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EXHIBIT 10.L
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED
UNDER THE SECURITIES EXCHANGE ACT OF 1934,AS AMENDED
NORAC AGREEMENT FOR MANUFACTURE AND SALE OF THC
This AGREEMENT FOR MANUFACTURE AND SALE OF THC (this "Agreement") is made
as of January 1, 1995, by and between THE NORAC COMPANY, INC., a New Jersey
corporation ("NORAC"), and UNIMED PHARMACEUTICALS, INC., a Delaware corporation
("UNIMED"), with reference to the following facts:
WHEREAS, pursuant to an Agreement for Manufacture and Sale of THC dated
September 9, 1992 (the "Prior Contract"), UNIMED contracted with NORAC for the
manufacture by NORAC of D-9-tetrahydrocannabinol (the "product" or "THC") to
UNIMED'S specifications from the starting raw materials of olivetol and
paramenthadienol, and the sale of the completed product to UNIMED; and
WHEREAS, the Prior Contract has been completed; and
WHEREAS, NORAC and UNIMED wish to enter into a new contract for NORAC to
manufacture the product and sell it to UNIMED;
NOW, THEREFORE, in consideration of the covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. MANUFACTURE AND SALE OF PRODUCT. During the term of this Agreement,
NORAC agrees to manufacture and sell THC to UNIMED only, and UNIMED agrees to
purchase THC from NORAC only, all on the terms and subject to the conditions of
this Agreement. The term of this Agreement shall commence as of January 1,
1995 and terminate on December 31, 1999; provided, however, that this Agreement
shall be automatically renewed for additional one-year periods unless either
party has given the other party hereto at least one year's prior written notice
of its intention not to renew this Agreement.
1.1 1995 AND 1996 QUANTITIES AND PRICE. UNIMED ordered from NORAC a
target quantity of XXXXXXXXXXXX of product with an estimated delivery
date of December 31, 1995. Such order was delivered. UNIMED also
ordered from NORAC a target quantity of XXXXXXXXXXXX with an estimated
delivery date of December 31, 1996, at the following purchase prices per
kilogram of product:
QUANTITY PRICE PER KG.
OF PRODUCT FOR 1996 ORDER
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First XXXXXX/yr. $XXXXXX
Next XXXXXX/yr. $XXXXXX
After XXXXXX/yr. $XXXXXX
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UNIMED's orders are firm and may not be cancelled unless this
Agreement is otherwise terminated in accordance with the terms hereof.
1.2 QUANTITIES AND PRICES AFTER 1996. In the event that UNIMED
fails to place an order for any of the remaining calendar years
hereunder of the initial term (i.e., 1997, 1998 and 1999), or any
extension thereof, for at least XXXXXXXXXXXX of product, UNIMED shall pay
to NORAC an amount equal to the difference between XXXXXXXXXXXXXXXXX made
by NORAC on product sold to UNIMED during the preceding calendar year).
In such event, NORAC shall inform UNIMED of the shortfall, and UNIMED
shall pay such amount to NORAC not later than December 31 of such year.
Notwithstanding the foregoing sentence, UNIMED shall not be obligated to
reimburse NORAC for any shortfall below XXXXXXXXXXXX if (i) the shortfall
is due to an allotment of the Drug Enforcement Administration (the "DEA")
for such lesser amount, and (ii) UNIMED has used its commercially
reasonable efforts to assist NORAC and Banner (or such other packaging
company engaged by UNIMED) in obtaining a DEA allotment of XXXXXXXXXXXX
or more. UNIMED acknowledges and agrees that NORAC's estimated current
capacity for manufacture of the product is XXXXXXXXXXXXXX, and that NORAC
may be unable to accommodate, and UNIMED shall not place, orders in
excess of that capacity or in excess of amounts permitted under
applicable laws and regulations (including, but not limited to, DEA
regulations and orders). The order for any given year shall be placed
with NORAC by July 1 of the preceding year and the estimated delivery
date of such order shall be no later than December 31 of the year for
which ordered (e.g., the order for 1997 shall be placed by July 1, 1996
and the estimated delivery date shall be December 31, 1997.) The price
for the product shall be the base purchase price set forth in Section 1.1
with the adjustment provided for in Section 1.3.
1.3 XXXXXXXXXXXXXXXXXXXXX
1.4 PAYMENT OF PURCHASE PRICE FOR PRODUCT; REQUEST FOR RETAINS;
ABANDONMENT OF BATCH.
1.4.1 PAYMENT. UNIMED will pay to NORAC the purchase price
for each batch of the product, as such purchase price is specified
in or determined pursuant to Section 1, XXXXXXXXXX, such
installments to be payable upon the occurrence of the following
milestones for such batch:
NO. MILESTONE
--- ---------
1 XXXXXXXXXXXX
2 XXXXXXXXXXXX
3 XXXXXXXXXXXX
4 XXXXXXXXXXXX
5 XXXXXXXXXXXX
6 XXXXXXXXXXXX (see
Section 1.5)
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Upon the occurrence of each of milestones 1 through 5, NORAC
shall notify UNIMED of the occurrence thereof and, except for
the installment of the purchase price with respect to XXXXXXXXXXX
which shall be due and payable pursuant to Section 1.4.2, the
installment of the purchase price with respect to such milestone
shall be due and payable within ten (10) days thereafter. The
XXXXXXXXXXXXXXXXX of the purchase price shall be due and payable as
provided in Section 1.5. The XXXXXXXXXXXXXXXXX shall be adjusted
to reflect any difference between the installment payments made
under this Section and the purchase price for such product.
