Unassociated Document


    Exhibit 10.28

     

    PRODUCTION
AGREEMENT

     

    This
Production Agreement (“Agreement”) is made and entered into as of this 26th day
of January, 2007 by and between AVAX Technologies, Inc., a New York corporation
with headquarters located at 2000 Hamilton Street Suite 204, Philadelphia,
Pennsylvania 19130 (“AVAX”), and Cancer Treatment Centers of America, Inc., an
Illinois corporation with headquarters located at 1336 Basswood Road,
Schaumburg, Illinois 60173 (“CTCA”).

     

    RECITALS

     

    
      	  	
              A.

            	
              CTCA
      manages certain oncology specialty hospitals and physician practices in
      Zion, Illinois (“MRMC”); Tulsa, Oklahoma (“SRMC”); and Philadelphia,
      Pennsylvania (“ERMC”, and together with MRMC and SRMC and others that CTCA
      may develop in the future, collectively referred to as “CTCA
      Facilities”).

            


    

     

    
      	  	
              B.

            	
              AVAX
      is in the business of the development and commercialization of
      individualized vaccine therapies and small molecules for the treatment of
      cancer and other life-threatening diseases. AVAX has represented to CTCA
      that AVAX owns a dormant GMP laboratory in Philadelphia, Pennsylvania (the
      “Philadelphia Laboratory” or “Philadelphia Lab”), which AVAX is capable of
      reactivating and obtaining FDA permission to use to manufacture
      products.

            


    

     

    
      	  	
              C.

            	
              AVAX
      has further represented that AVAX is capable of producing autologous
      haptenized cancer vaccines (“Vaccines”) and heterologous haploidentical,
      IL2-activated NK cells (“IL2NK
Cells”).

            


    

     

    
      	  	
              D.

            	
              CTCA
      desires to retain AVAX to produce Vaccines and IL2NK Cells, and AVAX is
      willing to produce them on the terms and conditions contained in this
      Agreement.

            


    

     

    AGREEMENTS

     

    For and
in consideration of the mutual covenants contained herein, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

     

    1.    
Retention of
AVAX. CTCA hereby agrees to retain
AVAX to produce CTCA’S requirements of Vaccines and IL2NK Cells for a period of
three (3) years from the date of this Agreement.


    
      
         


      

      
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    2.    
Obligations of AVAX
with Regard to GMP Lab. AVAX will
secure FDA agreement to manufacture clinical materials, and maintain and operate
the Philadelphia Laboratory in compliance with all FDA and other federal
regulations that govern the licensing of GMP laboratories that produce products
for use in humans, as well as in compliance with all state and local regulations
and laws, including laws relating to the handling and disposal of biological and
hazardous waste materials. It is understood and agreed that the FDA does not
provide a formal license for the authorization of the production of products
used in clinical studies that are the subject of an Investigational New Drug
Application (IND).

     

    3.    
Obligations of CTCA
with Regard to GMP Lab. Once AVAX
has performed its obligations set forth in paragraph 2 above, CTCA will
purchase, install and maintain service contract coverage for: one (1) cell
separator/concentrator device from the Miltenyi Biotec Corporation (or such
other provider acceptable to CTCA in its reasonable discretion); and, one (1)
FC500 Coulter Flow Cytometer for use by AVAX in its GMP laboratory for the
preparation and characterization of IL2NK cell preparations. These devices will
be owned by CTCA but maintained and operated by AVAX for the exclusive use of
CTCA. In the event that CTCA purchases any other capital equipment for use in
AVAX’s GMP lab, such equipment shall remain the property of CTCA. CTCA will bear
the cost for removing any CTCA equipment to ensure non-interruption of the GMP
Facility. Notwithstanding the foregoing, in no event shall CTCA’s financial
obligations for the purchase of equipment under this Section 3 exceed Two
Hundred Fifty Thousand Dollars ($250,000).

     

    4.    
AVAX’s Production
Requirements. AVAX will produce a
combined total of up to 40 usable preparations consisting of autologous Vaccines
and/or IL2NK cell therapy products annually. CTCA will handle all tumor samples
in an aseptic fashion and will place them into the agreed upon shipping box to
avoid sample contamination. In the event there is excessive contamination of
samples as, reasonably determined by AVAX, upon notice to CTCA, corrective
actions will be implemented at CTCA Facilities.

     

    (a)  
Vaccines. The number of each product will depend on
patient accrual by CTCA. Source material for autologous cancer vaccines will
consist of patient tumor tissues collected at CTCA hospitals, and shipped to
AVAX. Usable Vaccines shall be defined according to the definition developed by
AVAX for its clinical trials. All vaccines released by AVAX in accordance with
its manufacturing protocol in compliance with FDA approved release criteria will
be counted in the total number of preparations/year.

