EXHIBIT 10.1
EXCLUSIVE MANUFACTURING AND SUPPLY AGREEMENT
THIS EXCLUSIVE MANUFACTURING AND SUPPLY AGREEMENT ("Agreement"), dated as
of October 7, 1997 is entered into by and between NORTH AMERICAN SCIENTIFIC,
INC., a Delaware corporation ("NASI"), and RADIOMED CORPORATION, a Delaware
corporation ("RADIOMED"), with reference to the following facts:
RECITALS:
A. NASI is licensed under Nuclear Regulatory Commission ("NRC")
regulations as a manufacturer of products containing radioactive isotopes and
possesses capabilities for the manufacture, safe handling and distribution of
such products; and
B. RADIOMED possesses certain proprietary information involving the use
of radioactive isotopes in medical products and the use of ion implantation for
introducing radioactive isotopes into such products;
C. NASI has made a $500,000 convertible loan to RADIOMED as of the date
of this Agreement, which funds RADIOMED intends to utilize to create
manufacturing capacity for the products described herein, including the purchase
of ion implantation machines; and
D NASI wishes to become the exclusive North American manufacturer of
products designed and specified by RADIOMED and/or its customers which utilize
ion implantation in their manufacture and RADIOMED wishes to utilize NASI as the
exclusive North American manufacturer of such products.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS
Unless the context in which used requires a different meaning or
interpretation, the following words and phrases shall have the meanings set
forth below:
1.1 AFFILIATE. A Person or entity that directly or indirectly through one
or more intermediaries Controls, is Controlled by, or is under common Control
with, the designated party, but only for as long as such Control relationship
exists.
1.2 ANCILLARY PRODUCTS. Instruments, supplies and materials manufactured
by or for RADIOMED that are designed or are suitable for use in connection
with the use of the Product in the Field of Use, including (by way of example
and not in limitation), drapes, wipes, catheters, needles, templates and the
like.
1.3 ANTICIPATED REQUIREMENTS. RADIOMED'S projected purchases of the
Product as set forth in the forecasts provided by RADIOMED to NASI pursuant to
Section 4.6 of this Agreement.
1.4 APPLICABLE REGULATORY REQUIREMENTS. Any statute, law, ordinance,
rule, regulation, requirement, order or decree promulgated by (a) any federal,
state or local government or any agency or instrumentality thereof having
jurisdiction over the manufacture, shipment, handling, use, storage or disposal
of medical devices or radioactive materials, and (b) any government, or any
agency or instrumentality of the government, of any foreign country or a
political subdivision of a foreign country into which the Product is shipped or
in which the Product is sold.
1.5 COMMERCIAL SALES. A sale of a RADIOMED Product to a Customer in the
ordinary course of business (excluding sales of samples or for education and
training purposes) after the Product is Commercially Available.
1.6 COMMERCIALLY AVAILABLE. The existence of production capacity
sufficient to satisfy RADIOMED's anticipated requirements for the Product during
the first Sales Year.
1.7 CONFIDENTIAL INFORMATION. All information of a confidential or
proprietary nature disclosed by RADIOMED to NASI or by NASI to RADIOMED in
connection with or pursuant to this Agreement. As used in this Agreement,
"Confidential Information" shall not include any information or data disclosed
to a party (the "Recipient") that (a) was in the Recipient's lawful possession
prior to the Recipient's receipt of the same pursuant to this Agreement, (b) at
the time of the disclosure is or thereafter becomes, through no act or failure
to act on the part of the Recipient, known within the industry or part of the
public domain, (c) was furnished to the Recipient by a Third Party without
breaching any confidentiality or nondisclosure agreements to which such Third
Party was subject, or (d) was independently developed by the Recipient without
reference to or reliance upon such Confidential Information.
1.8 CONTROL. With respect to any Person or group of Persons, possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise, including (a) in the case of a
corporation, ownership of more than fifty percent (50%) of the shares of stock
entitled to vote for the election of directors and, (b) in the case of any other
business entity, ownership of more than fifty percent (50%) of the beneficial
interest in capital or profits.
1.9 COST. Direct labor, direct material, indirect labor and salaries
reasonably allocated to Ion Implantation Processing, and overhead related to the
cost of facilities, exclusive of wages and salaries, reasonably related to Ion
Implantation Processing, including the cost of maintaining NRC and/or State
licensure and safety regulations as they pertain to RADIOMED's
products only, in each case in accordance with NASI's accounting policies
consistently applied and generally accepted accounting principles.
1.10 CUSTOMER. Any Person to whom RADIOMED delivers one or more units of
the Product pursuant to a purchase order received by NASI from RADIOMED, whether
such purchase order was submitted directly by the purchaser or on behalf of the
purchaser by RADIOMED or any other Person.
1.11 DEFECTIVE PRODUCT. Product that was not manufactured and produced in
accordance with or that otherwise fails to conform to the Product
Specifications.
1.12 DOCUMENTED COST. The sum of (a) the price paid by RADIOMED to NASI for
units of the Product purchased by RADIOMED pursuant to this Agreement plus (b)
taxes, freight and insurance paid by RADIOMED in order to take possession of
such Product FOB NASI's factory.
1.13 EFFECTIVE DATE. The date of execution of this Agreement.
1.14 FDA. The United States Food and Drug Administration.
1.15 FIELD OF USE. Any application involving the treatment of malignant
tissue, intervascular irradiation, or irradiation of tissue to minimize or
prevent cellular growth or regrowth or otherwise aid in the treatment of
disease.
1.16 FORCE MAJEURE. The occurrence of an act of God or other events beyond
the reasonable ability of the party affected thereby to control, including, but
not limited to, wars or insurrections, strikes, fires, vandalism, floods,
earthquakes, work stoppages, embargoes, labor shortages, lack of materials or
other similar circumstances.
1.17 GEOGRAPHIC MARKET AREA. North America.
1.18 IMPROVEMENT. Any change in the Product that enhances the performance
of the Product or that makes it easier to manufacture, distribute, store, use or
dispose of.
1.19 INSOLVENT. With respect to any Person: (a) the filing of an
application by a Person for, or such Person's consent to, the appointment of a
trustee, receiver, or custodian of its other assets; (b) the entry of an order
for relief with respect to a Person in proceedings under the United States
Bankruptcy Code, as amended or superseded from time to time; (c) the making by a
Person of a general assignment for the benefit of creditors; (d) the entry of an
order, judgment, or decree by any court of competent jurisdiction appointing a
trustee, receiver, or custodian of the assets of a Person unless the proceedings
and the person appointed are dismissed within ninety (90) days; or (e) the
failure by a Person generally to pay his or her debts as the debts become due
within the meaning of Section 303(h)(1) of the United States Bankruptcy Code, as
determined by the Bankruptcy Court, or the admission in writing of such Person
of its inability to pay its debts as they become due.
1.20 INVOLUNTARY BUSINESS DISRUPTION. An interruption in the marketing and
distribution activities of RADIOMED caused by, resulting from or attributable to
(a) the failure or inability of RADIOMED or its vendors to supply components or
Technology necessary to produce the Product, (b) absence of a requisite permit,
approval or license or other governmental authorization necessary in order to
market and sell the Product for use in the Field of Use in the United States
without violating the laws of the state in which such sale is proposed to be
made, or (c) the occurrence of an event of Force Majeure.
1.21 ION IMPLANTATION PROCESSING. Use of the Technology for the
manufacture of Product.
1.22 NET SELLING PRICE. The actual end-user price for Product provided to a
Customer, less sales taxes, cost of shipping insurance, cost of freight, cost of
packing, and other transportation charges, but only if such taxes, costs and
charges are expressly stated and separately invoiced or may be readily
determined by acceptable accounting practices.
1.23 NOTE. The 10% Convertible Secured Subordinated Note due 2007 in the
principal amount of $500,000 made in favor of NASI by RADIOMED.
1.24 PERSON. Any individual, partnership, association, joint stock company,
joint venture, corporation, limited liability company, trust, unincorporated
organization or governmental entity, or any agency or political subdivision, or
economic unit thereof.
1.25 PRODUCT. Either radioactive sources, or medical devices provided by
RADIOMED or its Customers, into which a radioactive isotope is incorporated by
ion beam implantation processing. Product shall not include products which are
directly competitive with NASI's existing product line.