1.4.2 REQUEST FOR RETAIN OF PRODUCT. UNIMED may, within ten
(10) days following NORAC's notification of the occurrence of
milestone 3 described in Section 1.4.1 for each batch of the
product, request delivery of one Retain of the product (as defined
below) for UNIMED's analysis and approval (which approval shall not
be unreasonably withheld), provided that UNIMED or a laboratory
designated by UNIMED ("Licensed Laboratory") has all licenses and
approvals required by applicable laws and regulatory authorities to
accept delivery and analyze the product. ("Retain" for purposes of
this Agreement shall mean a representative sample of any given
batch of the product.) NORAC shall deliver a Retain of the product
to UNIMED or the Licensed Laboratory designated by UNIMED within
twenty (20) days following the date NORAC is notified of UNIMED's
request for such Retain pursuant to this Section. If UNIMED elects
to analyze the product, UNIMED shall notify NORAC of its approval
within twenty-one (21) days following the receipt by UNIMED or the
Licensed Laboratory designated by UNIMED of the Retain;
alternatively, UNIMED shall notify NORAC within such twenty-one
(21) day period of its reasons for not approving the Retain. In
the event that UNIMED approves of the Retain, UNIMED shall deliver
to NORAC the payment of the installment of the purchase price for
the product with respect to milestone 3 prior to the expiration of
the twenty-one (21) day approval period specified herein. In the
event that UNIMED disapproves of the Retain and NORAC agrees with
the reasons for such disapproval, NORAC may, at its option, either
(i) correct the deficiencies in the unfinished product identified
by UNIMED, notify UNIMED of such correction and send a new Retain
of the unfinished product to UNIMED or the Licensed Laboratory
designated by UNIMED for analysis and approval by UNIMED in
accordance with this Section (i.e., a new twenty-one (21) day
approval period shall apply), or (ii) abandon the product pursuant
to Section 1.4.3, in which case the provisions of Section 1.4.3
shall apply. In the event that UNIMED disapproves of the Retain
and NORAC disagrees with the reasons for such disapproval, the
dispute shall be resolved by an independent testing organization of
recognized repute within the U.S. pharmaceutical industry agreed
upon by the parties (which agreement shall not be unreasonably
withheld or delayed by either
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party), provided that such organization has all licenses and
approvals required by applicable laws and regulatory authorities to
accept delivery and analyze the product. The cost of such
determination shall be borne by the party against whom the decision
is made.
1.4.3 ABANDONMENT OF BATCH. NORAC may abandon the
manufacture of any batch of the product at any time prior to the
issuance by NORAC's laboratory of a Certificate of Analysis with
respect to such batch. In the event of the abandonment of the
manufacture of any batch ("Abandoned Batch"), NORAC shall
notify UNIMED of such abandonment and, at NORAC's option, (i)
commence the manufacture of a new batch ("Replacement Batch"); or
(ii) return to UNIMED all installments of the purchase price for
the Abandoned Batch received prior to the date of abandonment. In
the event that NORAC elects to commence the manufacture of a
Replacement Batch following the abandonment of an Abandoned Batch,
(a) all installments of the purchase price previously received by
NORAC with respect to the Abandoned Batch shall be credited against
the installments of the purchase price payable with respect to the
Replacement Batch, and (b) UNIMED shall not be required to pay any
installments of the purchase price for the Replacement Batch until
the Replacement Batch reaches the same stage in the manufacturing
process as the Abandoned Batch had reached at the time of its
abandonment at which time UNIMED shall be required to pay any and
all additional installments of the purchase price with respect to
the Replacement Batch in accordance with Sections 1.4.1 and 1.5.
NORAC may use all or any portion of an Abandoned Batch in the
manufacture of a Replacement Batch.
1.5 DELIVERY. Upon the purification and distillation of the product
(milestone 6 described in Section 1.4.1) and the issuance of a
Certificate of Analysis by NORAC's laboratory, NORAC shall notify UNIMED
of same and, if so requested by UNIMED within ten (10) days of such
notification, NORAC shall send a Retain of the product to UNIMED or the
Licensed Laboratory designated by UNIMED for analysis and approval by
UNIMED (which approval shall not be unreasonably withheld), provided that
UNIMED or the Licensed Laboratory designated by UNIMED, as the case may
be, has all licenses and approvals required by applicable laws and
regulatory authorities to accept delivery and analyze the product. If
UNIMED elects to analyze the product, UNIMED shall notify NORAC of its
approval within twenty-one (21) days following the receipt of the Retain
by UNIMED or the Licensed Laboratory designated by UNIMED; alternatively,
UNIMED shall notify NORAC within such twenty-one (21) day period of its
reasons for not approving the Retain. In the event that UNIMED
disapproves of the Retain and NORAC agrees with the reasons for such
disapproval, NORAC may, at its option, either (i) correct the
deficiencies in the product identified by UNIMED, notify UNIMED of such
correction and send a new Retain of the product to UNIMED or the Licensed
Laboratory designated by UNIMED for analysis and approval by UNIMED in
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accordance with this Section (i.e., a new twenty-one (21) day approval
period shall apply), or (ii) abandon the product pursuant to Section
1.4.3, in which case the provisions of Section 1.4.3 shall apply. In the
event that UNIMED disapproves of the Retain and NORAC disagrees with the
reasons for such disapproval, the dispute shall be resolved by an
independent testing organization of recognized repute within the U.S.
