Exhibit 10.2 Forbearance Agreement dated March 11, 2003,
by and between ISI, GP Strategies Corporation and the
Company
FORBEARANCE AND SETTLEMENT AGREEMENT
THIS FORBEARANCE AND SETTLEMENT AGREEMENT ("Agreement") is made as of
March __, 2003, among Interferon Sciences, Inc., a Delaware corporation, with an
office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Debtor"), GP
Strategies Corporation, a Delaware corporation with an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender") and Hemispherx
Biopharma, Inc., a Delaware corporation, with an office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("HEB").
BACKGROUND:
A. As of December 31, 2002, Debtor was indebted to Lender in the amount of
approximately $ 415,000 (the "Existing Debt") pursuant to the provisions of a
Promissory Note, dated April 15, 1999, as amended on March 27, 2000 and August
23, 2001 (the "Note");
B. The Existing Debt is currently due and owing without offset, deduction
or counterclaim whatever. Lender is entitled to exercise all rights and remedies
available to it under the Note and in accordance with applicable law, without
necessity of further notice or demand.
C. Debtor has granted and conveyed to Lender a mortgage, dated as of April
15, 1999 (the "Mortgage"), upon all of the real property and improvements
thereon owned by Debtor (the "Property") as security for the repayment of the
Existing Debt.
D. Lender has agreed to accept a settlement of all obligations of Debtor
to Lender, including the Existing Debt; and has agreed to provide Debtor a
period of time to raise such funds, on the terms and conditions set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby agree as follows:
1. The foregoing recitals are hereby incorporated into this Agreement by this
reference.
2. Debtor acknowledges that as of the date hereof, the Existing Debt is
approximately $415,000, all of which is due and payable by Debtor to
Lender without defense, setoff or counterclaim (to the extent that any
such defense, setoff or counterclaim now exists or heretofore existed,
Debtor hereby expressly waives and releases same). Debtor further
acknowledges that interest will continue to accrue on the Existing Debt in
accordance with the terms of the Note.
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3. During the period from the date hereof through the earlier of (i) the date
which is 10 days prior to the date (the "Redemption Date") the court in
the Case entitled Sass sets for redemption of the outstanding tax
certificates (provided; however, if ISI receives notice of the Redemption
Date and prior to the date which is 10 days prior to the Redemption Date
the case is terminated with prejudice, this Section 3 (i) shall be of no
force of effect), (ii) May 31, 2003, and (iii) the date of an Event of
Default (the "Forbearance Period"), Lender agrees to forbear in the
exercise of the rights and remedies available to Lender as a result of
defaults under the Note.
4. At any time during the Forbearance Period, HEB shall have the right to pay
Lender $425,000 in HEB common stock, par value $.001 per share, under the
terms set forth on Exhibit A attached hereto, in full settlement of all
obligations of Debtor to Lender, including the Existing Debt. Debtor and
Lender shall exchange general releases at the time of any such payment,
and Lender shall promptly take all actions as shall be necessary or
desirable to release its liens on the property of Debtor. On the date
hereof, Debtor is selling its inventory to HEB and granting HEB a license
to sell ALFERON N Injection. As partial compensation for the inventory and
the license, Debtor shall receive 487,000 shares (the "ISI Shares") of HEB
common stock. HEB is obligated to register the resale of the ISI Shares on
a Form S-3 Registration Statement. For a period commencing on the
effective date of the Registration Statement and ending on the earlier of
(a) the date 90 days after the effective date of the Registration
Statement and (b) the date on which the registration statement covering
the shares issued to the Lender, described in Exhibit A hereof, is
declared effective, Debtor agrees to pay Lender, within 10 days of the end
of each calendar month, 15% of the net proceeds Debtor receives from the
sale of the ISI Shares. Any proceeds paid by Debtor to Lender shall reduce
the amount required to be paid by HEB to Lender under (ii) above and HEB
shall issue to Debtor the number of shares of HEB common stock which would
have otherwise been issued to Lender. Any such shares issued to Debtor
shall have all the benefits of and be subject to all of the terms set
forth in Exhibit A attached hereto.
5. Upon the expiration of the Forbearance Period, if HEB has not made the
payment contemplated by Section 4, the Note, plus accrued interest, shall
be immediately due and payable in full and Lender shall be free to
exercise all rights and remedies available to it without necessity of
notice or demand to any party. Debtor expressly acknowledges and agrees
that Lender (i) has made no legally binding commitments with regard to the
further forbearance in the exercise of its rights and remedies; and (ii)
is not legally obligated to further modify or amend the payment
obligations of Debtor under the Note.
