event the Participant is under a legal disability to have stock issued
in the Participant's name), or (c) in a manner giving effect to the status of
such shares as community property. No other names may be included in the Common
Stock registration. The Corporation shall pay all issue or transfer taxes with
respect to the issuance or transfer of shares of such Common Stock, as well as
all fees and expenses necessarily incurred by the Corporation in connection with
such issuance or transfer.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 AMENDMENT. The Committee shall have the right to amend or modify
the Plan, in full or in part, at any time and from time to time; provided,
however, that no amendment or modification shall-
(a) affect any right or obligation with respect to any grant previously
made, unless required by law, or
(b) unless previously approved by the stockholders of the Corporation,
where such approval is necessary to satisfy federal securities laws, the Code,
or rules of any stock exchange on which the Corporation's Common Stock is
listed-
(1) in any manner materially affect the eligibility
requirements set forth in Sections 3.1 and 3.3, or change the
definition of Employer as set forth in Section 2.13,
(2) increase the number of shares of Common Stock subject to
any options issued to Participants (except as provided in Sections 4.2
and 4.3), or
(3) materially increase the benefits to Participants under the
Plan.
8.2 TERMINATION. The Committee may terminate the Plan at any time in
its sole and absolute discretion. The Plan shall be terminated by the Committee
if at any time the number of shares of Common Stock authorized for purposes of
the Plan is not sufficient to meet all purchase requirements, except as
specified in Section 4.1.
Upon termination of the Plan, the Administrator shall give notice
thereof to Participants and shall terminate all payroll deductions. Cash
balances then credited to
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Participants' Contribution Accounts shall be distributed as soon as practicable,
without interest.
ARTICLE IX
MISCELLANEOUS
9.1 SHAREHOLDER APPROVAL. The Plan shall be approved and ratified by
the stockholders of the Corporation, not later than 12 months after adoption of
the Plan by the Board of Directors of the Corporation, pursuant to Treasury
regulation Section 1.423-2(c). If for any reason such approval is not given by
such date, the Plan shall be null and void, and all payroll deductions to the
Plan shall cease. The cash balances and Common Stock credited to Participants'
accounts shall be promptly distributed to them; and any Common Stock
certificates issued and delivered to Participants prior to such date shall
remain the property of the Participants.
9.2 EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the
grant of any Options thereunder, nor the exercise thereof shall be deemed to
give to any Employee the right to be retained in the employ of the Corporation
or any Subsidiary or to interfere with the right of the Corporation or any
Subsidiary to discharge any Employee or otherwise modify the employment
relationship at any time.
9.3 TAX WITHHOLDING. The Administrator may make appropriate provisions
for withholding of federal, state, and local income taxes, and any other taxes,
from a Participant's Compensation to the extent the Administrator deems such
withholding to be legally required.
9.4 RIGHTS NOT TRANSFERABLE. Rights and Options granted under this Plan
are not transferable by the Participant other than by will or by the laws of
descent and distribution and are exercisable only by the Participant during his
or her lifetime.
9.5 NO REPURCHASE OF STOCK BY CORPORATION. The Corporation is under no
obligation to repurchase from any Participant any shares of Common Stock
acquired under the Plan.
9.6 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Tennessee except to the extent such
laws are preempted by the laws of the United States.
9.7 SHAREHOLDER APPROVAL; REGISTRATION. The Plan was adopted by the
Board of Directors of the Corporation on April __, 1999, to be effective as of
the Effective Date, provided that no payroll deductions may begin until a
registration statement on Form S-8 filed under the Securities Act of 1933, as
amended, covering the shares to be issued under the Plan, has become effective.
The Plan is subject to approval by the stockholders of the Corporation within 12
months of approval by the Board of Directors.
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* * * * * * * * * * * * * *
The foregoing is hereby acknowledged as being the Accredo Health,
Incorporated 1999 Employee Stock Purchase Plan as adopted by the Board of
Directors of the Corporation on April __, 1999, and approved by the stockholders
of the Corporation on __________, 1999.
Accredo Health, Incorporated
By:
---------------------------------------------------
Its:
---------------------------------------------------
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Exhibit 10.27
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
CONTRACT FOR THE SALE AND DISTRIBUTION
OF GENENTECH HUMAN GROWTH HORMONE
This Contract for the Sale and Distribution of Genentech Human Growth
Hormone is entered into effective as of March 1, 1997 (the "Effective Date")
by and between Genentech, Inc., a Delaware corporation, of 460 Point San
Bruno Boulevard, South San Francisco, California, 94080-4990 ("Genentech")
and Nova Factor, Inc., a Tennessee corporation located at 1620 Century Center
Parkway, Suite 109, Memphis, Tennessee 38134 ("Nova Factor"). Genentech and
Nova Factor are collectively referred to hereinafter as the "Parties", or
individually as a "Party".
WHEREAS, Genentech manufactures the recombinant human growth hormones
Protropin-Registered Trademark- (somatrem for injection), Nutropin-Registered
Trademark- [somatropin (rDNA origin) for injection] and Nutropin
AQ-Registered Trademark- [somatropin (rDNA origin) injection]; and
WHEREAS, the Parties wish to enter into an agreement governing the sale of
Genentech HGH to Nova Factor and the distribution of such Genentech HGH (as
defined below) by Nova Factor; and
WHEREAS, Nova Factor is a biotech disease management company doing business
throughout the United States with respect to disease management and human
growth hormone products;
NOW, THEREFORE, the Parties agree as follows:
Section 1. Definitions
The following terms shall have the following meanings in this Agreement:
1.1 "Affiliate" shall mean any entity or person which controls, is
controlled by or is under common control with a Party, excluding Welsh,
Carson, Anderson & Stowe and Associated Funds. For purposes of this
definition, "control" shall mean (a) in the case of corporate entities, the
direct or indirect ownership of at least thirty percent (30%) of the stock or
participating shares entitled to vote; and (b) in the case of a partnership,
the power customarily held by a general partner to direct the management and
policies of such partnership.
1.2 "Appeal(s)" shall mean any and all reasonable appeals to a decision of a
third party payer to deny coverage for all or part of the pharmaceutical
costs of Genentech HGH.
1.3 "Coverage Interruption" shall mean the date an insurance change or
termination becomes effective, the date of therapy restart on a patient whose
drug was therapeutically interrupted, or the date of determination of lack of
medical necessity by a third party payer, as defined in Section 2.3(a) below.
<PAGE>
1.4 "Government Program(s)" shall mean Medicaid, Medicare, Children's
Medical Services or other government or similar program.
1.5 "Genentech HGH" shall mean Protropin-Registered Trademark-,
Nutropin-Registered Trademark- and Nutropin AQ-Registered Trademark- or any
other product which is comprised of human growth hormone sold by Genentech.
1.6 "Unit" shall mean a quantity of Genentech HGH equivalent to ten (10)
milligrams.
Section 2. Sale and Distribution of Genentech HGH
2.1 Sale Price. Genentech shall sell Genentech HGH to Nova Factor, at a
cost equal to the lower of (1) $350 per Unit less the Discounts defined and
described in Section 2.2 below and Exhibits A and B attached hereto, or (2)
Genentech's then-current list price for Genentech HGH (currently $350 per
Unit), for distribution by Nova Factor. This price does not include
applicable sales tax. In the event Genentech lowers its list price for
Genentech HGH, the Parties agree to discuss in good faith, within thirty (30)
days thereafter, a potential discount off such revised list price following a
written request by either Party.
2.2 Discount. The total "Discount" applicable to Nova Factor in each
calendar quarter shall equal the sum of the discount percentages described in
Sections 2.2(a) and (b) below and Exhibits A and B attached hereto.
(a) Genentech HGH Base Discounts. Commencing as of the Effective Date,
Genentech shall sell Genentech HGH to Nova Factor at the discounted
prices shown in Exhibit A for the contract year indicated ("Base
Discount"). These prices to not include applicable sales taxes. The NDC
codes, Genentech's published direct list prices, carton sizes offered
and minimum order requirements are also shown on Exhibit A.
(b) Performance Discount. As used in this Section 2.2(b) only "previous
calendar quarter" shall refer to the first two (2) months of the
previous calendar quarter and the last month of the next preceding
calendar quarter. For each performance standard set forth in Exhibit B
("Performance Standard") that was met or exceeded by Nova Factor in the
previous calendar quarter, the relevant additional discount amount shall
be added to the Base Discount for the current calendar quarter, up to a
maximum of * percentage * (*%). For each incentive standard set
forth in Exhibit B ("Incentive Standard") that was met or exceeded by
Nova Factor in the previous calendar quarter, the relevant additional
discount amount shall be added to the base
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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Discount for the current calendar quarter, up to a maximum of *
percentage * (*%), for a maximum total addition under this Section
2.2 (b) of * percentage * (*%) in the aggregate. For each
Performance Standard set forth in Exhibit B that Nova Factor failed to
meet in the previous calendar quarter, the relevant discount amount for
a failure to meet such standard shall be deducted from the Base Discount
for the current calendar quarter, up to a maximum deduction of *
percentage * (*%) ("Reduced Performance Standard"). For each
Incentive Standard set forth in Exhibit B that Nova Factor failed to
meet in the previous calendar quarter, the relevant discount amount for
a failure to meet such standard shall be deducted from the Base Discount
for the current calendar quarter, up to a maximum deduction of *
percentage * (*%), for a maximum total deduction under this Section
2.2(b) of * percentage * (*%) in the aggregate. The maximum
combined Base Discount, additional Performance Standard discount and
additional Incentive Standard discount shall not exceed *% in any
calendar quarter through December 31, 1998, and shall not exceed *% in
any calendar quarter from January 1, 1999 through termination or
expiration of this Agreement.
(c) Changes to the Discounts. The Discounts shall be effective
throughout the term of this Agreement unless and until Genentech alters
its list price for Genentech HGH, in which case the Parties shall
discuss in good faith the level of discount, if any, applicable to the
new list prices. In the event of changes in any laws or regulations of
any jurisdiction relating to the promotion, sale or pricing of
prescription drugs, or in the interpretation or application of any such
laws or regulations, Genentech reserves the right to discontinue the
Discounts provided hereunder in such jurisdiction upon sixty (60) days
prior written notice to Nova Factor.
2.3 Shipment Replacement Requirements.
(a) Within three (3) business days of receipt of a prescription, Nova
Factor will undertake an initial insurance verification for each new
patient for whom Genentech HGH has been prescribed and will attempt to
obtain all necessary prior authorizations as required by the involved
third party payer. In performing such verification, Nova Factor will
obtain and provide prescribing physician letters of medical necessity
to third party payers and attempt to obtain verification of insurance
coverage from such third party payers. Nova Factor must compete the
Benefits/Coverage Insurance Verification form attached as EXHIBIT C at
the time of obtaining such verification of insurance coverage. For
purposes of this entire SECTION 2.3, "third party payer" shall mean a
private third party health insurance payer that does not specifically
exclude human growth hormone or injectable drugs from coverage but
shall not include Government Programs.
(b) If Nova Factor is not able to verify such third party payer
coverage or obtain prior authorization within that three (3) business
day period, Nova Factor will provide *. Thereafter, Nova Factor may
provide *.
(c) For each patient who does not have third party payer coverage or
for whom insurance coverage is in doubt, Nova Factor shall promptly
instruct and assist that patient in efforts to gain eligibility for
COBRA, if applicable, or Government Programs as appropriate.
(d) If during the time of this Agreement, a third party payer denies
authorization or payment to Nova Factor for Genentech HGH that has been
dispensed by Nova Factor to a patient in accordance with this
Agreement, Nova Factor will thereafter request that the third party
payer provide the basis for that denial in writing. *
(e) If Nova Factor determines that insurance coverage, COBRA benefits,
or coverage under a Government Program is not available, Nova Factor
shall promptly contact such patient to determine the patient's ability
to pay for the Genentech's HGH with his or her individual funds, and,
if appropriate, refer such patient to Genentech's Uninsured Patients'
Program, with prescriptions for Genentech HGH.
(f) Nova Factor will bill payers and patients for all Genentech HGH
dispensed. Subject to the limitations and requirements of this SECTION
2.3, * for the time period commencing on the first date of dispensing
Genentech HGH following initiation of such patient's Genentech HGH
therapy or following the date of a Coverage Interruption and ending *;
provided, however, that in no event will Genentech provide *.
(g) Genentech shall not *. Genentech shall not * to Nova Factor in
accordance with the terms of this SECTION 2.3 *, which states are
listed on EXHIBIT E as such EXHIBIT E may be updated by written notice
from Genentech from time to time.
(h) Subject to the limitations and requirements of this SECTION 2.3 and
the criteria described in EXHIBIT D, * in accordance with the terms of
this Agreement * Nova Factor. Nova Factor shall provide Genentech with
a fully completed and accurate * for Product Form attached as EXHIBIT F
* on or before the * of each calendar month (but in no event
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
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<PAGE>
later than * following the date on which the product was dispensed),
together with the following fully completed and accurate
documentation):
(1) the BENEFITS/COVERAGE VERIFICATION form attached as
EXHIBIT C;
(2) the * Batch Report attached as EXHIBIT G ("Batch
Report"), together with the data elements included in
such Batch Report on a 3.5* floppy diskette in ASCII
flat file;
(3) the patient invoice or the invoice submitted to *
(4) a copy of an explanation of benefits, remittance advice
or other document from the third party payer *
(i) Subject to the limitations set forth in this SECTION 2.3, Genentech
shall ship replacement *, together with the above-referenced
documentation, is submitted by Nova Factor on a timely basis as
required above . Genentech approval * limited to: *, (b) incomplete,
duplicate or inaccurate submissions not in compliance with this SECTION
2.3, and *, in which cases Genentech may approve or disapprove * in its
sole discretion. Genentech shall include with shipment of * a unique
patient identifier for each patient for * is included as well as the *
with respect to which Nova Factor's * is disputed or disapproved by
Genentech. The Parties shall use their commercially reasonable efforts
to mutually resolve all such disputes in writing within thirty (30)
days from the last business day of the month following submission *.
(j) If Nova Factor subsequently * payer, patient or other source *
following the end of the month in which *.
(k) The aggregate dollar value, calculated using the then current *
achieved by Nova Factor, * provided to Nova Factor pursuant to this
SECTION 2.3 with respect to any calendar quarter shall not exceed * of
all sales of Genentech HGH to Nova Factor during such calendar quarter.
In the event that the value of *.
(l) This SECTION 2.3 shall only remain in effect through December 31,
1998, unless extended upon mutual written agreement of the Parties.
Genentech reserves the right to modify or terminate this SECTION 2.3 at
any time during such *.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
4
<PAGE>
2.4 Orders. All purchase orders for Genentech HGH shall be submitted by
Nova Factor to Genentech either in writing or by telephone or via facsimile
at least two (2) business days prior to the requested date of shipment. The
Discount applicable to such purchase order shall be the Discount in effect
upon the date such purchase order is accepted by Genentech. No order will be
binding upon Genentech until accepted by Genentech, and Genentech shall have
no liability to Nova Factor for purchase orders that are not accepted. Nova
Factor's purchase orders submitted to Genentech for purchase of Genentech HGH
shall be governed by the terms of this Agreement. Nothing contained in any
purchase order shall modify any terms herein stated or add any terms or
conditions not stated herein. All Genentech HGH delivered to Nova Factor
under this Agreement shall be suitably packed for air freight shipment in
Genentech's shipping cartons, marked for delivery to the address provided by
Nova Factor with the relevant purchase order, and shall be shipped to Nova
Factor, FOB Origin. Genentech shall ship Nutropin AQ to Nova Factor in
temperature-controlled, validated, insulated shipping containers. Genentech
HGH shall be delivered to Nova Factor via second day air freight with
shipping costs prepaid by Genentech. Shipping charges for overnight delivery
requested by Nova Factor for Genentech HGH in excess of the standard shipping
method chosen by Genentech, shall be borne by Nova Factor. Genentech HGH
purchased by Nova Factor shall be returned for credit only upon prior
authorization by Genentech. The Discount percentage applicable to such credit
will be the Discount in effect upon the date the returned Genentech HGH is
received by Genentech.
2.5 Payment to Genentech. Nova Factor shall pay Genentech in full,
including payment of applicable taxes, for Genentech HGH furnished to Nova
Factor within * (*) days from the date of the invoice from Genentech
for the Genentech HGH supplied to Nova Factor (the "Due Date"). All payments
will be made by check or wire transfer to Genentech's designated bank account
on or before the morning of the Due Date, and supporting documentation on the
payment will be provided separately to Genentech. Genentech's designated
account is as follows, subject to change by notice from Genentech:
If by wire transfer:
Bank: Mellon Bank
Pittsburgh, PA
ABA Number: 0430-00261
Account Name: Genentech, Inc.
Account Number: 005-9230
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
5
<PAGE>
If by check:
Bank: Mellon Bank
Pittsburgh, PA
Mail to: Genentech, Inc.
P.O. Box 360527
Pittsburgh, PA 15251-6527
2.6 Product Availability: Responsibility for Expired, Damaged or Defective
Product. Genentech shall maintain a sufficient inventory of Genentech HGH
available to Nova Factor pharmacies to assure delivery thereof to a
requesting Nova Factor pharmacy by courier or mail within two (2) business
days of acceptance of a telephonic or written purchase order. In accordance
with Genentech's stated return of goods policy in effect at the relevant
times, Genentech shall reimburse or credit Nova Factor for any unused
Genentech HGH that is expired or defective or that is damaged prior to or
during shipment by Genentech to a Nova Factor pharmacy, if it is returned to
Genentech by Nova Factor. In the event of a product recall, Genentech shall
reimburse or credit Nova Factor or any unused Genentech HGH returned to
Genentech as a result of said recall, for the reasonable shipping costs and,
upon mutual agreement, for the reasonable recall related administrative costs
associated with said return.
2.7 Nova Factor Reports and Audits.
(a) Nova Factor shall provide Genetech with a weekly and monthly report
as follows:
(1) The Nova Factor weekly reports shall utilize the form attached as
Exhibit I, and shall cover all patients for whom Nova Factor has
received a prescription or purchase order for Genentech HGH in such
week, all patients who have experienced a Coverage Interruption and
an interruption in a patient's insurance or third party payer
coverage for Genentech HGH due to a loss of employment or other event
beyond the reasonable control of the patient or the patient's
guardian; provided, however, that said reports shall not include
patient names.
(2) The Nova Factor monthly reports shall utilize the parameters and
information listed in Exhibit J attached hereto.
(3) Reports will be centrally generated by Nova Factor and will
contain transaction data from each of its distribution centers.
6
<PAGE>
(4) Reports will include any returns or negative transactions but
will not include inter-distribution center transfers.
(5) Nova Factor will retain sales transaction data for a four-year
period.
(6) The weekly sales reports shall be delivered to Genentech on the
second business day following the end of each week and the monthly
sales reports shall be sent to Genentech prior to the fifteenth
(15th) day following the close of a calendar month.
(7) The weekly and monthly sales report shall be reported in: (1)
tape transfer using 8 mm. cassette tape or 9-track reel-to-reel tape
in ASCII format, via overnight service, (2) hard copy, mailed, or (3)
on-line modem transfer from Nova Factor to Genentech in ASCII format;
provided however, that electronic formats only (formats (1) an (3)
above) shall be provided commencing no later than January 1, 1997.
Nova Factor in consultation with Genentech, will provide the hardware
and software necessary to maintain and report the weekly and monthly
sales transaction data described above. Written sales transaction
reports shall be sent to:
Genentech, Inc.
Attn: Sales Administration
460 Point San Bruno Blvd.
South San Francisco, CA 94080.
(8) Upon reasonable request by Genentech, Nova Factor agrees to
perform reconciliations of sales reports to verify or correct the
accuracy of the weekly and monthly reports.
(9) Genentech, at its expense may have an independent certified
public account perform such audits as may be reasonably required on
Nova Factor's business records and activities to ensure compliance
with the terms of the Agreement. Genentech shall provide Nova Factor
with at least fifteen (15) business days advance notice of such
audits, and Nova Factor shall cooperate fully with the persons
conducting the audit, including full access to the necessary
facilities and records at all reasonable times, and copies, at
Genentech's expense, of all relevant records, provided; however, that
Genentech's audit right shall be limited to (i) bi-annual audits or
(ii) such other audits as Genentech may deem necessary, in its
reasonable judgment, to investigate quality assurance problems that
constitute material trends.
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<PAGE>
(10) Nova Factor shall maintain for a period of at least four (4)
years all weekly and monthly reports and all correspondence with
Genentech HGH patients and their physicians and third party payers,
including, without limitation copies of Statements of Medical
Necessity, Explanations of Benefit, financial assistance applications
and other Appeals correspondence. Nova Factor shall use its
commercially reasonable best efforts to remedy all discrepancies
identified by Genentech in its audits.
(11) Genentech agrees to return computer tapes to Nova Factor within
sixty (60) days of Genentech's receipt thereof.
(12) Nova Factor will furnish Genentech with un-audited quarterly
financial statements for Nova Factor and its Affiliates, within
forty-five (45) days of the end of the appropriate calendar quarter
and audited annual financial statements within ninety (90) days of
the end of the appropriate calendar year.
2.8 Nova Factor Services: Records; Handling; Control; Licensure. Nova
Factor shall:
(a) in the event of a recall, supply Genentech with a complete record of
accountability within one (1) business day of receiving Genentech's
request for such record; and
(b) store Genentech HGH at between 2deg. and 8deg. Celsius in a limited
access refrigeration unit which will be locked during non-working
hours and protected by a suitable alarm system, and dispense
Genentech HGH with due regard for the need to guard against
potential abuse or diversion; and
(c) monitor refrigeration unit temperature by physically recording the
temperature, at a minimum, twice each day or by utilizing a constant
temperature recording device; and
(d) maintain on a current basis all licenses and certifications as a
registered pharmacy as required by applicable federal, state or
local laws in all jurisdictions where Nova Factor delivers Genentech
HGH; and
(e) maintain in each branch involved in the distribution of Genentech
HGH, a minimum Genentech HGH inventory level sufficient to meet two
(2) weeks anticipated demand for
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<PAGE>
Section 3. Distribution of Genentech HGH
3.1 Dispensing Obligation. Subject to Section 4.1 of this Agreement and to
the extent in accordance with applicable laws and regulations, Nova Factor
shall evaluate the reimbursement status of, and dispense Genentech HGH to,
all patients with a prescription for Genentech HGH who are referred by any
person or entity to Nova Factor. Within three (3) business days of Nova
Factor's receipt of each prescription or other appropriate shipment request,
Nova Factor shall dispense Genentech HGH to patients without regard to third
party payer coverage of such patient's Genentech HGH; provided, however, that
if the patient or physician specifically requests a delay in dispensing or if
prior authorization is required for a Government Program patient, both as
documented by written records of Nova Factor, said (3) day time frame
shall not apply, and Nova Factor shall use its commercially reasonable best
efforts to ship the requested Genentech HGH within thirty (30) days of such
prescription or shipment request.
3.2 Exceptions. Notwithstanding Section 3.1 above, Nova Factor shall not be
obligated to dispense Genentech HGH to patients:
(a) having no insurance or other third party payer coverage (or coverage
equal to an amount less than * percent (*%) of Nova Factor's
acquisition cost for Genentech HGH for such patient) for Genentech HGH
after a duly diligent evaluation by Nova Factor of such patient's
eligibility for all reasonable payer sources, including, without
limitation, a Government Program, or
(b) where the patient, physician or payer repeatedly and consistently
refuses to assist with the reimbursement process, to complete the
required documentation necessary to process the reimbursement request,
or to process a request for coverage, as demonstrated by: (i) a failure
to respond to at least three (3) consecutive Nova Factor contacts, at
least one (1) of which is a written contact and all of which are
documented in Nova Factor's written records; or (ii) a failure to
substantially comply with the material requirements of a contract
between the payer and the patient or physician; or (iii) a failure by
the patient to pay Nova Factor within a reasonable time frame. Nova
Factor agrees that it shall use its commercially reasonable best efforts
to remedy the refusal, including, without limitation, contacting and
cooperating with Genentech to resolve the issue with the patients, payer
or provider, and exhausting all legal options under the federal, state,
ERISA or other applicable reimbursement standards to resolve the
coverage or claim request; provided, however, that the number of
patients denied service by Nova Factor each calendar year under this
Section 3.2(b) shall not exceed two percent (2%) of the total number of
patients with prescriptions or
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
9
<PAGE>
statements of medical necessity for Genentech HGH who are referred to,
or dispensed or serviced by, Nova Factor during such year. In the event
that such number of patients exceeds or threatens to exceed two percent
(2%) because of factors beyond the reasonable control of the Parties,
then the Parties shall meet to discuss methods to remedy such problems.
3.3 Notice to Genentech. Promptly (which means Nova Factor shall use its
commercially reasonable best efforts to notify within three (3) business
days) after Nova Factor learns that a patient either lacks or is not
eligible for any third party payer coverage for Genentech HGH, or at least
fifteen (15) business days prior to Nova Factor terminating or electing not
to ship to a patient during Appeals or due to a refusal to cooperate or
otherwise, Nova Factor shall notify Genentech of such patient and the reasons
for such patient's non-eligibility or lack of coverage, or for Nova Factor's
refusal to service, as the case may be, and Genentech may provide Genentech
HGH to such patient through its Uninsured Patient's Program or in any other
manner Genentech chooses.
3.4 Delivery Obligations. Nova Factor shall deliver Genentech HGH to the
home of each patient or to such other delivery point as may be designated by
the patient. Nova Factor may distribute Genentech HGH through its Affiliates
and, with the prior written approval of Genentech, which approval may be
withheld at Genentech's sole discretion, other third parties; provided,
however, that Nova Factor hereby guarantees compliance by such Affiliates and
third parties with the terms of this Agreement.
3.5 Appeals and Collections. Nova Factor shall use its commercially
reasonable best efforts to obtain reimbursement from the patient and/or the
third party payer or other payer, including in the event of a denial of
insurance coverage, prosecuting all Appeals. Said Appeals shall include at
least the following steps unless such step is not available: (a) obtaining a
written denial of payment which sets forth the rationale for such denial; (b)
sending a written appeal to the third party payer setting forth
comprehensively the nature of the appeal and providing all relevant support
for the appeal; and (c) sending a written appeal to the next higher level of
appeal at that third party payer. As a general matter, Nova Factor will ship
on first level Appeals, and on second level Appeals when the clinical
information of the patient falls within reasonable medical review criteria
for treating growth hormone inadequacy. Nova Factor is not required to ship
on patients with pre-existing clauses, lack of coverage for injectables, or
no Rx coverage.
3.6 Government Programs and UPP. For each patient who does not have third
party payer coverage or for who insurance coverage is in doubt, Nova Factor
will promptly and diligently assess that patient's eligibility for coverage
of Genentech HGH under all appropriate Government Programs. Nova Factor shall
use its best
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<PAGE>
efforts to inform patients about meeting, and for patients with Government
Program coverage, maintaining eligibility and coverage by Government
Programs. If third party payer or Government Program coverage for Genentech
HGH is not available, Nova Factor shall promptly contact such patient to
determine the patient's ability to pay for the Genentech HGH with his or her
individual funds. In the event that such patient is unable to pay for the
Genentech HGH individually, Nova Factor shall promptly advise Genentech so
that Genentech may consider the patient for Genentech's Uninsured Patients
Program.
3.7 Patient Assistance Program. Nova Factor shall develop and administer a
patient assistance program in accordance with applicable law and regulations
to assist patients financially unable to afford Genentech HGH therapy;
provided, however, that Nova Factor shall not have any obligation related to
patients having no third party payer coverage for Genentech HGH therapy as
described in Section 3.2(b), which patients may be eligible for Genentech's
Uninsured Patients Program. Nova Factor shall develop its own financial
criteria for patients and shall review each patient's financial status on a
case-by-case basis, all in conformance with applicable laws, rules and
regulations.
Section 4. Distribution Relationship
4.1 Exclusivity. In consideration of the benefits provided to Nova Factor
under this Agreement, Nova Factor agrees for itself not to sell and shall
cause its Affiliates not to sell during the term of this Agreement without
Genentech's prior written consent any product (other than Genentech HGH)
containing human growth hormone or an analog of human growth hormone, or
whose principal effect is that of human growth hormone, whether
naturally-occurring or manufactured by any process. Notwithstanding the
foregoing, Nova Factor shall have the right to distribute or sell any third
party's human growth hormone product measured in 2x5 mg unit cartons (or
their equivalent) (a "Third Party Unit") in a volume equal to * percent
(*%) of the combined Nova Factor and Affiliate sales volume, in 10 mg
equivalent units of Genentech HGH, for the preceding year. This sales volume
shall be adjusted, in a manner mutually agreed to by Genentech and Nova
Factor, to account for current and future Affiliate sales, in 10 mg
equivalent units of Genentech HGH, for the preceding year, payer formulary
restrictions, and sales of competitive product for indications for which
Genentech HGH does not have FDA approval. Said amount may be revised upward
or downward upon mutual agreement of Genentech and Nova Factor. At the end of
each calendar quarter, Nova Factor shall provide a statement to Genentech
setting forth the number of Third Party Units distributed by Nova Factor and
its Affiliates, which amount shall be subject to audit by Genentech in
accordance with Section 2.7(a)(9). In the event that in any year, based upon
such quarterly reports, Nova Factor and its Affiliates distribute Third Party
Units above the * percent (*%) limit described in
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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<PAGE>
the second sentence of this paragraph, Nova Factor shall pay to Genentech 85%
of Nova Factor's average purchase price of Genentech HGH during that year for
each Third Party Unit distributed by Nova Factor or its Affiliates during
such year in excess of said amount. Nova Factor also agrees and shall cause
its Affiliates not to distribute or sell Genentech HGH during the term of
this Agreement outside of the United States or its territories or possessions
without the prior written consent of Genentech, which consent shall be given
or withheld in Genentech's sole discretion.
4.2 Substitution and Counter-Detailing of Human Growth Hormone Products.
Except as may be required by applicable law, Nova Factor agrees that it shall
not substitute, generically or therapeutically, any other human growth
hormone product(s) for prescriptions written for Genentech HGH to patients
covered under this Agreement, but specifically excluding patients who are
covered under a Government Program. Nova Factor and its Affiliates shall not
counter-detail Genentech HGH. Nova Factor and its Affiliates agree not to (1)
promote against, counter-detail, or disparage the Genentech Single Point of
Contact system to be administered by Genentech or its subcontractor for
patients with prescriptions of Genentech HGH, (2) promote against,
counter-detail, or disparage the Genentech Managed Distribution System
operated by Healthcare Delivery Systems, Inc. and implemented by Genentech
for the distribution of Genentech HGH through a network of pharmacies
licensed to dispense Genentech HGH ("GMDS"), or (3) promote GMDS. Nova Factor
may inform its customers of its status as an authorized dispensing pharmacy
within GMDS; provided, however, that Nova Factor shall not so inform its
customers in writing unless Genentech has previously approved, in writing,
such written materials, which approval shall not be unreasonably withheld.
Nova Factor and its Affiliates shall not convert or attempt to convert
patients referred to Nova Factor as a GMDS provider to another delivery
option. Nova Factor agrees that it shall make no representation, guarantee or
warranty about Genentech HGH, whether in writing or orally, except as is
contained in written materials delivered to Nova Factor by Genentech for use
in promoting and selling Genentech HGH or as may otherwise be agreed to by
Genentech in writing. Genentech shall have the right to approve Nova Factor
promotional materials which contain pertinent facts relative to Genentech HGH
and all such materials shall comply with applicable regulatory requirements
and shall not contain misrepresentations, either about Genentech HGH or a
competitive product, or disparage a competitive product.
Section 5. Term; Termination
5.1 Term. The term of this Agreement shall commence as of the Effective Date
and continue through December 31, 1999, unless extended by mutual agreement
of the Parties for additional one-year periods.
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5.2 Termination Events. The foregoing notwithstanding, this Agreement may be
terminated by a Party: (a) upon any material breach of this Agreement by the
other Party which breach is not cured within sixty (60) days of notice by the
non-breaching Party; or (b) immediately upon giving notice (i) upon the
institution by or against the other Party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the settlement of the
other Party's debts, (ii) upon the other Party's making an assignment for the
benefit of its creditors, or (iii) upon the other Party's dissolution. This
Agreement may also be terminated upon mutual agreement of the Parties hereto.
5.3 Effect of Termination. Upon termination, if requested by Genentech, Nova
Factor shall return all unused Genentech HGH to Genentech and shall be
reimbursed by Genentech for the reasonable shipping expenses of the return
and the purchase price of the Genentech HGH returned if the purchase price
was previously paid by Nova Factor. If Genentech does not request such unused
Genentech HGH to be returned, Nova Factor may sell such unused Genentech HGH
to patients or return it to Genentech for credit. Nova Factor shall also
return, if so requested by Genentech, all sales aids and other associated
material supplied to Nova Factor by Genentech. Termination shall not relieve
either Party of obligations incurred prior to termination, including Nova
Factor's obligation to pay for Genentech HGH ordered by and delivered to it
under this Agreement, provided that Genentech has not requested return of
that Genentech HGH, and Genentech's obligations of reimbursements accrued as
of the termination date under the programs described in Section 2 above,
which obligations of reimbursement shall first be set off against obligations
of Nova Factor to Genentech, and if any reimbursement credits remain after
set-off after a reasonable period for reconciliation of all outstanding
claims, shall be paid in cash. The provisions of Sections 6.6 and 6.14 shall
survive any termination of this Agreement.
5.4 Change In Control. If Nova Factor or any of its Affiliates or all or
substantially all of either of their assets are to be acquired by whatever
means, including merger with or into, another entity, including an Affiliate
(the "Acquiring Entity") Nova Factor shall so notify Genentech in writing at
least ninety (90) days prior to the date of occurrence of such event, and
Genentech shall have the right to terminate this Agreement at any time until
ninety (90) days after Genentech's receipt of written notice from Nova
Factor. In addition Genentech shall have the right to terminate this
agreement if Nova Factor or its Affiliates acquires all or substantially all
of the assets of an entity or a division of any entity which in either case
sold Genentech HGH within one year preceding such purchase. Nova Factor shall
notify Genentech in writing at least sixty (60) days prior to the occurrence
of such event. If Genentech so
13
<PAGE>
terminates this Agreement, Nova Factor agrees for itself, its Affiliates and
for any such entity that, without Genentech's prior written consent, neither
it nor the Acquiring Entity nor any party affiliated with either of them
shall sell to any patient receiving Genentech HGH at the time of said
termination, for a period of two (2) years following the date of such
acquisition, a human growth hormone product or a product which can be
substituted for Genentech HGH using any of the assets or facilities or
programs developed or used by Nova Factor under this Agreement.
Section 6. Miscellaneous
6.1 Endowment. During the term of this Agreement, Genentech shall fund an
independent, non-profit endowment to assist financially and medically needy
patients, with prescriptions for Genentech HGH.
6.2 Relationship. Neither Party is in any way the legal representative or
agent of the other, nor authorized or empowered to assume any obligation of
any kind, implied or expressed, on behalf of the other Party, without the
express written consent of the other.
6.3 Force Majeure. Nonperformance of either Party shall be excused to the
extent that performance is rendered impossible by strike, fire, earthquake,
flood, governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the control and not
caused by the negligence of the nonperforming Party.
6.4 Entire Agreement. This Agreement is the entire agreement between the
Parties hereto, and supersedes any and all prior agreements between the
Parties (other than the Release Agreement), whether oral or written, relating
to the subject matter hereof. No amendments or modifications of the terms of
the Agreement shall be binding on either Party unless reduced to writing and
signed by both Parties.
6.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by either
Party without the other's written consent except to a wholly-owned subsidiary
of such Party, the corporate parent of such Party, or a corporation
controlled by the corporate parent of such Party.