pharmaceutical industry agreed upon by the parties (which agreement shall
not be unreasonably withheld or delayed by either party), provided that
such organization has all licenses and approvals required by applicable
laws and regulatory authorities to accept delivery and analyze the
product. The cost of such determination shall be borne by the party
against whom the decision is made. The sixth installment of the purchase
price for such batch shall be due and payable concurrently with UNIMED's
approval; provided, however, in the event that UNIMED does not have, and
UNIMED does not designate, a Licensed Laboratory which has all licenses
and approvals required by applicable laws and regulatory authorities to
accept delivery and analyze the Retain at the time of NORAC's
notification to UNIMED of the issuance of a Certificate of
Analysis for a batch of the product by NORAC's laboratory, the sixth
installment of the purchase price for such batch of the product shall be
due and payable within ten (10) days following such notification. Upon
receipt by NORAC of UNIMED's approval and the sixth installment of the
purchase price for such batch, the finished product shall be placed in
UNIMED's safe at NORAC's plant in Azusa, California (or if already in
UNIMED's safe, shall be segregated therein). Title to the product shall
pass to UNIMED upon placement or segregation, as the case may be, of the
product in UNIMED's safe following approval and payment, which act shall
constitute delivery to UNIMED and the date of which shall be herein
referred to as the "date of delivery." UNIMED may remove the finished
and paid for product from its safe at any time on or after the date of
delivery, provided that UNIMED has all licenses and approvals required by
applicable laws and regulatory authorities to take possession of the
product. Within a reasonable period following notification by NORAC that
NORAC's reasonable storage capacity for product has been reached, UNIMED
shall remove sufficient delivered product from NORAC's premises to allow
NORAC to continue production and delivery of the product. Within thirty
(30) days following the termination of this Agreement, UNIMED shall
remove all delivered product from NORAC's premises.
2. COMMERCIALLY REASONABLE EFFORTS BY NORAC; DELAYS IN DELIVERY. The
parties acknowledge and agree that the manufacture of THC is a complicated
process and that unexpected problems can arise during its production. Such
problems can include, but are not limited to, total or partial failure of
batches, shortages in batches, inability to manufacture or deliver the product
or delays in such manufacture or delivery (whether caused by inability or delay
in obtaining approvals from the DEA or other regulatory agencies or caused by
other factors), and the inability to obtain raw materials. NORAC will use
commercially reasonable efforts in meeting agreed production and delivery
schedules for the product as provided in this Agreement and in all construction
and manufacturing activities under this Agreement. NORAC will not be liable for
any damages of any nature or character whatsoever (including, but not
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limited to any increased cost of obtaining replacement product, lost
profits, and incidental and consequential damages) suffered by UNIMED by reason
of the failure of NORAC to manufacture and deliver the product in the amounts
and at the times agreed upon by the parties; provided, however, that the sole
and exclusive remedies of UNIMED shall be as provided in Section 7.3 hereof and
the remaining sentences of this Section 2, to the extent that each is
applicable. In the event that at least two-thirds (2/3) of the full amount of
product ordered by UNIMED is not delivered within ninety (90) days (or such
longer period as UNIMED approves in writing) after the delivery date specified
for such order, there shall be refunded to UNIMED, as its sole remedy, all
installment payments made for product not delivered. NORAC will keep UNIMED
informed of any potential delays in delivery and the parties agree to discuss
possible mutually agreeable solutions to any such problems. UNIMED may, at its
option, elect to extend any delivery period in writing. If such failure to
deliver at least two-thirds (2/3) of the full amount of product is due to
NORAC's material breach of its obligation to make a commercially reasonable
effort to produce and deliver the product (subject to Section 10.5), the sole
remedy (in addition to a refund on installment payments for THC not delivered
and the remedy provided by Section 7.3 below) which UNIMED shall have, in law
or in equity, is that UNIMED, at its option, may terminate this Agreement by
notification to NORAC within thirty (30) days after such ninety (90) day
period.
3. OBLIGATIONS OF NORAC.
3.1 SAMPLES AND BATCH RECORDS. During the term hereof, NORAC shall
prepare and maintain batch records and a file sample, properly stored,
from each batch of product manufactured. Upon termination of this
Agreement, NORAC shall offer such file samples to UNIMED, provided that
NORAC shall thereafter have access to same if required for regulatory or
other purposes required by law.
3.2 VISITS BY UNIMED. Subject to Section 10.16, NORAC shall permit
UNIMED's designated representatives to visit NORAC's facility at which
the product is manufactured from time to time for the purpose of
determining compliance with this Agreement, provided such inspections
shall occur after reasonable notice during regular business hours and
each visitor shall comply with NORAC's security procedures.
3.3 CHANGES BY NORAC. During the term hereof, NORAC may make
material modifications to the manufacturing equipment, or to the portion
of its manufacturing facility at which the product is manufactured, only
after providing written notice to UNIMED, and then only if such
modifications are in compliance with regulations and orders of the U.S.
Food and Drug Administration ("FDA"). NORAC may, without further
investigation, conclusively rely on any written notice by UNIMED that any
such modifications are in compliance with FDA regulations and orders,
which notification by UNIMED shall not be unreasonably withheld or
delayed by UNIMED.