1.26 PRODUCT SPECIFICATIONS. The product specifications, quality control
tests and inspection procedures for the Product that are to be set forth in each
order supplied by RADIOMED and provided to NASI prior to manufacturing of each.
1.27 PROPORTIONATE SHARE. The ratios in which RADIOMED and NASI shall share
(a) the costs and expenses of certain actions or proceedings under Section 10 of
this Agreement and (b) any recoveries resulting therefrom, if both parties elect
to participate in any such actions or proceedings. Each party's Proportionate
Share shall be the percentage obtained by multiplying 100% by a fraction, (a)
the numerator of which is the lost profits attributable to lost sales of the
Product by such party and (b) the denominator of which is the aggregate lost
profits of both parties attributable to lost sales of the Product.
1.28 SALES YEAR. The twelve (12)-month period commencing on the Effective
Date, and each subsequent twelve (12)-month period commencing on the one year
anniversary of the Effective Date.
1.29 TECHNOLOGY. Any proprietary invention, development or improvement, and
any trade secret, "know-how," proprietary manufacturing formula, process,
procedure, method or technique, whether or not patentable or registerable, now
or hereafter owned by or licensed to
RADIOMED to the extent that such technology is reasonably relevant to the
manufacture of the Product.
1.30 THIRD PARTY. Any person other than a legal entity that is a party to
this Agreement. As used in this Agreement, "Third Party" shall include agents
and employees of a party to this Agreement.
1.31 TRANSFER PRICE. The price at which Product is sold by NASI to
RADIOMED hereunder.
2. GRANT OF MANUFACTURING AND SUPPLY RIGHTS
2.1 SCOPE OF MANUFACTURING AND SUPPLY RIGHTS. Subject to Section 4.1
herein and the other provisions of this Agreement, RADIOMED hereby grants to
NASI an exclusive license to use the Technology for the sole purpose of
manufacturing in the Geographic Market Area 100% of RADIOMED's requirement for
Products for use in the Field of Use in the Geographic Market Area. In
addition, RADIOMED hereby grants to NASI an exclusive license to use the
Technology for the sole purpose of manufacturing in the United States such
portion of RADIOMED's requirement for Products for use outside the Geographic
Market Area as RADIOMED may request. The licenses granted in this Section 2.1
shall continue for so long as NASI holds at least 50% of the original value of
the Note (or equivalent in dollar value of the Note in Series A Preferred Stock
or Common Stock of the Company) and for one Sales Year thereafter.
2.1.1 Provided that this Agreement has not previously been terminated
by either party, the term of this Agreement may be extended for an additional
three (3) Sales Years by mutual consent of the parties.
2.1.2 As long as NASI holds manufacturing rights in the Geographic
Market Area under the provisions of 2.1 above, RADIOMED, at its sole option, may
order Products from NASI for delivery outside the Geographic Market Area and
NASI agrees to accept such orders, subject to the other provisions of this
Agreement. Should RADIOMED, in its sole discretion,
conclude that a manufacturing facility in a territory outside of the North
America is in its best interests, then it shall so inform NASI and NASI shall
have the right to propose to RADIOMED in writing within 60 days after receipt of
notice the terms under which it would agree to manufacture Products for RADIOMED
in that territory. The parties shall negotiate in good faith for a period of 30
days any proposal made by NASI hereunder. Whether or not the parties reach
agreement within such 30 day period, neither party shall xxxx any further
obligation pursuant to this Section 2.1. Notwithstanding the foregoing, if
RADIOMED, with approval of its Board of Directors, executes a collaboration
agreement of any sort with a foreign company which provides that company the
right to manufacture in a territory outside the Geographic Market Area, then
such right-to-negotiate shall not apply.
2.2 SUBLICENSES. The rights granted hereunder are personal to NASI and may
not be assigned or sublicensed except that NASI may grant a sublicense to any
Affiliate of NASI for as long as (a) NASI continues to own at least eighty
percent (80%) of the voting and beneficial ownership interest of such Affiliate
during the term of such license, and (b) such sublicense is on terms and
conditions consistent with this Agreement, in a written form previously
reasonably agreed to by RADIOMED and NASI, and expressly provides that it shall
terminate simultaneously with the termination of this Agreement.
2.3 IMPROVEMENTS OF PRODUCT. All Improvements or modifications made by
RADIOMED to the Product that are intended for use or that can be adapted for use
in the Field of Use are included in this Agreement and are subject to the
manufacturing rights granted to NASI hereunder. Ancillary Products developed or
licensed by RADIOMED shall not be covered by this Agreement.
2.4 RIGHTS TO PRODUCT IMPROVEMENTS. Subject to the provisions of Section
5.1.9 below, any Improvements to the Product developed by NASI during the term
of this Agreement shall be jointly owned by RADIOMED and NASI, but all
Improvements or modifications to Ion Implantation Processing or the Product that
are intended for use or that can be adapted for use in the Field of Use
developed by RADIOMED are included in this Agreement and are subject to the
manufacturing rights granted to NASI hereunder.
2.5 INFRINGEMENT. Subject to the provisions of Section 5.2.6, NASI shall
not utilize ion implantation in products other than RADIOMED's Products unless
such utilization is not based upon the Technology (i.e., is based upon
commercially available technology or technology developed by an independent
third party).
3. [THIS SECTION HAS BEEN LEFT INTENTIONALLY BLANK.]
4. REQUIREMENTS AND SUPPLY
4.1 REQUIREMENTS. RADIOMED shall procure from NASI, and NASI shall
supply to RADIOMED or to Customers each month, the number of units of the
Product for which RADIOMED submits purchase orders pursuant to Sections 4.6 and
4.10, below, representing 100% of RADIOMED's requirements for Product for use in
the Field of Use in the Geographic Market Area.
4.2 SPECIFICATIONS. All Product supplied by NASI hereunder shall in all
material respects meet the Product Specifications applicable to the Product when
intended for use in the Field of Use. Prior to the manufacturing of any
Product, NASI and RADIOMED shall agree on the Product Specifications for the
Product and shall attach same as part of a written order for Product. The
Product Specifications shall constitute an integral part of the order.
4.3 TRANSFER PRICES. The Transfer Price payable by RADIOMED for the
Product shall be NASI's Cost plus 25%. Additionally, NASI shall receive 10% of
the gross margin (Net Selling Price less the sum of the Transfer Price and the
cost to RADIOMED of any RADIOMED-provided components) for the Product.
4.4 PRE-MANUFACTURING PHASE. RADIOMED shall bear the responsibility
and cost of setting up the manufacturing operation (the "Pre-Manufacturing
Phase"). During the Pre-Manufacturing Phase, NASI shall provide sufficient
"shell" building space to house RADIOMED's activities in an efficient manner, in
accordance with the projections of required space set forth in RADIOMED's
business plan. The "shell" building space shall have the following services
available at its periphery: 208V.3 phase, 4 wire plus ground, 25KVA (per
implanter) power; water at 75 PSIG Max with a minimum pressure drop of 45 PSI
from inlet to outlet, 60-75 deg. F, closed loop cooled conditioned water; air at
90-100 PSIG, intermittent duty; dry nitrogen at 5 PSIG, intermittent duty;
ventilation at 600 CFM exhaust (per implanter) room temperature controlled to
reasonable working conditions, reasonable humidity control; and radiation
monitoring, filtering and controlled storage sufficient to meet the requirements
of NASI's NRC licensure. The facility services and equipment required within
the shell for operation of RADIOMED's manufacturing equipment shall be
specified and paid for by RADIOMED, subject only to zoning, safety, and other
legal and regulatory requirements of NASI. NASI shall provide, at RADIOMED's
request, reasonable labor and services to assist RADIOMED during the
Pre-Manufacturing Phase, and RADIOMED shall reimburse NASI for all reasonable
costs of such labor and services promptly upon NASI's submission of invoices
therefor. The Pre-Manufacturing Phase shall end when the ion implantation
facility is operational.
4.5 DUTY TO MANUFACTURE. Upon completion of the Pre-Manufacturing
Phase, NASI agrees to take responsibility for the ion implantation facility and
to manufacture Products to mutually agreed upon Product Specifications and in
accordance with forecasts provided by RADIOMED pursuant to Section 4.6 hereof.
