UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___________ to _________________
Commission File Number: 0-10379
INTERFERON SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2313648
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
783 Jersey Avenue, New Brunswick, New Jersey 08901
(Address of principal executive offices) (Zip code)
(732) 249 - 3250
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period) that the registrant was required to file
such reports and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
Number of shares outstanding of each of issuer's classes of common
stock as of July 25, 1997:
Common Stock 12,285,105 shares
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
Page
Part I. Financial Information:
Consolidated Condensed Balance Sheets--June 30, 1997
and December 31, 1996 . . . . . . . . . . . . . . . . . 1
Consolidated Condensed Statements of Operations--Three
Months and Six Months Ended June 30, 1997 and 1996. . . 2-3
Consolidated Condensed Statement of Changes in
Stockholders' Equity--Six Months Ended
June 30, 1997 . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows--Six
Months Ended June 30, 1997 and 1996 . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements. . . 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 8-12
Qualification Relating to Financial Information . . . . . 13
Part II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
PART I. FINANCIAL INFORMATION
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31,
1997 1996
(Unaudited) *
ASSETS ------------ ------------
Current assets
Cash and cash equivalents $ 8,199,859 $ 17,491,955
Accounts and other receivables 808,543 233,037
Inventories 6,129,223 4,328,598
Receivables from NPDC and
affiliated companies, net 63,516 82,902
Prepaid expenses and other
current assets 128,737 162,019
------------ ------------
Total current assets 15,329,878 22,298,511
------------ ------------
Property, plant and equipment,
at cost 12,805,347 12,473,580
Less accumulated depreciation and
amortization (7,874,085) (7,514,747)
------------ ------------
4,931,262 4,958,833
------------ ------------
Intangible assets, net of
amortization 296,289 311,619
Other assets 173,900 173,900
------------ ------------
Total assets $ 20,731,329 $ 27,742,863
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and
accrued expenses $ 2,485,441 $ 2,369,032
------------- -------------
Total current liabilities 2,485,441 2,369,032
------------- -------------
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share;
authorized-5,000,000 shares; none issued
and outstanding
Common stock, par value $.01 per share;
authorized-55,000,000 shares; issued
and outstanding-12,285,105 and
12,276,195 shares 122,851 122,762
Capital in excess of par value 107,447,693 107,396,184
Accumulated deficit (89,324,656) (82,145,115)
------------- -------------
Total stockholders' equity 18,245,888 25,373,831
------------- -------------
Total liabilities and stockholders'
equity $ 20,731,329 $ 27,742,863
============= =============
*The condensed balance sheet as of December 31, 1996 has been
summarized from the Company's audited balance sheet as of that
date.
The accompanying notes are an integral part of these consolidated
condensed financial statements.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
--------------------------
1997 1996
------------ -----------
Revenues
Sales
ALFERON N Injection $ 759,139 $ 405,288
Research products and other revenues 1,902 8,264
------------ ------------
Total revenues 761,041 413,552
------------ ------------
Costs and expenses
Cost of goods sold and excess/idle
production costs 603,268 244,774
Research and development
(net of $58,749 and $64,746
of rental income received from NPDC) 3,135,447 1,349,884
General and administrative
(includes $58,125 and $120,384
of payments to NPDC for management
fees and reimbursements of certain
salaries and operating expenses; net
of $70,787 received from NPDC for the
three months ended June 30, 1996 for
reimbursements of certain salaries) 1,147,703 1,250,304
Cost of reacquisition of marketing
rights 3,313,705
------------ ------------
Total costs and expenses 4,886,418 6,158,667
------------ ------------
Loss from operations (4,125,377) (5,745,115)
Interest and other income 130,645 121,186
------------ ------------
Net loss $(3,994,732) $(5,623,929)
============ ============
Net loss per share $ (.33) $ (.58)*
============ ============
Weighted average number of
shares outstanding 12,285,105 9,620,037*
*Restated to reflect the effect of the one-for-four reverse stock
split (see Note 3 to the Consolidated Condensed Financial
Statements).
The accompanying notes are an integral part of these consolidated
condensed financial statements.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
June 30,
--------------------------
1997 1996
------------ -----------
Revenues
Sales
ALFERON N Injection $ 1,388,120 $ 405,288
Research products and other revenues 27,120 14,049
------------ ------------
Total revenues 1,415,240 419,337
------------ ------------
Costs and expenses
Cost of goods sold and excess/idle
production costs 1,104,642 1,026,315
Research and development
(net of $117,498 and $129,492
of rental income received from NPDC) 5,727,535 2,324,193
General and administrative
(includes $116,250 and $242,489
of payments to NPDC for management
fees and reimbursements of certain
salaries and operating expenses; net
of $150,335 received from NPDC for the
six months ended June 30, 1996 for
reimbursements of certain salaries) 2,070,138 1,800,474
Cost of reacquisition of marketing
rights 3,313,705
------------ ------------
Total costs and expenses 8,902,315 8,464,687
------------ ------------
Loss from operations (7,487,075) (8,045,350)
Interest and other income 307,534 190,221
------------ ------------
Net loss $(7,179,541) $(7,855,129)
============ ============
Net loss per share $ (.58) $ (.85)*
============ ============
Weighted average number of
shares outstanding 12,282,574 9,188,104*
*Restated to reflect the effect of the one-for-four reverse stock
split (see Note 3 to the Consolidated Condensed Financial
Statements).
The accompanying notes are an integral part of these consolidated
condensed financial statements.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
Capital Total
Common Stock in excess Accumulated Stockholders'
Shares Amount of par value Deficit Equity
------------------ ------------ ------------ -------------
Balance at
Dec. 31,
1996 12,276,195 $122,762 $107,396,184 $(82,145,115) $25,373,831
Purchase of
fractional shares
of common stock
resulting from
reverse stock
split (106) (1) (632) (633)
Proceeds from
exercise of
common stock
options 9,016 90 52,141 52,231
Net loss (7,179,541) (7,179,541)
----------------------------------------------------------------
Balance at
June 30,
1997 12,285,105 $122,851 $107,447,693 $(89,324,656) $18,245,888
The accompanying notes are an integral part of these consolidated condensed
financial statements.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
-----------------------
1997 1996
------------ ------------
Cash flows from operations:
Net loss $(7,179,541) $(7,855,129)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 374,668 384,298
Compensation paid with common stock 298,124
Change in operating assets and liabilities:
Inventories (1,800,625) (1,553,230)
Receivables from NPDC and affiliated
companies 19,386 12,176
Accounts and other receivables (575,506) (314,098)
Prepaid expenses and other current
assets 33,282 (167,841)
Accounts payable and accrued expenses 116,409 147,196
------------ ------------
Net cash used for operations (9,011,927) (9,048,504)
------------ ------------
Cash flows from investing activities:
Additions to property, plant and
equipment (331,767) (234,185)
Additions to intangible and other assets (94,252)
------------ ------------
Net cash used for investing activities (331,767) (328,437)
------------ ------------
Cash flows from financing activities:
Proceeds from exercise of common stock
options 52,231
Purchase of fractional shares of common
stock (633)
Net proceeds from sale of common stock 14,453,458
------------ ------------
Net cash provided by financing activities 51,598 14,453,458
------------ ------------
Net (decrease) increase in cash and
cash equivalents (9,292,096) 5,076,517
Cash and cash equivalents at beginning
of period 17,491,955 7,221,108
------------ ------------
Cash and cash equivalents at end of period $ 8,199,859 $12,297,625
============ ============
The accompanying notes are an integral part of these consolidated
condensed financial statements.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Agreements with Purdue
In 1988, the Company entered into exclusive marketing and
distribution agreements with affiliates of The Purdue Frederick
Company (collectively, "Purdue") with respect to ALFERON N
Injection(R). The Company reacquired from Purdue in 1993 and 1994
all marketing rights except in the United States and Canada. In
May 1996, the Company reacquired the United States and Canadian
marketing rights from Purdue for $3,313,705, which was charged to
expense in the second quarter of 1996.
In connection with the reacquisition of United States and
Canadian marketing rights (i) Purdue agreed to provide during the
first year after the reacquisition certain distribution services to
the Company with respect to 24,000 vials of ALFERON N Injection at
an aggregate cost of $240,000, (ii) Purdue agreed to provide during
the second year after the reacquisition, if requested by the
Company, certain distribution services to the Company with respect
to up to 30,000 vials of ALFERON N Injection at a cost of $15 per
vial, and (iii) the Company purchased from Purdue all vials of
ALFERON N Injection and all other assets of Purdue used exclusively
in its ALFERON N Injection business at an aggregate cost of
$206,307.
Note 2. Inventories
Inventories, consisting of material, labor and overhead, are
classified as follows:
June 30, December 31,
1997 1996
-------------- --------------
Finished goods $ 2,384,999 $ 2,563,755
Work in process 3,019,615 1,106,214
Raw materials 724,609 658,629
-------------- --------------
$ 6,129,223 $ 4,328,598
Finished goods inventory consists of vials of ALFERON N
Injection, available for commercial and clinical use either
immediately or upon final release by Quality Assurance.
Note 3. Reverse Stock Split
On March 21, 1997, the Company's stockholders approved a
proposal to amend the Company's Restated Certificate of
Incorporation to effect a one-for-four reverse stock split of the
Company's Common Stock. The reverse stock split became effective
as of 5:00 PM, New York City time, on March 21, 1997 (the
"Effective Time"). As of March 21, 1997, there were 49,104,779
shares of Common Stock outstanding and after the Effective Time
there were 12,276,089 shares of new Common Stock outstanding.
The par value of the Common Stock did not change as a result
of the reverse stock split. Cash was paid in lieu of fractional
shares based on the last reported sale price of the new Common
Stock on the first trading date after the Effective Time.
The loss per share and average outstanding shares for the
three months and six months ended June 30, 1996 have been restated
to reflect the reverse split as if it had occurred on January 1,
1996.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
As of June 30, 1997, the Company had an aggregate of $8.2
million in cash and cash equivalents. Until utilized, such cash and
cash equivalents are being invested principally in short-term
interest-bearing investments.
The Company requires substantial funds to conduct research and
development and preclinical and clinical testing and to market its
products. For the six months ended June 30, 1997, the cash utilized
by the Company's operations was approximately $9.0 million of which
increases in inventories and accounts and other receivables
accounted for approximately $1.8 and $0.6 million, respectively.
The Company has continued to increase its investment in inventories
of ALFERON N Injection to meet increased market demand, for use in
the Company-sponsored Phase 3 clinical trials currently in progress
for HIV and hepatitis C, and so that inventory will be available in
the event such trials are successfully concluded beginning in late
1997 and ALFERON N Injection is subsequently approved for the
treatment of one or both of these new indications by the U.S. Food
and Drug Administration. The Company's future capital requirements
will depend on many factors, including: continued scientific
progress in its drug development programs; the magnitude of these
programs; progress with preclinical testing and clinical trials;
the time and costs involved in obtaining regulatory approvals; the
costs involved in filing, prosecuting, and enforcing patent claims;
competing technologies and market developments; changes in its
existing research relationships; the ability of the Company to
establish collaborative arrangements; and effective
commercialization activities and arrangements.
In the first two weeks of August 1997, the Company received (i) net
proceeds of $8.5 million from a private offering, primarily to institutional
investors, of the Company's common stock and (ii) subscriptions to purchase
additional shares of the Company's common stock, pursuant to which the Company
expects to receive an additional $2.8 million of net proceeds in the near
future. Based on the Company's estimates of revenues, expenses, and levels of
production, management believes that the cash presently available, together
with the cash expected to be received when the subscribed for shares are
purchased, will be sufficient to enable the Company to continue operations for
at least 12 months. However, actual results, especially with respect to
revenues, may differ materially from such estimates, and no assurance can be
given that additional funding will not be required sooner than anticipated or
that such additional funding, whether from financial markets or collaborative
or other arrangements with corporate partners or from other sources, will be
available when needed or on terms acceptable to the Company. Insufficient
funds will require the Company to delay, scale back, or eliminate certain or all
of its research and development programs or to license third parties to
commercialize products or technologies that the Company would otherwise seek to
develop itself or to shut down or curtail its manufacturing facility.
Results of Operations
Six Months Ended June 30, 1997 versus Six Months Ended June 30,
1996
For the six months ended June 30, 1997, the Company's revenues
of $1,415,240 included $1,388,120 from the sale of ALFERON N
Injection and the balance from sales of research products and other
revenues. Revenues of $419,337 for the six months ended June 30,
1996 included $405,288 from the sale of ALFERON N Injection and the
balance from sales of research products. There were no sales to
Purdue during the six months ended June 30, 1996 because the
Company was negotiating the reacquisition of United States and
Canadian marketing rights from Purdue and Purdue had adequate
inventory from which to make sales pending the consummation of such
reacquisition, which took place during May 1996. Cost of goods
sold and excess/idle production costs totalled $1,104,642 and
$1,026,315 for the six months ended June 30, 1997 and 1996,
respectively. There were no excess/idle production costs in the six
months ended June 30, 1997. The positive gross margin achieved in
the six months ended June 30, 1997 reflects the higher United
States selling prices of ALFERON N Injection realized as a result
of the reacquisition of United States marketing rights, as well as
the low carrying values of a portion of the inventories sold
resulting from write-downs in prior periods. The inventory which
was sold during the six months ended June 30, 1996 had previously
been written-down to its then net realizable value. Excess/idle
production costs in the six months ended June 30, 1996 represented
current production costs in excess of the estimated net realizable
value of the inventory produced.
Research and development expenses during the six months ended
June 30, 1997 of $5,727,535 increased by $3,403,342 from $2,324,193
for the same period in 1996, principally because the Company
continued to intensify its level of clinical research on ALFERON N
Injection. The Company received $117,498 and $129,492 during the
six months ended June 30, 1997 and 1996, respectively, as rental
income from National Patent Development Corporation ("NPDC") for
the use of a portion of the Company's facilities, which offset
research and development expenses.
General and administrative expenses for the six months ended
June 30, 1997 were $2,070,138 as compared to $1,800,474 for the
same period in 1996. The increase of $269,664 was principally due
to increases in payroll, marketing and other operating expenses,
partially offset by non-recurring compensation expenses of
approximately $550,000 for the same period in 1996. NPDC provides
certain administrative services for which the Company paid NPDC
$60,000 for each of the six-month periods ended June 30, 1997 and
1996. In addition, for the six months ended June 30, 1997 and
1996, the Company reimbursed NPDC zero and $97,500, respectively,
for expenses paid by NPDC on behalf of the Company. For the six
months ended June 30, 1997 and 1996, payments to NPDC for the
services provided to the Company by NPDC personnel amounted to
$56,250 and $84,989, respectively. For the six months ended June
30, 1997 and 1996, receipts from NPDC for the services provided to
NPDC by Company personnel amounted to zero and $150,335,
respectively.
