Exhibit 10.30
SECOND AMENDED AND RESTATED DISTRIBUTION AGREEMENT
THIS SECOND AMENDED AND RESTATED DISTRIBUTION AGREEMENT (hereinafter
referred to as the "Agreement") is made and entered into as of July 1, 1994,
by and among PHARMATHERA, INC -Registered Trademark-, a Tennessee corporation
(hereinafter referred to as "PTI"), 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 drug
Ceredase -Registered Trademark- enzyme which has been approved by the United
States Food and Drug Administration for the treatment of Gaucher's disease;
WHEREAS, in order to facilitate the national distribution of the
drug, PTI and Nova Factor, as PTI's successor in interest from and after July
1, 1994, desire to purchase Ceredase -Registered Trademark- enzyme from
Genzyme, and Genzyme desires to sell Ceredase -Registered Trademark- enzyme
to PTI or Nova Factor, as applicable, for resale, upon the terms and subject
to the conditions hereinafter set forth;
WHEREAS, PTI and Genzyme have entered into a Distribution Agreement
dated April 18, 1991 (the "Unamended Distribution Agreement") and an Amended
and Restated Distribution Agreement dated February 15, 1993 (the "Amended
Distribution Agreement");
WHEREAS, pursuant to that certain Assignment and Assumption
Agreement (the "Assignment") between PTI and Nova Factor dated as of July 1,
1994, PTI assigned to Nova Factor, and Nova Factor assumed all of PTI's
rights, duties, responsibilities and liabilities in and under the Unamended
Distribution Agreement, the Amended Distribution Agreement, the Security
Agreement (as hereinafter defined) and the Amended and Restated Security
Agreement (as hereinafter defined);
WHEREAS, PTI, Nova Factor and Genzyme desire to further amend and
restate the terms of the Unamended Distribution Agreement and the Amended
Distribution Agreement as set forth in this Agreement;
WHEREAS, the terms and conditions of this Agreement shall govern
certain sales of Ceredase -Registered Trademark- enzyme made by PTI during
the period commencing on April 1, 1994 and ending on June 30, 1994, and the
terms and conditions of this Agreement shall govern all sales of Ceredase
-Registered Trademark- enzyme made by Nova Factor from and after July 1, 1994;
WHEREAS, PTI has entered into a Security Agreement and Subordination
Agreement, each dated April 18, 1991 (the "Security Agreement"), to secure
its obligations under the Unamended Distribution Agreement, and the terms and
conditions of such Security Agreement and Subordination Agreement remain in
full force and effect with respect to the Unamended Distribution Agreement
(subject, however, to the effect of the Assignment from and after July 1,
1994);
WHEREAS, PTI has entered into an Amended and Restated Security
Agreement, dated February 15, 1993 (the "Amended and Restated Security
Agreement"), to secure its obligations under the Amended Distribution
Agreement, and the terms and conditions of such Amended and Restated Security
Agreement remain in full force and effect with respected to the Amended
Distribution Agreement (subject, however, to the effect of the Assignment
from and after July 1, 1994); and
WHEREAS, the parties desire that PTI's and Nova Factor's
obligations to Genzyme under this Agreement shall also be secured by the
Amended and Restated Security Agreement.
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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 (1) PTI, for the period
commencing on April 1, 1994 and ending on June 30, 1994, to act as a
preferred distributor of Ceredase -Registered Trademark- enzyme in all the
states of the United States, and (2) Nova Factor, from and after July 1,
1994, to act as a preferred distributor of Ceredase -Registered Trademark-
enzyme in all the states of the United States (each of PTI and Nova Factor,
during the period that the foregoing appointment is in effect with respect to
such party, is hereinafter referred to as the "Distributor"), and the
Distributor hereby accepts such appointment. During the period of time that
this Agreement is in effect, the Distributor shall sell Ceredase -Registered
Trademark- enzyme 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 Distributor shall be a distributor of Ceredase -Registered
Trademark- enzyme in all the states of the United States. The parties further
agree and acknowledge that (1) Genzyme may distribute Ceredase -Registered
Trademark- enzyme in all the states of the United States directly through
health care providers and pharmacies and notwithstanding the grant of a
distributorship to the Distributor, 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 -Registered Trademark-
in any or all of the states of the United States. Genzyme will
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provide the Distributor with notice of the appointment of any additional
distributors as of the effective date of any such appointment.
1.3 Terms Applicable to Distributorship. The Distributor shall
have sole responsibility and authority for determining the price at which it
will resell Ceredase -Registered Trademark- enzyme to its customers. Genzyme
shall not be involved in that determination in any way. In the event that the
Distributor determines to sell Ceredase -Registered Trademark- enzyme at the
price per unit at which it buys Ceredase -Registered Trademark- enzyme from
Genzyme, the distributorship shall be subject to the terms and conditions set
forth in Article III of this Agreement. In the event PTI determines to sell
Ceredase -Registered Trademark- enzyme at a price other than the price per
unit at which it buys Ceredase -Registered Trademark- enzyme from Genzyme,
the purchase and sale of Ceredase -Registered Trademark- enzyme shall be
conducted in the manner set forth in Article II of this Agreement. At or
prior to the time of execution of this Agreement, the Distributor shall make
an initial written election to be subject to the terms of Article II or
Article III or this Agreement. After the date hereof, the Distributor may,
from time to time, change this election upon ninety (90) days prior written
notice to Genzyme.
1.4 Applicability of Unamended Distribution Agreement. The terms
and conditions of the Unamended Distribution Agreement (subject, however, to
the effect of the Assignment from and after July 1, 1994) shall govern all
inventory of Ceredase -Registered Trademark- enzyme located at the
Distributor's Warehouse (as defined below) prior to or on October 31, 1992,
all accounts receivable generated from sales of Ceredase -Registered
Trademark- enzyme prior to November 1, 1992, and all accounts receivable
generated from the sale of the inventory of Ceredase -Registered Trademark-
enzyme located at the Distributor's Warehouse on or prior to October 31, 1992.
1.5 Applicability of Amended Distribution Agreement. The terms and
conditions of the Amended Distribution Agreement shall govern all
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inventory of Ceredase -Registered Trademark- enzyme received at the
Distributor's Warehouse between November 1, 1992 and March 31, 1994, all
accounts receivable generated from sales of Ceredase -Registered Trademark-
between November 1, 1992 and March 31, 1994, and all accounts receivable
generated from the sale of the inventory of Ceredase -Registered Trademark-
enzyme received at the Distributor's Warehouse between November 1, 1992 and
March 31, 1994. The terms and conditions of this Agreement shall otherwise
govern the sales of Ceredase -Registered Trademark- enzyme by the Distributor.
