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Exhibit 10.65
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
DISTRIBUTION AGREEMENT
THIS AMENDED AND RESTATED DISTRIBUTION AGREEMENT (hereinafter referred
to as the "Agreement") is made and entered into as of the 1st day of January,
1998, by and between NOVA FACTOR, INC., a Tennessee corporation, (hereinafter
referred to as "Nova Factor"), and GENZYME CORPORATION, a Massachusetts
corporation (hereinafter referred to as "Genzyme").
W I T N E S S E T H:
WHEREAS, Genzyme is the manufacturer of the prescription drugs
Ceredase(R) (alglucerase injection) ("Ceredase(R)") and Cerezyme(R)
(imiglucerase for injection) ("Cerezyme(R)") which have been approved by the
United States Food and Drug Administration for the treatment of Gaucher
disease;
WHEREAS, in order to facilitate distribution of Ceredase(R) and
Cerezyme(R), Nova Factor desires to purchase Ceredase(R) and Cerezyme(R) from
Genzyme, and Genzyme desires to sell Ceredase(R) and Cerezyme(R) to Nova Factor
for resale, upon the terms and subject to the conditions hereinafter set forth;
WHEREAS, Genzyme and Nova Factor have entered into prior Distribution
Agreements ("Predecessor Agreements") for Ceredase(R) and Cerezyme(R) and wish
to amend and restate the Predecessor Agreements;
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DISTRIBUTORSHIP
1.1 Appointment. Genzyme hereby appoints Nova Factor to act as a
distributor of Ceredase(R) and Cerezyme(R) in *, and Nova Factor hereby accepts
such appointment. During the period of time that this Agreement is in effect,
Nova Factor shall sell Ceredase(R) and Cerezyme(R) to third parties and perform
the other obligations set out herein.
1.2 Territory. Subject to the rights of Genzyme under this Section
1.2,*. The parties further agree and acknowledge that (1) Genzyme may
distribute Ceredase(R) and Cerezyme(R) in * directly to health care providers
and pharmacies, and notwithstanding the grant of a distributorship to Nova
Factor, such direct distribution by Genzyme shall not be construed to be a
violation of this Agreement and (2) Genzyme may at its option appoint
additional distributors of Ceredase(R) and Cerezyme(R) in * and will ensure the
continuity of patient care with all distributors. Genzyme will notify Nova
Factor of the
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
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addition of distributors of Ceredase(R) and Cerezyme(R) as soon as such
additions become public.
1.3 Terms Applicable to Distributorship. Nova Factor shall have sole
responsibility and authority for determining the price at which it will resell
Ceredase(R) and Cerezyme(R) to its customers. Genzyme shall not be involved in
that determination in any way.
1.4 Security Interest. Nova Factor shall enter into an Amended and
Restated Security Agreement, substantially in the form of Exhibit A attached
hereto (the "Security Agreement"), to secure Nova Factor's obligations to pay
Genzyme for Ceredase(R) and Cerezyme(R) provided to Nova Factor under this
Agreement.
ARTICLE II
PURCHASE OF CEREDASE(R) AND CEREZYME(R) FOR REsale
2.1 Purchase and Maintenance of Inventory of Ceredase(R) and
Cerezyme(R).
(a) Orders for Ceredase(R) and Cerezyme(R). Nova Factor shall
order Ceredase(R) and Cerezyme(R) from Genzyme, and Genzyme shall sell
Ceredase(R) and Cerezyme(R) to Nova Factor; provided however, that any portion
of an order which remains unfilled for * days after receipt of such order by
Genzyme may be canceled at Nova Factor's option. Genzyme shall ship Ceredase(R)
and Cerezyme(R) at its cost to Nova Factor in sealed vials. Each vial of
Ceredase(R) and Cerezyme(R) shall be packaged in an individual box, containing
a package insert and United States Food and Drug Administration
("FDA")-approved labeling. Genzyme shall have the option of shipping several
individual boxes in a larger shipping container. Genzyme shall ship each order
of Ceredase(R) and Cerezyme(R) to Nova Factor at its warehouse/pharmacies in
Memphis, Tennessee (the "Warehouse") or such other place as the parties shall
agree, at Genzyme's expense. Shipment shall be made by common carrier,
overnight courier or any other similar method of shipment in Genzyme's
discretion. Upon the shipment of Ceredase(R) and Cerezyme(R) to Nova Factor,
title to the Ceredase(R) and Cerezyme(R) shall pass to Nova Factor.
(b) Nova Factor Inventory. Nova Factor agrees that it will
purchase adequate amounts of Ceredase(R) and Cerezyme(R) so that such
inventory, (the "Inventory"), will result in an average of * days Inventory
during each calendar quarter; provided that, Nova Factor agrees that at the
option of Genzyme it will purchase adequate amounts of Ceredase(R) and
Cerezyme(R) to bring the Inventory to a *-day level prior to the end of any
such calendar quarter; provided however that in no event will such purchase
cause the inventory to exceed an average of * days for the calendar quarter,
provided further, that in no event shall Nova Factor be required (i) to
purchase Ceredase(R) and Cerezyme(R) after Genzyme has delivered a notice of
termination pursuant to Section
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*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
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3.2(d) hereof, and (ii) to have on hand Inventory in excess of * dollars ($*).
The calculation of Inventory will be based upon the average of the unit sales
volume for the previous month, the projected unit sales volume for the current
month, and the projected sales volume for the next month as described in
Exhibit B attached hereto. Genzyme shall use reasonable efforts to assure that
all Ceredase(R) and Cerezyme(R) shipped to Nova Factor by Genzyme will have a
remaining shelf life of at least ninety (90) days. At any time which is at
least thirty (30) days prior to the expiration date of Ceredase(R) and
Cerezyme(R), Nova Factor shall have the right to return to Genzyme such
Ceredase(R) and Cerezyme(R) that had a remaining shelf life of less than ninety
(90) days when it was received by Nova Factor. All such returns shall be made
to Genzyme for either replacement Ceredase(R) and Cerezyme(R) respectively, or
for a credit to the amount owed by Nova Factor to Genzyme equal to Nova
Factor's purchase price of such Ceredase(R) and Cerezyme(R), as may be elected
by Genzyme. The service fees earned by Nova Factor pursuant to Section 2.14 for
any Ceredase(R) and Cerezyme(R) returned to Genzyme pursuant to this Section
2.1(b) shall be credited against future service fees earned by Nova Factor, or
Genzyme may request that Nova Factor reimburse it within ninety (90) days of
notice thereof for service fees paid to Nova Factor for Ceredase(R) and
Cerezyme(R) that is returned, as Genzyme may elect. Nova Factor agrees to use
the shortest dated Ceredase(R) and Cerezyme(R) first. Nova Factor shall provide
Genzyme weekly verbal reports on Inventory levels, which will be subject to
audit at Genzyme's expense.
(c) Billing. No earlier than the date of shipment of
Ceredase(R) and Cerezyme(R) to Nova Factor, Genzyme shall invoice Nova Factor
for such shipment at Genzyme's then * price for Ceredase(R) and Cerezyme(R).
Payment against the invoice will be due from Nova Factor within * (*) days of
the date of Genzyme's invoice. In the event that Nova Factor fails to pay any
such invoice in full within * (*) days, Nova Factor shall pay Genzyme late
payment charges of * per annum on all unpaid amounts due under such invoice
calculated from the end of that * (*) day period. Payments shall be applied
first against any accrued interest until all interest is paid and then to the
principal account balance. At its option Genzyme may offset amounts due it
under this Section 2.1(c) against any service fee due to Nova Factor under
Section 2.14 hereof. The parties hereto agree that should any provision of this
Section 2.1(c) violate any law, rule or regulation pertaining to usury or the
contracting for or charging of interest, then the excess of interest contracted
for or charged or collected over the maximum lawful rate of interest shall be
applied as a prepayment of future obligations due by Nova Factor to Genzyme
under this Article II, and if any amount so prepaid shall be unused upon
termination of this Agreement, the excess of the prepaid amounts over the
amounts actually due to Genzyme shall be immediately returned to Nova Factor.
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*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
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2.2 Shipment and Warehousing.
(a) Inspection of Shipment. Upon receipt of each shipment of
Ceredase(R) and Cerezyme(R) by Nova Factor, Nova Factor shall immediately
inspect the shipment for obvious damage to the shipping container and each box
containing a vial of Ceredase(R) and Cerezyme(R). Nova Factor shall have no
obligation to inspect the contents of the vials, nor shall Nova Factor open or
unseal the vials. Nova Factor shall also confirm whether the number of vials
received by Nova Factor equals the number of vials recorded on the applicable
shipping documents, and Nova Factor shall note any discrepancies in the number
of vials received by Nova Factor on the shipping documents accompanying such
shipment of Ceredase(R) and Cerezyme(R) and immediately notify Genzyme of any
such discrepancies.
