DISTRIBUTION AGREEMENT
This
Agreement, effective as of the date of execution below, is made by and between
ISORAY MEDICAL, INC., a company with a principal place of business located at
000 Xxxxx Xxxxxx, Xxx. 000, Xxxxxxxx, XX 00000-0000 (hereinafter “IsoRay”), and
BIOCOMPATIBLES, INC., a company with a principal place of business located at
000 Xxxxxx Xxxx, Xxxxxxxx 0X, Xxxxxx, Xxxxxxxxxxx 00000 and affiliates
(hereinafter “Biocompatibles”). IsoRay and Biocompatibles are
together referred to as the “Parties”.
REPRESENTATIONS
AND WARRANTIES
WHEREAS,
IsoRay, as Manufacturer, is in the business of manufacturing and selling certain
Cesium isotope (“Cs-131”) radioactive source medical and related products used
in the brachytherapy treatment of prostate and other cancers;
WHEREAS,
Biocompatibles, as Distributor, is in the business of manufacturing, marketing,
distributing, and selling various medical and related products used in the
brachytherapy treatment of prostate and other cancers;
WHEREAS,
IsoRay desires to expand the market presence for its brachytherapy products in
the treatment of cancer in the United States (herein referred to as the
“Territory”), by having Biocompatibles distribute IsoRay’s Cs-131 radioactive
source products (herein referred to collectively as the
“Products”);
WHEREAS,
Biocompatibles represents that it is in compliance in all material respects with
all applicable governmental Laws and requirements of Regulatory Authorities
relating to its activities hereunder, including reporting and licensure
requirements to allow Biocompatibles to receive, store, transport, and generally
conduct the distribution of the Products, as well as other non-radioactive
medical products in a proper and legal manner in the Territory, and for purposes
of this Agreement, "Laws" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty; and "Regulatory Authorities" means any: (a) nation, state,
county, city, town, village, district, or other jurisdiction of any nature; (b)
federal, state, local, municipal, foreign, or other government; (c) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal); (d) multi-national organization or body; or (e) body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature, in each case as
such authorities hold responsibility for granting regulatory manufacturing,
distribution and/or marketing approval for a Product in any part of the
Territory;
WHEREAS,
as specified herein, IsoRay wishes to engage Biocompatibles to distribute the
Products in the Territory and Biocompatibles wishes to accept said engagement
desires;
WHEREAS
as a condition of the execution of this Distribution Agreement, the Parties have
also agreed to amend that certain Service Agreement dated March 1, 2006 by and
among Biocompatibles (as successor in interest to Advanced Care Medical, Inc.)
and IsoRay to provide for renewal, extension and added products and services
by Biocompatibles;
Page 1 of
18
NOW
THEREFORE, in consideration of the above recitals, the covenants and conditions
contained in this Agreement, and other good and valuable consideration the
Parties agree as follows:
1.
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EXCLUSIVE
CO-DISTRIBUTION IN TERRITORY.
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1.1.
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Appointment. Subject
to all the terms and conditions of this Agreement, IsoRay hereby appoints
Biocompatibles for the Term of this Agreement as the exclusive
co-distributor of the Products to customers located within the
Territory. For the purposes of clarity, the term
“co-distributor” shall mean that with the exception of IsoRay and its
internal or external sales personnel as further set forth in Section 5.5
and subject to Section 1.3 below, Biocompatibles will be the only other
distributor of the Products. Biocompatibles accepts these appointments and
agrees to use all commercially reasonable efforts to promote the sale of
the Products in the Territory. Biocompatibles hereby agrees to
acquire Cs-131 radioactive source products exclusively from IsoRay as
agreed to by the Parties for the treatment of prostate, lung and ocular
melanoma cancers.
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1.2.
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Transfer
Price. The transfer price, as more
particularly described in Exhibit A-1, shall
include [**].
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1.3.
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Loss of
Exclusivity. If sales volume of the Products sold by
Biocompatibles pursuant to this Agreement during the quarter ended [**]
(the "Trial Period") does not equal or exceed [**] cases, then IsoRay
shall have the right, but not the obligation, to convert this Agreement
into a nonexclusive agreement effective the first day of the second
calendar month following the end of the Trial Period, i.e., [**]. If
IsoRay elects to exercise such right, it shall provide Biocompatibles with
written notice of the loss of its co-exclusive rights on or
before the tenth (10th)
day of the first month following the end of the Trial Period, i.e. [**].
If written notice is not given by IsoRay by such tenth (10th)
day, then Biocompatibles’ exclusive rights shall be maintained. Future
minimum sales volumes shall be as follows (the “Initial Sales
Targets”):
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Quarter Ending
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Number of Cases
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[**]
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[**]
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[**]
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Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
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Page 2 of
18
If the
Agreement is renewed as provided in Section 2.1 below, during each subsequent
quarter following the quarter ended [**], the number of cases sold will be
subject to a new addendum as mutually agreed to by the parties (the
"Subsequent Sales Targets"). If any of the Initial Sales Targets or
Subsequent Sales Targets are not met, then IsoRay shall have the right, but not
the obligation, to convert this Agreement into a nonexclusive agreement
effective the first day of the second calendar month following the end of the
quarter during which the Initial or Subsequent Sales Targets, as the case may
be, were not met. If IsoRay elects to exercise such right, it shall provide
Biocompatibles with written notice of the loss of its co-exclusive rights on or
before the tenth day of the first month following the end of the quarter in
which the Initial or Subsequent Sales Target was not met. If written
notice is not given by IsoRay by such tenth (10th) day,
then Biocompatibles’ exclusive rights shall be maintained. For example, in the
quarter ended [**], at least [**] cases
must be sold to maintain exclusivity, and if this amount is not sold, IsoRay
could convert this Agreement into a nonexclusive agreement effective as of [**]
provided that IsoRay gives notice of its exercise of such right by [**]. In the
event IsoRay converts this Agreement into a nonexclusive agreement as set forth
above, IsoRay shall [**].
