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Exhibit 10-L
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
NORAC AGREEMENT FOR MANUFACTURE AND SALE OF THC
This AGREEMENT FOR MANUFACTURE AND SALE OF THC (this "Agreement") is made
as of January 1, 1995, by and between THE NORAC COMPANY, INC., a New Jersey
corporation ("NORAC"), and UNIMED PHARMACEUTICALS, INC., a Delaware
corporation ("UNIMED"), with reference to the following facts:
WHEREAS, pursuant to an Agreement for Manufacture and Sale of THC dated
September 9, 1992 (the "Prior Contract"), UNIMED contracted with NORAC for the
manufacture by NORAC of D-9-tetrahydrocannabinol (the "product" or "THC") to
UNIMED'S specifications from the starting raw materials of olivetol and
paramenthadienol, and the sale of the completed product to UNIMED; and
WHEREAS, the Prior Contract has been completed; and
WHEREAS, NORAC and UNIMED wish to enter into a new contract for NORAC to
manufacture the product and sell it to UNIMED;
NOW, THEREFORE, in consideration of the covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. MANUFACTURE AND SALE OF PRODUCT. During the term of this Agreement,
NORAC agrees to manufacture and sell THC to UNIMED only, and UNIMED agrees to
purchase THC from NORAC only, all on the terms and subject to the conditions
of this Agreement. The term of this Agreement shall commence as of January 1,
1995 and terminate on December 31, 1999; provided, however, that this
Agreement shall be automatically renewed for additional one-year periods
unless either party has given the other party hereto at least one year's prior
written notice of its intention not to renew this Agreement.
1.1 1995 AND 1996 OUANTITIES AND PRICE. UNIMED ordered from NORAC a
target quantity of [XXXX] of product with an estimated delivery date of
December 31, 1995. Such order was delivered. UNIMED also ordered from
NORAC a target quantity of [XXXXX] with an estimated delivery date of
December 31, 1996, at the following purchase prices per kilogram of
product:
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QUANTITY PRICE PER KG.
OF PRODUCT FOR 1996 ORDER
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First [XXXXX]/yr. [XXXXX]
Next [XXXXX]/yr. [XXXXX]
After [XXXXX] /yr. [XXXXX]
UNIMED's orders are firm and may not be cancelled unless this Agreement
is otherwise terminated in accordance with the terms hereof.
1.2 QUANTITIES AND PRICES AFTER 1996. [XXXXX]
1.3 CPI INCREASE. [XXXXX]
1.4 PAYMENT OF PURCHASE PRICE FOR PRODUCT; REQUEST FOR RETAINS;
ABANDONMENT OF BATCH.
1.4.1 Payment. [XXXXX]
1.4.2 REQUEST FOR RETAIN OF PRODUCT. UNIMED may, within ten
(10) days following NORAC's notification of the occurrence of milestone
3 described in Section 1.4.1 for each batch of the product, request
delivery of one Retain of the product (as defined below) for UNIMED's
analysis and approval (which approval shall not be unreasonably
withheld), provided that UNIMED or a laboratory designated by UNIMED
("Licensed Laboratory") has all licenses and approvals required by
applicable laws and regulatory authorities to accept delivery and
analyze the product. ("Retain" for purposes of this Agreement shall
mean a representative sample of any given batch of the product.) NORAC
shall deliver a Retain of the product to UNIMED or the Licensed
Laboratory designated by UNIMED within twenty (20) days following the
date NORAC is notified of UNIMED's request for such Retain pursuant to
this Section. If UNIMED elects to analyze the product, UNIMED shall
notify NORAC of its approval within twenty-one (21) days following the
receipt by UNIMED or the Licensed Laboratory designated by UNIMED of
the Retain; alternatively, UNIMED shall notify NORAC within such
twenty-one (21) day period of its reasons for not approving the Retain.
In the event that UNIMED approves of the Retain, UNIMED shall deliver
to NORAC the payment of the installment of the purchase price for the
product with respect to milestone 3 prior to the expiration of the
twenty-one (21) day approval period specified herein. In the event that
UNIMED disapproves of the Retain and NORAC agrees with the reasons for
such disapproval, NORAC may, at its option, either (i) correct the
deficiencies in the
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unfinished product identified by UNIMED, notify UNIMED of such
correction and send a new Retain of the unfinished product to UNIMED or
the Licensed Laboratory designated by UNIMED for analysis and approval
by UNIMED in accordance with this Section (i.e., a new twenty-one (21)
day approval period shall apply), or (ii) abandon the product pursuant
to Section 1.4.3, in which case the provisions of Section 1.4.3
shall apply. In the event that UNIMED disapproves of the Retain and
NORAC disagrees with the reasons for such disapproval, the dispute
shall be resolved by an independent testing organization of recognized
repute within the U.S. pharmaceutical industry agreed upon by the
parties (which agreement shall not be unreasonably withheld or delayed
by either party), provided that such organization has all licenses and
approvals required by applicable laws and regulatory authorities to
accept delivery and analyze the product. The cost of such determination
shall be borne by the party against whom the decision is made.