NASI agrees to provide access to the ion implantation facility by RADIOMED
personnel for research and development activities, provided that such access
does not interfere with scheduled manufacturing activities.
4.6 SALES FORECASTS. RADIOMED will provide NASI on or before the
fifteenth (15th) day of each month a nonbinding rolling forecast of reasonably
projected Product sales for the each of the three (3) calendar months following
the month in which the forecast is prepared.
4.7 ABATEMENT. If by reason of an Involuntary Business Disruption
during the term of this Agreement, NASI (a) is unable to begin or to continue
manufacturing and supplying the Product or a material portion thereof, or (b)
would incur an unreasonable risk (as determined by an objective standard) of
civil or criminal liability by continuing to do so, then the obligation of NASI
to manufacture and supply such Product shall be suspended for a period of time
equal to such time as the Involuntary Business Disruption continues to exist.
4.8 EXCLUSIVE REMEDY. The right granted to RADIOMED to terminate this
Agreement under Section 9 hereof, shall be the sole and exclusive remedy for the
failure of NASI to supply RADIOMED'S Anticipated Requirements, and in no event
shall NASI be liable for damages or any other amount by reason of its failure to
do so.
4.9 RIGHT OF NASI TO MANUFACTURE AND SUPPLY TO OTHERS. Subject to such
greater rights NASI shall have pursuant to Sections 5.1.2, 5.1.5 and 9.5.2
hereof, at any time after this Agreement has been terminated pursuant to Section
9 hereof, NASI shall be entitled to manufacture and distribute the Product;
provided that any Product so manufactured or distributed does not infringe on or
otherwise use RADIOMED Confidential Information or the Technology.
4.10 PURCHASE ORDERS. All purchase orders shall be submitted by RADIOMED
to NASI on the form agreed to by RADIOMED and NASI prior to manufacture under
this Agreement (a "Purchase Order"). The lead time for delivery of Products
pursuant to a Purchase Order shall be at least 30 days. Each such purchase
order shall specify by Customer name and address (a) the number of units and
activity level of the Product to be delivered to such Customer, (b) the required
delivery date, and (c) the Net Selling Price. Notwithstanding the provisions of
any such purchase order, the provisions of this Agreement shall govern the
purchase and sale of the Product between NASI and RADIOMED, and any
inconsistency or conflict between the terms set forth in any form of Purchase
Order submitted by RADIOMED with the provisions of this Agreement shall be
resolved in favor of the provisions of this Agreement. All Purchase Orders
submitted in accordance with the provisions of this Section 4.10 shall be deemed
accepted by NASI. However, NASI reserves the right to reject any Purchase Order
relating to Product which, in the exercise of NASI's reasonable discretion and
after consultation with RADIOMED, would be impossible or impracticable to fill
(in light of, for instance, the requested activity level or lead time), or could
expose NASI to an unreasonable risk of criminal or civil liability.
4.11 PACKAGING AND LABELING. The Product will be supplied in containers
meeting the Product Specifications, and will be packaged with all applicable
Product literature and instructions for use in packaging which (a) satisfies all
Applicable Regulatory Requirements governing the handling, shipment and storage
of the Product and (b) is reasonably sufficient to protect against damage during
shipping.
4.11.1 Subject to any limitations imposed by the foregoing
requirements, the packaging design and trade dress for the Product shall conform
to RADIOMED's specifications so as to assure that such design and trade dress
are consistent with the packaging of RADIOMED's other products.
4.11.2 NASI shall include with the Product such instructions for use
and such Product information data sheets as provided by RADIOMED and shall
include in any Products shipped to Customers in kit form such instructions for
use and Product information data sheets as may be supplied by RADIOMED for such
purposes.
4.11.3 All packaging, shipping labels, instructions for use and
product information data sheets shall bear RADIOMED's trademarks, labels and
markings as RADIOMED may reasonably request. RADIOMED shall provide NASI with
camera-ready art work for all trademarks, labels or markings that RADIOMED
desires to have imprinted on all packaging and product insert data sheets, and
NASI shall not make any changes in such art work or in the specifications for
such packaging materials without the prior written consent of RADIOMED.
4.11.4 NASI shall be entitled to display its name on the Product
packaging and Product information data sheets in a manner that (i) clearly
identifies the Product as having been manufactured by NASI, and that (ii) gives
NASI's name equal prominence with RADIOMED's .
4.12 ORDER FULFILLMENT. Subject to Section 4.10, NASI will fill
all Purchase Orders submitted by RADIOMED (provided that such Purchase Order is
not in excess of 150% of the most recent Anticipated Requirements of RADIOMED
under Section 4.6), will make shipment of the Product directly to the Customer
identified in the Purchase Order within the time prescribed by Section 4.10, and
will afford all Purchase Orders for the Product received from RADIOMED equal
priority with NASI's own supply requirements. NASI will ship all orders for the
Product in the priority in which such orders were received, unless otherwise
reasonably requested by RADIOMED.
4.13 SHIPPING AND INVOICING. All Product shall be drop shipped by
NASI directly to RADIOMED's Customers FOB NASI's manufacturing plant at a date
and time
appropriate to ensure that the Product will be delivered to the Customer at the
address specified in the purchase order on the delivery date specified in the
purchase order. Carriers and routing utilized to make such shipments shall be
selected by NASI but shall be consistent with any shipping protocols or
procedures previously established by the parties.
4.14 INVOICING. NASI shall invoice RADIOMED, 30-days net, upon
shipment of the Product. RADIOMED shall make payment of any correct invoice to
NASI.
4.15 PAYMENT. Payment of the Transfer Price for all Product
shipped to Customers shall be made by RADIOMED, whether or not RADIOMED
receives payment from the Customer, it being agreed that RADIOMED is the
customer for all Product shipped by NASI pursuant to purchase orders
submitted to NASI by RADIOMED pursuant to this Agreement. RADIOMED shall be
responsible for all xxxxxxxx, receivables and collections attributable to
Product sales made pursuant to purchase orders submitted to NASI by RADIOMED,
and NASI shall not be required to bear any of the risk or cost of collection
with respect to the Net Selling Price of the Product. Amounts owed to
RADIOMED due to rejections of Product or discrepancies on paid invoices will
be, at RADIOMED's option, fully credited against future invoices payable by
RADIOMED, or paid by NASI within 30 days after NASI's receipt of a debit memo
or other written request for payment from RADIOMED.
4.16 RISK OF LOSS. Delivery of the Product by NASI to RADIOMED
pursuant to this Agreement shall be complete and the risk of loss shall pass to
RADIOMED upon receipt by the carrier for shipment.
4.17 WARRANTIES OF NASI. NASI warrants to RADIOMED that:
A. The Product supplied to RADIOMED hereunder shall be
manufactured and produced in plants that have been registered with and are in
compliance with the applicable requirements of the FDA and the NRC.
B. NASI also warrants that the Products (i) conform to
Product Specifications and (ii) have been manufactured in accordance with:
(1) applicable Good Manufacturing Practices as promulgated by the FDA; and
(2) applicable laws and regulations of the United States and each of the
fifty states in which RADIOMED is marketing and distributing the Products;
and (3) all other Applicable Regulatory Requirements.
4.18 WARRANTIES OF RADIOMED. RADIOMED warrants to NASI that the
use of the Product for its intended purpose in the Field of Use will not violate
any Applicable Regulatory Requirements in the Geographic Market Area or any
foreign markets in which NASI delivers Product.
4.19 WARRANTY DISCLAIMERS. THE LIMITED WARRANTIES SET FORTH IN
SECTIONS 4.17 AND 4.18 ABOVE, AND SECTION 7.1 BELOW, ARE THE ONLY WARRANTIES
BEING MADE BY NASI AND RADIOMED WITH RESPECT TO THE PRODUCT. ALL OTHER
WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS OR IMPLIED, CONTRACTUAL OR
STATUTORY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE ARE SPECIFICALLY EXCLUDED AND DISCLAIMED.
4.19.1 RADIOMED agrees and understands that it shall be solely
responsible for any warranties or representations made by it to its Customers
which are inconsistent with or in addition to any warranties made by NASI, and
RADIOMED shall, at its own expense, defend, indemnify and hold NASI harmless
from and against any claims thereof of any nature whatsoever in the manner and
to the extent provided by Section 8.2, below.