1.6 Security Interest. PTI and Nova Factor each acknowledge and
agree that the Security Agreement secures the obligations of PTI and, by
virtue of the Assignment, Nova Factor, to Genzyme under the Unamended
Distribution Agreement and that the Amended and Restated Security Agreement
secures the obligations of PTI and, by virtue of the Assignment, Nova Factor,
to Genzyme under the Amended Distribution Agreement. In addition to the
foregoing, PTI and Nova Factor each hereby agree that all of the
Distributor's obligations to Genzyme under this Agreement also shall be
secured by the Amended and Restated Security Agreement. In connection
therewith, PTI, Nova Factor and Genzyme agree to amend the Security Agreement
such that all references therein to PTI, effective July 1, 1994, shall be
deemed references to Nova Factor, and PTI, Nova Factor and Genzyme agree to
amend the Amended and Restated Security Agreement as follows:
(a) The definition of Secured Obligations in the Amended and
Restated Security Agreement is hereby amended to include the following: (i)
all amounts payable by PTI and, by virtue of the Assignment, Nova Factor, to
Genzyme under the Amended Distribution Agreement or this Agreement, (ii) all
other obligations of PTI and, by virtue of the Assignment, Nova Factor, under
the Amended Distribution Agreement or this Agreement, and (iii) all
obligations of PTI
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and by virtue of the Assignment, Nova Factor, under the Amended and Restated
Security Agreement, as amended hereby.
(b) Paragraphs (a), (b), and (c) of Section 1.1 of the Amended and
Restated Security Agreement are hereby amended to read in their entirety as
follows:
"(a) All Ceredase -Registered Trademark- enzyme sold by
Secured Party to PTI from time to time pursuant to the
Amended and Restated Distribution Agreement or the
Second Amended and Restated Distribution Agreement,
dated as of July 1, 1994, among PTI, Nova Factor, Inc.
and Secured Party (collectively, 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 enacted 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") or PTI of
representing or arising from the sale of Ceredase
-Registered Trademark- enzyme by PTI from the Inventory;
and
(c) Any and all additions to any of the foregoing, and any
and all replacements, products and
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proceeds (including insurance proceeds) of any of the
foregoing."
(c) All references in the Amended and Restated Security Agreement
to the Amended Distribution Agreement or to a section or sections thereof,
shall be deemed to include a reference to this Agreement or the appropriate
section or sections hereof.
(c) All references in the Amended and Restated Security Agreement
to PTI, effective July 1, 1994, shall be deemed references to Nova Factor.
ARTICLE II
Purchase of Ceredase -Registered Trademark- Enzyme for Resale
2.1 Election of Article II. This Article II shall govern the terms
and conditions of the sale of Ceredase -Registered Trademark- enzyme to the
Distributor by Genzyme, to the exclusion of Article III, at such times during
the term of this Agreement as the Distributor elects in accordance with
Section 1.3 of this Agreement.
2.2 Orders for Ceredase -Registered Trademark- Enzyme. The
Distributor shall order Ceredase -Registered Trademark- enzyme from Genzyme,
and Genzyme shall sell Ceredase -Registered Trademark- enzyme to the
Distributor; provided however, that any portion of an order that remains
unfilled 30 days after receipt of such order by Genzyme may be cancelled at
the Distributor's option upon notice to Genzyme. Genzyme shall ship Ceredase
-Registered Trademark- enzyme at its cost to the Distributor in a sealed
vial. Each vial shall contain either 50 or 400 International Units of
Ceredase -Registered Trademark- enzyme. Each vial of Ceredase -Registered
Trademark- enzyme 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 -Registered Trademark- to the
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Distributor at its warehouse in Memphis, Tennessee (the "Warehouse") or such
other place as the parties shall agree, at Genzyme's expense. Shipment shall
be made by common carrier, overnight courier or any other similar method of
shipment in Genzyme's discretion.
2.3 Title. Upon the shipment of Ceredase -Registered Trademark- to
the Distributor, title to Ceredase -Registered Trademark- enzyme shall pass
to the Distributor. Upon receipt by the Distributor, , the Distributor shall
assume all responsibility for the marketing, storage, insurance, delivery and
billing of all Ceredase -Registered Trademark- enzyme provided to it under
this Article II. Upon receipt of each shipment of Ceredase -Registered
Trademark- enzyme by the Distributor, the Distributor shall immediately
inspect the shipment for obvious damage to the shipping container, and each
box containing a vial of Ceredase -Registered Trademark- enzyme. The
Distributor shall have no obligation to inspect the contents of the vials,
nor shall the Distributor open or unseal the vials. The Distributor shall
also confirm whether the number of vials received by the Distributor equals
the number of vials recorded on the applicable shipping documents, and the
Distributor shall note any discrepancies in the number of vials received by
the Distributor on the shipping documents accompanying such shipment of
Ceredase -Registered Trademark- enzyme and immediately notify Genzyme of any
such discrepancies. The Distributor shall not manufacture, mix or process any
Ceredase -Registered Trademark- enzyme.
2.4 Billing. No earlier than the date of shipment to the
Distributor, Genzyme shall invoice the Distributor for each shipment of
Ceredase -Registered Trademark- enzyme at Genzyme's then current price.
Payment of the invoice shall be due, net of returns, * (*) days from the
date of the invoice. In the event that the Distributor fails to pay such
invoice in full within * (*) days, the Distributor shall pay Genzyme
late payment charges of * percent (*%) per annum on all unpaid amounts
due under such invoice calculated from the
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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end of that * (*) day period. The parties hereto agree that should any
provision of this Section 2.4 violate any law, rule or regulation pertaining
to issuing or the contracting for or charging of interest, then the excess of
interest contracted for or charged or collected over the maximum lawful rate
of interest shall be applied as a prepayment of future obligations due by the
Distributor to Genzyme under this Article II, and if any amount so prepaid
shall be unused upon termination of the Distributor's election to be subject
to Article II, the excess of the prepaid amounts over the amounts actually
due to Genzyme shall be immediately returned to the Distributor.
2.5 Compliance with Pharmacy Laws. The Distributor shall dispense
or ship Ceredase -Registered Trademark- enzyme pursuant to a prescription or
authorized purchase order solely in compliance with applicable federal or
state laws, regulations, and orders including pharmacy laws.
2.6 Pharmacy Records. The Distributor shall maintain such pharmacy
records as are required by applicable federal and state law, regulations and
orders. Such records shall remain the property of the Distributor. However,
the Distributor shall permit Genzyme access to, and the right to obtain
copies of, such records, except to the extent limited by law.
2.7 Packaging. The Distributor shall pack Ceredase -Registered
Trademark- enzyme in cold packs, cartons or other packaging with such
insulation or other packing materials as required by the package insert or
FDA-approved labeling, or as otherwise agreed by the parties.
2.8 Recall Information. The Distributor shall generate such
distribution, sales, customer, account and financial reports, including
records necessary to trace lot numbers to Ceredase -Registered Trademark-
enzyme Patients to monitor shelf life and trace shipments and such other data
and information as the parties shall agree.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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ARTICLE III
Coordinate Distribution
3.1 Election of Article III. This Article III shall govern the
terms and conditions of the sale of Ceredase-Registered Trademark- enzyme to
the Distributor by Genzyme, to the exclusion of Article II, at such times
during the term of this Agreement as the Distributor so elects in accordance
with Section 1.3 of this Agreement.
3.2 Purchase and Maintenance of Inventory of Ceredase-Registered
Trademark- Enzyme.
(a) Sale of Ceredase-Registered Trademark- Enzyme. The
Distributor shall order Ceredase-Registered Trademark- from Genzyme, and
Genzyme shall sell Ceredase-Registered Trademark- enzyme to the Distributor.