1.4.3 ABANDONMENT OF BATCH. NORAC may abandon the manufacture
of any batch of the product at any time prior to the issuance by
NORAC's laboratory of a Certificate of Analysis with respect to such
batch. In the event of the abandonment of the manufacture of any batch
("Abandoned Batch"), NORAC shall notify UNIMED of such abandonment and,
at NORAC's option, (i) commence the manufacture of a new batch
("Replacement Batch"); or (ii) return to UNIMED all installments of the
purchase price for the Abandoned Batch received prior to the date of
abandonment. In the event that NORAC elects to commence the manufacture
of a Replacement Batch following the abandonment of an Abandoned Batch,
(a) all installments of the purchase price previously received by NORAC
with respect to the Abandoned Batch shall be credited against the
installments of the purchase price payable with respect to the
Replacement Batch, and (b) UNIMED shall not be required to pay any
installments of the purchase price for the Replacement Batch until the
Replacement Batch reaches the same stage in the manufacturing process
as the Abandoned Batch had reached at the time of its abandonment at
which time UNIMED shall be required to pay any and all additional
installments of the purchase price with respect to the Replacement
Batch in accordance with Sections 1.4.1 and 1.5. NORAC may use all or
any portion of an Abandoned Batch in the manufacture of a Replacement
Batch.
1.5 DELIVERY. Upon the purification and distillation of the product
(milestone 6 described in Section 1.4.1) and the issuance of a Certificate
of Analysis by NORAC's laboratory, NORAC shall notify UNIMED of same and,
if so requested by UNIMED within ten (10) days of such notification, NORAC
shall send a Retain of the product to UNIMED or the Licensed Laboratory
designated by UNIMED for analysis and approval by UNIMED (which approval
shall not be unreasonably withheld), provided that UNIMED or
the Licensed Laboratory designated by UNIMED, as the case may be,
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has all licenses and approvals required by applicable laws and regulatory
authorities to accept delivery and analyze the product. If UNIMED elects
to analyze the product, UNIMED shall notify NORAC of its approval within
twenty-one (21) days following the receipt of the Retain by UNIMED or the
Licensed Laboratory designated by UNIMED; alternatively, UNIMED shall
notify NORAC within such twenty-one (21) day period of its reasons for not
approving the Retain. In the event that UNIMED disapproves of the Retain
and NORAC agrees with the reasons for such disapproval, NORAC may, at its
option, either (i) correct the deficiencies in the product identified by
UNIMED, notify UNIMED of such correction and send a new Retain of the
product to UNIMED or the Licensed Laboratory designated by UNIMED for
analysis and approval by UNIMED in accordance with this Section (i.e., a
new twenty-one (21) day approval period shall apply), or (ii) abandon the
product pursuant to Section 1.4.3, in which case the provisions of Section
1.4.3 shall apply. In the event that UNIMED disapproves of the Retain and
NORAC disagrees with the reasons for such disapproval, the dispute shall
be resolved by an independent testing organization of recognized repute
within the U.S. pharmaceutical industry agreed upon by the parties (which
agreement shall not be unreasonably withheld or delayed by either party),
provided that such organization has all licenses and approvals required by
applicable laws and regulatory authorities to accept delivery and analyze
the product. The cost of such determination shall be borne by the party
against whom the decision is made. The sixth installment of the purchase
price for such batch shall be due and payable concurrently with UNIMED's
approval; provided, however, in the event that UNIMED does not have, and
UNIMED does not designate, a Licensed Laboratory which has all licenses
and approvals required by applicable laws and regulatory authorities to
accept delivery and analyze the Retain at the time of NORAC's notification
to UNIMED of the issuance of a Certificate of Analysis for a batch of the
product by NORAC's laboratory, the sixth installment of the purchase price
for such batch of the product shall be due and payable within ten (10)
days following such notification. Upon receipt by NORAC of UNIMED's
approval and the sixth installment of the purchase price for such batch,
the finished product shall be placed in UNIMED's safe at NORAC's plant in
Azusa, California (or if already in UNIMED's safe, shall be segregated
therein). Title to the product shall pass to UNIMED upon placement or
segregation, as the case may be, of the product in UNIMED's safe following
approval and payment, which act shall constitute delivery to UNIMED and
the date of which shall be herein referred to as the "date of delivery."
UNIMED may remove the finished and paid for product from its safe at any
time on or after the date of delivery, provided that UNIMED has all
licenses and approvals required by applicable laws and regulatory
authorities to take possession of the product. Within a reasonable period
following notification by NORAC that NORAC's reasonable storage capacity
for product has been reached, UNIMED shall remove sufficient delivered
product from NORAC's premises to allow NORAC to continue production and
delivery of the product. Within thirty (30) days following the termination
of this Agreement, UNIMED shall remove all delivered product from NORAC's
premises.