4.20 NONCONFORMING GOODS AND DEFECTIVE PRODUCT. RADIOMED shall
promptly advise NASI of any Product delivered to a Customer that has been or is
being rejected as Defective Product. Any such notice (a) shall be in writing,
(b) shall specify (i) the original date of sale and (ii) the shipment or lots
being rejected, and (c) shall be accompanied by appropriate information
substantiating the claim that such Product was Defective. The costs and expense
of returning Defective Product shall be borne by NASI, but NASI shall not be
responsible for the costs of Product believed to be Defective Product until it
is determined that
the Product was Defective Product, and no Product shall be deemed to be
Defective Product until NASI has first been afforded the opportunity to inspect
the Product and to confirm that it was Defective Product.
4.21 REPLACEMENT. NASI shall promptly replace at its own cost
and expense any Defective Product that is returned to NASI or, if RADIOMED so
requests, shall credit to RADIOMED on a monthly basis an amount equal to the
Documented Cost of any such returned Product, if such Product:
4.21.1 Is Defective Product that has been properly returned by
RADIOMED or any Customer of RADIOMED.
4.21.2 Has been replaced on a no-charge basis by RADIOMED in
accordance with the established customer complaint and returned goods
policies of NASI for the return and replacement of Defective Product.
4.22 CUSTOMER COMPLAINTS. RADIOMED shall promptly refer to NASI for
review and evaluation any complaints received by it that are subject to the
provisions of Part 820 of Title 21 of the Code of Federal Regulations (Good
Manufacturing Practice for Medical Devices).
4.22.1 With respect both to complaints referred to NASI
by RADIOMED and complaints received directly by NASI from Customers:
A. NASI shall (1) give such notices, (2) conduct such
investigations, (3) maintain such records, and (4) take such other actions as
in each case are required by the FDA and any state regulatory agency having
jurisdiction with respect thereto unless NASI is contesting the matter with
the FDA or other regulatory agency in good faith and with due diligence.
B. NASI shall keep RADIOMED advised on a continuing basis
with respect to (1) the nature of such complaints, (2) the results of any
investigations conducted by it with respect thereto, and (3) the corrective
action, if any, initiated as a result of or in response
thereto. RADIOMED shall treat all such information received by NASI as
Confidential Information.
4.23 SALES & USE TAXES. As between RADIOMED and NASI, RADIOMED shall
be responsible for the payment of all sales and use taxes becoming payable by
reason of its purchase of the Product from NASI and the subsequent sale of the
Product to its Customers.
5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 COVENANTS OF RADIOMED. RADIOMED covenants, warrants and represents
to NASI that:
5.1.1 SECURITY INTEREST. As security for the performance of its
obligations now or hereafter owing under this Agreement, RADIOMED, for valuable
consideration, receipt of which is acknowledged, hereby grants to NASI a first
priority security interest in RADIOMED's now owned or after acquired physical
assets (including but not limited to all inventory, supplies, raw materials,
work in process, finished goods, equipment, tools, furniture, fixtures, parts
and other goods) which are located on the premises of any manufacturing facility
owned by NASI or which are utilized by NASI in manufacturing Product for
RADIOMED pursuant to the terms of this Agreement (collectively, the
"Collateral"). RADIOMED acknowledges that NASI shall be entitled to a purchase
money security interest in the ion implantation machines and other equipment and
inventory purchased with the funds loaned by NASI to RADIOMED and evidenced by
the Note.
5.1.2 GRANT OF LICENSE TO USE TECHNOLOGY. Provided that NASI may
only exercise the rights and remedies granted hereunder after the occurrence of
an Event of Default (as defined in Section 5.1.4 below), RADIOMED hereby grants
to NASI an irrevocable nonexclusive license (exercisable without payment of
royalty or other compensation to RADIOMED) to use, assign, license or sublicense
any of the Technology (excluding patents), now or hereafter owned, licensed, or
otherwise acquired by RADIOMED. Except with respect to Technology which is not
owned by RADIOMED, no agreements hereafter acquired or agreed to
or entered into by RADIOMED shall prohibit, restrict or impair the security
interest granted in Section 5.1.1 above.
5.1.3 FINANCING STATEMENTS. RADIOMED hereby agrees to execute,
deliver and pay the cost of filing any financing statement, or other notices or
instruments appropriate under applicable law, in respect of any security
interest created pursuant to this Agreement which may at any time be required to
give NASI a perfected first priority security interest in the Collateral or
which, in the opinion of NASI, may at any time be desirable. In the event that
any re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such lien or security interest, RADIOMED shall, at its cost and
expense, cause the same to be re-recorded and/or refiled at the time and in the
manner requested be NASI. RADIOMED hereby irrevocably designates NASI, its
agents, representatives and designees as agents and attorneys-in-fact for
RADIOMED to sign such financing statements, notices and other instruments on
behalf of RADIOMED.
5.1.4 DEFAULT. RADIOMED shall be in default under this Agreement
upon the happening of any of the following events or conditions (an "Event of
Default"), without demand or notice from NASI:
(a) Material failure to observe or perform or material
violation of any of RADIOMED's agreements, warranties or representations in
this Agreement which breach remains uncured for a period of not less than 60
days after written notice thereof;
(b) Failure of RADIOMED to pay when due any obligation (whether
to NASI or any other creditor), whether by maturity, acceleration or
otherwise, or any other default by RADIOMED which causes or permits
acceleration thereof, which breach remains uncured for a period of not less
than 60 days after the occurrence thereof;
(c) The occurrence or any default of event of default under the
Note Purchase Agreement entered into between NASI and RADIOMED as of the date
of this Agreement or any
other agreement now or hereafter entered into between such parties which breach
remains uncured for a period of not less than 60 days after written notice
thereof; or
(d) Dissolution, termination of existence, insolvency (as
described herein), business failure, appointment of a receiver or custodian
of any part of RADIOMED'S property, assignment or trust mortgage for the
benefit of creditors by RADIOMED, the recording or existence of any lien for
unpaid taxes, the commencement of any proceeding under any bankruptcy or
insolvency laws of any state or of the United States by or against RADIOMED,
or service upon NASI of any writ, summons, or process designed to affect any
of RADIOMED'S property.
5.1.5 SECURED PARTY'S RIGHTS UPON DEFAULT. Upon an Event of
Default and at any time thereafter, NASI, without presentment, demand, notice,
protest or advertisement of any kind, may:
(a) have full power to take possession of, operate, compromise,
sell or otherwise deal with the Collateral, including without limitation the
express right to use the Collateral to manufacture and sell Product for
NASI's benefit, in its own name or in the name of RADIOMED and RADIOMED
hereby irrevocably appoints NASI its attorney-in-fact for this purpose;
(b) make all obligations from RADIOMED to NASI immediately due and
payable, without presentment, demand, protest, hearing or notice of any kind and
exercise the remedies of a secured party afforded by the Uniform Commercial Code
and other applicable law or by the terms of any agreement between RADIOMED and
NASI;
(c) take possession of the Collateral on the premises at which any
Collateral is located and sell all or part of the Collateral at a public or
private sale or retain the Collateral as payment, whether in part or in full, of
the obligation secured hereby;
(d) in the case of any sale or disposition of the Collateral,
or the realization of funds therefrom, or the retention of such Collateral by
NASI, the proceeds thereof shall first be
applied to the payment of the expenses of such sale, commissions, reasonable
attorneys fees and all charges paid or incurred by NASI pertaining to said sale
or this Agreement, including any taxes or other charges imposed by law upon the
Collateral and/or the owning, holding or transferring thereof; secondly, to pay,
satisfy the foregoing items, RADIOMED hereby promises and agrees to pay any
deficiency; and/or
(e) exercise any and all other rights and remedies available to a
secured party and a creditor under applicable law.
All of the foregoing rights and remedies of NASI shall be cumulative.
5.1.6 FDA MARKETING APPROVAL. RADIOMED shall exercise due
diligence in obtaining as soon as practicable after the execution of this
Agreement and thereafter maintaining in full force and effect throughout the
term of this Agreement all FDA marketing approvals necessary to the sale and
distribution of the Product for use in the Field of Use.
