Supply Agreement - CTI Molecular Imaging Inc.
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") is made as of the 1st day of
August, 2003 by and among *, a corporation organized under the laws of *, *, a
Delaware corporation (collectively, "Seller") and CTI MOLECULAR IMAGING, INC.,
formerly known as CTI, INC., a Delaware corporation (the "Buyer").
RECITALS
WHEREAS, * and * are successors in interest to * and *, respectively;
WHEREAS, Seller is a producer of Lutetium Oxide 99.99% (the "Virgin
Product") which is refined from Lu203 concentrate or from scrap Lutetium Oxide
produced in connection with Buyer's manufacturing operations (the "Recycled
Product" or, together with the "Virgin Product," "the Product(s)");
WHEREAS, Seller and Buyer desire to enter into this Agreement to
provide for the sale and purchase of the Products on the terms and conditions
set forth herein;
WHEREAS, Buyer and Seller have entered into that certain Contract,
dated March 17, 2000, and, upon the effective date of this Agreement, desire
that this Agreement supersede in its entirety such existing agreement for all
purchases of concentrates by Seller and sale of Products to Buyer; and
WHEREAS, unless otherwise expressly stated, all concentrate quantities
are expressed as 99.99% Lutetium Oxide contained.
NOW THEREFORE, Buyer agrees to purchase from Seller, and Seller agrees
to sell to Buyer, Virgin Product and Recycled Product and Buyer agrees to supply
to Seller, and Seller agrees to accept, Scrap Product (as defined herein) under
and subject to following terms and conditions:
Section 1. Term. The initial term of this Agreement shall be ten (10)
years beginning on August 1, 2003 (the "Effective Date") and ending on July 31,
2013 (the "Initial Term"). Thereafter, this Agreement will automatically renew
for additional successive terms of two (2) years each (the "Renewal Term(s)"),
unless and until terminated as of the end of the Initial Term or any Renewal
Term by either party by written notice given at least six (6) months prior to
the end of the then current term.
Section 2. Specifications of the Product. The Virgin Product and the
Recycled Product shall have the specifications set forth in Exhibit A attached
hereto.
Section 3. Supply and Recycling of Scrap Product. Buyer will provide to
Seller, at no charge to Seller, CIP (Incoterms 2000) Seller's facilities in *,
all scrap Lutetium Oxide produced by Buyer in connection with the processing of
the Product purchased from Seller during the Term (the "Scrap Product") that it
desires to have recycled by Seller and sale to Buyer. The Scrap Product shall
have the specifications set forth in Exhibit B attached hereto. Seller will
provide Buyer with a 90% yield on total Lutetium Oxide content from the
silica-based (non-slurry) Scrap Product.
Section 4. Quantity. Seller will provide and Buyer will purchase 100%
of Buyer's requirements for Virgin Product in accordance with the terms set
forth on Exhibit C attached hereto, up to the metric tonnage per year set forth
in Exhibit C attached hereto. The parties further agree that Buyer's obligation
to purchase its requirements from Seller applies to Buyer, its affiliates and
any joint venture,
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
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partnership, corporation or any other person or entity in which the Buyer or its
affiliates have a direct or indirect ownership or contractual interest.
Section 5. Pricing. Pricing of Virgin Product and Recycled Product will
be in accordance with Exhibit D attached hereto.
Section 6. Purchase Order. Buyer will provide Seller, no later than
November 1 of each calendar year, with an estimate of its requirements for
Products in the next succeeding calendar year through a purchase order
reflecting such estimated Product requirements (the "Annual P.O."). For the
first calendar year of the Initial Term, Buyer will provide Seller with an
Annual P.O. on or before October 15, 2003. In addition, each calendar quarter
(commencing with the calendar quarter ending December 31, 2003), Buyer will
provide Seller with Buyer's updated firm purchase order and delivery schedule
for Products during the forthcoming three-month period (the "Firm Quarterly
P.O."). Buyer may increase or decrease the Firm Quarterly P.O. by ten percent
(10%) without Seller's written consent. Unless otherwise specified in the Firm
Quarterly P.O., deliveries shall be made in approximately equal monthly
quantities. If Buyer forecasts that the Firm Quarterly P.O. will increase or
decrease by more than ten percent (10%) of the quantity scheduled for delivery,
Buyer will give Seller no less than thirty (30) days written notice of such
increase or decrease, so that Seller may consent to this change in writing.