2.
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TERM.
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2.1.
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Initial
Term. The initial term of this Agreement shall commence
as of the effective date hereof and continue through December 31,
2011.
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2.2.
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Renewal. The
initial term shall be automatically renewed for periods of one (1) year
unless canceled ninety (90) days prior to the end of the initial term or
any renewal term thereafter.
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3.
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PURCHASING
AND FULFILLMENT.
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3.1.
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Ordering
Process. Biocompatibles shall place orders for IsoRay
Products in a mutually agreed-upon written or electronic form, providing
in each case all information required by IsoRay to complete and fill each
order. IsoRay shall provide a specified form for said ordering
process. Purchase Orders are subject to the price schedule per
Exhibit A-1, and
the specifications and product insert per Exhibit A-2, attached
hereto and incorporated by reference. Purchase Orders are
subject to the order/shipping schedule per Exhibit D, which may
change as required by IsoRay and is attached hereto and incorporated by
reference. Purchase Orders shall be directed as
follows:
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Customer
Service
000 Xxxxx
Xxxxxx, Xxx. 000
Xxxxxxxx,
XX 00000-0000
000-000-0000
phone
000-000-0000
e fax
xxxxxxx@xxxxxx.xxx
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3.2.
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Authority To Receive
Radioactive Materials. Biocompatibles represents and
warrants that Biocompatibles is in possession of all regulatory and
nuclear licenses in order to allow Biocompatibles to receive, store,
transport, and generally conduct the distribution of the Products, as well
as other non-radioactive medical Products in a proper and legal manner in
the Territory. Biocompatibles further agrees and warrants to
remain continually authorized to receive radioactive materials at the
ship-to location. Upon written request as provided herein in
paragraph 15.3, Biocompatibles shall further provide IsoRay all
appropriate documentation for confirmation of said authority to receive
radioactive materials.
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3.3.
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Packaging and
Shipping. IsoRay shall ship to the Biocompatibles
location in Oxford, CT unless otherwise agreed in
writing. Shipment of accepted Orders shall use carriers chosen
by Biocompatibles and agreeable to IsoRay and shall be scheduled for
delivery on or before the delivery date specified. IsoRay shall
not be responsible for any failure of a carrier to meet its delivery
schedule.
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Shipment is F.O.B. IsoRay, Richland,
WA:
Title and
risk of loss passes to Biocompatibles upon leaving IsoRay’s production
facility. IsoRay will pack Products in a manner suitable for shipment
to enable Products to withstand the normal effects of shipping, including
handling during loading and unloading, all in accordance with IsoRay’s normal
packing and shipping practices for radioactive medical devices and related
products.
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3.4.
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Shipping And Handling Within
Territory. All storage, handling, duties, taxes and
transportation costs subsequent to receipt by Biocompatibles in Oxford, CT
shall be the responsibility of [**],
with exceptions of returns due to product quality or
non-conformity.
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4.
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INVOICES
AND PAYMENTS TO ISORAY.
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4.1.
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Invoices. Within
[**] days of each month end, IsoRay will invoice Biocompatibles for all
Purchase Orders shipped during the month just ended. The
invoice will include the Purchase Order number and applicable
detail. Per Exhibit A, the transfer
price used for the invoice will be based on the number of cases shipped
during the month just ended.
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4.2.
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Payment. Payment
of all Invoices is due in full within [**] days of the Invoice
Date. Biocompatibles shall be entitled to a [**] percent
([**]%) discount if paid within [**] days of the Invoice
Date. All invoicing and payments shall be in U.S.
dollars.
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[**]
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Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
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Page 4 of
18
5.
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MARKETING
BY BIOCOMPATIBLES.
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5.1.
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General.
Biocompatibles shall be responsible for all sales, marketing, and
distribution of the Products to its customers. Notwithstanding
the foregoing, IsoRay will provide training to Biocompatibles on
its Products and access to marketing and other materials
relating to distribution of the Products, which training shall consist of
a two-day training session and shall include [**]. IsoRay
shall set the date, time and location of the training in its sole
discretion and shall be responsible for the costs of the location at which
the training is held and for the costs of the physician providing the
training, who shall be selected by IsoRay. If Biocompatibles
develops any marketing materials for the Products, any such materials must
be approved in advance by IsoRay as provided in Section 5.3
below.
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5.2.
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Trade
Practices. Biocompatibles shall diligently and
continuously promote the sale of the Products and shall: (i) avoid
deceptive, unfair, misleading, or unethical trade practices that are or
might be detrimental to IsoRay, the Products, its customers, or the
public, including any disparagement of IsoRay or the Products; (ii) make
no false or misleading representations with regard to IsoRay or the
Products; (iii) refrain from publishing or employing any misleading or
deceptive advertising material; (iv) refrain from disparaging IsoRay or
its Products, or from otherwise injuring the reputation and good standing
of IsoRay; and (v) conduct its business in a professional manner which
will reflect positively upon IsoRay and its
business.