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2. COMMERCIALLY REASONABLE EFFORTS BV NORAC; DELAYS IN DELIVERY. The
parties acknowledge and agree that the manufacture of THC is a complicated
process and that unexpected problems can arise during its production. Such
problems can include, but are not limited to, total or partial failure of
batches, shortages in batches, inability to manufacture or deliver the product
or delays in such manufacture or delivery (whether caused by inability or
delay in obtaining approvals from the DEA or other regulatory agencies or
caused by other factors), and the inability to obtain raw materials. NORAC
will use commercially reasonable efforts in meeting agreed production and
delivery schedules for the product as provided in this Agreement and in all
construction and manufacturing activities under this Agreement. NORAC will not
be liable for any damages of any nature or character whatsoever (including,
but not limited to any increased cost of obtaining replacement product, lost
profits, and incidental and consequential damages) suffered by UNIMED by
reason of the failure of NORAC to manufacture and deliver the product in the
amounts and at the times agreed upon by the parties; provided, however, that
the sole and exclusive remedies of UNIMED shall be as provided in Section 7.3
hereof and the remaining sentences of this Section 2, to the extent that each
is applicable. In the event that at least two-thirds (2/3) of the full amount
of product ordered by UNIMED is not delivered within ninety (90) days (or such
longer period as UNIMED approves in writing) after the delivery date specified
for such order, there shall be refunded to UNIMED, as its sole remedy, all
installment payments made for product not delivered. NORAC will keep UNIMED
informed of any potential delays in delivery and the parties agree to discuss
possible mutually agreeable solutions to any such problems. UNIMED may, at its
option, elect to extend any delivery period in writing. If such failure to
deliver at least two-thirds (2/3) of the full amount of product is due to
NORAC's material breach of its obligation to make a commercially reasonable
effort to produce and deliver the product (subject to Section 10.5), the sole
remedy (in addition to a refund on installment payments for THC not delivered
and the remedy provided by Section 7.3 below) which UNIMED shall have, in law
or in equity, is that UNIMED, at its option, may terminate this Agreement by
notification to NORAC within thirty (30) days after such ninety (90) day
period.
3. OBLIGATIONS OF NORAC.
3.1 SAMPLES AND BATCH RECORDS. During the term hereof, NORAC shall
prepare and maintain batch records and a file sample, properly stored,
from each batch of product manufactured. Upon termination of this
Agreement, NORAC shall offer such file samples to UNIMED, provided that
NORAC shall thereafter have access to same if required for regulatory or
other purposes required by law.
3.2 VISITS BY UNIMED. Subject to Section 10.16, NORAC shall permit
UNIMED's designated representatives to visit NORAC's facility at which the
product is manufactured from time to time for the purpose of determining
compliance with this Agreement, provided such inspections shall occur
after reasonable notice during regular business hours and each visitor
shall comply with NORAC's security procedures.
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3.3 CHANGES BY NORAC. During the term hereof, NORAC may make material
modifications to the manufacturing equipment, or to the portion of its
manufacturing facility at which the product is manufactured, only after
providing written notice to UNIMED, and then only if such modifications
are in compliance with regulations and orders of the U.S. Food and Drug
Administration ("FDA"). NORAC may, without further investigation,
conclusively rely on any written notice by UNIMED that any such
modifications are in compliance with FDA regulations and orders, which
notification by UNIMED shall not be unreasonably withheld or delayed by
UNIMED.
3.4 INSPECTIONS BV GOVERNMENT AGENCIES. NORAC shall promptly notify
UNIMED of any inspections by federal, state or local regulatory
representatives of the parties of its manufacturing facility at which the
product is manufactured and the results of any such inspections, including
actions taken by NORAC to remedy conditions cited in such inspections.
3.5 PERMITS. NORAC shall obtain and maintain all licenses, permits and
registrations necessary for NORAC to manufacture and supply the product
hereunder, provided that there can be no assurances that DEA allotments
will remain available in any specific amount that may be desired by
Unimed; further provided, that NORAC agrees to use its commercially
reasonable efforts to obtain such allotment in the amount requested by
UNIMED from time to time and that UNIMED agrees to use its commercially
reasonable efforts to assist NORAC and Banner (or such other packaging
company engaged by UNIMED) in obtaining such allotment in the amount
requested by UNIMED from time to time.
3.6 ACCESS TO RECORDS. During the term hereof and for such longer
period as may be required by law, NORAC shall maintain, and (subject to
Section 10.16) shall grant UNIMED reasonable access to, all books and
records (including, but not limited to, batch records) related to the
manufacture of the product as may be necessary to determine compliance
with this Agreement or for such other purpose as may be required by law.
4. NORAC'S COVENANTS AND WARRANTIES. NORAC hereby covenants, represents
and warrants that:
4.1 COMPLIANCE WITH NDA. All product manufactured for UNIMED pursuant
to this Agreement shall, upon delivery to UNIMED, meet all pertinent
specifications in New Drug Application No. 18-651 (together with all
amendments and supplements thereto, if any) (the "NDA"), copies of which
specifications have been provided by UNIMED to NORAC, and any other
specifications for the product mutually agreed upon in writing by NORAC
and UNIMED.