Seller will rely on the Annual P.O. and the applicable Firm Quarterly P.O. to
maintain the inventory of Products to be supplied to Buyer in accordance with
the Firm Quarterly P.O. If Buyer requires Products on an expedited basis or not
in accordance with the applicable Firm Quarterly P.O. and Seller's actual costs
to meet Buyer's request are increased, Buyer shall reimburse Seller for such
increased costs actually incurred.
Section 7. Delivery. Deliveries will be made in accordance with the
Firm Quarterly P.O. EXW Seller's Bristol, PA warehouse for ocean shipments
(Incoterms 2000), then FOB Buyer's facility in Knoxville, Tennessee for inland
U.S. freight movements; or EXW * for air shipments requested by Buyer (Incoterms
2000).
Section 8. Terms. Payment terms shall be net forty-five (45) days from
date of Seller's invoice payable by wire transfer to a U.S. account designated
by Seller. Interest on all undisputed sums past due from Buyer hereunder shall
accrue and be payable by Buyer at the lesser of the maximum lawful rate or the
prime interest rate quoted by Citibank, N.A., New York, New York, plus 1%.
Section 9. Exclusivity Obligation. (a) It is understood between the
parties that (i) Seller has worked with Buyer over the past eight years in the
supply of the Product to assist Buyer in the development of Buyer's new
proprietary positron emission tomography medical scanning equipment (the "PET
Scanner"), (ii) Buyer has made a significant capital investment in its crystal
growth operations for the production of scintillators using the Product and
recently commenced commercial production of the PET Scanner, (iii) Buyer desires
to be assured of a guaranteed source of supply of the Product which constitutes
a key raw material needed in the continued full scale production of the PET
Scanner, and (iv) Seller has made a significant capital investment to increase
its production capacity of Virgin Product to meet Buyer's anticipated demand
under this Agreement, and further, in reliance on sales of Recycled Product
under this Agreement, has made an additional capital investment to purchase and
install a new production unit to recycle Scrap Product into Recycled Product for
supply to Buyer. Furthermore, Seller understands, based on Buyer's
representation set forth below in section 12(b), that there are currently no
other manufacturers of medical imaging equipment for human studies engaged in
the commercial production of lutetium oxide-based scintillation crystals. For
the foregoing reasons, and subject to Section 4 and Exhibit C on quantities,
Seller agrees that, during the Initial Term of this Agreement, Seller will not,
directly or indirectly, make commercial sales to any third party other than
Buyer of Virgin Product, Recycled Product, lutetium concentrates or lutetium
based products regardless of form or enrichment levels (the
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
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"Exclusivity Obligation"). Notwithstanding the foregoing, in the event Buyer's
purchases of Virgin Product from the effective date of the Agreement through the
Initial Term total less than * (*) metric tons of Virgin Product per contract
year or * (*) metric tons of Virgin Product in the aggregate over any three
contract years ("Minimum Purchases"), then Seller shall provide written notice
to Buyer of such shortfall and Seller's intention to terminate the Exclusivity
Obligation if the Minimum Purchases are not met. Buyer shall have 60 days to
tender a firm commitment purchase order for the purchase of such shortfall to
satisfy the Minimum Purchase requirements. If Buyer fails to tender such
purchase order and has not otherwise met the Minimum Purchase requirements, then
Seller will have the right, in its sole discretion, to unilaterally terminate
its Exclusivity Obligation immediately upon Buyer's receipt of notice of
Seller's election to do so. Minimum Purchases referred to above will include the
quantities of Virgin Product requested by Buyer that could not be supplied by
Seller. For the purpose of calculating aggregate Minimum Purchases over any
three contract years, Minimum Purchases referred to above will include
quantities covered by any firm purchase order issued by Buyer and received by
Seller before the end of any relevant third contract year of the Initial Term
for deliveries to Buyer within 180 days after the date of the purchase order. In
any event, Seller may terminate the Exclusivity Obligation at the end of the
Initial Term by providing written notice to Buyer not less than 365 days prior
to the expiration of the Initial Term. In the event Seller does not exercise its
right to terminate the Exclusivity Obligation at the end of the Initial Term or
any Renewal Term, the Exclusivity Obligation shall continue during the
subsequent Renewal Term. The parties agree that if Seller terminates its