Genzyme shall at its cost ship each order of Ceredase-Registered Trademark-
enzyme to the Distributor at its warehouse in Memphis, Tennessee (the
"Warehouse"). Title to each such order of Ceredase-Registered Trademark-
enzyme shipped to the Distributor hereunder shall pass to the Distributor at
the point of shipment to the Distributor.
(b) Inventory. The Distributor agrees that it will purchase
adequate amounts of Ceredase-Registered Trademark- enzyme to maintain an
average of * days inventory during each calendar quarter; provided that, the
Distributor agrees that at the option of Genzyme it will purchase adequate
amounts to bring the inventory up to a *-day level prior to the end of any
such calendar quarter, however, in no event will such purchase cause the
inventory to exceed an average of * days for such calendar quarter; provided
further that in no event shall the Distributor be required to have inventory
of Ceredase-Registered Trademark- enzyme on hand 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
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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unit sales volume for the next month as described in Exhibit A attached
hereto. Genzyme shall use reasonable efforts to assure that all
Ceredase-Registered Trademark- enzyme shipped to the Distributor by Genzyme
will have a remaining shelf life of at least * (*) days. At any time
which is at least * (*) days prior to the expiration date of
Ceredase-Registered Trademark-, the Distributor shall have the right to
return to Genzyme such Ceredase-Registered Trademark- enzyme that had a
remaining shelf life of less than * (*) days when it was received by
the Distributor. All such returns shall be made to Genzyme for either
replacement Ceredase-Registered Trademark- enzyme or for a credit to the
amount owed by the Distributor to Genzyme equal to the Distributor's purchase
price of such Ceredase-Registered Trademark- enzyme, as may be elected by
Genzyme. The service fees earned by the Distributor for any
Ceredase-Registered Trademark- enzyme returned to Genzyme pursuant to this
Section 3.2(b) shall be credited against future service fees earned by the
Distributor, or Genzyme may request that the Distributor reimburse it for
service fees paid to the Distributor for Ceredase-Registered Trademark-
enzyme that is returned, as Genzyme may elect. The Distributor agrees to use
the shortest dated Ceredase-Registered Trademark- enzyme first. The
Distributor shall provide Genzyme weekly reports on inventory levels, which
will be subject to audit at Genzyme's expense.
(c) Billing. No earlier than the date of shipment of
Ceredase-Registered Trademark- enzyme to the Distributor, Genzyme shall
invoice the Distributor for such shipment at its then current average
wholesale price for Ceredase-Registered Trademark- enzyme. Payment against
the invoice, net of returns, will be due from the Distributor within *
(*) days of the date of Genzyme's invoice. In the event that the Distributor
fails to pay any such invoice in full within * (*) days, the Distributor
shall pay Genzyme late payment charges of * percent (*%) per annum on all
unpaid amounts due under such invoice calculated from the end of that *
(*) day period. The parties hereto agree that should any provision of
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
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this Section 3.2(c) violate any law, rule or regulation pertaining to usury
or the contracting for or charging of interest, then the excess of interest
contracted for or charged or collected over the maximum lawful rate of
interest shall be applied as a prepayment of future obligations due by the
Distributor to Genzyme under this Article III, and if any amount so prepaid
shall be unused upon termination of the Distributor's election to be subject
to Article III, the excess of the prepaid amounts over the amounts actually
due to Genzyme shall be immediately returned to the Distributor.
3.3 Shipment and Warehousing.
(a) Shipment to the Distributor. Genzyme shall ship
Ceredase-Registered Trademark- enzyme to the Distributor in a sealed vial.
Each vial shall contain either 50 or 400 International Units of
Ceredase-Registered Trademark- enzyme. Each vial of Ceredase-Registered
Trademark- enzyme shall be packaged in an individual box, containing a
package insert and United States Food and Drug Administration
("FDA")-approved labeling. Genzyme shall have the option of shipping several
individual boxes in a larger shipping container.
(b) Inspection of Shipment. Upon receipt of each shipment of
Ceredase-Registered Trademark- enzyme by the Distributor, the Distributor
shall immediately inspect the shipment for obvious damage to the shipping
container and each box containing a vial of Ceredase-Registered Trademark-
enzyme. The Distributor shall have no obligation to inspect the contents of
the vials, nor shall the Distributor open or unseal the vials. The
Distributor shall also confirm whether the number of vials received by the
Distributor equals the number of vials recorded on the applicable shipping
documents, and the Distributor shall note any discrepancies in the number of
vials received by the Distributor on the shipping documents accompanying such
shipment of Ceredase-Registered Trademark- enzyme and immediately notify
Genzyme of any such discrepancies.
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(c) Storage. The Distributor shall store all Ceredase-Registered
Trademark- enzyme at the Distributor's Warehouse and shall not store
Ceredase-Registered Trademark- enzyme at any other location without the prior
written consent of Genzyme. The Distributor shall not manufacture, mix, or
process any Ceredase-Registered Trademark- enzyme. The Distributor shall be
responsible for inventory control of Ceredase-Registered Trademark- enzyme,
subject to Genzyme's determination of the appropriate shelf life of
Ceredase-Registered Trademark- enzyme. The Distributor shall segregate
Ceredase-Registered Trademark- enzyme from any other item stored by it and
shall not commingle Ceredase-Registered Trademark- enzyme with any other item
in its custody or control. For so long as any Ceredase-Registered Trademark-
enzyme is in the Distributor's possession, the Distributor shall store
Ceredase-Registered Trademark- enzyme in accordance with the requirements set
forth in Ceredase-Registered Trademark-'s enzyme package insert and
FDA-approved labeling, including any requirements with respect to
refrigeration.
(d) Risk of Loss. The Distributor shall bear the risk of loss,
theft, destruction or damage of each vial of Ceredase-Registered Trademark-
enzyme from receipt of each shipment containing the vial from Genzyme until
delivery of such vial of Ceredase-Registered Trademark- enzyme to a patient
(a "Patient)", physician, clinic or hospital (any of a Patient, physician,
clinic or hospital may hereafter be referred to as a "Ceredase-Registered
Trademark- Enzyme Customer"). Genzyme shall, at its cost, insure all
Ceredase-Registered Trademark- enzyme against loss from the time of shipment
until delivery to the Distributor. The Distributor shall, at its cost, insure
all Ceredase-Registered Trademark- enzyme in its possession until the
delivery of Ceredase-Registered Trademark- enzyme to a Ceredase-Registered
Trademark- Enzyme Customer for its replacement (i.e., market) value against
fire, theft, loss or destruction, and such other risks as are customarily
insured against by prudent persons in a similar line of business, with an
insurance carrier qualified to do business (in the State of Tennessee or such
other place as Genzyme may authorize.) The Distributor shall provide Genzyme
with certificates of such
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insurance prior to the Distributor's election to be subject to the terms of
Article III.
3.4 Marketing and Sales. Genzyme covenants and agrees that it
will provide such marketing, sales and patient/physician educational
materials as shall be deemed necessary by Genzyme to adequately promote and
market Ceredase-Registered Trademark- enzyme. The Distributor shall have no
responsibility for undertaking any sales efforts in connection with
Ceredase-Registered Trademark- enzyme and all inquiries received by the
Distributor concerning potential sales or prescriptions of
Ceredase-Registered Trademark- enzyme shall be referred to Genzyme by the
Distributor.