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4.2 COMPLIANCE WITH LAWS. NORAC will store all raw materials and will
manufacture and store the product in compliance with all then applicable
laws, rules, orders and regulations, including all then current Good
Manufacturing Practices of the FDA.
4.3 COMPLIANCE WITH THE ACT. As of the time of delivery of the product
to UNIMED, such shipment will not be, in whole or in part, (i) adulterated
within the meaning of the federal Food, Drug and Cosmetic Act (the "Act"),
or any applicable state law with a substantially similar definition of
adulteration; or (ii) an article which may not, under the provisions of
Section 404 or 505 of the Act, be introduced into interstate commerce.
4.4 TITLE TO THE PRODUCT. NORAC will have good title to all product
sold hereunder, which title shall pass to UNIMED as provided herein free
and clear of any lien or other conflicting interest of any kind of any
person claiming through NORAC.
4.5 NO OTHER WARRANTIES. Except as expressly set forth in this Section
4, NO OTHER WARRANTY IS EXPRESS OR IMPLIED. NORAC SPECIFICALLY DISCLAIMS
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. The provisions of Sections 4.1, 4.2 and 4.3 shall expire, and
have no further force and effect, with any respect to any particular batch
of product upon the delivery thereof to UNIMED.
5. UNIMED COVENANTS AND WARRANTIES. UNIMED hereby covenants,
represents and warrants that:
5.1 PERMITS. UNIMED will use commercially reasonable efforts to
maintain the NDA in effect.
5.2 FDA. UNIMED shall promptly notify NORAC of any additions to or
changes in FDA or other laws, rules, orders or regulations or to the
NDA which would affect the manufacture or storage of the product.
5.3 NO INFRINGEMENT. The product, when manufactured in accordance with
the specifications set forth in the NDA, does not infringe the patent or
other rights of any third person.
6. USE OF EQUIPMENT; CONSTRUCTION.
6.1 UNIMED EQUIPMENT. UNIMED has previously provided certain
equipment to NORAC for use by NORAC at its plant in Azusa, California in
connection with the manufacture of the product. UNIMED agrees that NORAC
may continue to use
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such equipment, together with all equipment subsequently added pursuant to
this Section 6 (collectively, the "UNIMED Equipment"), without rent or
other charge, throughout the duration of this Agreement exclusively for
the manufacture and sale of the product to UNIMED. Upon termination
of this Agreement, all of the UNIMED Equipment shall, subject to Section
6.4 hereof, be returned to UNIMED at UNIMED's expense.
6.2 FURTHER WORK. All costs, including but not limited to labor,
supplies, equipment and building permits, incurred in connection with the
acquisition of further equipment, construction projects and other work,
all of which must be expressly approved in advance in writing by UNIMED,
shall be paid by UNIMED. Details of costs shall be provided to UNIMED upon
request.
6.3 COSTS OF CONSTRUCTION. Costs of work undertaken pursuant to Section
6.2 shall include, but not be limited to, the following:
6.3.1 LABOR. All construction labor, other than normal
maintenance, shall be reimbursed by UNIMED at three (3) times the
direct hourly wage of each employee involved.
6.3.2 CONTRACTORS. All outside contractors engaged by NORAC to
assist in construction or other work shall be reimbursed by UNIMED at
cost plus ten percent (10 %).
6.3.3 MATERIALS AND EQUIPMENT. NORAC shall be reimbursed by
UNIMED for all materials and equipment purchased by NORAC for work
requested or approved by UNIMED, at the identified cost therefor, plus
ten percent (10%) to cover the cost of miscellaneous supplies and
materials.
6.4 NORAC'S RIGHT OF FIRST REFUSAL. In the event that during the term
of this Agreement UNIMED desires to sell or otherwise transfer all or any
part of the UNIMED Equipment, UNIMED shall first offer in writing to sell
such equipment to NORAC at the same price and on the same terms as offered
by a bona fide purchaser offering to purchase such equipment (the
"Offer"). Such notice to NORAC shall be accompanied by a copy of the
Offer. NORAC shall have ten (10) days following the date of such notice to
elect to exercise its right of first refusal by so notifying UNIMED in
writing and by payment for such equipment at the price and on the terms
specified in the Offer within thirty (30) days after the expiration of
such ten (10) day period. If NORAC shall fail to so notify UNIMED within
the said ten (10) day period, it shall be deemed to have rejected said
offer. In that event, UNIMED may sell or transfer such equipment to said
bona fide purchaser provided that such equipment is sold at a price at
least equal to the price stated in the Offer and in accordance with the
other terms stated
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therein, and the provisions of this Section 6.5 shall not thereafter apply
to any subsequent sales or other transfers of such equipment. If, however,
no such sale or transfer is consummated within one hundred twenty (120)
days from the date of the original Offer, the foregoing requirement that
the UNIMED first offer to sell such equipment to NORAC shall again apply.
7. DEFAULT
7.1 EVENT OF DEFAULT. It shall constitute an event of default by a
party under this Agreement if such party is in material breach of its duties
and obligations under this Agreement (including, but not limited, to any
failure to pay money when due) and fails to cure the same within thirty (30)
days after written notice thereof is given by the other party.