     

    (b) IL2NK Cells. Source material for IL2NK
Cells shall consist of leukapheresis preparations collected from donors at the
MRMC and shipped to AVAX. All IL2NK cell preparations released by AVAX in
accordance with its manufacturing protocol in compliance with FDA approved
release criteria will be counted in the total number of
preparations/year.

     

    (c) Quality assurance, quality
control of production.
AVAX will be responsible for all performance quality control aspects of
manufacturing, and characterization and quality assurance of all manufactured
products.


    
      
         


      

      
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    (d) Tissue Handling and
Shipping. AVAX will handle and
process all tissues received from CTCA facilities, and ship to CTCA facilities
all products produced by AVAX in its GMP facility, in compliance with all FDA
and other federal regulations that govern the handling, processing and shipping
of products for use in humans.

     

    5.    
AVAX’s Obligations
Prior to Opening GMP Lab. Prior to the opening of the
Philadelphia GMP laboratory, AVAX will manufacture for CTCA up to the 40
vaccines/year in support of CTCA’s protocol for advanced, recurrent ovarian
cancer that will be conducted under the IND held by AVAX for this indication.
CTCA and AVAX will collaborate in the registration and activation of this trial,
which will go to the MRMC Institutional Review Board of CTCA no later than 3
months following execution of this Agreement.

     

    6.    
Compensation, Payments
and Repayments. In consideration of
AVAX’s production and delivery of the Vaccines and the IL2NK Cells, CTCA will
make the following payments to AVAX:

     

    (a) Initial Payment and
Repayment Obligations. CTCA will
make a conditional payment to AVAX in the amount of $250,000 upon execution of
this Agreement, which funds will be used by AVAX solely to initiate actions
needed to manufacture clinically acceptable products in the Philadelphia GMP
Laboratory and generate documents and process development efforts that will lead
to the manufacture of Vaccines and/or the IL2NK Cells.

     

    (i) In
the event that AVAX fails to be ready to deliver to CTCA Vaccine or IL2NK Cells
produced in Philadelphia within 15 months following execution of this Agreement,
AVAX will refund to CTCA $125,000 of such payment.

     

    (ii) If
AVAX fails to be ready to deliver vaccines or cell therapy products manufactured
in the Philadelphia facility within 18 months following inception of this
agreement, AVAX agrees to refund to CTCA an additional $125,000.

     

    (iii) To
secure repayment by AVAX of the amounts set forth in subparagraphs (i) and (ii)
above, AVAX will grant to CTCA a first priority security interest in all of the
personal property comprising the Philadelphia GMP laboratory at the time that
CTCA advances the $250,000

     

    (b) Monthly Payments and
Abatement. CTCA will pay AVAX
$25,000 monthly for activities including facility validation and maintenance and
production of vaccines and/or cell therapy products produced in AVAX’s
Philadelphia GMP laboratory beginning the day the FDA allows AVAX to produce product for human use in that
facility (which is noted above in Section 2 of this
agreement and appended as Exhibit I); provided, however, CTCA will pay AVAX no
monthly fee for the first 90 days following execution of this
Agreement.


    
      
         


      

      
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    (c) Catch-up Payment. CTCA will pay AVAX, in one
lump sum payment, the accrued monthly fees of $25,000 per month on the day the
FDA allows AVAX to produce product for human use in AVAX’s Philadelphia facility
(which is noted in Section 2 above). The payment will not exceed $150,000. Fee
accrual begins 90 days after execution of this Agreement and ends the day the
FDA allows AVAX to produce product for human use.

     

    (d) Additional
Payments. In consideration of
additional vaccine program(s) in support of other trials activated by CTCA for
other indications, CTCA shall pay AVAX the following amounts:

     

    (i)
$75,000 for development and approval of a supporting IND and associated process
development for vaccines for tumor site other than ovarian cancer; it is
expressly understood and agreed that during the term of this Agreement, CTCA
shall have the right to add new trials involving NK cells at no additional cost
to CTCA so long as the production process does not deviate from the production
process then in place; and

     

    (ii)
$150,000 to initiate non-vaccine products or activated NK cell products that are
consistent with the continued production of vaccines and activated NK cells and
which both parties agree to produce, and will include the development of an
acceptable IND, process development for manufacturing and an acceptable testing
regimen and stability protocol.