5.1.7 COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS. RADIOMED
shall at all times (a) keep and maintain all records necessary or appropriate to
evidence such compliance or that are otherwise mandated by the Applicable
Regulatory Requirements, and (b) shall make such records available to NASI
(subject to the restrictions imposed by Section 5.3.6., below) and its duly
authorized representatives for inspection and copying at reasonable times during
regular business hours upon reasonable prior notice, and (c) shall promptly
comply with Applicable Regulatory Requirements of any cognizant governmental
authority pertaining to the promotion and sale of the Products.
5.1.8 COVENANT BY RADIOMED NOT TO COMPETE. Unless and until NASI's
exclusive manufacturing and supply rights are terminated pursuant to Section 9
hereof, neither RADIOMED nor any of its Affiliates shall manufacture or supply,
the Product for use in the Field of Use in violation of the exclusive
manufacturing and supply rights of NASI under this Agreement; and RADIOMED
shall not (a) license any other Person in the Geographic Market Area to
manufacture or supply the Product for use in the Field of Use, or (b) knowingly
or intentionally suffer or permit any Person to sell the Product for use in the
Field of Use in the
Geographic Market Area, except that RADIOMED shall have the right to license the
manufacture of Product to an existing unaffiliated Customer for that Product
under commercially reasonable terms and conditions approved by RADIOMED's Board
of Directors.
5.1.9 MANUFACTURING MODIFICATIONS. RADIOMED shall give NASI not
less than sixty (60) days' prior written notice (or such lesser period of time
as the parties mutually agree may be reasonable under the circumstances) of any
modifications proposed to be made by RADIOMED to the manufacturing processes or
procedures for the Product or to any quality control test and/or compliance
procedures relating to the Product or the supplies and components embodied
therein, whether resulting from governmental inspection, customer complaints or
for any other reason, if any such modification will (a) cause a change in the
Product Specifications or (b) cause the Product or the procedure for its
manufacture to differ in any material respect. Such notice shall be
accompanied by a written report setting forth in reasonable detail the reasons
for and the nature of the proposed change and all relevant technical data and,
if NASI so requests, RADIOMED shall meet with NASI to explain the nature of and
the reasons for such change.
5.1.10 LABELING AND WARRANTY CLAIMS. RADIOMED shall not make any
express warranties or other claims with respect to the Product that have not
been authorized by the FDA, NRC or other applicable regulatory agency or that
are inconsistent with any labeling claims that have been approved by the FDA,
NRC or other applicable regulatory agency with respect to the Product.
5.1.11 FOREIGN REGISTRATION. If, in accordance with Section 2.1.1,
RADIOMED provides Purchase Orders to NASI for delivery of Products to foreign
markets, RADIOMED shall inform NASI in writing of any Applicable Regulatory
Requirements that are unique to a foreign country into which RADIOMED elects to
begin marketing and distribution activities and that must be satisfied as a
condition to RADIOMED'S obtaining any necessary permits, licenses or Product
registrations required for the distribution of the Product in such country.
RADIOMED shall prepare at its own cost and expense all documents necessary for
registration, sale and distribution of the Product and any Improvements thereto
for use in the Field of Use, and
shall secure and maintain in full force and effect all other permits, licenses
and approvals required in order to sell the Product for use in the Field of Use
in such foreign countries.
5.2 COVENANTS OF NASI. NASI covenants to and agrees with RADIOMED that:
5.2.1 SALES CAPACITY. NASI shall train, equip and maintain
sufficient staff to effectively manufacture and supply the Product.
5.2.2 MARKETING SUPPORT. NASI shall from time to time provide such
scientific and technical information regarding the Product as RADIOMED may
reasonably request for the purpose of supporting RADIOMED's clinical study and
marketing activities, including such information as may be necessary to assist
RADIOMED in marketing the Product in kit form. In addition, NASI shall make its
technical and marketing personnel available to RADIOMED for reasonable periods
of time to provide technical support, to respond to technical inquiries, and to
participate in marketing and sales strategy sessions.
5.2.3 VENDOR'S AUDIT. NASI shall permit RADIOMED or its authorized
representatives to enter and inspect, during normal business hours, the plants
and facilities in which the Product is manufactured, packaged, labeled or held
in order to permit RADIOMED to verify that the Product is being produced in
conformity with applicable Good Manufacturing Practices and, if relevant, the
applicable Medical Device Directive of the European Commission, and that NASI is
otherwise satisfying its obligations under this Agreement.
A. During any such inspection, RADIOMED's quality control or
compliance inspectors shall be entitled to inspect the manufacturing and quality
control procedures of NASI relating to the Product, and all records relating
thereto, but:
(1) RADIOMED's access to those portions of NASI's
manufacturing and quality control procedures that NASI has designated as
proprietary to NASI shall be limited to the degree of access required in order
to satisfy the applicable requirements of the FDA; and
(2) All such inspections shall be carried out in a
manner that does not unreasonably interfere with NASI's manufacturing
operations.
B. RADIOMED's employees and agents shall be required to
execute NASI's standard form confidentiality and non-disclosure agreement as
a condition to being allowed to conduct such audit.
C. RADIOMED shall not perform an audit more than once in
any Sales Year unless necessary to satisfy Applicable Regulatory Requirements
to which RADIOMED is subject. RADIOMED shall give NASI prior notice of its
intention to conduct any such audit at least five (5) business days prior to
the scheduled commencement thereof, and shall cooperate with NASI in the
scheduling of any such audit so as to minimize to the extent practicable any
disruption to NASI's business operations, but RADIOMED shall not be obligated
to postpone the conduct of such audit for more than fifteen (15) days.
D. RADIOMED shall furnish NASI with a written report of the
results of any such audit as soon as practicable after its completion, and NASI
shall promptly take any action suggested or recommended in such report to the
extent that such action is necessary to cure a default by NASI in the
performance of its obligations under this Agreement.
5.2.4 GOVERNMENTAL INSPECTIONS. NASI shall promptly notify RADIOMED
of any inspection made of its facilities or its operations by any regulatory
agency, or of those of any of its suppliers or contract manufacturers of which
it receives notice, that relates in any manner to the production, distribution
or use of the Product or any component of the Product. NASI shall promptly
advise RADIOMED of the conduct of any such inspection and the results thereof,
and shall provide RADIOMED with a copy of any written notification or report
provided to NASI by the inspecting agency. In addition, NASI shall immediately
request an unexpurgated copy of the inspection report from the inspecting
governmental agency, and, unless prohibited from doing so under applicable law,
shall forward a copy thereof to RADIOMED immediately upon its receipt.
5.2.5 COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS. NASI
shall at all times (a) keep and maintain all records necessary or appropriate to
evidence such compliance or that are otherwise mandated by the Applicable
Regulatory Requirements, and (b) shall make such records available to RADIOMED
(subject to the restrictions imposed by Section 5.3.6 below) and its duly
authorized representative for inspection and copying at reasonable times during
regular business hours upon reasonable prior notice, and (c) shall promptly
comply with Applicable Regulatory Requirements of any cognizant governmental
authority within the United States or any of the fifty states pertaining to the
production of the Product.
5.2.6 COVENANT BY NASI NOT TO COMPETE. Unless and until exclusive
manufacturing and supply rights are terminated pursuant to Section 9 hereof,
neither NASI nor any of its Affiliates shall manufacture, supply, market or
distribute Products for use in the Field of Use in the Geographic Market Area,
except pursuant to this Agreement.
5.3 MUTUAL WARRANTIES AND COVENANTS. Each of the parties covenants to
and agrees with the other that:
5.3.1 AUTHORITY TO CONDUCT BUSINESS. It is duly organized and in
good standing under the laws of the jurisdiction in which it is incorporated and
has all requisite corporate power and authority and the permits, consents, and
qualifications necessary to operate its business as it is currently being
conducted.
5.3.2 AUTHORITY TO PERFORM AGREEMENT. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action, and does not constitute a breach by the warranting party of
its organizational documents or of any contract or agreement to which the
warranting party is a party or by which the warranting party or it assets are
bound.
5.3.3 EXCHANGE OF INFORMATION. It shall promptly furnish to the
other party a complete and correct copy of any notice, report or other
communication that it receives from the NRC, the FDA or from any other
governmental agency concerning the Product.