The $3,313,705 cost of reacquisition of marketing rights from
Purdue was charged to expense in the second quarter of 1996.
Interest and other income for the six months ended June 30,
1997 was $307,534 as compared to $190,221 for the same period in
1996. The increase of $117,313 was due to more funds available for
investment in the current period.
As a result of the foregoing, the Company incurred net losses
of $7,179,541 and $7,855,129 for the six months ended June 30, 1997
and 1996, respectively.
Three Months Ended June 30, 1997 versus Three Months Ended June 30,
1996
For the three months ended June 30, 1997, the Company's
revenues of $761,041 included $759,139 from the sale of ALFERON N
Injection and the balance from sales of research products and other
revenues. Revenues of $413,552 for the three months ended June 30,
1996 included $405,288 from the sale of ALFERON N Injection and the
balance from sales of research products. There were no sales to
Purdue during the three months ended June 30, 1996 because the
Company was negotiating the reacquisition of United States and
Canadian marketing rights from Purdue and Purdue had adequate
inventory from which to make sales pending the consummation of such
reacquisition, which took place during May 1996. Cost of goods
sold totalled $603,268 and $244,774 for the three months ended June
30, 1997 and 1996, respectively. There were no excess/idle
production costs in the three months ended June 30, 1997 and 1996.
The positive gross margin achieved in the three months ended June
30, 1997 and 1996 reflects the higher United States selling prices
of ALFERON N Injection realized as a result of the reacquisition of
United States marketing rights and, for the 1996 period, the low
carrying values of the inventories sold resulting from write-downs
in prior periods.
Research and development expenses during the three months
ended June 30, 1997 of $3,135,447 increased by $1,785,563 from
$1,349,884 for the same period in 1996, principally because the
Company continued to intensify its level of clinical research on
ALFERON N Injection. The Company received $58,749 and $64,746
during the three months ended June 30, 1997 and 1996, respectively,
as rental income from NPDC for the use of a portion of the
Company's facilities, which offset research and development
expenses.
General and administrative expenses for the three months ended
June 30, 1997 were $1,147,703 as compared to $1,250,304 for the
same period in 1996. The decrease of $102,601 was principally due
to non-recurring compensation expenses of approximately $550,000
for the 1996 period, partially offset by increases in payroll,
marketing and other operating expenses in the 1997 period. NPDC
provides certain administrative services for which the Company paid
NPDC $30,000 for each of the three-month periods ended June 30,
1997 and 1996. In addition, for the three months ended June 30,
1997 and 1996, the Company reimbursed NPDC zero and $48,750,
respectively, for expenses paid by NPDC on behalf of the Company.
For the three months ended June 30, 1997 and 1996, payments to NPDC
for the services provided to the Company by NPDC personnel amounted
to $28,125 and $41,634, respectively. For the three months ended
June 30, 1997 and 1996, receipts from NPDC for the services
provided to NPDC by Company personnel amounted to zero and $70,787,
respectively.
The $3,313,705 cost of reacquisition of marketing rights from
Purdue was charged to expense in the second quarter of 1996.
Interest and other income for the three months ended June 30,
1997 was $130,645 as compared to $121,186 for the same period 1996.
As a result of the foregoing, the Company incurred net losses
of $3,994,732 and $5,623,929 for the three months ended June 30,
1997 and 1996, respectively.
Recent Tax and Accounting Developments
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS No. 128). SFAS No. 128 applies to
entities with publicly held common stock or potential common stock.
SFAS No. 128 simplifies the computation of earnings per share by
replacing the presentation of primary earnings per share with a
presentation of basic earnings per share. It requires dual
presentation of basic and diluted earnings per share by entities
with complex capital structures. Statement No. 128 is effective
for financial statements issued for periods ending after December
15, 1997 and requires restatement of all prior period earnings per
share presented. The Company does not believe the adoption of SFAS
No. 128 will have a material impact on the Company's reported
earnings per share.
Forward-Looking Statements
This report contains certain forward-looking statements
reflecting management's current views with respect to future events
and financial performance. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements, including, but not limited to, uncertainty of obtaining
additional funding for the Company; uncertainty of obtaining United
States regulatory approvals for the Company's products under
development and foreign regulatory approvals for the Company's FDA-
approved product and products under development and, if such
approvals are obtained, uncertainty of the successful commercial
development of such products; substantial competition from
companies with substantially greater resources than the Company in
the Company's present and potential businesses; no guaranteed
source of required materials for the Company's products; dependence
on certain distributors to market the Company's products; potential
adverse side effects from the use of the Company's products;
potential patent infringement claims against the Company; possible
inability of the Company to protect its technology; uncertainty of
pharmaceutical pricing; substantial royalty obligations payable by
the Company; limited production experience of the Company; risk of
product liability; and risk of loss of key management personnel,
all of which are difficult to predict and many of which are beyond
control of the Company.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
QUALIFICATION RELATING TO FINANCIAL INFORMATION
JUNE 30, 1997
The financial information included herein is unaudited. Such
information, however, reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair statement of the results for the
interim periods. The results for interim periods are not
necessarily indicative of results to be expected for the year.
INTERFERON SCIENCES, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held on June 19, 1997,
the following individuals were elected to serve as directors of the
Company for a one year term, with each individual nominee receiving
the following votes:
Director Votes For Votes Withheld
Dr. Leon Botstein 8,044,421 504,963
Jerome I. Feldman 8,330,176 219,208
Martin M. Pollak 8,066,543 482,841
Lawrence M. Gordon 8,332,101 217,283
Scott N. Greenberg 8,332,226 217,158
Dr. Samuel H. Ronel 8,331,576 217,808
Dr. Stanley G. Schutzbank 8,332,101 217,283
Dr. Roald Hoffmann 8,070,468 478,916
Sheldon L. Glashow 8,070,468 478,916
Item 6. Exhibits and Reports on Form 8-K
(a) 10.54 Agreement, dated as of April 1, 1997 between the
Registrant and the American National Red Cross*
10.55 Agreement, dated May 27, 1997 between the
Registrant and Alternate Site Distributors, Inc.*
- ------------------
*Certain information omitted and subject to a request for
confidential treatment pursuant to Rule 24b-2.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the period
ended June 30, 1997.
INTERFERON SCIENCES, INC.
JUNE 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed in
its behalf by the undersigned thereunto duly authorized.
INTERFERON SCIENCES, INC.
DATE: August 14, 1997 By: /s/ Lawrence M. Gordon
Lawrence M. Gordon
Chief Executive Officer
DATE: August 14, 1997 By: /s/ Donald W. Anderson
Donald W. Anderson
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000351532
<NAME> INTERFERON SCIENCES, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,199,859
<SECURITIES> 0
<RECEIVABLES> 808,543
<ALLOWANCES> 0
<INVENTORY> 6,129,223
<CURRENT-ASSETS> 15,329,878
<PP&E> 12,805,347
<DEPRECIATION> 7,874,085
<TOTAL-ASSETS> 20,731,329
<CURRENT-LIABILITIES> 2,485,441
<BONDS> 0
0
0
<COMMON> 122,851
<OTHER-SE> 18,123,037
<TOTAL-LIABILITY-AND-EQUITY> 20,731,329
<SALES> 1,415,240
<TOTAL-REVENUES> 1,415,240
<CGS> 1,104,642
<TOTAL-COSTS> 1,104,642
<OTHER-EXPENSES> 7,797,673
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,179,541)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,179,541)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,179,541)
<EPS-PRIMARY> (.58)
<EPS-DILUTED> (.58)
</TABLE>
EXHIBIT 10.54
*Certain information omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2(b).
- ------------------------------------------------------------------------
Agreement, dated as of April 1, 1997, between Interferon Sciences, Inc., a
Delaware corporation with principal executive offices at 783 Jersey Avenue, New
Brunswick, New Jersey 08901 ("ISI"), and American National Red Cross, a
charitable and not-for-profit corporation with principal offices at 8111
Gatehouse Road, Falls Church, Virginia 22042 ("ARC").
WHEREAS, ARC's mission is to provide a safe, reliable, and cost effective supply
of blood and blood services;
WHEREAS, ARC is the pre-eminent provider of blood and blood services in the
United States, serving more than 3,000 hospitals through the generous donations
of some 22,000 people daily;
WHEREAS, ARC, as a by-product of its blood collection activities, collects
buffycoats; WHEREAS, ISI is a biopharmarceutical company currently engaged
in the manufacture and sale of natural source, multi-species alpha interferon
("Natural Alpha Interferon"); and
WHEREAS, ISI wishes to purchase from ARC, and ARC wishes to sell to ISI,
buffycoats to be used by ISI in the manufacture of Natural Alpha Interferon;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, ISI and ARC agree as follows (capitalized terms
used and not defined herein have the meanings as defined in Section 8):
1. Purchase and Sale of Buffycoats
1.1 Purchase and Sale. Subject to the terms and conditions set forth
herein, ISI agrees to purchase from ARC, and ARC agrees to sell to ISI,
buffycoats for use in the manufacture of Natural Alpha Interferon.
1.2 Orders. (a) In each of the first seven months of the Term, ISI shall
purchase from ARC, and ARC shall sell to ISI, the number of buffycoats set forth
for such month on Schedule 1.2.
(b) In each of the eighth through twenty-fourth months of the Term, ISI
shall purchase from ARC, and ARC shall sell to ISI, at least the number of
buffycoats set forth for such month on Schedule l.2 under the heading "Minimum
Purchases." Not later than the first day of each of the second through
eighteenth months of the Term, ISI shall submit to ARC a purchase order for
buffycoats for the sixth succeeding month. If the purchase order relating to any
month is for a number of buffycoats (i) less than or equal to the number of
buffycoats set forth for such month on Schedule l.2 under the heading "Minimum
Sales," such purchase order shall be binding on both parties, and ISI shall
purchase from ARC, and ARC shall sell to ISI, the number of buffycoats set forth
in such order or (ii) greater than the number of buffycoats set forth for such
month on Schedule l.2 under the heading "Minimum Sales," (A) such purchase order
shall be binding on both parties with respect to the number of buffycoats set
forth for such month on Schedule l.2 under the heading "Minimum Sales," and ISI
shall purchase from ARC, and ARC shall sell to ISI, such number of buffycoats,
(B) ARC shall notify ISI, not more than 10 days after its receipt of such
purchase order, of the number of buffycoats, if any, ARC is willing to supply in
such month in excess of the number of buffycoats set forth for such month on
Schedule l.2 under the heading "Minimum Sales," and (C) ARC shall use its
commercially reasonable efforts to sell to ISI the number of buffycoats set
forth in such notice from ARC.
1.3 Purchase Price and Payment. (a) The purchase price to ISI for all
buffycoats it purchases hereunder shall be determined pursuant to Schedule 1.3.
(b) As soon as practicable after the end of each of the first eleven
months of each Year, ARC shall invoice ISI for buffycoats purchased in such
month and the related shipping expenses, with the price per buffycoat determined
by assuming that the Buffycoat Number for such Year will equal the Buffycoat
Number for such month multiplied by 12. As soon as practicable after the end of
the twelfth month of each Year, ARC shall send ISI a final invoice for such Year
(the "Final Invoice") in an amount equal to (i) the number of buffycoats
purchased in such Year multiplied by the price per buffycoat less (ii) the
aggregate amount of the previous eleven invoices for such Year (excluding
shipping expenses) plus (iii) the shipping expenses incurred in such month.
(c) For invoices relating to the first Year, ISI shall pay (i) * % of
each invoiced amount in cash within 30 days from the date of such invoice and
(ii) the remaining * % of each invoiced amount (the "Unpaid Amount") as set
forth in Sections 1.3(m) and (n).
(d) If ISI gives ARC, or ARC gives ISI, not later than April 1, 1998
(the "First Anniversary Date"), a notice (the "Equity Election") that it elects
to have this sentence apply to invoices relating to the second Year, then for
invoices relating to the second Year, ISI shall pay (i) * % of each invoiced
amount in cash within 30 days from the date of such invoice and (ii) the Unpaid
Amount as set forth in Sections 1.3(m) and (n). If the Equity Election is not
made, for invoices relating to the second Year, ISI shall pay 100% of each
invoiced amount in cash within 30 days from the date of such invoice.
(e) If the Market Price on the First Anniversary Date (the "First
Anniversary Price") exceeds the Market Price on the date this Agreement is
executed (the "Opening Price"), ISI will issue to ARC, as soon as practicable
after the First Anniversary Date, a number of shares (the "First Shares") of
common stock, par value $.01 per share (the "Common Stock"), of ISI calculated
as follows: [(First Anniversary Price - Opening Price) x Formula Share Number]
, First Anniversary Price. An illustration of the operation of this Section
1.3(e) and Sections 1.3(f), (m), and (n) is set forth on Schedule 1.3(e).
(f) If the Equity Election is made and the Market Price (the "Second
Anniversary Price") on April 1, 1999 (the "Second Anniversary Date") exceeds the
First Anniversary Price, ISI will issue to ARC, as soon as practicable after the
Second Anniversary Date, a number of shares (the "Second Shares") of Common
Stock calculated as follows: [(Second Anniversary Price - First Anniversary
Price) x Formula Share Number] , Second Anniversary Price.
(g) The calculations set forth in Sections 1.3(e) and (f) shall be
subject to the following adjustments:
(i) In case at any time after the date hereof and prior to the
First Anniversary Date (or prior to the Second Anniversary Date if the Equity
Election is made) ISI shall subdivide its outstanding shares of Common Stock
into a greater number of shares or declare a dividend on its outstanding shares
of Common Stock payable in shares of Common Stock, the Formula Share Number in
effect immediately prior thereto shall be proportionately increased, and, if the
subdivision or dividend shall occur in the first Year, the Opening Price used in
the determination pursuant to Section 1.3(e), or, if the subdivision or dividend
shall occur in the second Year, the First Anniversary Price used in the
determination pursuant to Section 1.3(f), in effect immediately prior thereto
shall be proportionately reduced. Conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Formula
Share Number in effect immediately prior to such combination shall be
proportionately reduced, and, if the combination shall occur in the first Year,
the Opening Price used in the determination pursuant to Section 1.3(e), or, if
the combination shall occur in the second Year, the First Anniversary Price used
in the determination pursuant to Section 1.3(f), as in effect immediately prior
to such combination shall be proportionately increased.