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5.3.
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Advertising and Marketing
Materials: Biocompatibles shall submit for approval by
IsoRay all promotional literature, ad copy, and marketing collateral items
to be used by Biocompatibles with respect to the promotion of Products,
including all such items that use any of the Trademarks for the Products,
and shall obtain IsoRay’s approval prior to dissemination or use of such
items. IsoRay shall approve or disapprove, in writing, all
items submitted pursuant to the preceding sentence within fifteen (15)
days after receipt, and shall not unreasonably withhold said
approval. Biocompatibles shall provide IsoRay with at least
three (3) copies of all approved materials concurrent with their
deployment by Biocompatibles.
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5.4.
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Regulatory
Compliance: Biocompatibles shall comply in all material
respects with all applicable governmental laws and requirements of
Regulatory Authorities relating to its activities hereunder, including
reporting and licensure
requirements.
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[**]
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Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
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Page 5 of
18
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5.5
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[**]. The
Parties agree to provide each other with [**] within ten days following
execution of this Agreement, with the [**] to include (a) [**] from the
Party, (b) [**] from the Party and (c) [**] within the next six
months. Such [**] shall be considered "Confidential
Information" and subject to the restrictions contained in Section
9 below. For a period of six months from the date of
execution of this Agreement [**],
the Parties agree that neither Party shall [**], without prior written
consent from the other Party. The Parties further agree to
provide [**] to each other every ninety days throughout the term of this
Agreement, commencing on the expiration of the [**], which [**] within the
prior ninety (90) days. All [**] shall be considered
"Confidential Information" and subject to the restrictions contained in
Section
9 below. The Parties agree that neither Party shall
[**], without prior written consent from the other Party, for a period of
ninety days from the date of such [**]. However, [**], then the
Parties agree that [**] without being subject to the restrictions
contained in this Section 5.5. Notwithstanding any provision to
the contrary, if [**] then the Parties agree that [**]. Correspondingly,
the Parties also agree that [**]. In the event either Party
desires to maintain the [**] otherwise expressly provided in this Section
5.5, then such Party shall notify the other Party in writing which shall
consider such request on a case-by-case basis and provide a written
response of its decision, including
[**].
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5.6
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Limitation of Certain Accounts
Under Certain Conditions. In the event IsoRay [**], Biocompatibles
shall [**]. To exercise this right, Biocompatibles must notify IsoRay in
writing which notice shall include [**] and shall be given, if at all,
within ten (10) days after [**].
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5.6.1
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“Maintenance
Period” shall mean the lesser of the
[**].
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5.6.2
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“[**]”
shall mean [**]. Any [**] shall [**]. IsoRay may require reasonable
documentation from Biocompatibles to demonstrate [**]. If Biocompatibles
does not provide the [**] as contemplated above then the
[**].
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5.6.3
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“[**]
Calculations” shall mean the [**].
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6.
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TRADEMARKS.
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6.1.
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Promotion and
Sales. Biocompatibles shall promote and sell its own
products and the Products under each company’s respective Trademarks and
market names. Biocompatibles specifically shall in all cases
promote and refer to the Products with the name(s): PROXCELANTM,
Cesium-131 Brachytherapy Seeds together with Biocompatibles’ own
Trademarks “Real Time StrandTM”,
“RTSTM”,
“VariStrandTM”,
StandardStrandTM,
EchoStrandTM,
and “AnchorSeedTM”. Nothing
herein shall be deemed to give either Biocompatibles or IsoRay, either
during the term of this Agreement or thereafter, any right to trademarks
or copyrights of the other Party.
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[**]
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Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
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Page 6 of
18
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6.2.
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Use By
Biocompatibles. Biocompatibles shall not use the
Trademarks of IsoRay in any manner likely to confuse, mislead or deceive
the public, or to be injurious or inimical to the interests of
IsoRay. IsoRay shall retain sole ownership of all goodwill
associated with its Products, as represented and symbolized by IsoRay’s
Trademarks.
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6.3.
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Use By
IsoRay. IsoRay shall not use the Trademarks of
Biocompatibles in any manner likely to confuse, mislead or deceive the
public, or to be injurious or inimical to the interests of Biocompatibles.
Biocompatibles shall retain sole ownership of all goodwill associated with
its products, as represented and symbolized by the Biocompatibles’
Trademarks.
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7.
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PRODUCT
WARRANTY AND LIMITATIONS OF
LIABILITY.
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7.1.
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Product
Warranty. IsoRay warrants to Biocompatibles only that
Products, when delivered to customers pursuant to this Agreement, shall
conform in all material respects with the Customer Order specifications in
Exhibit E and with
the specifications and product inserts in Exhibit A-2 and shall be
free from material defects in construction, materials and
workmanship.
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7.2.