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3.4 INSPECTIONS BY GOVERNMENT AGENCIES. NORAC shall promptly notify
UNIMED of any inspections by federal, state or local regulatory
representatives of the parties of its manufacturing facility at which the
product is manufactured and the results of any such inspections,
including actions taken by NORAC to remedy conditions cited in such
inspections.
3.5 PERMITS. NORAC shall obtain and maintain all licenses, permits
and registrations necessary for NORAC to manufacture and supply the
product hereunder, provided that there can be no assurances that DEA
allotments will remain available in any specific amount that may be
desired by Unimed; further provided, that NORAC agrees to use its
commercially reasonable efforts to obtain such allotment in the amount
requested by UNIMED from time to time and that UNIMED agrees to use its
commercially reasonable efforts to assist NORAC and Banner (or such other
packaging company engaged by UNIMED) in obtaining such allotment in the
amount requested by UNIMED from time to time.
3.6 ACCESS TO RECORDS. During the term hereof and for such longer
period as may be required by law, NORAC shall maintain, and (subject to
Section 10.16) shall grant UNIMED reasonable access to, all books and
records (including, but not limited to, batch records) related to the
manufacture of the product as may be necessary to determine compliance
with this Agreement or for such other purpose as may be required by law.
4. NORAC'S COVENANTS AND WARRANTIES. NORAC hereby covenants, represents
and warrants that:
4.1 COMPLIANCE WITH NDA. All product manufactured for UNIMED
pursuant to this Agreement shall, upon delivery to UNIMED, meet all
pertinent specifications in New Drug Application No. 18-651 (together
with all amendments and supplements thereto, if any) (the "NDA"), copies
of which specifications have been provided by UNIMED to NORAC, and any
other specifications for the product mutually agreed upon in writing by
NORAC and UNIMED.
4.2 COMPLIANCE WITH LAWS. NORAC will store all raw materials and
will manufacture and store the product in compliance with all then
applicable laws, rules, orders and regulations, including all then
current Good Manufacturing Practices of the FDA.
4.3 COMPLIANCE WITH THE ACT. As of the time of delivery of the
product to UNIMED, such shipment will not be, in whole or in part, (i)
adulterated within the meaning of the federal Food, Drug and Cosmetic Act
(the "Act"), or any applicable state law with a substantially similar
definition of adulteration; or (ii) an article which may
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not, under the provisions of Section 404 or 505 of the Act, be
introduced into interstate commerce.
4.4 TITLE TO THE PRODUCT. NORAC will have good title to all product
sold hereunder, which title shall pass to UNIMED as provided herein free
and clear of any lien or other conflicting interest of any kind of any
person claiming through NORAC.
4.5 NO OTHER WARRANTIES. Except as expressly set forth in this
Section 4, NO OTHER WARRANTY IS EXPRESS OR IMPLIED. NORAC SPECIFICALLY
DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. The provisions of Sections 4.1, 4.2 and 4.3 shall
expire, and have no further force and effect, with any respect to any
particular batch of product upon the delivery thereof to UNIMED.
5. UNIMED COVENANTS AND WARRANTIES. UNIMED hereby covenants, represents
and warrants that:
5.1 PERMITS. UNIMED will use commercially reasonable efforts to
maintain the NDA in effect.
5.2 FDA. UNIMED shall promptly notify NORAC of any additions to or
changes in FDA or other laws, rules, orders or regulations or to the NDA
which would affect the manufacture or storage of the product.
5.3 NO INFRINGEMENT. The product, when manufactured in accordance
with the specifications set forth in the NDA, does not infringe the
patent or other rights of any third person.
6. USE OF EQUIPMENT; CONSTRUCTION.
6.1 UNIMED EQUIPMENT. UNIMED has previously provided certain
equipment to NORAC for use by NORAC at its plant in Azusa, California in
connection with the manufacture of the product. UNIMED agrees that NORAC
may continue to use such equipment, together with all equipment
subsequently added pursuant to this Section 6 (collectively, the "UNIMED
Equipment"), without rent or other charge, throughout the duration of
this Agreement exclusively for the manufacture and sale of the product to
UNIMED. Upon termination of this Agreement, all of the UNIMED Equipment
shall, subject to Section 6.4 hereof, be returned to UNIMED at UNIMED's
expense.
6.2 FURTHER WORK. All costs, including but not limited to labor,
supplies, equipment and building permits, incurred in connection with the
acquisition of further
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equipment, construction projects and other work, all of which must be
expressly approved in advance in writing by UNIMED, shall be paid by
UNIMED. Details of costs shall be provided to UNIMED upon request.
6.3 COSTS OF CONSTRUCTION. Costs of work undertaken pursuant to
Section 6.2 shall include, but not be limited to, the following:
6.3.1 LABOR. All construction labor, other than normal
maintenance, shall be reimbursed by UNIMED at three (3) times the
direct hourly wage of each employee involved.
6.3.2 CONTRACTORS. All outside contractors engaged by NORAC
to assist in construction or other work shall be reimbursed by
UNIMED at cost plus ten percent (10%).
6.3.3 MATERIALS AND EQUIPMENT. NORAC shall be reimbursed by
UNIMED for all materials and equipment purchased by NORAC for work
requested or approved by UNIMED, at the identified cost therefor,
plus ten percent (10%) to cover the cost of miscellaneous supplies
and materials.