(ii) In case at any time after the date hereof and prior to the
First Anniversary Date (or prior to the Second Anniversary Date if the Equity
Election is made), ISI shall be a party to any transaction (including, without
limitation, a merger, consolidation, sale of all or substantially all of its
assets, or recapitalization of its capital stock) (each such transaction being
herein called a "Transaction" and the consummation date of each such transaction
being herein called a "Consummation Date") in which the previously outstanding
shares of Common Stock shall be changed into or exchanged for different
securities of ISI or common stock or other securities of another corporation or
interests in a oncorporate entity or other property (including cash) or any
combination of any of the foregoing (the "Transaction Consideration"), then as
a condition to the consummation of the Transaction, lawful and adequate
provision shall be made so that ARC shall be entitled to receive, (A) if the
Consummation Date is prior to the First Anniversary Date, in lieu of First
Shares, Transaction Consideration having a fair market value on the First
Anniversary Date equal to the amount, if any, by which (I) the fair market value
on the First Anniversary Date of the Transaction Consideration a holder
immediately prior to the Consummation Date of the Formula Share Number of Common
Stock would have been entitled to receive upon the consummation of the
Transaction exceeds (II) the product of the Opening Price and the Formula Share
Number and (B) if the Consummation Date is after the First Anniversary Date but
prior to the Second Anniversary Date and the Equity Election is made, in lieu of
Second Shares, Transaction Consideration having a fair market value on the
Second Anniversary Date equal to the amount, if any, by which (I) the fair
market value on the Second Anniversary Date of the Transaction Consideration a
holder immediately prior to the Consummation Date of the Formula Share Number of
Common Stock would have been entitled to receive upon the consummation of the
Transaction exceeds (II) the product of the First Anniversary Price and the
Formula Share Number. As a further condition to the consummation of the
Transaction, lawful and adequate provision shall be made so that all of ISI's
obligations to pay ARC the Unpaid Amount or any part thereof pursuant to
Sections 1.3(m) and (n) shall become the obligations of ISI and of its
successor in interest, provided, however, that any amount received pursuant to
this Section 1.3(g)(ii) in cash shall be deemed to reduce, to that extent, the
amount of any deficiency of the Unpaid Amount which ISI and its successor in
interest shall be obligated to pay ARC pursuant to Sections 1.3(m) and (n).
(h) The issue and sale of the First Shares and Second Shares
(collectively, the "Shares") to ARC pursuant to Sections l.3(e) and (f) will not
be registered under the Securities Act of 1933, as amended (the "Act"), in
reliance upon the applicability of Section 4(2) of the Act to the transactions
contemplated thereby. In furtherance of such reliance, certificates
representing the Shares will bear a restrictive legend to the effect that they
may not be sold without registration under the Act, absent an available
exemption from the registration provisions of the Act, and appropriate "stop
transfer" instructions will be issued to the transfer agent for Common Stock.
ARC acknowledges that it has had access to such knowledge about ISI as is
customarily found in a registration statement filed under the Act and agrees
that it will acquire the Shares for investment and not with a view to
distribution and will not sell or otherwise dispose of the Shares except in
compliance with the Act, including pursuant to an exemption from registration
under the Act which, in the opinion of counsel to ARC, which counsel and
opinion are reasonably satisfactory to counsel of ISI, is available for a
proposed disposition of any of the Shares.
. (i) ISI shall, at its expense (except as provided in Appendix A), (i) not
later than 90 days prior to the First Anniversary Date, file a registration
statement (the "First Registration Statement") to register under the Act the
resale by ARC of the First Shares, (ii) take all commercially reasonable actions
to cause the First Registration Statement to become effective under the Act as
expeditiously as possible after the First Anniversary Date, (iii) after the
First Registration Statement is declared effective under the Act, furnish ARC
with such number of copies of the prospectus (the "First Prospectus") included
in the First Registration Statement as ARC may reasonably request to facilitate
the resale of the First Shares, (iv) take all commercially reasonable actions to
register and qualify the First Shares under such securities laws (other than the
Act) or Blue Sky laws of such jurisdictions as shall be reasonably requested by
ARC, provided that ISI shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, and (v) take all
commercially reasonable actions to (A) cause the First Registration Statement to
remain effective under the Act and such state registrations or qualifications to
remain effective under such state securities or Blue Sky laws, (B) prepare and
file under the Act such amendments and supplements to the First Registration
Statement and the First Prospectus as may be necessary to comply with the
provisions of the Act and the rules thereunder with respect to the disposition
of all securities covered by the First Registration Statement, and (C) file such
supplements and amendments to any such state registrations or qualifications as
may be necessary to comply with the provisions of such state securities or
Blue Sky laws with respect to the disposition of all securities covered by such
registration or qualification. The obligations of ISI in the preceding sentence
shall terminate at the earlier of (A) such time as ARC owns no First Shares and
(B) such time as, in the view of counsel to ISI concurred in by counsel to ARC,
ARC may sell all of the First Shares then held by ARC in the public securities
market without registration under the Act pursuant to Rule 144 under the Act (or
any successor rule). It shall be a condition precedent to the obligations of
ISI under this Section 1.3(i) that ARC shall furnish to ISI such information as
requested in writing by ISI regarding ARC, the First Shares held by ARC, and the
intended method of disposition of such First Shares as shall be required to
effect the registration of the First Shares.
(j) If the Equity Election is made, ISI shall, at its expense (except as
provided in Appendix A), (i) not later than 90 days prior to the Second
Anniversary Date, file a registration statement (the "Second Registration
Statement," and, together with the First Registration Statement, the
"Registration Statements") to register under the Act the resale by ARC of the
Second Shares, (ii) take all commercially reasonable actions to cause the Second
Registration Statement to become effective under the Act as expeditiously as
possible after the Second Anniversary Date, (iii) after the Second Registration
Statement is declared effective under the Act, furnish ARC with such number of
copies of the prospectus (the "Second Prospectus") included in the Second
Registration Statement as ARC may reasonably request to facilitate the resale of
the Second Shares, (iv) take all commercially reasonable actions to register and
qualify the Second Shares under such securities laws (other than the Act) or
Blue Sky laws of such jurisdictions as shall be reasonably requested by ARC,
provided that ISI shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, and (v) take all
commercially reasonable actions to (A) cause the Second Registration Statement
to remain effective under the Act and such state registrations or qualifications
to remain effective under such state securities or Blue Sky laws, (B) prepare
and file under the Act such amendments and supplements to the Second
Registration Statement and the Second Prospectus as may be necessary to comply
with the provisions of the Act and the rules thereunder with respect to the
disposition of all securities covered by the Second Registration Statement, and
(C) file such supplements and amendments to any such state registrations or
qualifications as may be necessary to comply with the provisions of such state
securities or Blue Sky laws with respect to the disposition of all securities
covered by such registration or qualification. The obligations of ISI in the
preceding sentence shall terminate at the earlier of (A) such time as ARC owns
no Second Shares and (B) such time as, in the view of counsel to ISI concurred
in by counsel to ARC, ARC may sell all of the Second Shares then held by ARC in
the public securities market without registration under the Act pursuant to Rule
144 under the Act (or any successor rule). It shall be a condition precedent to
the obligations of ISI under this Section 1.3(j) that ARC shall furnish to ISI
such information as requested in writing by ISI regarding ARC, the Second Shares
held by ARC, and the intended method of disposition of such Second Shares as
shall be required to effect the registration of the Second Shares.
(k) If at any time during the period that ARC owns any Shares an event
(an "Event") shall have occurred that has caused the First Prospectus or the
Second Prospectus to contain an untrue statement of a material fact or to omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, ISI shall promptly (i) give ARC a notice (the "No-Sell Notice")
that an Event has occurred, (ii) promptly (or, if in the reasonable judgment of
ISI disclosure of the Event would be seriously detrimental to ISI, promptly
after disclosure of the Event would not be seriously detrimental to ISI) take
all commercially reasonable efforts to cause the First Registration Statement
and the Second Registration Statement not to contain an untrue statement of a
material fact or to omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, and (iii) give ARC a notice (the
"Sell Notice") when the First Registration Statement and the Second
Registration Statement do not contain an untrue statement of a material fact or
to omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. ARC shall not sell any Shares pursuant to the First
Registration Statement or Second Registration Statement after it has received a
No-Sell Notice until it has received a subsequent Sell Notice.
(l) In addition to the provisions of this Agreement, the provisions of
Appendix A are incorporated herein by this reference as fully as if set forth
herein and those provisions shall apply with respect to the First Registration
Statement and the Second Registration Statement and shall otherwise govern the
rights of the parties with respect to the First Shares and the Second Shares.
In the event of a Transaction, the foregoing registration rights and the
provisions of Appendix A shall apply to any Transaction Consideration received
by ARC in lieu of Shares unless, in the opinion of counsel to ISI or its
successor, registration is not required for the resale of such Transaction
Consideration by ARC, which opinion is concurred in by counsel to ARC.
(m) If any First Shares or Transaction Consideration are issued, not
later than ten business days after the later of (A) the First Anniversary Date
and (B) the date that ARC receives a copy of ISI's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, ARC shall give ISI notice whether
it elects to sell the First Shares or Transaction Consideration pursuant to the
provisions of this Section 1.3(m). If ARC elects not to sell the First Shares
or Transaction Consideration pursuant to the provisions of this Section 1.3(m),
the First Shares or Transaction Consideration shall constitute full payment for
the first Year's Unpaid Amount. If ARC elects to sell the First Shares or
Transaction Consideration pursuant to the provisions of this Section 1.3(m), it
will cooperate with any reasonable request of ISI in order to maximize the Sales
Proceeds. If the Sales Proceeds are less than the first Year's Unpaid Amount,
ISI shall promptly pay the deficiency to ARC in cash. If ARC elects to sell the
First Shares or Transaction Consideration pursuant to the provisions of this
Section 1.3(m) but cannot do so because the First Registration Statement has not
been declared effective under the Act or ARC has received a No-Sell Notice but
has not received a subsequent Sell Notice, ISI shall promptly pay the first
Year's Unpaid Amount to ARC in cash. At such time as ARC is able to sell the
First Shares or Transaction Consideration, ARC shall promptly pay to ISI in cash
the lesser of (i) the first Year's Unpaid Amount and (ii) the Sales Proceeds.
If no First Shares or Transaction Consideration are issued, ISI shall pay the
first Year's Unpaid Amount to ARC in cash within 30 days from the date of the
Final Invoice for the first Year. ISI's obligation to pay the first Year's
Unpaid Amount shall remain in full force and effect until fully satisfied by
either (iii) the delivery of a written notice by ARC that it elects not to sell
the First Shares or Transaction Consideration pursuant to the provisions of this
Section 1.3(m), (iv) the application of the Sales Proceeds of the First Shares
or Transaction Consideration to the first Year's Unpaid Amount and receipt from
ISI of payment for any deficiency, or (v) the payment of the first Year's Unpaid
Amount in cash, in each case as provided for pursuant to this Section 1.3(m).
(n) If the Equity Election is made and any Second Shares or Transaction
Consideration are issued, not later than ten business days after the later of
(A) the Second Anniversary Date and (B) the date that ARC receives a copy of
ISI's Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
ARC shall give ISI notice whether it elects to sell the Second Shares or
Transaction Consideration pursuant to the provisions of this Section 1.3(n). If
ARC elects not to sell the Second Shares or Transaction Consideration pursuant
to the provisions of this Section 1.3(n), the Second Shares or Transaction
Consideration shall constitute full payment for the second Year's Unpaid Amount.
If ARC elects to sell the Second Shares or Transaction Consideration pursuant to
the provisions of this Section 1.3(n), it will cooperate with any reasonable
request of ISI in order to maximize the Sales Proceeds. If the Sales Proceeds
are less than the second Year's Unpaid Amount, ISI shall promptly pay the
deficiency to ARC in cash. If ARC elects to sell the Second Shares or
Transaction Consideration pursuant to the provisions of this Section 1.3(n) but
cannot do so because the Second Registration Statement has not been declared
effective under the Act or ARC has received a No-Sell Notice but has not
received a subsequent Sell Notice, ISI shall promptly pay the second Year's
Unpaid Amount to ARC in cash. At such time as ARC is able to sell the Second
Shares or Transaction Consideration, ARC shall promptly pay to ISI in cash the
lesser of (i) the second Year's Unpaid Amount and (ii) the Sales Proceeds. If
no Second Shares or Transaction Consideration are issued, ISI shall pay the
second Year's Unpaid Amount to ARC in cash within 30 days from the date of the
Final Invoice for the second Year. ISI's obligation to pay the second Year's
Unpaid Amount shall remain in full force and effect until fully satisfied by
either (iii) the delivery of a written notice by ARC that it elects not to sell
the Second Shares or Transaction Consideration pursuant to the provisions of
this Section 1.3(n), (iv) the application of the Sales Proceeds of the Second
Shares or Transaction Consideration to the second Year's Unpaid Amount and
receipt from ISI of payment for any deficiency, or (v) the payment of the second
Year's Unpaid Amount in cash, in each case as provided for pursuant to this
Section 1.3(n).
2. Delivery of Buffycoats
2.1 Shipment and Acceptance of Buffycoats. Buffycoats shall be shipped
at ISI's expense from each ARC Blood Services Region (a "Region") to ISI's New
Brunswick, New Jersey facility (the "ISI Facility") in such manner as ISI and
ARC shall agree. Title to buffycoats shall be transferred to and vest in ISI
at the time ISI accepts the buffycoats. ISI shall not be required to accept
buffycoats shipped by ARC unless, not later than 3 P.M. on the day following the
day such buffycoats are drawn from the blood donor, (a) such buffycoats shall
have been received at the ISI Facility and (b) ARC shall have furnished to ISI a
written notice certifying (i) the day such buffycoats were drawn from the blood
donor, (ii) that ARC tested such buffycoats in accordance with the testing
procedures set forth on Schedule 2.1, and (iii) that such buffycoats did not
fail any such test procedures. Any buffycoats not accepted by ISI shall be
destroyed by ISI in accordance with all applicable laws and ARC requirements and
Standard Operating Procedures or, if so requested by ARC, returned to ARC at
ARC's expense.