6.6 Confidentiality. Nova Factor and Genentech shall take all reasonable
steps and do all things reasonably necessary to ensure that any information
relating to Genentech HGH, including the terms of this Agreement or to the
business of the disclosing Party ("Confidential Information") acquired by
virtue of the position of the receiving Party under this Agreement shall not
be
14
<PAGE>
disclosed or made use of outside this Agreement; provided, however, that the
foregoing shall not apply to information (a) which receiving Party can show
was known to it prior to disclosure by the disclosing Party; (b) which is or
becomes public knowledge through no fault of the receiving Party; (c) which
is lawfully disclosed to the receiving Party by a third party; (d) which is
required to be disclosed pursuant to court order; or (e) which in the written
opinion of mutually acceptable legal counsel is required to be disclosed
pursuant to federal or state law or regulation (including, without
limitation, securities laws); provided that, in the case of (d) and (e)
above, a reasonable opportunity is afforded the disclosing Party to challenge
the requirement for such disclosure and/or request confidential treatment.
This Section 6.6 shall survive any termination of this Agreement for a period
of five (5) years from disclosure to the receiving Party.
6.7 Publicity. Nova Factor shall not originate any news release or public
announcement, written or oral, to any person relating to this Agreement or to
Genentech HGH except as previously agreed to by Genentech in writing and as
in the written opinion of counsel to Nova Factor is required by law to be
made. Except as required by law, Genentech shall seek approval from Nova
Factor prior to utilizing Nova Factor's name in any written promotional
material.
6.8 Waiver. Neither the waiver by either Party hereto of any breach of or
default under any of the provisions of this Agreement, nor the failure of
either Party to enforce any of the provisions of this Agreement or to
exercise any right hereunder, shall be construed as a waiver of any
subsequent breach or default, or as a waiver of any such rights or provisions
hereunder.
6.9 Severability. If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the
extent of such invalidity or unenforceability only, without in any way
affecting the remaining parts of this Agreement.
6.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. No provision of this
Agreement shall be applied or construed in a manner inconsistent with
applicable federal and state laws and regulations.
6.11 Enforceability. It is the explicit intention of the Parties hereto that
no person or entity other than the Parties hereto, except governmental
authorities to the extent required by law, is or shall be entitled to bring
any action to enforce any provision of this Agreement against either of the
Parties hereto.
6.12 Headings. The headings in this Agreement are intended
15
<PAGE>
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
6.13 Notices. Except as otherwise provided, all notices which may be
required pursuant to this Agreement (a) shall be in writing, (b) shall be
addressed, if to a Party, to the person and address set forth at the end of
this Agreement (or to such other person or address as either Party may so
designate from time to time), or addressed, if to a patient, to the patient's
last known address, (c) shall be deemed to have been given three (3) business
days from the date of postmark if sent by mail or on the date of delivery if
transmitted by courier or telegram or on the date of transmission if sent by
telex or telefacsimile, and (d) shall be mailed, postage prepaid, by
first-class mail, registered mail, or certified mail, return receipt
requested, or transmitted by courier for hand delivery, or by telegram, telex
or telefacsimile.
6.14 Limitation on Liability. If either Genentech or Nova Factor terminates
this Agreement in accordance with the provisions of Section 5 or if Genentech
or any governmental agency effects the nationwide withdrawal of the sale of
Genentech HGH for any reason, neither Party shall be liable to the other for
any special, incidental or consequential damages caused directly or
indirectly by such termination or withdrawal, whether arising under this
Agreement or relating to any injury or damage to business, earnings, profits
or goodwill suffered by that Party, including, without limitation any
liability for compensation, reimbursement or damages on the account of the
loss of prospective profits or anticipated sales or on account of
expenditures, inventory, investments, leases or commitments in connection
with the business or goodwill of either Party.
6.15 Affiliates. It is recognized and agreed that during the term of this
Agreement, Nova Factor may distribute Genentech HGH to patients through its
Affiliates and such distribution shall be construed as a distribution by Nova
Factor and all provisions of this Agreement shall apply to such distribution
and to the patients to whom Genentech HGH is distributed by Affiliates of
Nova Factor.
6.16 Records. To the extent required by Section 1861 (v)(1)(I) of the Social
Security Act, 42 U.S.C. Section 1395x(v)(1)(I), as amended, Genentech shall,
upon proper written request, allow the United States Department of Health and
Human Services, the Comptroller General of the United States and their duly
authorized representatives, access to this Agreement and to books, documents
and records necessary to verify the nature and extent of the costs incurred
pursuant to this Agreement at any time during the term of this Agreement and
for an additional period of four (4) years following the last date goods are
furnished under this Agreement.
6.17 Compliance with Laws. Each Party shall be responsible for
16
<PAGE>
compliance with all state and federal laws, rules and regulations applicable
to its performance hereunder, including, without limitation, those of the Food
and Drug Administration and of Government Programs.
6.18 Government Reporting. All Parties acknowledge and agree that each is
required to comply with all of their respective reporting obligations pursuant
to Section 1128(b) of the Social Security Act and 42 C.F.R. Section 1001.952,
including the accurate and complete reporting of the value of the Discounts.
IN WITNESS WHEREOF, Genentech and Nova Factor have caused this Agreement
to be executed by their duly authorized representatives effective as of the
day and year first written above.
NOVA FACTOR, INC. GENENTECH, INC.
By: /s/ Randy Grow By: /s/ Kim Popovits
-------------------- --------------------------
Name: /s/ Randy Grow Name: /s/ Kim Popovits
-------------------- --------------------------
Title: President Title: Vice President, Sales
------------------ ------------------------
Address: Address:
1620 Century Center Parkway 460 Point San Bruno Boulevard
Suite 109 So. San Francisco, CA 94080-4990
Memphis, TN 38134 (415) 225-1000
(901) 385-3633
Notices to be Addressed to: Notices to be Addressed to:
Chief Executive Officer Vice President--
Sales and Marketing
With a copy to:
Corporate Secretary
17
<PAGE>
EXHIBIT A
---------
1. The contract term, Base Discount percentages and discounted prices per
vial are shown below:
<TABLE>
<CAPTION>
Base Discount Genentech HGH
Contract Year Percentage Price per 10mg vail
------------- ------------- -------------------
<S> <C> <C>
March 1, 1997 through *% *
June 30, 1997
July 1, 1997 through *% *
December 31, 1997
January 1, 1998 through *% *
June 30, 1998
July 1, 1998 through *% *
December 31, 1998
January 1, 1999 through *% *
December 31, 1999
</TABLE>
2. Following are the NDC codes, published direct list prices, carton sizes
offered and minimum order requirements for Genentech HGH:
a. One 5 mg carton of Protropin (somatrem for injection) (NDC
50242-015-02) or Nutropin [somatropin (rDNA origin) for injection]
(NDC 50242-072-02) contains two (2) 5 mg vials of Genentech HGH and
one (1) vial containing 10 mL of diluent (benzyl alcohol preserved
Bacteriostatic Water for injection). The current published list price
per carton is $350.00 (or $175.00 per 5 mg vial).
b. One 10 mg carton of Protropin (somatrem for injection) (NDC
50242-016-20) or Nutropin [somatrophin (rDNA origin) for injection]
(NDC 50242-018-20) contains two (2) 10 mg vials of Genentech HGH and
two (2) vials containing 10 mL of diluent (benzyl alcohol preserved
Bacteriostatic Water for injection). The current published list price
per carton is $700.00 (or $350.00 per 10 mg vial).
The minimum order for all Protropin and Nutropin is one carton
containing two 5 mg or two 10 mg vials.
c. Nutropin AQ (NDC 50242-0114-11) is supplied as 10 mg (approximately
30 IU) of sterile liquid somatropin per vial. Each carton contains
six single vial cartons containing one 2 mL vial of Nutropin AQ
[somatronpin (rDNA origin) injection] (5 mg/mL). The current published
list price per carton is $2,100 (or $350 per 10 mg vial). The minimum
order is one carton containing six 10 mg vial cartons of Nutropin AQ.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
<PAGE>
Nova Factor Criteria - Exhibit B
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit C
<TABLE>
<CAPTION>
<S> <C>
PATIENT INFORMATION SHEET DELIVERY/SHIPPING INSTRUCTIONS
-----------------------------------------------------
Ship/Deliver To:
-----------------------------------------------------
-----------------------------------------------------
( ) HTA
-----------------------------------------------------
( ) Business Class Major
-----------------------------------------------------
( ) Business Class Minor Phone:
-----------------------------------------------------
Date of Delivery:
Rx:
- ------------------------------------------------------- -----------------------------------------------------
PATIENT Therapy Type:
- -------------------------------------------------------------------------------------------------------------
Patient No.: Name: Phone:
- -------------------------------------------------------------------------------------------------------------
Address: City: State: Zip:
- -------------------------------------------------------------------------------------------------------------
DOB: SSN: Dx:
- -------------------------------------------------------------------------------------------------------------
Allergies: Height: Weight: Sex: Marital Status:
- -------------------------------------------------------------------------------------------------------------
Emergency Contact/Next of Kind: Phone:
- -------------------------------------------------------------------------------------------------------------
PHYSICIAN
- -------------------------------------------------------------------------------------------------------------
Name: Physician #: Phone: Fax:
- -------------------------------------------------------------------------------------------------------------
Address: City: State: Zip:
- -------------------------------------------------------------------------------------------------------------
Nurse: Phone:
- -------------------------------------------------------------------------------------------------------------
HOSPITAL
- -------------------------------------------------------------------------------------------------------------
Name: Hospital #: Phone:
- -------------------------------------------------------------------------------------------------------------
Referral Source: Phone:
- -------------------------------------------------------------------------------------------------------------
EMPLOYMENT
- ------------------------------------------------------- -----------------------------------------------------
Policy Holder: Policy Holder:
- ------------------------------------------------------- -----------------------------------------------------
Patient ( ) Other ( ) Spouse ( ) Parent ( ) Patient ( ) Other ( ) Spouse ( ) Parent ( )
- ------------------------------------------------------- -----------------------------------------------------
Employer: Employer:
- ------------------------------------------------------- -----------------------------------------------------
Address: Address:
- ------------------------------------------------------- -----------------------------------------------------
City, State, Zip: City, State, Zip:
- ------------------------------------------------------- -----------------------------------------------------
Phone #: Phone #:
- ------------------------------------------------------- -----------------------------------------------------
Contact Person: Contact Person:
- ------------------------------------------------------- -----------------------------------------------------
PRIMARY INSURANCE SECONDARY
- ------------------------------------------------------- -----------------------------------------------------
Company Name: Company Name:
- ------------------------------------------------------- -----------------------------------------------------
Address: Address:
- ------------------------------------------------------- -----------------------------------------------------
City, State, Zip: City, State, Zip:
- ------------------------------------------------------- -----------------------------------------------------
Phone & Contact: Phone & Contact:
- ------------------------------------------------------- -----------------------------------------------------
Policy No: Policy No:
- ------------------------------------------------------- -----------------------------------------------------
Group #: Group #:
- ------------------------------------------------------- -----------------------------------------------------
Special Claim Form Required: ( ) YES ( ) NO Special Claim Form Required: ( ) YES ( ) NO
- ------------------------------------------------------- -----------------------------------------------------
Effective Date: Pre-X Effective Date: Pre-X
- ------------------------------------------------------- -----------------------------------------------------
Deductible: Met? Deductible: Max?
- ------------------------------------------------------- -----------------------------------------------------
% Paid: S/Loss: OP: % Paid: S/Loss: OP:
- ------------------------------------------------------- -----------------------------------------------------
Max Ben: ( ) LTM Amount Used: Max Ben: ( ) LTM Amount Used:
- ------------------------------------------------------- -----------------------------------------------------
( ) Annual Amount Used: ( ) Annual Amount Used:
- ------------------------------------------------------- -----------------------------------------------------
Forms Req: SMN RX INS/1500 Forms Req: SMN RX INS/1500
- ------------------------------------------------------- -----------------------------------------------------
Self Insured: ( ) YES ( ) NO Self Insured: ( ) YES ( ) NO
- -------------------------------------------------------------------------------------------------------------
NOTES
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
Referral Received by: Date/Time Taken:
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>
<PAGE>
PATIENT INFORMATION SHEET
- -------------------------------------------------------------------------------
CONTRACT
- -------------------------------------------------------------------------------
Contract Pricing:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CASE MANAGEMENT
- -------------------------------------------------------------------------------
Case Manager: Title:
- -------------------------------------------------------------------------------
Case Management Company:
- -------------------------------------------------------------------------------
Street Address:
- -------------------------------------------------------------------------------
City: State: Zip Code:
- -------------------------------------------------------------------------------
Phone: ( ) Fax: ( )
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BILLING INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PRE-AUTHORIZATION
- -------------------------------------------------------------------------------
Is Pre-Authorization Required: ( ) Yes ( ) No
- -------------------------------------------------------------------------------
By Whom?
- -------------------------------------------------------------------------------
Pre-Authorization Number:
- -------------------------------------------------------------------------------
Authorization/Pre-Cert Period:
- -------------------------------------------------------------------------------
<PAGE>
Exhibit D
* ITEMS
*
* ITEMS
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit E
STATE ANTI-KICKBACK STATUTES
1. Florida
2. Kentucky
3. Massachusetts
4. Michigan
5. Minnesota
6. Ohio
7. Rhode Island
8. South Carolina
9. Texas
<PAGE>
Exhibit F
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit G
PROTROPIN - * - Form #4
Month:
---------------------------------
<TABLE>
<CAPTION>
- ------------------------------------- -------------- ---------------- ----------- ------------- -----------------------------------
# of Cartons Shipped
Patient Patient Credit Invoice # Date of -----------------------------------
Identification Date of Birth Manager ID # Service #1502 - 5 mg Ctn #1520 - 10 mg Ctn
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
----------------- -----------------
Totals
---------------- -----------------
---------------- -----------------
#7202 #7220
</TABLE>
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit G
NUTROPIN - * - F
Month:
----------------------------
<TABLE>
<CAPTION>
- ------------------------------------- -------------- ---------------- ----------- ------------- -----------------------------------
# of Cartons Shipped
Patient Patient Credit Invoice # Date of -----------------------------------
Identification Date of Birth Manager ID # Service #1502 - 5 mg Ctn #1520 - 10 mg Ctn
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ----------------- -----------------
----------------- -----------------
Totals
----------------- -----------------
----------------- -----------------
#7202 #7220
</TABLE>
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit G
NUTROPIN AQ- *
Month:
---------------------------------
<TABLE>
<CAPTION>
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
# of Cartons Shipped
Patient Patient Credit Invoice # Date of -------------------
Identification Date of Birth Manager ID # Service #11411 - 12ml Ctn
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
- ------------------------------------- -------------- ---------------- ----------- ------------- ---------------------
---------------------
Totals
---------------------
#11411
</TABLE>
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit H
*
Product: / / Protropin / / Nutropin / / Nutropin AQ
Date:
---------------------
Patient Name: Completed By:
--------------------------------- --------------------
Account Number: Telephone:
------------------------------- -----------------------
*
/ X / *
Program
<TABLE>
<CAPTION>
- ----------------------- --------------------- ----------------- ------------------- -------------------------
Date of Invoice # * # of Cartons Product Number
Shipment
- ----------------------- --------------------- ----------------- ------------------- -------------------------
<S> <C> <C> <C> <C>
- ----------------------- --------------------- ----------------- ------------------- -------------------------
- ----------------------- --------------------- ----------------- ------------------- -------------------------
- ----------------------- --------------------- ----------------- ------------------- -------------------------
- ----------------------- --------------------- ----------------- ------------------- -------------------------
- ----------------------- --------------------- ----------------- ------------------- -------------------------
-------------------
TOTAL:
-------------------
</TABLE>
Explanation:
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit I
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit J
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.28
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 30th day of September, 1994,
by and between NOVA FACTOR, INC., a Tennessee corporation (hereinafter
referred to as "Nova Factor"), and GENZYME CORPORATION, a Massachusetts
corporation (hereinafter referred to as "Genzyme").
WITNESSETH:
WHEREAS, Genzyme is the manufacturer of the prescription drug
Cerezyme-TM- which has been approved by the United States Food and Drug
Administration for the treatment of Gaucher's disease;
WHEREAS, Nova Factor and Genzyme have previously entered into a
Distribution Agreement dated June 14, 1994 for the distribution of
Cerezyme-TM-, as amended by an Extension Agreement dated June 24, 1994, and a
second Extension Agreement dated September 28th, 1994 (collectively, the
"Original Distribution Agreement");
WHEREAS, in order to facilitate distribution of Cerezyme-TM- on a more
permanent basis, Nova Factor desires to purchase Cerezyme-TM- from Genzyme,
and Genzyme desires to sell Cerezyme-TM- to Nova Factor for resale, upon the
terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Original Distribution Agreement has expired and the terms
and conditions of this Agreement shall govern all sales of Cerezyme-TM-
to Nova Factor by Genzyme, including sales pursuant to the Original
Distribution Agreement.
<PAGE>
NOW, THEREFORE, for an in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DISTRIBUTORSHIP
1.1 Appointment. Genzyme hereby appoints Nova Factor at act as a
distributor of Cerezyme-TM- in all the states of the United States, and
Nova Factor hereby accepts such appointment. During the period of time that
this Agreement is in effect, Nova Factor shall sell Cerezyme-TM- to
third parties and perform the other obligations set out herein.
1.2 Territory. Subject to rights of Genzyme under this Section 1.2,
Nova Factor shall be a distributor of Cerezyme-TM- in all states of the
United States. The Parties further agree to acknowledge that (1) Genzyme may
distribute Cerezyme-TM- in all the states of the United States directly
through health care providers and pharmacies, and notwithstanding the grant of
a distributorship to Nova Factor, such direct distribution by Genzyme shall
not be construed to be a violation of this Agreement and (2) Genzyme may at its
option appoint additional distributors of Cerezyme-TM- in any or all of
the states of the United States. Genzyme will provide Nova Factor with notice
of the appointment of any additional distributors as of the effective date of
any such appointment.
1.8 Terms Applicable to Distributorship. Nova Factor shall have sole
responsibility and authority for determining the price at which it will
resell Cerezyme-TM- to its customers. Genzyme shall not be involved in that
determination in any way. In the event that Nova Factor determines to sell
Cerezyme-TM- at the price per unit at which it buys Cerezyme-TM- from
Genzyme, the distributorship shall be subject to the terms and conditions set
forth in Article III of this Agreement. In
2
<PAGE>
the event Nova Factor determines to sell Cerezyme-TM- at a price other
than the price per unit at which it buys Cerezyme-TM- from Genzyme,
the purchase and sale of Cerezyme-TM- shall be conducted in the manner
set forth in Article II of this Agreement. Immediately upon execution of this
Agreement, Nova Factor shall make an initial written election whether to be
subject to the terms of Article II or Article III of this Agreement. During
the term of this Agreement, Nova Factor may from time to time change this
election upon ninety (90) days prior written notice to Genzyme.
1.4 Security Interest. Nova Factor shall enter into a Security
Agreement, substantially in the form of Exhibit A attached hereto (the
"Security Agreement"), to secure Nova Factor's obligations to pay Genzyme for
Cerezyme-TM- provided to Nova Factor under this Agreement.
ARTICLE II
PURCHASE OF CEREZYME-TM- FOR RESALE
2.1 Election of Article II. This Article II shall govern the terms and
conditions of the sale of Cerezyme-TM- to Nova Factor by Genzyme, to
the exclusion of Article III at such times during the terms of this Agreement
as Nova Factor elects in accordance with Section 1.3 of this Agreement.
2.2 Orders for Cerezyme-TM-. Nova Factor shall order Cerezyme-TM- from
Genzyme, and Genzyme shall sell Cerezyme-TM- to Nova Factor; provided
however, that any portion of an order that remains unfilled * days after
receipt of such order by Genzyme may be cancelled at Nova Factor's option
upon notice to Genzyme. Genzyme shall ship Cerezyme-TM- at its cost to Nova
Factor in a sealed vial. Each vial shall contain 200 units of Cerezyme-TM-.
Each vial of Cerezyme-TM- shall be packaged in an individual box, containing
a package insert and United States Food Drug Administration ("FDA")-approved
labeling. Genzyme shall
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
3
<PAGE>
have the option of shipping several individual boxes in a larger shipping
container. Genzyme shall ship each order of Cerezyme-TM- to Nova Factor
at its warehouse in Memphis, Tennessee (the "Warehouse") or such other place
as the parties shall agree, at Genzyme's expense. Shipment shall be made by
common carrier, overnight courier or any other similar method of shipment in
Genzyme's discretion.
2.3 Title. Upon the shipment of Cerezyme-TM- to Nova Factor, title to
the Cerezyme-TM- shall pass to Nova Factor. Upon receipt by Nova Factor, Nova
Factor shall assume all responsibility for the marketing, storage, insurance,
delivery and billing of all Cerezyme-TM- provided to it under this Article
II. Upon receipt of each shipment of Cerezyme-TM- by Nova Factor, Nova Factor
shall immediately inspect the shipment for obvious damage to the shipping
container, and each box containing a vial of Cerezyme-TM-. Nova Factor shall
have no obligation to inspect the contents of the vials, nor shall Nova
Factor open or unseal the vials. Nova Factor shall also confirm whether the
number of vials received by Nova Factor equals the number of vials recorded
on the applicable shipping documents, and Nova Factor shall note any
discrepancies in the number of vials received by Nova Factor on the shipping
documents accompanying such shipment of Cerezyme-TM- and immediately notify
Genzyme of any such discrepancies. Nova Factor shall not manufacture, mix or
process any Cerezyme-TM-.
2.4 Billing. No earlier than the date of shipment to Nova Factor,
Genzyme shall invoice Nova Factor for each shipment of Cerezyme-TM- at
Genzyme's * price. Payment of the invoice shall
be due, net of approved returns, * (*) days from the date of the
invoice. In the event that Nova Factor fails to pay such invoice in full
within * (*) days from the date of the invoice. In the event that Nova
Factor fails to pay such invoice in full within * (*) days Nova Factor
shall pay Genzyme late payment charges of * percent (*%) per annum on all
unpaid amounts due under such invoice calculated form the end of that *
(*) day period. The parties hereto agree that should any provision of this
Section 2.4
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
4
<PAGE>
violate any law, rule or regulation pertaining to issuing or the contracting
for or charging of interest, then the excess of interest contracted for or
charged or collected over the maximum lawful rate of interest shall be
applied as a prepayment of future obligations due by Nova Factor to Genzyme
under this Article II, and if any amount so prepaid shall be unused upon
termination of Nova Factor's election to be subject to Article II, or upon
termination of this Agreement, whichever is earlier, the excess of the
prepaid amounts over the amounts actually due to Genzyme shall be immediately
returned to Nova Factor.
2.5 Compliance with Pharmacy Laws. Nova Factor shall dispense or ship
Cerezyme-TM- pursuant to a prescription or authorized purchase order
solely in compliance with applicable federal or state laws, regulations, and
orders including pharmacy laws.
2.6 Pharmacy Records. Nova Factor shall maintain such pharmacy
records as are required by applicable federal and state law, regulations and
orders. Such records shall remain the property of Nova Factor. However, Nova
Factor shall permit Genzyme access to, and the right to obtain copies of,
such records, except to the extent limited by law.
2.7 Packaging. Nova Factor shall pack Cerezyme-TM- in cold
packs, cartons or other packaging with such insulation or other packing
materials as required by the package insert or FDA-approved labeling, or as
otherwise agreed by the parties.
2.8 Recall information. Nova Factor shall generate such distribution,
sales, customer account and financial reports, including records necessary to
trace lot numbers to Cerezyme-TM- Patients to monitor shelf life and
trace shipments and such other data and information as the parties shall
agree.
5
<PAGE>
ARTICLE III
Coordinate Distribution
-----------------------
3.1 Election of Article III. This Article III shall govern the terms and
conditions of the sale of Cerezyme-TM- to Nova Factor by Genzyme, to the
exclusion of Article II, at such times during the term of this Agreement as
Nova Factor so elects in accordance with Section 1.3 of this Agreement.
3.2 Purchase and Maintenance of Inventory of Cerezyme-TM-.
------------------------------------------------------
(a) Sale of Cerezyme-TM-. Nova Factor shall order Cerezyme-TM-
from Genzyme, and Genzyme shall sell Cerezyme-TM- to Nova Factor. Genzyme
shall at its cost ship each order of Cerezyme-TM- to Nova Factor at its
warehouse in Memphis, Tennessee (the "Warehouse"). Title to each such order
of Cerezyme-TM- shipped to Nova Factor hereunder shall pass to Nova Factor at
the point of shipment to Nova Factor.
(b) Nova Factor Inventory. Nova Factor agrees that it will
purchase adequate amounts of Cerezyme-TM- so that such inventory, when added
to Nova Factor's inventory of Ceredase-Registered Trademark- enzyme (the
"Combined Inventory"), will result in an average of * days Combined
Inventory during each calendar quarter; provided that, Nova Factor agrees
that at the option of Genzyme it will purchase adequate amounts of
Cerezyme-TM- to bring the Combined Inventory to a *-day level prior to the
end of any such calendar quarter, however, in no event will such purchase
cause the inventory to exceed an average of * days for such calendar
quarter; provided further that in no event shall Nova Factor be required to
have on hand Combined Inventory in excess of * dollars. The
calculation of inventory will be based upon the average of the unit sales
volume for the previous month, the projected unit sales volume for the
current month, and the projected sales volume for the next month as described
in Exhibit B attached hereto. Genzyme shall use reasonable efforts to assure
that all Cerezyme-TM- shipped to Nova
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
6
<PAGE>
Factor by Genzyme will have a remaining shelf life of at least ninety (90)
days. At any time which is at least thirty (30) days prior to the expiration
date of Cerezyme-TM-, Nova Factor shall have the right to return to Genzyme
such Cerezyme-TM- that had a remaining shelf life of less than ninety (90)
days when it was received by Nova Factor. All such returns shall be made to
Genzyme for either replacement Cerezyme-TM- or for a credit to the amount
owed by Nova Factor to Genzyme equal to Nova Factor' purchase price of such
Cerezyme-TM- , as may be elected by Genzyme. The service fees earned by Nova
Factor for any Cerezyme-TM- returned to Genzyme pursuant to this Section
3.2(b) shall be credited against future service fees earned by Nova Factor,
or Genzyme may request that Nova Factor reimburse it for service fees paid to
Nova Factor for Cerezyme-TM- that is returned, as Genzyme may elect. Nova
Factor agrees to use the shortest dated Cerezyme-TM- first. Nova Factor
shall provide Genzyme weekly reports on inventory levels, which will be
subject to audit at Genzyme's expense.
(c) Billing. No earlier than the date of shipment of Cerezyme-TM-
to Nova Factor, Genzyme shall invoice Nova Factor for such shipment at
Genzyme's * price for Cerezyme-TM-. Payment
against the invoice, net of returns, will be due from Nova Factor within
* (*) days of the date of Genzyme's invoice. In the event that Nova
Factor fails to pay any such invoice in full within * (*) days, Nova
Factor shall pay Genzyme late payment charges of * percent (*%) per annum
on all unpaid amounts due under such invoice calculated from the end of that
* (*) day period. The parties hereto agree that should any provision of
this Section 3.2(c) violate any law, rule or regulation pertaining to usury
or the contracting for or charging of interest, then the excess of interest
contracted for or charged or collected over the maximum lawful rate of
interest shall be applied as a prepayment of future obligations due by Nova
Factor to Genzyme under this Article III, and if any amount so prepaid shall
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
7
<PAGE>
be unused upon termination of Nova Factor's election to be subject to Article
III, or upon termination of this Agreement whichever is earlier, the excess
of the prepaid amounts over the amounts actually due to Genzyme shall be
immediately returned to Nova Factor.
3.3 Shipment and Warehousing.
-------------------------
(a) Shipment to Nova Factor. Genzyme shall ship Cerezyme-TM- to
Nova Factor in a sealed vial. Each vial shall contain 200 units of
Cerezyme-TM-. Each vial of Cerezyme-TM- shall be packaged in an individual
box, containing a package insert and United States Food and Drug
Administration ("FDA")-approved labeling. Genzyme shall have the option of
shipping several individual boxes in a larger shipping container.
(b) Inspection of Shipment. Upon receipt of each shipment of
Cerezyme-TM- by Nova Factor, Nova Factor shall immediately inspect the
shipment for obvious damage to the shipping container and each box containing
a vial of Cerezyme-TM-. Nova Factor shall have no obligation to inspect the
contents of the vials, nor shall Nova Factor open or unseal the vials. Nova
Factor shall also confirm whether the number of vials received by Nova Factor
equals the number of vials recorded on the applicable shipping documents, and
Nova Factor shall note any discrepancies in the number of vials received by
Nova Factor on the shipping documents accompanying such shipment of
Cerezyme-TM- and immediately notify Genzyme of any such discrepancies.
(c) Storage. Nova Factor shall store all Cerezyme-TM- at the
Warehouse and shall not store Cerezyme-TM- at any other location without the
prior written consent of Genzyme. Nova Factor shall not manufacture, mix, or
process any Cerezyme-TM-. Nova Factor shall be responsible for inventory
control of Cerezyme-TM-, subject to Genzyme's determination of the
appropriate shelf life of Cerezyme-TM-. Nova Factor shall segregate
Cerezyme-TM- from any other item stored
8
<PAGE>
by it and shall not commingle Cerezyme-TM- with any other item in its custody
or control. For so long as any Cerezyme-TM- is in Nova Factor's possession,
Nova Factor shall store Cerezyme-TM- in accordance with the requirements set
forth in the Cerezyme-TM- package insert and FDA-approved labeling, including
any requirements with respect to refrigeration.
(d) Risk of Loss. Nova Factor shall bear the risk of loss, theft,
destruction or damage of each vial of Cerezyme-TM- from receipt of each
shipment containing the vial from Genzyme until delivery of such vial of
Cerezyme-TM- to a patient (a "Patient"), physician, clinic or hospital (any
of a Patient, physician, clinic or hospital may thereafter be referred to as
a "Cerezyme-TM- Customer"). Genzyme shall, at its cost, insure all
Cerezyme-TM- against loss from the time of shipment until delivery to Nova
Factor. Nova Factor shall, at its cost, insure all Cerezyme-TM- in its
possession until the delivery of Cerezyme-TM- to a Cerezyme-TM- Customer for
its replacement (i.e., market) value against fire, theft, loss or
destruction, and such other risks as are customarily insured against by
prudent persons in a similar line of business, with an insurance carrier
qualified to do business (in the State of Tennessee or such other place as
Genzyme may authorize.) Nova Factor shall provide Genzyme with certificates of
such insurance prior to Nova Factor's election to be subject to the terms of
Article III.
3.4 Marketing and Sales. Genzyme covenants and agrees that it will
provide such marketing, sales and patient/physician educational materials as
shall be deemed necessary by Genzyme to adequately promote and market
Cerezyme-TM-. Nova Factor shall have no responsibility for undertaking any
sales efforts in connection with Cerezyme-TM- and all inquiries received by
Nova Factor concerning potential sales or prescriptions of Cerezyme-TM- shall
be referred to Genzyme by Nova Factor.
9
<PAGE>
3.5 Designation of Patients and Recipients.
---------------------------------------
(a) Patient Status. Nova Factor shall sell Cerezyme-TM- under
this Article III only to a patient previously approved by Genzyme (an
"Approved Patient") or to a physician, hospital or clinic for administration
to an Approved Patient (a "Cerezyme-TM- Customer"). No patient previously
approved to receive Ceredase-Registered Trademark- enzyme will be provided
Cerezyme-TM- without Genzyme's prior approval. If sale is made to an
Approved Patient, shipment may nonetheless be made to a physician, hospital
or clinic, which will dispense Cerezyme-TM- to the Approved Patient. Before
approving the initial shipment to, or on behalf of, a patient, Genzyme shall
make such inquires as Genzyme, in its sole discretion, deems appropriate to
determine whether Cerezyme-TM- is indicated for such patient, which inquiries
shall include obtaining a letter or summary of medical necessity signed by
such patient's physician where required by the third party payor and
determining the availability of insurance or other source for payment for
Cerezyme-TM-.
(b) Patient Tracking System. Nova Factor shall establish a
patient tracking system in a mutually acceptable format that tracks the
dose, dosage changes and frequency of administration of Cerezyme-TM-
prescribed by physicians for all Approved Patients. Nova Factor shall
provide Genzyme with data on all Approved Patients added each month.
(c) Transmission of Records. Genzyme shall promptly forward to
Nova Factor such documentation as is reasonably necessary for Nova Factor to
transmit the initial shipment of Cerezyme-TM- to any Approved Patient and to
permit Nova factor to file claims with a third party payor, if any, or to
submit invoices to the appropriate Cerezyme-TM- Customer.
3.6 Distribution and Pharmacy Services.
-----------------------------------
(a) Physician Authorization. following the inquiry provided for
in Section 3.5 of this Agreement, Genzyme shall notify Nova Factor that a
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<PAGE>
patient is an Approved Patient. Prior to dispensing Cerezyme-TM- to or on
behalf of, an Approved Patient, Nova Factor shall obtain:
(i) a prescription which is either (A) in proper form signed
by the Approved Patient's physician, which physician shall be duly licensed
to practice medicine and dispense drugs in accordance with applicable state
and federal law, or (B) communicated verbally by said physician if such
communication is valid under applicable state law; or
(ii) an authorized purchase order from an entity, such as a
clinic or hospital, authorized under applicable state law to dispense drugs
to the Approved Patient(s).
In the event that shipment of Cerezyme-TM- is to be made to a Cerezyme-TM-
Customer who wishes to designate Nova Factor as its billing agent, a signed
Sales and Billing Agency Agreement (the "Sales Agreement"), substantially in
the form of Exhibit C attached hereto, shall be obtained from such
Cerezyme-TM- Customer.
(b) Compliance with Pharmacy Laws. Nova Factor shall dispense or
ship Cerezyme-TM- pursuant to a prescription or authorized purchase order
solely in compliance with applicable federal and state laws, regulations, and
orders including pharmacy laws. Nova Factor may ship sufficient amounts of
Cerezyme-TM- to a physician, hospital or clinic to permit dispensing of
single or multiple doses, but only if such does(s) are to be administered to
an Approved Patient(s). Nova Factor shall not provide Cerezyme-TM- to any
Cerezyme-TM- Customer without the prior authorization of Genzyme.
(c) Pharmacy Records. Nova Factor shall maintain such pharmacy
records as are required by applicable federal and state laws, regulations and
orders. Such records shall remain the property of Nova Factor. However, Nova
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<PAGE>
Factor shall permit Genzyme access to, and the right to obtain copies of,
such records, except to the extent limited by law.
3.7 Shipment of Cerezyme-TM- to Cerezyme-TM- Customers.
---------------------------------------------------
(a) Confirmation of Information. Nova Factor shall, before
dispensing or shipping Cerezyme-TM-, (i) confirm with the Approved Patient's
third party payor, if any, the necessary billing forms and billing
procedures, including billing address, required to file any claim for the
Cerezyme-TM- on Nova Factor's or such Approved Patient's behalf, or, in the
event Nova Factor is acting as billing agent for a Cerezyme-TM- Customer
pursuant to an executed Sales Agreement, for such Cerezyme-TM- Customer and
(ii) make due inquiry whether it may lawfully dispense Cerezyme-TM- in the
state to which shipment has been directed.
(b) Inventory Availability. Nova Factor shall be required to ship
Cerezyme-TM- only from Cerezyme-TM- inventory which Genzyme has previously
delivered to Nova Factor.