6. An "Event of Default" shall exist hereunder (a) if any decree or order for
relief is entered by a court having jurisdiction in respect of the Debtor
in an involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or under any other applicable federal or state
bankruptcy, insolvency or other similar law, or if there is appointed a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of Debtor or for any substantial part of its property,
or ordering the winding-up or liquidation of its affairs and the
continuance of any such decree or order unstayed and in effect for a
period of sixty (60) consecutive days or (b) if a voluntary case is
commenced by the Debtor under the federal bankruptcy laws, as now
constituted or hereafter
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amended, or under any other applicable federal or state bankruptcy,
insolvency or other similar law, or if Debtor consents to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of Debtor or of any
substantial part of its property, or if Debtor makes any assignment for
the benefit of creditors.
7. Except as expressly set forth herein with respect to Lender's forbearance
during the Forbearance Period and Lender's agreement to settle all
obligations of Debtor to Lender, including the Existing Debt in accordance
with the terms of this Agreement, the Note remains in full force and
effect in accordance with its terms.
8. This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey.
9. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
10. The rights and remedies set forth herein, or in any other document or
agreement referenced herein, to be vested in or conferred on Lender shall
be cumulative and shall be in addition to and not in substitution of or in
derogation of the rights and remedies conferred upon Lender by any
applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
DEBTOR:
INTERFERON SCIENCES, INC.
By:
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Executive Officer
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LENDER:
GP STRATEGIES CORPORATION
By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: President
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HEMISPHERX BIOPHARMA, INC.
By:
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Name:
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Title:
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EXHIBIT A
As set forth in Section 4 of the Forbearance Agreement, HEB shall have the right
to (i) deliver to the Lender, common stock, par value $.001 per share, of HEB
(the "HEB common stock") with a Market Value (as defined below) of $425,000 and
(ii) a guaranty, in the manner and for the period hereinafter provided, in full
satisfaction of all of the Debtor's obligations to the Lender. The date on which
HEB delivers the HEB common stock to the Lender shall be referred to as the
"Settlement Date." The Market Value per share of HEB Common Stock shall be
$1.59. The shares of HEB common stock delivered to the Lender on the Settlement
Date shall be referred to as the "Settlement Shares."
Within 30 days of the Settlement Date, but not prior to the effectiveness of the
registration statement covering the shares of HEB common stock issued by HEB in
connection with the sale of Debtor's inventory to HEB, HEB shall file a
registration statement (the "Registration Statement") on Form S-3 with the
Securities and Exchange Commission registering the Settlement Shares for resale,
and use its best efforts to have the Registration Statement declared effective
within 90 days after the Settlement Date. HEB agrees to keep the Registration
Statement effective until the earlier of the date (i) which is two years after
the Settlement Date and (ii) Lender does not own any Settlement Shares.
1. Commencing on the effective date of the Registration Statement ("Effective
Date"), Lender shall have the right but not the obligation to sell the
Settlement Shares. Without the prior written consent of HEB, until the
date (the "Termination Date") which is 18 months after the Settlement
Date, Lender agrees not to sell more Settlement Shares than as provided in
the following schedule:
(a) If the closing price of HEB common stock on the ASE the immediately
preceding trading day is less than $ 1.50, Lender can sell the lesser of
(i) 1,500 Settlement Shares and (ii) 4.5 % of the current day's trading
volume of HEB common stock.
(b) If the closing price of HEB common stock on the ASE the immediately
preceding trading day is greater than or equal to $ 1.50 but less than or
equal to $ 1.99, Lender can sell a number of Settlement Shares equal to
the greater of (i) 1,500 Settlement Shares and (ii) the lesser of 4,500
Settlement Shares and 4.5 % of the current day's trading volume of HEB
common stock.
(c) If the closing price of HEB common stock on the ASE the immediately
preceding trading day is greater than or equal to $ 2.00 but less than or
equal to $ 3.00, Lender can sell a number of Settlement Shares equal to
the greater of (i) 1,500 Settlement Shares and
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(ii) the lesser of 6,000 Settlement Shares and 4.5 % of the current day's
trading volume of HEB common stock.
(d) If the closing price of HEB common stock on the ASE the immediately
preceding trading day is greater than $ 3.00, Lender can sell a number of
Settlement Shares equal to the greater of (i) 1,500 Settlement Shares and
(ii) the lesser of 9,000 Settlement Shares and 4.5 % of the current day's
trading volume of HEB common stock.
2. If on the Termination Date, the Lender has not sold all the Settlement
Shares; Lender shall, for a period of 30 days commencing on the first
anniversary of the Settlement Date, have the right to deliver to HEB
evidence of the number of Settlement Shares which it still owns and a
request for the guaranty ( the "Guaranty Notice"). Within 10 days of the
receipt by HEB of the Guaranty Notice, HEB shall pay to Lender in cash, an
amount (the "Guaranty Payment") equal to the product received by
multiplying (i) the number of Settlement Shares which remain unsold and
(ii) the Market Value. Simultaneously with the receipt of the Guaranty
Payment, Lender shall execute a stock power transferring the unsold
Settlement Shares to HEB. In the event HEB does not receive the Guaranty
Notice within 30 days of the Termination Date, the Guaranty Obligation
shall be conclusively deemed null and void.
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