2.2 Shipment by Regions. Except as set forth in this Section 2.2, ARC
shall determine which Regions will ship buffycoats to ISI. If any Region shall
produce buffycoats using a process different from that used by the majority of
Regions on the date of this Agreement (a "Different Process Region"), ARC shall
not ship such buffycoats to ISI unless ISI shall have first determined that such
buffycoats are suitable for use in the manufacture of Natural Alpha Interferon.
If ARC wants to ship buffycoats produced at a Different Process Region, ARC
shall, at its expense, furnish such buffycoats to ISI to enable ISI to determine
whether such buffycoats are suitable for use in the manufacture of Natural Alpha
Interferon. If ISI shall determine that such buffycoats are suitable for use in
the manufacture of Natural Alpha Interferon, ISI shall so notify ARC and ARC
shall be permitted to ship to ISI buffycoats produced by such Different Process
Region. If ISI shall determine that such buffycoats are not suitable for use in
the manufacture of Natural Alpha Interferon, ISI shall so notify ARC and ARC
shall not ship to ISI buffycoats produced by such Different Process Region.
2.3 Timing of Shipments of Buffycoats. ISI and ARC shall cooperate to
insure that the buffycoats to be purchased by ISI and sold by ARC are shipped in
an orderly manner so as to allow ISI to utilize them efficiently in the
manufacture of Natural Alpha Interferon. Without limiting the generality of the
foregoing, (a) ARC shall not ship more than * buffycoats to be received by
ISI on any day, unless given written permission by ISI, and (b) if ISI gives ARC
written notice (a "No Ship Notice") that the ISI Facility will not be operating
on any day or days, ARC shall not ship any buffycoats to be received by ISI on
such day or days provided that the No Ship Notice is faxed by ISI to each Region
then shipping buffycoats to ISI not later than noon of the day preceding the day
such buffycoats are collected. ARC shall furnish to ISI from time to time the
fax numbers of the Regions then shipping buffycoats to ISI. If, as a result of
a No Ship Notice or No Ship Notices, the number of days in any month of the Term
on which ISI is able to receive buffycoats (the "Open Days Number") is less than
the number of days set forth for such month on Schedule 1.2 under the heading
"Minimum Days" (the "Minimum Days Number"),(c) with respect to the first through
seventh months of the Term, the number of buffycoats set forth for such month on
Schedule 1.2 under the heading "Quantity" shall be reduced by the product of (i)
the quotient obtained by dividing (A) the number of buffycoats set forth for
such month on Schedule 1.2 under the heading "Quantity" by (B) the Minimum Days
Number for such month and (ii) the number by which the Minimum Days Number for
such month exceeds the Open Days Number for such month, and (d) with respect to
the eighth through twenty-fourth months of the Term, the number of buffycoats
set forth for such month on Schedule 1.2 under the heading "Minimum Sales" shall
be reduced by the product of (i) * and (ii) the number by which the Minimum
Days Number for such month exceeds the Open Days Number for such month, and in
case of both clauses (c) and (d) ARC shall not be obligated to sell to ISI in
such month a number of buffycoats in excess of such reduced number of
buffycoats.
3. Confidential Information
3.1 Use. All Confidential Information of a party hereto shall be used
by the other party only during the Term and solely for the purpose of performing
its obligations hereunder.
3.2 Confidential Treatment. Each party agrees that it will keep
confidential the other party's Confidential Information and shall not, without
the prior written consent of the other party, disclose or permit the disclosure
by it or by its representatives or employees of such Confidential Information,
in any manner whatsoever, in whole or in part, except as specifically
contemplated by this Agreement, and that such party will only reveal the other
party's Confidential Information to such representatives and employees of the
receiving party who need to know the Confidential Information for the purpose of
performing the obligations of the receiving party hereunder and that such
representatives and employees will be informed by the receiving party of and
agree with the receiving party to maintain the confidential nature of the
Confidential Information.
3.3 Required Disclosure. Each party agrees that, if such party becomes
legally compelled to disclose any of the other party's Confidential Information,
it will provide such other party with prompt notice so that such other party may
seek a protective order or other appropriate remedy. If such protective order
or other remedy is not timely obtained, or such other party waives compliance
with the provisions of this Section 3, the party compelled to make such
disclosure shall only furnish that portion of the Confidential Information
which, on the advice of counsel, it reasonably determines it is legally required
to furnish and will use its commercially reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded such Confidential
Information.
3.4 Return on Termination. Upon termination of this Agreement, each
party shall use its commercially reasonable efforts to return to the other party
all Confidential Information acquired by it from such other party and all copies
thereof.
3.5 Injunctive Relief. Each party hereto acknowledges and agrees that
any breach by such party of the provisions of this Section 3 could cause
irreparable harm to the other party, and that the resulting damages and injuries
to such other party might be incalculable and irremediable. Accordingly, the
parties agree that, in the event of such breach, the other party shall be
entitled to injunctive relief and specific performance of the covenants
contained herein, in addition to any other remedy to which it may be entitled in
law or equity.
4. Force Majeure
Neither party shall be liable for any loss, damage, delay, or failure to
perform hereunder resulting from causes beyond its control, including, but not
limited to, fire, flood, earthquake, war, embargo, strikes, lockouts, labor
troubles, accident, explosion, riot, insurrection, governmental laws or
regulations (other than such laws and regulations relating to the sale of
securities), taking of its property by governmental authority, quarantine by
governmental authority, breakdown of equipment, or shortages of materials or
labor or supplies of any kind (other than shortages resulting from a party's
failure to order or take reasonable steps to procure such materials, labor, or
supplies). If either party shall become aware of any event described in this
Section 4 which could reasonably be expected to affect such party's performance
of its obligations hereunder, it shall promptly give notice thereof to the other
party.
5. Representations and Covenants
5.1 Representations By ARC. ARC represents and warrants as follows:
(a) ARC is a charitable and not-for-profit corporation chartered
by Congress, with all requisite corporate power and authority to carry on the
business in which it is engaged and to enter into and perform its obligations
under this Agreement.
(b) All necessary corporate proceedings of ARC have been duly taken
to authorize the execution, delivery, and performance of this Agreement by ARC.
This Agreement has been duly authorized, executed, and delivered by ARC,
constitutes the legal, valid, and binding obligation of ARC, and is enforceable
as to it in accordance with its terms.
(c) No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority is required by ARC for its
execution, delivery, and performance of this Agreement. No consent of any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which ARC is a party, or to which it or any of its businesses,
properties, or assets are subject, is required for the execution, delivery, or
performance of this Agreement; and the execution, delivery, and performance of
this Agreement will not violate, result in a breach of, or conflict with any
such contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate, result in a breach of, or conflict with any law,
rule, regulation, order, judgment, or decree binding on ARC or to which it or
any of its businesses, properties, or assets are subject or any authorizing
statute or corporate bylaws of ARC.
5.2 Representations and Covenants By ISI.
The following representations and warranties shall be deemed to be
given to ARC on the date first above written, on the date an Equity Election is
made pursuant to Section 1(d), on the date of a notice by ARC of its election to
sell or not to sell the First Shares pursuant to Section 1.3(m), and on the date
of a notice by ARC of its election to sell or not to sell the Second Shares
pursuant to Section 1.3(n).
(a) ISI is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, with all requisite corporate power and
authority to carry on the business in which it is engaged and to enter into and
perform its obligations under this Agreement. ISI is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which failure to so
qualify would have a material adverse effect on its business, properties, or
assets.
(b) All necessary corporate proceedings of ISI have been duly taken
to authorize the execution, delivery, and performance of this Agreement by ISI.
This Agreement has been duly authorized, executed, and delivered by ISI,
constitutes the legal, valid, and binding obligation of ISI, and is enforceable
as to it in accordance with its terms. The Shares are and when issued shall be
duly authorized and, when issued pursuant to the terms of this Agreement, shall
be duly and validly issued, fully paid and nonassessable, without any personal
liability attaching to the ownership thereof, and the issuance of such Shares
will not violate any preemptive rights of stockholders. ARC will receive good
title to the Shares, when issued, free and clear of all liens, charges, security
interests, encumbrances, and voting trusts of every kind and nature whatsoever,
other than those arising from the actions or failure to act of ARC. No
stockholder approval is required for ISI to issue and deliver the Shares to be
issued pursuant to this Agreement.
(c) No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority is required by ISI for its
execution, delivery, and performance of this Agreement. No consent of any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which ISI is a party, or to which it or any of its businesses,
properties, or assets are subject, is required for the execution, delivery, or
performance of this Agreement; and the execution, delivery, and performance of
this Agreement will not violate, result in a breach of, or conflict with any
such contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate, result in a breach of, or conflict with any law,
rule, regulation, order, judgment, or decree binding on ISI or to which it or
any of its businesses, properties, or assets are subject or any provision of
ISI's certificate of incorporation or bylaws.
(d) As of the date hereof, the authorized capital of ISI consists
of (i) 55,000,000 shares of Common Stock, of which approximately 12,285,105
shares are issued and outstanding, and (ii) 5,000,000 shares of preferred stock,
none of which are issued and outstanding. All outstanding shares of capital
stock are duly and validly issued, fully paid, and nonassessable.
(e) ISI has delivered to ARC a true and correct copy of ISI's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 as filed
with the Securities and Exchange Commission (the "Commission""). ISI shall
deliver to ARC, promptly as filed, a true and correct copy of each report filed
by ISI with the Commission on Form 10-K, 10-Q, or 8-K (collectively, "SEC
Reports"), and shall deliver to ARC promptly as mailed a copy of all
communications distributed to the holders of its Common Stock (collectively,
"Stockholder Communications"). The foregoing obligations shall remain in effect
so long as any Shares remain to be issued pursuant to this Agreement. ISI
represents and warrants that no SEC Report or Stockholder Communication
delivered by ISI to ARC pursuant to this Section 5.2(e) has contained or will
contain any untrue statement of a material fact or has omitted or will omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided, however, that ISI shall have no liability for any
breach of the representation and warranty set forth in this sentence unless ISI
commits a breach thereof by making with scienter any such untrue statement of a
material fact or omitting with scienter to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) After the date hereof and prior to the First Anniversary Date
(or prior to the Second Anniversary Date if the Equity Election is made), ISI
shall not declare a dividend on its outstanding shares of Common Stock payable
(i) in part in shares of Common Stock (the foregoing shall not apply to a
dividend on its outstanding shares of Common Stock payable in whole in shares of
Common Stock) or (ii) in other securities exchangeable or convertible into
Common Stock.
(g) ISI shall, at its sole expense, keep in force the following
policies of insurance (the "Policies") in the amounts specified:
(i) a Commercial General Liability Policy with the following
conditions to benefit ARC: (A) ARC and its officers, agents, employees, and
volunteers are named as additional insureds and (B) the amount of the Policy
will be at least $5,000,000 combined single limit for each occurrence;
(ii) a Products Liability Policy specifically insuring claims
for bodily injury, death, or property damage arising from development of
products or professional services (Errors & Omissions) and applicable to the
manufacture of any product of ISI, including, but not limited to, coverage for
Natural Alpha Interferon, with the following conditions to benefit ARC: (A) ARC
and its officers, agents, employees, and volunteers are named as additional
insureds and (B) the amount of the Policy will be at least $10,000,000 combined
single limit for each occurrence;
(iii) Workers' Compensation coverage with statutory limits for
each jurisdiction where the work required under this Agreement is performed;
(iv) an employers' liability Policy with at least the
following limits: $1,000,000 per accident, $1,000,000 per disease, and
$1,000,000 disease (each employee); and
(v) such other Policies as may be required by statute.
All such Policies shall be maintained with companies, in forms, and with
deductibles reasonably acceptable to ARC and will be written as primary policy
coverage and not contributing with, or in excess of, any coverage which the ARC
may carry; the Policies will respond to claims brought in domestic or foreign
courts of law; the insurance shall be obtained under valid and enforceable
Policies issued by insurers licensed in the states in which this Agreement is
being carried out; all companies writing the Policies shall be A.M. Best rated
A 10 or higher; certificates of insurance evidencing all of the above coverages
and conditions (types and amounts) shall be and remain in full force and effect
during the term of this Agreement; ISI shall provide ARC with all required
certificates of insurance prior to the commencement of services and renewal
certificates within ten days of expiration or non-renewal of the Policies
required herein, as long as this Agreement is in effect; in the "Cancellation
Clause" the certificate shall read "in the event of nonrenewal of policies,
cancellation, or material change in the coverage provided, not less than thirty
(30) days prior written notice will be furnished to ARC prior to the date of
nonrenewal, cancellation, or change;" and the liabilities assumed in this
Agreement will be insured by such Policies and the full limits of such Policies
will be available to protect ISI and ARC from such liabilities (subject to
impairment of annual aggregate Policy limits by claims filed prior to ARC's
claims). ARC acknowledges and agrees that the Policies listed on Appendix B
satisfy ISI's obligations under this Section 5.2(g) to the extent information
about such Policies is set forth on Appendix B.
(h) ISI will comply with all applicable laws, rules, regulations, and
recommendations of the United States Food and Drug Administration, Environmental
Protection Agency, Occupational Safety and Health Administration, and any other
federal, state, or local regulatory agency having jurisdiction over biomedical
operations or the manufacturing of Natural Alpha Interferon.
5.3 Limitations. Neither party makes any warranties, express or
implied, other than those expressly made in this Agreement. All other
warranties, express or implied, including, without limitation, the implied
warranties of merchantability and fitness for a particular purpose, are hereby
disclaimed.
6. Termination
6.1 Rights to Terminate. This Agreement may be terminated prior to the
scheduled end of the Term by a party (the "terminating party") as follows, by
notice as provided in Section 6.2:
(a) by either party, if the other party shall breach in any
material respect any of its material obligations under this Agreement and such
breach, if capable of being cured, shall not have been cured within 90 days
after notice of such breach to the breaching party from the terminating party
or, if such breach is capable of being cured but not within such 90-day period,
then within such period as is reasonably necessary to effect a cure so long as
the breaching party diligently pursues such cure during such extended period; or
(b) by either party upon the entry of a decree or order by a court
having jurisdiction adjudging the other party a bankrupt or insolvent, or
approving a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of such other party, under federal bankruptcy law,
as now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency, or other similar law, and the continuance of any such
decree or order unstayed and in effect for a period of 60 days; or the
commencement by such other party of a voluntary case under any such law, as now
or hereafter constituted, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any such law, or the
consent by it to the filing of such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, or similar official of it
or of any substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of corporate action
by such other party in furtherance of any such action.