(c) Packaging. Nova Factor shall pack Cerezyme-TM- in cold packs,
cartons or other packaging with such insulation or other packing materials as
required by the package insert or FDA-approved labeling, or as otherwise
agreed by the parties. Nova Factor shall, at its cost, cause Cerezyme-TM- to
be delivered to Cerezyme-TM- Customers by common carrier, overnight courier
or other similar method of shipment selected by Nova Factor.
(d) Return of Cerezyme-TM-. In the event that a shipment of
Cerezyme-TM- is refused or rejected by the Cerezyme-TM- Customer, Nova Factor
will cause the shipment of Cerezyme-TM- to be returned to the Warehouse at
Nova Factor's expense. Upon return, Genzyme will direct Nova Factor, at
Genzyme's cost, either to (i) return the refused shipment to Genzyme or (ii)
destroy the refused shipment.
12
<PAGE>
3.8 Billing Services.
(a) After compliance by Nova Factor with its obligations
under Section 3.7(a) hereof, upon delivery of Cerezyme-TM- to a Cerezyme-TM-
Customer, Nova Factor shall prepare and mail an invoice for such shipment
within * (*) business days after receipt by Nova Factor of the
documentation necessary for billing to be provided by Genzyme under Section
3.5 of this Agreement and thereafter to any third party payor. Each invoice,
as appropriate, shall be on a form agreed to by the parties or upon the
standardized form (such as HCFA - 1500 - Health Insurance Claim Form)
required by a third party payor or in such electronic billing format as may
be required. In the event Cerezyme-TM- is sold to an Approved Patient, Nova
Factor shall submit the invoice to the Approved Patient or, if authorized to
do so, to the applicable third party payor. If Nova Factor has sold
Cerezyme-TM- to a Cerezyme-TM- Customer, Nova Factor shall submit the invoice
to the Cerezyme-TM- Customer (except a Cerezyme-TM- Customer for which Nova
Factor acts as a billing agent). If Nova Factor has shipped Cerezyme-TM- to a
Cerezyme-TM- Customer for which Nova Factor acts as billing agent, Nova
Factor shall submit the invoice in the manner provided in the Sales Agreement.
(b) Nova Factor shall use reasonable efforts to comply with
all requirements for the submission of claims imposed by each third party
payor for an Approved Patient.
(c) Nova Factor shall comply with all applicable federal
and state laws, regulations and orders, including Medicare requirements, in
its capacity as billing agent for any Cerezyme-TM- Customer pursuant to the
Sales Agreement.
3.9 Collection. Nova Factor shall be responsible for the
collection of all monies due for the sale by Nova Factor of Cerezyme-TM- and
all such monies shall belong to Nova Factor.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
13
<PAGE>
3.10 Bad Debts and Delinquent Accounts. Nova Factor shall bear the
risk of loss on all uncollected accounts and bad debts resulting from sales
and shipments of Cerezyme-TM- by Nova Factor under this Article III.
3.11 Accounting and Financial Reporting. Nova Factor shall maintain
records and books of account, in the form of computer data or otherwise,
which will identify Nova Factor's inventory of Cerezyme-TM-, each sale and
shipment of Cerezyme-TM- by Nova Factor (showing recipient's name, amount of
drug dispensed, and charges for said drug), and all revenue collected from
the sale and distribution of Cerezyme-TM- by Nova Factor properly applied to
and against the invoices for said drug generated by Nova Factor. In addition
to these records, Nova Factor shall generate such distribution, sales,
customer, account and financial reports, including records necessary to trace
lot numbers to Cerezyme-TM- patients, to monitor shelf life and trace
shipments and such other data and information (collectively, "Accounting
Records") as the parties shall agree. Nova Factor agrees that on a monthly
basis, it will furnish Genzyme with an accounting of all Cerezyme-TM-
received, all Cerezyme-TM- shipped and all bills submitted and all revenues
collected in connection with Cerezyme-TM- sold and distributed, by Nova
Factor during the month.
3.12 Computer System Access
(a) Terms of Access. Nova Factor shall maintain an IBM AS400
computer system. Nova Factor shall establish a separate computer data base for
demographic, account and patient information regarding Cerezyme-TM- within
Nova Factor's IBM AS400 computer system, or any successor hardware. Genzyme
shall be given direct inquiry (read only) access to the computer data base
for Cerezyme-TM- maintained within Nova Factor's computer system; provided,
however, that Genzyme shall be responsible for obtaining at its cost all
compatible terminal hardware, modems, telephone access lines, and all other
hardware and
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<PAGE>
materials necessary to access Nova Factor's computer system. Nova Factor
shall also have full access to this data base. Nova Factor will make
available to Genzyme the necessary phone numbers, access codes and passwords
which shall provide Genzyme with direct inquiry access solely to the Nova
Factor computer data base concerning Cerezyme-TM-. Genzyme shall be
responsible for all long distance charges incurred by Genzyme in using dial
access to Nova Factor's computer system. Genzyme acknowledges that the entry
of data and information into the computer data base may be delayed, however,
Nova Factor will make reasonable efforts to ensure that the information is
current and will promptly notify Genzyme if the information in the data base
is not current.
(b) Confidentiality of Computer Data. The information
contained in the data base is considered by Nova Factor to be confidential.
Nova Factor shall provide Genzyme with a list of material in the database
considered confidential by Nova Factor in accordance with Section 4.5 hereof.
Genzyme shall deal with all such data designated as confidential by Nova
Factor, together with any computer access codes and passwords provided to
Genzyme by Nova Factor to permit Genzyme access to said database, in
accordance with Section 4.5 hereof.
3.13 Audit. Nova Factor shall allow Genzyme access to Nova Factor's
books and records related to its sale of Cerezyme-TM- under this Article III
for purposes of audit. Any such audit shall be at Genzyme's cost and shall be
conducted at Nova Factor's offices in Memphis, Tennessee during Nova Factor's
regular business hours, and upon Genzyme providing Nova Factor with
reasonable advance notice. Any amounts found from such audit to be due and
owing Genzyme but unpaid shall thereafter be paid in accordance with the
terms of this Agreement.
3.14 Personnel. Nova Factor shall designate certain Nova Factor
personnel to perform Nova Factor's obligations under this Article III,
including those with respect to inventory, storage, shipment, billing,
collections, accounting
15
<PAGE>
and recordkeeping. Nova Factor shall be solely responsible for its employees'
salaries, federal and state income tax withholding, Social Security tax
withholding, worker's compensation benefits and fringe benefits. When Nova
Factor determines that the volume of its distribution of Cerezyme-TM-
requires, Nova Factor shall dedicate certain of its personnel, which Nova
Factor shall select, exclusively to handle Nova Factor's obligations under
this Article III.
3.15 Compensation to Nova Factor.
(a) Service Fee. In consideration for the services provided
to Genzyme by Nova Factor under this Article III, Genzyme agrees to pay to
Nova Factor a service fee for each unit of Cerezyme-TM- purchased by Nova
Factor pursuant to this Article III. For Cerezyme-TM- purchased until and
including December 31, 1994, the amount of the service fee per unit shall be
$*. The amount of the service fee will be renegotiated for each calendar
year (or a portion thereof) thereafter in accordance with Section 3.17 hereof.
(b) Invoicing. Genzyme shall pay this service fee to Nova
Factor within * (*) days of the date that Genzyme invoices Nova Factor
for a shipment of Cerezyme-TM-. In the event that Genzyme fails to pay any
such service fee in full within * (*) days, Genzyme shall pay Nova
Factor late payment charges of * percent (*%) per annum on all unpaid
amounts due pursuant to this Section 3.15 calculated from the end of that
* (*) day period. The parties hereto agree that should any provision of
this Section 3.15 violate any law, rule or regulation pertaining to usury or
the contracting for or charging of interest, then the excess of interest
contracted for or charged or collected over the maximum lawful rate of
interest shall be applied as a prepayment of future obligations due by
Genzyme to Nova Factor under this Article III, and if any amount so prepaid
shall be unused upon termination of Nova Factor' election to be subject to
Article III, the
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
16
<PAGE>
excess of the prepaid fees over the fees actually due to Nova Factor shall be
immediately returned to Genzyme.
(c) Reimbursement for Expenses. Upon presentment of invoices
or other documentation of such expenses, Genzyme will reimburse Nova Factor
for any reasonable expenses which are the responsibility of Genzyme under
this Article III so long as such expenses are advanced by Nova Factor with
the prior approval of Genzyme. Genzyme will reimburse such expenses within
* (*) days of Genzyme's receipt of the documentation of any such
expenses. Notwithstanding this Section 3.15(c), Nova Factor shall be solely
responsible for expenses incurred by it in carrying out its obligations under
this Article III, including but not being limited to, shipping, obtaining
supplies, postage and printing necessary for the collection of accounts
receivable generated by Nova Factor's distribution of Cerezyme-TM-.
3.16 Taxes. Nova Factor shall prepare and file all sales and use
tax returns which are required by, and pay all taxes due to any state or
local governmental entity from, or as a result of, the sale or distribution of
Cerezyme-TM- by Nova Factor. To the extent directed by any Cerezyme-TM-
Customer for whom Nova Factor acts as billing agent, Nova Factor will include
the amount of such taxes on invoices submitted by Nova Factor on behalf of
said Cerezyme-TM- Customer if sales or use taxes are require to be collected
from said Cerezyme-TM- Customer. Nova Factor shall be liable for any personal
property taxes on inventory of Cerezyme-TM- held in Tennessee by Nova Factor,
any gross receipts or business taxes resulting from the sale or distribution
of Cerezyme-TM- by Nova Factor, and to the extent required, shall include
such inventories of Cerezyme-TM- held by Nova Factor, and sales of
Cerezyme-TM- distributed by Nova Factor, in Nova Factor's respective federal
and state income and franchise tax returns. To the extent that Nova Factor is
required to file tax returns with any governmental entity in regard to the
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
17
<PAGE>
distribution and sale of Cerezyme-TM- by Nova Factor pursuant to this Article
III and to remit taxes in connection therewith, other than income taxes for
service fee income pursuant to Section 3.15 hereof, Genzyme shall promptly
reimburse Nova Factor for such taxes upon presentation by Nova Factor of
evidence reasonably satisfactory to Genzyme that Nova Factor has paid such
taxes.
3.17 Renegotiation of Terms.
(a) Renegotiation of Terms of Article III. In the event that
Nova Factor elects to be subject to Article III during the first year of this
Agreement, and if, upon the first anniversary of the effective date of this
Agreement, either of the following shall have occurred: *, Nova Factor may,
within * (*) days after such anniversary, request in writing that Genzyme
renegotiate those terms of this Agreement specified in such request. Genzyme
shall have * (*) days from the receipt of such request to agree to renegotiate
the terms specified in the request, together with such terms as Genzyme shall
specify in its response, or to give notice of termination of this Agreement
under Section 4.2(b)(ii) hereof.
(b) Renegotiation of Service Fee. The service fee to be paid
by Genzyme to Nova Factor for services provided under this Agreement will be
renegotiated by the parties between January 1 and February 28 of each
calendar year, with changes in such fee, if any, to become effective with
respect to Cerezyme-TM- purchased after January 1 of the applicable calendar
year, subject at all times to the parties' rights of termination under
Section 4.2(b)(ii). The service fee to be paid with respect to Cerezyme-TM-
purchased during the time period the
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
18
<PAGE>
parties are negotiating such fee shall be paid at the rate in effect during
the preceding year, and once the parties agree upon a change in such fee, if
any, Genzyme shall promptly pay to Nova Factor the amount by which the new
service fee exceeds the previous service fee, or Nova Factor promptly shall
reimburse Genzyme the amount by which the new service is less than the
previous service fee, whichever is applicable. The parties agree to use
reasonable efforts to negotiate the service fee by February 28 of each
calendar year.
3.18 Effect of Termination. Upon termination of Nova Factor's
election to be subject to this Article III for any reason, Nova Factor shall
promptly provide Genzyme with a final accounting of units of Cerezyme-TM-
held in inventory at termination, units shipped, billings, collections and
such other information contained in the Accounting Records as is requested by
Genzyme. A copy of all computer and other records concerning Cerezyme-TM-,
including the Accounting Records, maintained by Nova Factor under this
Article III, shall be provided to Genzyme; however, Nova Factor shall
maintain the original of said records.
ARTICLE IV
Miscellaneous
4.1 Indemnity and Insurance.
(a) Indemnification. Nova Factor and Genzyme hereby agree
that:
(i) Nova Factor shall assume responsibility for and
shall indemnify and hold Genzyme harmless and defend Genzyme from
all losses (including claims for injuries to employees of Nova
Factor or Genzyme), expenses, attorneys' fees, damages, claims and
judgments resulting solely from (A) Nova Factor's breach of the
terms of this Agreement; (B) the negligent acts or omissions or
wrongful acts
19
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of Nova Factor, its agents or employees; or (C) any
misrepresentation or breach of any representation or warranty made
herein by Nova Factor; provided, however, that Nova Factor shall
have no liability to Genzyme for loss of profits to Genzyme in the
event Nova Factor is unable, through no fault of Nova Factor's, to
ship Cerezyme-TM- to a Cerezyme-TM- Customer; and
(ii) Genzyme shall assume responsibility for and shall
indemnify and hold Nova Factor harmless and defend Nova Factor from
all losses (including claims for injuries to employees of Nova
Factor or Genzyme), expenses, attorneys' fees, damages, claims and
judgments resulting solely from (A) Genzyme's breach of the terms of
this Agreement; (B) the negligent acts or omissions or wrongful acts
of Genzyme, its agents or employees; (C) any misrepresentation or
breach of representation or warranty made herein by Genzyme; or (D)
any defect in the design, manufacture or condition of Cerezyme-TM-
supplied to Nova Factor by Genzyme.
(b) Insurance. During the term of this Agreement, Nova Factor and
Genzyme will each maintain a general public liability, products liability and
products property damage insurance, each policy with limits of not less than
$1,000,000.00 per incident, $3,000,000.00 in the aggregate. All policies
insuring against liability for bodily injury or death or damage to property
shall include coverage for claims resulting from the sale and distribution of
Cerezyme-TM- and in the case of Genzyme, claims resulting from the
manufacture of Cerezyme-TM-. Genzyme and Nova Factor will provide the other
party with certificates evidencing the insurance required hereunder, and all
such policies shall provide that notice of cancellation or termination or
reduction in the limits of or other material change to the coverage thereof
shall be provided in advance to the
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other party. In the event of such cancellation, termination, reduction or
change of the coverage described herein, the party maintaining such insurance
shall immediately obtain substitute or replacement coverage. Failure to
obtain substitute or replacement coverage shall be grounds for the
termination of this Agreement.
4.2 Term, Renewal and Termination.
(a) Initial Term. Unless otherwise terminated pursuant to
subsection (c) below, this Agreement shall be for an initial term expiring on
December 31, 1995 (the "Initial Term").
(b) Renewal. Unless otherwise terminated pursuant to
subsection (c) below, this Agreement will automatically renew at the
expiration of the Initial Term for an additional period of one year and shall
thereafter automatically renew from year to year for additional one-year
periods, unless either party shall give written notice of cancellation to the
other party at least 90 days prior to the end of the Initial Term or the
expiration of any extension.
(c) Termination. This Agreement shall automatically
terminate (i) upon the mutual agreement of the parties, (ii) at any time upon
sixty (60) days prior notice by either party hereto, (iii) upon the insolvency
or bankruptcy of either party, the making by either party of an assignment
for the benefit of creditors, the consent by either party to the appointment
of a trustee or receiver, or the appointment without its consent, of a
trustee or receiver for it or for a substantial part of its property, or (iv)
upon the institution by or against either party of bankruptcy,
reorganization, arrangement or insolvency proceedings. In addition, if either
party hereto shall breach the terms of this Agreement, the nonbreaching party
may give written notice of the breach to the breaching party, and if said
breach is not cured within 30 days following the giving of said notice, this
Agreement shall at the option of the nonbreaching party be terminated
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immediately upon the conclusion of such 30 day period. Late payment by Nova
Factor under the terms of Section 3.2(c) hereof shall not constitute a breach
of the terms of this Agreement sufficient to give rise to termination of this
Agreement.
(d) Return of Cerezyme-TM-. In the event of termination of
this Agreement, Nova Factor shall cause the inventory of Cerezyme-TM- then in
Nova Factor's possession to be returned to Genzyme, at Genzyme's cost. Each
unit of Cerezyme-TM- returned to Genzyme shall be credited in full payment
for the amount due from Nova Factor for that unit, except any units which are
destroyed or damaged for which Nova Factor shall bear the risk of loss in
accordance with Section 3.3(d) hereof. The services fees earned by Nova
Factor for any Cerezyme-TM- returned to Genzyme pursuant to this Section
4.2(c) shall be offset against such credit. To the extent the amount credited
to Nova Factor pursuant to this paragraph exceeds the amount owed by Nova
Factor to Genzyme at such time, such excess shall be promptly paid by Genzyme
to Nova Factor.
(e) Survival of Obligations. Termination of this Agreement
shall not relieve either party from any liability or obligation it had
incurred prior to the date of such termination including, but not limited to,
obligations to pay any outstanding unpaid amounts due pursuant to this
Agreement and to accept returns of Cerezyme-TM- in accordance with the
provisions of this Agreement. It is the express intention and agreement of
the parties hereto that all the covenants, agreements, warranties and
indemnities contained in Sections 4.1, 4.5 and 4.7 shall survive the
termination of this Agreement.
4.3 Force Majeure. Neither party shall be liable to the other for
failure or delay in the performance of any of its obligations under this
Agreement for the time, and to the extent, such failure or delay is caused by
riots, civil commotion, wars, hostilities between nations, embargoes, acts of
God, earthquakes, storms, fires, strikes, sabotage, explosions, shortages of
raw materials or power, or
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any other matter which is beyond the reasonable efforts of the party to
control. This provision shall not excuse, or apply to, obligations of a party
to make monetary payments hereunder.
4.4 Independent Contractor. Subject to the requirements herein,
Nova Factor shall determine the time spent and the methods employed in
carrying out its obligations hereunder, and Nova Factor shall be solely
responsible for the operation and management of its business. In entering
into and carrying out its obligations under this Agreement, Nova Factor is an
independent contractor. Nothing in this Agreement, or in the relationship
between the parties or in the activities of Nova Factor, its agents or
employees, an employee of, or joint venturer or partner with, Genzyme, or to
empower any of them to bind or obligate Genzyme in any way. Nova Factor
further agrees that it will make no representations with respect to its
relationship to Genzyme, except that it has contracted with Genzyme to act as
a distributor of Cerezyme-TM- and to perform the obligations set out herein.
It is further agreed and understood that Nova Factor is only contracting to
provide certain specified services to, and purchase Cerezyme-TM- from,
Genzyme. Genzyme shall be responsible for all costs incurred in operating
Genzyme's business, and Genzyme shall be solely responsible for the
management and operation of its business.
4.5 Confidentiality and Restrictive Covenant.
(a) Protection of Documents. Each party has developed or may
during the term hereof develop, certain formulae, products, methods of doing
business, and other proprietary information which that party deems to be
confidential and a trade secret. In the course of fulfilling each party's
respective obligations hereunder, some of these formulae, products, methods
and other proprietary information of one party will become known to the other
party hereto.
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Each party agrees that it will not duplicate, make use of, or disclose, in
any manner whatsoever, any information which is deemed to be confidential by
the other party (as provided in Section 4.5(b) hereof), either during or
after the term of this Agreement, without the express prior written consent
of the other party hereto.
(b) Designation of Materials. In the event that any
information deemed to be confidential by a party is provided to the other
party or its employees or agents in writing, the party providing same shall
mark the writing as confidential, prior to providing such information to the
other party. In the event that such information is provided in non-written
form such as orally, by audio tape, by direct telephonic access to computer
data bases, videotape or computer software or disc, the party claiming such
information to be confidential shall, at the time such information is
furnished to the other party or within fifteen (15) days thereafter, furnish
to the other party a written list containing a brief description of such item
and designating such item as confidential. Upon termination of this
Agreement, all such information, together with any copies thereof, of any
information hereunder deemed, or designated by a party as, confidential shall
be returned to the party who supplied the information. Notwithstanding the
preceding provision, the following types of information provided by a party
shall always be deemed confidential, whether or not so designated: patient
medical records; patient and physician names and addresses; hospitals;
clinics; number of patients on therapy; prescription files; costs of goods
and supplies; the formula and composition of Cerezyme-TM-; and financial
records of the party.
(c) Exceptions. The restrictions in this Section 4.5 shall
not apply (i) to any information which is not deemed confidential hereunder,
or which has not been designated as confidential in the manner specified
herein, (ii) to any information which was already known to the receiving
party prior to its disclosure by the other party, as can be proven by
competent evidence, (iii) to any information
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which is or becomes public knowledge through no fault or failure of a party
bound by this Agreement, (iv) to any information which is independently
developed by an employee of the receiving party who had no access to or
knowledge of the information disclosed hereunder or (v) to any information
which was rightfully obtained from a third-party who was not subject to any
restriction of confidentiality.
(d) Covenant. Nova Factor agrees that during the term of
this Agreement, and for a period of five years following the termination
hereof, Nova Factor will not undertake to distribute or supply any
prescription drug for the treatment of Gaucher's disease other than
Cerezyme-TM-, without the prior written consent of Genzyme. Furthermore,
during the same period, and whether or not otherwise prohibited by the
restrictions set out hereinabove, Nova Factor will not disclose to any other
person or entity, except as may be required by a lending institution that has
provided a loan to Nova Factor relating to its performance of its obligations
under this Agreement, or use for purposes of competing directly or indirectly
with the sale of Cerezyme-TM- by Genzyme: (i) the names of patients or
hospitals, clinics or physicians or number thereof provided Cerezyme-TM- by
Nova Factor pursuant to this Agreement, (ii) the volume of Cerezyme-TM-
supplied to Cerezyme-TM- Customers by Nova Factor, (iii) the addresses of
patients, (iv) the referral sources of Cerezyme-TM- Customers, (v) Genzyme's
price for Cerezyme-TM-, or (vi) the service fees, if any, paid to Nova Factor
pursuant to this Agreement. This provision shall not prohibit disclosure of
such information in the event that Nova Factor is requested or required by
law or governmental regulations or by litigation discovery requests, subpoena,
civil investigative demands or similar processes to disclose such
information, nor shall it prohibit disclosure and use by Nova Factor of such
information, if and as necessary, in any litigation between Nova Factor and
Genzyme.
4.6 Representations, Warranties and Covenants.
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(a) No Interference. Genzyme represents and warrants to Nova Factor
that Genzyme has the sole and exclusive right to manufacture and distribute
Cerezyme-TM- and that the distribution of Cerezyme-TM- and the other
activities to be performed by Nova Factor hereunder do not, and will not,
infringe upon or violate the rights of, any other party. Genzyme will
protect, indemnify and hold Nova Factor harmless from any claims of
infringement of patent, trademark, mark name or proprietary rights by third
parties relating to Nova Factor's distribution of Cerezyme-TM-.
(b) Government Approval. Genzyme further represents and warrants
to Nova Factor that all FDA and state approvals and permits required for
Genzyme's manufacture, sale and distribution of Cerezyme-TM- have been
obtained and that Genzyme has the corporate authority to authorize Nova
Factor to sell and distribute Cerezyme-TM-. Genzyme shall comply with all
applicable FDA and state laws and regulations in the manufacture, design,
testing, inspection, labeling, warning and instructions for use of
Cerezyme-TM- material to its performance under this Agreement.
(c) Compliance with Laws, Licensure. Nova Factor represents and
warrants to Genzyme that Nova Factor has materially complied with, shall
continue to comply with, and nothing in the transactions contemplated by this
Agreement would cause it not to be in compliance with, all federal and state
laws, regulations and orders applicable to it and its business as a pharmacy,
including all pharmacy laws. Nova Factor possesses all federal and state
governmental licenses and permits material to and necessary in its
performance of this Agreement. Such licenses and permits are, and shall
remain, in full force and effect, no violations are or have been recorded in
respect of any such licenses or permits and no proceeding is pending or, to
the knowledge of Nova Factor, threatened to revoke or limit any thereof. Nova
Factor shall promptly notify
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Genzyme in the event that a proceeding is threatened or commenced to revoke to
limit any such licenses or permits.
4.7 Trade Names and Trademarks
(a) Use of the Name Cerezyme-TM-. Genzyme grants to Nova Factor
the non-exclusive privilege to use, in connection with the stocking, sale and
distribution of Cerezyme-TM-, the various trade names, trademarks, service
marks and several other word and design marks which Genzyme associates with
Cerezyme-TM-. Nova Factor acknowledges that Genzyme is the exclusive owner of
the various trade names, trademarks, service marks and several other word and
design marks which Genzyme uses in connection with Cerezyme-TM- and the sales
thereof, and that all goodwill associated with such is the property of and
shall inure to the benefit of Genzyme. Nova Factor agrees that Genzyme has
the right to control the use or display thereof by Nova Factor. This
non-exclusive license is a limited license and may be terminated at any time
by Genzyme. Nova Factor agrees that it will initially display the trademark
"Cerezyme" as follows: Cerezyme-TM-. After the mark has been federally
registered and as soon as reasonably practicable after receipt of notice from
Genzyme, Nova Factor agrees to commence displaying the "Cerezyme" trademark
as follows: Cerezyme-Registered Trademark-. Nova Factor shall discontinue the
display or use of any such mark or name, or change the manner in which any
such name or mark is displayed or used, upon request by Genzyme. Nova Factor
further agrees that:
(i) No such name or mark will be used in such a manner that
is may become a generic word, causing a loss of its protected status
as such;
(ii) Nova Factor shall not use such names or marks, or any
variant thereof, as the whole or any part of its title or the name
of
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its business, except upon Genzyme's express written consent to
such use;
(iii) Nova Factor shall not use such names or marks in any
manner in connection with an effort to sell goods of others,
whether or not such goods are competitive with Cerezyme-TM-, and
shall not use such names or marks as part of its business name;
(iv) Nova Factor shall not use, or allow the use of, any name
or mark which is likely to cause confusion, mistake or deception
with respect to any of the trade names or trademarks of Genzyme;
and
(v) Nova Factor shall not assert, acquire or attempt to
acquire any rights or interest in or to, or consent or assist
others in contesting, said names or marks of Genzyme.
Upon Termination of this Agreement, Nova Factor shall discontinue any and
all use of Genzyme's trademarks, trade names and any other
identification with Genzyme and shall avoid any statement or
implication that it is a distributor of Cerezyme-TM-.
(b) Use of the Name Nova Factor-Registered Trademark- The parties
recognize that Nova Factor-Registered Trademark- is registered
trademark, and Nova Factor hereby grants to Genzyme the
non-exclusive privilege to use, in connection with the stocking and
sale of Cerezyme-TM- the various trade names, trademarks, service
marks and the several other word and design marks which are
associated with Nova Factor-Registered Trademark-. Genzyme
acknowledges that Nova Factor is the exclusive owner of the various
trade names, trademarks, service marks and the several other word
and design marks which are used in connection with the name Nova
Factor-Registered Trademark and that all good will associated with
such is the property of and shall inure to the benefit of Nova
Factor. Genzyme agrees that Nova Factor has the right to control the
use or display thereof by Genzyme. This non-exclusive license is a
limited license and may be terminated at any time by Nova Factor.
Genzyme shall discontinue the display or use of any such
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name or mark, or change the manner in which any such name or mark is
displayed or used, upon request by Nova Factor. Genzyme further agrees that:
(i) No such name or mark shall be used in such a manner that
it may become a generic word, causing the loss of its protected
status as such;
(ii) Genzyme shall not use such names or marks, or any variant
thereof, as the whole or any part of its title or the name of its
business, except upon Nova Factor's express written consent to such
use;
(iii) Genzyme shall not use such names or marks in any manner
in connection with an effort to sell goods of others and shall not
use such names or marks as part of its business name;
(iv) Genzyme shall not use, or allow the use of, any name or
mark which is likely to cause confusion, mistake or deception with
respect to any of the trade names or trademarks of Nova Factor; and
(v) Genzyme shall not assert, acquire or attempt to acquire
any rights or interest in or to, or context or assist others in
contesting, the names or marks of Nova Factor.
Upon termination of this Agreement, Genzyme shall discontinue any and all use
of Nova Factor's trademarks, trade names and any other identification with
Nova Factor, and shall avoid any statement or implication that it is
affiliated with Nova Factor.
4.8 Service to Other Businesses. Genzyme acknowledges that Nova
Factor offers it services to other businesses, and Genzyme agrees that no
provision contained herein shall restrict or prohibit Nova Factor from
providing services to others in addition to Genzyme as long as the
performance of said services does not
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violate the restrictions st out in Section 4.5 hereof, or interfere with the
performance of Nova Factor's obligations hereunder.
4.9 Records. To the extent required by Section 1861(b)(1)(I) of
the Social Security Act, Nova Factor shall, upon proper request, allow the
United States Department of Health and Human Services, the Comptroller
General of the United States and their duly authorized representatives,
access to this Agreement and to all books, documents and records necessary to
verify the nature and extent of the costs of the services provided by Nova
Factor under this Agreement at any time during the term of this Agreement
and for an additional period of four (4) years following the last date
services are furnished under this Agreement.
4.10 Specific Performance. The parties acknowledge that violation
of Sections 4.5 and 4.7 hereof could cause irreparable damage to the party
against whom the violation is committed which would not adequately be
remedied by an action at law for damages. The parties agree that, in the
event of a breach or threatened breach of either of these sections, the party
alleging such breach shall be entitled to injunctive relief prohibiting such
breach or threatened breach in any court of the United States or of any
state or other political subdivision thereof.
4.11 Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude any party from asserting any other rights
or seeking any other remedies against the other party, or such other party's
successors or permitted assigns, pursuant to this Agreement, as provided
under other agreements and as provided by law. Nothing contained herein shall
preclude a party from seeking equitable relief, where appropriate.
4.12 Nonassignability and Subcontracting. This Agreement and the
rights, duties and responsibilities of the parties hereto shall not be
assigned without the prior expresss written consent of the other party,
except that no prior consent shall be required in the event of acquisition of
all or substantially all of the assets of
30
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a party by an acquirer. The parties to this Agreement acknowledge that for a
limited period of time, it may be necessary for Nova Factor to arrange for
the performance of certain of its obligations under this Agreement by a third
party pursuant to an agreement between Nova Factor and such third party. Nova
Factor shall not enter into such agreement without the prior written consent
of Genzyme, which shall not be unreasonably withheld, provided that Nova
Factor may enter into such an agreement with PharmaThera, Inc. without the
consent of Genzyme.
4.13 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Tennessee (excluding the choice of
law rules thereof), and the laws of the State of Tennessee shall govern the
rights, duties, liabilities and responsibilities created hereunder.
4.14 Headings. All headings used herein are for ease of reference
only and shall in no way be construed as interpreting, decreasing or
enlarging the provisions of this Agreement.
4.15 Effect. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors, administrators, trustees and
permitted assigns.
4.16 Modification. This Agreement and the Security Agreement
constitute the entire agreement and understanding between the parties hereto
in respect to the transactions contemplated herein and supersede all prior
written or oral agreements, arrangements and understanding relating to the
subject matter hereof. This Agreement may be amended, changed or modified
only with the written consent of both parties.
4.17 Notices. All notices, demands, request, consents, reports,
approvals or other communications which may be or are required to be given
served or sent pursuant to this Agreement shall be in writing and shall be
hand delivered, or mailed by first class, registered or certified mail,
return receipt
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requested, postage prepaid, or transmitted by telegram, facsimile or by
overnight courier addressed to the party at its business address and to the
attention of the individual set out following the signatures of the parties
on the last page of this Agreement. Each party may designate by notice in
writing a different person, or new address, to which any notice, demand,
request, consent, report, approval or other communication may thereafter be
given, served or sent. Each notice, demand, request, consent, report,
approval or other communication mailed in the manner described above or
delivered to a telegraph company or to an overnight courier, or by facsimile
transmission, shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee (with the
return receipt or delivery receipt or machine report, in the case of
facsimile transmission, being deemed conclusive evidence of such delivery) or
at such time as delivery is refused by the addressee upon presentation.
4.18 Waivers. No waiver of the breach of any provision of this
Agreement shall be deemed a waiver of any other breach of or default under
the same or any other provision hereof, nor will any waiver constitute a
continuing waiver. No term or provision of this Agreement shall be waived
except by a written instrument executed by a duly authorized officer of the
waiving party hereto and no course of dealing, act or omission to act shall
operate as a waiver of any right, power or privilege granted to a party
hereunder.
4.19 Accreditation Standards. The services provided hereunder are
designed to meet the applicable requirements stated in PH.1 through PH.11.3
of the Standards for the Accreditation of Home Care-Pharmaceutical Services
of the Joint Commission on Accreditation of Healthcare Organizations
("JCAHO"). In the performance of this Agreement the parties shall conform to
the policies, standards and requirements of JCAHO, to the extent applicable.
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4.20 Severability. If any one or more of the provisions of this
Agreement shall for any reason be held illegal or invalid, such illegality or
invalidity shall not affect any other provision of this Agreement and this
Agreement shall be enforced as if such illegal or invalid provision had not
been contained herein.
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IN WITNESS WHEREOF, the undersigned parties hereto have caused this
Agreement to be executed as of the day and year first above written.
GENZYME CORPORATION
By: /s/ illegible
-------------------------
Title: President Therapeutics
----------------------
Address: One Kendall Square
Cambridge, Massachusetts 02139
Attention: William Aliski
NOVA FACTOR, INC.
BY: Randy Grow
------------------------
Title: President
---------------------
Address: Suite 114
1785 Nonconnah Blvd.
Memphis, Tennessee 38132
Attention: Randy Grow
34
<PAGE>
EXHIBIT A
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made as of the 30th
day of September, 1994 by and between NOVA FACTOR, INC., a Tennessee
corporation ("Nova Factor") and GENZYME CORPORATION, a Delaware corporation
("Secured Party").
RECITALS:
WHEREAS, Nova Factor and Secured Party have entered into a certain
Distribution Agreement dated the date hereof (the "Distribution Agreement")
pursuant to which Secured Party has agreed to sell to Nova Factor and Nova
Factor has agreed to purchase from Secured Party quantities of the
prescription drug known as Cerezyme-TM- on the terms and conditions set forth
therein; and
WHEREAS, in order to secure (i) the amounts payable to Secured Party
under Section 3.2(c)of the Distribution Agreement, (ii) the fulfillment of
the other obligations of Nova Factor under the Distribution Agreement and
(iii) the fulfillment of the obligations of Nova Factor hereunder
(collectively, the "Secured Obligations"), Nova Factor is required to enter
into this Security Agreement and to grant to Secured Party a security
interest in the Collateral (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
1. SECURITY INTEREST.
1.1 COLLATERAL. As security for the Secured Obligations, Nova Factor
hereby grants to Secured Party a security interest in and lien on, and
assigns and pledges to Secured Party, all of the following (the "Collateral"):
(a) all Cerezyme-TM- sold by Secured Party to Nova Factor from time
to time pursuant to Article III of the Distribution Agreement, which
Cerezyme-TM- shall be held for sale by Nova Factor to third parties in
accordance with the terms of the Distribution Agreement (the "Inventory");
<PAGE>
(b) all accounts, chattel paper, instruments and general
intangibles (as such terms are defined in Article 9 of the Uniform Commercial
Code as in effect from time to time in the State of Tennessee), accounts
receivable and other obligations of any kind, whether or not evidenced by an
instrument or chattel paper (collectively, the "Accounts") of Nova Factor
representing or arising from the sale of Cerezyme-TM- by Nova Factor from the
Inventory; and
(c) any and all additions to any of the foregoing, and any and all
replacements, products and proceeds (including insurance proceeds) of any of
the foregoing.