6.4 NORAC'S RIGHT OF FIRST REFUSAL. In the event that during the
term of this Agreement UNIMED desires to sell or otherwise transfer all
or any part of the UNIMED Equipment, UNIMED shall first offer in writing
to sell such equipment to NORAC at the same price and on the same terms
as offered by a bona fide purchaser offering to purchase such equipment
(the "Offer"). Such notice to NORAC shall be accompanied by a copy of
the Offer. NORAC shall have ten (10) days following the date of such
notice to elect to exercise its right of first refusal by so notifying
UNIMED in writing and by payment for such equipment at the price and on
the terms specified in the Offer within thirty (30) days after the
expiration of such ten (10) day period. If NORAC shall fail to so notify
UNIMED within the said ten (10) day period, it shall be deemed to have
rejected said offer. In that event, UNIMED may sell or transfer such
equipment to said bona fide purchaser provided that such equipment is
sold at a price at least equal to the price stated in the Offer and in
accordance with the other terms stated therein, and the provisions of
this Section 6.5 shall not thereafter apply to any subsequent sales or
other transfers of such equipment. If, however, no such sale or transfer
is consummated within one hundred twenty (120) days from the date of the
original Offer, the foregoing requirement that the UNIMED first offer to
sell such equipment to NORAC shall again apply.
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7. DEFAULT.
7.1 EVENT OF DEFAULT. It shall constitute an event of default by a
party under this Agreement if such party is in material breach of its
duties and obligations under this Agreement (including, but not limited,
to any failure to pay money when due) and fails to cure the same within
thirty (30) days after written notice thereof is given by the other
party.
7.2 TERMINATION. Upon the occurrence hereunder of any event of
default by a party hereto, (which event of default has not been cured
within the thirty (30) day period described in Section 7.1), the other
party may, upon notice to the defaulting party, and in addition to all
other rights and remedies available to it under this Agreement or at law
or in equity (except as otherwise expressly provided in this Agreement),
terminate this Agreement within a reasonable time after the occurrence of
such event of default.
7.3 TRANSFER OF TECHNOLOGY.
7.3.1 WRONGFUL TERMINATION OR FAILURE TO USE COMMERCIALLY
REASONABLE EFFORTS. In the event that NORAC either (i)
terminates this Agreement other than in accordance with any of the
provisions of this Agreement, or (ii) materially breaches its
obligation to make a commercially reasonable effort to produce and
deliver the product pursuant to this Agreement, then NORAC shall
immediately grant to UNIMED a perpetual, royalty free license to
all manufacturing know-how and technology used by NORAC to
manufacture THC. The foregoing license (i) shall be exclusive to
UNIMED, with the right to grant sublicenses, with respect to the use
of such know-how and technology to manufacture THC, and (ii) shall
permit UNIMED and its sublicensees to use such know-how and
technology only to manufacture THC and for no other purpose. NORAC
shall retain all rights to use such know-how and technology
(including the right to grant sublicenses) for the manufacture of
products other than THC.
7.3.2 OTHER TERMINATION. In the event of any termination of
this Agreement that occurs other than as described in clauses
(i) or (ii) of Section 7.3.1 above, and other than by reason of a
breach of this Agreement by UNIMED, the parties agree to discuss a
grant by NORAC to UNIMED of a license to use all of its
manufacturing know-how and technology used by NORAC to manufacture
the product for UNIMED, for such consideration as the parties may
mutually agree.
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8. INSURANCE.
8.1 PROPERTY AND CASUALTY INSURANCE. UNIMED shall provide property
insurance coverage for UNIMED'S equipment and finished product at
NORAC'S facility in accordance with standard practice in the industry.
UNIMED and NORAC shall be shown as loss payees thereunder as their
interests may appear. NORAC shall provide adequate property insurance
for the replacement cost of NORAC'S plant and equipment, to the extent
utilized in the production of the product. NORAC shall be reimbursed, in
accordance with Section 6.2 and other provisions of this Agreement, for
any out-of-pocket or labor costs it incurs in rebuilding, repairing or
replacing UNIMED's equipment or property used in the production of the
product.
8.2 LIABILITY INSURANCE OF UNIMED. UNIMED shall procure and
maintain in effect at all times during and after the term of this
Agreement, at UNIMED's sole cost and expense, a commercial general
liability policy of insurance in the minimum amount of $1,000,000,
combined single limit, and a products liability policy of insurance in
the minimum amount of $3,000,000, combined singly limit, insuring against
personal injury and property damage caused by storage after delivery,
distribution, sale, or use of the product, and contractual liability.
Each of such insurance policies shall (i) either be written on a claims
made or occurrence basis, at UNIMED's option; (ii) be obtained from an
insurer reasonably acceptable to NORAC; (iii) name NORAC as an additional
insured; (iv) contain a waiver of subrogation clause; (v) contain a
cross-liability endorsement or severability of interest clause in favor
of NORAC and UNIMED, including a waiver of any exclusion of liability
arising from a claim by one named insured against another named insured;
(vi) include broad form contractual liability coverage insuring UNIMED's
obligation to indemnify NORAC pursuant to Section 9.1; (vii) be
reasonably satisfactory to NORAC in form and content; (viii) state that
it is primary and not contributing with any other insurance maintained by
NORAC; and (ix) require that NORAC be given at least thirty (30) days'
prior written notice of the modification, cancellation or expiration
thereof. Concurrently with its execution of this Agreement, UNIMED shall
deliver to NORAC a certificate of insurance evidencing such insurance
policy and a copy of such insurance policy. The provisions of this
Section 8.2 shall survive the expiration or termination of this
Agreement.