6.2 Notice of Termination. Notice of termination in accordance with
Section 6.1 may be given by the terminating party, in the case of termination in
accordance with (a) Section 6.1(a), at any time after the end of the period
during which the other party has the right to cure the breach giving rise to
such right of termination and provided such breach has not been cured at the
date of the giving of such notice or (b) Section 6.1(b), at any time after
occurrence of the event giving rise to such right of termination.
6.3 Contested Termination. If either party shall give notice of
termination of this Agreement pursuant to Section 6.2 and the other party shall,
within five days of receipt of such notice, commence legal proceedings
contesting the terminating party's right to so terminate this Agreement, the
parties shall continue to perform under this Agreement until the resolution of
such controversy.
6.4 Effect of Termination. Termination, expiration, cancellation, or
abandonment of this Agreement through any means or for any reason shall not
relieve the parties of any obligation accruing prior thereto and shall be
without prejudice to the rights and remedies of either party with respect to any
antecedent breach of any of the provisions of this Agreement. The obligations
of the parties in Sections 3, 5.2(e), 6.4, 7, and 9, all obligations of the
parties set forth in Section 1 and in Appendix A hereto relating to the
registration and sale of shares of Common Stock and/or other securities, and any
representation or warranty made herein or in Appendix A shall survive any
termination of this Agreement.
7. Indemnification
7.1 Indemnification of ARC by ISI. ISI agrees to indemnify, defend, and
hold ARC and its directors, officer, employees, volunteers, and agents harmless
from and against all liability, expense (including court costs and reasonable
attorneys' fees), and claims for bodily injury, death, or property damage, which
ARC may incur, suffer, become liable for, or which may be asserted or claimed
against ARC as a result of (a) the acts, errors, or omissions of ISI or its
directors, officers, employees, contractors, subcontractors, agents, customers,
or clients as a result of or while performing its obligations hereunder or
arising otherwise from the use, testing, or handling by ISI of ARC's buffycoats
or (b) the development, manufacture, sale, distribution, and use of Natural
Alpha Interferon or any other product derived, in whole or in part, by ISI from
ARC's buffycoats, including, but not be limited to, with respect to both clause
(a) and clause (b), (i) workers compensation claims of ISI's employees which may
arise from their handling of the buffycoats; (ii) claims ISI employees may
personally make against ARC; (iii) any claim for damages arising from any
subrogation attempt against ARC by ISI's insurers; and (iv) any claim against
ARC, direct or indirect, arising in any manner from the provision by ISI to any
customer of ISI, Natural Alpha Interferon, whether such claim is made in a
domestic court of law or foreign court of law; provided, however, that the
indemnity agreement contained in this Section 7.1 shall not apply to amounts
paid in settlement of any such liability, expense, or claim if such settlement
is effected by ARC or another person indemnified under this Section 7.1 without
the consent of ISI (which consent shall not be unreasonably withheld), nor shall
ISI be responsible to ARC for any wrongful or negligent act or omission of ARC
or its directors, officers, agents, or employees.
7.2 Indemnification of ISI by ARC. ARC agrees to indemnify, defend, and
hold ISI and its directors, officer, employees, volunteers, and agents harmless
from and against all liability, expense (including court costs and reasonable
attorneys' fees), and claims for bodily injury, death, or property damage, which
ISI may incur, suffer, become liable for, or which may be asserted or claimed
against ISI as a result of any negligent act or omission of ARC or its
directors, officers, agents, or employees; provided, however, that the
indemnity agreement contained in this Section 7.2 shall not apply to amounts
paid in settlement of any such liability, expense, or claim if such settlement
is effected by ISI or another person indemnified under this Section 7.2 without
the consent of ARC (which consent shall not be unreasonably withheld), nor shall
ARC be responsible to ISI for any wrongful or negligent act or omission of ISI
or its directors, officers, agents, or employees.
7.3 Indemnification Procedures. Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the reasonable fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 7.
Notwithstanding the foregoing, this Section 7.3 shall not be applicable to any
claim for indemnification under Section 7.1 or 7.2 to the extent that this
Section 7.3 conflicts with or is inconsistent with the terms of any insurance
policy of ARC or ISI covering such claim.
7.4 Indemnification Not Exclusive. The indemnification provided in this
Section 7 shall not be deemed exclusive of any other rights to which the parties
may be entitled.
7.5 Relationship With Appendix A. Each party agrees that with respect
to any litigation or claim covered by the indemnifications in Appendix A,
Appendix A shall govern and not this Section 7. Each party agrees that with
respect to any litigation or claim not covered by the indemnifications in
Appendix A, this Section 7 shall govern and not Appendix A.
8. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
8.1 "Affiliate" of any person shall mean any other person which controls,
is controlled by, or is under common control with such specified person, where
"control," including the terms "controlling" and "controlled," means the power
to direct the management and policies of a person, directly or indirectly,
whether through the ownership of securities or partnership or other ownership
interests, by contract, or otherwise.
8.2 "Buffycoat Number" for any period shall mean (a) the number of
buffycoats that ISI is obligated to purchase from ARC, and ARC is obligated to
sell to ISI, in that period plus (b) the number of buffycoat that ARC sells to
ISI pursuant to Section 1.2(b)(ii)(C) in that period.
8.3 "Confidential Information" shall mean all information and data which
is provided by either party to the other hereunder and either marked as
confidential or which the disclosing party otherwise informs the receiving party
is confidential, excluding any such information or data which (a) is known to
the recipient before receipt thereof as evidenced by its written records, (b) is
or becomes available to the receiving party on a nonconfidential basis from a
source which, to the receiving party's knowledge, is not prohibited from
disclosing such information to the receiving party by a legal, contractual, or
fiduciary obligation to the other party, or (c) is or becomes publicly available
other than as a result of a disclosure by the receiving party or its
representatives or employees.
8.4 "Formula Share Number" shall be * shares, subject to adjustment
from time to time pursuant to Section 1.3(g)(i).
8.5 "Market Price" on any date shall be deemed to be the average of the
daily Closing Price (as hereinafter defined) per share of Common Stock for the
30 consecutive trading days immediately preceding the day in question, after
appropriate adjustment for stock splits, stock dividends, and similar events
occurring within said 30-day period, and the "Closing Price" per share of Common
Stock for each day shall be (a) the closing sale price per share of Common Stock
on such day as reported on the composite tape of such national securities
exchange as shall then be the primary market for the Common Stock or (b) if the
Common Stock shall not then be listed or admitted to trading on any national
securities exchange or if the Common Stock shall then be so listed or admitted
to trading on a national securities exchange but that shall not then be the
primary market for the Common Stock, the closing sale price per share of the
Common Stock on such day as reported by Nasdaq or a comparable system or (c) if
not determinable as aforesaid, the mean between the highest and lowest bid
prices reported on such day by market makers and dealers for the Common Stock
listed as such by the National Quotation Bureau, Incorporated or any similar
successor organization.
8.6 "Sales Proceeds" shall be the amount received by ARC from the sale
of the First Shares or Second Shares, as the case may be, less all expenses of
sale incurred by ARC.
8.7 "Term" shall mean the period from the date hereof to March 31, 1999
or such earlier date on which this Agreement may be terminated pursuant to
Section 6.
8.8 "Year" shall mean each of the 12-month periods commencing April 1,
1997 and April 1, 1998.
8.9 All references herein to Sections and Schedules shall mean Sections
of and Schedules to this Agreement unless otherwise specified.
9. Miscellaneous
9.1 Payments. All cash payments to be made hereunder shall be made by
check or wire transfer. In the event a party shall reasonably dispute any
amounts claimed to be owed hereunder, such amounts shall not be deemed due until
such dispute is resolved, but any amounts not in dispute shall be deemed due.
9.2 Further Actions. At any time and from time to time, each party
agrees, at its expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
9.3 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail, or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex, or similar telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth in the preamble to
this Agreement (or to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 9.3). Any notice given
to (a) ISI (fax number (908) 249-6895) shall be to the attention of Vice
President, Manufacturing with a copy to General Counsel or (b) ARC (fax number
703-312-5848) shall be to the attention of Vice President, Manufacturing with a
copy to General Counsel. Any notice or other communication given by certified
mail shall be deemed given five days after the time of mailing thereof, except
for a notice changing a party's address which will be deemed given at the time
of receipt thereof. Any notice given by other means permitted by this Section
9.3 shall be deemed given at the time of receipt thereof.
9.4 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective permitted assigns and
successors in interest.
9.5 No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement (except as provided in Section 9.4).
9.6 Headings. The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
9.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.8 Assignment. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by either party hereto without the
prior written consent of the other party; provided, that (a) the rights but not
obligations of any party herein may be assigned to one or more of such party's
Affiliates, (b) either party may cause any Affiliate to perform on its behalf
any of such party's obligations, and (c) either party may assign all of its
rights and obligations to any purchaser of all or substantially all of the
assets of the part of such party's or its Affiliates' business which relates to
the subject of this Agreement. No assignment shall relieve either party of
responsibility for the performance of any accrued obligation which such party
then has hereunder.
9.9 Modification. This Agreement and the Schedules hereto set forth the
entire understanding of the parties with respect to the subject matter hereof,
supersede all existing agreements among them concerning such subject matter
(including agreements between individual ARC blood centers and ISI), and may be
modified only by a written instrument duly executed by each party.
9.10 Severability. If any term or provision of this Agreement shall for
any reason be held invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other term or
provision hereof, and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to be valid,
illegal, or unenforceable, had never been contained herein.
9.11 Waiver. Any waiver by either party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
9.12 Jurisdiction. Each of the parties hereby irrevocably consents to
the jurisdiction of the courts of the State of New Jersey or the Commonwealth of
Virginia and of any federal court located in such State or Commonwealth in
connection with any action or proceeding arising out of or relating to this
Agreement or a breach of this Agreement. In any such action or proceeding, each
of the parties waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section
9.3. Within 30 days after such service, or such other time as may be mutually
agreed upon in writing by the attorneys for the parties to such action or
proceedings or as may be ordered by the court, each of the parties shall appear
or answer such summons, complaint, or other process. Should any of the parties
so served fail to appear or answer within such 30-day period or such extended
period, as the case may be, such party shall be deemed in default and judgment
may be entered by the other party against such party for the amount as demanded
in any summons, complaint, or other process so served.
9.13 Public Announcements. Neither party shall issue any press release or
otherwise make any public statement with respect to this Agreement or any of the
transactions contemplated hereby without first consulting with and (unless such
press release or statement is required by applicable law or the requirements of
any listing agreement with any applicable stock exchange or inter-dealer
quotation system) obtaining the consent of the other party, which consent shall
not be unreasonably withheld. ISI shall not use ARC's emblem without ARC's
prior written consent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first above written.
AMERICAN NATIONAL RED CROSS
By: /s/ Niall M. Conway
Niall M. Conway
Vice President, Manufacturing
INTERFERON SCIENCES, INC.
By: /s/ Lawrence M. Gordon
Lawrence M. Gordon
Chief Executive Officer
Schedules
Schedule 1.2 Buffycoat Quantities
Schedule 1.3 Buffycoat Pricing
Schedule 1.3(e) Illustration of Equity Provisions
Schedule 2.1 Buffycoat Testing Procedures
Schedule 1.2
BUFFYCOAT QUANTITIES
Quantity Minimum Days
Month 1 * *
Month 2 * *
Month 3 * *
Month 4 * *
Month 5 * *
Month 6 * *
Month 7 * *
Minimum Purchases Minimum Sales Minimum Days
Month 8 * * *
Month 9 * * *
Month 10 * * *
Month 11 * * *
Month 12 * * *
Month 13 * * *
Month 14 * * *
Month 15 * * *
Month 16 * * *
Month 17 * * *
Month 18 * * *
Month 19 * * *
Month 20 * * *
Month 21 * * *
Month 22 * * *
Month 23 * * *
Month 24 * * *
Schedule 1.3
BUFFYCOAT PRICING
Buffycoat Number for Year Price per Buffycoat
* *
* *
* *
* *
* *
* *
Schedule 1.3(e)
Illustration of the workings of the equity provisions of the agreement between
Interferon Sciences, Inc. and the American National Red Cross.
Assumptions (1)
*
Calculations
*
_________________________
(1) For illustrative purposes only. The actual numbers may differ materially
from the numbers shown.
Schedule 2.1
BUFFYCOAT TESTING PROCEDURES
*
Appendix A
This Appendix A to the Agreement, dated as of April 1, 1997, between
Interferon Sciences, Inc., a Delaware corporation, and American National Red
Cross, a charitable and not-for-profit corporation (the "Agreement"), is
incorporated by reference in the Agreement as if fully set forth therein and for
all purposes shall be considered a part of the Agreement. The terms defined in
the Agreement shall have their defined meanings when used herein.
1. Expenses of Registration.
All expenses, other than underwriting discounts and commissions, incurred
in connection with the Registration Statements or pursuant to Section 1.3(i)(iv)
or 1.3(j)(iv) of the Agreement, including (without limitation) all registration,
filing, and qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for ISI, shall be borne by ISI.
2. Indemnification.
In the event any Shares or Transaction Consideration are registered under
a Registration Statement:
(a) ISI will indemnify and hold harmless ARC, any underwriter (as defined
in the Act) for ARC, and each person, if any, who controls ARC or such
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act, or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions, or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by ISI of the Act, the 1934 Act, any state securities law or any rule
or regulation promulgated under the Act, the 1934 Act, or any state securities
law; and ISI will pay to ARC and each such underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action, including without limitation any governmental investigation relating to
any such alleged Violation; provided, however, that the indemnity agreement
contained in this Section 2(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of ISI (which consent shall not be unreasonably
withheld), nor shall ISI be liable to any person entitled to be indemnified
pursuant to this Section 2(a) for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished by
any person entitled to be indemnified pursuant to this Section 2(a) expressly
for use in connection with such Registration Statement.
(b) ARC will indemnify and hold harmless ISI, each of its directors, each
of its officers who has signed such Registration Statement, each person, if any,
who controls ISI within the meaning of the Act, any underwriter, and any
controlling person of any such underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing persons may
become subject under the Act, the 1934 Act, or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by ARC expressly for use in
connection with such Registration Statement; and ARC will pay to each person
entitled to be indemnified pursuant to this Section 2(b), as incurred, any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action, including
without limitation any governmental investigation relating to any such alleged
Violation; provided, however, that the indemnity agreement contained in this
Section 2(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of ARC, which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity obligation under this Section 2(b)
(together with any obligation to contribute under Section 2(d)) exceed the gross
proceeds from the offering received by ARC.