1.2 RIGHT OF SECURED PARTY TO PAY TAXES OR COSTS RELATING TO
COLLATERAL. Secured Party shall have the right, but not the obligation, to
pay any taxes or levies on the Collateral or any costs to preserve the
Collateral, which payment shall constitute a part of the Secured Obligations;
provided, however, that no taxes payable by Secured Party pursuant to the
Distribution Agreement shall be deemed part of the Secured Obligations.
1.3 FINANCING STATEMENTS. At the request of Secured Party, Nova Factor
will promptly join with Secured Party in executing financial statements,
continuation statements, assignments, certificates and other documents with
respect to the Collateral pursuant to the Uniform Commercial Code and
otherwise as may be necessary to enable Secured Party to perfect or from time
to time continue the security interests granted hereby, including without
limitation such financing statements, continuation statements, certificates
and other documents as may be necessary to perfect a security interest in any
Cerezyme-TM- acquired by Nova Factor subsequent to the date hereof pursuant
to the terms of the Distribution Agreement or in any replacements or proceeds
thereof, in form satisfactory to Secured Party, and Secured Party will pay
the cost of filing the same in all public offices wherever Secured Party
deems filing to be necessary or desirable. Nova Factor grants Secured Party
the right, at Secured Party's option, to file any or all such financing
statements, continuation statements and other documents pursuant to the
Uniform Commercial Code and otherwise, without Nova Factor's signature, and
irrevocably appoints Secured Party as Nova Factor's attorney in fact to
execute any such statements and documents in Nova Factor's name and to
perform all other acts which Secured Party reasonably deems appropriate to
perfect and continue the security interests conferred by this Security
Agreement.
1.4 INJURY TO COLLATERAL: STORAGE OF INVENTORY. No injury to, or loss or
destruction of, the Collateral shall relieve Nova Factor of any of the
Secured Obligations. Nova Factor shall handle and store the Inventory in the
manner required by the Distribution Agreement except as otherwise provided
herein.
-2-
<PAGE>
1.5 COLLECTING AND SERVICING ACCOUNTS. Nova Factor is authorized to
collect and service the Accounts, provided that Secured Party may, without
cause or notice, upon the default of Nova Factor hereunder, terminate such
authority at any time.
1.6 NOTICE OF PAST DUE ACCOUNTS. Nova Factor will promptly notify
Secured Party if any Account owned by it in excess of Fifty Thousand Dollars
($50,000) is not paid within one hundred and twenty (120) days after the
date of shipment by Nova Factor of the Inventory to which such Account
relates, or if an Account debtor thereof disputes liability, exercises a right
of set-off or counterclaim, becomes insolvent, fails, or goes out of business.
2. REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS OF NOVA
FACTOR. Nova Factor represents, warrants, agrees and covenants that:
2.1 Unless Secured Party shall otherwise agree in writing, Nova Factor
will not grant or permit to exist, nor shall there exist, any security
interest in, or any lien, attachment, levy or encumbrance upon, any of the
Collateral, except for the security interest granted to Secured Party
hereunder and except for any encumbrance (as hereafter defined) in existence
at the time Nova Factor acquired or acquires the Collateral that has been
subordinated to the lien created by this Security Agreement and has been
approved, in writing by Secured Party, or, subject to the approval of Secured
Party, which shall not be unreasonably withheld, any lien credited subsequent
to the date hereof that is subordinate to the lien of Secured Party. Nova
Factor has not signed or filed or authorized the signing or filing of, a
financing statement (other than one naming Secured Party as the secured
party) under the Uniform Commercial Code of any jurisdiction with respect to
the Collateral or any portion thereof, except for financing statements naming
First Tennessee Bank National Association as secured party, if agreed to in
writing by Secured Party. For the purposes of this Section 2, "encumbrance"
shall mean any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, assigned deposit, arrangement, encroachment,
claim, option, reservation, right of way, easement, covenant, lease, purchase
right, condition, restriction, charge or defect of any kind, or any
preference, priority or security agreement or other preferential arrangement
of any kind or nature whatsoever (including, without limitation, any
conditional sale or title retention agreement, any capitalized lease
obligation having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
2.2 Nova Factor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Tennessee and has the full
and unrestricted power and authority to enter into and perform the terms of
this Security Agreement and the transactions contemplated hereby. The
execution,
-3-
<PAGE>
delivery and performance of this Security Agreement have been duly authorized
by all necessary corporate action of Nova Factor and this Security Agreement
has been duly executed on behalf of Nova Factor.
2.3 This Security Agreement constitutes a legal, valid and binding
obligation of Nova Factor, enforceable against Nova Factor in accordance with
its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the rights of creditors generally.
The execution, delivery, and performance of this Security Agreement and of
all other instruments or agreements executed in connection herewith will not
(i) violate, conflict with, or constitute a default under any law,
regulation, order or any other requirement of any governmental authority or
arbitrator, any terms of the Articles or Certificate of Incorporation or
bylaws of Nova Factor, or any contract, agreement or other arrangement
binding upon or affecting Nova Factor or any of its properties, (ii) result
in the creation, imposition or acceleration of any indebtedness of any nature
upon, or with respect to, Nova Factor or any of its properties, (iii) have a
material adverse effect on the conduct of Nova Factor's business as it is now
being conducted and as proposed to be conducted while this Security Agreement
is in effect, or (iv) otherwise impair the value of the security interests
granted to Secured Party hereunder.
2.4 Nova Factor will (i) execute and deliver any and all documents, or
cause the execution and delivery of any and all documents, reasonably
necessary for Secured Party to create, perfect, preserve, validate or
otherwise protect its security interest in the Collateral; (ii) maintain, or
cause to be maintained, at all times, Secured Party's security interest in
the Collateral; (iii) after the occurrence of an Event of Default hereunder,
immediately upon learning thereof, report to Secured Party any reclamation,
return or repossession of any of their Inventory, any claim or dispute
asserted by any debtor or other obligor of Nova Factor, and any other matters
affecting the value or enforceability or collectibility of any of the
Collateral; (iv) after the occurrence of an Event of Default hereunder,
defend the Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein adverse to Secured Party and
pay all costs and expenses (including attorneys' fees and expenses) incurred
in connection with such defense; and (v) at Nova Factor's sole cost and
expense (including attorneys' fees and expenses), settle any and all such
claims and disputes referenced in paragraph 2.4(iv) above and indemnify and
protect Secured Party against any liability, loss or expense arising
therefrom or out of any such reclamation, return (except as otherwise
provided in Section 3.7(d) of the Distribution Agreement) or repossession of
any of the Collateral; provided, however, if Secured Party shall so elect, it
shall have the right following the occurrence of an Event of Default
hereunder to settle, compromise, adjust, or litigate all claims or disputes
directly with the debtor or other obligor of Nova Factor upon such reasonable
terms and conditions as Secured Party deems advisable, and to charge all
costs and expenses thereof (including
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attorneys' fees and expenses) to Nova Factor's account and to add them to the
Secured Obligations.
2.5 Nova Factor's principal place of business and its chief executive
office are located at the address for Nova Factor set forth in Section 10
hereof, and Nova Factor shall not change such location unless Nova Factor
shall have provided to Secured Party at least (30) days' prior notice of any
changes in the location of Nova Factor's principal place of business and Nova
Factor's chief executive office. Notwithstanding anything in the Distribution
Agreement to the contrary, the Inventory shall be located at Nova Factor's
warehouse in Memphis, Tennessee and the records and books of account relating
to the Collateral shall be located at Nova Factor's chief executive office,
and Nova Factor shall not change such locations unless with the prior written
consent of Secured Party given no less than thirty (30) days in advance of
any relocation of the Inventory or the books and records.
2.6 Nova Factor will (i) promptly notify Secured Party in writing of any
compromise, settlement or adjustment with respect to an Account; (ii)
maintain accurate and complete records of the Accounts and make the same
available to Secured Party at reasonable times during normal business hours
after receipt of notice from Secured Party, except after the occurrence of an
Event of Default in which case no notice shall be required; (iii) if
requested by Secured Party and desirable for the protection of Secured
Party's interest in the Collateral, stamp, in form and manner satisfactory to
Secured Party, its accounts receivable ledger and other books and records
pertaining to the Accounts, with an appropriate reference to the security
interest of Secured Party in the Accounts; (iv) upon Secured Party's
reasonable request, furnish Secured Party original or other papers relating
to the sale of Cerazyme-TM- which created any Account; and (v) promptly
notify Secured Party in writing of the return or rejection of any
Cerezyme-TM- represented by the Accounts.
2.7 For any transaction governed by Article II of the Distribution
Agreement, from time to time as Secured Party may require, Nova Factor will
deliver to Secured Party schedules of all outstanding Accounts as Secured
Party may reasonably request. Such schedules shall be in form satisfactory to
Secured Party and shall show the age of such Accounts in intervals of not more
than 30 days, and contain such other information and be accompanied by such
reasonably supporting documents as Secured Party may from time to time
reasonably prescribe. Nova Factor shall also deliver to Secured Party copies
of Nova Factor's invoices, evidences of shipment or delivery and such other
schedules and information as Secured Party may reasonably request. For any
transaction governed by Article III of the Distribution Agreement, Nova
Factor shall prepare, maintain and deliver the records and books and other
materials in the manner provided in Section 3.11 of the Distribution
Agreement. The items to be provided
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<PAGE>
under this Section are to be prepared and delivered to Secured Party from
time to time solely for its convenience in maintaining records of the
Collateral and Nova Factor's failure to give any of such items to Secured
Party shall not affect, terminate, modify or otherwise limit Secured Party's
security interest granted herein.
2.8 Nova Factor will (i) sell or dispose of the Inventory only in
accordance with the terms of the Distribution Agreement or otherwise in the
ordinary course of business; and (ii) immediately notify Secured Party at
least thirty (30) days prior to any change in location of any of the
Inventory other than in the event of sales to third parties in accordance
with the Distribution Agreement or in the ordinary course of business and,
prior to any such change, execute and deliver to Secured Party such financing
statements satisfactory to Secured Party as Secured Party may request.
2.9 [Reserved]
2.10 Except to the extent Section 3.3(d) of the Distribution Agreement
applies, Nova Factor shall insure all of the Inventory for its replacement
(i.e., market) value against fire, theft, loss or destruction, and such other
risks as are customarily insured against by prudent persons in a similar line
of business, with an insurance carrier qualified to do business in the State
of Tennessee (or such other place as Secured Party shall authorize). Nova
Factor shall provide Secured Party with certificates of such insurance upon
request.
3. EVENTS OF DEFAULT. The occurrence of one or more of the following
events shall constitute an Event of Default hereunder (each, an "Event of
Default"):
(i) The failure of Nova Factor to observe or perform any term,
condition, covenant or agreement contained in this Security Agreement or
in the Distribution Agreement and the continuance of such failure for
thirty (30) days after the receipt of written notice thereof in the case
of such failure. Late payment by Nova Factor to Secured Party under the
terms of Section 3.2(c) of the Distribution Agreement shall not
constitute an Event of Default but shall cause the late payment charges
to come into effect;
(ii) The breach of any representation, warranty, covenant or
agreement by Nova Factor made in Section 2 hereof and continuance of
such breach for thirty (30) days after the receipt of written notice
thereof by Nova Factor;
(iii) [Reserved]
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(iv) (a) The entry of a decree or order for relief of Nova Factor by a
court of competent jurisdiction in any involuntary case
involving Nova Factor under any bankruptcy, insolvency, or
other similar law now or hereafter in effect, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar agent for Nova Factor
or for any substantial part of Nova Factor's assets or
property, or the order of the winding up or liquidation of
Nova Factor's affairs, or the taking of any action by any
creditor (other than Secured Party) of Nova Factor preparatory
to or for the purpose of commencing any such involuntary case,
appointment, winding-up or liquidation and such decree or
order or other such action shall be entered and continue
unstayed and in effect for a period of thirty (30) days; or
(b) The commencement by Nova Factor of a voluntary case under any
bankruptcy, insolvency or other similar law now or hereafter
in effect, or the consent by Nova Factor to the entry of an
order for relief in an involuntary case under any such law or
to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or
other similar agent for Nova Factor or for any substantial
part of Nova Factor's assets or property, or the making by
Nova Factor of any general assignment for the benefit of
creditors, or the taking by Nova Factor of any action
preparatory to or otherwise in furtherance of any of the
foregoing, or the failure of Nova Factor generally to pay its
debts as such debts come due; or
(v) The occurrence of an Event of Default under that certain Loan
Agreement dated December 3, 1998 between First Tennessee Bank National
Association and PharmaThera, Inc., that certain Amended and Restated
Promissory Note dated as of July 1, 1994 from PharmaThera, Inc. and Nova
Factor to First Tennessee Bank National Association, that certain Amended and
Restated Security Agreement dated as of July 1, 1994 between PharmaThera,
Inc., Nova Factor and First Tennessee Bank National Association or the
default by Nova Factor under any other note, security agreement or other
document or instrument that creates a lien on the Collateral or evidence the
obligation of Nova Factor to repay borrowed money.
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<PAGE>
4. REMEDIES. The rights and remedies, privileges, obligations, and
duties of Secured Party and Nova Factor with respect to this Security
Agreement and the security interest of Secured Party shall be as set forth in
the Uniform Commercial Code of the State of Tennessee (the "Code"), and in
addition thereto, as set forth herein. Upon the occurrence of any Event of
Default, Secured Party shall have the right (a) to declare all of the Secured
Obligations to be immediately due and payable, whereupon all such Secured
Obligations shall become immediately due and payable without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by Nova Factor, anything contained herein to the contrary
notwithstanding; and (b) to exercise any one or more of the rights and
remedies exercisable by a secured party under the Code (subject to any rights
of Nova Factor to redeem the Collateral provided therein) or under any other
applicable law. Upon the occurrence of any Event of Default, and without
limiting the generality of the foregoing, Secured Party shall have the right
to sell the Collateral at public or private sale. All reasonable attorneys'
fees and disbursements and all other costs, charges, premiums and other
expenses incurred in connection with any such sale shall be charged against
and deducted from the proceeds thereof, with the balance, if any, applied in
reduction of the Secured Obligations of Nova Factor to Secured Party, and in
the event there is a deficiency, said deficiency shall be payable forthwith
by Nova Factor to Secured Party (except as otherwise provided in Section 3.2
of the Distribution Agreement). Notice of public or private sale, if given,
shall be sufficiently given for all purposes if published once in any
newspaper of general circulation distributed in the City of Memphis,
Tennessee, not less than ten days prior to sale. It is agreed that ten days'
written notice of any such sale to Nova Factor or any other person shall be
sufficient for all purposes and is commercially reasonable. Secured Party may
itself purchase the whole, or any part of the Collateral or any interest
therein, free from any right of redemption on the part of Nova Factor, which
right of redemption on the part of Nova Factor is hereby waived and released,
but only to the extent such waiver and release is permitted by applicable law.
Secured Party shall not be liable for failure to collect or demand
payment of, or to protest, or give notice of nonpayment of, the Collateral or
any part thereof, or for any delay in so doing, nor shall Secured Party be
under any obligation to foreclose on or sell any Collateral or to take any
other action whatsoever in regard to the Collateral or any part thereof,
except that Secured Party hereby agrees to credit against the outstanding
aggregate invoice price of all Inventory an amount equal to the outstanding
aggregate invoice price of all properly stored Inventory which is returned by
Nova Factor to Secured Party in original, sealed packaging and having not
less than thirty (30) days remaining shelf life.
5. TRANSFER OF COLLATERAL. Nova Factor shall not sell, lease, transfer,
assign, mortgage, pledge or otherwise dispose of all or any portion of the
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<PAGE>
Collateral except in accordance with the Distribution Agreement or when
authorized by the Secured Party in writing.
6. RELEASE OF COLLATERAL. Promptly following payment in full or
satisfaction of the Secured Obligations, the security interest created
hereby shall terminate, and Secured Party shall execute and deliver such
documents as are necessary to release Secured Party's security interest in
the Collateral, whether such security interest was created hereby or
otherwise; it being the intention of the parties hereto that, upon payment in
full or satisfaction of the Secured Obligations, Nova Factor shall hold the
Collateral free and clear of all liens, claims, charges, security interests,
mortgages or encumbrances of Secured Party or any assignee or subrogee of
Secured Party.
7. BENEFIT; GOVERNING LAW. This Security Agreement shall benefit and
bind the successors, and permitted assigns of the parties hereto, and shall
be governed by and construed in accordance with the laws of the State of
Tennessee (but not including the choice-of-law rules thereof).
8. WAIVER. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Security Agreement or
under any other instruments given in connection with or pursuant to this
Security Agreement shall impair any such right, power or privilege or be
construed as a waiver or default or any acquiescence therein. No waiver
shall be valid against any party hereto unless make in writing and signed by
the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
9. ASSIGNMENT. Nova Factor shall not assign this Security Agreement, in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of Secured Party.
10. NOTICES. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Security Agreement shall be in writing and shall
be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery, or telegram,
addressed as follows:
If to Nova Factor:
Nova Factor, Inc.
Suite 115
1785 Nonconnah Boulevard
Memphis, Tennessee 38132
Attention: Randy Grow
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<PAGE>
with a copy (which shall not constitute notice) to:
Armstrong Allen Prewitt Gentry
Johnston & Holmes
1900 One Commerce Square
Memphis, Tennessee 88108-2568
Attention: Thomas W. Bell, Jr., Esq.
If to Secured Party:
Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139-1562
Attention: William Aliski
with a copy (which shall not constitute notice) to:
Hogan & Hartson LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Isabel P. Dunst, Esq.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent and received for all purposes at such time
as it is delivered to the addressee (with the return receipt, the delivery
receipt or the affidavit of messenger being deemed conclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.
11. ENTIRE AGREEMENT. This Security Agreement and the other
instruments and documents referred to herein or delivered pursuant hereto,
represent the entire understanding of the parties hereto, supersede all other
and prior memoranda and agreements between the parties and their affiliates
and may not be modified or amended, except by a written instrument executed
by each of the parties hereto designating specifically the terms and
provisions so modified and amended.
12. SEVERABILITY. If any part or any provision of this Security
Agreement shall be invalid or unenforceable under applicable law, said part
or provision shall be ineffective to the extent of such invalidity or
unenforceable only, without in any way affecting the remaining parts of such
provisions or the remaining provisions of this Security Agreement, which
shall be construed as if such invalid parts or provisions had not been
inserted.
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<PAGE>
13. COUNTERPARTS. This Security Agreement may be executed in separate
counterparts, none of which need contain the signatures of all parties, each
of which is deemed to be an original, and all of which taken together
constitute one and the same instrument. It shall not be necessary in making
proof of this Security Agreement to produce or account for more than the
number of counterparts containing the respective signatures of, or on behalf
of, all the parties hereto.
IN WITNESS WHEREOF, the undersigned have caused this Security Agreement
to be executed as of the date first above written.
NOVA FACTOR, INC.
By: /s/ Randy Grow
------------------------------------
Its: President
-----------------------------------
GENZYME CORPORATION
By: /s/ illegible
------------------------------------
Its: President Therapeutics
------------------------------------
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<PAGE>
Exhibit B
Section 3.2(b)
Basis for Calculating Inventory
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
<PAGE>
Exhibit 10.33
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
DISTRIBUTION AND SERVICES AGREEMENT
This Distribution and Services Agreement is entered into as of this
11st day of November, 1995 by and between Biogen, Inc., with principal offices
located at 14 Cambridge Center, Cambridge, MA 02142 ("Biogen"), and Nova
Factor, Inc., with principal offices located at 1785 Nonconnah Blvd., Suite
114, Memphis, TN 38132 ("Nova Factor").
WHEREAS, Biogen has filed a Product License Application with the
United States Food and Drug Administration for approval to market and sell
Biogen's AVONEX-TM- beta interferon-1a in the United States in the
treatment of multiple sclerosis;
WHEREAS, Biogen is in the process of establishing a distribution
network for the sale of AVONEX-TM-;
WHEREAS, as part of its distribution network, Biogen intends to
appoint preferred distributors to provide quality services to users of
AVONEX-TM- and to provide data reporting and other services to Biogen;
WHEREAS, Nova Factor has the facilities and expertise to distribute
AVONEX-TM- to customers at their homes, to provide quality reimbursement
assistance and other customer services to its customers and to provide data
reporting and other services to Biogen;
WHEREAS, Biogen is willing to appoint Nova Factor as a preferred
distributor of AVONEX-TM- on the terms and conditions set forth in this
Agreement, and Nova Factor is willing to accept such appointment.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 "Adverse Event" shall have the meaning set forth in 21 CFR 600.80.
1.2 "Affiliates" shall mean, with respect to a given party, any
corporation, firm, partnership or other entity which directly or
indirectly controls or is controlled by or is under common control
with such party. For purposes of this Section 1.2, "control" shall
mean direct or indirect ownership of greater than fifty percent
(50%) of the equity having the power to vote on or direct the
affairs of the entity.
<PAGE>
1.3 "Average Wholesalers' Price" ("AWP") for purposes of this Agreement
shall mean the suggested wholesale price submitted by Biogen in
responding to inquiries from commercial publishers of pricing
information, as adjusted by Biogen from time to time in its sole
discretion. In the event Biogen decides not to submit a suggested
wholesale price to commercial publishers of pricing information, the
parties shall meet to discuss a revised definition of AWP for
purposes of this Agreement.
1.4 "Commercial Launch" shall mean the date on which Biogen makes
Product available for commercial sale after receipt from the FDA of
approval to manufacture Product at Biogen's Cambridge facility and
approval to market and sell Product in the Territory.
1.5 "Database" shall have the meaning set forth in Section 7.1.
1.6 "Facility" shall mean Nova Factor's facility located at 1785
Nonconnah Blvd., Suite 114, Memphis, TN or any other Nova Factor
facility approved by Biogen prior to use by Nova Factor in
connection with services to be provided under this Agreement,
provided that a new facility which conforms to the plans referenced
in Section 20 shall be deemed to have been approved by Biogen.
1.7 "FDA" shall mean the United States Food and Drug Administration.
1.8 "Home Delivery Customers" shall mean multiple sclerosis patients in
the Territory who want Product delivered to their homes or to such
other residence, office or similar locations as they may specify,
not including pharmacies.
1.9 "Nova Factor Collection Policy" shall have the meaning set forth in
Section 5.1 (iv).
1.10 "PLA/ELA filing" shall mean the Product License Application and
Establishment License Application filed by Biogen with respect to
Product.
1.11 *
1.12 "Product" shall mean Biogen's AVONEX-TM- beta interferon-1a for
the treatment of multiple sclerosis in the packaged form listed in
Schedule A hereto, as amended from time to time by the parties.
1.13 "Specifications" shall mean the Product specifications attached
hereto as Schedule B as amended by Biogen from time to time.
1.14 "SOP" shall mean the written standard operating procedures,
specifications and instructions approved by both parties as the same
may be amended from time to time by the parties.
1.15 "Territory" shall mean the United States of America.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
2
<PAGE>
2. APPOINTMENT AS PREFERRED DISTRIBUTOR
2.1 Subject to the terms and conditions contained in this Agreement, Biogen
hereby appoints Nova Factor and Nova Factor hereby accepts appointment
as a nonexclusive, preferred distributor of Product to Home Delivery
Customers. Nova Factor shall not sell Product other than to Home Delivery
Customers without the prior written consent of Biogen. Biogen expressly
reserves the right to appoint other distributors, to sell Product to
wholesalers, pharmacy benefit managers and other third parties and to
sell Product directly. Biogen shall provide Nova Factor with written
notice at least thirty (30) days prior to the effective date of any
agreement between Biogen and a third party under which Biogen grants the
third party the right to sell Product to Home Delivery Customers which
such notice shall specify the name of the third party.
3. ORDERS, DELIVERY, FORECASTS
3.1 The parties hereto agree that, commencing upon Commercial Launch and
continuing during the term of this Agreement, Nova Factor shall purchase
Product from Biogen at the prices set forth in Section 8, and, subject
to the right of Biogen to allocate supplies of Product under Section 3.6,
Biogen shall supply Product to Nova Factor, for sale and distribution to
Home Delivery Customers. Nova Factor shall order Product from Biogen in
such quantities as are necessary to meet the demand for Product from
Nova Factor's Home Delivery Customers. On average during any month, Nova
Factor shall submit orders not more frequently than once per week. All
orders shall be firm and Nova Factor shall not change or cancel an order
without prior approval from Biogen. All purchases of Product by Nova
Factor shall be on the terms and conditions set forth in this Agreement.
No purchase order, invoice or other form shall be deemed to vary the
terms of this Agreement. To assist Biogen in managing its manufacturing
operations, Nova Factor shall furnish to Biogen, on the first day of each
month, a nonbinding forecast of Nova Factor's anticipated needs for
Product for such month and the following five months. Biogen shall assist
Nova Factor in preparing forecasts for the first three months after
Commercial Launch. Each forecast shall represent Nova Factor's good faith
best estimate of its Product needs. Notwithstanding anything herein to
the contrary, if Biogen receives an order in any month which would cause
the total amount ordered for such month to exceed the amount shown on
the first forecast for such month, Biogen shall have the right, in its
sole discretion, to reject the order. As soon as Nova Factor's inventory
falls to a one-week supply of Product, Nova Factor shall submit an order
to Biogen for an additional two (2) weeks' supply of Product, based on
Nova Factor's most recent forecast. Biogen shall notify Nova Factor of
receipt from the FDA of approval to manufacture Product at Biogen's
Cambridge facility and of approval to market and sell Product in the
Territory and of the date of Commercial Launch.
3.2 Biogen shall ship Product to Nova Factor not more frequently than weekly
FOB Biogen's warehouse facility. Biogen shall ship Product to Nova
Factor by means of transportation
3
<PAGE>
(commercial truck or better) determined by Biogen and at Biogen's cost.
While Biogen shall use reasonable efforts to avoid any delay in
delivering Product on the delivery dates agreed upon by the parties,
failure to deliver Product by the agreed upon date will not be sufficient
cause for termination of this Agreement by Nova Factor as long as the
delay does not extend beyond two (2) weeks from the agreed upon delivery
date, nor will Biogen be liable to Nova Factor for late delivery.
3.3 Nova Factor shall unload each shipment of Product immediately upon
receipt from Biogen in accordance with the applicable SOP. The parties
acknowledge that preparation of the SOPs will continue after execution
of this Agreement and Biogen and Nova Factor shall each use reasonable
efforts and shall each cooperate with the other to develop a set of
mutually agreeable SOPs within three (3) months after execution of this
Agreement. Nova Factor shall store Product in a refrigerated storage
area at the Facility. Nova Factor shall notify Biogen prior to moving
Product to another location for storage and distribution. Nova Factor
shall use storage facilities and storage conditions for Product which
comply with applicable SOPs. Nova Factor shall at all times handle and
store Product in accordance with applicable SOPs. Nova Factor shall not
alter Product packaging without Biogen's consent (except to remove
Product from the shipping containers) and shall not alter Product
labeling except to add a prescription label to Product. Nova Factor
shall at all times comply with the information and recommendations
communicated by Biogen in writing with respect to the storage, handling
and shipment of Products, provided that if such information and
recommendations are materially different than those included in the SOPs
or otherwise set forth in this Agreement and result in a material
increase in the costs incurred by Nova Factor in performing its
obligations under this Agreement, the parties shall negotiate in good
faith *. Nova Factor shall be responsible for all costs associated with
storage, handling and shipment from the Facility of Product.
3.4 Nova Factor shall carefully examine Products upon delivery and shall
notify Biogen within one (1) business day of any nondelivery of a
portion of a shipment or any defect in any Product which is reasonably
discoverable upon visual inspection of the Product without unloading
individual shipping units. Along with notice of any defect, Nova Factor
shall furnish to Biogen a detailed description of the nature of the
defect. Upon receipt of notice of any defect or nondelivery, Biogen, at
its option, shall replace or repair any defective Product or issue Nova
Factor a credit in the amount of the purchase price paid for any
defective Product or replace or issue Nova Factor a credit in the amount
of purchase price paid for any undelivered Product. Except as set forth
in Section 16, the preceding sentence sets forth Biogen's sole liability
with respect to Product defects reasonably discoverable upon visual
inspection of the Product without unloading individual shipping units or
with respect to Product that is not in accordance with Nova Factor's
order and Section 9.1 sets forth Biogen's sole liability with respect to
other Product defects and Biogen shall not be otherwise liable to Nova
Factor. In the absence of written notice from Nova Factor to Biogen in
accordance with the terms of this Section 3.4, a shipment of Products
shall be deemed to have been delivered and accepted by Nova
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
4
<PAGE>
Factor as complete and in satisfactory condition. Nova Factor shall, at
Biogen's request and expense, follow Biogen's instructions to return to
Biogen or Biogen's third party disposal company any Products delivered
to Nova Factor which are not in compliance with the Specifications. Nova
Factor shall cooperate with Biogen in investigating the cause of any
defect in Product.
3.5 Title to Product shall transfer to Nova Factor upon delivery of Product
to the carrier for shipment to the Facility. Risk of loss of Product
shall transfer to Nova Factor upon delivery of Product to the Facility.
3.6 Notwithstanding anything herein to the contrary, in the event of a
shortage of Product, Biogen reserves the right to allocate available
supplies of Product in its sole discretion. If Biogen is not able to
supply Product to Nova Factor in the quantities ordered by Nova Factor
for more than twelve (12) weeks on any occasion during the term of this
Agreement because of a Product shortage, Nova Factor shall have the right
to terminate this Agreement for material breach under Section 14.3
excluding the thirty (30) day cure period.
4. CUSTOMER ORDERS AND HOME DELIVERY
4.1 Marketing and sales literature distributed by Biogen's sales force will
contain a Biogen toll-free number as the point of contact for all
potential customers for Product. Biogen's customer service
representatives shall include Nova Factor in their description to
potential customers of various purchase and delivery options for
Product, and, if a potential customer expresses interest in Nova
Factor's home delivery program, the Biogen customer service
representative shall forward the call or direct the customer to Nova
Factor. Biogen and Nova Factor shall mutually agree on the description
of Nova Factor to be used by Biogen's customer service representatives.
Biogen shall provide Nova Factor with a copy of the script used by
Biogen's customer service representatives in describing Product
distribution options to potential customers. Nova Factor shall maintain
a telephone line dedicated to calls transferred from Biogen and to calls
from customers for Product. Nova Factor shall answer all calls from
customers for Product in accordance with a script mutually agreeable to
Biogen and Nova Factor. If the customer has volunteered information to
Biogen or has previously been in contact with Biogen's third party
reimbursement agency, Biogen or the agency shall transmit the
information to Nova Factor. At Biogen's request, Nova Factor shall
assist Biogen in developing a standard intake form for initial customer
contact. Nova Factor shall direct to Biogen's customer service operation
all potential users of Product who contact Nova Factor directly in
accordance with a script mutually agreeable to Biogen and Nova Factor.
4.2 Nova Factor shall ship Product to customers at their homes or to any
other residence, office or similar location designated by customer, not
including pharmacies, via Federal Express standard overnight delivery
service or another mutually agreed to overnight carrier. Nova Factor
shall package Products for shipment in insulated shipping units in
5
<PAGE>
accordance with the applicable SOP. Nova Factor shall use its best
efforts to ship Products such that Product having the earliest
expiration date is shipped first from available inventory. Nova Factor
shall track each shipment of Product to customer and confirm receipt. If
product is not received by the intended customer, Nova Factor shall use
reasonable efforts to track the missing shipment until found and, if
found, shall retrieve the missing shipment. Any shipment not delivered
to the intended recipient which is found shall be retrieved by Nova
Factor and, if determined by Nova Factor to be unusable, shall be
disposed of by Nova Factor.
4.3 Except for initial shipments made to a customer's home or designated
location and except where the customer's payor requires preapproval of
subsequent shipments. Nova Factor shall, subject to Product
availability, ship Product to a customer within 48 hours of receipt of
an order. Nova Factor shall use reasonable efforts to obtain
reimbursement clearance, if necessary, for anticipated subsequent orders
from a customer prior to actual receipt of the subsequent order. Nova
Factor shall ship each initial order and any subsequent order which
requires reimbursement clearance to a customer's home or designated
location within 48 hours of reimbursement clearance unless Biogen and
Nova Factor have agreed upon a first shipment program. At Biogen's
request, Biogen and Nova Factor shall work together to develop a first
shipment program to allow shipment of initial quantities of Product to a
patient prior to reimbursement clearance. If the parties have agreed
upon a first shipment program, Nova Factor shall comply with the
timelines for delivery of Product contained in the program.
4.4 Nova Factor shall be responsible for all billing and collection in
connection with its sales of Product. Nova Factor shall not bundle sales
of Product with other products or services, provided that Nova Factor
may list Product on the same invoice with other products for the same
customer, if required by the customer's insurance provider, as long as
the Product price and any negotiated discount from or allowance taken
with respect to the Product price are listed separately. Nova Factor may
bundle shipments of Product with other products for delivery to the same
customer, provided that such bundling is covered by an SOP.
4.5 Nova Factor shall be responsible for all costs associated with
distribution and delivery of Products to its customers.
5. REIMBURSEMENT-RELATED SERVICES
5.1 To ensure a consistent, high level of services and to maintain
consistency of communications with end-users of Product, the parties
have agreed that Nova Factor will, as part of its commitment to its
customers, provide the following services for each potential or existing
Nova Factor customer who contacts Nova Factor for home delivery of
Product:
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(i) Nova Factor shall collect the relevant insurance information
from each new customer who has insurance and shall obtain
confirmation of the existence and extent of insurance coverage
for Product from the customer's insurance provider or other
third party payor. Nova Factor shall use its best efforts to
confirm reimbursement coverage within one (1) week of receipt of
an order from a customer. Biogen understands that, despite Nova
Factor's best efforts, confirmation of reimbursement coverage
will often take longer than one (1) week.
(ii) Nova Factor shall accept assignment of benefits from each
customer with reimbursement coverage unless the customer's
insurance provider or other third party payor does not allow
assignment of benefits. To effect the assignment of benefits,
Nova Factor shall, within two (2) business days of initial
contact with each customer, provide to the customer the
applicable forms and instructions for assignment of benefits and
shall file the forms with the customer's insurance provider or
other third party payor at the time of Product shipment and
billing.
(iii) Upon receipt of the appropriate approval, Nova Factor shall bill
and submit the appropriate claims to each customer's insurance
provider, third party payor or other responsible party,
including Medicaid, but not including Medicare.
(iv) Consistent with applicable law and Nova Factor's standard
collection policy, a copy of which is attached hereto as
Schedule C (the "Nova Factor Collection Policy"). Nova Factor
shall use its best efforts to collect the amount allowed from
each customer's insurance provider or other third party payor,
and shall work with customers and negotiate with providers and
third party payors to maximize reimbursement coverage.
(v) Nova Factor shall bill patient co-payments, self-pays or
deductibles and shall use reasonable good faith efforts to
collect such payments consistent with applicable law and the
Nova Factor Collection Policy. Nova Factor shall provide Biogen
with a copy of any changes to the Nova Factor Collection Policy
prior to implementation of such changes.
(vi) Nova Factor shall make the intake coordinator function available
from 9:00 a.m. to 8:00 p.m., E.S.T, Monday through Friday,
except Nova Factor holidays, to answer customer, insurance
provider, third party payor and prescriber reimbursement
questions. Biogen will, in its sales and marketing material,
list Biogen's toll-free number as the number for users of the
Product to call with reimbursement questions. When Biogen
receives a telephone call from a Nova Factor customer with a
reimbursement question, the Biogen customer service
representative will transfer the telephone call to Nova Factor.
(vii) Nova Factor shall use its best efforts to resolve reimbursement
issues of customers who would like to purchase Product from Nova
Factor. If Biogen has engaged
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a third party to provide reimbursement support services to
Biogen, Nova Factor shall direct certain reimbursement inquiries
to such third party and share relevant information with such
third party, as specified in guidelines established by Biogen.