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Limitation of
Liability. Other than the indemnity provisions above and
the warranty and other remedies expressly specified herein, IsoRay’s and
its affiliates' entire and collective liability arising out of or relating
to this Agreement, including without limitation on account of performance
or nonperformance of obligations hereunder, regardless of the form of the
cause of action, whether in contract, tort (including without limitation
gross negligence but not including intentional torts, fraud, or bad
faith), statute or otherwise, shall in no event exceed the amounts paid to
IsoRay under this Agreement for the Products. EXCEPT AS
SPECIFIED IN THIS AGREEMENT, NEITHER PARTY NOR ITS AFFILIATES OR PARENTS
SHALL, UNDER ANY CIRCUMSTANCES, BE LIABLE TO THE OTHER PARTY OR ITS
AFFILIATES OR PARENTS FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT,
PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES OF ANY NATURE WHATSOEVER, OR FOR
ANY DAMAGES ARISING OUT OF OR IN CONNECTION WITH ANY DELAYS, LOSS OF
PROFIT, INTERRUPTION OF SERVICE OR LOSS OF BUSINESS OR ANTICIPATORY
PROFITS, EVEN IF A PARTY OR ITS AFFILIATES HAVE BEEN APPRISED OF THE
LIKELIHOOD OF SUCH DAMAGES OCCURRING. No action, regardless of
form, arising out of this Agreement may be brought by either party more
than [**]
years after the cause of action has
accrued.
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[**]
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Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
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Page 7 of
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8.
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INDEMNIFICATION.
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8.1.
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Biocompatibles. Biocompatibles
shall bear the cost of liability for any claim for loss, injury, or demand
arising out of Biocompatibles’ acts or omissions in connection with the
distribution of the Products and other products described herein and
agrees to indemnify IsoRay for all such
claims.
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8.2.
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IsoRay. IsoRay
shall bear the cost of liability for any claim for loss, injury, or demand
arising out of IsoRay’s acts or omissions in connection with the
distribution of the Products described herein and agrees to indemnify
Biocompatibles for all such claims. Further, per Section 7.1
herein, IsoRay warrants to Biocompatibles only that the Products, when
delivered to customers pursuant to this Agreement, shall conform in all
material respects with the Purchase Order specifications and shall [**].
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9.
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CONFIDENTIALITY.
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9.1.
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Confidential Information;
Solicitation. Each of the Parties hereto acknowledges
that, from time to time during the term of this Agreement, the Parties
hereto may come into the possession of confidential information of the
other Party relating to such Party’s customers, operations, activities,
intellectual property (including, without limitation, trade secrets and
know-how), products and/or services, (collectively, the “Confidential
Information”), and that such information is property valuable to the Party
that has developed it, and that the Party that has developed it desires to
retain it in confidence and withhold it from publication to others, and
that such Party has a legitimate business interest in such
intent. Accordingly, each Party hereby agrees that during the
term of this Agreement and thereafter, (a) that Party will not copy,
communicate or disclose, in any manner, any of the Confidential
Information of the other Party, except internally or as otherwise provided
herein, (b) that Party will use Confidential Information belonging to the
other solely for the purpose(s) for which it was disclosed hereunder or
otherwise as contemplated hereby, and (c) that Party will not disclose
Confidential Information (including without limitation the terms and
conditions of the Agreement) belonging to the other Party, other than to
its employees, consultants and/or other third parties reasonably requiring
such Confidential Information who are bound by written obligations of
nondisclosure and non-use; provided that the foregoing shall not restrict
any disclosure by either Party required by applicable law provided that
the other Party is given prompt written notice thereof and a reasonable
opportunity to review such disclosure and, if applicable, seek a
protective order or other method of limiting the scope of such
disclosure. This provision will survive for a period of five
(5) years after the date this Agreement is terminated, provided that the
recipient's obligations with respect to any particular Confidential
Information will terminate at such earlier time as any of the exceptions
set forth below in this Section 9.1 first apply. The term
“Confidential Information” shall also include all information of each
Party’s affiliates, parents and subsidiaries which would qualify as
Confidential Information if it belonged to such
Party.
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[**]
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Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
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Page 8 of
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Notwithstanding
the foregoing, Confidential Information shall not include any information
disclosed hereunder that, at the relevant time: (a) is or becomes
available to the public without breach of this Agreement; (b) was previously
known by the recipient without obligation of confidentiality as determined by
documentary evidence; (c) is received from a third party without breach of any
obligation of confidentiality as determined by documentary evidence; (d) is
independently developed by recipient without reliance on information disclosed
hereunder as determined by documentary evidence; (e) is approved for release by
written authorization of the disclosing party (but only to the extent of such
authorization).
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9.2.
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Unlawful
Disclosure/Injunction. Each Party hereto acknowledges
that its unlawful disclosure of any Confidential Information of the other
may give rise to irreparable injury to the other, or the owner of such
information, inadequately compensable to damages. Accordingly,
each Party may seek and obtain injunctive relief against the breach or
threatened breach of the foregoing undertakings, in addition to any other
legal remedies which may be available without requirement of posting bond
or other security.
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9.3.
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Customer/Patient
Information. IsoRay agrees that the identities, contact
information, Product purchase quantities, etc. of Biocompatibles’
customers disclosed in connection with this Agreement (e.g., hospitals,
physicians, and the like as opposed to the patients ultimately receiving
implants of the Products) is Confidential Information of Biocompatibles
and, so long as it meets the definition of Confidential Information, it is
not to be shared by IsoRay with third parties, except as required to
IsoRay’s affiliates in order to meet obligations pursuant to this
Agreement. This separate disclosure to IsoRay’s affiliates
shall not be deemed to disqualify this information from being considered
Confidential Information.