7.2 TERMINATION. Upon the occurrence hereunder of any event of default
by a party hereto, (which event of default has not been cured within the thirty
(30) day period described in Section 7.1), the other party may, upon notice to
the defaulting party, and in addition to all other rights and remedies
available to it under this Agreement or at law or in equity (except as
otherwise expressly provided in this Agreement), terminate this Agreement
within a reasonable time after the occurrence of such event of default.
7.3 TRANSFER OF TECHNOLOGY.
7.3.1 WRONGFUL TERMINATION OR FAILURE TO USE COMMERCIALLY
REASONABLE EFFORTS. In the event that NORAC either (i) terminates this
Agreement other than in accordance with any of the provisions of this
Agreement, or (ii) materially breaches its obligation to make a
commercially reasonable effort to produce and deliver the product
pursuant to this Agreement, then NORAC shall immediately grant to
UNIMED a perpetual, royalty free license to all manufacturing know-how
and technology used by NORAC to manufacture THC. The foregoing license
(i) shall be exclusive to UNIMED, with the right to grant sublicenses,
with respect to the use of such know-how and technology to manufacture
THC, and (ii) shall permit UNIMED and its sublicensees to use such
know-how and technology only to manufacture THC and for no other
purpose. NORAC shall retain all rights to use such know-how and
technology (including the right to grant sublicenses) for the
manufacture of products other than THC.
7.3.2 OTHER TERMINATION. In the event of any termination of
this Agreement that occurs other than as described in clauses (i) or
(ii) of Section 7.3.1 above, and other than by reason of a breach of
this Agreement by UNIMED, the parties agree to discuss a grant by NORAC
to UNIMED of a license to use all of its manufacturing know-how and
technology used by NORAC
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to manufacture the product for UNIMED, for such consideration as the
parties may mutually agree.
8. INSURANCE.
8.1 PROPERTY AND CASUALTY INSURANCE. UNIMED shall provide property
insurance coverage for UNIMED's equipment and finished product at NORAC's
facility in accordance with standard practice in the industry. UNIMED and
NORAC shall be shown as loss payees thereunder as their interests may
appear. NORAC shall provide adequate property insurance for the
replacement cost of NORAC'S plant and equipment, to the extent utilized in
the production of the product. NORAC shall be reimbursed, in accordance
with Section 6.2 and other provisions of this Agreement, for any
out-of-pocket or labor costs it incurs in rebuilding, repairing or
replacing UNIMED's equipment or property used in the production of the
product.
8.2 LIABILITY INSURANCE OF UNIMED. UNIMED shall procure and maintain in
effect at all times during and after the term of this Agreement, at
UNIMED's sole cost and expense, a commercial general liability policy of
insurance in the minimum amount of $1,000,000, combined single limit, and
a products liability policy of insurance in the minimum amount of
$3,000,000, combined singly limit, insuring against personal injury and
property damage caused by storage after delivery, distribution, sale, or
use of the product, and contractual liability. Each of such insurance
policies shall (i) either be written on a claims made or occurrence basis,
at UNIMED's option; (ii) be obtained from an insurer reasonably acceptable
to NORAC; (iii) name NORAC as an additional insured; (iv) contain a waiver
of subrogation clause; (v) contain a cross-liability endorsement or
severability of interest clause in favor of NORAC and UNIMED, including a
waiver of any exclusion of liability arising from a claim by one named
insured against another named insured; (vi) include broad form contractual
liability coverage insuring UNIMED's obligation to indemnify NORAC
pursuant to Section 9.1; (vii) be reasonably satisfactory to NORAC in
form and content; (viii) state that it is primary and not contributing
with any other insurance maintained by NORAC; and (ix) require that NORAC
be given at least thirty (30) days' prior written notice of the
modification, cancellation or expiration thereof. Concurrently with its
execution of this Agreement, UNIMED shall deliver to NORAC a certificate
of insurance evidencing such insurance policy and a copy of such insurance
policy. The provisions of this Section 8.2 shall survive the expiration or
termination of this Agreement.
8.3 LIABILITY INSURANCE OF NORAC. NORAC shall procure and maintain in
effect at all times during the term of this Agreement and for a period of
one (1) year thereafter, at NORAC's sole cost and expense, a commercial
general liability policy of insurance in the amount of $1,000,000,
combined single limit, insuring against personal injury and property
damage caused by the manufacture of the product and storage thereof
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prior to delivery. NORAC shall not be obligated to approve or maintain
products liability insurance coverage. The commercial general liability
insurance policy required to be maintained by NORAC hereunder shall (i) be
written on a claims made or occurrence based policy, at NORAC's option;
(ii) be obtained from an insurer reasonably acceptable to UNIMED; (iii)
name UNIMED as an additional insured; (iv) contain a waiver of subrogation
clause; (v) contain a cross-liability endorsement or severability of
interest clause in favor of UNIMED and NORAC, including a waiver of any
exclusion of liability arising from a claim by one named insured against
another named insured; (vi) be reasonably satisfactory to UNIMED in form
and content; (vii) state that it is primary and not contributing with any
other insurance maintained by UNIMED; and (vii) require that UNIMED be
given at least thirty (30) days' prior written notice of the modification,
cancellation or expiration thereof. Concurrently with its execution of
this Agreement, NORAC shall deliver to UNIMED a certificate of insurance
evidencing such insurance policy and a copy of such insurance policy.