(b) Storage. Nova Factor shall store all Ceredase(R) and
Cerezyme(R) at the Warehouse and shall not store Ceredase(R) and Cerezyme(R) at
any other location without the prior written consent of Genzyme. Nova Factor
shall not manufacture, mix, or process any Ceredase(R) and Cerezyme(R). Nova
Factor shall be responsible for inventory control of Ceredase(R) and
Cerezyme(R), subject to Genzyme's determination of the appropriate shelf life
of Ceredase(R) and Cerezyme(R). Nova Factor shall segregate Ceredase(R) and
Cerezyme(R) from any other item stored by it and shall not commingle
Ceredase(R) and Cerezyme(R) with any other item in its custody or control. For
so long as any Ceredase(R) and Cerezyme(R) is in Nova Factor's possession, Nova
Factor shall store Ceredase(R) and Cerezyme(R) in accordance with the
requirements set forth in the Ceredase(R) and Cerezyme(R) package insert and
FDA-approved labeling, including any requirements with respect to
refrigeration.
(c) Risk of Loss. Nova Factor shall bear the risk of loss,
theft, destruction or damage of each vial of Ceredase(R) and Cerezyme(R) from
and after receipt of each shipment by Nova Factor at the Warehouse until
receipt of each such vial of Ceredase(R) and Cerezyme(R) by a patient,
physician, clinic or hospital. Genzyme shall, at its cost, insure all
Ceredase(R) and Cerezyme(R) against loss from the time of shipment until
delivery to the Warehouse. Nova Factor shall, at its cost, insure all
Ceredase(R) and Cerezyme(R) in its possession until the receipt by a patient,
physician, clinic or hospital for its replacement value against fire, theft,
loss or destruction, and such other risks as are customarily insured against by
prudent persons in a similar line of business, with an insurance carrier
qualified to do business (in the State of Tennessee or such other place as
Genzyme may authorize). Nova Factor shall provide Genzyme with certificates of
such insurance prior to Nova Factor's election to be subject to the terms of
Article II.
2.3 Marketing and Sales. Genzyme covenants and agrees that will
provide such marketing, sales and patient/physician educational materials as
shall be deemed necessary by Genzyme to adequately promote and market
Ceredase(g) and Cerezyme(R). Nova Factor shall have no direct responsibility
for undertaking any sales efforts in connection with Ceredase(R) and
Cerezyme(R) and all inquiries received by Nova Factor
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concerning potential sales or prescriptions of Ceredase(R) and Cerezyme(R)
shall be referred to Genzyme by Nova Factor.
2.4 Designation of Patients and Recipients.
(a) Patient Status. Nova Factor shall sell Ceredase(R) and
Cerezyme(R) under this Article II only to a patient previously approved by
Genzyme (an "Approved Patient") or to a physician, hospital or clinic for
administration to an Approved Patient (hereinafter sometimes referred to as a
"Customer"). No patient previously approved to receive Ceredase(R) will be
provided Cerezyme(R) without Genzyme's prior approval. If sale is made to an
Approved Patient, shipment may nonetheless be made to a physician, hospital or
clinic, which will dispense Ceredase(R) or Cerezyme(R) to the Approved Patient.
Before approving the initial shipment to, or on behalf of, a patient, Genzyme
shall make such inquires as Genzyme, in its sole discretion, deems appropriate
to determine whether Ceredase(R) or Cerezyme(R) is indicated for such patient,
which inquiries shall include obtaining a letter or summary of medical
necessity signed by such patient's physician where required by the third party
payor and determining the availability of insurance or other source for payment
for Ceredase(R) or Cerezyme(R).
(b) Patient Tracking System. Nova Factor shall establish a
patient tracking system in a mutually acceptable format that tracks the dose,
dosage changes and frequency of administration of Ceredase(R) and Cerezyme(R)
prescribed by physicians for all Approved Patients. Nova Factor shall provide
Genzyme with data on all Approved Patients each month.
(c) Transmission of Records. Genzyme shall promptly forward
to Nova Factor such documentation as is reasonably necessary for Nova Factor to
transmit the initial shipment of Ceredase(R) or Cerezyme(R) to any Approved
Patient and to permit Nova Factor to file claims with a third party payor, if
any, or to submit invoices to the appropriate Ceredase(R) or Cerezyme(R)
Customer.
2.5 Distribution and Pharmacy Services.
(a) Physician Authorization. Following the inquiry provided
for in Section 2.4 of this Agreement, Genzyme shall notify Nova Factor that a
patient is an Approved Patient. Prior to dispensing Ceredase(R) or Cerezyme(R)
to, or on behalf of, an Approved Patient, Nova Factor shall obtain:
(i) a prescription which is either (A) in proper form
signed by the Approved Patient's physician, which physician shall be
duly licensed to practice medicine and dispense drugs in accordance
with applicable state and federal law, or (B) communicated verbally by
said physician if such communication is valid under applicable state
law; or
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(ii) an authorized purchase order from a Customer
authorized under applicable state law to dispense drugs to the
Approved Patient(s).
In the event that shipment of Ceredase(R) or Cerezyme(R) is to be made to a
Customer who wishes to designate Nova Factor as its billing agent, a signed
Sales and Billing Agency Agreement (the "Sales Agreement"), substantially in
the form of Exhibit C attached hereto, shall be obtained from such Customer.
(b) Compliance with Pharmacy Laws. Nova Factor shall dispense
or ship Ceredase(R) and Cerezyme(R) pursuant to a prescription or authorized
purchase order solely in compliance with applicable federal and state laws,
regulations, and orders including pharmacy laws. Nova Factor may ship
sufficient amounts of Ceredase(R) and Cerezyme(R) to a physician, hospital or
clinic to permit dispensing of single or multiple doses, but only if such
dose(s) are to be administered to an Approved Patient(s). Nova Factor shall not
provide Ceredase(R) and Cerezyme(R) to any Customer without the prior
authorization of Genzyme.
(c) Pharmacy Records. Nova Factor shall maintain such
pharmacy records as are required by applicable federal and state laws,
regulations and orders. Such records shall remain the property of Nova Factor.
However, Nova Factor shall permit Genzyme access to, and the right to obtain
copies of, such records, except to the extent limited by law.
2.6 Shipment of Ceredase(R) and Cerezyme(R) to Approved Patients
and Customers.
(a) Confirmation of Information. Nova Factor shall, before
dispensing or shipping Ceredase(R) or Cerezyme(R), (i) confirm with the
Approved Patient's third party payor, if any, the necessary billing forms and
billing procedures, including billing address, required to file any claim for
the Ceredase(R) or Cerezyme(R) on Nova Factor's or such Approved Patient's
behalf, or, in the event Nova Factor is acting as billing agent for a Customer
pursuant to an executed Sales Agreement, for such Ceredase(R) and Cerezyme(R)
Customer and (ii) make due inquiry whether it may lawfully dispense Ceredase(R)
or Cerezyme(R) in the state to which shipment has been directed.
(b) Inventory Availability. Nova Factor shall be required to
ship Ceredase(R) and Cerezyme(R) only from Ceredase(R) and Cerezyme(R)
inventory which Genzyme has previously delivered to Nova Factor.
(c) Packaging. Nova Factor shall pack Ceredase(R) and
Cerezyme(R) in cold packs, cartons or other packaging with such insulation or
other packing materials as required by the package insert or FDA-approved
labeling, or as otherwise agreed by the parties. Nova Factor shall, at its
cost, cause Ceredase(R) and Cerezyme(R) to be delivered to Ceredase(R) and
Cerezyme(R) Customers by common carrier, overnight courier or other similar
method of shipment selected by Nova Factor.
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(d) Return of Ceredase(R) and Cerezyme(R). In the event that
a shipment of Ceredase(R) or Cerezyme(R) is refused or rejected by the Approved
Patient or Customer, Nova Factor will cause the shipment of Ceredase(R) or
Cerezyme(R) to be returned to the Warehouse at Nova Factor's expense. Upon
return, Genzyme will direct Nova Factor, at Genzyme's cost, either to (i)
return the refused shipment to Genzyme or (ii) destroy the refused shipment.
2.7 Billing Services.
(a) After compliance by Nova Factor with its obligations
under Section 2.6 hereof, upon delivery of Ceredase(R) or Cerezyme(R) to a
Customer, Nova Factor shall prepare and mail an invoice for such shipment
within * business days after receipt by Nova Factor of the documentation
necessary for billing to be provided by Genzyme under Section 2.4 of this
Agreement. Such invoice shall be sent to the Customer, or if Nova Factor has
shipped Ceredase(R) or Cerezyme(R) to a Customer for which Nova Factor acts as
billing agent, Nova Factor shall submit the invoice in the manner provided in
the Sales Agreement. Each invoice, as appropriate, shall be on a form agreed to
by the parties or upon the standardized form (such as HCFA - 1500 Health
Insurance Claim Form) required by a third party payor or in such electronic
billing format as may be required. In the event Ceredase(R) or Cerezyme(R) is
sold to an Approved Patient after compliance by Nova Factor with its
obligations under section 2.6 hereof, Nova Factor shall submit the invoice to
the Approved Patient or, if authorized to do so, to the applicable third party
payor.
(b) Nova Factor shall use reasonable efforts to comply with
all requirements for the submission of claims imposed by each third party payor
for an Approved Patient.