8.3 LIABILITY INSURANCE OF NORAC. NORAC shall procure and maintain
in effect at all times during the term of this Agreement and for a period
of one (1) year thereafter, at NORAC's sole cost and expense, a
commercial general liability policy of insurance in the amount of
$1,000,000, combined single limit, insuring against personal injury and
property damage caused by the manufacture of the product and storage
thereof prior to delivery. NORAC shall not be obligated to approve or
maintain products liability insurance coverage. The commercial general
liability insurance policy required to be maintained by NORAC hereunder
shall (i) be written on a claims made or
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occurrence based policy, at NORAC's option; (ii) be obtained from an
insurer reasonably acceptable to UNIMED; (iii) name UNIMED as an
additional insured; (iv) contain a waiver of subrogation clause; (v)
contain a cross-liability endorsement or severability of interest clause
in favor of UNIMED and NORAC, including a waiver of any exclusion of
liability arising from a claim by one named insured against another named
insured; (vi) be reasonably satisfactory to UNIMED in form and content;
(vii) state that it is primary and not contributing with any other
insurance maintained by UNIMED; and (vii) require that UNIMED be given at
least thirty (30) days' prior written notice of the modification,
cancellation or expiration thereof. Concurrently with its execution of
this Agreement, NORAC shall deliver to UNIMED a certificate of insurance
evidencing such insurance policy and a copy of such insurance policy.
8.4 WORKERS' COMPENSATION OF NORAC. NORAC shall procure and
maintain in effect at all times during the term hereof workers'
compensation insurance policy, including employer's liability coverage in
accordance with applicable laws.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY UNIMED. UNIMED agrees to indemnify and
defend NORAC and hold it harmless from and against any and all claims,
damage, liability, loss, cost or deficiency (including, but not limited
to, reasonable attorneys' fees and other costs and expenses incident to
any suit, action, proceeding, inquiry or investigation or the defense of
any claim or for enforcing this indemnification provision) and to pay
NORAC on demand the full amount of any expenses, claims, liabilities or
other sums which NORAC pays or becomes obligated to pay on account of,
arising from or related to the storage after delivery, distribution, sale
or use of the product hereunder, including but not limited to breach of
warranty, strict liability or product liability claims (except to the
extent that NORAC is obligated with respect to such claims under Section
9.2). The provisions of this Section 9.1 shall survive the termination
of this Agreement.
9.2 LIMITATION OF LIABILITY OF NORAC; INDEMNIFICATION BY NORAC.
9.2.1 LIMITATION OF LIABILITY OF NORAC. UNIMED acknowledges
and agrees that notwithstanding any other provisions of this
Agreement, NORAC's liability hereunder and to third parties shall
be limited to claims, damages, losses, liabilities, costs or
deficiencies (including, but not limited to reasonable attorneys'
fees), arising from or related to the manufacture of the product or
storage thereof prior to delivery solely to the extent that the
injuries or damages giving rise to such claims occur and are
actually known by NORAC during the period of manufacture of the
product and storage thereof prior to delivery and shall exclude any
and all products liability claims; provided, however, that this
Section 9.2.1 shall not be construed to negate or supersede
UNIMED's remedies set forth in
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Sections 2 and 7.3 hereof under certain circumstances
specifically set forth therein. Nothing in this Section is
intended to affect any other limitations on the liability of NORAC
under any other provision of this Agreement or otherwise. The
limitation on NORAC's liability hereunder is a material
consideration for NORAC entering into this Agreement, it being the
understanding of the parties that UNIMED is providing NORAC with
the specifications for the manufacture of the product and the
approval of the product by UNIMED pursuant to Section 1.5 shall
constitute UNIMED's agreement and approval that the product
conforms to such specifications and the full and complete release
of NORAC and its directors, officers, employees, agents and
shareholders with respect to any and all claims, damages, losses,
costs or deficiencies, known and unknown, arising from or relating
to the manufacture or storage of the product.
9.2.2 INDEMNIFICATION BY NORAC. NORAC agrees to indemnify and
defend UNIMED and hold it harmless from and against any and all
claims, damage, liability, loss, cost or deficiency (including, but
not limited to, reasonable attorneys' fees and other costs and
expenses incident to any suit, action, proceeding, inquiry or
investigation or the defense of any claim or for enforcing this
indemnification provision) and to pay UNIMED on demand the full
amount of any expenses, claims, liabilities or other sums which
UNIMED pays or becomes obligated to pay on account of, arising from
or related to the manufacture of the product or storage thereof
prior to delivery solely to the extent that the injuries or damages
giving rise to such claims occur and are actually known by NORAC
during the period of manufacture of the product or storage thereof
prior to delivery (except to the extent that such claims arise from
UNIMED's gross negligence or willful misconduct). In no event
shall NORAC's indemnification obligations hereunder apply to any
products liability claims.
9.2.3 SURVIVAL. The provisions of this Section 9.2 shall
survive the termination of this Agreement.
10. MISCELLANEOUS.
10.1 WAIVER, AMENDMENTS AND MODIFICATIONS. Any of the terms or
conditions of this Agreement may be waived at any time by the party which
is entitled to the benefit thereof only by a writing executed by the
waiving party. This Agreement may be amended or modified at any time, in
whole or in part, only by a writing executed by the respective parties.