(c) Promptly after receipt by an indemnified party under this Section 2
of notice of the commencement of any action (including any governmental action
or investigation), such indemnified party will, if a claim in respect thereof is
to be made against any indemnifying party under this Section 2, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2, but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.
(d) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to this Section 2 but is found
in a final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Section 2
expressly provides for indemnification in such case, or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the 1934 Act, or otherwise,
then ISI (including for this purpose any contribution made by or on behalf of
any director of ISI, any officer of ISI who signed any such Registration
Statement, and any controlling person of ISI), as one entity, and ARC (including
for this purpose any contribution by or on behalf of a party indemnified under
Section 2(a)), as a second entity, shall contribute to the losses, liabilities,
claims, damages, and expenses whatsoever to which any of them may be subject, on
the basis of relevant equitable considerations such as the relative fault of ISI
and ARC in connection with the facts which resulted in such losses, liabilities,
claims, damages, and expenses. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by ISI or by ARC,
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission,
or alleged omission. ISI and ARC agree that it would be unjust and inequitable
if the respective obligations of ISI and ARC for contribution were determined by
pro rata or per capital allocation of the aggregate losses, liabilities, claims,
damages, and expenses (even if ARC and the other parties indemnified under
Section 2(a) were treated as one entity for such purpose) or by any other method
of allocation that does not reflect the equitable considerations referred to in
this Section 2. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 2, each person, if any, who controls ARC or any underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the 1934 Act and each
officer, director, partner, employee, and agent of ARC or such underwriter or
control person shall have the same rights to contribution as ARC or such
underwriter or control person and each person, if any, who controls ISI within
the meaning of Section 15 of the Act or Section 20(a) of the 1934 Act, each
officer of ISI who shall have signed any such registration statement, and each
director of ISI shall have the same rights to contribution as ISI, subject in
each case to the provisions of this Section 2. Anything in this Section 2 to the
contrary notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written consent,
provided that such consent may not be unreasonably withheld. This Section 2 is
intended to supersede any right to contribution under the Act, the 1934 Act, or
otherwise.
(e) The obligations of ISI and ARC under this Section 2 shall survive the
completion of any offering of Shares or Transaction Consideration in a
Registration Statement.
3. Reports Under the 1934 Act.
With a view to making available to ARC the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit ARC to sell securities of ISI to the public without
registration or pursuant to a registration on Form S-3, ISI agrees to:
(a) make and keep available adequate current public information with
respect to ISI as shall be required to comply with the provisions of Rule
144(c), including by filing in a timely manner all reports and other documents
required to be filed by ISI under the Act and the 1934 Act;
(b) furnish to ARC, so long as ARC owns any Shares or Transaction
Consideration, forthwith upon request (i) a written statement by ISI that it has
complied with the reporting requirements of the Act and the 1934 Act in such a
manner as to meet the requirements of Rule 144(c), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of
the most recent annual or quarterly report of ISI and such other reports and
documents so filed by ISI, and (iii) such other information as may be reasonably
requested in availing ARC of any rule or regulation of the Commission which
permits the selling of any such securities without registration or pursuant to
such form.
4. Expenses.
If any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements in addition to any other
relief to which such party may be entitled.
EXHIBIT 10.55
*Certain information omitted and filed separately with the
Securities and Exchange Commission pursuant to Rule 24b-2(b).
- -----------------------------------------------------------------
INTEGRATED ACCESS CENTER
SERVICES AGREEMENT
This Integrated Access Center Services Agreement ("Agreement")
made this 27th day of May, 1997 by and between ALTERNATE SITE
DISTRIBUTORS, INC. ("ASD") and INTERFERON SCIENCES, INC. ("ISI").
RECITALS
I. ISI is a biopharmaceutical Company currently engaged in the study,
manufacture and sale of pharmaceutical products based on its natural source,
multispecies alpha interferon Interferon Alfa-n3.
ISI has developed Alferon N Injection(r) ("Alferon") which product
has U.S.F.D.A. approval for human use.
II. ASD is in the business of providing distribution and product
service support services through a single-point-of-contact
Integrated Access Center.
III. ISI desires to engage ASD to provide an integrated access
center with four core service components which are Distribution
Services, Clinical Services, Reimbursement Services and Patient
Assistance Services.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1.0 Development of Integrated Access Center
1.1 Exclusivity
1. ISI hereby appoints ASD as its sole distributor of
Alferon in the U.S.A. and the U.S. territories. ISI agrees not to
appoint or contract with any other entity as a distributor of
Alferon in the U.S.A. and the U.S. territories.
2. ASD hereby agrees that it shall not design,
implement or manage a single point of contact distribution program
similar to the Interferon Integrated Access Center for any other
alpha interferon product which is used in any of the following
therapeutic indications: Human Immunio Deficiency Virus - positive
patients, Hepatitis C - patients and genital warts patients. ISI
acknowledges that the exclusivity granted in this section
specifically excludes ASD's core distribution business.
1.2 ISI hereby engages ASD to develop the Interferon Sciences
Integrated Access Center ("Center") for the provision of services
to ISI as described below. ASD agrees to develop the Center for
the fee listed in Schedule "A" attached hereto and by this
reference made a part hereof.
1.3 The Center shall comprise the following:
1. A fully-integrated telecommunications and
information management system that will capture and manage key
information from each customer audience requesting information or
specific services relating to Alferon.
2. A single-point-of-contact product distribution and patient
support system.
3. Insurance eligibility and coverage verification and the
payment policy for Alferon.
4. Referral of patients to appropriate providers.
5. A toll-free Alferon-dedicated telephone and fax number.
1.4 ISI and ASD will together develop:
1. Brochures for targeted physicians describing how to access
Alferon.
2. An enrollment form to be completed by patients and physicians.
2.0 Distribution Services
For the fees listed in Schedule "A", ASD will provide the following
services:
2.1 Order Process Management.
ASD will provide customer service representatives to perform the
following order process management activities.
1. staffing during normal customer service hours;
2. management of inbound telephone calls, faxes and EDI
transmissions;
3. new account processing, including credit verification;
4. return goods processing; and
5. triaging calls to Interferon Sciences, if requested.
2.2 Distribution/Warehousing.
ASD will warehouse and inventory Alferon at ASD's distribution
facility at Louisville, Kentucky, (the "ASD Facility"). Alferon that has met
all regulatory product release requirements will be received, and placed into
inventory for distribution. ASD and ISI will comply with all FDA regulations
including product lot record retention. Distribution and warehousing services
include the following:
1. continuous inventory maintenance
2. Invoicing on ASD invoice stock;
3. Shipment tracking;
4. Shipping costs;
5. Security costs;
6. Receipt of returned/damaged goods; and
7. Shipment of outdated/damaged goods to site of disposal.
ISI will pay all costs, expenses, insurance, and import duties, if
any, for delivery of all Alferon to the ASD facility. ASD will visually
inspect each shipment of Alferon for external container or package damage or
loss in transit (based upon records provided to ASD from ISI). Contingent upon
ASD receiving the appropriate records to enable batch verification, ASD shall
notify ISI when damage or loss has occurred within three business days of
receipt of Alferon by ASD. ASD will store and ship all Alferon in compliance
with good manufacturing practice guidelines and other FDA requirements.
Alferon will be shipped in regulatory compliant refrigerated shippers
upon receipt of the order transmission from customer service. Orders received
by 6:00 pm EST will be shipped the same day. Orders will be distributed via UPS
Next Day Air, 2 Day or 5 Day Ground for bulk shipments. Products will be
distributed on an FEFO (first expired, first out) basis.
2.3 Wholesaler and Direct Distribution
ASD will receive direct orders for Alferon by any of electronic
transmission, fax or phone. Orders may be processed in two ways:
1. Direct accounts will be established and invoiced directly; or
2. Orders received by ASD will be processed as a dropship through
the accounts' designated wholesaler if so requested by the customer.
3.0 CLINICAL SERVICES
ASD will hire, train, and manage Customer Service
Representatives and Clinical Specialists to answer drug information
questions that come through the Integrated Access Center. Customer
Service Representatives shall respond to calls of minimal service
complexity (Level 1) and Clinical Specialists will handle calls of
moderate service complexity (Level 2). Questions that are deemed
to be complex or comprehensive (Level 3) will be transmitted via a
"hot-key" to Interferon Services Medical Affairs.
3.1 Promotional Materials
ASD shall warehouse and manage the inventory and
distribution (fulfillment) of Alferon promotional materials that
are sent to ISI sales representatives. These materials will be
developed and provided by ISI for use in the Integrated Access
Center. ISI will provide ASD with bulk clinical and promotional
materials which will be regarded as units. For the purposes of
this Agreement, 50 brochures in a shrink-wrapped package will be
regarded as one unit. Bulk clinical and promotional materials will
further be categorized as "line items" at the ASD warehouse. ISI
will be charged for the shipping costs per "line item" processed
(see Schedule "A"). ASD will ship orders for weekly promotional
materials via UPS Second Day Air unless otherwise specified by ISI.
ASD will charge ISI actual costs for out-of-scope shipments to
sales representatives as listed in Schedule "A".
Requests for promotional materials will be directed to ASD by ISI
sales representatives or other authorized ISI marketing personnel
via telephone, fax, or electronic media. In addition to shipments
to ISI sales representatives, ASD will also ship promotional
materials to medical conventions. ASD will also ship bulk clinical
and promotional materials to caregivers and providers, for the fees
listed in Schedule "A", for the first year of this contract. At
the end of the first year of this Agreement, ASD and ISI senior
management will determine if this service is still beneficial for
both parties.
3.2 The parties agree that no promotional materials to be
utilized pursuant to this Agreement that refer to any specific
pharmaceutical products shall be disseminated until such materials
have been reviewed by ISI with regard to all applicable laws and
regulations, including, but not limited to, laws and regulations
administered by the U.S. Food and Drug Administration regarding the
advertising and promotion of pharmaceutical products, and approved
by ISI as compliant with such laws and regulations. The parties
further agree that ASD shall bear no liability whatsoever for the
content of any materials so reviewed and approved by ISI, and ISI
shall indemnify ASD against all liability, damages, and costs
arising from the use of any such materials.
3.3 ASD will receive adverse event information from treating
physicians, medical treatment centers and/or other healthcare
professionals and will report such information to ISI in an FDA
compliant form.
3.4 Skilled Nursing Support (if required)
If skilled nursing support services are required ASD will
determine during the health insurance eligibility and coverage
assessment process which skilled nursing service is an appropriate
provider. ASD will also determine that the skilled nursing
services provided will be reimbursed by the responsible payer. If
such services are not reimbursable, ASD shall inform the patient
that he/she shall be responsible for payment. ASD will refer the
patient to an appropriate local skilled nursing service if
preferred by the patient or physician. If no preference is stated,
ASD will utilize a national home health agency to provide skilled
nursing services to patients or physicians who request a referral.
4.0 REIMBURSEMENT SERVICES
ASD will provide the following services for the fees as listed
in Schedule "A" attached hereto:
4.1 Reimbursement Guide.
ASD will develop a reimbursement guide to offer
information to physicians and health care providers to illustrate
how to properly code and submit "clean claims" to payers for prompt
payment and to reduce payment denials. The guide may also be
utilized by ISI or ASD to train internal ISI personnel and the ISI
sales force. The guide will include a brief description of
Alferon, the rationale for treatment, package insert, and:
1. brief overviews of key payer coverage and payment
policy
2. medical necessity criteria
3. diagnosis (ICD-9-CM), CPT-4, HCPCS and revenue
source codes (if applicable)
4. examples of completed claim forms specific to the
treatment setting, e.g., HCFA 1500
5. access to the toll-free Interferon Sciences'
Integrated Access Center
4.2 *
4.3 *
4.4 Alferon Treatment Assurance Program (ATAP)
1. Uninsured Patient Exposure Analysis
ASD will estimate ISI's overall product exposure
based on financial and health insurance models that include income,
family size, age, the shift to Medicare and Medicaid as primary
payers as the disease progresses, the percentage of Medicare
beneficiaries who have secondary prescription drug coverage, and
various levels of financial eligibility guidelines. ASD will
evaluate the benefits of structuring the ATAP under a foundation
with 501(c)3 status versus a straight-forward company-sponsored
program. ASD will also research the eligibility guidelines and
structure of competitive manufacturer patient support programs and
other manufacturer sponsored patient assistance programs to
recommend a specific program structure and proposed eligibility
criteria. For purposes of this research, ISI has indicated that
its overall objectives are:
(1) to provide access to Alferon for patients who
are uninsured, are not eligible for city county, state or federal
assistance, and cannot afford the cost of therapy
(2) to establish appropriate program guidelines to
fairly disperse a limited supply of product
(3) to identify patients who may qualify for
alternate health insurance/funding to maintain the Alferon
Treatment Assurance Program as the "payer of last resort"
(4) identify various State Medicaid program
initiatives intended to shift patients from a state administered
program to a managed healthcare program
(5) to develop a user-friendly, streamlined program
application process that is not in itself a hardship for patients
and physicians to complete while maintaining necessary program
controls
(6) to provide appeals assistance and profile
payers that do not provide coverage for Alferon
2. Initial Enrollment Kits
If requested ASD together with ISI and its
designated advertising agency will develop ATAP enrollment kits.
The enrollment kit will consist of a program brochure providing a
description of the program, enrollment procedures, and a program
application form. If requested, an initial supply of ATAP
enrollment kits will be distributed to sales representatives with
additional supplies maintained in the fulfillment materials
warehouse for re-orders. For the fees listed in Schedule "A",
ISI/ASD sales representatives will distribute program enrollment
kits to key physicians. ASD will direct-mail a supply of the
enrollment kits to remote physicians and other Alferon prescribers
including those who cannot be reached by the sales force during
product launch. ATAP enrollment kits will be made available on a
per request basis for reorders by contacting the Interferon
Sciences Integrated Access Center.
3. Initial Enrollment Process
It is anticipated by ASD and ISI that:
(1) Patients and physicians will complete the ATAP
enrollment application and attach all required supporting
documentation (e.g., W-2, pay check stubs, physician statement of
medical necessity, insurance policies or EOBS) required to confirm
that the patient is uninsured and cannot afford the cost of
therapy.
(2) Enrollment applications may be faxed or mailed
to the ATAP.