(c) Nova Factor shall comply with all applicable federal and
state laws, regulations and orders, including Medicare requirements, in its
capacity as billing agent for any Ceredase(R) or Cerezyme(R) Customer pursuant
to the Sales Agreement.
2.8 Collection. Nova Factor shall be responsible for the
collection of all monies due for the sale by Nova Factor of Ceredase(R) and
Cerezyme(R) and all such monies shall belong to Nova Factor.
2.9 Bad Debts and Delinquent Accounts. Nova Factor shall bear the
risk of loss on all uncollected accounts and bad debts resulting from sales and
shipments of Ceredase(R) and Cerezyme(R) by Nova Factor under this Article II.
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*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
8
2.10 Accounting and Financial Reporting.
(a) Nova Factor shall maintain records and books of account,
in the form of computer data or otherwise, which will identify Nova Factor's
inventory of Ceredase(R) and Cerezyme(R), each sale and shipment of Ceredase(R)
and Cerezyme(R) by Nova Factor (showing recipient's name, amount of drug
dispensed, and charges for said drug), and all revenue collected from the sale
and distribution of Ceredase(R) and Cerezyme(R) by Nova Factor properly applied
to and against the invoices for said drug generated by Nova Factor. In addition
to these records, Nova Factor shall generate such distribution, sales,
customer, account and financial reports, including records necessary to trace
lot numbers to Ceredase(R) and Cerezyme(R) patients, to monitor shelf life and
trace shipments and such other data and information (collectively, "Accounting
Records") as the parties shall agree. Nova Factor agrees that on a monthly
basis, it will furnish Genzyme with an accounting of all Ceredase(R) and
Cerezyme(R) received, all Ceredase(R) and Cerezyme(R) shipped and all bills
submitted and all revenues collected in connection with Ceredase(R) and
Cerezyme(R) sold and distributed, by Nova Factor during the month.
(b) Nova Factor shall furnish to Genzyme (i) as soon as
available and in any event written 45 days after the end of the first three
quarterly fiscal periods of each fiscal year of Nova Factor, a consolidated
balance sheet and profit and loss statement reflecting the financial condition
of Nova Factor at the end of each such period and for the period from the
beginning of the respective fiscal year to the end of such period, and setting
forth the corresponding figures for the corresponding periods in the previous
fiscal year, which financial statements shall be accompanied by a certificate
of the chief financial officer of Nova Factor that such financial statements
present fairly in all material respects the consolidated financial position of
Nova Factor, in accordance with generally accepted accounting principles
consistently applied, as at the end of, and for, such period, and (ii) as soon
as available and in any event within ninety (90) days after the end of each
fiscal year of Nova Factor, a consolidated balance sheet and profit and loss
statement reflecting the consolidated financial condition of Accredo Health,
Incorporated at the end of such fiscal year and for the period from the
beginning of such fiscal year to the end of such fiscal year, and setting forth
the corresponding figures for the preceding fiscal year, which financial
statements shall be accompanied by a report from independent certified public
accountants that such financial statements present fairly in all material
respects the consolidated financial position of Accredo Health, Incorporated,
in accordance with generally accepted accounting principles consistently
applied, as at the end of, and for, such fiscal year. All such information will
be considered confidential pursuant to Section 3.5. without limiting the
generality of the foregoing such information shall not be used in violation of
any federal securities laws and regulations.
2.11 Computer System Access.
(a) Terms of Access. Nova Factor shall establish a separate
computer data base for demographic, account and patient information regarding
Ceredase(R) and Cerezyme(R) within Nova Factor's computer system, or any
successor hardware. Genzyme
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*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
9
shall be given direct inquiry (read only) access to the computer data base for
Ceredase(R) and Cerezyme(R) maintained within Nova Factor's computer system;
provided, however, that Genzyme shall be responsible for obtaining at its cost
all compatible terminal hardware, modems, telephone access lines, and all other
hardware and materials necessary to access Nova Factor's computer system. Nova
Factor shall also have full access to this data base. Nova Factor will make
available to Genzyme the necessary phone numbers, access codes and passwords
which shall provide Genzyme with direct inquiry access solely to the Nova
Factor computer data base concerning Ceredase(R) and Cerezyme(R). Genzyme shall
be responsible for all long distance charges incurred by Genzyme in using dial
access to Nova Factor's computer system. Genzyme acknowledges that the entry of
data and information into the computer data base may be delayed, however, Nova
Factor will make reasonable efforts to ensure that the information is current
and will promptly notify Genzyme if the information in the data base is not
current.
(b) Confidentiality of Computer Data. The information
contained in the data base is considered by Nova Factor to be confidential.
Nova Factor considers all information in its database to be confidential in
accordance with Section 3.5. Genzyme shall deal with all such data designated
as confidential by Nova Factor, together with any computer access codes and
passwords provided to Genzyme by Nova Factor to permit Genzyme access to said
database, in accordance with Section 3.5. hereof.
2.12 Audit. Nova Factor shall allow Genzyme access to Nova
Factor's books and records related to its sale of Ceredase(R) and Cerezyme(R)
for purposes of audit. The information provided by Nova Factor shall be subject
to the operation of Section 3.5. without limiting the generality of the
foregoing such information shall not be used in violation of federal securities
laws and regulations. Any such audit shall be at Genzyme's cost and shall be
conducted at Nova Factor's offices in Memphis, Tennessee during Nova Factor's
regular business hours, and upon Genzyme providing Nova Factor with reasonable
advance notice. Any amounts found from such audit to be due and owing Genzyme
but unpaid shall thereafter be paid in accordance with the terms of this
Agreement. The information provided by Nova Factor shall be subject to the
operation of Section 3.5. without limiting the generality of the foregoing such
information shall not be used in violation of federal securities laws and
regulations.
2.13 Personnel. Nova Factor shall designate certain Nova Factor
personnel to perform Nova Factor's obligations, including those with respect to
inventory, storage, shipment, billing, collections, accounting and
recordkeeping. Nova Factor shall be solely responsible for its employees'
salaries, federal and state income tax withholding, Social Security tax
withholding, worker's compensation benefits and fringe benefits. When Nova
Factor determines that the volume of its distribution of Ceredase(R) and
Cerezyme(R) requires, Nova Factor shall dedicate certain of its personnel,
which Nova Factor shall select, exclusively to handle Nova Factor's obligations
under this Article II.
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2.14 Compensation to Nova Factor.
(a) Service Fee. In consideration for the services provided to
Genzyme by Nova Factor, Genzyme agrees to pay to Nova Factor *. For Ceredase(R)
and Cerezyme(R) purchased under this Agreement from January 1, 1998 to
December 31, 1998 * will be determined in accordance with 3.2(b).
(b) Invoicing. Genzyme shall pay this service fee to Nova
Factor within * days after the date that Genzyme invoices Nova Factor for an
invoice for such related shipment of Ceredase(R) and Cerezyme(R). In the event
that Genzyme fails to pay any such service fee in full within * days of the
receipt of the related invoice, Genzyme shall pay Nova Factor late payment
charges of * per annum on all unpaid amounts due pursuant to this Section 2.14
calculated from the end of that * day period. The parties hereto agree that
should any provision of this Section 2.14 violate any law, rule or regulation
pertaining to usury or the contracting for or charging of interest, then the
excess of interest contracted for or charged or collected over the maximum
lawful rate of interest shall be applied as a prepayment of future obligations
due by Genzyme to Nova Factor.
(c) Reimbursement for Expenses. Upon presentment of invoices
or other documentation of such expenses, Genzyme will reimburse Nova Factor for
any reasonable expenses which are the responsibility of Genzyme so long as such
expenses are incurred by Nova Factor with the prior approval of Genzyme.
Genzyme will reimburse such expenses within * days of Genzyme's receipt of the
documentation of any such expenses. Notwithstanding this Section 2.14(d), Nova
Factor shall be solely responsible for expenses incurred by it in carrying out
its obligations, including but not being limited to, shipping, obtaining
supplies, postage and printing necessary for the collection of accounts
receivable generated by Nova Factor's distribution of Ceredase(R) and
Cerezyme(R).
2.15 Taxes. Nova Factor shall prepare and file all sales and use
tax returns which are required by, and pay all taxes due to any state or local
governmental entity from, or as a result of, the sale or distribution of
Ceredase(R) and Cerezyme(R) by Nova Factor. Nova Factor shall be liable for any
personal property taxes on inventory of Ceredase(R) and Cerezyme(R) held in
Tennessee by Nova Factor or any other approved site, any gross receipts or
business taxes resulting from the sale or distribution of Ceredase(R) and
Cerezyme(R) by Nova Factor, and to the extent required, shall include such
inventories of Ceredase(R) and Cerezyme(R) held by Nova Factor, and sales of
Ceredase(R) and Cerezyme(R) distributed by Nova Factor, in Nova Factor's
respective federal and state income and franchise tax returns. To the extent
that Nova Factor is required to file tax
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*Omitted information is the subject of a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934 and has been filed separately with the Securities and Exchange
Commission.