Exclusivity Obligation to Buyer for any reason, Buyer shall have a right to
terminate this Agreement (subject to the provisions of sections 13(b) and (d))
and enter into a supply relationship for the Products with any other party. The
parties further agree that the Exclusivity Obligation applies to Seller, its
affiliates and any joint venture, partnership, corporation or any other person
or entity in which the Seller or its affiliates have a direct or indirect
ownership or contractual interest without the prior written consent of Buyer. In
the event the Exclusivity Obligations are terminated for any reason, Seller
agrees that it shall not sell any Virgin Product, Recycled Product or lutetium
concentrates to any other party at a price less than the highest price paid by
Buyer under this Agreement during the three month period preceding the sale
without first offering such material to Buyer in writing at such lower price and
giving the Buyer 30 days to exercise such purchase right.
(b) Notwithstanding subpart (a) above, Seller has the right to sell not
more than an aggregate amount of * kg of Virgin Product or lutetium concentrates
per contract year solely for research and development purposes in all fields of
use. In the event Seller receives an unsolicited request to sell in excess of
such * kg annual limit, Seller shall promptly notify Buyer of such request in
writing and shall state the amount of Virgin Product or lutetium concentrates
Seller desires to sell pursuant to such request. Buyer shall consider such
request in light of its production needs and shall discuss with Seller the
anticipated affect, if any, a denial of such request could have on the price or
availability of lutetium concentrate in the market. After consideration of such
request, Buyer shall have the right, in its discretion, to consent to such sale
or enforce the annual limit set forth in this subpart (b) and refuse to permit
such sale. Seller agrees that it shall not sell any Virgin Product or lutetium
concentrates pursuant to this subpart (b) at a price that is less than the
highest price paid by Buyer during the three month period immediately preceding
the sale.
Section 10. Emergency Inventory. (a) Within fifteen (15) days following
the end of each calendar quarter, Seller will notify Buyer in writing of the
quantity of lutetium concentrates purchased by Seller on the market during such
quarter that is expected to exceed Buyer's supply needs as set forth in the Firm
Quarterly P.O. and the weighted average concentrate cost per kilogram for all
concentrate purchases during that quarter. For the first contract year, Seller
shall begin purchasing the equivalent of * metric tons of lutetium concentrates
for inclusion in the Emergency Inventory (as defined below) and the parties
agree that the target level for the Emergency Inventory after the second
contract year is a total of * metric tons. Within thirty (30) days of the
receipt of such notice, Buyer shall have the right to purchase from Seller
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
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such excess quantity at the weighted average concentrate cost paid by Seller
through delivery of a purchase order related thereto. Payment terms for such
lutetium concentrates shall be net fifteen (15) days from the date of Buyer's
purchase order to Seller. Interest on all undisputed sums past due from Buyer
hereunder shall accrue and be payable by Buyer at the lesser of the maximum
lawful rate or the prime interest rate quoted by Citibank, N.A., New York, New
York, plus 1%. Seller agrees that any such excess quantity so purchased by Buyer
shall be delivered to and stored at Seller's facility in * at no additional cost
to Buyer as emergency inventory to be owned by Buyer and to be used only at the
written direction of Buyer (the "Emergency Inventory"). Seller further agrees
that such Emergency Inventory shall be prominently identified as the property of
the Buyer and shall be segregated from all other materials owned by Seller or
any other party. Seller shall provide to Buyer quarterly inventory reports
identifying the quantity of concentrate then included in the Emergency
Inventory. Buyer, or its representatives, shall have the right, upon not less
than 48 hours prior notice to Seller, to inspect and audit such Emergency
Inventory during normal business hours. Seller acknowledges that an annual audit
of the Emergency Inventory may be necessary in connection with the preparation
of Buyer's consolidated financial statements. Buyer shall be responsible for
insuring such Emergency Inventory and for the prompt payment of any ad velorum
or other similar taxes incurred or imposed with respect to the Emergency
Inventory. The price to be paid by Buyer in connection with the processing of
the Emergency Inventory into Virgin Product for supply to Buyer is set forth on
Exhibit D.