8.4 WORKERS' COMPENSATION OF NORAC. NORAC shall procure and maintain in
effect at all times during the term hereof workers' compensation insurance
policy, including employer's liability coverage in accordance with
applicable laws.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY UNIMED. UNIMED agrees to indemnify and defend
NORAC and hold it harmless from and against any and all claims, damage,
liability, loss, cost or deficiency (including, but not limited to,
reasonable attorneys' fees and other costs and expenses incident to any
suit, action, proceeding, inquiry or investigation or the defense of any
claim or for enforcing this indemnification provision) and to pay NORAC on
demand the full amount of any expenses, claims, liabilities or other sums
which NORAC pays or becomes obligated to pay on account of, arising from
or related to the storage after delivery, distribution, sale or use of the
product hereunder, including but not limited to breach of warranty, strict
liability or product liability claims (except to the extent that NORAC is
obligated with respect to such claims under Section 9.2). The provisions
of this Section 9.1 shall survive the termination of this Agreement.
9.2 LIMITATION OF LIABILITY OF NORAC; INDEMNIFICATION BY NORAC.
9.2.1 LIMITATION OF LIABILITY OF NORAC. UNIMED acknowledges and
agrees that notwithstanding any other provisions of this Agreement,
NORAC's liability hereunder and to third parties shall be limited to
claims, damages, losses, liabilities, costs or deficiencies (including,
but not limited to reasonable attorneys' fees), arising from or related
to the manufacture of the product or storage thereof prior to delivery
solely to the extent that the injuries or damages giving rise to such
claims occur and are actually known by NORAC during the period of
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manufacture of the product and storage thereof prior to delivery and
shall exclude any and all products liability claims; provided,
however, that this Section 9.2.1 shall not be construed to negate or
supersede UNIMED's remedies set forth in Sections 2 and 7.3 hereof
under certain circumstances specifically set forth therein. Nothing in
this Section is intended to affect any other limitations on the
liability of NORAC under any other provision of this Agreement or
otherwise. The limitation on NORAC's liability hereunder is a material
consideration for NORAC entering into this Agreement, it being the
understanding of the parties that UNIMED is providing NORAC with the
specifications for the manufacture of the product and the approval of
the product by UNIMED pursuant to Section 1.5 shall constitute UNIMED's
agreement and approval that the product conforms to such specifications
and the full and complete release of NORAC and its directors, officers,
employees, agents and shareholders with respect to any and all claims,
damages, losses, costs or deficiencies, known and unknown, arising from
or relating to the manufacture or storage of the product.
9.2.2 INDEMNIFICATION BY NORAC. NORAC agrees to indemnify and
defend UNIMED and hold it harmless from and against any and all claims,
damage, liability, loss, cost or deficiency (including, but not limited
to, reasonable attorneys' fees and other costs and expenses incident to
any suit, action, proceeding, inquiry or investigation or the defense
of any claim or for enforcing this indemnification provision) and to
pay UNIMED on demand the full amount of any expenses, claims,
liabilities or other sums which UNIMED pays or becomes obligated to pay
on account of, arising from or related to the manufacture of the
product or storage thereof prior to delivery solely to the extent that
the injuries or damages giving rise to such claims occur and are
actually known by NORAC during the period of manufacture of the product
or storage thereof prior to delivery (except to the extent that such
claims arise from UNIMED's gross negligence or willful misconduct). In
no event shall NORAC's indemnification obligations hereunder apply to
any products liability claims.
9.2.3 SURVIVAL. The provisions of this Section 9.2 shall
survive the termination of this Agreement.
10. MISCELLANEOUS.
10.1 WAIVER. AMENDMENTS AND MODIFICATIONS. Any of the terms or
conditions of this Agreement may be waived at any time by the party which
is entitled to the benefit thereof only by a writing executed by the
waiving party. This Agreement may be amended or modified at any time, in
whole or in part, only by a writing executed by the respective parties.
The provisions of this Section 10 shall survive the termination of this
Agreement.
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10.2 NOTICES. All notices, requests and other communications required
or permitted hereunder shall be in writing, addressed to the respective
parties as follows:
NORAC
The NORAC Company, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention: President
UNIMED
Unimed Pharmaceuticals, Inc.
0000 X. Xxxx Xxxx Xxxx,
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Any notice or other communication sent by registered or certified mail,
return receipt requested, shall be effective on the date of receipt or
refusal of delivery by the addressee, as specified on the return receipt
therefor. Notice given in any other manner shall be effective upon actual
receipt by the addressee. Any party may change its address for
purposes of this Section by giving notice to the other party as provided
in this Section.