     

    (e) Payment for Products in Excess of the
Required 40. In the event that CTCA requires AVAX to produce Vaccines or
IL2NK Cells in excess of forty (40) during any calendar year during the term of
this Agreement, CTCA will pay to AVAX $7,500.00 per additional Vaccine or IL2NK
Cell produced and delivered.

     

    7. Operational Obligations of
CTCA. During the term of this
Agreement, CTCA shall perform the following obligations, it being expressly
agreed that CTCA’s failure to perform any of these obligations will NOT excuse
AVAX’s performance of its production requirements set forth in paragraph 4
above:

     

    (a)  
IND and IRB
Approvals. CTCA will use
commercially reasonable efforts to obtain IND and IRB approval at CTCA-managed
hospital facilities for all treatment protocols that use products produced by
AVAX in its GMP laboratory.

     

    (b)  
Clinical Trial
Conduct. CTCA will conduct all
clinical trials that use products produced by AVAX in its GMP laboratory
according to the IND and IRBapproved protocols in compliance with relevant 21
CFR guidelines, ICH Guidelines for Good Clinical Practice, and applicable
national guidelines and laws.

     

    (c)   Vaccine
Results. CTCA will provide to AVAX for its use,
all clinical results collected on patients treated with the vaccines produced by
AVAX utilizing its proprietary technology on
behalf of CTCA on the Forms provided for the study which have been developed by
AVAX. Such data will be patient de-identified.


    
      
         


      

      
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    (d)  
Cell Prep
Results. CTCA will share all
clinical results collected on patients treated with the IL2NK cell preparations
produced by AVAX on behalf of CTCA.

     

    
      	
               
      

            	
              8.

            	
              Intellectual Property
      Provisions.

            


    

     

    (a) Vaccines Discovery,
Invention or other Intellectual Property. CTCA agrees that any discovery, invention or
other intellectual property relating to the Vaccines that may be developed by
AVAX during the conduct of this Agreement shall be the sole property of
AVAX.

     

    (b) IL2NK Discovery, Invention
or other Intellectual Property. The parties each agree that any
discovery, invention or other intellectual property that may be developed in the
production and clinical testing of IL2NK Cells as a result of this Agreement
shall be owned jointly and
equally by AVAX and CTCA. AVAX hereby agrees that CTCA shall have the
right to assign ownership of its portion of such discovery, invention or other
intellectual property to International Capital and Management Company, LLLP or
other assignee with common ownership and AVAX hereby consents to any such
assignment. Any further commercial use of such discovery, invention or other
intellectual property shall require mutual approval, and AVAX and CTCA shall
share equally in any royalties accruing from such commercial use. Each party
agrees that any results, discoveries or inventions discovered during the conduct
of this agreement will not be disclosed to outside third parties until both
sides have agreed that the subject matter is not-patentable. In the event a
discovery is patentable CTCA and AVAX will share equally in the patent
costs.

     

    (c)    General Disclosure
Provision. Each party will disclose any and all such discoveries to the other
and will not disclose this information to any third party without the express
written consent of the other party.

     

    
      	
               
      

            	
              9.

            	
              Indemnification and
      Insurance.

            


    

     

    (a)
Indemnification. AVAX hereby agrees to indemnify and defend CTCA, CTCA
Facilities and their respective officers, directors, shareholders, employees,
staff and physicians (collectively, the “Indemnitees”) from and against any
injury (or alleged injury) to patients caused by their use of a Vaccine or IL2NK
Cells product delivered by AVAX which fails to meet protocol specifications. In
connection with such defense obligations, AVAX hereby waives its right to select
counsel for the Indemnitees and shall allow the Indemnitees to utilize defense
counsel of their choice for any claim filed by a patient of an
Indemnitee.


    
      
         


      

      
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    (b)  
Insurance. AVAX agrees that at all times during the term of this Agreement, AVAX
will purchase and maintain in force property/casualty and liability (including
general liability and products liability) insurance policies covering the
Philadelphia Laboratory, the capital equipment purchased by CTCA under this
Agreement and all products produced by AVAX for CTCA under this Agreement. AVAX
will also purchase and maintain other types of insurance required by law or
typical of similar businesses, covering the Philadelphia Laboratory, its
products and activities. All such insurance policies will be issued by reputable
carriers, acceptable to CTCA in its reasonable discretion, and will contain name
CTCA as an “additional insured”. Policy limits for all liability insurance will
in no event be less than $5,000,000, and for property insurance shall be not
less than the estimated value of the Philadelphia Laboratory plus all capital
equipment purchase by CTCA hereunder. AVAX will provide CTCA with certificates
evidencing such coverage from time to time upon request.