3.5 Designation of Patients and Recipients.
(a) Patient Status. The Distributor shall sell
Ceredase-Registered Trademark- enzyme under this Article III only to a
Patient previously approved by Genzyme (an "Approved Patient") or to a
physician, hospital or clinic for administration to an Approved Patient. If
sale is made to an Approved Patient, shipment may nonetheless be made to a
physician, hospital or clinic, which will dispense Ceredase-Registered
Trademark- enzyme to the Approved Patient. Before approving the initial
shipment to, or on behalf of, a Patient, Genzyme shall make such inquiries as
Genzyme, in its sole discretion, deems appropriate to determine whether
Ceredase-Registered Trademark- enzyme is indicated for such Patient, which
inquiries shall include obtaining a letter or summary of medical necessity
signed by Patient's physician where required by the third party payor and
determining the availability of insurance or other source for payment for
Ceredase-Registered Trademark- enzyme.
(b) Patient Tracking System. The Distributor shall establish a
patient tracking system in a mutually acceptable format that tracks the dose,
dosage changes and frequency of administration of Ceredase-Registered
Trademark- enzyme prescribed by physicians for all Approved Patients. The
Distributor shall provide Genzyme with data on all Approved Patients added
each month.
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(c) Transmission of Records. Genzyme shall promptly forward to
the Distributor such documentation as is reasonably necessary for the
Distributor to transmit the initial shipment of Ceredase-Registered
Trademark- enzyme, and to permit the Distributor to file claims with a third
party payor, if any, or to submit invoices to the appropriate
Ceredase-Registered Trademark- Enzyme Customer.
3.6 Distribution and Pharmacy Services.
(a) Physician Authorization. Following the inquiry provided for
in Section 3.5 of this Agreement, Genzyme shall notify the Distributor that a
Patient is an Approved Patient. Prior to dispensing Ceredase-Registered
Trademark- enzyme to, or on behalf of, an Approved Patient, the Distributor
shall obtain:
(i) a prescription which is either (A) in proper form
signed by the Approved Patient's physician, which physician shall be duly
licensed to practice medicine and dispense drugs in accordance with
applicable state and federal law, or (B) communicated verbally by said
physician if such communication is valid under applicable state law; or
(ii) an authorized purchase order from an entity, such as a clinic
or hospital, authorized under applicable state law to dispense drugs to the
Approved Patient(s).
In the event that shipment of Ceredase-Registered Trademark- enzyme
is to be made to a Ceredase-Registered Trademark- Enzyme Customer who wishes
to designate the Distributor as its billing agent, a signed Sales and Billing
Agency Agreement (the "Sales Agreement"), substantially in the form of
Exhibit B hereto shall be obtained from such Ceredase-Registered Trademark-
Enzyme Customer.
(b) Compliance with Pharmacy Laws. The Distributor shall dispense
or ship Ceredase-Registered Trademark- enzyme pursuant to a prescription or
authorized purchase order solely in compliance with applicable federal and
state laws, regulations, and orders including pharmacy laws. The Distributor
may ship
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sufficient amounts of Ceredase-Registered Trademark- enzyme 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). The Distributor shall not provide Ceredase-Registered Trademark-
enzyme to any Ceredase-Registered Trademark- Enzyme Customer, without the
prior authorization of Genzyme.
(c) Pharmacy Records. The Distributor shall maintain such
pharmacy records as are required by applicable federal and state law,
regulations and orders. Such records shall remain the property of the
Distributor. However, the Distributor shall permit Genzyme access to, and the
right to obtain copies of, such records, except to the extent limited by law.
3.7 Shipment of Ceredase-Registered Trademark- Enzyme to
Ceredase-Registered Trademark- Enzyme Customers.
(a) Confirmation of Information. The Distributor shall, before
dispensing or shipping Ceredase-Registered Trademark- enzyme, (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-Registered Trademark- enzyme on the Distributor's or
such Approved Patient's behalf, or, in the event the Distributor is acting as
billing agent for a Ceredase-Registered Trademark- Enzyme Customer pursuant
to an executed Sales Agreement, for such Ceredase-Registered Trademark- Enzyme
Customer and (ii) make due inquiry whether it may lawfully dispense
Ceredase-Registered Trademark- enzyme in the state to which shipment has been
directed.
(b) Inventory Availability. The Distributor shall be required to
ship Ceredase-Registered Trademark- enzyme only from Ceredase-Registered
Trademark- enzyme inventory which Genzyme has previously delivered to the
Distributor.
(c) Packaging. The Distributor shall pack Ceredase-Registered
Trademark- enzyme 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
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otherwise agreed by the parties. The Distributor shall, at its cost, cause
Ceredase-Registered Trademark- enzyme to be delivered to Ceredase-Registered
Trademark- Enzyme Customers by common carrier, overnight courier or other
similar method of shipment selected by the Distributor.
(d) Return of Ceredase-Registered Trademark- Enzyme. In the event
that a shipment of Ceredase-Registered Trademark- enzyme is refused or
rejected by the Ceredase-Registered Trademark- Enzyme Customer, the
Distributor will cause the shipment of Ceredase-Registered Trademark- Enzyme
to be returned to the Distributor's Warehouse at the Distributor's expense.
Upon return, Genzyme will direct the Distributor, at Genzyme's cost, either
to (i) return the refused shipment to Genzyme or (ii) destroy the refused
shipment.
3.8 Billing Services.
(a) After compliance by the Distributor with its obligations
under Section 3.7(a), upon delivery of Ceredase-Registered Trademark- enzyme
to a Ceredase-Registered Trademark- Enzyme Customer, the Distributor shall
prepare and mail an invoice for such shipment within * (*) business days
after receipt by the Distributor of the documentation necessary for billing
to be provided by Genzyme under Section 3.5 of this Agreement and thereafter
to any third party payor. Each invoice, as appropriate, shall be on a form
agreed to by the parties or upon the standardized form (such as HCFA - 1500 -
Health Insurance Claim Form) required by a third party payor or in such
electronic billing format as may be required. In the event
Ceredase-Registered Trademark- enzyme is dispensed to an Approved Patient,
the Distributor shall submit the invoice to the Approved Patient or, if
authorized to do so, to the applicable third party payor. If the Distributor
has shipped Ceredase-Registered Trademark- enzyme to a Ceredase-Registered
Trademark- Enzyme Customer which is not an Approved Patient, the Distributor
shall submit the invoice to the Ceredase-Registered Trademark- Enzyme
Customer (except a Ceredase-Registered Trademark- Enzyme Customer for which
the Distributor acts as a billing agent). If the Distributor has shipped
Ceredase-Registered Trademark-
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
17
enzyme to a Ceredase-Registered Trademark- Enzyme Customer for which the
Distributor acts as billing agent, the Distributor shall submit the invoice
in the manner provided in the Sales Agreement.
(b) The Distributor 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) The Distributor shall comply with all applicable federal and
state laws, regulations and orders, including Medicare requirements, in its
capacity as billing agent for any Ceredase-Registered Trademark- Enzyme
Customer pursuant to the Sales Agreement.