(viii) Biogen shall furnish to Nova Factor the criteria for
eligibility in Biogen's financial assistance program, and Nova
Factor shall direct potential customers who meet the criteria to
Biogen's customer service department.
5.2 Nova Factor shall not deny Product to customers who do not have insurance
or who have insufficient insurance coverage if the customer has the
ability to self-pay.
5.3 Nova Factor shall be responsible for all costs associated with the
services provided under this Section 5.
5.4 Nova Factor shall be responsible for assuring that the services provided
under this Section are carried out in a manner consistent with
applicable federal and state laws.
6. OTHER SERVICES
6.1 Nova Factor shall ensure that a licensed pharmacist, who is properly
trained to answer Product-related questions or requests for emergency
supplies of Product, is available by telephone (i) from 9:00 a.m. to 6:00
p.m. E.S.T., Monday through Friday, except Nova Factor holidays, for
routine calls and (ii) twenty-four hours (24) per day for emergency
calls. Biogen's customer service representatives will direct any
appropriate calls from Nova Factor's customers received on Biogen's
toll-free line to the Nova Factor pharmacist.
6.2 Nova Factor shall, to the extent consistent with applicable federal and
state pharmacy laws, contact each of its customers approximately one
week before the customer's supply of Product, assuming proper
administration, will be depleted to determine if the customer needs a
new supply of Product.
6.3 Upon receipt of an order from a new customer, Nova Factor shall inquire
whether the customer has received Product administration training. If
the customer has not received Product administration training or would
like to receive additional training, Nova Factor shall direct the
patient to Biogen's customer service department or such other contact as
Biogen shall designate.
6.4 Nova Factor shall maintain an inventory of Product educational materials
developed and provided by Biogen. Nova Factor shall, to the extent
permissible under applicable laws, ship the materials as requested by
Nova Factor's customers or by its customers' insurance providers or
other third party payors.
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6.5 To the extent allowable under applicable law, Nova Factor's customer
service representatives shall call each new customer one to three weeks
after the customer has received an initial shipment of Product to check
on the customer's progress. In checking on the customer's progress,
Nova Factor shall use a script and checklist mutually agreeable to the
parties. At Biogen's request, Nova Factor shall during its telephone
conversations with customers conduct additional clinical efficacy and
customer satisfaction surveys provided by Biogen and shall report the
resulting information to Biogen in a manner consistent with any
confidentiality restrictions. The parties shall negotiate, in advance,
the fee for each additional survey initiated by Biogen.
6.6 Nova Factor shall be responsible for assuring that the services
provided under this Section are carried out in a manner consistent with
applicable federal and state laws, including state pharmacy laws.
7. DATA AND REPORTS
7.1 Nova Factor shall maintain in a separate, Biogen-specific database (the
"Database") the information specified in Schedule D for each customer
and each order. In addition, Nova Factor shall maintain in the Database
information, by customer, regarding (i) *, (ii) *, and (iii) any other
information Biogen reasonably requests Nova Factor to track to the
extent that collection of such other information will not result in a
material increase in the costs incurred by Nova Factor in performing its
obligations under this Agreement.
7.2 Nova Factor shall generate and furnish to Biogen monthly and weekly
reports from the Database as specified in Schedule D and such other
reports as Biogen may from time to time reasonably request to the
extent that generation of such other reports will not result in a
material increase in the costs incurred by Nova Factor in performing
its obligations under this Agreement. The reports shall identify
customers only by number and not by name.
8. PAYMENT
8.1 Nova Factor shall purchase Product from Biogen at a price *
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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* Nova Factor shall have sole responsibility and authority for
determining the price at which it will sell Product to its customers.
8.2 All amounts due hereunder shall be payable by check to Biogen in United
States funds. Biogen shall invoice Nova Factor for all amounts due
hereunder. Payment by Nova Factor shall be due within * (*) days
from the date of the invoice or on such other payment terms as the
parties shall mutually agree. Biogen shall have the right to charge
interest on a per diem basis on any amounts past due at an annualized
rate of one and one-half percent (1-1/2%) over the prime rate then in
effect at the Bank of Boston, Boston, Massachusetts.
8.3 Except as otherwise expressly set forth herein, Nova Factor shall be
responsible for all costs and expenses associated with fulfilling its
obligations under this Agreement.
8.4 All prices are exclusive of federal, state and local excise, sales, use
and other taxes levied or imposed on the sale, shipment, delivery,
ownership, possession or resale of Product or any other activities
contemplated under this Agreement. Except for taxes on Biogen's income.
Nova Factor shall be liable for any pay all taxes imposed in connection
with the activities contemplated hereunder.
8.5 During the term of this Agreement and for a period of three (3) years
after termination or expiration of this Agreement, Nova Factor shall
keep complete and accurate records of sales of Product in sufficient
detail to enable Biogen to calculate and confirm *. Nova Factor shall
permit Biogen, during the term of this Agreement and for a period of
three (3) years after termination or expiration of this Agreement, to
examine periodically, but not more than once per year during regular
business hours, the books, ledgers and records of Nova Factor for any
year for the purpose of and to the extent necessary to verify the
information provided by Nova Factor *. The cost of such examination
shall be borne by Biogen unless it shall be established by Biogen that,
as a result of an error in information provided by Nova Factor, there
was a miscalculation * Nova Factor exceed $* per audit.
8.6 *
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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9. REPLACEMENTS AND RETURNS
9.1 In the event Nova Factor or a Nova Factor customer returns or requests
to return a Product, Nova Factor shall promptly notify Biogen and
Biogen shall, upon return of Product, unless the customer requests
replacement Product, give Nova Factor a credit in the amount of the
purchase price paid by Nova Factor for the returned Product, provided
that the Product is returnable and returned under Biogen's then current
Return Goods Policy, a copy of which Biogen shall furnish to Nova
Factor, and provided that the reason for the return of the Product does
not arise from (i) the negligence or intentional misconduct of Nova
Factor or any of its agents or employees, (ii) failure of Nova Factor
to follow applicable SOPs or to otherwise comply with the terms of
this Agreement or (iii) misdelivery or loss of Product by a carrier
used by Nova Factor. For any return of Product authorized by Biogen,
Nova Factor shall send the Product, or shall instruct customers to send
the Product, to Biogen or Biogen's designated disposal company as
specified and in the manner described in the then current Return Goods
Policy.
9.2 If a Nova Factor customer requests replacement Product for Product
returned under Biogen's then current Return Goods Policy or under
circumstances in which Biogen will otherwise furnish replacement
Product at no charge under the Return Goods Policy, Nova Factor shall
furnish the replacement Product to the customer from Nova Factor's
inventory. At the end of each month, Nova Factor shall furnish Biogen
with a list specifying (i) the quantity of replacement Product supplied
to customers under circumstances in which Biogen will supply
replacement Product at no charge under its then current Return Goods
Policy and (ii) the name of the relevant customers. Biogen shall
deliver to Nova Factor an amount of Product equal to the amount used by
Nova Factor as replacement Product consistent with Biogen's then
current Return Goods Policy, at no cost to Nova Factor. If Biogen
determines not to supply replacement Product at no charge, Nova Factor
may purchase the replacement Product at the prices and on the terms set
forth in Section 8. Biogen shall not supply replacement Product to Nova
Factor at no charge if the need for replacement product arises from (i)
the negligence or intentional misconduct of Nova Factor or any of its
agents or employees, (ii) failure of Nova Factor to follow applicable
SOPs or to otherwise comply with the terms of this Agreement or (iii)
misdelivery or loss of Product by a carrier used by Nova Factor. Biogen
may change its Return Goods Policy in its sole discretion, provided
that if any change results in a material increase in the costs incurred
by Nova Factor in performing its obligations under this Agreement, the
parties shall meet *.
9.3 In the event that in any quarter the quantity of Products returned by
Nova Factor's customers under the Return Goods Policy or the quantity
of replacement Product provided to Nova Factor by Biogen, at no cost,
for Nova Factor's customers exceeds *% of the total quantity of
Product sold by Nova Factor in the quarter, the parties shall meet to
negotiate in good faith *.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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9.4 Nova Factor shall cooperate with Biogen in investigating the need for
any replacement Product or the reason for return of a Product by a Nova
Factor customer.
10. ADVERSE EVENT REPORTING AND CUSTOMER COMPLAINTS
10.1 Nova Factor shall notify the designated contact in Biogen's Drug Safety
and Medical Information Group (or such other person as Biogen may
designate), by telephone, immediately (but in no event later than one
(1) business day) after receipt of notice of an Adverse Event
associated with the Product or after Nova Factor or any of its agents
or employees becomes aware of an Adverse Event associated with the
Product. Nova Factor shall confirm each notice of an Adverse Event by
providing to Biogen within two (2) business days a written report in
the format required for Adverse Events by the FDA, or, at Biogen's
request, in the format provided by Biogen. All communications and
reports regarding Adverse Events shall be sent to: Biogen, Inc., 14
Cambridge Center, Cambridge, MA 02142, Attention: Director - Drug
Safety and Medical Information Group, Fax No. (617) 679-2342, or to
such other address as Biogen may from time to time designate.
10.2 Nova Factor shall give notice by fax to Biogen's customer service
department within two (2) business days of all customer complaints
related to Product, other than Adverse Events, and all labeling and
package insert issues, specifying the nature of the complaint or issue.
Nova Factor shall send Biogen a monthly report describing all
complaints related to customer service. The parties shall mutually
agree on Product information to be used by Nova Factor in addressing
customer complaints, Adverse Events and labeling and package insert
issues.
10.3 Nova Factor shall cooperate with Biogen in responding to or
investigating any customer complaints and Adverse Events.
11. SUSPENSION OF DISTRIBUTION AND RECALLS
11.1 If requested by Biogen as the result of a problem with Product quality
or a directive from the FDA, Nova Factor shall suspend distribution of
Product. If the suspension continues for more than * (*) *
Biogen will repurchase the Product held in inventory by Nova Factor at
* and Nova Factor shall have
the right to terminate this Agreement for material breach under Section
14.3 excluding the thirty (30) day cure period.
11.2 Biogen shall promptly notify Nova Factor of any recalls initiated by
Biogen or required by the FDA. Upon receipt of notice of a recall from
Biogen, Nova Factor shall immediately notify the affected customers
Biogen shall provide Nova Factor with the form of letter to be used in
connection with notice of any recall which shall contain the
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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appropriate instructions as to whether the customer should return or
dispose of the affected Product. Biogen shall be responsible for the
mailing, shipping and reasonable administrative expenses incurred by
Nova Factor in connection with the recall as well as the cost of
replacement Product for Nova Factor's customers, provided that the
reason for the recall does not arise from (i) the negligence or
intentional misconduct of Nova Factor or any of its agents or employees
or (ii) failure of Nova Factor to follow applicable SOPs or to
otherwise comply with the terms of this Agreement. Nova Factor shall
cooperate in any recalls by providing relevant Product tracking
information to Biogen.
11.3 Nova Factor shall maintain for two (2) years after termination or
expiration of this Agreement such information as shall be reasonably
required by Biogen to effect a Product recall after termination or
expiration of this Agreement, and shall make such information available
to Biogen, at Biogen's request, in the event of such a recall.
11.4 Nova Factor shall cooperate with Biogen in investigating any Product
failure which resulted in the need for a recall.
12. REPRESENTATIONS AND WARRANTIES OF NOVA FACTOR
12.1 In performing its obligations under this agreement, Nova Factor shall
comply with all applicable laws and regulations, including federal and
state pharmacy laws, laws relating to the disposal of pharmaceutical
products and hazardous wastes, to the extent disposal of Product is
Nova Factor's responsibility under this Agreement, and all applicable
professional and industry standards and good business practices. Nova
Factor shall use a dedicated, well-trained, knowledgeable team of
employees to handle Product and to perform the services to be performed
by Nova Factor under this Agreement.
12.2 *
12.3 Nova Factor represents that it is currently eligible to participate as
a provider in the Medicaid program in each state in the Territory except
those states listed on SCHEDULE F and agrees to maintain such
eligibility during the term of the Agreement. Nova Factor may amend
SCHEDULE F in its sole discretion to add additional states and shall
provide Biogen with prompt notice of any such amendment, provided that
Nova Factor shall not add any state to SCHEDULE F unless the state has
changed its laws to require an in-state pharmacy presence for
eligibility in its Medicaid program. Nova Factor shall remove a state
from SCHEDULE F (and shall provide notice to Biogen of such removal)
when the state no longer requires an in-state pharmacy presence for
eligibility in the state's
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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Medicaid program.
12.4 Nova Factor shall not take any action which would materially adversely
affect its standing or that of Biogen in the industry or with respect
to Product customer base or which would undermine the image of Product.
12.5 Nova Factor shall periodically, but not less frequently than once per
year, perform written quality reviews of Nova Factor's performance in
fulfilling its obligations under this Agreement, and shall provide
Biogen with copies of such reviews. Nova Factor shall administer a
validation checklist to each employee performing services related to
Product upon completion of such employee's initial training and
annually thereafter, and shall provide Biogen with copies of such
checklists.
12.6 Nova Factor represents that it now has and shall maintain a full force
during the term of this Agreement all federal and state pharmacy,
wholesaler and other licenses or approvals required by Nova Factor to
fulfill its obligations under this Agreement, except as otherwise set
forth in Section 12.3, and except that Nova Factor shall not be
required to maintain its licenses in any state which amends its laws
and regulations to require an in-state pharmacy presence as a
requirement for licensing if the new requirement would materially
increase the costs incurred by Nova Factor in performing its
obligations under this Agreement. Nova Factor shall provide Biogen with
notice of any communications with Pharmacy licensing boards which
relate to potential problems with facilities, operations or procedures
used by Nova Factor in its distribution of Product, including notices
of inquiries, investigations or inspections and resulting findings.
12.7 Nova Factor shall not make any performance claims or engage in any
promotional activities with respect to Product except for the
distribution of Product literature prepared by Biogen and any other
activities expressly approved by Biogen.
12.8 Nova Factor shall not use the trademarks or tradenames of Biogen except
to the extent contained in Product literature provided by Biogen and on
Product labels or as otherwise approved by Biogen.
12.9 Nova Factor shall furnish to Biogen copies of quarterly and annual
financial statements of Nova Factor and its parent (including balance
sheet and income statements). Nova Factor shall promptly notify Biogen
of any significant change to the business or financial condition of
Nova Factor or any changes in its ownership or control. The financial
statements provided to Biogen by Nova Factor and its parent under this
Section shall be treated by Biogen as confidential information of Nova
Factor under Section 17.2.
12.10 Nova Factor represents that it has the authority to enter into this
Agreement and that its execution of this Agreement and its performance
of its obligations hereunder will not conflict with and is not
prohibited by any other agreement to which Nova Factor is a party.
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12.11 In no event shall Nova Factor be liable for loss of profit or any
other incidental or consequential damages of Biogen.
13. REPRESENTATIONS AND WARRANTIES OF BIOGEN
13.1 Biogen shall be responsible for testing Product and ensuring that
Product complies, when shipped to Nova Factor, with all applicable
laws, regulations, directives and requirements of the FDA, including
without limitation, packaging and labeling requirements, product
warning requirements, product design and safety requirements and
advertising requirements.
13.2 Biogen shall not use the trademark or tradenames of Nova Factor
except to the extent necessary for activities contemplated under
this Agreement.
13.3 Biogen warrants that, as of the date of shipment to Nova Factor,
Product will conform to the Specifications, will not be adulterated
or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act and will not be articles which may not, under the
provisions of the Act, be introduced into interstate commerce. THE
WARRANTIES CONTAINED IN THIS SECTION 13.3 ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, BIOGEN DISCLAIMS ALL OTHER
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Except as otherwise set forth in Section 16, Biogen's sole liability
and Nova Factor's sole remedy for breach of warranty under this
Agreement shall be for Biogen to repair or replace the defective
Product or to credit Nova Factor's account in accordance with
Section 3.4 and Section 9.1. In no event shall Biogen be liable for
loss of profit or any other incidental or consequential damages of
Nova Factor.
13.4 Biogen represents and warrants to Nova Factor that at the time of
the first shipment of Product to Nova Factor, Biogen will have
received approval from the FDA to market and sell Product in the
Territory.
13.5 Biogen represents that it has the authority to enter into this
Agreement and that its execution of this Agreement and its
performance of its obligations hereunder will not conflict with and
is not prohibited by any other Agreement to which Biogen is a party.
14. TERM AND TERMINATION
14.1 This Agreement shall become effective on the date hereof and, unless
earlier terminated in accordance with this Section, shall continue
in effect for an initial term of three (3) years from the date of
Commercial Launch.
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14.2 Either party may terminate this Agreement for any reason, at any
time after the first anniversary of the Commercial Launch, upon
ninety (90) days prior written notice given after the first
anniversary of Commercial Launch. In addition, Biogen shall have
the right to terminate this Agreement immediately in the event the
FDA rejects the PLA/ELA filing, or if Biogen withdraws its PLA/ELA
filing.
14.3 Either party may terminate this Agreement (i) for a material breach
by the other party upon thirty (30) days' prior written notice
unless the breaching party cures the breach within such thirty (30)
day period or (ii) in the event of any proceedings, voluntary or
involuntary, in bankruptcy or insolvency, by or against the other
party, or the appointment with or without the other parties' consent
of a receiver for such party.
14.4 Upon receipt or delivery of a termination notice by Nova Factor or
ninety (90) days prior to expiration of this Agreement at the end of
the term, as applicable, the parties shall begin to transition
distribution of Product for Nova Factor's customers to a party to be
designated by Biogen. Transition of distribution under this Section
14.4 shall mean the following:
(i) Biogen shall as soon as possible begin referring Nova
Factor customers who contact Biogen's customer service
department to the designated distributor.
(ii) At Biogen's request, Nova Factor shall provide notice to
all of Nova Factor's customers of the change in distributors.
(iii) Nova Factor shall complete any reimbursement clearances
and Product shipments then underway, but otherwise shall refer
customers to the designated distributor.
(iv) Nova Factor shall transfer a copy of the Database and
customer information, including prescription files, to the
designated distributor, provided that if applicable patient
confidentiality laws prohibit transfer of the customers' name
to the designated distributor, Nova Factor shall transfer the
Database and customer information using customer numbers instead
of names.
(v) Nova Factor's obligation to order additional Product
when its inventory falls to a one-week supply shall cease and
Biogen shall repurchase any Product held in inventory by Nova
Factor on the date of termination at the price paid for the
Product by Nova Factor.
After receipt of the termination notice and during the period
thereafter ending six months after termination, Nova Factor shall
use reasonable efforts to cooperate with Biogen in ensuring the
smooth transition of the services provided by Nova Factor under this
Agreement to the distributor designated by Biogen, provided that
after termination of this Agreement, Biogen shall reimburse Nova
Factor for its reasonable out-of-pocket, non-
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personnel-related expenses associated with such cooperation.
14.5 Sections 9, 10, 11, 14.4, 15, 16, 17, and 22.7 shall survive
termination or expiration of this Agreement.
15. REGULATORY, INSPECTIONS, AUDITS
15.1 Nova Factor shall provide to the FDA or, at Biogen's request, shall
provide to Biogen all documents and information requested by the FDA
or by Biogen in support of its regulatory filings. Copies of all
documents to be provided to the FDA shall be provided to Biogen in
advance, if practicable, or otherwise within two (2) business days
of delivery to the FDA. Nova Factor shall notify Biogen immediately
upon receipt of notice of any inspection by the FDA directed
specifically toward Product, and Biogen shall have the right to have
an employee present at any such inspection, if allowed by law. Nova
Factor shall notify Biogen immediately of any notices, requests for
information or other communications related to Product from the U.S.
Department of Health and Human Services or any other government agency
or any state healthcare program or other state agency and, to the
extent permitted under applicable law, shall give Biogen copies of
such communications.
15.2 Nova Factor shall provide to Biogen, at Biogen's request, any
information reasonably required in connection with Biogen
investigations relating to recalled or returned Product or any
requests of investigations by or filings with governmental bodies,
including the FDA or in support of Biogen's applications to the FDA.
Nova Factor shall respond within two (2) business days to any
reasonable requests for information by Biogen.
15.3 Nova Factor shall from time to time submit to inquiries, audits and
inspections by Biogen during normal business hours or at any other
time during which the services being audited are ongoing. Biogen
shall give Nova Factor at least two (2) business days prior notice
of any audit or inspection and shall bear the costs of such audit or
inspection.
16. INDEMNIFICATION
16.1 Biogen shall at all times during the term of this Agreement and
thereafter defend, indemnify and hold Nova Factor and its officers,
directors, agents and employees harmless from and against any and
all claims, suits, damages, liabilities, costs and expenses,
including but not limited to court costs and reasonable attorneys'
fees, incurred in connection with any third-party claim arising out
of the use of any Product by an end-user, except to the extent
caused by (i) the negligence or intentional misconduct of Nova
Factor or any of its officers, directors, agents or employees or
(ii) breach by Nova Factor of any of the terms of this Agreement or
(iii) acts of Nova Factor or any of its officers, directors, agents
or employees which are outside the scope of this Agreement.
16.2 Nova Factor shall at all times during the term of this Agreement and
thereafter defend, indemnify and hold Biogen and its officers,
directors, agents and employees harmless
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from and against any and all claims, suits, damages, liabilities,
costs and expenses, including but not limited to court costs and
reasonable attorneys' fees, incurred in connection with any
third-party claim arising out of (i) the negligence or intentional
misconduct of Nova Factor or any of its officers, directors, agents
or employees, (ii) breach by Nova Factor of any of the terms of this
Agreement, or (iii) acts of Nova Factor or any of its officers,
directors, agents or employees which are outside the scope of this
Agreement.
16.3 A party seeking indemnification under this Section shall give prompt
notice of the claim to the other party and, provided that the
indemnifying party is not contesting the indemnity obligation, shall
permit the indemnifying party to control any litigation relating to
such claim and disposition of any such claim, provided that the
indemnifying party shall act reasonably and in good faith with
respect to all matters relating to the settlement or disposition of
any claim as the settlement or disposition relates to the parties
being indemnified under this Section and the indemnifying party
shall not settle or otherwise resolve any claim without prior notice
to the indemnified party. The indemnified party shall cooperate with
the indemnifying party in its defense of any claim for which
indemnification is sought hereunder.
17. CONFIDENTIALITY
17.1 Nova Factor agrees to treat any confidential or proprietary
information obtained from Biogen and any confidential or proprietary
information generated by Nova Factor in performing its obligations
under this Agreement, including information regarding Biogen's
pricing policies and reimbursement for the Product, information
regarding the cost of providing services to Biogen and the
information in the Database,and anything derived therefrom,
(collectively, the "Biogen Information") as the confidential and
exclusive property of Biogen, (except for the information in the
Database which shall be joint property of Biogen and Nova Factor),
and agrees not to disclose any of the Biogen Information to any
third party without first obtaining the written consent of Biogen.
Nova Factor agrees that it will use any Biogen Information only for
purposes of performing its obligations hereunder and for no other
purpose without the prior written consent of Biogen. Nova Factor
further agrees to take all practicable steps to ensure that the
Biogen Information will not be used by its directors, officers or
employees, except on like terms of confidentiality as aforesaid, and
will be kept confidential by them.
The above provisions of confidentiality shall not apply to that part
of the Biogen Information which Nova Factor is able to demonstrate
by documentary evidence:
(a) was in Nova Factor's possession prior to receipt from Biogen;
or
(b) was in the public domain at the time of receipt from Biogen; or
(c) became part of the public domain through no fault of Nova
Factor, its directors, officers or employees; or
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(d) was lawfully received by Nova Factor from some third party not
disclosing the information on behalf of Biogen and having a
right of further disclosure; or
(e) is required by law to be disclosed.
Nova Factor agrees that, at Biogen's request, it shall return to
Biogen all parts of the Biogen Information existing in documentary
form, not including pharmacy records and will, at Biogen's request,
return or destroy any copies thereof made by Nova Factor, its
directors, officers or employees except that Nova Factor shall
retain a copy of the Database, subject to the ongoing obligation of
confidentiality. Nova Factor shall not dispose of the information in
the Database without first offering in writing, given at least sixty
(60) days prior to such disposal, to deliver the information to
Biogen.
17.2 Biogen agrees to treat any confidential or proprietary information
obtained from Nova Factor, (not including the Database, information
about insurers' reimbursement policies with respect to Product and
information used to calculate * ) and anything
derived therefrom, (collectively, the "Nova Factor Information") as
the confidential and exclusive property of Nova Factor, and Biogen
agrees not to disclose any of the Nova Factor Information to any
third party without first obtaining the written consent of Nova
Factor, provided that Biogen may disclose Nova Factor Information to
any third party providing reimbursement-related services to Biogen
as long as the third party is obligated to Nova Factor to keep such
information confidential. Biogen agrees that it will use any Nova
Factor Information only for purposes of activities contemplated
hereunder and for no other purpose without the prior written consent
of Nova Factor. Biogen further agrees to take all practicable steps
to ensure that the Nova Factor Information will not be used by its
directors, officers or employees, except on like terms of
confidentiality as aforesaid, and will be kept confidential by them.
The above provisions of confidentiality shall not apply to that part
of the Nova Factor Information which Biogen is able to demonstrate
by documentary evidence:
(a) was in Biogen's possession prior to receipt from Nova Factor;
or
(b) was in the public domain at the time of receipt from Nova
Factor; or
(c) became part of the public domain through no fault of Biogen, its
directors, officers or employees; or
(d) was lawfully received by Biogen from some third party not
disclosing the information on behalf of Nova Factor and having a
right of further disclosure; or
(e) is required by law to be disclosed.
Biogen agrees that, at Nova Factor's request, it shall return to
Nova Factor all parts of the Nova Factor Information existing in
documentary form and will, at Nova Factor's request, return or
destroy any copies thereof made by Biogen, its directors, officers,
or employees.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
19
<PAGE>
17.3 Nothing contained herein shall be deemed to grant to either party any
rights or licenses under any patent applications or patents or to any
know-how, technology, inventions or other intellectual property rights
of the other party.
17.4 Notwithstanding anything to the contrary contained in Section 12.7,
Nova Factor shall be permitted to disclose to potential and existing
customers of Nova Factor as well as to potential purchasers of stock
or assets of Nova Factor or other potential sources of capital (i)
that Nova Factor distributes Product under an agreement with Biogen
and (ii) the general nature of the relationship with Biogen. Nova
Factor shall also be permitted to make such public statements
regarding its relationship with Biogen as may be required by law,
regulation or by obligations pursuant to any listing agreement with
any securities exchange. Nova Factor shall not disclose the terms of
this Agreement to any third party or, except as expressly set forth in
this Section, make any public announcement of the existence of its
relationship with Biogen without the prior written consent of Biogen
except to its auditors and lawyers or as required by law.
17.5 The obligations of the parties under this Section 17 shall continue
during the term of this Agreement and for a period ending five (5)
years after termination or expiration of this Agreement.
18. INSURANCE
Nova Factor agrees (i) to obtain and maintain, while this Agreement is
in effect, commercial general liability insurance, including product
liability insurance, with coverage limits of not less than $1,000,000
per occurrence and $3,000,000 in the aggregate, and (ii) not to cancel
the insurance or reduce the coverage without giving at least thirty
(30) days prior written notice to Biogen. Nova Factor shall cause
Biogen to be a notice party on each insurance policy such that Biogen
shall receive notice of any cancellation or change in the policy. At
the request of Biogen, Nova Factor shall provide Biogen with a copy of
a certificate of insurance to verify that insurance with the required
coverage is in effect.
19. TRAINING
Nova Factor shall be responsible for insuring that the personnel
handling Product, dealing with customers and payors and performing the
services contemplated under this Agreement are properly trained to
perform their functions. Biogen and Nova Factor will jointly prepare a
training manual and orientation program for Nova Factor and Biogen
personnel to familiarize the personnel with the Product and the market.
20. FACILITIES EXPANSION
Nova Factor plans, at its sole expense, to extend its existing
facilities and modify its existing procedures and processes. A
facility expansion plan and procedures modification
20
<PAGE>
plan are attached as Schedule G.
21. COMPETITIVE PRODUCTS
As long as Nova Factor is the only home delivery preferred distributor
approved by Biogen, other than distributors authorized to sell to
Medicaid customers in the states listed on Schedule F, Nova Factor
shall not distribute, as a reseller or as a consignee, or provide
reimbursement assistance with respect to, any products which compete
with Product in the treatment of multiple sclerosis.
22. MISCELLANEOUS
22.1 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns,
provided that neither party shall have the right to assign this
Agreement or its rights and obligations hereunder without the prior
written consent of the other party, which such consent shall not be
unreasonably withheld, except that Biogen may assign this Agreement or
its rights and obligations hereunder to its Affiliates or successors
in business who assume and agree to be bound by the terms hereof
provided the entity has demonstrated financial ability to carry out
Biogen's obligations hereunder.
22.2 This Agreement constitutes the entire and only agreement between the
parties relating to the subject matter hereof, and all prior
negotiations, representations, agreements and understandings are
superseded hereby. No agreements amending, altering or supplementing
the terms hereof may be made except by means of a written document
signed by the duly authorized representatives of both parties.
22.3 Any notice required by this Agreement shall be given by prepaid, first
class, certified mail, return receipt requested, or by air courier,
hand delivery or facsimile, to the parties at the following addresses:
If to Biogen:
Biogen, Inc.
14 Cambridge Center
Cambridge, MA 02142
Attention: Vice President - Marketing and Sales
with a copy to Vice President-General Counsel
Fax: (617) 679-2617
21
<PAGE>
If to Nova Factor, Inc.:
Nova Factor, Inc.
1785 Nonconnah Blvd.
Suite 114
Memphis, TN 38132
Attention: Chief Executive Officer
Fax: (901) 348-8261
with a copy to:
Thomas W. Bell, Jr.
Armstrong Allen Prewitt
Gentry Johnson & Holmes
Brinkley Plaza
80 Monroe Ave., Suite 700
Memphis, TN 38103-2467
Fax: (901) 524-4936
Any notice sent under this Section shall be deemed delivered within
five (5) days if sent by mail and within twenty-four (24) hours if
sent by fax, courier or hand delivery.
22.4 Neither party shall be liable for any failure or delay caused by
fires, flood, earthquakes, peril of the sea, accidents, explosions,
sabotage, strikes, or other labor disturbances (regardless of the
reasonableness of the demands of labor), civil commotions, riots,
invasions, wars, acts, restraints, requisitions, regulations, or
directions of governmental authorities, shortages of labor, fuel,
power, or raw material, inability to obtain equipment or supplies,
inability to obtain or delays in transportation, acts of God, or any
other cause beyond its reasonable control.
22.5 Headings included herein are for convenience only, and shall not be
used to construe this Agreement.
22.6 For the purposes of this Agreement, the parties shall be, and shall be
deemed to be, independent contractors and not agents or employees of
the other party. No party shall have authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on the other party, except as may be explicitly
provided for herein or authorized in writing.
22.7 Except as required by law, neither party shall use the name of the
other party or of any employee of the other party in connection with
any publicity without the prior written approval of the other party.
22.8 If any provision of this Agreement shall be found by a court to be
void, invalid or unenforceable, the same shall either be reformed to
comply with applicable law or stricken if not so conformable, so as
not to affect the validity or enforceability of this Agreement, except
if the principal intent of the Agreement is frustrated by such
22
<PAGE>
reformation or deletion in which case this Agreement shall terminate.
22.9 Failure of either party to enforce a right under this Agreement shall
not act as a waiver of that right or the ability to later assert that
right relative to the particular situation involved or to terminate
this Agreement as a result of any subsequent default or breach.
22.10 This Agreement shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts.
22.11 Unless waived by the parties, any dispute, controversy or claim
between the parties arising out of or relating to this Agreement
either during or after the term hereof (including the question as to
whether any particular matter is arbitrable) shall be solely and
finally settled by arbitration conducted in Memphis, Tennessee, if the
arbitration is initiated by Nova Factor or in the Boston,
Massachusetts metropolitan area, if the arbitration is initiated by
Biogen, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in force (the "Rules"). The
party requesting arbitration shall serve upon the other party to the
controversy, dispute or claim a written demand for arbitration stating
the substance of the controversy, dispute or claim, the contention of
the party requesting arbitration, and the name and address of the
arbitrator appointed by it. The recipient of such demand shall within
twenty (20) days after such receipt appoint an arbitrator and notify
the party requesting arbitration of the identity of the arbitrator so
selected, and the two arbitrators shall appoint a third, and the
decision or award of any two arbitrators shall be final and binding
upon the parties. In the event that the two arbitrators fail to
appoint a third arbitrator within twenty (20) days of the appointment
of the second arbitrator, either arbitrator, or any party to the
arbitration, may apply to a judge of the United States District Court
for the district in which the arbitration is held for the appointment
of the third arbitrator and the appointment of such arbitrator by such
judge or such application shall have precisely the same force and
effect as if such arbitrator had been appointed by the two
arbitrators. If for any reason the third arbitrator cannot be
appointed in the manner prescribed by the preceding sentence, either
regularly appointed arbitrator, or either party to the arbitration,
may apply to the American Arbitration Association for appointment of
the third arbitrator in accordance with the Rules. If the parties upon
whom the demand for arbitration has been served fail or refuse to
appoint an arbitrator within twenty (20) days, the single arbitrator
shall have the right to decide alone, and such arbitrator's decision
or award shall be final and binding upon the parties. The decision of
the arbitrator shall be in writing and shall set forth the basis
therefor. The parties shall abide by all awards rendered in
arbitration proceedings, and all such awards may be enforced and
executed in any court having jurisdiction over the party against whom
enforcement of such award is sought. The party losing the dispute
which was submitted to arbitration shall pay the administrative
charges, arbitrator's fees, and related expenses of arbitration, and
each parties legal fees incurred in connection with any such
arbitration. This agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law.
23
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
BIOGEN INC.
By: /s/ [illegible]
--------------------
Title: President/CEO
--------------------
NOVA FACTOR, INC.
By: /s/ Randy Grow
--------------------
Title: President
24
<PAGE>
SCHEDULE A
PRODUCTS
Package containing four AVONEX-TM- beta interferon - 1a administration dose
packs
<PAGE>
SCHEDULE B
SPECIFICATIONS
Each AVONEX-TM- beta interferon - 1(a) administration dose pack contains:
1 single-use vial of AVONEX-TM- interferon beta - 1(a)
(containing 30 mcg Interferon beta - 1a, Albumin Human, USP,
Sodium Chloride, USP, Dibasic Sodium Phosphate, USP and
Monobasic Sodium Phosphate, USP)
1 single-use vial of diluent (containing 10mL (10cc) Sterile
Water for Injection USP)
2 alcohol swabs
1 Syringe
1 MicroPin-Registered Trademark-
1 needle
1 adhesive bandage
<PAGE>
SCHEDULE C
*
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE D
*
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE E
*
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE F
EXCLUSION FOR MEDICAID ELIGIBILITY
California
Colorado
Delaware
District of Columbia
Florida
Hawaii
Kansas
Maine
Massachusetts
Nevada
New Jersey
North Carolina
Rhode Island
South Carolina
Vermont
West Virginia
Wisconsin
<PAGE>
SCHEDULE G
FACILITIES EXPANSION AND PROCEDURE MODIFICATION PLAN
Blueprint of "Tenant Layout For Nova Factor, Century Center-Building C, Memphis,
Tennessee", Project No. 9563, dated 9/8/95, prepared by The Crump Firm, Inc., 81
Monroe Building, Memphis, Tennessee.
[Blueprints are intentionally omitted.]