10.3 ASSIGNMENT.
10.3.1 This Agreement shall not be assignable by either party
without the prior written consent of the other. Notwithstanding the
foregoing, NORAC may, upon UNIMED's prior written consent which shall
not be unreasonably withheld, assign this Agreement and delegate its
performance hereunder to a wholly-owned subsidiary of NORAC, and
thereupon NORAC shall have no further obligations under this Agreement,
except in the event of the breach by such subsidiary of any of its
obligations under Section 1.4 to deliver to UNIMED any batch of product
and the failure by such subsidiary to return to UNIMED any and all
installments of the purchase price for such batch previously paid by
UNIMED pursuant to Section 1.4, NORAC shall be obligated to return any
such installments to UNIMED and NORAC shall have no further obligations
under this Agreement.
10.3.2 Notwithstanding the foregoing Section 10.3.1, either
party may assign its rights and obligations hereunder to a successor by
merger or to a purchaser of all or substantially all of its business to
which this Agreement relates (provided, however, that this section
shall not affect the provisions set forth in Section 10.4 or the
subsections thereof or the protections to UNIMED described therein).
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10.4 UNIMED'S RIGHT OF FIRST REFUSAL. NORAC and its shareholders, as
an inducement to UNIMED to enter into this Agreement, agree as follows:
10.4.1 The shareholders of NORAC agree that during the term of
this Agreement they shall not sell or otherwise transfer a controlling
interest in NORAC (as "control" is defined in Section 10.4.5) to a
direct competitor of UNIMED (as such term is defined in Section
10.4.5), other than in accordance with this Section 10.4.
10.4.2 NORAC agrees that during the term of this Agreement it
shall not sell or otherwise transfer that portion of its manufacturing
facility in Azusa, California at which the product is manufactured
(such portion of the manufacturing facility being herein referred to as
the "Plant") other than in accordance with the provisions of this
Section 10.4. Notwithstanding the foregoing:
(i) A sale or other transfer of the Plant to any person or
entity which controls, is controlled by or is under common control
with NORAC (as "control" is defined in Section 10.4.5) (such person
or entity being herein referred to as a "Control Person") shall not
be subject to the provisions of this Section 10.4; provided,
however, any further sale or other transfer of the Plant (except to
another Control Person) shall continue to be subject to the
provisions of this Section 10.4.
(ii) The foregoing provisions of this Section 10.4.2 shall not
apply to any sale or other transfer of all or substantially all of
NORAC's manufacturing facility in Azusa, California, of which the
Plant is a portion; provided, however, that it shall be a condition
of such sale or other transfer that any purchaser or other
transferee shall assume the obligations of NORAC under this
Agreement.
10.4.3 If NORAC or its shareholders, as the case may be
("Offeror"), desire to sell or otherwise transfer a Subject Interest
(as defined in Section 10.4.5), as provided in Sections 10.4.1 or
10.4.2, the Offeror shall first offer in writing to sell the Subject
Interest to UNIMED at the same price and on the same terms as offered
by a bona fide purchaser offering to purchase the Subject Interest (the
"Offer"). Such notice to UNIMED shall be accompanied by a copy of the
Offer. UNIMED shall have ten (10) days following the date of such
notice to elect to exercise its right of first refusal by so notifying
the Offeror in writing and by payment for such Subject Interest at the
price and on the terms specified in the Offer within thirty (30) days
after the expiration of such ten (10) day period.
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10.4.4 If UNIMED shall fail to so notify the Offeror within the
said ten (10) day period, it shall be deemed to have rejected said
offer. In that event, the Offeror may sell or transfer the Subject
Interest to said bona fide purchaser provided that the Subject Interest
is sold at a price at least equal to the price stated in the Offer and
in accordance with the other terms stated therein, and the provisions
of this Section 10.4 shall not thereafter apply to any subsequent sales
or other transfers of any Subject Interest. If, however, no such sale
or transfer is consummated within one hundred twenty (120) days from
the date of the original Offer, the foregoing requirement that the
Offeror first offer to sell the Subject Interest to UNIMED shall again
apply.
10.4.5 As used in this Section 10.4, the following terms shall
have the meanings specified in this Section 10.4.5:
"Control" shall mean having the power to direct or cause
direction of the management and policies of NORAC.
A "direct competitor of UNIMED" shall mean an entity that sells
a pharmaceutical product which directly competes with Marinol.
"Subject Interest" shall mean either a controlling interest in
NORAC (provided that it is sold or otherwise transferred to a direct
competitor of UNIMED) or the Plant.
10.5 Force Majeure.
10.5.1 No party shall be liable for any failure to perform its
obligations hereunder where such failure results from causes beyond the
reasonable control of such party, including, without limitation,
strikes, lockouts, labor disputes, embargoes, acts of God, inability to
obtain labor or materials, governmental restrictions, governmental
regulations, governmental orders, judicial orders, enemy or hostile
governmental action, civil commotion, earthquake, fire or other
casualty, provided that the party claiming the force majeure has given
prompt notice thereof to the other party. Performance by the party
claiming the force majeure shall be suspended for the duration of the
force majeure, subject to Section 10.5.2 below.