3.9 Collection. The Distributor shall be responsible for the
collection of all monies due for the sale by the Distributor of
Ceredase-Registered Trademark- enzyme and all such monies shall belong to the
Distributor.
3.10 Bad Debts and Delinquent Accounts. The Distributor shall
bear the risk of loss on all uncollected accounts and bad debts resulting
from sales and shipments of Ceredase-Registered Trademark- enzyme by the
Distributor under this Article III.
3.11 Accounting and Financial Reporting. The Distributor shall
maintain records and books of account, in the form of computer data or
otherwise, which will identify the Distributor's inventory of
Ceredase-Registered Trademark- enzyme, each sale and shipment of
Ceredase-Registered Trademark- enzyme by the Distributor (showing recipient's
name, amount of drug dispensed, and charges for said drug), and all revenue
collected from the sale and distribution of Ceredase-Registered Trademark-
enzyme by the Distributor properly applied to and against the invoices for
said drug generated by the Distributor. In addition to these records, the
Distributor shall generate such distribution, sales, customer, account and
financial reports, including records necessary to trace lot numbers to
Ceredase-Registered Trademark- Enzyme Patients, to
18
monitor shelf life and trace shipments and such other data and information
(collectively "Accounting Records") as the parties shall agree. The
Distributor agrees that on a monthly basis, it will furnish Genzyme with an
accounting of all Ceredase-Registered Trademark- enzyme received, all
Ceredase-Registered Trademark- enzyme shipped and, all bills submitted and
all revenues collected in connection with Ceredase-Registered Trademark-
enzyme sold and distributed, by the Distributor during that month.
3.12 Computer System Access.
(a) Terms of Access. The Distributor maintains an IBM AS400
computer system. The Distributor shall establish a separate computer data
base for demographic, account and Patient information regarding
Ceredase-Registered Trademark- enzyme within the Distributor's IBM AS400
computer system, or any successor hardware. Genzyme shall be given direct
inquiry (read only) access to the computer data base for Ceredase-Registered
Trademark- enzyme maintained within the Distributor'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 the Distributor's
computer system. The Distributor shall also have full access to this data
base. The Distributor will make available to Genzyme the necessary phone
numbers, access codes and passwords which shall provide Genzyme with direct
inquiry access solely to the Distributor's computer data base concerning
Ceredase-Registered Trademark- Enzyme. Genzyme shall be responsible for all
long distance charges incurred by Genzyme in using dial access to the
Distributor's computer system. Genzyme acknowledges that the entry of data
and information into the computer data base may be delayed, however, the
Distributor will make all reasonable efforts to ensure that the information is
current and will promptly notify Genzyme if the information in the data base
is not current.
19
(b) Confidentiality of Computer Data. The information contained in
the data base is considered by the Distributor to be confidential. The
Distributor shall provide Genzyme with a list of material in the database
considered confidential by the Distributor in accordance with Section 4.5.
Genzyme shall deal with all such data designated as confidential by the
Distributor, together with any computer access codes and passwords provided
to Genzyme by the Distributor to permit Genzyme access to said database, in
accordance with Section 4.5.
3.13 Audit. The Distributor shall allow Genzyme access to the
Distributor's books and records related to the sale of Ceredase-Registered
trademark- enzyme under this Article III for purposes of audit. Any such
audit shall be at Genzyme's cost and shall be conducted at the Distributor's
offices in Memphis, Tennessee during the Distributor's regular business
hours, and upon Genzyme providing the Distributor with reasonable advance
notice. Any amounts found from such audit due and owning Genzyme but unpaid
shall thereafter be paid in accordance with the terms of this Agreement.
3.14 Personnel. The Distributor shall designate certain of its
personnel to perform the Distributor's obligations under this Article III,
including those with respect to inventory, storage, shipment, billing,
collections, accounting and record keeping. The Distributor shall be solely
responsible for its employee's salaries, federal and state income tax
withholding, Social Security tax withholding, worker's compensation benefits
and fringe benefits. When the Distributor determines that the volume of its
distribution of Ceredase-Registered trademark- enzyme requires, the
Distributor shall dedicate certain of its personnel, which the Distributor
shall select, exclusively to handle the Distributor's obligations under this
Article III.
20
3.15 Compensation to the Distributor.
(a) Service Fee. In consideration for the services provided to
Genzyme by the Distributor under this Article III, Genzyme agrees to pay to
the Distributor a service fee for * net of returns pursuant to this
Article III. In the event Genzyme has paid such fee with respect to
Ceredase-Registered trademark- enzyme which is returned by the Distributor to
Genzyme, the Distributor shall reimburse the service fee applicable to such
returned Ceredase-Registered trademark- enzyme at the time it is returned.
For Ceredase-Registered trademark- enzyme purchased between April 1, 1994 and
December 31, 1994, the amount of the service fee per unit shall be $* . The
amount of the service fee will be renegotiated for each calendar year (or a
portion thereof) thereafter in accordance with Section 3.17.
(b) Invoicing. Genzyme shall pay this service fee to the
Distributor within * (*) days of the date that Genzyme invoices the
Distributor for a shipment of Ceredase-Registered trademark- enzyme. In the
event that Genzyme fails to pay any such service fee in full within *
(*) days, Genzyme shall pay the Distributor late payment charges of *
percent (* %) per annum on all unpaid amounts due pursuant to this Section
3.15 calculated from the end of that * (*) day period. The parties
hereto agree that should any provision of this Section 3.15 violate any law,
rule or regulation pertaining to usury or the contracting for or charging of
interest, then the excess of interest contracted for or charged or
collected over the maximum lawful rate of interest shall be applied as a
prepayment of future obligations due by Genzyme to the Distributor under this
Article III, and if any such amount so prepaid shall be unused upon
termination of the Distributor's election to the subject to Article III, the
excess of the prepaid fees over the fees actually due to the Distributor
shall be immediately returned to Genzyme.
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
21
(c) Reimbursement for Expenses. Upon presentment of invoices or other
documentation of such expenses, Genzyme will reimburse the Distributor for
any reasonable expenses which are the responsibility of Genzyme under this
Article III so long as such expenses are advanced by the Distributor with the
prior approval of Genzyme. Genzyme will reimburse such expenses within *
(*) days of Genzyme's receipt of the documentation of any such expenses.
Notwithstanding this Section 3.15(c), the Distributor shall be solely
responsible for expenses incurred by it in carrying out its obligations under
this Article III, including but not limited to, shipping, obtaining supplies,
postage and printing necessary for the collection of accounts receivable
generated by the Distributor's distribution of Ceredase-Registered trademark-
enzyme.
3.16 Taxes. The Distributor 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-Registered trademark- enzyme by the Distributor. To the extent
directed by any Ceredase-Registered trademark- Enzyme Customer for whom the
Distributor acts as billing agent, the Distributor will include the amount of
such taxes on invoices submitted by the Distributor on behalf of said
Ceredase-Registered trademark- Enzyme Customer if sales or use taxes are
required to be collected from said Ceredase-Registered trademark- Enzyme
Customer. The Distributor shall be liable for any personal property taxes on
inventory of Ceredase-Registered trademark- enzyme held in Tennessee by the
Distributor, any gross receipts or business taxes resulting from the sale or
distribution of Ceredase-Registered trademark- enzyme by the Distributor, and
to the extent required, shall include such inventories of Ceredase-Registered
trademark- enzyme held by the Distributor, and sales of Ceredase-Registered
trademark- enzyme distributed by the Distributor, in the Distributor's
federal and state income and franchise tax returns. To the extent that the
Distributor is required to file tax returns with any governmental entity in
regard to the distribution and sale of
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
22
Ceredase-Registered trademark- enzyme by the Distributor pursuant to this
Article III and to remit taxes in connection therewith, other than income
taxes for service fee income pursuant to Section 3.15 herein. Genzyme shall
promptly reimburse the Distributor for such taxes upon presentation by the
Distributor of evidence reasonably satisfactory to Genzyme that the
Distributor has paid such taxes.