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returns with any governmental entity in regard to the distribution and sale of
Ceredase(R) and Cerezyme(R) by Nova Factor pursuant to this Article II and to
remit taxes in connection therewith, other than income taxes for service fee
income pursuant to Article II hereof, Genzyme shall promptly reimburse Nova
Factor for such taxes upon presentation by Nova Factor of evidence reasonably
satisfactory to Genzyme that Nova Factor has paid such taxes.
2.16 Effect of Termination. Upon termination of this Agreement,
Nova Factor shall promptly provide Genzyme with a final accounting of units of
Ceredase(R) and Cerezyme(R) held in Inventory at termination, units shipped,
xxxxxxxx, collections and such other information contained in the Accounting
Records as is requested by Genzyme. A copy of all computer and other records
concerning Ceredase(R) and Cerezyme(R), including the Accounting Records,
maintained by Nova Factor, shall be provided to Genzyme; however, Nova Factor
shall maintain the original of said records. Nova Factor shall fully cooperate
with and assist Genzyme in achieving an orderly transfer of patients and health
care provider to an alternative supplier of Ceredase(R) and Cerezyme(R) if this
Agreement is terminated. Genzyme will reimburse Nova Factor for all reasonable
costs, as agreed upon by both parties, incurred during the transfer of patients
and health care providers to an alternate supplier. This provision shall
survive termination of this Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Indemnity and Insurance.
(a) Indemnification. Nova Factor and Genzyme hereby agree
that:
(i) Nova Factor shall assume responsibility for and
shall indemnify and hold Genzyme harmless and defend Genzyme from all
losses (including claims for injuries to employees of Nova Factor or
Genzyme), expenses, attorneys' fees, damages, claims and judgments
resulting solely from (A) Nova Factor's breach of the terms of this
Agreement; (B) the negligent acts or omissions or wrongful acts of
Nova Factor, its agents or employees; or (C) any misrepresentation or
breach of any representation or warranty made herein by Nova Factor;
provided, however, that Nova Factor shall have no liability to Genzyme
for loss of profits to Genzyme in the event Nova Factor is unable,
through no fault of Nova Factor's, to ship Ceredase(R) and Cerezyme(R)
to a Ceredase(R) and Cerezyme(R) Customer or Approved Patient, and
(ii) Genzyme shall assume responsibility for and
shall indemnify and hold Nova Factor harmless and defend Nova Factor
from all losses (including claims for injuries to employees of Nova
Factor or Genzyme), expenses, attorneys' fees, damages, claims and
judgments resulting solely from (A) Genzyme's breach of the terms of
this Agreement; (B) the negligent acts or omissions or wrongful acts
of Genzyme, its agents or employees; (C) any misrepresentation or
breach of
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any representation or warranty made herein by Genzyme; or (D) any
defect or issue arising out of a defect in design, manufacture or
condition of Ceredase(R) and Cerezyme(R) supplied to Nova Factor by
Genzyme.
(b) Insurance. During the term of this Agreement, Nova Factor
and Genzyme will each maintain general public liability, products liability and
products property damage insurance, each policy with limits of not less than
$1,000,000 per incident, $3,000,000 in the aggregate. All policies insuring
against liability for bodily injury or death or damage to property shall
include coverage for claims resulting from the sale and distribution of
Ceredase(R) and Cerezyme(R) and in the case of Genzyme, claims resulting from
the manufacture of Ceredase(R) and Cerezyme(R). Each party will provide the
other party with certificates evidencing the insurance required hereunder, and
all such policies shall endeavor to provide notice of cancellation or
termination or reduction in the limits of or other material change to the
coverage thereof shall be provided in advance to the other party. In the event
of such cancellation, termination, reduction or change of the coverage
described herein, the party maintaining such insurance shall immediately obtain
substitute or replacement coverage. Failure to obtain substitute or replacement
coverage shall be grounds for the termination of this Agreement.
3.2 Term, Renewal and Termination.
(a) Initial Term. Unless otherwise terminated pursuant to
subsection (c) below, this Agreement shall be for an initial term expiring on
December 31, 1998.
(b) Renegotiation of Service Fee. The service fee to be paid
by Genzyme to Nova Factor for services provided under this Agreement will be
renegotiated by the parties between * of each calendar year, with changes in
such fee, if any, to become effective with respect to Ceredase(R) and
Cerezyme(R) purchased * of the applicable calendar year, subject at all times to
the parties' rights of termination under Section 3.2(d) hereof. The service fee
to be paid with respect Ceredase(R) and Cerezyme(R) purchased during the time
period the parties are negotiating such fee shall be paid at the rate in effect
during the preceding year, and once the parties agree upon a change in such fee,
if any, Genzyme shall promptly pay to Nova Factor the amount by which the new
service fee exceeds the previous service fee, or Nova Factor promptly shall
reimburse (by direct payment or by credit against future amounts payable to Nova
Factor by Genzyme) Genzyme the amount by which the new service fee is less than
the previous service fee, whichever is applicable. The parties agree to use
reasonable efforts to negotiate the service fee by * of each calendar year.
(c) Renewal. This Agreement will automatically renew at the
expiration of the Initial Term for an additional period of one year and shall
thereafter automatically renew from year to year for additional one-year
periods, unless either party shall give written notice of cancellation to the
other party at least ninety (90) days prior to the end of the Initial Term or
the expiration of any extension.
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*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
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(d) Termination and Suspension of Distribution. This Agreement
shall automatically terminate (i) upon the mutual agreement of the parties, (ii)
at any time upon sixty (60) days prior notice by either party hereto, (iii) upon
the insolvency or bankruptcy of either party, the making by either party of an
assignment for the benefit of creditors, the consent by either party to the
appointment of a trustee or receiver, or the appointment without its consent, of
a trustee or receiver for it or for a substantial part of its property, or (iv)
upon the institution by or against either party of bankruptcy, reorganization,
arrangement or insolvency proceedings. In addition, if either party hereto shall
breach the terms of this Agreement, the non-breaching party, may give written
notice of the breach to the breaching party, and if said breach is not cured
within thirty (30) days following the giving of said notice, immediately upon
the conclusion of such thirty (30) day period the non-breaching party, at its
option, may (i) suspend performance of its obligations under this Agreement,
and/or (ii) terminate this Agreement.
(e) Return of Ceredase(R) and Cerezyme(R). In the event of
termination of this Agreement, Nova Factor shall cause the inventory of
Ceredase(R) and Cerezyme(R) then in Nova Factor's possession to be returned to
Genzyme, at Genzyme's cost. Each unit of Ceredase(R) and Cerezyme(R) returned
to Genzyme shall be credited in full payment for the amount due from Nova
Factor for that unit, except any units which are destroyed or damaged for which
Nova Factor shall bear the risk of loss in accordance with Article II hereof.
The services fees earned by Nova Factor for any Ceredase(R) and Cerezyme(R)
returned to Genzyme pursuant to this Section 3.2(e) shall be offset against
such credit. To the extent the amount credited to Nova Factor pursuant to this
paragraph exceeds the amount owed by Nova Factor to Genzyme at such time, such
excess shall be promptly paid by Genzyme to Nova Factor.
(f) Survival of Obligations. Termination of this Agreement
shall not relieve either party from any liability or obligation it had incurred
prior to the date of such termination including, but not limited to,
obligations to pay any outstanding unpaid amounts due pursuant to this
Agreement and to accept returns of Ceredase(R) and Cerezyme(R) in accordance
with the provisions of this Agreement. It is the express intention and
agreement of the parties hereto that all the covenants, agreements, warranties
and indemnities contained in Sections 2.16, 3.1, 3.5, 3.6, and 3.7 shall
survive the termination of this Agreement.
3.3 Force Majeure. Neither party shall be liable to the other for
failure or delay in the performance of any of its obligations under this
Agreement for the time, and to the extent, such failure or delay is caused by
riots, civil commotion, wars, hostilities between nations, embargoes, acts of
God, earthquakes, storms, fires, strikes, sabotage, explosions, shortages of
raw materials or power, or any other matter which is beyond the reasonable
efforts of the party to control. This provision shall not excuse, or apply to,
obligations of a party to make monetary payments hereunder.
3.4 Independent Contractor. Subject to the requirements herein,
Nova Factor shall determine the time spent and the methods employed in carrying
out its obligations
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hereunder, and Nova Factor shall be solely responsible for the operation and
management of its business. In entering into and carrying out its obligations
under this Agreement, Nova Factor is an independent contractor. Nothing in this
Agreement, or in the relationship between the parties or in the activities of
Nova Factor, its agents or employees, shall be construed to make Nova Factor,
its agents or employees, an employee of, or joint venture or partner with,
Genzyme, or to empower any of them to bind or obligate Genzyme in any way. Nova
Factor further agrees that it will make no representations with respect to its
relationship to Genzyme, except that it has contracted with Genzyme to act as a
distributor of Ceredase(R) and Cerezyme(R) and to perform the obligations set
out herein. It is further agreed and understood that Nova Factor is only
contracting to provide certain specified services to, and purchase Ceredase(R)
and Cerezyme(R) from, Genzyme. Genzyme shall be responsible for all costs
incurred in operating Genzyme's business, and Genzyme shall be solely
responsible for the management and operation of its business.