10.5.2 Notwithstanding the foregoing, in the event the claimed
force majeure prevents NORAC from commencing manufacture of the product
within six (6) months from the occurrence of the event of force
majeure, either party may terminate this Agreement and cancel all
orders for product hereunder not yet delivered immediately upon written
notice to the other. Upon notice of such termination, and cancellation,
NORAC shall immediately refund to UNIMED any
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and all amounts paid by UNIMED hereunder for product not yet delivered.
NORAC will, if requested, assist UNIMED in finding alternative
sources of supply for the product.
10.6 PARTIES. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any person, other than the parties hereto and
their successors and permitted assigns, any rights or remedies under or by
reason of this Agreement.
10.7 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach or interpretation thereof, shall be
resolved by binding arbitration in Los Angeles County, California. The
arbitrator, who shall be a retired judge of the Superior Court, shall be
selected jointly by the parties, or if the parties fail to do so, shall be
appointed by Judicial Arbitration and Mediation Services, Inc. The
arbitration shall be conducted in accordance with the provisions of Part
3, Title 9 (Section 1280 et seq.) of the California Code of Civil
Procedure. The provisions of Section 1283.05 of the California Code of
Civil Procedure, which provides for certain discovery procedures, is by
this reference made a part hereof. A judgment upon the award rendered in
the arbitration may be entered in any court having jurisdiction thereof.
Neither the provisions of this Section nor the exercise of any rights
hereunder shall limit the right of any party to institute and maintain
litigation in order to obtain, at any time, provisional or ancillary
remedies including, without limitation, attachment and injunctive relief;
the institution and maintenance of such litigation shall not constitute a
waiver of the right of any party to submit any controversy or claim to
arbitration as herein provided. In any action or arbitration proceeding
brought under or arising out of or relating to this Agreement, or the
breach or interpretation thereof, each party hereby consents to the
jurisdiction of any competent court within the State of California and to
service of process by any means authorized by California law.
10.8 ATTORNEYS' FEES. If any proceeding (including any arbitration
proceeding) is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection
with the provisions hereof, the successful or prevailing party in such
proceeding shall be entitled to recover its reasonable attorneys' fees and
other costs incurred in such proceeding.
10.9 LATE PAYMENT. If any amount is not paid when due under this
Agreement, interest shall thereafter accrue on such amount at a rate of
three percentage points (3%) in excess of the "prime rate" as reported in
The Wall Street Journal (or if more than one prime rate is reported, the
highest thereof) until such payment is received by the party to whom such
payment is owed (the "payee"), and, in addition, in the event that the
person obligated to make such payment (the "payor") fails to make payment
to the payee
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within twenty-one (21) days following the delivery to the payee of written
notice of nonpayment, the payee shall be entitled to receive a late charge
in an amount equal to ten percent (10%) of the overdue amount. The parties
recognize that a default in making payments as provided herein will
require the payee to incur additional costs and expenses and that the
damages caused thereby would be extremely difficult and impractical to
ascertain. The parties agree that an amount equal to the late charge plus
the accrual of interest at the prime rate plus 3% is a reasonable estimate
as of the date hereof of the damage to the payee in the event of late
payment.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute only one instrument.
10.11 INTERPRETATION. The section headings of this Agreement are for
the convenience of reference only and shall not be deemed to alter or
affect the meaning of any provision hereof. This Agreement has been
reviewed by both parties and their respective counsel, and as a result,
shall be given a fair and reasonable interpretation without consideration
or weight being given to its having been drafted by any one party or its
counsel.
10.12 ENTIRE AGREEMENT. This Agreement hereto constitutes the final,
complete and exclusive agreement between the parties and supersedes any
and all prior negotiations, discussions, understandings and agreements
between the parties relating to the subject matter hereof (including, but
not limited to the Prior Contract).
10.13 TIME OF ESSENCE. Time is of the essence in the observation and
performance of the provisions of this Agreement.
10.14 SEVERABILITY. In case one or more of the provisions contained in
this Agreement shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired hereby.
10.15 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of California,
without regard to principles of conflicts of laws.
10.16 CONFIDENTIALITY. The parties agree that all information obtained
by them pursuant to Sections 3.2 or 3.6 or otherwise shall remain strictly
confidential and shall not be used or disclosed by either party for any
purpose other than to determine compliance with this Agreement or for such
other purpose as may be required by law. In the event that disclosure is
required by law, the recipient will be advised of the
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confidential nature of such information and a confidentiality agreement or
protective order maintaining the confidentiality of such information will
be obtained to the maximum extent possible.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
UNIMED PHARMACEUTICALS, INC. THE NORAC COMPANY, INC.
By: _______________________ By: _______________________
Xxxxxxx X. Xxxxx, Title: __________________
President & CEO
By: _______________________ By: _______________________
Title: ____________________ Title: __________________
The undersigned, shareholders of NORAC holding a controlling interest (as
defined above) therein, hereby join in the foregoing agreement solely for
purposes of Section 10.4 thereof.
______________________________
______________________________
______________________________
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