     

    10.  
HIPAA. AVAX
will execute CTCA’s standard “business associate agreement” and will comply with
HIPAA and other federal and state regulations governing the use of personal
health information.

     

    11.  
Option to Operate in
the Event of Change of Ownership or Cessation of Lab Operation. AVAX agrees that any transaction wherein it may
be acquired by another corporation or entity will not recuse AVAX or its
subsequent owner of its obligations to CTCA under this agreement. In the event
that AVAX does not produce the Vaccines and IL2NK Cells as required by this
Agreement or experiences a substantial decline in operational activity at the
Philadelphia Laboratory during the term of this Agreement, CTCA will have the
right, but not the obligation, to take ownership and operational control of the
Philadelphia Lab, including taking an assignment of the real estate lease
covering the Philadelphia Lab and all licensure, contents, equipment and
inventory then located in or associated with the operation of the Philadelphia
Lab. In order to assert such right, CTCA shall provide written notice to AVAX of
CTCA’s intent to exercise its rights set forth in the prior
sentence.

     

    12.  
Early Termination of
Agreement. In the event that either
party desires to terminate this Agreement before the end of the three (3) year
period, that party must provide written notice to the other a minimum of 120
days prior to the early termination date. In the event that CTCA wishes to
terminate this Agreement, it will pay AVAX the sum of $100,000. In the event
that AVAX desires to terminate the Agreement, it will reimburse CTCA an amount
equal to the $250,000 startup cost prorated based on the remaining term of this
Agreement following the 120-day termination period and shall trigger CTCA’s
rights set forth in paragraph 11 above.

     

    13.  
Severability. The provisions of this Agreement shall be
severable, and if any provision of this Agreement shall be held or declared to
be illegal, invalid or unenforceable, such provision shall, if possible, be
limited or construed so as to make it valid and enforceable or, if such
limitation or construction is not possible or would be contrary to the parties’
manifest intentions, such provision shall be stricken from this Agreement. In
any event, the remainder of this Agreement shall continue in full force and
effect.


    
      
         


      

      
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    14.  
No
Assignment. This Agreement may not
be assigned by either party except that CTCA shall have the right to assign its
rights and obligations hereunder to an affiliate of CTCA so long as such party
assumes the assigned obligations in writing.

     

    15.  
Governing
Law. This Agreement is deemed to be
made and entered into pursuant to the laws of the State of Illinois. In the
event of any dispute hereunder, this Agreement shall be governed by and shall be
construed and interpreted in accordance with the laws of the State of
Illinois.

     

    16.  
Waiver. The terms of this Agreement may be waived, and
this Agreement may be amended, only in writing signed by the party to be bound
thereby. A waiver of one term shall not be construed as a waiver of any other
term, nor shall a waiver of, or failure to enforce, a term in one instance be
deemed a continuing waiver or a waiver of the provision itself.

     

    17.  
Nature of
Relationship. Nothing herein shall
be construed to place the parties in a relationship of employees, agents,
partners or joint venturers, and neither party shall have the power to obligate
or bind the other in any manner whatsoever.

     

    18.  
Notices. All communications, notices and exchanges of
information contemplated herein or required or permitted to be given hereunder
shall be in writing and shall be given when one of the parties deposits the same
via hand delivery, courier or Certified United States mail, postage prepaid,
addressed to the other party at its address set forth below:

     

    If to
CTCA:

     

    Cancer
Treatment Centers of America, Inc.

    1336
Basswood Road

    Schaumburg, Illinois 60173

    Attn:
Robert Mayo, Vice Chairman

     

    If to
AVAX:

     

    AVAX
Technologies, Inc

    2000
Hamilton Street, Suite 204

    Philadelphia, Pennsylvania 19130

    Attn:
Richard Rainey, CEO

     

    19.  
Entirety. This Agreement constitutes the parties’ entire
agreement and understanding with respect to the subject matter hereof, and
supersedes all prior oral and written agreements and
understandings.


    
      
         


      

      
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    The
parties hereto have caused this Agreement to be executed by their respective
officers with full legal and corporate authority to do so as of the date first
above written.

     

    
      
        
          
            
              
                
                  
                    	
                            CANCER
      TREATMENT CENTERS

                          	 
      	
                            AVAX
      TECHNOLOGIES, INC.

                          
	
                            OF
      AMERICA, INC.

                          	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            By: 

                          	
                            /s/
      Robert
      Mayo

                          	 
      	
                            By: 

                          	/s/
      Richard Rainey
	
                            Its

                          	
                            Vice
      Chairman

                          	 
      	
                            Its:

                          	CEO


                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
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