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9.4.
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Competitive Disclosure
Prohibited. In no event shall a Party be entitled to use
any of the other’s Confidential Information, or any derivatives thereof,
in connection with the sale or production of any products or services that
are competitive with (direct or indirect) or similar to those products and
services sold, produced, manufactured, offered for sale, designed or
developed by the disclosing Party or any of its affiliates or parent. Each
Party agrees to refrain from knowingly infringing, in any manner, directly
or indirectly, on any Confidential Information of the other Party (or any
of its affiliates or parent), regardless of whether such Confidential
Information has been registered, filed or recorded with the United States
Patent and Trademark Office, or any similar federal, state or
international agency or regulatory body. Each Party further
agrees that it shall comply with all obligations imposed on it by the
United States Patent and Trademark Office or any similar federal, state or
international agency or regulatory body with respect to
the other Party's intellectual property rights. The obligations
of this provision shall survive the termination of this Agreement (a) for
the life of the relevant intellectual property rights, in the case of
patents and trademarks, and (b) for the applicable period described in
Section 9.1, in the case of Confidential
Information.
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Page 9 of
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9.5.
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Protected Health
Information. The Parties acknowledge that
individually-identifiable information concerning the patients scheduled to
receive implants of the Products is "Protected Health Information" under
42 U.S.C. §1320d, enacted by the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA"), and regulations promulgated
thereunder, which the Parties are obligated to treat as confidential under
such law and regulations, and which may also be covered by other
confidentiality laws, rules and regulations. The Parties agree
as follows with respect to Protected Health Information shared with a
Party: (a) to maintain the confidentiality of all such patient information
in compliance with HIPAA and applicable regulations thereunder, as the
foregoing may now exist or hereafter be amended, and other applicable
confidentiality laws, rules and regulations, for so long as such
obligations apply; (b) to comply with such reasonable or customary
obligations with respect to such patient information, as may now or
hereafter be imposed upon the other Party by contract with its customers
pursuant to HIPAA (e.g., under so-called Business Associate Agreements),
provided that the providing Party shall disclose to the recipient Party in
writing the nature of its obligations under each such agreement; and (c)
to require any of its agents or subcontractors who may become privy to
such patient information hereunder to comply with the foregoing to the
same extent such Party is obligated to do so, and include in its contracts
with any such parties a clause comparable to this
clause.
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10.
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COMPLIANCE
WITH ALL APPLICABLE LAWS
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10.1.
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Biocompatibles - Legal And
Regulatory Compliance In The Territory. Biocompatibles
hereby represents and warrants that Biocompatibles is in possession of all
regulatory and nuclear licenses in order to allow Biocompatibles to
receive, store, transport, and generally conduct the distribution of the
Products, as well as other non-radioactive medical products in a proper
and legal manner in the Territory. Upon written request by
IsoRay, Biocompatibles shall provide copies of all such regulatory and
nuclear licenses to IsoRay for review prior to execution of this
Distribution Agreement.
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10.2.
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IsoRay - Legal And Regulatory
Compliance In The Territory. IsoRay hereby represents
and warrants that IsoRay is in possession of all regulatory and nuclear
licenses in order to allow IsoRay to manufacture, store, ship, and
generally conduct the distribution of the Products, as well as its other
non-radioactive medical products in a proper and legal manner in the
Territory. Upon written request by Biocompatibles, IsoRay shall
provide copies of all such regulatory and nuclear licenses to
Biocompatibles for review prior to execution of this Distribution
Agreement.
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Page 10
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10.3.
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General Compliance –
IsoRay. During the term of this Agreement, IsoRay agrees
to comply, in all material respects, with all applicable laws, ordinances,
rules, regulations, orders, licenses, permits and other requirements, now
or hereafter in effect, of any applicable governmental authority with
respect to the delivery of the Products, including without limitation all
requirements regarding labeling and traceability of the Products as
processed by IsoRay or its affiliates, as such requirements arise out of
or in connection with this Agreement. IsoRay shall provide all
reasonable cooperation to Biocompatibles in connection with
Biocompatibles’ compliance with any law, ordinance, rule, regulation,
order, license, permit or other requirement regarding the provision of
this Agreement.
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10.4.
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General Compliance –
Biocompatibles. During the term of this Agreement,
Biocompatibles shall comply, in all material respects, with all applicable
laws, ordinances, rules, regulations, orders, licenses, permits and other
requirements, now or hereafter in effect, of any applicable governmental
authority with respect to the sale and delivery of the Products under this
Agreement. Biocompatibles shall provide all reasonable
cooperation to IsoRay in connection with IsoRay’s compliance with any law,
ordinance, rule, regulation, order, license, permit or other requirement
regarding the provision of this
Agreement.
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11.
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CUSTOMER
COMPLAINTS AND INCIDENTS.
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11.1.