3.17 Renegotiation of Terms.
(a) Renegotiation of Terms of Article III. In the event that the
Distributor elects to be subject to Article III during the first year of this
Agreement, and if, upon the first anniversary of the effective date of this
Agreement, any of the following shall have occurred: * , the Distributor may,
within * (*) days after such anniversary, request in writing that Genzyme
renegotiate those terms of this Agreement specified in such request. Genzyme
shall have * (*) days from the receipt of such request to agree to
renegotiate the terms specified in the request, together with such terms as
Genzyme shall specify in its response, or to give notice of termination of
this Agreement under Section 4.2(b)(ii).
(b) Renegotiation of Service Fee. The service fee to be paid by
Genzyme by the Distributor for services provided under this agreement will be
renegotiated by the parties between * and * of each calendar year, with
changes in such fee, if any, to become effective with respect to
Ceredase-Registered trademark- enzyme purchased after * of the applicable
calendar
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
23
year, subject at all times to the parties' right of termination under Section
4.2(b)(ii). The service fee to be paid with respect to Ceredase-Registered
trademark- enzyme 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 such fee, if any, Genzyme
shall promptly pay to the Distributor the amount by which the new service fee
exceeds the previous service fee, or the Distributor promptly shall reimburse
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.
3.18 Effect of Termination. Upon termination of the Distributor's
election to be subject to this Article III for any reason, the Distributor
shall promptly provide Genzyme with a final accounting of units of
Ceredase-Registered trademark- enzyme held in inventory at termination, units
shipped, ▇▇▇▇▇▇▇▇, 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-Registered trademark- enzyme, including the
Accounting Records, maintained by the Distributor under this Article III,
shall be provided to Genzyme; however, the Distributor shall maintain the
original of said records.
ARTICLE IV
Miscellaneous
4.1 Indemnity and Insurance.
(a) Indemnification. PTI, Nova Factor and Genzyme hereby agree that
(i) The Distributor shall assume responsibility for and shall
indemnify and hold Genzyme harmless and defend Genzyme from all
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.
24
losses (including claims for injuries to employees of the Distributor or
Genzyme), expenses, attorney's fees, damages, claims and judgments resulting
solely from (A) the Distributor's breach of the terms of this Agreement; (B)
the negligent acts or omissions or wrongful acts of the Distributor, its
agents or employees; or (C) any misrepresentation or breach of any
representation or warranty made herein by the Distributor; provided,
however, that the Distributor shall have no liability to Genzyme for loss of
profits to Genzyme in the event the Distributor is unable, through no fault
of the Distributor's, to ship Ceredase-Registered trademark- enzyme to a
Ceredase-Registered trademark- Enzyme Customer.
(ii) Genzyme shall assume responsibility for and shall indemnify
and hold the Distributor harmless and defend the Distributor from all losses
(including claims for injuries to employees of the Distributor or Genzyme),
expenses, attorneys' fees, damages, claims and judgments resulting from (A)
Genzyme's breach of the terms of this Agreement; (B) the negligent acts or
omissions or wrongful acts of Genzyme, its agent or employees; (C) any
misrepresentation or breach of any representation or warranty made herein by
Genzyme; or (D) any defect in the design, manufacture or condition of
Ceredase-Registered trademark- enzyme supplied to the Distributor by Genzyme.
(b) Insurance. During the term of this Agreement, the Distributor and
Genzyme will each maintain general public liability, products liability and
products property damage insurance, each policy with limits of not less than
$1,000,000.00 per incident, $3,000,000.00 in the aggregate. All policies
insuring against liability for bodily injury or death or damage to property
shall include coverage for claims resulting from the sale and distribution of
Ceredase-Registered trademark- enzyme and in the case of Genzyme, claims
resulting from the manufacture of Ceredase-Registered trademark- enzyme.
Genzyme and the Distributor will provide each other with certificates
evidencing the insurance required
25
hereunder, and all such policies shall provide that notice of cancellation or
termination or reduction in the limits of or other material change to the
coverage thereof shall be provided in advance to the other party. In the
event of such cancellation, termination, reduction or change of coverage
described herein, the party maintaining such insurance shall immediately
obtain substitute or replacement coverage. Failure to obtain substitute or
replacement coverage shall be grounds for the termination of this Agreement.
4.2 Term, Renewal and Termination.
(a) Term. This Agreement shall be for an initial term of three years
from the date of execution, unless otherwise terminated in accordance with
this section. Unless otherwise terminated, this Agreement will automatically
renew at the expiration of the initial three-year term for an additional
period of one year and shall thereafter automatically renew from year to year
for additional one-year periods, unless Genzyme or the Distributor shall give
written notice of cancellation to the other party at least 90 days prior to
the end of the initial three-year term or the expiration of any extension.
(b) Termination. This Agreement shall automatically terminate upon
(i) the mutual agreement of Genzyme and the Distributor, (ii) at any time
upon sixty (60) days prior written notice by Genzyme or the Distributor to
the other, (iii) upon the insolvency or bankruptcy of either Genzyme or the
Distributor, the making by either such party of an assignment for the benefit
of creditors, the consent by either such 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) the
institution by or against either such party of bankruptcy, reorganization,
arrangement or insolvency proceedings. In addition, if either Genzyme or the
Distributor shall breach the terms of this Agreement, the nonbreaching party
may given written notice of the
26
breach to the breaching party, and if said breach is not cured within 30 days
following the giving of said notice, this Agreement shall at the option of
the nonbreaching party be terminated. Late payment by the Distributor under
the terms of Section 3.2(c) shall not constitute a breach of the terms of
this Agreement sufficient to give rise to termination of this Agreement.
(c) Return of Ceredase-Registered trademark- Enzyme. The Distributor
shall cause the inventory of Ceredase-Registered trademark- enzyme then in
the Distributor's possession to be returned to Genzyme, at Genzyme's cost.
Each unit of Ceredase-Registered trademark- enzyme returned to Genzyme shall
be credited in full payment for the amount due from the Distributor for that
unit, except any units which are destroyed or damaged for which the
Distributor shall bear the risk of loss in accordance with Section 3.3(d).
(d) Survival of Obligations. Termination of this Agreement shall not
relieve either Genzyme or the Distributor 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-Registered trademark- enzyme in
accordance with the provisions of this Agreement. It is the express intention
and agreement of Genzyme and the Distributor that all the covenants,
agreements, warranties, and indemnities contained in Sections 4.1, 4.5 and
4.7 shall survive the termination of this Agreement.