3.5 Confidentiality and Restrictive Covenant.
(a) Protection of Documents. Each party has developed or may
during the term hereof develop, certain formulae, products, methods of doing
business, and other proprietary information which that party deems to be
confidential and a trade secret. In the course of fulfilling each party's
respective obligations hereunder, some of these formulae, products, methods and
other proprietary information of one party will become known to the other party
hereto. Each party agrees that it will not duplicate, make use of, or disclose,
in any manner whatsoever, any information which is deemed to be confidential by
the other party (as provided in Section 3.5(b) hereof), either during or after
the term of this Agreement, without the express prior written consent of the
other party hereto.
(b) Designation of Materials. In the event that any
information deemed to be confidential by a party is provided to the other party
or its employees or agents in writing, the party providing same shall xxxx the
writing as confidential, prior to providing such information to the other
party. In the event that such information is provided in non-written form such
as orally, by audio tape, by direct telephonic access to computer data bases,
videotape or computer software or disc, the party claiming such information to
be confidential shall, at the time such information is furnished to the other
party or within fifteen (15) days thereafter, furnish to the other party a
written list containing a brief description of such item and designating such
item as confidential. Upon termination of this Agreement, all such information,
together with any copies thereof, of any information hereunder deemed, or
designated by a party as, confidential shall be returned to the party who
supplied the information. Notwithstanding the preceding provision, the
following types of information provided by a party shall always be deemed
confidential, whether or not so designated: patient medical records; patient
and physician names and addresses; hospitals; clinics; number of patients on
therapy; prescription files; costs of goods and supplies: the formula and
composition of Ceredase(R) and Cerezyme(R); and financial records of the party.
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(c) Exceptions. The restrictions in this Section 3.5 shall
not apply (i) to any information which is not deemed confidential hereunder, or
which has not been designated as confidential in the manner specified herein,
(ii) to any information which was already known to the receiving party prior to
its disclosure by the other party, as can be proven by competent evidence,
(iii) to any information which is or becomes public knowledge through no fault
or failure of a party bound by this Agreement, (iv) to any information which is
independently developed by an employee of the receiving party who had no access
to or knowledge of the information disclosed hereunder or (v) to any
information which was rightfully obtained from a third party who was not
subject to any restriction of confidentiality.
(d) Covenant. Nova Factor agrees that during the term of this
Agreement, and for a period of five years following the termination hereof,
Nova Factor will not undertake to distribute or supply any prescription drug
for the treatment of Gaucher disease other than Ceredase(R) and Cerezyme(R),
without the prior written consent of Genzyme. Furthermore, during the same
period, and whether or not otherwise prohibited by the restrictions set out
hereinabove, Nova Factor will not disclose to any other person or entity or use
for purposes of competing directly or indirectly with the sale of Ceredase(R)
and Cerezyme(R) by Genzyme (i) the names of patients or hospitals, clinics or
physicians or number thereof provided Ceredase(R) and Cerezyme(R) by Nova
Factor pursuant to this Agreement, (ii) the volume of Ceredase(R) and
Cerezyme(R) supplied to Ceredase(R) and Cerezyme(R) Customers by Nova Factor,
(iii) the addresses of patients, (iv) the referral sources of Ceredase(R) and
Cerezyme(R) Customers, (v) Genzyme's price for Ceredase(R) and Cerezyme(R), or
(vi) the service fees, if any, paid to Nova Factor pursuant to this Agreement.
This provision shall not prohibit disclosure of such information in the event
that Nova Factor is requested or required by law or governmental regulations or
by litigation discovery requests, subpoena, civil investigative demands or
similar processes to disclose such information, nor shall it prohibit
disclosure and use by Nova Factor of such information, if and as necessary, in
any litigation between Nova Factor and Genzyme Furthermore, Nova Factor may
disclose such information, to the extent permitted by law, as may be required
by a lending institution that has provided a loan to Nova Factor, or to Nova
Factor's accountants or attorneys in the ordinary course of business provided
that such disclosee agrees in writing not to further disclose such information.
3.6 Representations, Warranties and Covenants.
(a) No Interference. Genzyme represents and warrants to Nova
Factor that Genzyme has the sole and exclusive right to manufacture and
distribute Ceredase(R) and Cerezyme(R) and that the distribution of Ceredase(R)
and Cerezyme(R) and the other activities to be performed by Nova Factor
hereunder do not, and will not, infringe upon or violate the rights of, any
other party. Genzyme will protect, indemnify and hold Nova Factor harmless from
any claims of infringement of patent, trademark, xxxx name or proprietary
rights by third parties relating to Nova Factor's distribution of Ceredase(R)
and Cerezyme(R).
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(b) Government Approval. Genzyme further represents and
warrants to Nova Factor that all FDA and state approvals and permits required
for Genzyme's manufacture, sale and distribution of Ceredase(R) and Cerezyme(R)
have been obtained and that Genzyme has the corporate authority to authorize
Nova Factor to sell and distribute Ceredase(R) and Cerezyme(R). Genzyme shall
comply with all applicable FDA and state laws and regulations in the
manufacture, design, testing, inspection, labeling, warning and instructions
for use of Ceredase(R) and Cerezyme(R) material to its performance under this
Agreement.
(c) Compliance with Laws, Licensure. Nova Factor represents
and warrants to Genzyme that Nova Factor has materially complied with, shall
continue to comply with, and nothing in the transactions contemplated by this
Agreement would cause it not to be in compliance with, all federal and state
laws, regulations and orders applicable to it and its business as a pharmacy,
including all pharmacy laws. Nova Factor possesses all federal and state
governmental licenses and permits material to and necessary in its performance
of this Agreement. Such licenses and permits are, and shall remain, in full
force and effect, no violations are or have been recorded in respect of any
such licenses or permits and no proceeding is pending or, to the knowledge of
Nova Factor, threatened to revoke or limit any thereof. Nova Factor shall
promptly notify Genzyme in the event that a proceeding is threatened or
commenced to revoke or limit any such licenses or permits.
3.7 Trade Names and Trademarks.
(a) Use of Trade Names and Trademarks by Nova Factor. Genzyme
grants to Nova Factor the non-exclusive privilege to use, in connection with
the stocking, sale and distribution of Ceredase(R) and Cerezyme(R), the
various trade names, trademarks, service marks and several other word and
design marks which Genzyme associates with Ceredase(R) and Cerezyme(R). Nova
Factor acknowledges that Genzyme is the exclusive owner of the various trade
names, trademarks, service marks and several other word and design marks which
Genzyme uses in connection with Ceredase(R) and Cerezyme(R) and the sales
thereof, and that all goodwill associated with such is the property of and
shall inure to the benefit of Genzyme. Nova Factor agrees that Genzyme has the
right to control the use or display thereof by Nova Factor. This non-exclusive
license is a limited license and may be terminated at any time by Genzyme upon
the termination of this Agreement. Nova Factor shall discontinue the display or
use of any such xxxx or name, or change the manner in which any such name or
xxxx is displayed or used, upon request by Genzyme. Nova Factor further agrees
that:
(i) No such name or xxxx will be used by Nova Factor
in such a manner that it may reasonably be expected to become a
generic word, causing a loss of its protected status as such;
(ii) Nova Factor shall not use such names or marks,
or any variant thereof, as the whole or any part of its title or the
name of its business, except upon Genzyme's express written consent to
such use;
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(iii) Nova Factor shall not use such names or marks
in any manner in connection with an effort to sell goods of others,
whether or not such goods are competitive with Ceredase(R) and
Cerezyme(R), and shall not use such names or marks as part of its
business name;
(iv) Nova Factor shall not use, or allow the use of,
any name or xxxx which is likely to cause confusion, mistake or
deception with respect to any of the trade names or trademarks of
Genzyme; and
(v) Nova Factor shall not assert, acquire or
attempt to acquire any rights or interests in or to, or contest or
assist others in contesting, said names or marks of Genzyme.
Upon termination of this Agreement, Nova Factor shall discontinue any and all
use of Genzyme's trademarks, trade names and any other identification with
Genzyme and shall avoid any statement or implication that it is a distributor
of Ceredase(R) and Cerezyme(R).
(b) Use of Trade Names and Trademarks by Genzyme. The
parties recognize that Nova Factor(R) is a registered trademark, and Nova
Factor hereby grants to Genzyme the non-exclusive privilege to use, in
connection with the stocking and sale of Cerezyme(R) and Ceredase(R), the
various trade names, trademarks, service marks and the several other word and
design marks which are associated with Nova Factor(R). Genzyme acknowledges
that Nova Factor is the exclusive owner of the various trade names, trademarks,
service marks and the several other word and design marks which are used in
connection with the name Nova Factor(R) and that all good will associated with
such is the property of and shall inure to the benefit of Nova Factor. Genzyme
agrees that Nova Factor has the right to control the use or display thereof by
Genzyme. This non-exclusive license is a limited license and may be terminated
at any time by Nova Factor. Genzyme shall discontinue the display or use of any
such name or xxxx, or change the manner in which any such name or xxxx is
displayed or used, upon request by Nova Factor. Genzyme further agrees that:
(i) No such name or xxxx shall be used in such a
manner that it may become a generic word, causing the loss of its
protected status as such;
(ii) Genzyme shall not use such names or marks, or
any variant thereof, as the whole or any part of its title or the name
of its business, except upon Nova Factor's express written consent to
such use;
(iii) Genzyme shall not use such names or marks in
any manner in connection with an effort to sell goods of others and
shall not use such names or marks as part of its business name;
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(iv) Genzyme shall not use, or allow the use of, any
name or xxxx which is likely to cause confusion, mistake or deception
with respect to any of the trade names or trademarks of Nova Factor;
and
(v) Genzyme shall not assert, acquire or attempt to
acquire any rights or interests in or to, or contest or assist others
in contesting, the names or marks of Nova Factor.