(3) Enrollment application data will be input into
the Alferon Patient Support Management System which creates a
system-generated response regarding the patient's eligibility for
ATAP participation based on:
(a) income/assets
(b) health insurance coverage status
(c) current out-of-pocket medical expenses
(d) eligibility for alternate health
insurance/funding from Medicaid and other state and federal
pharmaceutical assistance programs including state Ryan White and
other AIDS drug assistance programs (ADAPS)
(4) Should referrals to the ATAP exceed two percent
(2%) of all active patients treated with Alferon (excluding ATAP
patients currently enrolled), ASD shall notify ISI and together ASD
and ISI will re-evaluate the program eligibility criteria.
(5) All completed ATAP applications shall be
forwarded to the ISI Director of Product Reimbursement.
(6) If a patient is approved for ATAP
participation, and Alferon is requested, ASD will schedule a
delivery date for a 30- or 90-day supply of Alferon. ASD will
create an order entry record and EDI the order to the ASD Finished
Goods Warehouse for picking, packing in appropriate containers for
refrigerated product, and direct shipment to the physician.
4. Re-Qualification / Re-Enrollment
(1) The ATAP participating patient or patient
representative will be contacted by ASD once each calendar quarter
to determine the level of customer satisfaction, if any further
assistance is required, and to confirm that there has been no
change in insurance and financial status.
(2) ASD will mail the ATAP participating patient or
patient representative a re-enrollment application with a
notification to the treating physician 60 days prior to the end of
the semi-annual ATAP participation award period (i.e., every six
months). A letter will be enclosed requesting that all financial,
insurance and medical enrollment information be updated to continue
participation in the program. The patient will also be re-screened
for alternate health insurance/funding eligibility.
4.5 Under-insured Patient Assistance Program
Under -insured patients, for purposes of this Agreement
are those patients who are financially unable to pay for the full
cost of Alferon and associated care for the following reasons:
a) their insurance policy has high deductibles
and/or co-payment obligations; or
b) their insurance policies have annual drug
benefit limitations and the cost of Alferon exceeds such limits; or
c) their insurance policies have spend-down
requirements that must be met prior to the Alferon costs becoming
reimbursable.
ASD and ISI will work together to develop a program to assist these
patients.
5.0 DATA MANAGEMENT AND REPORTING (Key Program Activity and
Management Reports)
All integrated access center activities will be linked to a
central repository (data warehouse) of information from which the
following types of reports will be available to Interferon Sciences
for the fees listed in Schedule "A" attached hereto:
1. transmission of daily sales by unit and dollars
2. sales reports by territory/region
3. inventory reports
4. inventory management program designed to support
ISI's treatment continuity guarantee
5. credits
6. new accounts
7. chargeback, rebate data
8. program utilization data including call volume, type
of caller and reason for inquiry down to the state level and/or
sales territory level
9. payer profiling and formulary status
10. patient, health care professional and provider
profiling
11. reimbursement outcomes
12. program performance measures jointly developed and
mutually agreed by ASD and ISI
ISI and ASD will jointly determine the types of reports, data
elements and formats, and the frequency of reports that will be
required to provide key management and program oversight
information. Although standard reports are covered under this
Agreement, there will be additional charges for special reports
based upon programming charges.
6.0 RECALLS
6.1 In the event that it becomes necessary to conduct a
recall, market withdrawal or field correction (a "Recall") of any
Product, ISI shall conduct the Recall and shall have primary
responsibility therefor, and ASD shall cooperate with ISI in
recalling any affected Alferon. If the Recall was due to the acts
or omissions of ISI, then ISI shall pay or reimburse, as the case
may be, all of ASD's direct out-of-pocket expenses, including but
not limited to any reasonable attorney's fees and expenses,
incurred by ASD in connection with performing any such Recall. If
the Recall was due to the acts or omissions of ASD then ASD shall
pay or reimburse, as the case may be, all of ISI's direct
out-of-pocket expenses, including but not limited to any reasonable
attorneys fees or expenses, incurred by ISI in connection with
performing any such Recall. Each of the parties shall use its
reasonable best efforts to minimize the expenses of Recall when it
occurs. ISI shall inform ASD of the proposed Recall within
forty-eight (48) hours of the initiation of the Recall. ISI and
ASD will jointly develop Recall standard operating procedures.
6.2 FDA Correspondence and Inspections
Each of the parties shall provide the other with a copy
of any correspondence or notices received by such party from FDA
specifically relating to the Alferon within three (3) days of
receipt. Each party shall also provide the other copies of any
responses to any such correspondence or notices within three (3)
days of making the response. ASD shall notify ISI of any FDA
inspections of ASD's facilities specifically relating to any of the
Alferon and, if reasonably possible, shall afford ISI the
opportunity to be present at such inspection.
7.0 PURCHASE OF PRODUCT/RISK
Upon execution of this Agreement:
7.1 ASD shall buy such quantities of Alferon from ISI as
required to satisfy its obligations hereunder. ISI shall sell
Alferon to ASD on purchase terms as follows:
1. *
2. *
7.2 ASD will obtain title to all Alferon on receipt and
acceptance of the Alferon at the ASD Facility. ASD shall insure
Alferon in its control against loss in shipment from the ASD
Facility, damage or natural catastrophes, acts of God or other
reasons of force majeure.
7.3 *
8.0 TERM AND TERMINATION
8.1 Initial Term
This Agreement shall be effective immediately upon
execution provided that the parties hereto acknowledge that full
service will be operational within one hundred twenty (120) days
after the date of execution by both parties and shall continue in
full force and effect thereafter for a period of three (3) years
from the date of execution unless sooner terminated as provided
herein.
8.2 Termination
This Agreement may be terminated by either party without
cause on one hundred twenty (120) days written notice to the other.
8.3 A party may terminate this Agreement immediately upon
written notice for the following causes:
1. the commencement of a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to the other party of its debts under any bankruptcy,
insolvency, corporation or other similar law now or hereafter in
effect; or (ii) the other party's making a general assignment for
the benefit of creditors, or the other party's becoming insolvent,
or the other party taking any corporate action to authorize any of
the foregoing;
2. the other party's failure to pay any amount that is
due to the non-breaching party under this Agreement and such
failure continues for seven (7) days after the other party receives
notice of such breach from the non-breaching party;
3. the other party's failure to perform any of its
material obligations under this Agreement, and such failure
continues for thirty (30) days after the other party receives
notice of such breach from the non-breaching party; provided,
however, if the other party has commenced to cure such breach
within such thirty (30) days, but such cure is not completed within
said thirty (30) days, the other party shall be afforded the amount
of additional time reasonably necessary to complete said cure,
provided that the other party diligently pursues curing the breach
until completion; and
4. the other party's failure to perform the
distribution services as described in Section 2.0 for a period of
more than thirty (30) days as a result of a force majeure event
specified in Section 22.
8.4 For the purposes of Section 8.3(c) above, the failure of
performance by ASD hereunder shall be measured against mutually
agreed S.O.Ps and program performance measures.
8.5 If ASD shall terminate this Agreement without cause, or
if ISI shall terminate this Agreement with cause, within the first
ninety (90) days after execution hereof, then and only then shall
ASD refund to ISI *
8.6 All accrued payment obligations of the parties under this
Agreement, Sections 1 through 6, inclusive and Sections 11 through
15, inclusive, of this Agreement shall survive the termination of
this Agreement and, except as provided elsewhere in this Agreement,
no termination of this Agreement shall affect any obligations or
liabilities arising, or based upon acts or omissions occurring,
prior to the date of such termination. The development fees shall
be non-refundable except in the limited circumstances set out in
Section 8.5 above. Within thirty (30) days of termination, for
whatever cause or no cause, ISI shall repurchase all inventory sold
to ASD at ASD's acquisition cost . If ASD shall have terminated
this Agreement without cause, or if ISI shall have terminated for
cause, ASD shall pay the freight costs to deliver such inventory to
ISI. If this Agreement shall have terminated for any other reason,
ISI shall pay the reasonable freight costs to deliver such
inventory to ISI.
8.7 ASD agrees that for a period of six months following the
termination of this Agreement, for any reason or no reason, it
shall not design, implement or manage a single point of contact
program for any alpha interferon product used in any of the three
therapeutic indications specified in Section 1.1(b) below.
9.0 DISASTER RECOVERY
ASD and ISI shall cooperate to develop a disaster recovery
service specific to ISI's needs during the implementation process.
This shall be drafted as a standard operating procedure ("SOP").
10.0 COMPENSATION - FEES FOR SERVICES
10.1 *
10.2 *
10.3 *
10.4 *
10.5 Auditing Rights
ASD shall keep records relating to the transactions
covered by this Agreement, which records shall be available for
inspection by ISI to confirm that the correct amounts have been
paid under this Agreement. Such inspections shall take place not
more than once per year at ASD's offices and on no less than thirty
(30) days notice and during normal business hours.
11.0 COMPLIANCE WITH LAWS
11.1 During the term of this Agreement, each party shall
conduct its activities in connection with this Agreement in
compliance with all applicable laws. Specifically, ASD shall
comply with all applicable Requirements of Law related to the
storage, handling and distribution of Alferon, and ISI shall comply
with all applicable Requirements of Law related to the importation,
manufacture, distribution, labeling, storage, sale and handling of
Alferon. ISI shall have the right, not more than once per year and
on no less than thirty (30) days notice and during normal business
hours, to inspect ASD's facilities to confirm compliance with all
applicable Requirements of Law related to the storage, handling and
distribution of Alferon, provided that ISI acknowledges that such
inspection shall be limited to such extent required to comply with
laws and to maintain the confidentiality of ASD's other customers
and clients.
11.2 ISI agrees and does hereby represent and warrant to ASD
during the term of this Agreement that (1) all Alferon, and each
shipment of each, or other delivery now and hereafter made by ISI
to or on the order of ASD will not be, at the time of shipment or
delivery, adulterated, misbranded or otherwise prohibited within
the meaning of the Act or within the meaning of any applicable
state or municipal law and (2) the Alferon is not, at the time of
shipment or delivery to ASD, merchandise which may not be
introduced or delivered for introduction into interstate commerce
under the provisions of Sections 404 or 405 of the Act, and (3) all
such Alferon will be the subject of a duly approved NDA or ANDA and
may be legally transported or sold under applicable Requirements of
Law and ISI guarantees that only those chemicals or sprays, and the
amounts of such chemicals or sprays, approved by Governmental
Authority, have been used in any of the Alferon, and (4) all
Alferon have been duly approved by all Governmental Authority for
commercial sale and shipment within the United States.
12.0 CORPORATE AUTHORITY
During the term of this Agreement, each party continually
represents and warrants to the other that: (a) it has full power
and authority to enter into this Agreement and perform and observe
all obligations and conditions to be performed or observed by it
under this Agreement without any restriction by any other agreement
or otherwise, (b) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate
action of that Party, (c) this Agreement constitutes the legal,
valid and binding obligation of that Party, (d) no approvals,
consents, orders or authorizations of or designation, registration,
declaration or filing with any Governmental Authority (within, as
a part of, or constituting the United States of America) is
required for the sale and distribution of the Alferon other than
any approvals previously obtained from the FDA, (e) there is no
action, proceeding, or investigation pending or, so far as each
party knows, threatened, which questions the validity of this
Agreement, the patents and licenses related to and for the Alferon,
any actions taken or to be taken pursuant to this Agreement, and
(f) the Alferon, or any part thereof, has not been materially
adversely affected in any way as a result of any legislative or
regulatory change, or any revocation of license or right to
manufacture, distribute, handle, store, sell or market any of the
Alferon.
13.0 TRADEMARKS/DATA
Neither Party shall have the right to use the name of the
other Party or the other Party's trademarks, service marks, logos,
other similar marks or data and information in any manner except in
the production of marketing documents and brochures as contemplated
herein, without the prior written approval of that Party. Data and
information which shall be deemed to belong to ISI will be the
identity of Alferon customers, prescribing physician data and the
identity of payor coverage and reimbursement policy data related to
Alferon. Data and information which shall be deemed to belong to
ASD shall be the data and information related to all goods, Alferon
and services offered and sold by ASD and all data and information
relating to any of ASD's customers and their respective profiles.
14.0 CONFIDENTIALITY
14.1 Each Party acknowledges that as a result of this
Agreement, that each Party shall learn Confidential Information of
the other Party. Neither Party shall disclose any Confidential
Information of the other Party to any person or entity, or use, or
permit any person or entity to use, any of such confidential
information, excepting only: (a) disclosures on a confidential
basis to and use by the directors, officers, employees, and agents
of that Party, or its affiliates, who have a reasonable need to
know such information in connection with that Party's performance
of this Agreement, and (b) disclosures which are required by law,
or legal process, as reasonably determined by that Party or its
legal counsel, or are made on a confidential basis to that Party's
attorneys, accountants, and other professional advisors in
connection with matters relating to this Agreement. The specific
material terms of this Agreement shall be deemed to be Confidential
Information of each Party.
14.2 The obligation of confidentiality hereunder shall survive
the termination of this Agreement for a period of three (3) years.
14.3 Upon termination of this Agreement (for any reason) each
Party shall promptly: (i) return to the other Party or destroy all
documentation and other materials (including copies of original
documentation or other materials) containing any Confidential
Information of the other Party; or (ii) certify to the other Party,
pursuant to a certificate in form and substance reasonably
satisfactory to the other Party, as to the destruction of all such
documentation and other materials.
15.0 INDEMNIFICATION
15.1 Each Party shall indemnify and hold harmless the other
and their respective Related Parties from and against all claims,
liabilities, losses, damages, costs and expenses (including without
limitation reasonable attorneys' fees) arising directly or
indirectly out of any act or omission of that Party or any failure
of that Party to perform and observe fully all obligations and
conditions to be performed or observed by that Party pursuant to
this Agreement or any breach of any warranty made by that Party in
this Agreement. Further, ISI does hereby protect, indemnify and
hold harmless ASD and its related parties from and against all
claims, liabilities, losses, damages, costs and expenses (including
without limitation, reasonable attorneys' fees and expenses)
imposed upon or incurred by or asserted against ASD and/or its
Related Parties related to or arising from (1) any claim of patent
or copyright infringement and (2) any loss of or damage to
property, accident, injury to or death of a person or persons
occurring or arising from the storage and handling of the Alferon,
use, non-use, demonstration, consumption, ingestion, digestion,
manufacture, production and assembly, of the Alferon and its
transportation to ASD, excepting only for claims arising out of the
act, negligence or omission of ASD or its employees. Further, ASD
does hereby agree to protect, indemnify and hold harmless ISI and
its related parties from and against all claims, liabilities,
losses, damages, costs and expenses (including without limitation,
attorneys' fees and expenses) imposed upon or incurred by or
asserted against ISI and/or its Related Parties related to or
arising from any loss of or damage to property, accident, injury to
or death of a person or persons occurring or arising from the
negligence of ASD (or its employees), excepting herefrom, any act,
negligence or omission of ISI or its Related Parties.