<PAGE>
EXHIBIT 10.36
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
ADDENDUM AND AMENDMENT NO. 3 TO
DISTRIBUTION AND SERVICES AGREEMENT
This Addendum and Amendment No. 3 to Distribution and Services Agreement
is entered into as of this 1st day of July, 1997 by and between Biogen, Inc.,
through its offices located at 701 Green Valley Road, Suite 308, Greensboro,
NC 27408 ("Biogen") and Nova Factor, Inc., with principal offices located at
1620 Century Center Parkway, Suite 109, Memphis, TN 38134 ("Nova Factor").
WHEREAS, Biogen has appointed Nova Factor as a preferred distributor of
Biogen's AVONEX-Registered Trademark- (Interferon beta-1a) under the terms of
a Distribution and Services Agreement between the parties, dated as of
November 1, 1995, as amended by Amendment No. 1 to Distribution and Services
Agreement, dated as of May 17, 1996, and as amended and supplemented by
Addendum and Amendment No. 2 to Distribution and Services Agreement, dated as
of May 21, 1997, (the "Distribution Agreement");
WHEREAS, as additional services under the Distribution Agreement, Biogen
desires Nova Factor to (i) accept and process referrals from physicians under
* program and (ii) to supply Product, as defined in the Distribution
Agreement, to participants in Biogen's variable cap program, and Nova Factor
is willing to provide such additional services on the terms and conditions
set forth in this Addendum;
WHEREAS, to reflect the additional services to be provided by Nova
Factor, the parties desire to supplement and amend the Distribution Agreement
as set forth in this Addendum;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
1. DEFINITION
The capitalized terms used in this Addendum that are defined in the
Distribution Agreement shall have the meanings assigned to such terms in
the Distribution Agreement. In addition, the following terms used in
this Addendum shall have the following meanings:
1.1 "Additional Services" shall mean the services to be provided by
Nova Factor under this Addendum.
1.2 "Free VCAP Product" shall mean Product supplied by Nova Factor,
acting on behalf of Biogen, to a VCAP Participant in a VCAP
Program Year, at no cost to the VCAP Participant or to any third
party payor, after the VCAP Participant has purchased his or her
VCAP Quantity of Product for such VCAP Program Year.
1.3 "Interim" shall mean Interim Healthcare, Inc.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
<PAGE>
1.4 "Paid VCAP Product" shall mean Product supplied by Nova Factor,
acting on behalf of Biogen, to a VCAP Participant in a VCAP
Program Year as part of the VCAP Participant's VCAP Quantity of
Product for such VCAP Program Year.
1.5 *
1.6 *
1.7 *
1.8 "Training Provider" shall mean Interim or such other company as
Biogen shall engage to provide Product administration training
services, and as to whose appointment Biogen shall notify Nova
Factor.
1.9 "Variable Cap Program" shall mean a financial assistance program
funded by Biogen and administered for Biogen by the VCAP
Administrator under which a VCAP Participant who has purchased his
or her VCAP Quantity of Product during a VCAP Program Year will
thereafter receive Free VCAP Product for the remainder of such
VCAP Program Year.
1.10 "VCAP Administrator" shall mean Covance Health Economics and
Outcome Services Inc., or such other administrator of the Variable
Cap Program as Biogen shall appoint and as to whose appointment
Biogen shall notify Nova Factor.
1.11 "VCAP Participant" shall mean an end-user of Product who has been
enrolled in the Variable Cap Program by the VCAP Administrator
acting on behalf of Biogen.
1.12 "VCAP Product" shall mean Free VCAP Product and Paid VCAP Product.
1.13 "VCAP Program Year" for each VCAP Participant shall mean the
twelve-month period commencing with the date of the VCAP
Participant's enrollment or re-enrollment, as the case may be, in
the Variable Cap Program, as determined by the VCAP Administrator.
1.14 "VCAP Quantity", as determined by the VCAP Administrator, for each
VCAP Participant, shall mean the quantity of Product which such
VCAP Participant must purchase in any VCAP Program Year (using
available insurance and other resources) before such VCAP
Participant will be eligible to receive Free VCAP product in such
VCAP Program Year.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
2
<PAGE>
2. *
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
3
<PAGE>
3. VARIABLE CAP PROGRAM
--------------------
3.1 As additional services under the Distribution Agreement, Nova
Factor shall, under the terms of this Addendum, act as a supplier
of VCAP Product on behalf of Biogen to VCAP Participants. Biogen
reserves the right to appoint other distributors of VCAP Product,
provided that Biogen shall give Nova Factor at least *
(*) days written notice prior to any such appointment.
3.2 Biogen, through the VCAP Administrator, shall have sole
responsibility for enrolling participants in the Variable Cap
Program. Upon enrollment of a * Customer into the
Variable Cap Program, as a VCAP Participant, the VCAP
Administrator shall provide notice to Nova Factor, substantially
in the form attached to this Agreement as Schedule C, of the name,
address, telephone number, Nova Factor code number, if applicable,
VCAP Quantity and VCAP Program Year for the VCAP Participant and
shall indicate whether or not the VCAP Participant will be
obtaining Paid VCAP Product through Nova Factor. In the event the
VCAP Participant is using another
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
4
<PAGE>
pharmacy for Paid VCAP Product, the VCAP Administrator shall
provide additional notification to Nova Factor at such time as the
VCAP Participant has purchased his or her VCAP Quantity from such
other source.
3.3 If the VCAP Administrator has indicated that a VCAP Participant
will be obtaining Paid VCAP Product through Nova Factor, Nova
Factor shall, on behalf of Biogen, supply Paid VCAP Product (at a
price determined by Biogen) to the VCAP Participant from Nova
Factor's inventory until the VCAP Participant has received his or
her VCAP Quantity for the applicable VCAP Program Year. Nova
Factor shall notify the VCAP Administrator when a VCAP Participant
who is receiving Paid VCAP Product through Nova Factor has been
shipped his or her VCAP Quantity for the applicable VCAP Program
Year and at such time as the VCAP Participant has fully paid for
the Paid VCAP Product.
3.4 Except as set forth in Section 3.7, after a VCAP Participant has
purchased (and paid for) his or her VCAP Quantity of Product in a
VCAP Program Year, Nova Factor shall, on behalf of Biogen, supply
Free VCAP Product on behalf of Biogen to the VCAP Participant from
Nova Factor's inventory for the remainder of such VCAP Program
Year. Nova Factor shall not bill a VCAP Participant or any insurer
or other third party payor for Free VCAP Product.
3.5 Nova Factor shall have the same obligations with respect to the
supply of VCAP Product to VCAP Participants as Nova Factor has
under the Distribution Agreement with respect to the supply of
Product to Nova Factor customers, including but not limited to
accepting assignment of benefits and billing and collecting with
respect to amounts due to Biogen for Paid VCAP Product, except
that (i) services provided with respect to VCAP Participants shall
be provided by Nova Factor on behalf of Biogen and Biogen shall
pay Nova Factor for such services as specified in Section 6.1 of
this Addendum, (ii) Nova Factor shall not bill a VCAP Participant
or any insurer or other third party payor for Free VCAP Product,
(iii) shipments of VCAP Product to VCAP Participants shall be
identified separately in the Database and in reports provided to
Biogen, as more fully described in Section 4 of this Addendum and
(iv) *. Each shipment of Free VCAP
Product shall be a three (3) months supply except that Nova Factor
shall ship less than a three (3) months supply of Free VCAP
Product when necessary to as not to exceed a VCAP Participant's
VCAP Program Year.
3.6 During each follow-up telephone call to a VCAP Participant under
Section 6.2 of the Distribution Agreement, Nova Factor shall use
its best efforts to confirm that the VCAP Participant's insurance
status or financial condition has not changed. If the VCAP
Participant's insurance status or financial condition has
changed, Nova Factor shall immediately notify the VCAP
Administrator.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
5
<PAGE>
3.7 Nova Factor shall not ship VCAP Product to a VCAP Participant
after the end of the VCAP Participant's VCAP Program Year unless
Nova Factor receives written or faxed notice from the VCAP
Administrator that the VCAP Participant has been re-enrolled in
the Variable Cap Program for the next VCAP Program Year in which
case Nova Factor shall ship Free VCAP Product to the VCAP
Participant only after the VCAP Participant has purchased his or
her VCAP Quantity of Product for the new VCAP Program Year. Nova
Factor shall not ship VCAP Product to a VCAP Participant unless
Nova Factor has received notice of enrollment from the VCAP
Administrator. Nova Factor shall not ship VCAP Product to a VCAP
Participant after Nova Factor receives written notice that the
VCAP Participant is no longer participating in the Variable Cap
Program.
3.8 Nova Factor shall remit to Biogen on a weekly basis all amounts
collected by Nova Factor for Biogen with respect to Paid VCAP
Product supplied to VCAP Participants.
4. DATA AND REPORTS
----------------
In addition to the other information to be maintained in the Database
under the Distribution Agreement, Nova Factor shall maintain in the
Database the information specified in Schedule D to the Agreement
regarding the * Program and distribution of VCAP Product
under the Variable Cap Program. In addition to other reports to be
generated by Nova Factor under the Distribution Agreement, Nova Factor
shall generate the monthly and weekly reports from the Database as
specified in Schedule D to this Addendum.
5. *
---------------------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
6
<PAGE>
5.2 *
6. PAYMENT
6.1 In consideration of the delivery by Nova Factor for Biogen of VCAP
Product to VCAP Participants under this Addendum, Biogen shall pay
to Nova Factor (i) a fee per unit of Paid VCAP Product (four dose
pack) shipped by Nova Factor to VCAP Participants equal to *, and
(ii) a fee of $* per unit of Free
VCAP Product (four dose pack) shipped by Nova Factor to VCAP
Participants, provided that the fee for the supply of Free VCAP
Product shall be reduced to $* per unit of Free VCAP
Product shipped commencing with the first quarter in which *
is $* or less. Nova Factor shall invoice Biogen at
the end of each month for amounts due hereunder with respect to
VCAP Product shipped during such month. Along with its invoice
Nova Factor shall submit to Biogen a report (the "VCAP Program
Report") specifying (i) the total quantity of Paid VCAP Product
shipped to VCAP Participants during the month, (ii) the total
quantity of Free VCAP Product shipped to VCAP Participants during
the month, (iii) the total amount billed and total amount
collected by Nova Factor during the month for Paid VCAP Product
and (iv) the amount then owing from VCAP Participants and third
party payors to Biogen on Paid VCAP Product. All amounts due from
Biogen shall be payable by check to Nova Factor in United States
funds. Payment by Biogen shall be due within * (*) days from
the date of invoice.
6.2 Within * (*) days of receipt of the VCAP Program Report,
Biogen shall issue to Nova Factor a credit in an amount equal to
the quantity of VCAP Product
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
7
<PAGE>
shipped during the month from Nova Factor's inventory under the
terms of this Addendum multiplied by the applicable Credit Price
for the month (as defined in the Distribution Agreement). Nova
Factor may apply credits under this Section against subsequent
purchases of Product under the Distribution Agreement. Credits may
not be assigned or transferred by Nova Factor to a third party,
and no cash payments shall be made on account of any credit. Nova
Factor shall not unilaterally apply any credit against or make any
deductions from payments due to Biogen without the prior written
approval of Biogen. Nova Factor shall apply credits on a first-in,
first-out basis.
6.3 Except as otherwise set forth herein, Nova Factor shall be
responsible for all costs and expenses associated with fulfilling
its obligations under this Agreement.
7. REPRESENTATIONS
---------------
Nova Factor shall not engage in any promotional activities with respect
to the * Program or the Variable Cap Program, other than
the distribution of literature approved by Biogen and other activities
expressly authorized by Biogen. Nova Factor shall not use any
promotional materials which refer to the * Program or the
Variable Cap Program unless such promotional materials have been approved
in writing in advance by Biogen. Any promotional literature or verbal
representations describing Nova Factor's role in the *
Program or the Variable Cap Program shall be approved in advance
in writing by Biogen.
8. TERMINATION
-----------
Biogen may terminate all or a portion of the Additional Services at any
time, upon forty-five (45) days' written notice to Nova Factor, without
terminating the entire Distribution Agreement, provided that
notwithstanding anything to the contrary contained in this Agreement,
Biogen may terminate further enrollment in the VCAP Program at any time
without prior notice to Nova Factor. After receipt of the termination
notice with respect to some or all of the Additional Services and during
the period thereafter ending six (6) months after such termination, Nova
Factor shall use reasonable efforts to cooperate with Biogen in ensuring
the smooth transition of the terminated services to a distributor
designated by Biogen.
9. DISTRIBUTION AGREEMENT
----------------------
The Additional Services to be provided by Nova Factor under this
Addendum shall be deemed to be services provided and obligations assumed
by Nova Factor under the terms of the Distribution Agreement, and,
except as expressly set forth herein, the terms of the Distribution
Agreement shall apply with full force and effect to such obligations and
the performance of such services.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Addendum on the date first
above written.
BIOGEN, INC.
By: /s/ Mark W. Leuchtenberger
-----------------------------------
Mark W. Leuchtenberger
Vice President--Marketing
and Sales
By: /s/ Darlene Romine
-----------------------------------
Darlene Romine
Director of National Accounts
NOVA FACTOR, INC.
By: /s/ Randy Grow
-----------------------------------
Title: President
9
<PAGE>
SCHEDULE A
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE B
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE C
Form of status report from VCAP Administrator
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
VARIABLE CAP PROGRAM
PATIENT RECONCILIATION REPORT
PATIENTS REGISTERED AT COVANCE AS OF JUNE 23, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Patient ID# Status
- -------------------------------------------------------------------------------
<S> <C> <C>
Patient Name 999 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 998 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 7271 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 7157 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 997 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 901 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 7237 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 7144 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 7093 Denied by Phone: VCAP
- -------------------------------------------------------------------------------
Patient Name 3487 In Process - VCAP Program
- -------------------------------------------------------------------------------
Patient Name 6987 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7372 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7383 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 996 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 3706 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7307 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 6136 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 588 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 995 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 6917 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7143 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7373 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 6918 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7393 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 6962 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7329 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7006 In Process: VCAP Program
- -------------------------------------------------------------------------------
Patient Name 7195 VCAP declined
- -------------------------------------------------------------------------------
Patient Name 4693 VCAP declined
- -------------------------------------------------------------------------------
Patient Name 902 VCAP declined
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE D
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.41
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
TEXAS HEALTH PHARMACEUTICAL RESOURCES
PARTNERSHIP AGREEMENT
This PARTNERSHIP AGREEMENT (the "Agreement") is made and entered into as of
the 1st day of July, 1994, by and between ALTERNATIVE CARE SYSTEMS, INC.
("ACS"), a Texas for profit corporation, and NOVA FACTOR, INC. ("NF"), a
Tennessee for profit corporation;
WITNESSETH:
WHEREAS, ACS is a Texas business corporation, all of the capital stock of
which is owned by Children Health Services of Texas, a Texas non-profit
corporation; and
WHEREAS, ACS and NF believe that it is necessary for them to join together
in order to create an economically viable entity capable of providing goods and
services contemplated herein; and
WHEREAS, ACS and NF have mutually agreed to form a general partnership
under and pursuant to the laws of Tennessee for the purposes and upon the terms
hereinafter set forth in this Agreement;
NOW, THEREFORE, In consideration of the mutual promises and agreements of
the parties hereto, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby
- 1 -
<PAGE>
acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE I
FORMATION OF PARTNERSHIP
1.01. Formation. ACS and NF (both of which are sometimes hereinafter
referred to collectively as the "Partners" and each of which is sometimes
hereinafter referred to individually as a "Partner") hereby form a general
partnership (the "Partnership") pursuant to the provisions of the Tennessee
Uniform Partnership Act (the "Act"). In the event of a conflict between the
provisions of the Act and the provisions of this Agreement, the latter shall
control.
1.02. Name and Office. The name of the Partnership shall be Texas Health
Pharmaceutical Resources. The Partners may change the name from time to time,
and the Partnership may also do business under one or more fictitious names as
determined by the Partnership's Steering Committee. The principal office of the
Partnership shall be in Dallas, Texas.
1.03. Purpose. The purpose of the Partnership is (i) to market, sell,
provide and distribute drugs manufactured by other parties, such as growth
hormone, hemophilia therapy services and supplies (clotting factor and blood
components) and other drugs,
- 2 -
<PAGE>
either as a dealer or a distributor for the manufacturer or its' duly authorized
agents. ("Drug Therapies").
ARTICLE II
AREA OF OPERATION OF PARTNERSHIP AND RELATED RIGHTS
AND OBLIGATIONS OF THE PARTNERS
2.01 Definitions. For purposes of this Agreement, the following terms shall
have the following respective meanings:
(a) "Target Provider" means all health Caregivers listed on Exhibit A.
(b) "Caregiver" means the provider of health care at which, or from whom,
the patient is, at the time of any determination made pursuant to the provisions
of this Article II, receiving care, as either an outpatient or inpatient" for
the condition or illness which necessitates the use of goods or services offered
by the Partnership. Solely in the context of a Target Provider, the patient's
Caregiver will be the Target Provider if the Target Provider is at the time of
determination in a position to refer the patient to the Partnership by reason of
its providing, paying for or arranging for the provision of health care to the
patient for the condition or illness which necessitates the purchase of goods
from or the use of services provided by the Partnership.
- 3 -
<PAGE>
2.02 Service Area. The service area of the business of the Partnership
shall be the area encompassed within the 50 mile radius of Dallas, Texas and
within the city limits of Lubbock, Texas.
2.03 Non-Competition.
(a) Restriction on Partner's Activities With Respect to Patients. Each
Partner agrees that, during the term of this Agreement, it shall not compete
with the Partnership by providing therapies, services, supplies or goods which
are encompassed within the definition of the business purposes of the
Partnership (as set forth in Article I of this Agreement) to any patient who has
his principal residence in the Service Area or whose Caregiver is either located
in the Service Area or a Target Provider ("Restricted Patient"). From time to
time, either Partner may, but shall have no obligation to, refer non-restricted
Patients to the Partnership from outside the Service Area.
(b) Notwithstanding the preceding provisions of this Article II, the
restrictions or activities contained in this Article II shall not apply to
Restricted Patients as defined in the Operating Agreement for the Campus Home
Health L.L.C. formed between the Partners and Zale Lipshy University Hospital,
nor to Restricted Patients as defined in the Partnership Agreement between Nova
Factor, Inc. and Cook-Fort Worth Children's Medical Center. Notwithstanding the
preceding provisions of this Article II, the restrictions on activities
contained in this Article II shall not
- 4 -
<PAGE>
apply to therapies, services, supplies or goods which are not at the time in
question being offered by the Partnership. However, if a Partner wishes to
provide therapies, services, supplies or goods of a type which is encompassed
within the business purposes of the Partnership (as set out in Article I) but
which is not then currently being offered by the Partnership, to Restricted
Patients, the Partner shall first notify the Partnership of its intentions. The
Partnership shall then have * days within which to notify the Partner in
writing that it elects to offer the therapy, services, supplies or goods. During
such * day period the proposing Partner shall not compete with the Partnership
and shall disclose any information reasonably requested by the Partnership as
being necessary to reach a decision as to whether the Partnership should provide
the new therapies, services, supplies or goods. If the Partnership elects to
offer such therapy, services, supplies or goods, the restrictions on competition
shall apply to the therapy, services, supplies or goods for so long as the
Partnership continues such election.
(c) Neither Partner shall be in violation of this Article II if it has made
reasonable inquiry of the patient and the patient has denied having a principal
residence or Caregiver which would cause the patient to be covered by these
restrictions. However, if the correct information is subsequently discovered
such that the patient should not have been provided therapies, services,
supplies or goods, the Partner shall so advise the patient and shall use
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
- 5 -
<PAGE>
reasonable efforts to encourage the patient to have such therapies, services,
supplies or goods, as the case may be, provided by the Partnership, consistent
with the right of the patient to select his own care provider.
(d) All restrictions contained in this Section 2.03 shall terminate upon
termination of the Partnership.
ARTICLE III
TERM OF PARTNERSHIP
The Partnership shall commence as of the date of this Agreement and
continue until March 31, 1999, unless (i) terminated at an earlier date in
accordance with Section 11.01 hereof; or (ii) extended beyond such date by
agreement of the Partners.
ARTICLE IV
PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS
4.01. Partnership Interests. The percentage interest (the "Partnership
Percentage") of each Partner in the assets, liabilities, profits, losses, income
and expenses of the Partnership shall be fifty percent (50%).
4.02. Initial Capital Contribution. Each Partner shall contribute to the
capital of the Partnership the sum of $ . Such contributions shall be in cash
and shall constitute the
- 6 -
<PAGE>
initial capital of the Partnership. Such contributions shall be made within a
reasonable period of time following execution of this Agreement as agreed upon
by the Partners.
4.03. Additional Capital Contributions. In the event that at one time (or
from time to time) funds in excess of retained operating revenues and any
Partnership borrowings are required by the Partnership for or in respect of its
business or any of its obligations, expenses, costs, liabilities or expenditures
(including, without limitation, operating deficits), the Partners shall
contribute cash to the capital of the Partnership in such amounts as are
determined ("Additional Capital Contribution"), and on such dates as are set
(the "Contribution Date") by the unanimous vote of all members of the Steering
Committee. Each Partner shall contribute its share of such amounts based on its
Partnership Percentage.
4.04. Failure To Make Additional Capital Contribution. In the event that a
Partner fails to make an Additional Capital Contribution as required under
Section 4.03 hereof, the amount of Additional Capital Contribution made by the
other Partner (the "Contributing Partner") shall not be treated as a Capital
Contribution but shall instead be treated as a loan from the Contributing
Partner to the Partnership. Such loan shall be evidenced in the manner deemed
appropriate by the Contributing Partner and shall be secured by a security
interest in the
- 7 -
<PAGE>
Partnership Receipts (as defined in Section 5.02). Such loan shall bear interest
at an annual rate equal to the lower of: (i) four percent (4%) more than the
prime rate, as set by the Chase Manhattan Bank, N.A., One Chase Manhattan Plaza,
New York, New York 10081, in effect on the Contribution Date; or (ii) the
maximum rate permitted under applicable law; and said loan, principal and
interest, shall be repaid on a quarterly basis from the Partnership Receipts
before distributions are made to the Partners. The amount of the loan to be
repaid each quarter shall be determined by the Steering Committee, provided
however, that the loan shall be repaid as promptly as possible taking into
account the reasonable needs of the Partnership to retain cash for the operation
of the business of the Partnership. All repayments shall be first applied
against interest due before reducing the principal balance of the loan.
4.05. Interest on Capital Contributions. No interest shall accrue or be
paid the Partners on Capital Contributions and Additional Capital Contributions.
4.06. Limit on Contributions, Extent of Liability. Except as provided in
Sections 4.02 and 4.03 hereof, the Partners shall not be required to make any
capital contributions, loans, or other advances to the Partnership. The Partners
shall have no personal liability, one to another, for the payment or repayment
of Contributions or loans made pursuant to this Article IV, except as
- 8 -
<PAGE>
provided in Section 11.02 hereof where there is a Delinquent Partner (as defined
in Section 11.02).
4.07. No Third Party Benefit. The provisions of Section 4.03 hereof are not
intended to be for the benefit of any creditor or other person (other than a
Partner in his capacity as a Partner) to whom any debts, liabilities or
obligations are owed by, or who otherwise has any claim against, the Partnership
or any of the Partners; and no such creditor or other person shall by reason of
any such foregoing provisions make any claim in respect of any debt, liability
or obligation (or otherwise) against the Partnership or any of the Partners.
ARTICLE V
CAPITAL ACCOUNTS, DISTRIBUTIONS, ALLOCATIONS
5.01. Capital Accounts. The Partnership Steering Committee shall establish
and maintain on the Partnership Books a capital account for each Partner. The
capital account of each Partner shall be credited with (i) the initial Capital
Contribution made by such Partner pursuant to Section 4.02 hereof; (ii)
Additional Capital Contributions made by such Partner pursuant to Section 4.03
hereafter and (iii) such Partner's Partnership Percentage of the net profits of
the Partnership. The capital account of each Partner shall be decreased by (i)
the amount of any distribution which is made to such Partner pursuant to Section
5.02
- 9 -
<PAGE>
hereof, and (ii) such Partner's Partnership Percentage of all net losses of the
Partnership.
5.02. Distributions. The Partnership Steering Committee shall, as soon as
practicable following the end of each fiscal quarter of the Partnership,
distribute to the Partners their respective Partnership Percentages of any
amounts of cash (the "Partnership Receipts") held by the Partnership which are
in excess of amounts reasonably required for operation of the business of the
Partnership in accordance with the approved Partnership Budget (as described in
Section 7.03 hereof).
5.03. Allocation of Income and Losses. The net profits and losses of the
Partnership and each item of income, gain, loss, deduction or credit entering
into the computation thereof shall, for accounting and tax purposes, be
allocated to and between the Partners in proportion to their respective
Partnership Percentages.
ARTICLE VI
PATIENT DEVELOPMENT AND REFERRAL
- 10 -
<PAGE>
6.01. CMC Patients. Partnership will arrange for homecare services to
individual patients discharged from Children Medical Center of Dallas ("CMC")
based upon the assumption that homecare services remain as they are currently
provided by the Partnership. If new homecare services are developed, the
partners will review the situation to arrive at a mutually satisfactory position
on care.
6.02. Best Efforts Obligations of Partners. The Partners agree to use their
best efforts to promote the sale of services and supplies offered by the
Partnership to Restricted Patients. However, both Partners are in the same
business as Partnership and unless a Partner's actions would violate the
restrictions contained in Article II, the Partners may compete with the
Partnership without such competition constituting a breach of loyalty or other
duty owed by a Partner to the Partnership.
ARTICLE VII
PARTNERSHIP MANAGEMENT
7.01. Steering, Committee. The overall management and control of the
business and affairs of the Partnership shall be vested in the Steering
Committee. The Steering Committee will consist of two persons designated by ACS,
two persons designated by NF, and one additional member to be selected by the
remaining Steering Committee members, by unanimous vote. Each Steering
- 11 -
<PAGE>
Committee member will serve at the pleasure of the Partner designating such
member and may be replaced, with or without cause, at any time by such Partner,
except that the member chosen by the Steering Committee itself will serve at the
pleasure of both Partners and shall be replaced, with or without cause, at any
time at the request of either Partner. In the event that the Steering Committee
member selected by the Committee must be replaced, the remaining Steering
Committee members, by unanimous vote, will select a successor. Except with
respect to Partnership Major Decisions as set forth in Section 7.02, approval of
the Partnership Budget or as otherwise provided in this Section with respect to
Steering Committee membership selection, the act of a majority of the members of
the Steering Committee shall constitute the act of the entire Committee, so long
as each member is given written notice at least three days in advance of a
Steering Committee meeting (unless such notice is waived in writing by a member
at any time) of all actions proposed to be taken at that meeting by the Steering
Committee. The presence of a quorum of the Steering Committee members shall be
necessary at any meeting for the transaction of business. A quorum shall consist
of four members of the Steering Committee provided however that any Steering
Committee member appointed by a Partner may be represented by a substitute
designated by the Partner which designated the Steering Committee member who is
to be represented by the substitute.
- 12 -
<PAGE>
(a) Meetings. The Steering Committee shall meet regularly at such times and
places as it shall determine, provided that a Partner may call a special meeting
of the Steering Committee on three days' advance written notice to all members
of the Committee. Meetings of the Steering Committee may, upon the request of
any two members and as otherwise agreed, be held by means of conference
telephone or similar communications equipment by means of which all members
participating in a meeting can hear and speak to each other. The members of the
Steering Committee shall elect a chairman to preside at all the meetings of the
Steering Committee, which chairman will be responsible for providing notice for
meetings and proposed actions to be taken by the Steering Committee, and for
maintaining minutes of Steering Committee meetings.
(b) Responsibilities. The Steering Committee, either directly, or by
specific delegation to one or more of its members, or by contract with a third
party, shall be responsible for the implementation of the Partnership Major
Decisions and for conducting the ordinary and usual business and affairs of the
Partnership in accordance with and as limited by this Agreement, including,
without limitation, the following:
(i) protecting and preserving the title and interests of the Partnership
with respect to all property and other assets owned by the Partnership;
- 13 -
<PAGE>
(ii) filing any tax returns and paying all taxes, assessments and other
governmental impositions applicable to the Partnership;
(iii) negotiating and entering into and supervising the performance of
contracts and other agreements, subject to the provisions of Section 7.02
hereof;
(iv) maintaining all Partnership Books and other records of the
Partnership;
(v) collecting all amounts due to the Partnership;
(vi) to the extent that funds of the Partnership are available therefor,
paying all debts and other obligations of the Partnership;
(vii) maintaining all funds of the Partnership in a bank or banks as
provided in Section 9.04 hereof;
(viii) making distributions to the Partners in accordance with the
provisions of Section 5.02 hereof;
(ix) performing other normal business functions and otherwise operating and
managing the business and affairs of the Partnership in accordance with and as
limited by this Agreement;
- 14 -
<PAGE>
(x) appointing or removing any officers of the Partnership in accordance
with Section 7.04 hereof, delegating to such officers any responsibilities which
may be delegated to such officers under this Agreement, and directing such
officers in the performance of their respective responsibilities;
(xi) hiring and firing of Partnership personnel;
(xii) engaging legal counsel;
(xiii) determining all advertising and other promotional activities on
behalf of the Partnership (as distinguished from individual partners); and
(xiv) performing any other obligations required elsewhere in this Agreement
to be performed by the Steering Committee.
(c) Limitation of Responsibilities. The Steering Committee shall be
obligated to perform its respective responsibilities and obligations hereunder
only to the extent that funds of the Partnership are available therefor.
Notwithstanding any other provisions hereof, the members of the Steering
Committee shall be liable to the Partnership and the Partners only for actions
constituting bad faith or breach of an express provision of this Agreement, but
in all other respects shall not be liable for mistakes of judgment.
- 15 -
<PAGE>
7.02. Partnership Major Decisions. No act shall be taken or funds expended
or obligation incurred by the Partnership, by any Partner acting on behalf of
the Partnership, by any member of the Steering Committee acting on behalf of the
Partnership, or by any officer of the Partnership appointed pursuant to Section
7.04 hereof acting on behalf of the Partnership, with respect to a matter within
the scope of any of the Partnership Major Decisions, as hereinafter defined,
affecting the Partnership, unless such Partnership Major Decision shall have
been unanimously approved in advance in writing by all the members of the
Steering Committee. The "Partnership Major Decisions" shall be the following:
(a) acquiring any real estate or interest therein, including, without
limitation, entering into, terminating or modifying leases or other arrangements
involving space occupied or to be occupied by the Partnership, except as
previously provided for in the Partnership Budget;
(b) borrowing any money or property or otherwise obtaining financing for
the Partnership, other than credit purchases of goods and services on a current
basis and in the normal course of business, or except as previously provided for
in the Partnership Budget;
- 16 -
<PAGE>
(c) selling, leasing or otherwise transferring, or mortgaging, pledging,
granting a security interest in, or otherwise encumbering any of the property or
other assets of the Partnership;
(d) taking, or omitting to take, any action if such action or omission
would constitute a breach or default under any agreement or instrument to which
the Partnership is a party or by which it or any of its properties is bound;
(e) entering into, or permitting any amendment or termination of, any
contract of insurance, except in the ordinary course of business of the
Partnership or as previously provided for in the Partnership Budget;
(f) entering into, or permitting any amendment or termination of, any
contract, agreement, license or other instrument involving (i) the expenditure
of an amount in excess of the amount provided for in the Partnership Budget or,
if not specifically covered by the Partnership Budget, an amount in excess of
twenty thousand dollars ($20,000.00); (ii) a financial interest on the part of,
or a relationship with, a Partner or any officer, director, shareholder or
partner of a Partner, or any two or more such persons or entities, or between
the Partnership and any other corporation, partnership, association or other
organization in which any one or more of the aforementioned persons is a
director or officer, or has a financial interest, regardless of amount; or
- 17 -
<PAGE>
(iii) a duration for a period of more than one (1) year, or (iv) a matter not
undertaken in the ordinary course of the business of the Partnership;
(g) organizing, acquiring or disposing of an interest in, merging or
combining with, or entering into a corporation, partnership or joint venture
with any other person or entity;
(h) admitting any new Partner;
(i) adopting any general rules or guidelines governing the conduct of the
business and affairs of the Partnership;
(j) changing the location of the Partnership's principal office and
establishing or terminating any additional offices;
(k) selecting depreciation and accounting methods, establishing reserves,
and making other decisions with respect to the treatment of various transactions
for federal income and other tax purposes;
(l) determining whether or not distributions should be made to the Partners
in accordance with the provisions of Section 5.02 hereof;
- 18 -
<PAGE>
(m) approving, modifying or taking any action inconsistent with the
Partnership Budget;
(n) making any capital or other expenditure or incurring any obligation by,
for or of the Partnership in an amount exceeding twenty thousand dollars
($20,000.00) for any one transaction or series of related transactions, except
with respect to expenditures made and obligations incurred pursuant to the
Partnership Budget;
(o) initiating, terminating and settling legal proceedings;
(p) establishing or terminating bank accounts and depositing or investing
funds in any other manner, and designating authorized signatories for all such
accounts;
(q) establishing any employee benefit program;
(r) determining the type and limits of fidelity bonds obtained on various
employees of the Partnership;
(s) making any other decision or taking any other action which by any
provision of this Agreement is required to be approved by the Partnership, or
which reasonably would be expected to have a material effect on the Partnership
or the assets or operations thereof, except with respect to expenditures made
and obligations
- 19 -
<PAGE>
incurred pursuant to a Partnership Budget or another approved Partnership Major
Decision;
(t) determining the amount of Additional Capital Contributions pursuant to
Section 4.03 hereof; and
(u) establishing charges for Partnership goods and services.
7.03. Partnership Budget. Prior to the beginning of each fiscal year (and,
in the first instance, as soon as practicable after the date of this Agreement),
the Steering Committee shall prepare and, upon the concurrence of all members of
the Steering Committee, approve in accordance with Section 7.02 hereof a budget
("Partnership Budget") setting forth the estimated receipts and expenditures
(capital, operating and other) of the Partnership for the period covered by the
Partnership Budget. The first Partnership Budget shall be developed from a
suggested Partnership Budget prepared by the Partners prior to execution of this
Agreement and submitted to the Steering Committee for such use. When the
Partnership Budget has been approved, the Steering Committee, the members
thereof, and any officers appointed by the Steering Committee in accordance with
Section 7.04 hereof, shall in good faith use their best effort to implement the
Partnership Budget and shall be authorized, without the need for further
approval of the Partners, to make expenditures and incur the obligations as
provided in the Partnership Budget.
- 20 -
<PAGE>
7.04. Officers. The Steering Committee shall be authorized to appoint a
General Manager, and such other officers or agents of the Partnership, with such
titles and responsibilities, as the Steering Committee shall from time to time
designate in accordance with Section 7.01 hereof. To the extent that such duties
have not been contractually delegated to a third party, the Steering Committee
may authorize officers of the Partnership to exercise any of the powers or to
carry out any of the responsibilities of the Steering Committee set forth in
Section 7.01(b) hereof, provided, however, that the Steering Committee may not
delegate to any officer or officers of the Partnership the responsibility (i)
for making Partnership Major Decisions, or (ii) to carry out any of the
responsibilities of the Steering Committee described in Section 7.01(b)(x)
hereof. Any officer appointed by the Steering Committee may be removed at any
time from such office, with or without cause, by the Steering Committee, by
written notice to such officer, as provided in Section 7.01(b) hereof.
7.05. Audit. Either Partner may at its discretion, request a consolidated
audit of the Partnership's financial statements to be prepared and paid for by
the Partnership.