Upon termination of this Agreement, Genzyme shall discontinue any and all use
of Nova Factor's trademarks, trade names and any other identification with Nova
Factor, and shall avoid any statement or implication that it is affiliated with
Nova Factor.
3.8 Service to Other Businesses. Genzyme acknowledges that Nova
Factor offers its services to other businesses, and Genzyme agrees that no
provision contained herein shall restrict or prohibit Nova Factor from
providing services to others in addition to Genzyme as long as the performance
of said services does not violate the restrictions set out in Section 3.5
hereof, or interfere with the performance of Nova Factor's obligations
hereunder.
3.9 Records. To the extent required by Section 1861(b)(1)(I) of
the Social Security Act, Nova Factor shall, upon proper request, allow the
United States Department of Health and Human Services, the Comptroller General
of the United States and their duly authorized representatives, access to this
Agreement and to all books, documents and records necessary to verify the
nature and extent of the costs of the services provided by Nova Factor under
this Agreement at any time during the term of this Agreement and for an
additional period of four (4) years following the last date services are
furnished under this Agreement.
3.10 Specific Performance. The parties acknowledge that violation
of Sections 3.5 and 3.7 hereof could cause irreparable damage to the party
against whom the violation is committed which would not adequately be remedied
by an action at law for damages. The parties agree that, in the event of a
breach or threatened breach of either of these sections, the party alleging
such breach shall be entitled to injunctive relief prohibiting such breach or
threatened breach in any court of the United States or of any state or other
political subdivision having proper jurisdiction thereof.
3.11 Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude any party from asserting any other rights or
seeking any other remedies against the other party, or such other party's
successors or permitted assigns, pursuant to this Agreement, as provided under
other agreements and as provided by law. Nothing contained herein shall
preclude a party from seeking equitable relief, where appropriate.
3.12 Non-assignability. This Agreement and the rights, duties and
responsibilities of the parties hereto shall not be assigned without the prior
express written
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consent of the other party, except that no prior consent shall be required in
the event of acquisition of all or substantially all of the assets of a party
by an acquirer.
3.13 Headings. All headings used herein are for ease of reference
only and shall in no way be construed as interpreting, decreasing or enlarging
the provisions of this Agreement.
3.14 Effect. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their successors, administrators, trustees and permitted
assigns.
3.15 Modification. This Agreement and the Security Agreement
constitute the entire agreement and understanding between the parties hereto in
respect to the transactions contemplated herein and supersede all prior written
or oral agreements, arrangements and understanding relating to the subject
matter hereof. This Agreement may be amended, changed or modified only with the
written consent of both parties.
3.16 Notices. All notices, demands, request, consents, reports,
approvals or other communications which may be or are required to be given,
served or sent pursuant to this Agreement shall be in writing and shall be hand
delivered, or mailed by first class, registered or certified mail, return
receipt requested, postage prepaid, or transmitted by telegram, facsimile or by
overnight courier addressed to the party at its business address and to the
attention of the individual set out following the signatures of the parties on
the last page of this Agreement. Each party may designate by notice in writing
a different person, or new address, to which any notice, demand, request,
consent, report, approval or other communication may thereafter be given,
served or sent. Each notice, demand, request, consent, report, approval or
communication mailed in the manner described above or delivered to a telegraph
company or to an overnight courier, or by facsimile transmission, shall be
deemed sufficiently given, served, sent or received for all purposes at such
time as it is delivered to the addressee (with the return receipt or delivery
receipt or machine report, in the case of facsimile transmission, being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
3.17 Waivers. No waiver of the breach of any provision of this
Agreement shall be deemed a waiver of any other breach of or default under the
same or any other provision hereof, nor will any waiver constitute a continuing
waiver. No term or provision of this Agreement shall be waived except by a
written instrument executed by a duly authorized officer of the waiving party
and no course of dealing, act or omission to act shall operate as a waiver of
any right, power or privilege granted to a party hereunder.
3.18 Accreditation Standards. The services provided hereunder are
designed to meet the applicable requirements stated in PH.1 through PH.1 1.3 of
the Standards for the Accreditation of Home Care-Pharmaceutical Services of the
Joint Commission on Accreditation of Healthcare Organizations ("JCAHO"). In the
performance of this
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Agreement the parties shall conform to the policies, standards and requirements
of JCAHO, to the extent applicable.
3.19 Severability. If any one or more of the provisions of this
Agreement shall for any reason be held illegal or invalid, such illegality or
invalidity shall not affect any other provision of this Agreement and this
Agreement shall be enforced as if such illegal or invalid provision had not
been contained herein.
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IN WITNESS WHEREOF, the undersigned parties hereto have caused this
Agreement to be executed as of the day and year first above written.
GENZYME CORPORATION
By: /s/ Illegible
--------------------------------------
Title: Executive Vice President
-----------------------------------
Address: Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
NOVA FACTOR, INC.
By: /s/ Xxxxx Grow
--------------------------------------
Title: President
-----------------------------------
Address: 0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
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EXHIBIT A
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Security
Agreement") is made as of the ___day of ______, 1998 by and between NOVA
FACTOR, INC., a Tennessee corporation (hereinafter referred to as "Nova
Factor") and GENZYME CORPORATION, a Massachusetts corporation ("Secured
Party").
RECITALS:
WHEREAS, Nova Factor and Secured Party have entered into a
certain Amended and Restated Distribution Agreement dated the date hereof (the
"Distribution Agreement") pursuant to which Secured Party has Agreed to sell to
Nova Factor and Nova Factor has agreed to purchase from Secured Party
quantities of the prescription drugs know as Ceredase(R) enzyme and Cerezyme(R)
on the terms and conditions set forth therein; and
WHEREAS, in order to secure (i) the amounts payable to
Secured Party under Section 2.1(c) of the Distribution Agreement, (ii) the
fulfillment of the other obligations of Nova Factor under the Distribution
Agreement and (iii) the fulfillment of the obligations of Nova Factor hereunder
(collectively, the "Secured Obligations"), Nova Factor is required to enter
into this Security Agreement and to grant to Secured Party a security interest
in the Collateral (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
1. Security Interest.
1.1 Collateral. As security for the Secured
Obligations, Nova Factor hereby grants to Secured Party a security interest in
and lien on, and assigns and pledges to Secured Party, all of the following
(the "Collateral"):
(a) all Ceredase(R) enzyme and Cerezyme(R) sold
by Secured Party to Nova Factor from time to time pursuant to Article II of the
Distribution Agreement, which Ceredase(R) enzyme and Cerezyme(R) shall be held
for sale by Nova Factor to third parties in accordance with the terms of the
Distribution Agreement (the "Inventory");
(b) all accounts, chattel paper, instruments
and general intangibles (as such terms are defined in Article 9 of the Uniform
Commercial Code as in effect from time to time in the State of Tennessee),
accounts receivable and other obligations of any kind, whether or not evidenced
by an instrument or chattel paper (collectively, the "Accounts") of Nova Factor
representing or arising from the sale of Ceredase(R) enzyme and Cerezyme(R) by
Nova Factor from the Inventory; and
(c) any and all additions to any of the
foregoing, and any and all replacements, products and proceeds (including
insurance proceeds) of any of the foregoing.
1.2 Right of Secured Party to Pay Taxes or
Costs Relating to Collateral. Secured Party shall have the right, but not the
obligation, to pay any taxes or levies on the Collateral or any costs to
preserve the Collateral, which payment shall constitute a part of the Secured
Obligations; provided, however, that no taxes payable by Secured Party pursuant
to the Distribution Agreement shall be deemed part of the Secured Obligations.
1.3 Financing Statements. At the request of
Secured Party, Nova Factor will promptly join with Secured Party in executing
financing statements, continuation statements,
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assignments, certificates and other documents with respect to the Collateral
pursuant to the Uniform Commercial Code and otherwise as may be necessary to
enable Secured Party to perfect or from time to time continue the security
interests granted hereby, including without limitation such financing
statements, continuation statements, certificates and other documents as may be
necessary to perfect a security interest in any Ceredase(R) enzyme and
Cerezyme(R) acquired by Nova Factor subsequent to the date hereof pursuant to
the terms of the Distribution Agreement or in any replacements or proceeds
thereof, in form satisfactory to Secured Party, and Secured Party will pay the
cost of filing the same in all public offices wherever Secured Party deems
filing to be necessary or desirable. Nova Factor grants Secured Party the
right, at Secured Party's option, to file any or all such financing statements,
continuation statements and other documents pursuant to the Uniform Commercial
Code and otherwise, without Nova Factor's signature, and irrevocably appoints
Secured Party as Nova Factor's attorney in fact to execute any such statements
and documents in Nova Factor's name and to perform all other acts which Secured
Party reasonably deems appropriate to perfect and continue the security
interests conferred by the Security Agreement.