(b) Buyer anticipates that it will periodically need to instruct Seller
to use a portion of the Emergency Inventory to meet its supply production
requirements. In such event, the parties agree that the price to be paid by
Buyer for the Virgin Product extracted from the Emergency Inventory shall equal
the difference between (i) the concentrate cost per kg previously paid by Buyer
for the Emergency Inventory being used, and (ii) the price of Virgin Product
determined in accordance with Exhibit D attached hereto. All concentrates
included in the Emergency Inventory shall be deemed to be used on a first in,
first out basis for purposes of establishing the weighted average concentrate
cost necessary to determine the price of Virgin Product to be paid to Seller.
For the avoidance of doubt, the parties agree that the total amount to be paid
to Seller for any Virgin Product extracted from the Emergency Inventory is equal
to the amount that Buyer would have paid for such Virgin Product in accordance
with Exhibit D had no Emergency Inventory been established.
Section 11. Confidentiality. Buyer and Seller also agree that any
technical and business information disclosed by either party to the other party
in the course of the relationship between them created by this Agreement shall
be deemed "Confidential Information."
(a) The amount of Confidential Information disclosed shall be solely
within the discretion of the disclosing party ("Discloser"). Confidential
Information shall only be subject to the terms of this Agreement if it is
either: (a) disclosed in writing and marked "Confidential"; or (b) if not
disclosed in writing, then identified as confidential when first disclosed and
summarized in a writing that is marked "Confidential" and delivered to the
receiving party ("Recipient") within thirty (30) days of such first disclosure.
(b) Recipient shall, during the term of this Agreement and for three
(3) years following termination of this Agreement: (i) hold the Confidential
Information received hereunder in confidence using the same care and caution
that Recipient affords its own confidential information, but not less than a
reasonable degree of care; and (ii) use such Confidential Information only to
the extent necessary to discharge Recipient's duties or obligations under this
Agreement; and (iii) restrict disclosure of Confidential Information to only
those individuals that need to know the Confidential Information and who have
obligations to Recipient of confidentiality, limited use and non-disclosure that
cover the Confidential Information and are at least as restrictive as those of
this Agreement.
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
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(c) The obligations set forth in paragraph (b) above shall not apply to
any Confidential Information that: (i) is in the possession of Recipient at the
time of disclosure by Discloser; or (ii) is or later becomes publicly known
through no wrongful act of Recipient; or (iii) is independently discovered by
Recipient; or (iv) is provided to Recipient free of restriction on disclosure by
a third party having the right to so provide such Confidential Information; or
(e) is required to be disclosed by operation of law, including without
limitation as required by the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, provided that any party subject to compelled disclosure of the terms
set forth herein will furnish only that portion of the information that is
legally required to be disclosed and will exercise reasonable efforts to ensure
that confidential treatment is accorded such information. In addition, any
combination of features shall not be deemed to be within any of the above
exceptions merely because the features are individually within such exception,
but only if the combination itself and its principle of operation are within
such exception.