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Notification Of Claims To
IsoRay. As soon as practicable after receiving notice of
any claim, action or inquiry by the FDA or other applicable Regulatory
Authority or court of law relating to alleged non-compliance with the
Products’ warranty or any notice with respect to any alleged violation of
any Law on the part of the Products, and of any adverse incidents or
customer or patient complaints regarding the Products of which
Biocompatibles becomes aware — Biocompatibles shall notify IsoRay as
provided herein in Section 15.3 with the form titled “Event Report Form,”
a copy of which is attached hereto as Exhibit C, and shall
consult with IsoRay regarding responses to such claims, actions or
inquiries and shall also provide IsoRay with copies of all correspondence
in response to such claims, actions or inquiries. In addition,
Biocompatibles shall notify IsoRay of any adverse reaction, malfunction,
injury or other similar claims with respect to the Products of which
Biocompatibles becomes aware. In addition, Biocompatibles shall
promptly notify IsoRay of any event of a type described above relating to
any products or services provided to customers by Biocompatibles in
connection with the Products.
|
11.2.
|
Notification Of Claims To
Biocompatibles. Similarly, as provided herein in Section
15.3 IsoRay shall notify Biocompatibles as soon as practicable after
receiving notice of any claim, action or inquiry by the FDA or other
applicable Regulatory Authority or court of law relating to alleged
non-compliance with the Products’ warranty affecting the Products
generally or any notice with respect to any alleged violation of any Law
on the part of the Products generally, and of any adverse incidents or
customer or patient complaints regarding the Products of which IsoRay
becomes aware.
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Page 11
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11.3.
|
Suspension of
Deliveries. Biocompatibles may suspend the distribution
or sale of the Products if Biocompatibles shall become aware of any
material non-conformity of the Products to the Specifications (see Exhibit E) or other
product performance problems that in either case Biocompatibles reasonably
concludes poses a risk to the health of the patient or any other party,
including without limitation Biocompatibles’ staff, hospital staff,
transport and delivery staff, and physicians, to the clinical efficacy of
the Products or constitutes (or the continued shipment of the Products
would constitute) a violation of Law or of any Regulatory
Requirement. Biocompatibles shall promptly notify IsoRay of any
such suspension. Such suspension shall remain in place until
IsoRay has either implemented appropriate modifications to its
pre-shipment inspection procedures designed to prevent shipment of the
Products suffering from the noted defects, or identified a root cause for
the failure and implemented appropriate corrective
action. Likewise, IsoRay may suspend the manufacture and
shipment of the Products to Biocompatibles if IsoRay shall become aware of
any similar quality, regulatory, safety or efficacy issues involving
Biocompatibles’ products or services provided to customers in connection
with Biocompatibles’ distribution of the Products. IsoRay shall
promptly notify Biocompatibles of any such
problems.
|
11.4.
|
Replacement
of Damaged or Defective
Products.
|
11.4.1
|
IsoRay
will replace,[**],
within a period of [**] days from the date of delivery of Product(s), or
at a later date as advised to IsoRay by Biocompatibles in order to
coincide with the rescheduling of the relevant patient’s implant, any
Product(s) which are proved to the reasonable satisfaction of IsoRay to be
damaged or defective due to defects in material, or workmanship or design
(other than a design made by Biocompatibles, the replacement of which
shall be [**] responsibility and shall be made at [**]
expense).
|
11.4.2
|
IsoRay
will refund to Biocompatibles the [**] on the return of any such defective
or damaged Product, and will deliver any replacement Product to
Biocompatibles at [**].
|
IsoRay
will refund Biocompatibles’ [**] for all Product required to be returned to
IsoRay in the event of IsoRay’s notice of withdrawal of the Product. With the
exception of events arising under Force Majeure (Section 15.1); (a) in the event
of a Product recall in the Territory, IsoRay will endeavour to replace, [**],
any units required to be withdrawn by Biocompatibles from the Territory and
returned to IsoRay; and (b) in the event of a complete withdrawal of the Product
from the Territory whereby the Product cannot be replaced by IsoRay, IsoRay will
[**] to
Biocompatibles [**] by Biocompatibles to IsoRay for such Product.
12.
|
PROPRIETARY
RIGHTS.
|
12.1.
|
Ownership. IsoRay and
Biocompatibles shall each shall continue to own all of their respective
Intellectual Property (“IP”), including IP developed or acquired by that
Party after the date hereof, and nothing in this Agreement shall be
construed as transferring any IP of a Party. Nor shall this
Agreement be construed to grant any license to any such IP, except as
expressly provided for herein during the term hereof. Any derivative work,
as relates to copyright, or improvement of a Party’s IP created by the
other Party pursuant to this Agreement shall be the property of the Party
who owns the IP on which the derivative work or improvement is based,
unless otherwise specifically agreed in
advance.
|
13.
|
TERMINATION.
|
13.1.
|
Termination for
Default. If a Party materially defaults in the
performance of any of its obligations under this Agreement and does not
cure such default within thirty (30) days, after receiving Notice as
provided herein, then the other Party may, by giving Notice to the
defaulting Party, terminate this Agreement, as of the termination date
specified in the Notice.
|
13.2.
|
Termination for
Cause. IsoRay may terminate this Agreement for cause if
an act or omission of Biocompatibles, its employees, officers or agents is
likely to cause or has caused harm or disrepute to the Products, IsoRay’s
trade names or the goodwill attached to this Agreement or associated with
IsoRay's Products. In the event IsoRay believes there is
sufficient cause to terminate this Agreement for such cause, it shall
provide Biocompatibles with written notice of its demand for arbitration
to determine the existence of such cause and such arbitration shall
commence pursuant to the terms of Section
13.4.
|
13.3.
|
Voluntary
Termination. Either Party may terminate this Agreement
at any time ninety (90) days prior to the end of the initial term or
renewal term, as applicable.
|
13.4.
|
Arbitration to Determine
Sufficient Cause. In the event IsoRay desires to terminate this
Agreement for cause pursuant to Section 13.2, IsoRay may file demand for
arbitration to be held in Richland, Washington under the then current
commercial arbitration rules of the American Arbitration Association, in
accordance with the terms set forth in this Section
13.4:
|
Page 13
of 18
|
13.4.1
|
Unless
the Parties can agree on a single arbitrator, such arbitration shall be
conducted by three arbitrators, one appointed by each of Biocompatibles
and IsoRay and the third selected by the first two appointed arbitrators.