1.4 Injury to Collateral, Storage of Inventory. No injury
to, or loss or destruction of, the Collateral shall relieve Nova Factor of any
of the Secured Obligations. Nova Factor shall handle and store the Inventory in
the manner required by the Distribution Agreement except as otherwise provided
herein.
1.5 Collecting and Servicing Accounts. Nova Factor is
authorized to collect and service the Accounts, provided that Secured Party may,
without cause or notice, upon the default of Nova Factor hereunder, terminate
such authority at any time.
1.6 Notice of Past Due Accounts. Nova Factor will
promptly notify Secured Party if any Account owned by it in excess of * Dollars
($*) is not paid within one hundred and twenty (120) days after the date of
shipment by Nova Factor of the Inventory to which such Account relates, or if an
Account debtor thereof disputes liability, exercises a right of set-off or
counterclaim, becomes insolvent, fails, or goes out of business.
2. Representations, Warranties, Agreements and Covenants of
Nova Factor. Nova Factor represents, warrants, agrees and covenants that:
(a) Unless the Secured Party shall otherwise
agree in writing, Nova Factor will not grant or permit to exist, nor shall
there exist, any security interest in, or any lien, attachment, levy or
encumbrance upon, any of the Collateral, except for the security interest
granted to Secured Party hereunder and except for any encumbrance (as hereafter
defined) in existence at the time Nova Factor acquired or acquires the
Collateral that has been subordinated to the lien created by this Security
Agreement and has been approved in writing by Secured Party, or, subject to the
approval of Secured Party, which shall not be unreasonably withheld, any lien
created subsequent to the date hereof that is subordinate to the lien of
Secured Party. Nova Factor has not signed or filed or authorized the signing or
filing of, a financing statement (other than one naming Secured Party as the
secured party) under the Uniform Commercial Code of any jurisdiction with
respect to the Collateral or any portion thereof except for financing
statements naming Nations Bank of Tennessee, N.A. as agent for Secured Parties,
Nations Bank of Tennessee, N.A. and First Tennessee Bank National Association.
For the purposes of this Section 2, "encumbrance" shall mean any mortgage, deed
of trust, pledge, security interest, hypothecation, assignment, assigned
deposit, arrangement, encroachment, claim, option, reservation, right of way,
easement, covenant, lease, purchase right, condition, restriction, charge or
defect of any kind, or any preference, priority or security agreement or other
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement, any capitalized
lease obligation having substantially the same economic effect as any of the
foregoing, and the
2
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
24
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
(b) Nova Factor, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of Tennessee
and has the full and unrestricted power and authority to enter into and perform
the terms of this Security Agreement and the transactions contemplated hereby.
The execution, delivery and performance of this Security Agreement have been
duly authorized by all necessary corporate action of Nova Factor and this
Security Agreement had been duly executed on behalf of Nova Factor.
(c) This Security Agreement constitutes a
legal, valid and binding obligation of Nova Factor, enforceable against Nova
Factor in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting the rights of
creditors generally. The execution, delivery, and performance of this Security
Agreement and of all other instruments or agreements executed in connection
herewith will not (i) violate, conflict with, or constitute a default under any
law, regulation, order or any other requirement of any governmental authority
or arbitrator, any terms of the Articles or Certificate of Incorporation or
bylaws of Nova Factor, or any contract, agreement or other arrangement binding
upon or affecting Nova Factor or any of its properties, (ii) result in the
creation, imposition or acceleration of any indebtedness of any nature upon, or
with respect to, Nova Factor or any of its properties, (iii) have a material
adverse effect on the conduct of Nova Factor's business as it is now being
conducted and as proposed to be conducted while this Security Agreement is in
effect, or (iv) otherwise impair the value of the security interests granted to
Secured Party hereunder.
(d) Nova Factor will (i) execute and deliver
any and all documents, or cause the execution and delivery of any and all
documents, reasonably necessary for Secured Party to create, perfect, preserve,
validate or otherwise protect its security interest in the Collateral; (ii)
maintain, or cause to be maintained, at all times, Secured Party's security
interest in the Collateral; (iii) immediately upon learning thereof, report to
Secured Party any reclamation, return or repossession of any of the Inventory,
any claim or dispute asserted by any debtor or other obligor of Nova Factor,
and any other matters affecting the value or enforceability or collectibility
of any of the Collateral; (iv) after an occurrence of an event of default
hereunder, defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein adverse to Secured Party
and pay all costs and expenses (including attorneys' fees and expenses)
incurred in connection with such defense; and (v) at Nova Factor's sole cost
and expense (including attorneys' fees and expenses), settle any and all such
claims and disputes referenced in paragraph 2(d)(iv) above and indemnify and
protect Secured Party against any liability, loss or expense arising therefrom
or out of any such reclamation, return (except as otherwise provided in Section
2.6(d) of the Distribution Agreement) or repossession of any of the Collateral;
provided, however, if Secured Party shall so elect, it shall have the right
following the occurrence of an Event of Default hereunder to settle,
compromise, adjust, or litigate all claims or disputes directly with the debtor
or other obligor of Nova Factor upon such reasonable terms and conditions as
Secured Party deems advisable, and to charge all costs and expenses thereof
(including attorneys' fees and expenses) to Nova Factor's account and to add
them to the Secured Obligations.
(e) Nova Factor's principal place of business
and its chief executive office are located at the address for Nova Factor set
forth in Section 10 hereof, and Nova Factor shall not change such location
unless Nova Factor shall have provided to Secured Party at least thirty (30)
days' prior written notice of any changes in the location of Nova Factor's
principal place of business and Nova Factor's chief executive office.
Notwithstanding anything in the Distribution Agreement to the contrary, the
Inventory shall be located at Nova Factor's warehouse at 0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx and the records and books of account
relating to the Collateral shall be located at Nova Factor's chief executive
office, and Nova Factor shall not change such locations unless with the prior
written consent of Secured Party given no less than thirty (30) days in advance
of any relocation of the Inventory or the books and records.
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(f) Nova Factor will (i) promptly notify
Secured Party in writing of any compromise, settlement or adjustment with
respect to an Account; (ii) maintain accurate and complete records of the
Accounts and make the same available to Secured Party at reasonable times
during normal business hours after receipt of notice from Secured Party, except
after the occurrence of an Event of Default in which case no notice shall be
required; (iii) if requested by Secured Party and desirable for the protection
of Secured Party's interest in the Collateral, stamp, in form and manner
satisfactory to Secured Party, its accounts receivable ledger and other books
and records pertaining to the Accounts, with an appropriate reference to the
security interest of Secured Party in the Accounts; (iv) upon Secured Party's
reasonable request, furnish Secured Party original or other papers relating to
the sale of Ceredase(R) enzyme and Cerezyme(R) which created any Account; and
(v) promptly notify Secured Party in writing of the return or rejection of any
Ceredase(R) enzyme and Cerezyme(R) represented by the Accounts.
(g) For any transaction governed by the
Distribution Agreement, from time to time as Secured Party may require, Nova
Factor will deliver to Secured Party schedules of all outstanding Accounts as
Secured Party may reasonably request. Such schedules shall be in form
satisfactory to Secured Party and shall show the age of such Accounts in
intervals of not more than 30 days, and contain such other information and be
accompanied by such reasonable supporting documents as Secured Party may from
time to time reasonably prescribe. Nova Factor shall also deliver to Secure
Party copies of Nova Factor's invoices, evidences of shipment or delivery and
such other schedules and information as Secured Party may reasonably request.
In addition Nova Factor shall prepare, maintain and deliver the records and
books and other materials in the manner provided in Section 2.10 of the
Distribution Agreement. The items to be provided under this Section are to be
prepared and delivered to Secured Party from time to time solely for its
convenience in maintaining records of the Collateral and Nova Factor's failure
to give any of such items to Secured Party shall not affect, terminate, modify
or otherwise limit Secured Party's security interest granted herein.
(h) Nova Factor will (i) sell or dispose of the
Inventory only in accordance with the terms of the Distribution Agreement; and
(ii) immediately notify Secured Party at least thirty days (30) prior to any
change in location of any of the Inventory other than in the event of sales to
third parties in accordance with the Distribution Agreement or in the ordinary
course of business and, prior to any such change, execute and deliver to
Secured Party such financing statements satisfactory to Secured Party as
Secured Party may request.
(i) [Reserved]
(j) Except to the extent Section 2.2(c) of the
Distribution Agreement applies, Nova Factor shall insure all of the Inventory
for its replacement (i.e., market) value against fire, theft, loss or
destruction, and such other risks as are customarily insured against by prudent
persons in a similar line of business, with an insurance carrier qualified to
do business in the State of Tennessee in which the inventory is located (or
such other place as Secured Party shall authorize). Nova Factor shall provide
Secured Party with certificates of such insurance upon request.