ARTICLE VIII
OPERATIONS AND EMPLOYEES
- 21 -
<PAGE>
8.01. Operations. Notwithstanding the restriction that the Partnership
shall not enter into any separate agreement with either Partner without the
written consent of the Partner which is not a party to such agreement, both
Partners consent and agree that as needed the Partnership may contract with NF
or its parent, Southern Health Systems, Inc. ("SHS") for certain supplies,
equipment, solutions and other materials and for the performance of certain
services as may be needed and reasonably available from NF or SHS. Consent of
the Steering Committee shall be required for entering into these contracts.
8.02. Employee Protection. During the term of this Agreement and for a
period of eighteen (18) months following termination of this Agreement, each
Partner agrees that neither it, nor any entity associated with it or under its
control will hire any employee of the Partnership who, immediately prior to
employment by the Partnership, was an employee of the other Partner (or its
corporate affiliates or subsidiaries). This limitation will be subject to waiver
based on written consent of both Partners.
8.03. Proprietary Information. Each Partner is currently engaged in the
same business as the Partnership and each Partner has developed, or may develop
during the term hereof, certain formulas, products, methods of doing business,
customer lists and other proprietary information which the Partner deems to be
- 22 -
<PAGE>
confidential and a trade secret. Some of these formulae, products, methods and
other proprietary information will be made available to the Partnership, and
thus become known to the other Partner. It is contemplated that each employee or
agent of the Partnership who will be exposed to such confidential information
will be required to execute a confidentiality agreement. Each Partner also
agrees that it will not duplicate, make use of, or disclose, in any manner
whatsoever, any information which is deemed to be confidential by the other
Partner, either during or after the term of this Agreement, without the express
prior written consent of the other Partner. Each Partner further agrees that it
will cause its employees and agents who will have access to such information to
execute a confidentiality agreement similar to that executed by employees and
agents of the Partnership.
In the event that any information deemed to be confidential by a Partner is
provided to the Partnership or its employees or agents in writing, the Partner
providing same shall mark the writing as "confidential". In the event that such
information is provided in non-written form such as orally, by audio tape,
videotape or computer software or disc, the Partner claiming such information to
be confidential shall furnish to the other Partner and/or the Partnership's
employees and agents a written list containing a brief description of such item
and designating such item as confidential. Upon termination of this Agreement
all copies of any information hereunder deemed, or designated as, confidential
by a
- 23 -
<PAGE>
Partner shall be returned to the Partner who supplied the information, or who
designated same as confidential. Notwithstanding the preceding provisions the
following types of information provided by a Partner shall always be deemed
confidential whether or not so designated: Patient records; prescription files;
lists of patient names, addresses or phone numbers; lists of referring
practitioner names, addresses or phone numbers; costs of goods and supplies; and
financial records of the Partner.
It is recognized and acknowledged that damages caused by a Partner's breach
of this Section would be difficult to ascertain and would not adequately
compensate the other Partner for its losses. Therefore, both Partners agree that
the Partner claiming a breach of this Section shall be entitled to injunctive
relief to restrain the commission or continued commission of said breach either
through the arbitration procedures set out herein or, at the injured Partner's
discretion, by seeking such relief from a court of competent jurisdiction.
Notwithstanding the preceding paragraphs of this Section, this restriction
shall not apply to (i) any information which is not deemed confidential
hereunder, or which has not been designated as confidential in the manner
specified herein, (ii) any information which was known to a Partner prior to its
disclosure by the other Partner, (iii) any information which is or becomes
public knowledge
- 24 -
<PAGE>
through no failure of a party bound by this Agreement, or (iv) any information
which is independently developed by a party hereto.
It is further contemplated that each Partner will execute a confidentiality
agreement with the Partnership by which, subject to Sections 11.04 and 14.01
herein, each will agree not to disclose during the term of the Partnership
confidential information developed by the Partnership.
ARTICLE IX
ACCOUNTING
9.01. Fiscal Year. The fiscal year of the Partnership for purposes of
accounting and federal and local income and other taxes shall begin on January 1
and end on December 31 of each year of the term.
9.02. Books and Records. The Steering Committee shall establish, maintain
and keep accurate, full and complete books of account and records (the
"Partnership Books") showing the assets and liabilities, revenues and
expenditures, and all other aspects of the operations, transactions and
financial condition of the Partnership (including changes in the respective
capital accounts of the Partners). The Partnership Books shall be maintained at
the principal office of the Partnership or at such other place reasonably
designated by the Steering Committee, and each Partner and its authorized
representatives shall have access to the
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Partnership Books during ordinary business hours. The Partnership Books shall be
maintained in accordance with generally accepted accounting principles,
consistently applied.
9.03. Financial Reports. The Steering Committee shall cause to be prepared
and submitted to each Partner, within one hundred fifty (150) days after the end
of each fiscal year, unaudited financial statements for the fiscal year showing
the revenues and expenditures, and the assets and liabilities, of the
Partnership. In addition, the Steering Committee shall cause to be prepared and
submitted to each Partner, within thirty (30) days after the end of each month,
an unaudited financial statement for that month, showing the revenues and
expenditures, and the assets and liabilities, of the Partnership for such month.
9.04. Bank Accounts. All receipts, funds and income of the Partnership
shall be deposited in an account or accounts in the name of the Partnership in
such bank or banks as shall be designated by the Steering Committee. All such
bank accounts shall be owned by both Partners, and the signatories for such bank
accounts shall be duly authorized representatives selected by both Partners,
together with such other persons as the Partners may jointly designate for
specific accounts. No check to one Partner shall be issued without the signature
of a representative of the other Partner. There shall be no commingling of the
monies and funds of the Partnership with monies and funds of any other entity,
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and such monies and funds shall be maintained in separate and distinct accounts
of the Partnership.
9.05. Tax Status and Tax Returns. Each of the Partners hereby recognizes
that, for United States federal income tax purposes, the Partnership will be
subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the
United States Internal Revenue Code of 1986, as amended. The Steering Committee
shall prepare the informational U.S. federal, state and municipal tax returns
required to be filed by the Partnership, and all other tax returns required to
be filed by the Partnership; provided, however, that the filing of U.S. federal,
state, municipal and other tax returns shall not be construed to extend the
purposes of the Partnership or expand the obligations or liabilities of the
Partners.
ARTICLE X
RESTRICTIONS ON TRANSFER OF INTERESTS
IN PARTNERSHIP, RIGHT OF FIRST REFUSAL
10.01. Restrictions on Transfer. During the term of this Agreement, neither
Partner may, directly or indirectly sell, transfer, assign, give, pledge,
syndicate, hypothecate, encumber, alienate or otherwise dispose of (voluntarily
or involuntarily, by operation of law or otherwise) all or any part of its
interest in the Partnership without the prior consent of the other Partner,
except that either Partner may transfer not less than all of its interest in the
Partnership (a) to a corporation which is wholly
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owned by such Partner, or which acquires substantially all of the assets and
assumes substantially all of the liabilities of such Partner (including
specifically assuming in writing all of the Partner's obligations under this
Agreement) or (b) in the manner provided in Section 10.02 hereof. If a loan to
the Partnership from a Partner who desires to sell its Partnership interest
remains outstanding at the time of sale, all of the selling Partner's rights in
said loan must be sold as part of the selling Partner's Partnership interest.
10.02. Right of First Refusal. This Section sets forth a procedure by which
a Partner may sell all of its interest in the Partnership, but does not
authorize a Partner to sell less than all of its interest in the Partnership
without the consent of the other Partner. In the event a Partner desires to sell
all (but not a part) of its interests in the Partnership, it shall first notify
and fully inform the other Partner in writing of the identity of the proposed
buyer ("Buyer") and the proposed terms and conditions of such proposed sale
("Notice of Proposed Sale") and shall afford the non-selling Partner the
opportunity, within thirty (30) days after receiving such notice, to elect to
purchase such interests in accordance with such proposed terms and conditions by
delivery of written notice to this effect to the selling Partner. In the event
the non-selling Partner shall so elect to make a purchase of such interests on
such terms and conditions, the closing on the purchase will take place according
to the proposed terms and conditions of
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the sale, or, if not specified, within a reasonable period (but not more than
ninety (90) days) after such election to purchase is made. In the event the
non-selling Partner does not so elect, within the 30 days period to purchase
such interests so offered, the selling Partner will then be free to sell to the
proposed Buyer all (but not part) of such interests on terms no less favorable
to the selling Partner than the proposed terms and conditions specified in the
Notice of Proposed Sale within a period of one hundred and twenty (120) days
after the end of such 30 day period. In the event that the sale does take place
to the proposed Buyer in compliance with this Section within the 120 day period,
the selling Partner shall give written notice to this effect to the non-selling
Partner no later than the date of the closing thereof. At any time following
receipt of the Notice of Proposed Sale and prior to expiration of 30 days
following the closing thereof, the nonselling Partner shall have the right (by
delivering notice to the selling Partner or to the Buyer (if the sale has
closed)) to terminate this Agreement. In the event a sale of such interests is
not made by the selling Partner to the proposed Buyer during such 120 day
period, any sale by that Partner of its interests in the Partnership will
require compliance anew with the provisions of this Section.
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<PAGE>
ARTICLE XI
TERMINATION
11.01. Partnership Termination. The Partnership shall terminate upon the
first to occur of the following events:
(a) upon the written agreement of the Partners to terminate this Agreement:
(b) upon written notice by either Partner (the "Non-Defaulting Partner"),
if the other Partner (the "Defaulting Partner") shall fail to perform its
obligations hereunder, including without limitation the failure to make its
share of Additional Contributions as required by Section 4.03 hereof (the
"Default"), and such Default shall continue for a period of at least forty-five
(45) days after written notice of such Default from the Non-Defaulting Partner
to the Defaulting Partner;
(c) upon the permanent cessation or abandonment of the business of the
Partnership;
(d) upon 12 months written notice of termination by either Partner;
provided, however, that neither Partner may request termination under this
Section 11.01(d) sooner than twelve (12) months following execution of the
Agreement;
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(e) if either Partner (i) shall voluntarily suspend or otherwise
discontinue its business operations; (ii) shall become insolvent; (iii) shall
become unable to pay or shall fail to pay generally its debts as such debts
become due, or shall admit in writing such inability or such failure to pay
generally its debts when due; (iv) shall make a general assignment for the
benefit of its creditors or shall enter into a composition agreement with its
creditors; (v) shall take or authorize any action preparatory to, or for the
purpose of, commencing (in the capacity of debtor) a voluntary case under any
applicable chapter of Title 11 of the United States Code, 11 U.S.C. Sections 101
et seq. (entitled "Bankruptcy"), or any future United States bankruptcy code or
statute; or (vi) shall have possession of all or a substantial portion of its
property taken by a custodian, receiver, trustee or assignee for the benefit of
creditors, or shall consent to such possession;
(f) upon the acquisition by either Partner of all of the other Partner's
interest in the Partnership in accordance with Section 10.02 hereof or
otherwise;
(g) upon election by the non-selling Partner pursuant to Section 10.02
hereof; or
(h) upon expiration of this Agreement.
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<PAGE>
11.02. Distributions on Partnership Termination.
(a) Upon termination of the Partnership, the affairs of the Partnership
shall be wound up as soon as practicable. A reasonable time shall be allowed for
the liquidation mad discharge of the liabilities of the Partnership. Each
Partner shall be furnished with an audited financial statement, prepared by the
Partnership's Certified Public Accountants, setting forth the total amount of
assets and liabilities of the Partnership as of the date of complete
liquidation. In the event that the liabilities of the Partnership (including
loans to Partners shall exceed the assets available for distribution, the
Partners shall assume and pay the excess in accordance with their respective
Partnership Percentages, and in the event that any Partner (the "Delinquent
Partner") shall fail to pay its full share of any such excess and the other
Partner is required to do so, then the other Partner shall be entitled to
contribution from the Delinquent Partner to the extent of the Delinquent
Partner's obligation hereunder. During the period of the winding up of the
Partnership, the affairs of the Partnership shall continue to the extent
necessary to permit an orderly termination thereof.
(b) The Partnership assets shall be used and distributed first to pay the
liabilities of the Partnership, including the complete satisfaction of all liens
against Partnership property
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(other than the loans or advances that may have been made by the Partners to the
Partnership) and the expenses of liquidation. The remaining Partnership assets
shall next be applied to the repayment of any loans or advances made to the
Partnership by the partners. The net assets of the Partnership, after making all
of the payments previously set forth in this Section shall be distributed to the
Partners in an amount equal to their respective Partnership Percentage in the
Partnership. If assets other than cash are distributed, such assets shall be
valued at their then fair market value.
(c) Distribution upon liquidation shall be in full and final satisfaction
of all amounts of capital contributed by the Partners pursuant to Section 4.02
and 4.03 hereof.
11.03. Termination of Agreement. This Agreement shall terminate upon (i)
the termination of the Partnership in accordance with Section 11.01 hereof, and
(ii) the completion of the winding up of the affairs of the Partnership and the
distribution of all assets and payment of all liabilities of the Partnership in
accordance with Section 11.02 hereof.
11.04. Post-Termination Business Activities of the Partners. The Partners
agree that upon termination of the Partnership, there will be a return to the
status guo ante; at such time, each Partner will be free to offer to Restricted
Patients the
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services and supplies formerly offered by the Partnership, subject to the
limitations set out in Sections 8.02, 8.03 and 14.01 herein. Upon termination of
the Partnership for any reason, the Partnership name shall not be used by either
Partner. The Partnership's telephone numbers shall not be used by either
Partner. Upon termination of this Agreement copies of all Partnership files and
lists of patients, other than information covered by the confidentiality
provisions of Section 8.03 and Technology purchased under Section 14.01, shall
be provided to each Partner upon request.
ARTICLE XII
ARBITRATION
Except as otherwise provided in Section 8.03, any dispute, controversy or
claim between the Partners arising out of or relating to this Agreement either
during or after the term thereof (including the question as to whether any
particular matter is arbitrable) shall be solely and finally settled by
arbitration conducted in Dallas, Texas, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in force (the
"Rules"). The Partner requesting arbitration shall serve upon the other Partner
to the controversy, dispute or claim a written demand for arbitration, stating
the substance of the controversy, dispute or claim, the contention of the
Partner requesting arbitration, and the name and address of the arbitrator
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<PAGE>
appointed by it. The recipient of such demand shall within 20 days after such
receipt appoint an arbitrator and notify the other Partner of the identity of
the arbitrator so selected, and the two arbitrators shall appoint a third, and
the decision or award of any two arbitrators shall be final and binding upon the
parties. In the event that the two arbitrators fail to appoint a third
arbitrator within 20 days of the appointment of the second arbitrator, either
arbitrator, or either party to the arbitration, may apply to a judge of the
United States District Court located in or nearest to Dallas, Texas for the
appointment of the third arbitrator, and the appointment of such arbitrator by
such judge on such application shall have precisely the same force and effect as
if such arbitrator had been appointed by the two arbitrators. If for any reason
the third arbitrator cannot be appointed in the manner prescribed by the
preceding sentence, either regularly appointed arbitrator, or either party to
the arbitration, may apply to the American Arbitration Association for
appointment of the third arbitrator in accordance with the Rules. Should the
party upon whom the demand for arbitration has been served fail or refuse to
appoint an arbitrator within 20 days, the single arbitrator shall have the right
to decide alone, and such arbitrator's decision or award shall be final and
binding upon the parties. The decision of the arbitrator shall be in writing and
shall set forth the basis therefor. The Partners shall abide by all awards
rendered in arbitration proceedings, and all such awards may be enforced and
executed upon in any court having jurisdiction over
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<PAGE>
the party against whom enforcement of such award is sought. The Partners shall
divide equally the administrative charges, arbitrator's fees, and related
expenses of arbitration, but each Partner shall pay its own legal fees incurred
in connection with any such arbitration. This agreement to arbitrate shall be
specifically enforceable under the prevailing arbitration law and the parties
stipulate that this Agreement involves interstate commerce.
ARTICLE XIII
COVENANTS, REPRESENTATIONS AND WARRANTIES
13.01. Partners' Authority. Each Partner warrants to the other that it is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the full unrestricted power
and authority, corporate and otherwise, to carry on its business as currently
conducted, to own, operate and lease its properties, to execute and deliver this
Agreement and to carry out the transactions contemplated thereby; and that the
execution, delivery and performance of this Agreement have been duly authorized
by all proper and necessary corporate actions.
13.02. Absence of Violation. Each Partner warrants to the other that
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation of, or a default
under, or conflict with,
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any term or provision of the charter or by-laws of the warranting Partner or any
contract, commitment, indenture, lease or other agreement to which the Partner
is a party or by which it is bound.
13.04. Binding Effect. Each Partner warrants to the other that this
Agreement constitutes a valid and binding obligation of the warranting Partner,
enforceable in accordance with its terms.
ARTICLE XIV
MISCELLANEOUS
14.01. New Technology. The Partnership may from time to time develop new
and innovative service techniques, equipment, supplies or other related
technologies or patents ("Technology"). These will be proprietary to the
Partnership, and neither Partner shall use these techniques, equipment,
supplies, technologies or patents except as provided in this Section. The
Partnership shall give both Partners the right to bid for the right to own and
engage in exclusive marketing of such items (such right to be subject to the
Partnership's exclusive right to market and use such items during the term of
this Agreement with regard to Restricted Patients). Subject to negotiation of a
financial arrangement satisfactory to the Partnership, the Partner submitting
the highest bid shall be granted said ownership and marketing rights. In the
event that the Partners are unable to negotiate such an arrangement, the matter
may be submitted by either Partner to
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<PAGE>
arbitration pursuant to ARTICLE XII hereof. To the extent that such ownership
and marketing rights are not sold to a Partner under this section, the
Technology shall be disposed of on dissolution of the Partnership in the same
manner as other Partnership assets.
14.02. Limitation on Agency. It is specifically understood and agreed
between the Partners that this Partnership extends only to, and is limited to,
the rights and obligations under this Agreement and, except an otherwise
expressly provided herein, this Agreement shall not constitute either Partner as
the agent of, or principal for, the other Partner.
14.03. Other Activities. Nothing in this Agreement shall be construed to
restrict either Partner from carrying on any business or activity (other than as
specifically stated in Article II hereof), whether or not any such business or
activity is competitive with the business of the Partnership.
14.04. Inspection of Records. Each Partner or its authorized representative
may examine the Partnership Books or other records of the Partnership as
provided in Section 9.02 hereof, and may examine or inspect any of the property
or assets owned or used by the Partnership at any time without notice.
To the extent required by Section 1861(b)(1)(I) of the Social Security Act,
each Partner shall, upon proper request, allow the
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<PAGE>
United Stated Department of Health and Human Services, the Comptroller General
of the United States and their duly authorized representatives, access to this
Agreement and to all books, documents and records necessary to verify the nature
and extent of the costs of the services provided by the Partnership at anytime
during the term of this Agreement and for an additional period of four (4) years
following the last date services are furnished by the Partnership. If the
Partnership carries out any of the duties of this Agreement through an agreement
between it and a Partner or other individual or organization related to it,
Partnership shall require that a clause be included in such agreement to the
effect that until the expiration of four (4) years after the furnishing of such
services pursuant to such an agreement, the related organization shall make
available, upon request by the Department of Health and Human Services, the
Comptroller General of the United States or any of their duly authorized
representatives, all agreements, books, documents and records of such related
organization that are necessary to verify the nature and extent of the costs of
the services provided under that agreement. Except as set forth in this section,
neither Partner nor any third party shall have any right or access to the
separate business and other records of either Partner.
14.05. Notices. All notices, demands, requests, consents, reports,
approvals, or other communications which may be or are required to be given,
served, or sent pursuant to this Agreement
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<PAGE>
shall be in writing and shall be mailed by first class, registered or certified
mail, return receipt requested, postage prepaid, or transmitted by telegram,
addressed as follows:
(a) If to ACS:
Alternative Care Systems, Inc.
2777 Stemmons Freeway
Suite 1089
Dallas, Texas 75207
Attention: Mr. George Farr
(b) If to NF:
Nova Factor, Inc.
1785 Nonconnah Blvd.
Memphis, Tennessee 38132
Attention: Mr. Randy Grow
Each Partner may designate by notice in writing a new address to which any
notice, demand, request, consent, report, approval or communication may
thereafter be so given, served or sent. Each notice, demand, request, consent,
report, approval or communication which shall be mailed in the manner described
above, or which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent or received for all purposes at such time as it
is delivered to the addressee (with the return receipt or the delivery receipt
being deemed conclusive evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
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<PAGE>
14.06. Severability. If any part of any provision of this Agreement or any
other agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of said provision or the
remaining provisions of said agreement.
14.07. Benefits and Obligations. The covenants and agreements contained
herein shall inure to the benefit of, and be binding upon, the Partners and
their respective legal, successors. Any persons succeeding to the interest of a
Partner shall succeed to all of such Partner's rights, interests and obligations
hereunder, subject to and with the benefit of all terms and conditions of this
Agreement, including the restrictive conditions contained herein.
14.08. Amendment. This Agreement shall not be amended, altered, or modified
except by an instrument in writing duly executed by the parties hereto.
14.09. Entire Agreement. This Agreement constitutes the entire agreement
between the Partners with respect to the transactions contemplated herein, and
it supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein.
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<PAGE>
14.10. Headings. Article and Section headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
14.11. Governing Law. This Agreement, the rights and obligations hereunder,
and any claims or disputes relating thereto, shall be governed by and construed
in accordance with the laws of the State of Tennessee (but not including the
choice of law rules thereof).
14.12. Waiver of Partition. Each Partner hereby waives during the term of
this Agreement any right that it may have to maintain any action for Partition
with respect to any Partnership property.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed on their behalf, on the day and year hereinabove set forth.
NOVA FACTOR, INC.
By: /s/ Randy Grow
-------------------------------------
Title: President
-----------------------------------
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ALTERNATIVE CARE SYSTEMS, INC.
By: /s/ George Farr
-------------------------------------
Title: President
-----------------------------------
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<PAGE>
Exhibit 10.42
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
DRUG DISTRIBUTION BUSINESS
MANAGEMENT AND SERVICE AGREEMENT
This Management and Service Agreement (hereinafter referred to as the
"Agreement") is made and entered into this 1st day of July, 1994, by and between
SOUTHERN HEALTH SYSTEMS, INC., a Tennessee corporation (hereinafter referred to
as "SHS") and TEXAS HEALTH PHARMACEUTICAL RESOURCES, a Tennessee general
partnership (hereinafter referred to as "THPR");
W I T N E S S E T H:
WHEREAS, THPR has been formed to engage in the business of providing
distribution of certain drugs (the "Drug Distribution Business"); and
WHEREAS, THPR desires to obtain from SHS, and SHS is willing to provide to
THPR, certain services necessary or desirable in the conduct of THPR's Drug
Distribution Business, all upon the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Services to be Provided by SHS. During the term of this
Agreement, SHS agrees to provide or arrange for the provision of, the following
services to THPR:
A. Billing, Reimbursement, Collection and Financial Counseling
Services.
(i) Services. SHS shall provide such billing, reimbursement,
collection and financial counseling services as are required,
or reasonably requested, by THPR in conducting its Drug
Distribution Business, including the preparation, transmitting
and monitoring of all bills to patients of THPR's Drug
Distribution Business or third party payors, preparing
requests or otherwise assisting patients of THPR's Drug
Distribution Business in seeking reimbursement from all third
party payors for the services provided to such patients by
THPR, collecting amounts due THPR from patients or third
parties, and counseling patients regarding the options
available to them in paying for the Drugs and related services
provided to them by THPR. THPR shall establish all patient
charges for
2
<PAGE>
such Drugs and related services provided by THPR to the
patients.
(ii) Clearance of Patients. SHS agrees that it will not commit
to provide Drugs or related services to any patient until such
patient is approved by THPR. THPR shall promptly notify SHS as
to any potential patient and shall obtain such patient data as
shall be specified by SHS. SHS agrees to promptly investigate
a potential patient's insurance coverage and financial ability
to pay and to notify THPR as to the patient's financial
ability to pay for Drugs or related services from THPR. THPR
shall thereafter obtain all documentation necessary to file
claims with third party payors and forward same to SHS. SHS
shall have no liability for relying upon information provided
by third party payors concerning coverage in the event that
such information shall subsequently prove to be incorrect.
(iii) Collection and Disbursement. SHS shall monitor and
coordinate collection, for and on behalf of THPR, of all
monies due to THPR from patients and/or third party payors for
Drugs and related services. SHS shall deposit said funds into
a bank account designated by
3
<PAGE>
THPR. SHS shall not have authority to disburse funds from
said bank account. However, funds from said Account, in an
amount determined by THPR, shall be deposited in a separate
operating account, and SHS shall have authority to disburse
funds from this operating account as necessary to carry out
the management functions specified herein. Collections of all
accounts are performed by SHS on behalf of THPR and SHS shall
not be responsible for any failure to collect such accounts.
SHS hall use reasonable efforts to collect said accounts
(but not greater than those efforts used in the collection of
its own accounts), but SHS shall not be required to institute
suit for collection or incur any extraordinary expenses in
attempting to collect these receivables unless such action is
approved by the Steering Committee and the costs are paid by
THPR.
B. Accounting and Financial Reporting. SHS shall provide the following
accounting and financial reporting services required by THPR in the conduct of
its Drug Distribution Business: (i) monthly, quarterly and annual financial
statements consisting of income statements, balance sheets, a detailed General
Ledger and Status Report of Collections, (ii) all sales tax returns and reports,
(iii) schedules of accounts receivable,
4
<PAGE>
accounts payable and cash applications, (after applying cash received to
appropriate invoices, applying credits to patient accounts and applying
write-offs and adjustments approved by THPR) and (iv) reconciliation of the Drug
Distribution Business bank account statements of THPR. SHS shall not make
provision for any annual audit of THPR, and such audit if desired by THPR shall
be the responsibility of THPR and shall be conducted by such independent
accounting firm as THPR may select. SHS agrees to cooperate with the accounting
firm in the conduct of the audit of THPR or any other accounting procedure for
which the accounting firm may be engaged by THPR. THPR shall make available to
SHS such information and documentation as may be needed to enable SHS to prepare
the tax returns and financial reports specified herein.
C. Management Services and Marketing.
(i) Responsibilities. THPR hereby appoints SHS to manage and
supervise the operation of THPR's day-to-day operations of its
Drug Distribution Business and for this purpose, THPR
delegates to SHS the authority to make, subject to the terms
hereof, such management decisions as are necessary for the
day-to-day operations of THPR's Drug Distribution Business.
SHS accepts this engagement and agrees to faithfully
5
<PAGE>
perform the duties and responsibilities set out herein.
In carrying out its management responsibilities, and in
accordance with the provisions of this Agreement, SHS shall
be subject to the direction, input and general guidance of
the Steering Committee. The Steering Committee shall
communicate to SHS all decisions of that Committee which
affect the duties and responsibilities of SHS under this
Agreement.
(ii) Marketing. SHS shall also provide such procedure manuals,
and marketing materials as SHS may from time to time determine
to be helpful in the operation of THPR's Drug Distribution
Business and upon the direction of the Steering Committee, SHS
personnel shall perform sales calls and other related
marketing activities. Such marketing materials and procedure
manuals are deemed confidential by SHS and shall be available
for review by THPR at SHS's offices.
(iii) Personnel. SHS shall designate certain SHS personnel to
perform the management functions set out hereunder and such
SHS personnel shall supervise the operation of THPR's Drug
Distribution Business. Subject to the reimbursement provisions
set out in
6
<PAGE>
Section 2 hereinbelow, SHS shall solely be responsible for
all costs associated with such employment, including without
limitation, its employees' salaries, federal and state income
tax withholding, Social Security tax withholding, workmen's
compensation benefits and fringe benefits.
(iv) Steering Committee. The overall management and control of
the business and affairs of THPR's Drug Distribution Business
shall be vested in a Steering Committee as described in the
THPR Partnership Agreement.
2. Compensation. THPR shall pay a monthly fee to SHS for the reimbursement,
accounting, management and computer services specified herein as set out on
Exhibit A attached hereto and made a part hereof, plus an amount equal to *
percent (*%) of net patient revenues of THPR during that month. Net patient
revenue shall be determined in accordance with generally accepted accounting
principles. SHS will bill THPR for all charges for services and employment costs
on a monthly basis. All charges shall be due and payable by THPR * (*)
days from the end of the month in which the changes reflected on SHS's invoice
to THPR were earned by SHS.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
7
<PAGE>
Notwithstanding any provision herein to the contrary, the * percent
of net patient revenues when added to similar fees (excluding reimbursement,
accounting, management and computer service fees as described on Exhibit A) paid
to SHS by all other partnerships between an SHS affiliate and Alternative Care
Systems, Inc. shall not exceed for fiscal year July 1, 1994 through June 30,
1995 the sum of $*. If the total should exceed this amount, SHS shall
determine which of the fees paid by these partnerships to SHS shall be reduced.
The management fees are based on the assumption that the homecare reimbursement
market remains relatively stable. If significant changes in the Texas Medicaid
levels of reimbursement or other unforeseen material changes occur, then the
parties to this Agreement will mutually review other options for compensation.
The management fees set out in this section will be effective from July 1, 1994
to June 30, 1995 unless one of the unforeseen events referenced hereinabove
should occur. Both parties will review the previous years fees and their
reasonableness on an annual basis and resolve outstanding issues and agree to
the fees and cap on fees for the following year. In the event that the parties
cannot agree, the management fees shall remain the same as for the prior fiscal
year ending June 30.
3. THPR Costs. It is agreed and understood that during the term of this
Agreement, THPR shall also be responsible for
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
8
<PAGE>
the costs incurred by SHS in providing the services which it is obligated to
provide under Sections 1A, 1B and 1C hereunder (including without limitation,
telephone, travel, office supplies and postage). In addition to the preceding
provision, THPR shall be responsible for the costs of salaries and fringe
benefits for THPR's employees, if any; outside auditor fees; acquisition of
Drugs; facility lease costs; capital expenditures; principal and interest on
loans; payroll taxes for its employees, if any; and the cost of preparing
Federal and state Income Tax returns, and all sales taxes on sales to patients.
THPR shall contract for all such expenses for and in the name of THPR, without
basing the same upon SHS's credit, and SHS shall not be liable to third party
providers for the costs of such goods and services. SHS shall file for and on
behalf of THPR all sales and use tax returns necessary in the operation of
THPR's Drug Distribution Business.
4. Subcontracting. The parties to this Agreement recognize that SHS may
provide to THPR certain of the services which it is obligated to provide under
this Agreement by means of subcontracts with third parties. However, no such
subcontract shall release SHS from its duties and responsibilities under this
Agreement with respect to the services so subcontracted.
9
<PAGE>
5. Term. This Agreement shall be for a term beginning on July 1, 1994 and
ending on March 31, 1999, unless otherwise terminated in accordance with this
section. This Agreement shall automatically terminate upon (i) SHS or THPR
ceasing to exist, (ii)either party ceasing to be licensed to sell Drugs, (iii)
either party permanently ceasing to engage in the Drug Distribution Business,
(iv) the mutual agreement of the parties, (v) the insolvency or bankruptcy of
either party, the making by either party of an assignment for the benefit of
creditors, the consent by either party to the appointment of a trustee or
receiver, or the appointment without its consent, of a trustee or receiver for
it or for a substantial part of its property, or (vi) the institution by or
against either party of bankruptcy, reorganization, arrangement or insolvency
proceedings. In addition, if either party hereto shall breach the terms of this
Agreement, the nonbreaching party may give written notice of the breach to the
breaching party, and if said breach is not cured within 21 calendar days
following the giving of said notice, this Agreement shall at the option of the
nonbreaching party be terminated. Furthermore, notwithstanding any other
provision of this Agreement, either party may terminate this Agreement upon
giving 90 days prior written notice to the other party.
6. Force Majeure. The obligations of SHS hereunder shall be excused during
any period of delay caused by matters such as
10
<PAGE>
strikes, acts of God, shortages of raw materials or power, inability to obtain
product, governmental action or compliance with governmental requirements,
whether voluntary or pursuant to order, or any other matter which is beyond the
reasonable efforts of SHS to control.
7. Severability. If any one or more of the provisions of this Agreement
shall for any reason be held illegal or invalid, such illegality or invalidity
shall not affect any other provision of this Agreement and this Agreement shall
be enforced as if such illegal or invalid provision had not been contained
herein.
8. Confidentiality. Each party has developed or may during the term hereof
develop certain formulae, products, methods of doing business, customer lists
and other proprietary information which that party deems to be confidential and
a trade secret. In the course of fulfilling their respective obligations
hereunder, some of these formulae, products, methods and other proprietary
information will become known to the other party hereto. It is contemplated that
each employee or agent of the parties who will be exposed to such confidential
information will be required to execute a confidentiality agreement with each
party hereto. Each party also agrees that it will not duplicate, make use of, or
disclose, in any manner whatsoever, any
11
<PAGE>
information which is deemed to be confidential by the other party, either during
or after the term of this Agreement, without the express prior written consent
of the other party hereto.
In the event that any information deemed to be confidential by a party is
provided to the other party or its employees or agents in writing, the party
providing same shall mark the writing as "confidential." In the event that such
information is provided in non-written form such as orally, by audiotape,
videotape or computer software or disc, the party claiming such information to
be confidential shall furnish to the other party a written list containing a
brief description of such item and designating such item as confidential. Upon
termination of this Agreement, all copies of any information hereunder deemed,
or designated by a party as, confidential shall be returned to the party who
supplied the information, or who designated same as confidential.
Notwithstanding the preceding provision, the following types of information
provided by a party shall always be deemed confidential, whether or not so
designated: patient records; prescription files; costs of goods and supplies;
and financial records of the party.
Notwithstanding the preceding sections, this restriction shall not apply
(i) to any information which is not deemed confidential hereunder, or which has
not been designated as
12
<PAGE>
confidential in the manner specified herein, (ii) to any information which was
known to a party prior to its disclosure by the other party, (iii) to any
information which is or becomes public knowledge through no failure of a party
bound by this Agreement, (iv) to any information which is independently
developed by a party hereto, or (v) to the extent that such restrictions
conflict with the terms of the THPR Partnership Agreement.
It is recognized and acknowledged that damages caused by a party's breach
of this Section would be difficult to ascertain and would not adequately
compensate the other party for its losses. Therefore, both parties agree that
the party claiming a breach of this Section shall be entitled to injunctive
relief to restrain the commission or continued commission of said breach by
seeking such relief from a court of competent jurisdiction.
9. Service to Other Businesses. THPR acknowledges that
SHS offers its services to other business, and THPR agrees that no provision
contained herein shall restrict or prohibit SHS from providing services to
others in addition to THPR as long as the performance of said services does not
interfere with the performance of SHS's obligations hereunder.
13
<PAGE>
10. Records. To the extent required by Section 1861(b)(1)(I) of the
Social Security Act, SHS shall, upon proper request, allow the United States
Department of Health and Human Services, the Comptroller General of the United
States and their duly authorized representatives, access to this Agreement and
to all books, documents and records necessary to verify the nature and extent of
the costs of the services provided by SHS under this Agreement at any time
during the term of this Agreement and for an additional period of four (4) years
following the last date services are furnished under this Agreement.
11. Nonassignability. The rights, duties and responsibilities of the
parties hereto are personal in nature and shall not be assigned without the
express written consent of the other party except that SHS may subcontract with
other parties to perform some or all of its duties hereunder.
12. Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of Tennessee and the laws of the State of Tennessee shall
govern the rights, duties, liabilities and responsibilities created hereunder.
13. Headings. All headings used herein are for ease of reference only and
shall in no way be construed as interpreting, decreasing or enlarging the
provisions of this Agreement.
14
<PAGE>
14. Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors, administrators, trustees and
assigns.
15. Modification. This Agreement constitutes the entire understanding
between the parties hereto and may be changed or modified only with the written
consent of both parties.