(d) Recipient shall return to Discloser, upon request, any and all
written documents comprising Discloser's Confidential Information, except that
Recipient's legal counsel may retain one copy of such documents for record
keeping purposes only.
(e) Except as otherwise specifically provided in this Agreement,
nothing in this Agreement shall be construed as granting to either party any
rights or license under any Confidential Information of the other party.
Section 12. Representations and Warranties.
(a) Seller's Representations and Warranties. Seller hereby represents
and warrants that it is solvent; that it has capital sufficient to carry on the
business in which it is engaged; and that it has the overall financial
wherewithal to fulfill its duties and obligations under this Agreement. Seller
further agrees to provide prompt written notice to Buyer in the event of any
material change in such representations and warranties or in the event that
Seller, whether individually or collectively and whether voluntarily or
involuntarily, commences or has commenced against it any action, suit or
proceeding seeking receivership, liquidation, dissolution or bankruptcy of
Seller, the appointment of a receiver, trustee, liquidator or similar official,
any assignment for the benefit of creditors of Seller or foreclosure on at least
a majority of Seller's properties and assets, or the initiation of comparable
proceedings.
(b) Buyer's Representations and Warranties. Buyer hereby represents and
warrants that (i) it has been granted an exclusive license by * under * U.S.
Patent * covering certain lutetium oxide scintillating crystals for use in the
manufacture of medical imaging equipment, (ii) it will maintain such exclusive
license until the expiration date of such patent in *, and (iii) to Buyer's
knowledge, there are currently no other manufacturers of medical imaging
equipment for human studies engaged in the commercial production of lutetium
oxide based scintillation crystals. Buyer will notify Seller immediately if such
exclusive license is terminated.
Section 13. Termination. (a) Either party shall have a right to
terminate this Agreement prior to the expiration of the Initial Term or any
Renewal Term in the event the other party is in material breach of its
obligation hereunder and such breach is not cured within 30 days of the receipt
of written notice thereof. Notwithstanding any other term or condition set forth
herein, this Agreement may also be terminated upon the occurrence of an Event of
Default. Each of the following shall constitute "Events of Default" hereunder:
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
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(i) Seller's failure to provide notice to Buyer of
any of the events specified in Section 12 (a) above after the initiation or
commencement of any such events;
(ii) Seller's transfer of or agreement to transfer
substantially all of its business or assets, without Buyer's consent in
accordance with Section 19 below;
(iii) the calling of a meeting of creditors, an
appointment of a committee of creditors or liquidating agents, or an offering of
a composition or extension to creditors by, for or of Seller, or comparable
events; or
(iv) Buyer's breach of its representations and
warranties set forth in Section 12 (b), above.
Upon the occurrence of an Event of Default by Seller, Buyer may, in its
sole discretion, elect to terminate the Agreement by written notice to the
Seller. Upon the occurrence of an Event of Default by Buyer, Seller may, in its
sole discretion, elect to terminate its exclusivity obligations, by written
notice to Buyer if such breach or default is not cured within 30 days of the
receipt of written notice thereof.
(b) The termination of this Agreement shall not affect or
impair the rights and obligations of either party under any Product purchase
order placed prior to such termination, nor relieve either party of any
obligation or liability accrued hereunder or under any such purchase order prior
to such termination, not affect or impair the rights of either party arising
under this Agreement prior to such termination, except as expressly provided in
this Agreement.
(c) Any termination of this Agreement due to an Event of
Default shall be without prejudice to any remedy of the non-defaulting party for
the recovery of any moneys then due to it under this Agreement or in respect to
any antecedent breach of this Agreement, and without prejudice to any other
right of the non-defaulting party, including, without limitation, damages for
breach to the extent they may be recoverable.
(d) The rights and obligations set forth in Section 11 above
shall survive termination of this Agreement for the time period set forth in
part 11 (b) of Section 11 above.
Section 14. Resolution of Disputes.
(a) Negotiation by Senior Executives.