5.3.4 IMPAIRMENT OF OBLIGATION. Neither party has entered and will
not hereafter enter into any agreement, the execution or performance of which
would violate this Agreement or have an adverse effect upon its ability to
perform this Agreement.
5.3.5 ADVERSE INFORMATION. Each party will promptly notify the
other party in writing of any fact, condition or information which may hereafter
come to its attention and which may adversely affect the reliability, utility or
marketability of the Product, including but not limited to, adverse scientific
or technical studies or evaluations and threatened litigation or claims. If such
adverse information requires that corrective or protective action be taken
related to the Product, including, but not limited to, a recall, market
withdrawal, stock recovery or label clarification, the recipient of such
information will immediately notify the other of such requirement in writing,
provide the other party with complete copies of all documentation related
thereto, and provide all commercially reasonable assistance to the other party
necessary to assure that such actions are taken or such requirements are
satisfied.
5.3.6 CONFIDENTIAL INFORMATION. All Confidential Information
communicated by each party to the other pursuant to this Agreement, including
any Confidential Information gained by either of the parties or their
representatives by reason of association with the other party in connection with
the performance of any obligations under this Agreement, whether or not such
Confidential Information was directly or intentionally communicated, is and
shall at all times remain confidential.
A. Each of the parties agrees that:
(1) It shall not disclose any Confidential Information
to any other person unless specifically authorized in writing by the other party
to do so. In the event that any such written authorization to make disclosure is
given, disclosure shall be made only within the limits and to the extent of such
of authorization.
(2) It shall use its best efforts to prevent any
inadvertent disclosure of any Confidential Information to any Third Party by
using at least the same care
and/or discretion that it uses with similar data of its own that it deems
confidential in the operation of its business.
B. For purposes of this Section 5.3.6, the disclosure of
Confidential Information to employees and agents of a party to this agreement
shall not be deemed to be disclosure to a Third Party provided that the
disclosure is made for purposes related to the performance by such party of its
duties and obligations under this Agreement.
5.3.7 BOOKS AND RECORDS. Each party shall at all times during the
continuance of this Agreement keep books and records in sufficient detail to
permit verification of its compliance with the terms and conditions of this
Agreement. All such books and records shall be available for inspection and
copying by the other party or its designated representative at the principal
place of business of the party keeping such books and records at reasonable
times during regular business hours for purposes reasonably related to this
Agreement.
5.3.8 FURTHER ASSURANCES. Each of the parties shall take such acts
and execute and deliver such documents and instruments as may reasonably be
requested by the other party to enable the other party to perfect any of its
rights under this Agreement, including any assignments, notices of assignment,
or other registrations with applicable domestic and foreign governmental
agencies.
6. TRADE NAMES AND TRADEMARKS
6.1 MARKS OF NASI. The provisions of this Agreement permitting or
requiring RADIOMED to place NASI'S trade name and trademark on the Product and
its packaging are not intended and shall not be construed to give RADIOMED any
interest or license in any such trademarks, trade names, labels or markings.
RADIOMED shall not make any use of NASI's name or any trade name or trademark
owned by NASI except for the purpose of marketing and selling the Product in
accordance with the provisions of this Agreement. Any uses by
RADIOMED in its advertising or elsewhere of NASI's name or any trade name or
trademark owned by NASI, or any name or xxxx similar thereto, shall be subject
to the prior written approval of NASI in its sole discretion and shall be
governed by a separate written agreement.
6.2 MARKS OF RADIOMED. RADIOMED shall be entitled to register and use its
own trade names and trademarks for the purpose of marketing and distributing the
Product for uses within the Field of Use. Any such names and marks shall
constitute the proprietary property of RADIOMED; NASI shall not have any rights
in any such names and marks, and RADIOMED shall be entitled to continue to use
such names and marks after the expiration of NASI's exclusive manufacturing
rights under this Agreement. The provisions of this Agreement permitting or
requiring NASI to place RADIOMED's name and Marks on the Product and its
packaging are not intended and shall not be construed to give NASI any interest
or license in any such trademarks, trade names, labels or markings. Any uses by
NASI in its advertising or elsewhere of RADIOMED's name or any trade name or
trademark owned by RADIOMED, or any name or xxxx similar thereto, shall be
subject to the prior written approval of RADIOMED in its sole discretion and
shall be governed by a separate written agreement.
7. INFRINGEMENT CLAIMS
7.1 WARRANTIES OF RADIOMED. RADIOMED warrants and represents to NASI that
7.1.1 RADIOMED is the owner of or has the right to use all of the
Technology, and has taken all actions reasonably necessary to protect the
Technology. To the knowledge of RADIOMED, after reasonable investigation, the
business conducted or proposed to be conducted pursuant to this Agreement does
not and will not cause RADIOMED to infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, licenses, trade secrets or
other intellectual property rights of any other person or entity.
7.1.2 In the performance of this Agreement, RADIOMED will not
knowingly or willfully infringe any intellectual property rights of any Third
Party including, without limitation, any now existing or subsequently issued
patents.
7.1.3 RADIOMED has no knowledge of any claims, disputes, or
litigation proceedings pending or threatened as of the Effective Date with
respect to the Product or the Technology.
7.2 CLAIMS AGAINST THIRD PARTIES. Should any actual or possible
infringement or other violation by any Third Party of any Technology come to the
attention of either party to this Agreement, such party shall promptly notify
the other party of the alleged infringement or violation. The parties hereto
shall consult with one another with a view to reaching agreement as to the best
means of eliminating the infringement or violation.
7.2.1 DISCRETIONARY LITIGATION. Should RADIOMED elect or agree to
commence litigation or other enforcement action or proceedings, then NASI shall
be entitled to elect to participate in such action or proceeding and to pay its
Proportionate Share of the costs and expense thereof and to receive its
Proportionate Share of any net recovery resulting therefrom provided that NASI
has a material interest in such proceedings or any potential recovery resulting
therefrom. If NASI is not entitled or elects not to participate in any such
action or proceeding, and if RADIOMED elects or agrees to commence litigation or
other enforcement actions or proceedings, then RADIOMED shall bear the entire
cost and expense thereof, and shall be entitled to retain the entirety of any
resulting recovery.
7.2.2 DUTY TO COOPERATE. If RADIOMED elects to initiate litigation
or other action or proceeding on account of an alleged infringement of any
Technology owned by RADIOMED, and NASI elects not to participate in prosecuting
such action or proceeding, including participation in the costs and expenses
incident thereto, NASI shall nonetheless cooperate with RADIOMED in the
prosecution of such action or proceeding provided satisfactory provisions have
been made for the reimbursement by RADIOMED of all reasonable costs and expenses
that NASI incurs in doing so.
7.3 CLAIMS BY THIRD PARTIES. Except as provided below, RADIOMED shall
defend and indemnify NASI from and against any damages, liabilities, costs and
expenses (including reasonable attorneys' fees) arising out of any claim that
any Product sold or licensed
hereunder infringes a valid patent or copyright or misappropriates a trade
secret of a third party, provided that (i) NASI shall have promptly provided
RADIOMED written notice thereof, and reasonable cooperation, information, and
assistance in connection therewith, and (ii) RADIOMED shall have sole control
and authority with respect to the defense, settlement, or compromise thereof,
except that NASI, at its election, shall be entitled to be represented in any
such proceeding by independent counsel of its choosing at its own cost and
expense. Should any Product sold or licensed hereunder become or, in RADIOMED's
opinion, be likely to become the subject of an injunction preventing its use as
contemplated herein, RADIOMED may, at its option, (i) procure the right to
continue using such Product, (ii) replace or modify such Product so that it
becomes non-infringing, or (iii) if (i) and (ii) are not reasonably available to
RADIOMED, then to discontinue the marketing and distribution of such Product.
8. INSURANCE, INDEMNIFICATION AND LIMITATIONS ON LIABILITY
8.1.1 RADIOMED'S LIABILITY INSURANCE. Beginning on the Effective Date,
RADIOMED shall procure such liability insurance as shall be reasonably necessary
in light of the business proposed to be conducted. Prior to distribution of
Product under this Agreement for human use, and continuing for a period of five
(5) years from the date on which the last sale of a Product occurs, RADIOMED
shall maintain (a) product liability insurance (containing both a Vendor's
Additional Insured Endorsement and a Products Contractual Liability Endorsement)
on the Product in amounts that are consistent with the amount of products
liability insurance that are maintained by similarly situated companies selling
comparable products for similar or related purposes, but in no event less than
One Million Dollars ($1,000,000) first dollar coverage per occurrence and Five
Million Dollars ($5,000,000) in the aggregate; and (b) general business
liability insurance with minimum limits of One Million Dollars ($1,000,000)
first dollar coverage per occurrence and Five Million Dollars ($5,000,000) in
the aggregate. NASI shall be named as an additional insured in each policy of
insurance required to be maintained by NASI hereunder.