The provisions of this Section 10 shall survive the termination of this
Agreement.
10.2 NOTICES. All notices, requests and other communications
required or permitted hereunder shall be in writing, addressed to the
respective parties as follows:
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NORAC
The NORAC Company, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention: President
UNIMED
Unimed Pharmaceuticals, Inc.
0000 X. Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Any notice or other communication sent by registered or certified mail,
return receipt requested, shall be effective on the date of receipt or
refusal of delivery by the addressee, as specified on the return receipt
therefor. Notice given in any other manner shall be effective upon
actual receipt by the addressee. Any party may change its address for
purposes of this Section by giving notice to the other party as provided
in this Section.
10.3 ASSIGNMENT.
10.3.1 This Agreement shall not be assignable by either party
without the prior written consent of the other. Notwithstanding the
foregoing, NORAC may, upon UNIMED's prior written consent which
shall not be unreasonably withheld, assign this Agreement and
delegate its performance hereunder to a wholly-owned subsidiary of
NORAC, and thereupon NORAC shall have no further obligations under
this Agreement, except in the event of the breach by such subsidiary
of any of its obligations under Section 1.4 to deliver to UNIMED any
batch of product and the failure by such subsidiary to return to
UNIMED any and all installments of the purchase price for such batch
previously paid by UNIMED pursuant to Section 1.4, NORAC shall be
obligated to return any such installments to UNIMED and NORAC shall
have no further obligations under this Agreement.
10.3.2 Notwithstanding the foregoing Section 10.3.1, either
party may assign its rights and obligations hereunder to a
successor by merger or to a purchaser of all or substantially all of
its business to which this Agreement relates (provided, however, that
this section shall not affect the provisions set forth in Section
10.4 or the subsections thereof or the protections to UNIMED
described therein).
10.4 UNIMED'S RIGHT OF FIRST REFUSAL. NORAC and its shareholders,
as an inducement to UNIMED to enter into this Agreement, agree as
follows:
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10.4.1 The shareholders of NORAC agree that during the term
of this Agreement they shall not sell or otherwise transfer a
controlling interest in NORAC (as "control" is defined in Section
10.4.5) to a direct competitor of UNIMED (as such term is defined
in Section 10.4.5), other than in accordance with this Section
10.4.
10.4.2 NORAC agrees that during the term of this Agreement it
shall not sell or otherwise transfer that portion of its
manufacturing facility in Azusa, California at which the product is
manufactured (such portion of the manufacturing facility being
herein referred to as the "Plant") other than in accordance with
the provisions of this Section 10.4. Notwithstanding the
foregoing:
(i) A sale or other transfer of the Plant to any person
or entity which controls, is controlled by or is under common
control with NORAC (as "control" is defined in Section
10.4.5) (such person or entity being herein referred to as a
"Control Person") shall not be subject to the provisions of
this Section 10.4; provided, however, any further sale or
other transfer of the Plant (except to another Control
Person) shall continue to be subject to the provisions of
this Section 10.4.
(ii) The foregoing provisions of this Section 10.4.2
shall not apply to any sale or other transfer of all or
substantially all of NORAC's manufacturing facility in Azusa,
California, of which the Plant is a portion; provided,
however, that it shall be a condition of such sale or other
transfer that any purchaser or other transferee shall assume
the obligations of NORAC under this Agreement.
10.4.3 If NORAC or its shareholders, as the case may be
("Offeror"), desire to sell or otherwise transfer a Subject
Interest (as defined in Section 10.4.5), as provided in Sections
10.4.1 or 10.4.2, the Offeror shall first offer in writing to sell
the Subject Interest to UNIMED at the same price and on the same
terms as offered by a bona fide purchaser offering to purchase the
Subject Interest (the "Offer"). Such notice to UNIMED shall be
accompanied by a copy of the Offer. UNIMED shall have ten (10)
days following the date of such notice to elect to exercise its
right of first refusal by so notifying the Offeror in writing and
by payment for such Subject Interest at the price and on the terms
specified in the Offer within thirty (30) days after the expiration
of such ten (10) day period.
10.4.4 If UNIMED shall fail to so notify the Offeror within
the said ten (10) day period, it shall be deemed to have rejected
said offer. In that event, the Offeror may sell or transfer the
Subject Interest to said bona fide purchaser
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provided that the Subject Interest is sold at a price at least
equal to the price stated in the Offer and in accordance with the
other terms stated therein, and the provisions of this Section 10.4
shall not thereafter apply to any subsequent sales or other
transfers of any Subject Interest. If, however, no such sale or
transfer is consummated within one hundred twenty (120) days from
the date of the original Offer, the foregoing requirement that the
Offeror first offer to sell the Subject Interest to UNIMED shall
again apply.
10.4.5 As used in this Section 10.4, the following terms
shall have the meanings specified in this Section 10.4.5:
"Control" shall mean having the power to direct or cause
direction of the management and policies of NORAC.
A "direct competitor of UNIMED" shall mean an entity
that sells a pharmaceutical product which directly competes
with Marinol.
"Subject Interest" shall mean either a controlling
interest in NORAC (provided that it is sold or otherwise
transferred to a direct competitor of UNIMED) or the Plant.