16. Notices. Any notice required to be given hereunder shall be in writing
and shall be hand delivered or sent by certified United States mail, postage
prepaid, return receipt requested, to the chief executive officer of the party
at its respective primary business address set out below or at such other
address as shall be indicated in writing to the other party. Notice shall be
effective when hand delivered or on the third day after deposit in the United
States mail as required by this Section.
17. Waivers. A waiver of the breach of any provision of this Agreement
shall not be effective unless in writing signed by the waiving party, and such
waiver shall not be deemed a waiver of any other breach of the same or any other
provision hereof.
15
<PAGE>
18. Fairness. The parties hereto recognize that Nova Factor, Inc. is a
general partner of THPR. Each party acknowledges that the terms of this
Agreement are fair and reasonable to both parties and that it is in the best
interest of each party to enter into this Agreement. Each party further
acknowledges that the terms of this Agreement were negotiated and that the
decision to enter into this Agreement was made solely by the unrelated general
partner of THPR, without participation by Nova Factor, Inc.
IN WITNESS WHEREOF, the undersigned parties hereto have caused this
Agreement to be executed as of the day and year first above written.
TEXAS HEALTH DRUG
DISTRIBUTION RESOURCES,
a partnership
By: Nova Factor, Inc.
By: /s/ George Farr
Title: President
Address:
SOUTHERN HEALTH SYSTEMS, INC.
By: /s/ David Stevens
Title: President
Address:
16
<PAGE>
EXHIBIT A
FEES TO NFI
In exchange for the goods and services provided by NFI under this Agreement,
the Partnership agrees to pay to NFI the following amounts:
A. * of the Partnership in exchange for computer services.
B. * of the Partnership for reimbursement services.
C. * per month for accounting and reporting services.
D. Reimbursement on a monthly basis for all employment costs incurred
by NFI in providing NFI personnel to perform the services set out
herein. Employment costs shall mean the salary, payroll and FICA
taxes, and the cost of all fringe benefits paid to or for the
employee by NFI, plus all incremental costs incurred by NFI for and
on behalf of the Partnership, such as workers' compensation
insurance, automobile insurance, and incremental costs of property
and casualty insurance coverage. In the event that any NFI employee
devotes only a portion of his or her time to the performance of
services for the Partnership, the employment costs for that
employee, which is charged to the Partnership, shall be a prorated
portion of the total employment costs determined by multiplying the
total costs by a fraction, the numerator of which is the time spent
by the employee for the Partnership and the denominator of which is
the total hours worked by the employee during that month.
E. In exchange for pharmaceutical solutions supplied by NFI, the
Partnership will pay on a monthly basis to NFI an amount equal to
NFI's * said medical equipment, services and supplies. NFI's *
shall mean the * by NFI to its supplier for the medical equipment,
services and supplies, plus taxes and freight.
For purposes of this Agreement, the Partnership's * shall mean all charges
made by the Partnership in a given month, determined on an accrual basis,
regardless of whether such accounts are actually collected, and * shall not
be reduced for *; taxes, depreciation, principal payment on loans,
distributions to Partners, other reserves, fees paid to NFI hereunder, or any
other expenses.
The fees due to NFI shall be determined on a monthly basis by NFI and NFI
shall submit monthly invoices to the Partnership setting out the amounts due
NFI for said month. The invoices for NFI's services shall be due thirty (30)
days from the receipt of same by the Partnership.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
17
<PAGE>
Exhibit 10.43
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
AMENDMENT NUMBER ONE TO DRUG DISTRIBUTION BUSINESS MANAGEMENT
AND SERVICE AGREEMENT
This Agreement ("Amendment") is made and entered into by and between
Southern Health Systems, Inc., a Tennessee corporation ("SHS"), Texas Health
Pharmaceutical Resources, a Tennessee general partnership (hereinafter
referred to "THPR"), and Nova Factor, Inc., a Tennessee corporation
(hereinafter referred to "NFI").
WITNESSETH
WHEREAS, SHS and THPR entered into a Drug Distribution Business
Management and Service Agreement dated , 1995 ("Service
Agreement"); and
WHEREAS, THPR is engaged in the business of providing distribution
of drugs and SHS is in the process of withdrawing from that business; and
WHEREAS, THPR, NFI and SHS desire to amend the Service Agreement to
substitute NFI for SHS and to provide that SHS's obligations thereunder shall
hereinafter be performed by NFI.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Service Agreement is
amended, effective as of the date hereof ("Effective Date"), as follows:
1. Except as set out in Section 4 hereof, THPR, SHS and
NFI agree that from and after the Effective Date, all
privileges, rights, duties and obligations of SHS under
the Service Agreement shall be and hereby are assigned
and transferred to NFI and that the Service Agreement
shall, from the Effective Date, be an agreement solely
by and between NFI and THPR.
2. Except as set out in Section 4 hereof, NFI hereby
accepts the assignment and transfer of all rights,
privileges, duties and obligations of SHS under the
Service Agreement, and from and after the Effective
Date, agrees to carry out the duties and obligations of
SHS set forth in the Service Agreement.
3. All references to SHS in the Service Agreement shall be
deleted and NFI shall be substituted therefor.
4. From and after the Effective Date, SHS shall have no
further liability or responsibility under the Service
Agreement, and THPR shall have no further obligation
and liabilities to SHS thereunder. Notwithstanding the
preceding sentence, all obligations and duties which
<PAGE>
were to be performed by THPR or SHS and all rights and
privileges which accrued in favor of SHS or THPR, prior
to the Effective Date, shall continue to be in effect,
including the indemnity contained in the Service
Agreement for matters occurring prior to the Effective
Date. In addition, SHS and THPR agree to continue to
observe the confidentiality provisions of the Service
Agreement, as well as their respective obligations to
maintain records, all as concern information and
records generated prior to the Effective Date. All
monies earned or owed to SHS or THPR under the Service
Agreement prior to the Effective Date shall promptly be
paid in accordance with the terms of the Service
Agreement as in effect prior to the Effective Date.
5. Effective March 1, 1996, Section 2 of the Service
Agreement entitled Compensation is amended to delete
the reference to "* of THPR
during that month" and to substitute in place thereof
the following: "* of THPR
during that month." In addition, Section 2 is amended
to provide that if the total sum of $* is
exceeded, the excess shall be split among NFI,
PharmaThera, Inc., HealthEffects, Inc. and CliniCall,
Inc. in a manner agreed upon by those four parties. It
is further agreed that these changes in Section 2 of
the Service Agreement shall be in effect until June 30,
1996, at which time, NFI and THPR will negotiate a new
fee arrangement mutually acceptable to both parties.
6. All provisions of the Service Agreement shall
hereinafter be in full force and effect by and between
NFI and THPR except as otherwise specifically stated
herein.
7. NFI and SHS also entered into a Drug Distribution
Management and Services Subcontract dated ,
1995 (the "Subcontract"). The parties hereby agree
that said Subcontract shall be, and is, terminated and
cancelled as of the Effective Date.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Amendment to be executed by their duly authorized officers this day of
, 1996.
SOUTHERN HEALTH SYSTEMS, INC.
By: /s/ illegible
----------------------------
Title: Chairman
-------------------------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
2
<PAGE>
NOVA FACTOR, INC.
By: /s/ David Stevens
---------------------------
Title: President
------------------------
TEXAS HEALTH PHARMACEUTICAL
RESOURCES, INC., a partnership
By: Nova Factor, Inc., one of
its general partners
By: /s/ David Stevens
---------------------------
Title: President
------------------------
3
<PAGE>
Exhibit 10.44
Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and
Exchange Commission.
HEMOPHILIA THERAPY PHARMACY MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into this th day of , 19 , by and between
TEXAS HEALTH PHARMACEUTICAL RESOURCES, a Tennessee partnership (hereinafter
referred to as "THPR") and CHILDREN'S MEDICAL CENTER OF DALLAS (hereinafter
referred to as "Company");
W I T N E S S E T H:
WHEREAS, Company is an eligible Covered Entity as defined herein, is
licensed to provide health care services under the laws of the State of Texas
and is engaged in the business of providing certain clotting factors,
therapies and services, commonly referred to as hemophilia therapy, to
hemophilia Patients of the Company, as defined herein (hereinafter referred
to as the "Hemophilia Therapy Business"); and
WHEREAS, Company has access to Public Health Service pricing,
and
WHEREAS, the Company desires to obtain from THPR certain services
necessary or desirable in the conduct of the Company's Hemophilia Therapy
Business, including but not limited to,
1
<PAGE>
dispensing of hemophilia factor, billing and collection services, direct
patient consultations and patient monitoring, all upon the terms and subject
to the conditions hereinafter set forth;
WHEREAS, THPR has the capacity to dispense hemophilia factor to
Patients of the Company to provide homecare services and to provide
additional administrative assistance including, but not limited to, billing
and collection services.
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
I. Definitions. Defined terms used throughout this Agreement
shall have the meanings set out in Appendix A.
II. Services to be Provided by THPR. During the term of this
Agreement, THPR agrees to provide, or arrange for the provision of, the
following services to the Company:
A. Patient Instruction and Clinical Services. THPR agrees to
provide, or arrange for the provision of, clinical consultations
required by patients of the Company's Hemophilia Therapy Business,
said clinical consultations to include prescription consultation,
and the provision of
2
<PAGE>
routine and emergency consultation to such patients.
B. Billing, Reimbursement, Collection and Financial Counseling
Services.
1. Services. In the name of and as directed by Company,
THPR shall provide billing, reimbursement, collection and
financial counseling services on behalf of the Company in
conducting its Hemophilia Therapy Business, including the
preparation, transmitting and monitoring of all bills to
patients of the Company's Hemophilia Therapy Business, or
third party payors; preparing requests or otherwise
assisting patients of the Company's Hemophilia Therapy
Business in seeking reimbursement from all third party
payors for the services provided to such patients by the
Company; assisting in collecting amounts due the Company
from patients or third parties; and counseling patients
regarding the options available to them in paying for the
clotting factor and related drugs ("Hemophilia Therapy
Goods"), and related services, provided to them by the
Company. Company shall establish patient charges for such
Hemophilia Therapy Goods and related services. Company
shall provide THPR with a fee schedule reflecting such
charges.
2. Clearance of Patients. Company understands and
3
<PAGE>
agrees that it is Company's exclusive responsibility to
determine whether an individual is an Approved Patient of
the Company as defined herein. Prior to dispensing any
outpatient drugs, Company shall inform THPR whether the
individual is an Approved Patient of the Company. If an
individual is no longer an Approved Patient of the Company,
Company shall inform THPR, in writing, within 2 days of the
change in status. Company understands that THPR shall rely
upon Company's determination as to whether an individual is
an Approved Patient of the Company who is entitled to
receive outpatient drugs at Section 340B pricing under the
Public Health Services Act. The Company shall promptly
notify THPR as to any potential patient and shall obtain
such patient data as shall be specified by THPR. THPR
agrees to promptly investigate a potential patient's
insurance coverage and financial ability to pay and to
notify the Company as to whether said patient is approved
to purchase Hemophilia Therapy Goods, or related services,
from the Company. Company shall thereafter assist THPR in
obtaining all documentation necessary to file claims with
third party payors and forward same to THPR. THPR shall
have no liability for relying upon information provided by
third party payors concerning coverage in the event that
such information shall subsequently prove to be
4
<PAGE>
incorrect.
3. Authorization. THPR shall bill for all Hemophilia
Therapy Goods as billing agent for Company. All sales of
Hemophilia Therapy Goods dispensed by THPR for Company
shall be invoiced by THPR in Company's name. Following each
sale and delivery of Hemophilia Therapy Goods by Company,
THPR shall cause a bill to be prepared and transmitted to
the patient, third party payor or other applicable entity
which has been identified by Company. Company hereby
engages THPR to serve as "Billing Agent" to bill, collect
and disburse fees resulting from claims for Hemophilia
Therapy Goods sold by Company hereunder and THPR accepts
such engagement. For this purpose, Company hereby
constitutes and appoints THPR as Company's agent and
attorney in fact with full power of sub-stitution or
revocation, and hereby grants to THPR the rights and powers
enumerated herein, for the purpose of taking any action or
executing any instrument which THPR may deem necessary or
advisable to accomplish the purposes set forth herein.
To the extent allowed by third party payors,
Company hereby authorizes THPR to use a stamp
replicating Company's signature, or the signature of an
5
<PAGE>
individual authorized to act on behalf of Company, and
Company's provider number, for the limited purposes of
billing Company's patients, filing claims with the
applicable third party payors to effectuate payment for
Hemophilia Therapy Goods, and collecting and depositing
accounts receivable. Bills shall be on the appropriate
standardized form (i.e., 1500 claim form) or through
electronic filing if available.
4. Collection and Disbursement. THPR shall monitor and
coordinate collection of all monies due to the Company from
patients and/or third party payors for Hemophilia Therapy
Goods and related services. THPR shall deposit all Company
funds received by it into the bank account designated by
the Company. THPR shall not have authority to disburse
funds from said bank account. Collections of all accounts
are performed by THPR on behalf of the Company and THPR
shall not be responsible for any failure to collect such
accounts. THPR shall use reasonable efforts to collect said
accounts (but not greater than those efforts used in the
collection of its own accounts) but THPR shall not be
required to institute suit for collection or incur any
extraordinary expenses in attempting to collect these
receivables unless such action is approved by the Company
and the costs are paid by the Company.
6
<PAGE>
5. THPR shall comply with the rules, regulations and
requirements of third party payors in seeking reimbursement
of behalf of the Company.
C. Accounting and Financial Reporting. THPR shall provide the
following accounting and financial reporting services required by
the Company in the conduct of its Hemophilia Therapy Business: (a)
monthly and annual financial statements consisting of income
statements, balance sheets, and Status Report of Collections, (b)
schedules of accounts receivable (after applying cash received to
appropriate invoices, applying credits to patient accounts and
applying write-offs and adjustments approved by the Company).
D. Audits. THPR and Company understand that they are subject to
audits (by the United States Department of Health and Human Services
("Department") and participating manufacturers) of records that
directly pertain to Company's compliance with the drug resale or
transfer prohibition and the prohibition against duplicate Medicaid
rebates and 340B discounts. THPR will assure that all pertinent
reimbursement accounts and dispensing records, maintained by THPR,
will be separate from THPR's own operations and will be accessible
to Company, the Department, and the manufacturer in the case of a
manufacturer audit.
7
<PAGE>
However, THPR shall not make provision for any annual audit of the
Company, and such audit if desired by the Company shall be the
responsibility of the Company and shall be conducted by such
independent accounting firm as the Company may select. THPR agrees
to cooperate with the accounting firm in the conduct of the audit of
the Company or any other accounting procedure for which the
accounting firm may be engaged by the Company. Company shall make
available to THPR such information and documentation as may be
needed to enable THPR to prepare the financial reports specified
herein and meet the audit requirements established by the Office of
Drug Pricing.
E. Management Services and Marketing.
1. Responsibilities. Company hereby appoints THPR to manage
and supervise the operation of the Company's day-to-day
operations of its Hemophilia Therapy Business, and for this
purpose, Company delegates to THPR the authority to make,
subject to the terms hereof, such management decisions as
are necessary for the day-to-day operations of the
Company's Hemophilia Therapy Business. THPR accepts this
engagement and agrees to faithfully perform the duties and
responsibilities set out herein.
8
<PAGE>
2. Personnel. THPR shall designate certain THPR personnel
to perform the management functions set out hereunder and
such THPR personnel shall supervise the operation of the
Company's Hemophilia Therapy Business.
All such employees shall remain employees of THPR and THPR
shall retain control and supervision of such employees.
F. Pharmacy Services.
1. Agency. THPR will act as the pharmacy agent of
Company for dispensing Hemophilia Therapy Goods sold by
Company to Approved Patients of the Company pursuant to a
prescription.
2. Purchasing and Shipment. Company will purchase
Hemophilia Therapy Goods and assume responsibility for
establishing its price, pursuant to any applicable consumer
protection laws and pursuant to the terms of the Public
Health Services grant. Company agrees to adhere to all
rules and regulations established by the PHS in connection
with its grant of federal funds giving rise to Company's
Covered Entity status. Company will order outpatient drugs
for Approved Patients of the Company from a participating
drug
9
<PAGE>
manufacturer during the term of this Agreement and direct
that the Outpatient Drugs be billed in the name of Company
and delivered to THPR for storage and dispensing to
Approved Patients of the Company.
Notwithstanding any Contracted Pharmacy Service provided by
THPR, including inventory management, Company understands
and agrees that it is Company's responsibility to order a
sufficient quantity of Outpatient Drugs from a
participating manufacturer necessary to meet the
prescription needs of the Approved Patients of the Company.
Company understands and agrees that THPR is acting as a
warehouse for Outpatient Drugs ordered by Company until
such time as THPR receives a request from Company to
dispense outpatient drugs to an Approved Patient of the
Company and that Company retains legal title to such
outpatient drugs until the outpatient drugs have been
dispensed. Company will make timely payments for the
Hemophilia Therapy Goods delivered to THPR pursuant to
Company's order.
THPR will also monitor the receipt of Hemophilia
Therapy Goods, and report the quantities of Hemophilia
Therapy Goods received. THPR will compare all shipments
received to the orders and inform Company of
10
<PAGE>
any discrepancy within five (5) business days of receipt.
3. Services. THPR will provide all Contract Pharmacy
Services for the Company. THPR will secure the
prescription, dispense the Hemophilia Therapy Goods,
maintain a summary of receiving and dispensing records,
provide drug utilization review, provide formulary
maintenance, provide patient profiles, and provide follow
up documentation as required by the Office of Drug
Pricing's Contract Pharmacy Services Guidelines.
4. Patient Choice. Company will inform its patients of his
or her freedom to choose a pharmacy provider on a form
substantially similar to Exhibit A of this Agreement. If
the patient does not elect to use the contracted services
of THPR, the patient may obtain the prescription from the
Company and then obtain the Hemophilia Therapy Goods from
the pharmacy of his or her choice. When a patient obtains
Hemophilia Therapy Goods from a retail pharmacy other than
THPR, the manufacturer is not required to offer Hemophilia
Therapy Goods at 340B pricing.
5. Pharmacy Records. THPR shall maintain such
pharmacy records as required by state and local
governmental entities. Such records shall be the
11
<PAGE>
property of THPR; however, copies will be made available to
Company to the extent allowed by law.
G. Prohibition of Drug Diversion. THPR and Company agree that they
will not resell or transfer Hemophilia Therapy Goods purchased at
section 340B pricing to an individual who is not a Approved Patient
of Company. Company understands that it can be removed from the list
of covered entities because of its participation in drug diversion,
a 340B(a)(5) prohibition, and no longer be eligible for 340B
pricing. Company understands that Agreement is contingent upon it
maintaining its Covered Entity status and agrees to inform THPR (no
later than one (1) business day after becoming aware of same) of the
loss of its status as a Covered Entity.
1. Dispensing of Hemophilia Therapy Goods. THPR will
dispense Hemophilia Therapy Goods only in the
following circumstances:
a. Upon presentation of a prescription bearing
Company's name, the eligible patient's name, a
designation that the patient is an eligible
patient, and the signature of a legally qualified
health care provider affiliated with Company; or
b. Receipt of a prescription ordered by
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<PAGE>
telephone on behalf of an eligible patient by a
legally qualified health care provider affiliated
with Company who states that the prescription is
for an eligible patient. Company will furnish a
list to THPR of all such qualified health care
providers and will update the list of providers to
reflect any changes. If THPR is found to have
violated the drug diversion prohibition, THPR will
pay Company the amount of the discount in question
so that Company can reimburse the manufacturer.
2. Patient Eligibility.
a. Company and THPR will develop a system to
verify patient eligibility. As used in the context
of this Agreement, an individual is a "patient" of
Company (with the exception of State-operated or
funded AIDS drug purchasing assistance programs)
only if:
1. Company has established a
relationship with the individual, such
that Company maintains records of the
individual's health care; and
2. the individual receives health
care services from a health care
professional who is either employed by
Company or provides
13
<PAGE>
health care under contractual or other
arrangements (e.g. referral for
consultation) such that responsibility
for the care provided remains with
Company; and
3. the individual receives a health care
service or range of services from Company
which is consistent with the service or
range of services for which grant funding
or Federally-qualified health center
look-alike status has been provided to
Company.
b. An individual is not a "patient" of Company for
purposes of 340B if the only health care service
received by the individual from Company is the
dispensing of a drug or drugs for subsequent
self-administration or administration in the home
setting.
c. An individual registered in a State-operated or
funded AIDS drug purchasing assistance program
receiving financial assistance under title XXVI of
the Public Health Services Act will be considered a
"patient" of Company for purposes of this
definition if so registered as eligible by the
State program.
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H. Tracking Service. THPR, with the assistance of Company, will
establish and maintain a tracking system suitable to prevent diversion
of section 340B discounted drugs to individuals who are not Approved
Patients of the Company. For example, such a tracking system might
include quarterly sample comparisons of eligible patient prescriptions
to the dispensing records and a six (6) month comparison of 340B drug
purchasing and dispensing records as is routinely done in other
reconciliation procedures. Customary business records may be used for
this purpose.
Company will verify, using THPR's (readily retrievable)
customary business records, that a tracking system exists which will
ensure that any Hemophilia Therapy Goods purchased under the Veteran's
Health Care Act of 1992 are not diverted to individuals who are not
Approved Patients of Company. Such records may include: prescription
files, velocity reports, and records of ordering and receipt. These
records will be maintained for the period of time required by State law
and regulations.
Prior to THPR providing pharmacy services pursuant to this
Agreement, Company will have the opportunity, upon reasonable notice
and during business hours, to examine the tracking system. Company will
establish a process for a periodic random (sample) comparison of its
prescribing
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records with THPR's dispensing records to detect potential
irregularities. THPR will permit Company or its duly authorized
representatives to have reasonable access to THPR's facilities and
records during the term of this Agreement in order to make periodic
checks regarding the efficacy of such tracking systems. THPR agrees to
make any and all adjustments to the tracking system which Company
advises are reasonably necessary to prevent diversion of the Hemophilia
Therapy Goods to individuals who are not Approved Patients of the
Company.
I. Handling and Labeling. THPR agrees that all Hemophilia Therapy Goods
provided by Company shall be labeled in accordance with applicable
Federal, State and local law and that said Hemophilia Therapy Goods
shall be stored, shipped and handled by THPR in accordance with
recognized professional standards for handling and storage of such
products and in accordance with Company's policies and procedures to
the extent that same do not contradict the requirements of Federal,
State and local law. As part of preparing Hemophilia Therapy Goods for
shipment, THPR shall pack the goods in cartons or other suitable
packaging with such cooling packs, insulation, or other packing
materials as necessary. All Hemophilia Therapy Goods shall be
delivered to Company's patients on behalf of Company, by Federal
Express or other acceptable courier, with the cost of said
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delivery to be paid by THPR.
J. Other Services. Regardless of the fact that THPR has agreed in this
Agreement to provide services other than Contract Pharmacy Services to
Company, access to 340B pricing will always be restricted to only
Approved Patients of the Company.
III. Compensation. In exchange for the services provided by THPR under
Sections IIA through IIJ of this Agreement, the Company agrees to pay THPR a
monthly fee as set out on Exhibit B. Said fee shall be determined on a monthly
basis by THPR and THPR shall at the end of each calendar month during the term
of this Agreement submit invoices to the Company setting out the amounts due
THPR for said month. The invoices for THPR's services shall be due and payable
* (*) days from the receipt of same by the Company, except that the first
months invoice will be due in * (*) days. Both parties acknowledge and
agree that the fees established for the Contracted Pharmacy Services have been
set in advance, are consistent with fair market value derived in an arms-length
transaction, and have not been determined in a manner that takes into account
the volume or value of any referrals or business otherwise generated between the
parties.
IV. Company Costs. It is agreed and understood that during the term of
this Agreement, THPR shall be responsible for the
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costs incurred in providing the services which it is obligated to provide
hereunder, and that THPR shall pay such costs out of its compensation received
under Section III. Notwithstanding the preceding provision, the Company shall be
responsible for the costs of salaries and fringe benefits for the Company's
employees, if any; cost of goods; outside auditor fees; interest expense; state
taxes; principal on Company loans; depreciation; and payroll taxes for its
employees, if any, and the cost of preparing the Company's Federal and State
Income tax returns. All such expenses shall be contracted for and in the name of
the Company, based solely upon the Company's credit, and THPR shall not be
liable to third party providers for the costs of such goods and services.
V. Subcontracting. The parties to this Agreement recognize that THPR
may provide to the Company certain of the goods and services which it is
obligated to provide under this Agreement by means of subcontracts with third
parties, provided however that the use of subcontractors shall not relieve THPR
of its obligations hereunder.
VI. Indemnity and Insurance. THPR and Company hereby agree that:
A. THPR shall assume responsibility for and shall indemnify and hold
Company harmless and defend Company from all losses (including claims
for injuries to employees of THPR or of Company), expenses, attorneys'
fees, damages,
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claims and judgments awarded to third parties resulting solely from
the negligent acts or omissions or wrongful acts of THPR, its agents
or employees;
B. Company shall assume responsibility for and shall indemnify and hold
THPR harmless and defend THPR from all losses (including claims for
injuries to employees of THPR or of Company), expenses, attorneys'
fees, damages, claims and judgments awarded to third parties resulting
solely from the negligent acts or omissions or wrongful acts of
Company, its agents or employees.
The indemnities and assumptions of liabilities and obligations herein
provided for shall continue in full force and effect notwithstanding the
termination of this Agreement whether by expiration of time, by operation of law
or otherwise. Each party hereto agrees to reimburse the other party for its
attorneys fees incurred in enforcing the provisions of this Agreement. This
obligation shall only apply when the party seeking to recover attorneys fees has
obtained a final non-appealable judgment from a court of competent jurisdiction
holding that a breach of this Agreement has occurred and awarding dollar damages
as a result of said breach. THPR, during the term of this Agreement, will
provide through a related entity at its sole cost and expense, general public
liability, products liability and property damage insurance in limits of not
less than $1,000,000.00 per incident;
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and $3,000,000.00 per annum aggregate. All policies insuring against liability
for bodily injury or death or damage to property shall include coverage for
malpractice if such exposure exists and shall insure THPR against the matters
covered by THPR's contractual duty to indemnify the Company set out hereinabove.
THPR will provide Company with certificates evidencing the insurance
required hereunder, and all such policies shall provide that notice of
cancellation or termination thereof shall be provided in advance to Company. In
the event of cancellation or termination of the coverage described herein, THPR
shall immediately obtain substitute or replacement coverage.
VII. Term. This Agreement shall be for a term beginning on the date of
the execution hereof and expiring on March 31, 1999, unless otherwise terminated
in accordance with this section. This Agreement shall automatically terminate
upon (a) THPR or the Company ceasing to exist or upon either party ceasing to be
licensed to sell Hemophilia Therapy Goods or upon either party permanently
ceasing to engage in the Hemophilia Therapy Business, (b) the mutual agreement
of the parties, (c) upon notice by either party hereto given twelve months prior
to the effective date of termination, (d) upon the insolvency or bankruptcy of
either party, the making by either party of an assignment for the benefit of
creditors, the consent by either party to the appointment of a trustee or
receiver, or the appointment without its consent, of a
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trustee or receiver, for it or for a substantial part of its property, or (e)
the institution by or against either party of bankruptcy, reorganization,
arrangement or insolvency proceedings.
In addition, if either party hereto shall breach the terms of this Agreement,
the nonbreaching party may give written notice of the breach to the breaching
party, and if said breach is not cured within fourteen (14) business days
following the giving of said notice, this Agreement shall at the option of the
nonbreaching party be terminated. Notwithstanding the above, this Agreement
shall be terminated immediately in the event that Company loses its status as a
Covered Entity as defined herein, or if any federal or state law is enacted
which could make this Agreement impractical including, but not limited to, a law
which limits the Company's ability to bill third party payors in excess of the
Company's acquisition cost plus a dispensing fee for outpatient drugs purchased
under Section 340B of the Public Health Services Act.
VIII. Applicable Patients. This Agreement only applies to individuals
who are patients of the Company and who are covered under the Chronically Ill
and Disabled Children's Services Program or Medicare or who pay with private
insurance or personal funds. This Agreement does not apply to patients who are
covered under the state Medicaid program.
IX. Force Majeure. The obligations of THPR hereunder shall
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be excused during any period of delay caused by matters such as strikes, acts of
God, shortages of raw materials or power, governmental action or compliance with
governmental requirements, whether voluntary or pursuant to order, or any other
matter which is beyond the reasonable efforts of THPR to control.
X. Independent Contractor. It is agreed that THPR shall be an
independent contractor, and not an employee of the Company.
THPR shall have sole control and discretion in the manner of performing its
obligations under this Agreement and the Company shall not be responsible for
the acts of THPR while THPR is performing services under this Agreement. THPR is
solely responsible for its employees' salaries, federal and state income
withholding, social security tax withholding, workmen's compensation benefits
and fringe benefits.
XI. Severability. If any one or more of the provisions of this
Agreement shall for any reason be held illegal or invalid, such illegality or
invalidity shall not affect any other provision of this Agreement and this
Agreement shall be enforced as if such illegal or invalid provision had not been
contained herein.
XII. Confidentiality. Each party has developed or may during the term
hereof develop certain products, methods of doing business, customer lists and
other proprietary information which that party deems to be confidential and a
trade secret. In the
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course of fulfilling their respective obligations hereunder, some of these
products, methods and other proprietary information will become known to the
other party hereto. Each party agrees that it will not duplicate, make use of,
or disclose, in any manner whatsoever, any information which is deemed to be
confidential by the other party, either during or after the term of this
Agreement, without the express prior written consent of the other party hereto.
In the event that any information deemed to be confidential by a party
is provided to the other party or its employees or agents in writing, the party
providing same shall mark the writing as "confidential." In the event that such
information is provided in non-written form such as orally, by audiotape,
videotape or computer software or disc, the party claiming such information to
be confidential shall furnish to the other party a written list containing a
brief description of such item and designating such item as confidential. Upon
termination of this Agreement, all copies of any information hereunder deemed,
or designated by a party as, confidential shall be returned to the party who
supplied the information, or who designated same as confidential.
Notwithstanding the preceding provision, the following types of information
provided by a party shall always be deemed confidential, whether or not so
designated: patient records; prescription files; lists of patient names,
addresses or phone
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numbers; lists of referring practitioner names, addresses or phone numbers;
costs of goods and supplies; and financial records of the party.
It is recognized and acknowledged that damages caused by a party's
breach of this Section would be difficult to ascertain and would not adequately
compensate the other party for its losses. Therefore, both parties agree that
the party claiming a breach of this Section shall be entitled to injunctive
relief to restrain the commission or continued commission of said breach by
seeking such relief from a court of competent jurisdiction.
Notwithstanding the preceding paragraphs, this restriction shall not
apply (a) to any information which is not deemed confidential hereunder, or
which has not been designated as confidential in the manner specified herein,
(b) to any information which was known to a party prior to its disclosure by the
other party, (c) to any information which is or becomes public knowledge through
no failure of a party bound by this Agreement, (d) any information which is
independently developed by a party hereto, or (e) to the extent that such
restrictions conflict with the terms of the Company Agreement evidencing the
Company.
XIII. Service to Other Businesses. Company acknowledges that THPR
offers its services to other businesses and Company agrees that no provision
contained herein shall restrict or prohibit THPR from providing services to
others in addition to the Company as
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long as the performance of said services does not interfere with the performance
of THPR's obligations hereunder.
XIV. Records. To the extent required by Section 1861(b)(1)(1) of the
Social Security Act, THPR shall, upon proper request, allow the United States
Department of Health and Human Services, the Comptroller General of the United
States and their duly authorized representatives, access to this Agreement and
to all books, documents and records necessary to verify the nature and extent of
the costs of the services provided by THPR under this Agreement at any time
during the term of this Agreement and for an additional period of four (4) years
following the last date services are furnished under this Agreement. Upon
request, a copy of this Agreement will be provided to a participating
manufacturer which sells covered outpatient drugs to Company. All confidential
proprietary information shall be deleted from the Agreement prior to disclosure
to a manufacturer.
XV. Nonassignability. The rights, duties and responsibilities of the
parties hereto are personal in nature and, except as stated herein, shall not be
assigned without the express written consent of the other party.
XVI. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Tennessee and the laws of the State of Tennessee
shall govern the rights, duties,
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liabilities and responsibilities created hereunder.
XVII. Compliance With The Law. THPR and Company will adhere to all
Federal, State, and local laws and requirements. Both THPR and the Company are
aware of the potential for civil or criminal penalties if Company and/or THPR
violate Federal or State law.
XVIII. Headings. All headings under herein are for each of reference
only and shall in no way be construed as interpreting, decreasing or enlarging
the provisions of this Agreement.
XIX. Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their successors,
administrators, trustees and assigns.
XX. Modification. This Agreement may be changed or modified only with
the written consent of both parties.
XXI. Notices. All notices, demands, requests, consents, reports,
approvals, or other communications which may be or are required to be given,
served, or sent pursuant to this Agreement shall be in writing and shall be
mailed by first class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, addressed as set out below. Each
party may designate by notice in writing a new address to which any notice,
demand, request, consent, report, approval or
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communication may thereafter be so given, served or sent. Each notice, demand,
request, consent, report, approval or communication which shall be mailed in the
manner described above, or which shall be delivered to a telegraph company,
shall be deemed sufficiently given, served, sent or received for all purposes at
such time as it is delivered to the addressee (with the return receipt or the
delivery receipt being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
XXII. Licenses. THPR is a licensed pharmacy under the laws
of Texas. THPR agrees to maintain all licenses and permits
necessary to fulfill its obligations hereunder.
XXIII. Waivers. A waiver of the breach of any provision of
this Agreement shall not be deemed a waiver of any other breach of
the same or any other provision hereof.
XXIV. Provider. Company represents that it does not have access to
appropriate "in-house" pharmacy services as that term is used by the PHS in its
Contracted Pharmacy Service guidelines. Company understands and agrees that THPR
is the provider of Contracted Pharmacy Services to Approved Patients of the
Covered Entity during the term of this Agreement.
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IN WITNESS WHEREOF, the undersigned parties hereto have caused this
Agreement to be executed as of the day and year first above written.
CHILDREN'S MEDICAL CENTER OF DALLAS
By: /s/ George Farr
--------------------------------
Title: President and CEO
--------------------------------
Address: Children's Memorial Center
--------------------------------
1935 Motor Street, Dallas 75235
--------------------------------
TEXAS HEALTH PHARMACEUTICAL RESOURCES,
a general partnership
By: NOVA FACTOR, INC.,
a general partner
By: /s/ David Stevens
--------------------------------
Title: Chief Executive Officer
--------------------------------
Address: 1620 Century Parkway #109
--------------------------------
Memphis, TN 38134
--------------------------------
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APPENDIX A
DEFINITIONS
The following terms as used in the Hemophilia Therapy Pharmacy
Management Agreement shall have the meanings set forth in this Appendix A:
1. "Covered Entity" shall mean a comprehensive hemophilia
diagnostic treatment center receiving a grant under Section
501(a)(2) of the Social Security Act.
2. "Contract Pharmacy Services" shall mean those dispensing, home
care and administrative support services described in the
guidelines issued by PHS.
3. "CIDC" shall mean the Texas Chronically Ill and
Disabled Children's Services Program.
4. "Patients of the Company" shall mean those persons who are
receiving care from the Company other than those persons who
receive healthcare benefits from the state Medicaid program.
5. "Approved Patient of the Company" shall mean Patient of the
Company for whom the Company has elected to access the Section
340B pricing under the Public Health Services Act.
<PAGE>
Exhibit 21.1
Subsidiaries of the Company
Southern Health Systems, Inc.
Nova Factor, Inc.
Hemophilia Health Services, Inc.