The issuer of each such policy shall be a standard company
licensed to issue insurance having a Best's rating of B+ or higher and a
policy holder surplus of not less than Twenty-Five Million Dollars
($25,000,000). Each such policy shall provide for (a) the issuance of a
reporting or tail coverage endorsement upon termination of (i) the base
policy, (ii) the
production, manufacturing, marketing and sale of the Product or (iii) the
corporate existence of RADIOMED and (b) for not less than thirty (30) days'
prior written notice to NASI of any proposed change in the nature, scope or
amount of coverage. RADIOMED shall provide NASI with certificates of such
insurance and evidence of the payment of premiums therefor, promptly upon
request.
The insurance coverage required to be maintained hereunder
shall be subject to review and adjustment from time to the time at the
request of either party to limits of liability that are mutually agreeable in
order to assure a continuing level of insurance protection that, as nearly as
practicable after taking relative costs and benefits into account, is
consistent with the level of protection contemplated by the parties at the
time they execute this Agreement, but no such adjustment shall be made more
than once in any consecutive twelve-month period. Should the parties be
unable to agree with respect to the nature or amount of such insurance
coverage, then the dispute shall be resolved by an independent insurance
consultant who has not previously performed services for either party. If the
parties cannot agree on any such independent consultant, then such consultant
shall be selected by the President of the Independent Insurance Brokers
Association in Los Angeles, California.
8.1.2 NASI'S LIABILITY INSURANCE. Beginning on the Effective Date, NASI
shall procure such liability insurance as shall be reasonably necessary in light
of the business proposed to be conducted. Prior to distribution of Product
under this Agreement for human use, and continuing for a period of five (5)
years from the date on which the last sale of a Product occurs, NASI shall
maintain (a) product liability insurance (containing both a Vendor's Additional
Insured Endorsement and a Products Contractual Liability Endorsement) on the
Product in amounts that are consistent with the amount of products liability
insurance that are maintained by similarly situated companies selling comparable
products for similar or related purposes, but in no event less than One Million
Dollars ($1,000,000) first dollar coverage per occurrence and Five Million
Dollars ($5,000,000) in the aggregate; and (b) general business liability
insurance with minimum limits of One Million Dollars ($1,000,000) first dollar
coverage per occurrence and Five Million Dollars ($5,000,000) in the aggregate.
RADIOMED shall be named as an additional insured in each policy of insurance
required to be maintained by RADIOMED hereunder.
The issuer of each such policy shall be a standard company licensed to
issue insurance having a Best's rating of B+ or higher and a policy holder
surplus of not less than Twenty-Five Million Dollars ($25,000,000). Each such
policy shall provide for (a) the issuance of a reporting or tail coverage
endorsement upon termination of (i) the base policy, (ii) the production,
manufacturing, marketing and sale of the Product or (iii) the corporate
existence of NASI and (b) for not less than thirty (30) days' prior written
notice to RADIOMED of any proposed change in the nature, scope or amount of
coverage. NASI shall provide RADIOMED with certificates of such insurance and
evidence of the payment of premiums therefor, promptly upon request.
The insurance coverage required to be maintained hereunder shall be
subject to review and adjustment from time to the time at the request of either
party to limits of liability that are mutually agreeable in order to assure a
continuing level of insurance protection that, as nearly as practicable after
taking relative costs and benefits into account, is consistent with the level of
protection contemplated by the parties at the time they execute this Agreement,
but no such adjustment shall be made more than once in any consecutive
twelve-month period. Should the parties be unable to agree with respect to the
nature or amount of such insurance coverage, then the dispute shall be resolved
by an independent insurance consultant who has not previously performed services
for either party. If the parties cannot agree on any such independent
consultant, then such consultant shall be selected by the President of the
Independent Insurance Brokers Association in Los Angeles, California.
8.2 INDEMNIFICATION BY RADIOMED. RADIOMED shall promptly indemnify,
defend and hold NASI (including its officers, directors, employees, and agents)
harmless from and against any and all claims by Third Parties (whether based in
contract or tort or otherwise arising by operation of law), losses, damages,
penalties, expenses, settlements, or attorneys' fees arising out of or resulting
from (i) any breach of a representation or warranty or failure to perform any
covenant or obligation of RADIOMED under this Agreement; and (ii) any written
representations or warranties made by RADIOMED regarding the Product; and (iii)
any acts or omission of RADIOMED in connection with its marketing and
distribution of the Product supplied by NASI. RADIOMED's contractual obligations
to indemnify, defend and hold NASI harmless shall extend to all such third-party
allegations or claims except to the extent that such
allegations or claims have been established by a court of competent jurisdiction
or other dispute resolution tribunal (including an arbitration panel) to have
resulted from or to be attributable to the fault or negligence of RADIOMED.
8.2.1 LIMITATION ON RADIOMED'S OBLIGATION. In any action or proceeding
in which liability for personal injury resulting from the use of the Product is
alleged to exist both against NASI and RADIOMED based in whole or in part upon
theories of negligent design, negligent manufacturing, failure to warn,
defective product, product liability, strict liability or any other theory of
liability directly related to the Product:
A. If NASI so requests, RADIOMED shall be obligated by this
Section 8.2 to defend NASI, notwithstanding that allegations are also made
that NASI (a) breached a written representation or warranty given by NASI
under this Agreement or to its Customers, or (b) was negligent in connection
with its manufacturing and supply of the Product, unless RADIOMED elects to
name NASI as a cross-defendant in such action or proceeding.
(1) If RADIOMED elects to name NASI as a cross-defendant
in any such action or proceeding, then each party shall provide its own
defense, and each party shall be entitled to be indemnified by the other with
respect to any damages, costs or expense established by a court of competent
jurisdiction or other dispute resolution tribunal (including an arbitration
panel) to have resulted from or to be attributable to the fault or neglect of
the other party.
(2) If allegations are made against NASI in any such
action or proceeding and (i) RADIOMED does not name NASI as a cross-defendant
therein, and (ii) NASI declines to provide its own defense with respect
thereto, and (iii) NASI subsequently acknowledges, or it is determined, that
NASI is liable by reason of the facts set forth in such allegations, then, in
addition to its indemnification obligation with respect to those damages for
which it is determined to be liable, NASI shall also be liable to RADIOMED
for that portion of the costs and fees incurred by NASI in defending such
action or proceeding that is equal to NASI's percentage of liability for the
damages awarded in any such action or proceeding.
8.2.2 PARTICIPATION IN AND CONTROL OF DEFENSE. If RADIOMED is obligated
to defend NASI in a lawsuit, arbitration, negotiation, or other proceeding
concerning a claim pursuant to this Agreement, NASI shall have the right to
engage separate counsel, at NASI's expense, to monitor and advise NASI about the
status and progress of the defense or to otherwise represent the interests of
NASI. To be entitled to sole control of the defense, upon request by NASI,
RADIOMED shall demonstrate, to the reasonable satisfaction of NASI, RADIOMED's
financial ability to carry out its defense obligations (and its indemnity
obligations, if any). NASI shall in any event provide such cooperation and
assistance in the conduct of any such defense as RADIOMED may reasonably
request.
8.2.3 INDEMNIFICATION BY NASI. NASI shall indemnify, defend and hold
RADIOMED (including its officers, directors, employees, and agents) harmless
from and against any and all claims by Third Parties (whether based in contract
or tort or otherwise arising by operation of law), losses, damages, penalties,
expenses, settlements, or attorneys' fees arising out of or resulting from (i)
any breach of a representation or warranty or failure to perform any covenant or
obligation of NASI under this Agreement; (ii) any written representations or
written warranties made by NASI regarding the Product; and (iii) any acts or
omission of NASI in connection with its manufacture of Product supplied by NASI.