(i) The parties shall attempt in good faith to
resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between senior executives who have authority to
settle the controversy and who are at a higher level of management than
the persons with direct responsibility for administration of this
Agreement. Any party may give the other party written notice of any
dispute not resolved in the ordinary course of business. Within fifteen
(15) days after delivery of the notice the party receiving the notice
shall submit to the other a written response.
(ii) The notice and the response shall include: (i) a
statement of each party's position regarding the matter in dispute and
a summary of arguments in support thereof, and (ii) the name and title
of the executive who will represent that party and any other person who
will accompany that executive. Within thirty (30) days after delivery
of the notice, the designated
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executives shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt to
resolve the dispute. All reasonable requests far information made by
one party to the other shall be honored in a timely fashion.
(b) Mediation. If the dispute has not been resolved within
sixty (60) days after delivery of the notice referred to above, the
dispute shall be submitted to non-binding mediation in accordance with
the Rules of the Center for Public Resources Institute for Dispute
Resolution. The parties shall mediate in good faith in an effort to
resolve the dispute. The place of mediation will be Washington, D.C.,
or such other location agreed to by the parties. Mediation costs shall
be shared equally by the parties. If the dispute is not resolved by the
mediation process within sixty (60) days after commencement, either
party may initiate arbitration as set forth, below.
(c) Arbitration.
(i) Any dispute, controversy or claim arising out of
or relating to this Agreement or the performance by the parties of its
terms which has not been resolved by non-binding mediation as set forth
above within ninety (90) days shall be finally settled by binding
arbitration held in the Washington, D.C. in accordance with the
Commercial Rules of the American Arbitration Association then in
effect, except as specifically otherwise provided in this Section
14(c).
(ii) The arbitration shall be held before one neutral
arbitrator. Such arbitrator shall be mutually agreed upon by Seller and
Buyer and shall be a retired U.S. federal judge (the "Arbitrator"). If
the parties are unable to agree after 15 days, Buyer shall prepare a
list of (5) retired U.S. federal judges and Seller shall select one
such judge to be the arbitrator.
(iii) The Arbitrator shall allow such discovery as
the Arbitrator determines appropriate under the circumstances and shall
resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator. The
arbitrator shall give the parties written notice of the decision, with
the reasons therefor set out, and shall have 30 days thereafter to
reconsider and modify such decision if a party so requests within 10
days after the decision. Thereafter, the decision of the Arbitrator
shall be final, binding, and non-appealable with respect to all
persons, including (without limitation) persons who have failed or
refused to participate in the arbitration process. The parties waive
any right to appeal the Arbitrator's decision or award, to the extent
an appeal may be lawfully waived. The arbitration proceedings,
submissions and award shall be in English.
(iv) The Arbitrator shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys' fees and expenses in
such manner as is determined to be appropriate by the Arbitrator.
(v) The parties consent to the jurisdiction of any
U.S. state or Federal court or any French court of competent subject
matter jurisdiction for all purposes in connection with arbitration,
including: (a) enforcement of the arbitration award; and (b) issuance
of provisional remedies to protect rights, interests, assets or
property, including but not limited to temporary or preliminary
injunctive relief, to ensure ultimate satisfaction of the arbitration
award. The parties may, without inconsistency with this agreement to
arbitrate, seek from any court having jurisdiction any interim measures
or provisional remedies pending the establishment of the arbitration
and until the Arbitrator's final award has been satisfied.
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(vi) All proceedings under this Section 14(c), and
all evidence given or discovered pursuant hereto, shall be maintained
in confidence by all parties.
(vii) The fact that the dispute resolution procedures
specified in this Section 14(c) shall have been or may be invoked shall
not excuse a party from performing its obligations under this Agreement
and during the pendency of any such procedure all parties shall
continue to perform their respective obligations in good faith, subject
to any rights to terminate this Agreement that may be available to a
party.
(viii) All applicable statutes of limitation shall be
tolled while the procedures specified in this Section 14(c) are
pending. The parties will take such action, if any, required to
effectuate such tolling.