10.5 FORCE MAJEURE.
10.5.1 No party shall be liable for any failure to perform
its obligations hereunder where such failure results from causes
beyond the reasonable control of such party, including, without
limitation, strikes, lockouts, labor disputes, embargoes, acts of
God, inability to obtain labor or materials, governmental
restrictions, governmental regulations, governmental orders,
judicial orders, enemy or hostile governmental action, civil
commotion, earthquake, fire or other casualty, provided that the
party claiming the force majeure has given prompt notice thereof
to the other party. Performance by the party claiming the force
majeure shall be suspended for the duration of the force majeure,
subject to Section 10.5.2 below.
10.5.2 Notwithstanding the foregoing, in the event the
claimed force majeure prevents NORAC from commencing manufacture of
the product within six (6) months from the occurrence of the event
of force majeure, either party may terminate this Agreement and
cancel all orders for product hereunder not yet delivered
immediately upon written notice to the other. Upon notice of such
termination and cancellation, NORAC shall immediately refund to
UNIMED any and all amounts paid by UNIMED hereunder for product not
yet delivered. NORAC will, if requested, assist UNIMED in finding
alternative sources of supply for the product.
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10.6 PARTIES. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any person, other than the parties hereto and
their successors and permitted assigns, any rights or remedies under or
by reason of this Agreement.
10.7 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach or interpretation thereof,
shall be resolved by binding arbitration in Los Angeles County,
California. The arbitrator, who shall be a retired judge of the Superior
Court, shall be selected jointly by the parties, or if the parties fail
to do so, shall be appointed by Judicial Arbitration and Mediation
Services, Inc. The arbitration shall be conducted in accordance with the
provisions of Part 3, Title 9 (Section 1280 et seq.) of the California
Code of Civil Procedure. The provisions of Section 1283.05 of the
California Code of Civil Procedure, which provides for certain discovery
procedures, is by this reference made a part hereof. A judgment upon the
award rendered in the arbitration may be entered in any court having
jurisdiction thereof. Neither the provisions of this Section nor the
exercise of any rights hereunder shall limit the right of any party to
institute and maintain litigation in order to obtain, at any time,
provisional or ancillary remedies including, without limitation,
attachment and injunctive relief; the institution and maintenance of such
litigation shall not constitute a waiver of the right of any party to
submit any controversy or claim to arbitration as herein provided. In
any action or arbitration proceeding brought under or arising out of or
relating to this Agreement, or the breach or interpretation thereof, each
party hereby consents to the jurisdiction of any competent court within
the State of California and to service of process by any means authorized
by California law.
10.8 ATTORNEYS' FEES. If any proceeding (including any arbitration
proceeding) is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection
with the provisions hereof, the successful or prevailing party in such
proceeding shall be entitled to recover its reasonable attorneys' fees
and other costs incurred in such proceeding.
10.9 LATE PAYMENT. If any amount is not paid when due under this
Agreement, interest shall thereafter accrue on such amount at a rate of
three percentage points (3%) in excess of the "prime rate" as reported in
The Wall Street Journal (or if more than one prime rate is reported, the
highest thereof) until such payment is received by the party to whom such
payment is owed (the "payee"), and, in addition, in the event that the
person obligated to make such payment (the "payor") fails to make payment
to the payee within twenty-one (21) days following the delivery to the
payee of written notice of non-payment, the payee shall be entitled to
receive a late charge in an amount equal to ten percent (10%) of the
overdue amount. The parties recognize that a default in making payments
as provided herein will require the payee to incur additional costs and
expenses
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and that the damages caused thereby would be extremely difficult
and impractical to ascertain. The parties agree that an amount equal to
the late charge plus the accrual of interest at the prime rate plus 3% is
a reasonable estimate as of the date hereof of the damage to the payee in
the event of late payment.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute only one instrument.
10.11 INTERPRETATION. The section headings of this Agreement are
for the convenience of reference only and shall not be deemed to alter or
affect the meaning of any provision hereof. This Agreement has been
reviewed by both parties and their respective counsel, and as a result,
shall be given a fair and reasonable interpretation without consideration
or weight being given to its having been drafted by any one party or its
counsel.
10.12 ENTIRE AGREEMENT. This Agreement hereto constitutes the
final, complete and exclusive agreement between the parties and
supersedes any and all prior negotiations, discussions, understandings
and agreements between the parties relating to the subject matter hereof
(including, but not limited to the Prior Contract).
10.13 TIME OF ESSENCE. Time is of the essence in the observation
and performance of the provisions of this Agreement.
10.14 SEVERABILITY. In case one or more of the provisions contained
in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
hereby.
10.15 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of California,
without regard to principles of conflicts of laws.
10.16 CONFIDENTIALITY. The parties agrees that all information
obtained by them pursuant to Sections 3.2 or 3.6 or otherwise shall
remain strictly confidential and shall not be used or disclosed by either
party for any purpose other than to determine compliance with this
Agreement or for such other purpose as may be required by law. In the
event that disclosure is required by law, the recipient will be advised
of the confidential nature of such information and a confidentiality
agreement or protective order maintaining the confidentiality of such
information will be obtained to the maximum extent possible.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as
of the day and year first above written.
UNIMED PHARMACEUTICALS, INC. THE NORAC COMPANY, INC.
By: By:
------------------------------ --------------------------------
Xxxxxxx X. Xxxxx, Title:
President & CEO --------------------------
By: By:
------------------------------ --------------------------------
Title: Title:
------------------------ --------------------------
The undersigned, shareholders of NORAC holding a controlling interest (as
defined above) therein, hereby join in the foregoing agreement solely for
purposes of Section 10.4 thereof.
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