NASI's contractual obligations to indemnify, defend and hold RADIOMED harmless
shall extend to all such third-party allegations or claims except to the extent
that such allegations or claims have been established by a court of competent
jurisdiction or other dispute resolution tribunal (including an arbitration
panel) to have resulted from or to be attributable to the fault or negligence of
RADIOMED.
8.3 LIMITATION OF LIABILITY. WITH RESPECT TO CLAIMS MADE BY ONE PARTY (A
"CLAIMANT") AGAINST THE OTHER (A "DEFENDANT") UNDER THIS AGREEMENT FOR CLAIMS
NOT ARISING OR RESULTING FROM OR BASED UPON THIRD-PARTY CLAIMS, THE DEFENDANT
SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS, IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT, REGARDLESS OF WHETHER A CLAIM AGAINST THE
DEFENDANT SOUNDS IN CONTRACT OR TORT (INCLUDING, BUT
NOT LIMITED TO, ACTIONS BASED ON ANY ALLEGED JOINT OR SOLE NEGLIGENCE OR THE
DEFENDANT).
8.3.1 DEFENSE PROCEDURE. Each party shall notify the other party in
writing within ten (10) days of the assertion of any claim or discovery of any
fact upon which the notifying party intends to base a claim for defense and/or
indemnification under this Agreement. The failure to so notify the other party
shall not relieve such party of the duty to defend and indemnify the notifying
party with respect to such claim, except to the extent the defense of such claim
is actually prejudiced thereby.
9. COMMENCEMENT, TERM AND TERMINATION
9.1 COMMENCEMENT, TERM AND TERMINATION. This Agreement shall commence on
the Effective Date hereof and, unless sooner terminated as provided in this
Section 9, or extended pursuant to Section 2.1.1 hereof, this Agreement shall
continue for the term specified in Section 2.1 hereof.
9.2 CHANGE IN CONTROL. Notwithstanding the provisions of Section 9.1, in
the event of a sale of all or substantially all of the business of RADIOMED
through merger, sale of assets or otherwise, the term of this Agreement shall
extend until two years after such sale.
9.3 TERMINATION FOR CAUSE BY EITHER PARTY. Upon the occurrence of any of
the following events, any party who is not in material default in the
performance of its obligations under this Agreement shall be entitled to
terminate this Agreement by giving written notice of its intention to terminate,
specifying the effective date of termination, not less than sixty (60) days
prior to the effective date of its termination.
9.3.1 The other party (herein, a "defaulting party") has committed
a material breach of any warranty, representation, or covenant or obligation
under this Agreement, including the obligation to pay any amount owing under
this Agreement when due, and such breach remains uncured for a period of not
less than 60 days after written notice of default, specifying the nature
thereof, has been given to the defaulting party.
9.3.2 The other party becomes Insolvent.
9.4 TERMINATION FOR CAUSE BY NASI. NASI may terminate this Agreement
immediately upon an Event of Default pursuant to Section 5.1.4.
9.5 RIGHTS AND DUTIES UPON TERMINATION.
9.5.1 Subject to NASI's continuing rights under certain
circumstances under Sections 5.1.2 and 5.1.5 hereof, upon termination of this
Agreement for any reason:
A. The license granted pursuant to Section 2.1 and any
sublicenses entered into by NASI shall automatically terminate.
B. Each party shall return to the providing party all
copies of any Confidential Information that was provided by one party to the
other during the course of this Agreement.
9.5.2 Upon termination of this Agreement by NASI for breach by
RADIOMED, in addition to NASI's right to begin manufacturing and distributing
the Product pursuant to Section 4.9 hereof and/or pursuant to Sections 5.1.2 and
5.1.5 hereof, NASI shall be entitled to market and sell any existing inventory
of the Product to the extent permitted by law until such inventory has been
exhausted provided that such sales are made at prices and on terms that are
consistent with RADIOMED's past practices.
9.5.3 Each party shall continue to be bound by the provisions of
this Agreement which, by their nature, extend beyond or cannot be fully
performed prior to the effective date of termination, including (a)
indemnification obligations and (b) provisions relating to the protection,
nondisclosure and restrictions on use of Confidential Information, including
any Confidentiality Agreements previously entered into by the parties.
9.6 SURVIVAL OF REMEDIES. The termination of this Agreement
pursuant to this Section shall be without prejudice to any rights or any
remedies to which the terminating party is entitled, if any, due to the
material breach by one of the parties of any warranty, representation or
covenant made by the defaulting party under this Agreement.
10. GENERAL PROVISIONS
10.1 NOTICES. Any notices permitted or required hereunder shall be in
writing and shall be deemed to have been given (a) on the date of delivery if
delivery of a legible copy was made personally or by facsimile transmission, or
(b) on the third (3rd) business day after the date on which mailed by registered
or certified mail, return receipt requested, addressed to the party for whom
intended at the address set forth on the signature page of this Agreement or
such other address, notice of which is given as provided herein.
10.2 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of each of the parties and their respective heirs,
successors, assigns and legal representatives. No party hereto shall have the
right to transfer or assign its interest in this Agreement, without the prior
written authorization of the other party hereto, except that (a) either party
may freely assign this Agreement to any Affiliate and (b) either party shall
have the right to assign its rights and licenses and to delegate its duties
under this Agreement to any third party who purchases substantially all of the
business assets of the assignor or who succeeds to the business of the assignor
by reason of a merger or consolidation. The assignment by either party of any
rights under this Agreement shall not relieve the assigning party from any of
its obligations under this agreement.
10.3 FORCE MAJEURE. Neither of the parties shall be liable for any
delay or default in performing its obligations hereunder if such delay or
default is caused by Force Majeure, provided that the party so affected (a)
promptly gives written notice of the occurrence of such event and the likely
effects thereof, and (b) resumes the performance of its obligations with due
diligence as soon as practicable after the effects of any such event have been
alleviated.
10.4 GOVERNING LAW. This Agreement, the construction and enforcement
of its terms, and the interpretation of the rights and duties of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware.
10.5 RESOLUTION OF DISPUTES. The parties hereto (a) mutually consent
and submit to the jurisdiction of any state or federal court of competent
jurisdiction located in the City of Los Angeles, State of California, in any
action or proceeding arising out of or relating in any manner to this Agreement
which is brought by RADIOMED, and to the jurisdiction of any state or federal
court of competent jurisdiction located in the City of Boston, Commonwealth of
Massachusetts in any action or proceeding arising out of or relating in any
manner to this Agreement which is brought by NASI, (b) each waive any claim
that any such respective state or federal court is an inconvenient forum, and
(c) each irrevocably agree that any and all actions or proceedings arising out
of or relating to this Agreement or from transactions contemplated herein shall
be exclusively heard only in such respective state or federal court.
10.6 COSTS OF ENFORCEMENT. Should any action or proceeding be
necessary to construe or enforce this Agreement, then the party prevailing in
any such action or proceeding shall be entitled to recover all court costs and
reasonable attorneys' fees, to be fixed by the court and taxed as part of any
judgment entered therein, and the costs and fees incurred in enforcing or
collecting any such judgment.
10.7 INDEPENDENT CONTRACTORS. Each of the parties to this Agreement
understands and stipulates that they are independent contractors, and that this
Agreement is not intended and shall not be construed to make either party a
partner, joint ventures, employee, agent, or legal representative of the other
party for any purpose whatsoever. Neither party is granted any right or
authority to assume or create any obligation or responsibility, express or
implied, on behalf of or in the name of the other party hereto or to bind the
other party hereto in any manner or thing whatsoever.
10.8 COMPLETE AGREEMENT. This written instrument, together with any
exhibits or appendices referred to herein, constitutes the entire understanding
of the parties with
respect to subject matter of this Agreement and it may not be amended except by
an instrument in writing signed by the party alleged to he bound thereby.
IN WITNESS WHEREOF, both parties have executed this Exclusive Manufacturing and
Supply Agreement as of the date first set forth above.
NORTH AMERICAN SCIENTIFIC, INC. RADIOMED CORPORATION
By: /s/ L. Xxxxxxx Xxxxxx By: /s/ X.X. Xxxxxxx, Xx.
---------------------------------- ---------------------------------
Its: President & CEO Its: Chairman & CEO
--------------------------------- --------------------------------