4.3 Force Majeure. Neither Genzyme nor the Distributor 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
27
beyond the reasonable efforts of the party to control. This provision shall
not excuse, or apply to, obligations of a party to make monetary payments
hereunder.
4.4 Independent Contractor. Subject to the requirements herein, the
Distributor shall determine the time spent and the methods employed in
carrying out its obligations hereunder, and the Distributor shall be solely
responsible for the operation and management of its business. In entering
into and carrying out its obligations under this Agreement, the Distributor
is an independent contractor. Nothing in this Agreement, or in the
relationship between Genzyme or the Distributor or in the activities of the
Distributor, its agents or employees, shall be construed to make the
Distributor, its agents or employees, an employee of, or joint venturer or
partner with, Genzyme, or to empower any of them to bind or obligate Genzyme
in any way. The Distributor 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-Registered
trademark- enzyme and to perform the obligations set out herein. It is
further agreed and understood that the Distributor is only contracting to
provide certain specified services to, and purchases Ceredase-Registered
trademark- enzyme from, Genzyme. Genzyme shall be responsible for all costs
incurred in operating Genzyme's business, and Genzyme shall be solely
responsible for the management and operation of its business.
4.5 Confidentiality and Restrictive Covenant.
(a) Protection of Documents. Each party has developed or may during
the term hereof develop, certain formulae, products, methods of doing
business, and other proprietary information which that party deems to be
confidential and a trade secret. In the course of fulfilling each party's
respective obligations hereunder, some of these formulae, products, methods
and other
28
proprietary information of one party will become known to another party
hereto. Each of Genzyme and the Distributor 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 such party (as provided in
Section 4.5(b)), either during or after the term of this Agreement, without
the express prior written consent of the other such party hereto.
(b) Designation of Materials. In the event that any information
deemed to be confidential by Genzyme or the Distributor is provided to the
other such party or its employees or agents in writing, the party providing
same shall ▇▇▇▇ the writing as confidential, prior to providing such
information to the other such party. In the event that such information is
provided in nonwritten 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 such party or within fifteen
(15) days thereafter, furnish to the other such 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-Registered trademark- enzyme; and financial records
of party.
29
(c) Exceptions. The restrictions in this Section 4.5 shall not
apply (i) to any information which is not deemed confidential hereunder, or
which has not been designated as confidential in the manner specified
herein, (ii) to any information which was already known to the receiving
party prior to its disclosure by the other party, as can be proven by
competent evidence, (iii) to any information which is or becomes public
knowledge thought 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. PTI and Nova Factor each agree that during the term
of this Agreement, and for a period of five years following the termination
hereof, it will not undertake to distribute or supply any prescription drug
for the treatment of Gaucher's disease other than Ceredase -Registered
Trademark- enzyme, without the prior written consent of Genzyme. Furthermore,
during the same period, and whether or not otherwise prohibited by the
restrictions set out hereinabove, neither PTI nor Nova Factor will disclose
to any other person or entity, or use for purposes of competing directly or
indirectly with the sale of Ceredase -Registered Trademark- enzyme by
Genzyme: (i) the names of Patients or hospitals, clinics or physicians or
number thereof provided Ceredase -Registered Trademark- enzyme by it pursuant
to this Agreement, (ii) the volume of Ceredase -Registered Trademark- enzyme
supplied to Ceredase -Registered Trademark- Enzyme Customers by it, (iii) the
addresses of Patients, (iv) the referral sources of Ceredase -Registered
Trademark- Enzyme Customers, (v) Genzyme's price for Ceredase -Registered
Trademark- enzyme, or (vi) the service fees, if any, paid to it pursuant to
this Agreement. This provision shall not prohibit disclosure of such
information in the event that PTI or Nova Factor is requested or required by
law or governmental regulations or
30
by litigation discovery requests, subpoena, civil investigative demands or
similar processes to disclose such information, nor shall it prohibit
disclosure and use by PTI or Nova Factor or such information, if and as
necessary in any litigation between PTI or Nova Factor and Genzyme. PTI shall
continue to be bound by the terms of this Section 4.5, and by any comparable
provisions of the Unamended Distribution Agreement and the Amended
Distribution Agreement, notwithstanding PTI's assignment to Nova Factor of
its duties and obligations hereunder and thereunder pursuant to the
Assignment and Nova Factor's assumption of such duties and obligations
pursuant to the Assignment and Section 4.12 hereof.
4.6 Representations, Warranties and Covenants.
(a) No Interference. Genzyme represents and warrants to the
Distributor that Genzyme has the sole and exclusive right to manufacture and
distribute Ceredase-Registered Trademark- enzyme and that the distribution
of Ceredase-Registered Trademark- enzyme and the other activities to be
performed by the Distributor hereunder do not, and will not, infringe upon or
violate the rights of, any other party. Genzyme will protect, indemnify and
hold the Distributor harmless from any claims of infringement of patent,
trademark, ▇▇▇▇ name or proprietary rights by third parties relating to the
Distributor's distribution of Ceredase-Registered Trademark- enzyme.
(b) Governmental Approval. Genzyme further represents and warrants
to the Distributor that all FDA and state approvals and permits required for
Genzyme's manufacture, sale and distribution of Ceredase-Registered
Trademark- enzyme have been obtained and that Genzyme has the corporate
authority to authorize the Distributor to sell and distribute Ceredase
-Registered Trademark- enzyme. 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-Registered Trademark- enzyme, material to its performance under this
Agreement.
31
(c) Compliance with Laws, Licensure. The Distributor represents
and warrants to Genzyme that the Distributor 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. The Distributor 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 the Distributor, threatened to revoke or limit any thereof.
The Distributor shall promptly notify Genzyme in the event that a proceeding
is threatened or commenced to revoke or limit any such licenses or permit.
4.7 Trade Names and Trademarks.
(a) Use of the Name Ceredase -Registered Trademark- Enzyme.
Genzyme grants to the Distributor the non-exclusive privilege to use, in
connection with the stocking, sale and distribution of Ceredase -Registered
Trademark- enzyme, the various trade names, trademarks, service marks and
several other word and design marks which Genzyme associates with Ceredase
-Registered Trademark- enzyme. The Distributor 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 -Registered Trademark- enzyme and the sales thereof, and that all
goodwill associated with such is the property of and shall inure to the
benefit of Genzyme. The Distributor agrees that Genzyme has the right to
control the use or display thereof by the Distributor. This non-exclusive
license is a limited license and may be terminated at any time by Genzyme.
The Distributor shall discontinue the display or use of any such ▇▇▇▇ or
name, or change the manner
32
in which any such name or ▇▇▇▇ is displayed or used, upon request by Genzyme.
The Distributor further agrees that;
(i) No such name or ▇▇▇▇ will be used in such a manner
that it may become a generic word, causing a loss of its protected
status as such;
(ii) The Distributor shall not use such names or marks, or
any variant thereof, as the whole or an part of its title or the name
of its business, except upon Genzyme's express written consent to
such use;
(iii) The Distributor 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-Registered Trademark- enzyme, and shall not use such names
or marks as part of its business name;
(iv) The Distributor shall not use, or allow the use of, any
name or ▇▇▇▇ which is likely to cause confusion, mistake or deception
with respect to any of the trade names or trademarks of Genzyme; and
(v) The Distributor 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, the distributor 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 -Registered Trademark- enzyme. Notwithstanding the
foregoing, upon the effective date of the Assignment, PTI shall discontinue
any and all use of Genzyme's
33
trademarks, trade names and any other identification with Genzyme and shall
avoid any statement or implication that it is a distributor of Ceredase
-Registered Trademark- enzyme.