Each arbitrator shall be a person with relevant experience in the medical
device industry. Biocompatibles and IsoRay shall instruct such arbitrators
to render a determination of any such dispute within 15 business days
after the appointment of the third arbitrator. Biocompatibles and IsoRay
must make their respective appointments within five business days of
notice being given to Biocompatibles by IsoRay of its intention to
terminate the Agreement for cause pursuant to Section 13.2. Such appointed
arbitrators must select the third arbitrator within five business days of
the last to occur of their respective appointments. The dispute shall be
resolved by submission of documents unless the arbitration panel
determines that an oral hearing is necessary. The arbitration panel shall,
within the overall 15 business day time constraint, determine what shall
be conclusively deemed to be fair and appropriate deadlines for submitting
documents and dates, if any, of oral
hearings.
|
|
13.4.2
|
Any
determination made or award rendered by the arbitrators shall be final and
binding upon the Parties. Judgment upon any determination or award
rendered may be entered in any court having jurisdiction, or application
may be made to such court for a judicial acceptance of the award and an
order of enforcement, as the case may be. Each Party shall pay its own
expenses of arbitration, and the expenses of the arbitrators shall be
equally shared between Biocompatibles and IsoRay unless the arbitrators
assess as part of their award all or any part of the arbitration expenses
of a Party (including reasonable attorneys' fees) against the other
Party.
|
|
13.4.3
|
This
Section 13.4 shall not prohibit a Party from seeking injunctive relief
from a court of competent jurisdiction in the event of a breach or
prospective breach of this Agreement by any other Party which would cause
irreparable harm to the first
Party.
|
14.
|
INSURANCE
AND INDEMNIFICATION.
|
14.1.
|
IsoRay Insurance. IsoRay
shall obtain and maintain in full force and effect valid general liability
and product liability insurance in respect of Products for death, illness,
bodily injury and property damage in an amount not less than [**]
million per occurrence; [**] million aggregate. IsoRay shall
within thirty (30) days after the Effective Date provide Biocompatibles
with evidence of this coverage, provided that the existence of such
coverage shall not limit IsoRay’s liability or obligations
hereunder. Such insurance policy shall provide that in the
event such insurance coverage should be materially adversely changed or
terminated for any reason, the insurer there under will give IsoRay and
Biocompatibles thirty (30) days prior written notice of such change or
termination. Pursuant to and as provided in the notice
provisions of sections 11, 15 and elsewhere herein, IsoRay shall notify
Biocompatibles as soon as practicable upon receipt of payment by IsoRay’s
insurers on any claims related to the Products or services encompassed by
this Agreement.
|
[**]
|
Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
|
Page 14
of 18
14.2.
|
Biocompatibles
Insurance. Biocompatibles
shall obtain and maintain in full force and effect valid general liability
and product liability insurance in respect of Products for death, illness,
bodily injury and property damage in an amount not less than [**]
million per occurrence; [**] million aggregate. Biocompatibles
shall within thirty (30) days after the Effective Date provide IsoRay with
evidence of this coverage, provided that the existence of such coverage
shall not limit Biocompatibles’ liability or obligations
hereunder. Pursuant to and as provided in the notice provisions
of sections 11, 15 and elsewhere herein, Biocompatibles shall notify
IsoRay as soon as practicable upon receipt of payment by Biocompatibles’
insurers on any claims related to the Products or services encompassed by
this Agreement.
|
14.3.
|
IsoRay’s
Indemnification. To the full
extent of IsoRay’s applicable general liability and product liability
insurance coverage with respect to the Products, IsoRay on behalf of
itself and its directors, employees, affiliates, suppliers and
agents, shall indemnify, defend and hold harmless Biocompatibles, its
subsidiaries and affiliates and their directors, officers, agents and
employees from and against any and all liabilities, claims, demands,
damages, causes of action, losses, expenses and attorney’s fees, whether
known or unknown, resulting from any and all product or material
defects.
|
14.4.
|
Biocompatibles’ Indemnification. To the full
extent of Biocompatibles’ applicable general liability and or other
insurance coverage with respect to the Products’ distribution as described
herein, Biocompatibles on behalf of itself and its directors,
employees, affiliates, suppliers and agents, shall indemnify, defend and
hold harmless IsoRay, its subsidiaries and affiliates and their directors,
officers, agents and employees from and against any and all liabilities,
claims, demands, damages, causes of action, losses, expenses and
attorney’s fees, whether known or unknown, resulting from any and all
handling or mishandling, use or misuse of the Products by
Biocompatibles.
|
[**]
|
Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
|
Page 15
of 18
15.
|
MISCELLANEOUS
PROVISIONS.
|
15.1.