NOTWITHSTANDING THE FOREGOING OR ANY OTHER PROVISION TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER PARTY FOR ANY LOST PROFITS, CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN
CONNECTION WITH A BREACH OF THIS AGREEMENT OR, EXCEPT AS SET FORTH
IN SECTION 8 ANY EXPENSES, CHARGES, COSTS OR LIABILITIES, WHETHER
FORESEEN OR UNFORESEEN, ARISING FROM OR RELATED TO THE ACT OF
TERMINATING THIS AGREEMENT.
15.2 The obligations and liabilities of ISI or ASD with
respect to ASD Indemnified Claims or ISI Indemnified Claims,
respectively, (collectively, the "Indemnified Claims"), resulting
from the assertion of liability by third parties (each, a "Third
Party Claim") shall be subject to the following terms and
conditions:
(1) The party claiming indemnification (the
"Indemnified Person") shall give prompt written notice to the other
party of any Third Party Claim which may give rise to a Third Party
Claim against the other party (the "Indemnifying Person"), stating
the nature and basis of said Third Party Claim and the amount
thereof to the extent known. Each Notice of Claim shall be
accompanied by copies of all relevant documentation with respect to
such Third Party Claim, including, without limitation, any summons,
complaint or other pleading which may have been served or written
demand or other document or instrument.
(2) If the Indemnifying Person shall acknowledge in
a writing delivered to the Indemnified Persons that the
Indemnifying Person shall be obligated under the terms of its
indemnity hereunder in connection with such Third Party Claim, then
the Indemnifying Person shall have the right to assume the defense
of any Third Party Claim at its own expense and by its own counsel
(reasonably satisfactory to the Indemnified Persons); provided,
however, that the Indemnifying Person shall not have the right to
assume the defense of any Third Party Claim, notwithstanding the
giving of such written acknowledgment, if (aa) such Third Party
Claim seeks an injunction, restraining order, declaratory relief or
other nonmonetary relief and, if decided adversely, such Third
Party Claim could have a material adverse effect on the financial
condition, properties, assets, liabilities, business, operations or
prospects of any of the Indemnified Persons or (bb) the named
parties to any such action or proceeding (including any impleaded
parties) include both the Indemnified Persons and the Indemnifying
Person and the former shall have been advised by counsel that there
are one or more legal or equitable defenses available to them which
are different from or additional to those available to the
Indemnifying Person, and, in the reasonable opinion of the
Indemnified Persons, counsel for the Indemnifying Person could not
adequately represent the interests of the Indemnified Persons
because such interests could be in conflict with those of the
Indemnifying Person (any Third Party Claim of the type referred to
in (aa) or (bb) being a "Nonassumable Claim").
(3) If, in accordance with the provisions of the
preceding subparagraph (ii), the Indemnifying Person shall assume
the defense of a Third Party Claim (other than a Nonassumable
Claim), the Indemnifying Person shall not be responsible for any
legal or other defense costs subsequently incurred by the
Indemnified Persons in connection with the defense thereof. If the
Indemnifying Person does not exercise its right to assume the
defense of such a Third Party Claim by giving the written
acknowledgment referred to in subparagraph (ii) above or may not
assume such defense pursuant to such subparagraph (ii) above, then
the Indemnified Persons may assume such defense and the costs,
expenses and reasonable attorneys' fees incurred shall continue to
constitute Losses hereunder, provided, however, that the
Indemnifying Person shall not be responsible for the fees and
expenses of more than one law firm in the aggregate for all
Indemnified Persons.
(4) Anything contained herein to the contrary
notwithstanding, neither the Indemnifying Person nor the
Indemnified Persons shall admit any liability with respect to, or
settle, compromise or discharge, any Third Party Claim without the
written consent of the other, which consent shall not be
unreasonably withheld. In addition, each of the Indemnifying
Person and the Indemnified Persons shall cooperate and act in a
reasonable and good faith manner to minimize Losses relating to any
Third Party Claim.
(5) The foregoing indemnities shall not extend to
any claims arising out of one or more of: (aa) the incorrectness of
any representation or warranty made by Indemnified Person pursuant
to this Agreement; (bb) the failure by such Indemnified Person to
perform or observe any agreement or covenant made by it in this
Agreement; or (cc) the willful misconduct or gross negligence of
such Indemnified Person.
16.0 INSURANCE
During the term of this Agreement, ISI will maintain product
liability and commercial general liability insurance having a limit
of not less than five million dollars ($5,000,000.00), pursuant to
one or more insurance policies with reputable insurance carriers.
ISI shall designate ASD as an "additional insured" under all
insurance policies referenced in this paragraph. As a condition
precedent to the effectiveness of this Agreement, ISI shall execute
the Guarantee in the form attached hereto as Schedule "B".
ASD shall provide ISI with a certificate of insurance showing
that ASD is a named insured covered by the commercial and general
liability policies of its parent company Bergen Brunswig
Corporation.
17.0 NOTICES
Any notice or other communication required or desired to be
given to any Party under this Agreement shall be in writing and
shall be deemed given when: (a) deposited in the United States
mail, first-class postage prepaid, and addressed to that Party at
the address for such Party set forth at the end of this Agreement;
(b) delivered to an express delivery service for delivery to that
Party at that address; or (c) sent by facsimile transmission, with
electronic confirmation, to that Party at its facsimile numbers set
forth at the end of this Agreement. Any Party may change its
address or facsimile number for notices under this Agreement by
giving the other Party notice of such change.
18.0 REMEDIES
With respect to the provisions of Section 14 of this
Agreement, each Party acknowledges that in the event of any
violation by that Party of any of the provisions of Section 14 of
this Agreement, the other Party may suffer irreparable harm and its
remedies at law may be inadequate. Accordingly, in the event of
any violation or attempted violation of any such provisions of
Section 14 by either Party, the other Party shall be entitled to
petition for a temporary restraining order, temporary and permanent
injunctions, specific performance, and other equitable relief. The
rights and remedies of each Party under this Agreement shall be
cumulative and in addition to any other rights or remedies
available to such Party, whether under any other agreement, at law,
or in equity.
19.0 GOVERNING LAW
All questions concerning the validity or meaning of this
Agreement or relating to the rights and obligations of the Parties
with respect to performance under this Agreement shall be construed
and resolved under the laws of the State of California excluding
the body of law relating to conflicts of laws.
20.0 SEVERABILITY
The intention of the Parties is to comply fully with all laws
and public policies, and this Agreement shall be construed
consistently with all laws and public policies to the extent
possible. If and to the extent that any court of competent
jurisdiction determines that it is impossible to construe any
provision of this Agreement consistently with any law or public
policy and consequently holds that provision to be invalid, such
holding shall in no way affect the validity of the other provisions
of this Agreement, which shall remain in full force and effect.
21.0 NON-WAIVER
No failure by either Party to insist upon strict compliance
with any term of this Agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of the other
Party shall affect, or constitute a waiver of, the first Party's
right to insist upon strict compliance, to exercise that option, to
enforce that right, or to seek that remedy with respect to that
default or any prior, contemporaneous, or subsequent default. No
custom or practice of the Parties at variance with any provision of
this Agreement shall affect, or constitute a waiver of, that
Party's right to demand strict compliance with all provisions of
this Agreement.
22.0 FORCE MAJEURE
If the performance of any part of this Agreement by either
Party shall be affected for any length of time by fire or other
casualty, government restrictions, war, riots, strikes or labor
disputes, lock out, transportation delays, electronic disruptions,
telecommunication failures, and acts of God, or any other causes
which are beyond the control of the Parties (financial inability
excepted), such Party shall not be responsible for delay or failure
of performance of this Agreement for such length of time, provided,
however, that the obligation of one Party to pay amounts due to any
other Party shall not be subject to the provisions of this Section.
Each party shall use its commercially reasonable efforts to
minimize the impact on the other of any force majeure event
specified in this Section.
23.0 CAPTIONS
The captions of the various sections of this Agreement are not
part of the context of this Agreement, and are only labels to
assist in locating those sections, and shall be ignored in
construing this Agreement.
24.0 COMPLETE AGREEMENT
This Agreement contains the entire agreement between the
Parties and supersedes all prior or contemporaneous discussions,
negotiations, representations, warranties, or agreements relating
to the subject matter of this Agreement. No changes to this
Agreement shall be made or be binding on either Party unless made
in writing and signed by both Parties. All schedules, Exhibits,
Appendixes referred to in this Agreement are incorporated herein
and made a part hereof as fully as if set forth herein.
25.0 SUCCESSORS
Except as set forth in this Section, neither Party shall have
the right to assign this Agreement or any of such Party's rights or
obligations under this Agreement without the prior written consent
of the other Party, which consent shall not be unreasonably
withheld. After providing written notice to ISI, ASD may assign
this Agreement to a party that succeeds to all or substantially all
of ASD's business or assets relating to this Agreement whether by
sale, merger, operation of law or otherwise.
26.0 APPROVALS
When this Agreement requires the approval of one or both of
the parties to this Agreement, each and every such approval sought
will not be unreasonably withheld by the party required to provide
its approval.
27.0 RELATIONSHIP OF THE PARTIES
The relationship of the Parties is and shall be that of
independent contractors. This Agreement does not establish or
create a partnership or joint venture among the Parties.
28.0 INTERPRETATION
The parties have jointly negotiated this Agreement and, thus,
neither this Agreement nor any provision hereof shall be
interpreted for or against any party on the basis the party or the
party's attorney drafted the Agreement or the provision at issue.
This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by and against the respective successors and
assigns of the Parties.
INTERFERON SCIENCES, INC.
By:/s/Lawrence M. Gordon
Lawrence M. Gordon
Address and facsimile number:
783 Jersey Avenue
New Brunswick, New Jersey 08901
Attn:Magnus Precht
EVP Marketing and Sales
Facsimile: (732)249-6895
ALTERNATE SITE DISTRIBUTORS, INC.
By:/s/Rick Williams
Rick Williams
Address and facsimile number:
4006 Beltline Road
Suite 200
Addison, Texas 75244
Attn: Rick Williams
EVP Marketing and
Business Development
Facsimile: (972)490-5266
APPENDIX A
"Act" means the Federal Food, Drug and Cosmetic Act, Title 21,
United States Code, as amended, and the regulations thereunder.
"Confidential Information" shall mean information, data considered
confidential by the party owning such information, whether visual,
oral or in written form, but does not include (1) information which
is or becomes public without the fault or participation of the
other party to this Agreement or which is responsive to legal
process or obligation, (2) any information lawfully in the
receiving party's possession prior to the date the receiving party
receives the disclosing party's information, or (3) any information
which either party receives from a third party who rightfully
possesses and discloses such information.
"Drug" shall have the meaning as set forth in Section 321(g)(1) of
the Act.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"NDA" means a New Drug Application as defined in and contemplated
by the Act.
"Person" or "Persons" means any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization,
government or any department or agency of any government.
"Related Parties" mean the successors, subsidiaries, parent
corporations, affiliates, Directors, employees, agents,
representatives, related entities and assigns of any Person.
"Requirement(s) of Law" means any law (including, without
limitation, consumer law), treaty, rule or regulation or a final
and binding determination of an arbitrator or a determination of a
court or other Governmental Authority, in each case applicable to
or binding upon such Person or any of its property or to which such
Person or any of its property is subject.
SCHEDULE A
*
SCHEDULE B
CONTINUING GUARANTY AND INDEMNIFICATION AGREEMENT
The undersigned does hereby guarantee to Alternate Site
Distributors, its parent Bergen Brunswig Corporation ("BBC") and
each of BBC's subsidiary corporations (together the "Group") that
each shipment or other delivery of any food, drugs, devices,
cosmetics, or other merchandise now or hereafter made by the
undersigned, its subsidiaries, divisions or affiliated companies to
or on the order of any member of the Group will not be, at the time
of such shipment or delivery, adulterated, misbranded, or otherwise
prohibited within the meaning of the Federal Food, Drug and
Cosmetic Act, 21 U.S.C.A. #301 et seq., as amended, and in effect
at the time of said shipment or delivery (the Act) or within the
meaning of any applicable state or municipal law in which the
definition of adulteration or misbranding are substantially the
same as those contained in the Act; and such merchandise is not, at
the time of such shipment or delivery, merchandise which may not be
introduced or delivered for introduction into interstate commerce
under the provisions of section 404 or 405 of the Act (21 U.S.C.A.
#344 and #355); and such merchandise is merchandise which may be
legally transported or sold under the provisions of any other
applicable federal, state or municipal law; and the undersigned
guarantees further that only those chemicals or sprays approved by
federal, state or municipal authorities have been used, and any
residue in excess of the amount allowed by any such authorities has
been removed therefrom.
The undersigned hereby agrees to defend, indemnify and hold the
Group harmless against any and all claims, losses, damages, and
liabilities whatsoever (and expenses connected therewith, including
counsel fees), arising as a result of (a) any actual or asserted
violation of the Act or any other federal, state or local law or
regulation by virtue of which products sold, supplied, or delivered
by the undersigned shall be alleged or determined to be
adulterated, misbranded, mislabeled or otherwise not in full
compliance with any federal, state or local law or regulation, and
(b) the possession, distribution, sale and/or use of, or by reason
of the seizure of, any of the undersigned's products, including any
prosecution or action whatsoever by any government body or agency
or by any private party, including claims of bodily injury, death
or property damage. The undersigned further agrees to maintain
primary and noncontributing Products Liability Insurance of not
less than $1,000,000.00 Combined Single Limit (Bodily Injury and
Property Damage) including each member of the Group as Additional
Insured as respects Broad Form Vendors Coverage, with provision for
at least 30 days prior written notice to the Additional Insured in
the event of cancellation or material reduction of coverage, and
upon request promptly submit satisfactory evidence of such
insurance. The provisions set forth herein are in addition to, and
not in lieu of, any terms set forth in any purchase orders accepted
by the undersigned.
Interferon Sciences, Inc. /s/Lawrence M. Gordon May 27, 1997
Guarantor Lawrence M. Gordon Date
Chief Executive Officer
783 Jersey Avenue
New Brunswick, NJ 08901
(732)249-3250