(b) Use of the Name PharmaThera -Registered Trademark-. The
parties recognize that PHARMATHERA, INC. -Registered Trademark- is a
registered trademark, and PTI hereby grants to Genzyme the non-exclusive
privilege to use, in connection with the stocking and sale of Ceredase
-Registered Trademark- enzyme, the various trade names, trademarks, service
marks and the several other word and design marks which are associated with
PHARMATHERA, INC. -Registered Trademark-. Genzyme acknowledges that PTI 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 PHARMATHERA, INC. -Registered Trademark- and that all good will
associated with such is the property of and shall inure to the benefit of
PTI. Genzyme agrees that PTI 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 PTI. Genzyme shall discontinue the display or
use of any such name or ▇▇▇▇, or change the manner in which any such name or
▇▇▇▇ is displayed or used, upon request by PTI. Genzyme further agrees that;
(i) No such name or ▇▇▇▇ shall be used in such a manner
that it may become a generic word, causing the loss or 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 PTI'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;
34
(iv) Genzyme shall not use, or allow the use of any name or
▇▇▇▇ which is likely to cause confusion, mistake or deception with
respect to any of the trade names or trademarks of PTI; 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 PTI.
Within 60 days after the effective date of the Assignment, Genzyme shall
discontinue any and all use of PTI's trademarks, trade names and any other
identification with PTI, and shall avoid any statement or implication that it
is affiliated with PTI.
4.8 Service to Others Businesses. Genzyme acknowledges that the
Distributor offers its services to other businesses, and Genzyme agrees that
no provision contained herein shall restrict or prohibit the Distributor 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 4.5, or interfere with the performance of the Distributor's
obligations hereunder.
4.9 Records. To the extent required by Section 1861(b)(1)(I) of
the Social Security Act, each of PTI and 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 it 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 by it.
35
4.10 Specific Performance. Each of the parties hereto acknowledges that
violation of Section 4.5 and 4.7 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 any of these sections, the party
alleging such breach shall be entitled to injunctive relief prohibiting such
breach or threatened breach in any court of appropriate jurisdiction of the
United States or of any state or other political subdivision thereof.
4.11 Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude any party from asserting any other rights or
seeking any other remedies against any other party, or such other party's
successors or permitted assigns, pursuant to this Agreement, as provided
under other agreements and as provided by law. Nothing contained herein shall
preclude a party from seeking equitable relief, where appropriate.
4.12 Nonassignability and Subcontracting. This Agreement and the
rights, duties, responsibilities, and liabilities of the parties hereto shall
not be assigned by Genzyme or the Distributor without the prior written
consent of the other party, except that no prior consent shall be required in
the event of acquisition of all or substantially all of the assets of a party
by an acquirer. The parties to this Agreement acknowledge that for a limited
period of time, it may be necessary for the Distributor to arrange for the
performance of certain of its obligations under this Agreement by a third
party pursuant to an agreement between the Distributor and such third party.
The Distributor shall not enter into such agreement without the prior written
consent of Genzyme, which shall not be unreasonably withheld, provided that
Nova Factor may enter into such an agreement with New Pharma Thera Inc.
without the consent of Genzyme. Notwithstanding anything contained in the
first sentence of this Section 4.12 to
36
the contrary, Genzyme hereby consents to the assignment of PTI to Nova
Factor of its rights and obligations to and under this Agreement, the
Unamended Distribution Agreement, the Amended Distribution Agreement, the
Security Agreement and the Amended and Restated Security Agreement pursuant
to the Assignment and agrees that, except as is otherwise expressly set forth
in this Agreement, PTI shall be released from all liability hereunder and
thereunder, subject to the condition that Genzyme shall have received, on or
prior to the date hereof, that certain Amendment Number One to Guaranty
Agreement, dated of even date herewith, executed by PTI, Nova Factor and
Southern Health Systems, Inc. Nova Factor hereby acknowledges, and represents
and warrants to Genzyme, that, effective July 1, 1994, Nova Factor has
assumed pursuant to the Assignment all of the rights, duties,
responsibilities and liabilities of PTI under this Agreement and under the
Unamended Distribution Agreement, the Amended Distribution Agreement, the
Security Agreement and the Amended and Restated Security Agreement.
4.13 Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Tennessee (excluding the choice of law rules
thereof), and the laws of the State of Tennessee shall govern the rights,
duties, liabilities and responsibilities created hereunder.
4.14 Headings. All headings used herein are for ease of reference only
and shall in no way be construed as interpreting, decreasing or enlarging the
provisions of this Agreement.
4.15 Effect. Subject to the 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.
37
4.16 Modification. This Agreement, the Amended and Restated Security
Agreement and that certain Guaranty Agreement, dated December 2, 1993, among
Genzyme, PTI and Southern Health Systems, Inc., as amended by Amendment
Number One to Guaranty Agreement, of even date herewith among Genzyme, PIT,
Nova Factor and Southern Health Systems, Inc., 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 understandings relating to the subject matter
hereof. This Agreement may be amended, changed or modified only with the
written consent of Genzyme and the Distributor.
4.17 Notices. All notices, demands, requests, consents, reports,
approvals or other communications which may be or are required to be given,
served or sent pursuant to this Agreement shall be in writing and shall be
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 Genzyme or the Distributor, as
applicable, at its business addresses 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 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,
38
being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
4.18 Waivers. No waiver of the breach of any provision of this
Agreement shall be deemed a waiver of any other breach of or default under
the same or any other provision hereof, nor will any waiver constitute a
continuing waiver. No term or provision of this Agreement shall be waived
except by a written instrument executed by a duly authorized officer of the
waiving party and no course of dealing, act or omission to act shall operate
as a waiver of any right, power or privilege granted to a party hereunder.
4.19 Accreditation Standards. The services provided hereunder are
designed to meet the applicable requirements stated in PH.1 through PH11.3 of
the Standards for the Accreditation of Home Care-Pharmaceutical Services of
the Joint Commission on Accreditation of Healthcare Organizations ("JCAHO").
In the performance of this Agreement the parties shall conform to the
policies, standards and requirements of JCAHO, to the extent applicable.
4.20 Severability. If any one or more of the provisions of this
Agreement shall for any reason be held illegal or invalid, such illegality or
invalidity shall not affect any other provision of this Agreement and this
Agreement shall be enforced as if such illegal or invalid provision had not
been contained herein.
39
IN WITNESS WHEREOF, the undersigned parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
GENZYME CORPORATION
By: /s/ illegible
---------------------------------
Title: President Therapeutics
------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
PHARMATHERA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: CEO - Illegible
------------------------------
Address: ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
NOVA FACTOR, INC.
By: /s/ ▇▇▇▇▇ Grow
---------------------------------
Title: C.O.O.
------------------------------
Address: ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Grow
40
Exhibit A
Section 3.2(b)
Basis for Calculating Inventory
*
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities Exchange Commission.