|
Force Majeure. If and to
the extent that a Party's performance of any of its obligations pursuant
to this Agreement is prevented, hindered or delayed by fire, flood,
earthquake, elements of nature or acts of God, accident, acts of war,
terrorism, riots, civil disorders, rebellions or revolutions, strikes,
lockouts, or other labor troubles, shortages of supplies or materials,
utility failures or outages, action of any Regulatory Authority (excluding
Product recalls), or any other similar cause beyond the reasonable control
of such Party (each, a "Force Majeure
Event"), and such non-performance, hindrance or delay could not
have been prevented by reasonable precautions, then the non-performing,
hindered or delayed Party shall be excused for such non-performance,
hindrance or delay, as applicable, of those obligations affected by the
Force Majeure Event for as long as such Force Majeure Event continues and
such Party continues to use its best efforts to recommence performance
whenever and to whatever extent possible without delay, including through
the use of alternate sources, workaround plans or other
means. The Party whose performance is prevented, hindered or
delayed by a Force Majeure Event shall promptly notify the other Party of
the occurrence of the Force Majeure Event and describe in reasonable
detail the nature of the Force Majeure Event. During the
pendency of the Force Majeure Event, and only during the pendency of the
Force Majeure Event, the other Party may pursue alternative sources for
the products or services that the Force Majeure Event has prevented it
from obtaining under this
Agreement.
|
15.2.
|
Assignment. No Party
shall, without the consent of the other Party, assign this Agreement,
except that any Party may assign this Agreement to an affiliate without
such consent, and any Party may assign this Agreement in connection with a
merger or acquisition of such Party or in connection with a sale of all or
substantially all of the assets of such Party, provided that, in the case
of an asset sale, the acquiring party agrees in writing to assume and be
bound by all the obligations of the assigning Party
hereunder. This Agreement shall be binding on the Parties and
their respective successors and permitted assigns. Any
assignment in contravention of this subsection shall be
void.
|
15.3.
|
Notices. Except
as otherwise specified in this Agreement, all notices, requests, consents,
approvals, agreements, authorizations, acknowledgments, waivers and other
communications required or permitted under this Agreement shall be in
writing and shall be deemed given when sent by electronic mail or
delivered by hand to the address specified below. A copy of any
such notice shall also be sent by overnight express air mail on the date
such notice is transmitted by electronic mail to the address specified
below:
|
In
the case of IsoRay Medical, Inc.:
Xxxx
Xxxxx
Chief
Operating Officer
000 Xxxxx
Xxxxxx, Xxx. 000
Xxxxxxxx,
XX 00000-0000
XXX
(T) +1.509.375.1202
x 228
(F) x0.000.000.0000
xxxxxx@xxxxxx.xxx
xxx.xxxxxx.xxx
Page 16
of 18
In
the case of Biocompatibles:
Xxxxx
Xxxxxx, President
BIOCOMPATIBLES,
INC.
000
Xxxxxx Xxxx, Xxxxxxxx 0
Xxxxxx,
Xxxxxxxxxxx 00000
XXX
(T) x0.000.000.0000
(F) x0.000.000.0000
xxxxxxx@xxxxxxxxxxxxxx.xxx
xxx.xxxxxxxxxxxxxx.xxx
Any Party
may change its address, telephone, or facsimile number for notification purposes
by giving the other Parties written notice of the new address, telephone, or
facsimile number, and the date upon which it will become effective.
15.4.
|
Relationship Of
Parties. In entering into, and performing their duties
under, this Agreement, the Parties are acting as independent
parties. No provision of this Agreement shall create, imply or
be construed as creating a partnership, joint venture, or agency
relationship between the Parties. No Party shall have the
authority to act for or bind the other Party in any
respect.
|
15.5.
|
Severability. If
any provision of this Agreement is held by a court of competent
jurisdiction to be contrary to Law, then the remaining provisions of this
Agreement, if capable of substantial performance, shall remain in full
force and effect.
|
15.6.
|
Amendments. No
amendment to, or change, waiver or discharge of; any provision of this
Agreement shall be valid unless in writing and signed by an authorized
representative of each of the
Parties.
|
15.7.
|
Governing
Law. This Agreement and the rights and obligations of
the Parties under this Agreement shall be governed by and construed in
accordance with the Laws of [**],
without giving effect to the principles thereof relating to the conflicts
of Laws.
|
15.8.
|
Counterparts. This
Agreement may be executed in any number of counterparts, each of which
will be deemed an original, but all of which taken together shall
constitute one single Agreement between the
Parties.
|
[SIGNATURE
PAGE FOLLOWS]
[**]
|
Certain
information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted
portions.
|
Page 17
of 18
[SIGNATURE
PAGE]
IN
WITNESS WHEREOF, ISORAY MEDICAL, INC. and BIOCOMPATIBLES, INC. have caused this
Agreement to be signed and delivered by its duly authorized
representative
ACKNOWLEDGED
and AGREED this 18th day of
February, 2009:
ISORAY
MEDICAL, INC.
|
BIOCOMPATIBLES,
INC.
|
|||
By:
|
/s/ Xxxx Xxxxx
|
By:
|
/s/ Xxxxx Xxxxxx
|
|
Xxxx
Xxxxx
|
Xxxxx
Xxxxxx
|
|||
Chief
Operating Officer
|
President
|
Page 18
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