3. Events of Default. The occurrence of one or more of
the following events shall constitute an Event of Default hereunder (each, an
"Event of Default"):
(i) The failure of Nova Factor to observe or
perform any term, condition, covenant or agreement contained in this
Security Agreement or in the Distribution Agreement and the
continuance of such failure for thirty (30) days after the receipt of
written notice thereof in the case of such failure. Late payment by
Nova Factor to Secured Party under the terms of Section 2.1(c) of the
Distribution Agreement shall not constitute an Event of Default but
shall cause the late payment charges to come into effect;
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(ii) The breach of any representation, warranty,
covenant or agreement by Nova Factor made in Section 2 hereof and
continuance of such breach for thirty (30) days after the receipt of
written notice thereof by Nova Factor;
(iii) [Reserved]
(iv) (a) The entry of a decree or order for
relief of Nova Factor by a court of
competent jurisdiction in any involuntary
case involving Nova Factor under any
bankruptcy, insolvency, or other similar
law now or hereafter in effect, or the
appointment of a receiver, liquidator,
assignee, custodian, trustee, seqestrator
or other similar agent for Nova Factor or
for any substantial part of Nova Factor's
assets or property, or the ordering of the
winding up or liquidation of Nova Factor's
affairs, or the taking of any action by any
creditor (other than Secured Party) of Nova
Factor preparatory to or for the purpose of
commencing any such involuntary case,
appointment, winding-up or liquidation and
such decree or order or other such action
shall be entered and continue unstayed and
in effect for a period of thirty (30) days;
or
(b) The commencement by Nova Factor of a
voluntary case under any bankruptcy,
insolvency or other similar law now or
hereafter in effect, or the consent by Nova
Factor to the entry of an order of relief
in an involuntary case under any such law
or to the appointment of or taking
possession by a receiver, liquidator,
assignee, trust, custodian, sequestrator or
other similar agent for Nova Factor or for
any substantial part of Nova Factor's
assets or property, or the making by Nova
Factor of any general assignment for the
benefit of creditors, or the taking by Nova
Factor of any action preparatory to or
otherwise in furtherance of any of the
foregoing, of the failure of Nova Factor
generally to pay its debts as such debts
come due; or
(v) The default by Nova Factor under any note,
security agreement or other document or instrument that creates a lien
on the Collateral or evidences the obligation of Nova Factor to repay
borrowed money.
4. Remedies. The rights and remedies,
privileges, obligations, and duties of Secured Party and Nova Factor with
respect to this Security Agreement and the security interest of Secured Party
shall be as set forth in the Uniform Commercial Code of the State of Tennessee,
and in addition thereto, as set forth herein. Upon the occurrence of any Event
of Default, Secured Party shall have the right (a) to declare all of the
Secured Obligations to be immediately due and payable, whereupon all such
Secured Obligations shall become immediately due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Nova Factor, anything contained herein to the
contrary notwithstanding; and (b) to exercise any one or more of the rights and
remedies exercisable by a secured party under the Code (subject to any rights
of Nova Factor to redeem to the Collateral provided therein) or under any other
applicable law. Upon the occurrence of any Event of Default, and without
limiting the generality of the foregoing, Secured Party shall have the right to
sell the collateral at public or private sale. All reasonable attorneys' fees
and disbursements and all other cost, charges, premiums and other expenses
incurred in connection with any such sale shall be charged against and deducted
from the proceeds thereof, with the balance, if any, applied in reduction of
the Secured Obligations of Nova Factor to Secured Party, and in the event there
is a deficiency, said deficiency shall be payable forthwith by Nova Factor to
Secured Party (except as otherwise provided in Section 2.1 of the Distribution
Agreement). Notice of public or private sale, if given, shall be sufficiently
given for all purposes if published once in any newspaper of general
circulation distributed in the City of Memphis, Tennessee, not less than ten
days prior of sale. It is agreed that ten days' written notice of any public or
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27
private sale of the Collateral shall be sufficient for all purposes and is
commercially reasonable. Secured Party may itself purchase the whole, or any
part of, the Collateral, or any interest therein at any such sale, free from
any right of redemption on the part of Nova Factor which right of redemption on
the part of Nova Factor is hereby waived and released, but only to the extent
such waiver and release is permitted by applicable law.
Secured Party shall not be liable for failure to collect or
demand payment of, or to protest, or give notice of nonpayment of, the
Collateral or any part thereof, or for any delay in so doing, nor shall Secured
Party be under any obligation to foreclose on or sell any Collateral or to take
any other action whatsoever in regard to the Collateral or any part thereof,
except that Secured Party hereby agrees to credit against the outstanding
aggregate invoice price of all Inventory an amount equal to the outstanding
aggregate invoice price of all properly stored Inventory which is returned by
Nova Factor to Secured Party pursuant to Section 2.1 (b) of the Distribution
Agreement in original, sealed packaging and having not less than thirty (30)
days remaining shelf life.
5. Transfer of Collateral. Nova Factor shall not sell,
lease, transfer, assign, mortgage, pledge or otherwise dispose of all or any
portion of the Collateral except in accordance with the Distribution Agreement
or when authorized by the Secured Party in writing.
6. Release of Collateral. Promptly following payment in
full or satisfaction of the Secured Obligations, the security interest created
hereby shall terminate, and Secured Party shall execute and deliver such
documents as are necessary to release Secured Party's security interest in the
Collateral, whether such security interest was created hereby or otherwise; it
being the intention of the parties hereto that, upon payment in full or
satisfaction of, the Secured Obligations, Nova Factor shall hold the
Collateral free and clear of all liens, claims, charges, security interests,
mortgages of encumbrances of Secured Party or any assignee or subrogee of
Secured Party.
7. [Reserved]
8. Waiver. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Security
Agreement or under any other instruments given in connection with or pursuant
to this Security Agreement shall impair any such right, power or privilege or
be construed as a waiver or default or any acquiescence therein. No waiver
shall be valid against any party hereto unless made in writing and signed by
the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
9. Assignment. Nova Factor shall not assign this
Security Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of Secured Party.
10. Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Security Agreement shall be in
writing and shall be mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or transmitted by hand delivery, or
telegram, addressed as follows:
(a) If to Nova Factor:
c/o Nova Factor, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
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with a copy (which shall not constitute notice) to:
Mr. Xxxxxx Xxxx, Esquire
Nova Factor, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
(b) If to Secured Party:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Director, Patient and
Product Services
with a copy (which shall not constitute notice) to:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: General Counsel
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent and received for all purposes at such time as
it is delivered to the addressee (with the return receipt, the delivery receipt
or the affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
11. Entire Agreement. This Security Agreement and the
other instruments and documents referred to herein or delivered pursuant
hereto, represent the entire understanding of the parties hereto, supersede all
other and prior memoranda and agreements between the parties and their
affiliates and may not be modified or amended, except by a written instrument
executed by each of the parties hereto designating specifically the terms and
provisions so modified and amended.
12. Severability. If any part or any provision of this
Security Agreement shall be invalid or unenforceable under applicable law, said
part or provision shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such
provisions or the remaining provisions of this Security Agreement, which shall
be construed as if such invalid parts or provision had not been inserted.
13. Counterparts. This Security Agreement may be
executed in separate counterparts, none of which need contain the signatures of
all parties, each of which is deemed to be an original, and all of which taken
together constitute one and the same instrument. It shall not be necessary in
making proof of this Security Agreement to produce or account for more than the
number of counterparts containing the respective signatures of, or on behalf
of, all the parties hereto.
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IN WITNESS WHEREOF, the undersigned have caused this Security
Agreement to be executed as of the date and year first above written.
NOVA FACTOR, INC.
By: /s/ Xxxxx Grow
---------------------------
Its: President
--------------------------
GENZYME CORPORATION
By: /s/ Illegible
---------------------------
Its: Executive Vice President
--------------------------
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EXHIBIT B
Section 2.1 (b)
Basis for Calculating Inventory
A.) Inventory Ceiling
1. Monthly Ceredase(R) End User Sales and Cerezyme(R) End User
Sales = Total Monthly End User Sales
2. To Obtain * of End User Sales = Previous Month + Current
Month + Future Month
3. * Inventory Ceiling = Month Average *
* Ceredase(R) Enzyme Average
* Cerezyme(R) Enzyme Average
*Unit Sales of Ceredase(R) Enzyme
*Unit Sales of Ceredase(R) Enzyme
*Projected Unit Sales of Ceredase(R) Enzyme
* Unit Sales of Cerezyme(R) Enzyme
* Unit Sales of Cerezyme(R) Enzyme
* Projected Unit Sales of Cerezyme(R) Enzyme
Next * projected sales of Ceredase(R) and Cerezyme(R) is based upon Genzyme's *
amount for Nova Factor with Nova Factor's agreement but that in no event will
be less than the * unless agreed to by Genzyme.
B.) Inventory * Average
1. Ending Days Inventory/Week = *
2. Average Days of Inventory for Quarter = *
*Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