Section 15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability and shall
be severed from the balance of this Agreement, all without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 16. Warranties, Limits on Liability.
(a) Determination of the suitability of Product supplied
hereunder for the uses and applications contemplated by Buyer and others shall
be the sole responsibility of Buyer. All warranties by Seller pertaining to the
Product are expressed in this paragraph. Seller warrants that the Product
delivered hereunder meets Seller's standard quality on the date of production,
or such other specifications attached hereto. Seller MAKES NO OTHER EXPRESS
WARRANTIES; THERE ARE NO IMPLIED WARRANTIES INCLUDING WITHOUT LIMITATION
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Buyer ASSUMES ALL RISK AND
LIABILITY FOR ALL LOSS, DAMAGE OR INJURY TO PERSON OR PROPERTY, INCLUDING
WITHOUT LIMITATION POLLUTION, ENVIRONMENTAL DAMAGE AND RESTORATION LIABILITY,
RESULTING FROM (I) THE USE OF SAID PRODUCT IN MANUFACTURING PROCESSES OR IN
COMBINATION WITH OTHER SUBSTANCES, OR OTHERWISE (II) THE HANDLING AND DISPOSAL
OF THE PRODUCT.
No claim of any kind, whether as to Product delivered or for
non-delivery of Product, and whether arising in tort, contract or otherwise
shall be greater in amount than the purchase price of the Product in respect of
which such damages are claimed. IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND INCLUDING WITHOUT LIMITATION
BUYER'S MANUFACTURING COSTS, LOST PROFITS OR GOOD WILL, REGARDLESS OF THE FORM
OR BASIS OF ANY ACTION.
Section 17. Force Majeure. Neither party shall be liable for its
failure to perform hereunder if said performance is made impracticable due to
any act of God, act of terrorism, fire, flood, war, sabotage, accident, labor
disputes, involuntary compliance with any law, order, rule or regulation of
government agency or authority, or other similar event that is beyond the
reasonable control of the party affected. The affected party may omit purchases
or deliveries during the period of continuance of such circumstances and the
Agreement; however, the other party may meet its supply needs from any other
source for so long as the inability to perform continues. If the Force Majeure
event continues for a period of 180 days, the unaffected party shall have a
right to terminate this agreement upon written notice to the affected party.
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Section 18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties concerning the subject matter hereof and there are
no understandings, representations or warranties of any kind, express or
implied, not expressly set forth herein. Exhibit A, Exhibit B, Exhibit C and
Exhibit D attached hereto are hereby agreed to and made a part of and
incorporated in this Agreement. No modification of this Agreement or the
attached Exhibits shall be of any force or effect unless such modification is in
writing and signed by the party to be bound thereby; and no modification shall
be effected by the acknowledgment or acceptance of purchase order forms
containing terms or conditions at variance with those set forth herein.
Section 19. Assignment. Except as set forth in this Section 19, neither
party shall assign any rights or delegate any duties under this Agreement
without the express written consent of the other. Either party may, with the
consent of the other party which consent shall not be unreasonably withheld,
assign its rights and delegate its duties hereunder to any parent, any
subsidiary corporation a majority of the stock of which is owned by the
assigning party or any partnership or other entity wherein the assigning party
maintains controlling interest, provided such assignee agrees to be bound by the
terms of this Agreement. Either party may, without the consent of the other
party, assign this Agreement to the purchaser of all or substantially all of the
assets or stock of the assigning party or its business, or in connection with
any merger, consolidation, reorganization or other change of control, provided
such assignee agrees to be bound by the terms of this Agreement. No assignment
of this Agreement shall release the assigning party of its obligations under
this Agreement except to the extent that the other party to this Agreement shall
otherwise agree in its sole discretion.
Section 20. Waiver. Either party's waiver of any breach, or failure to
enforce any of the terms and conditions of this Agreement, at any time, shall
not in any way affect, limit or waive such party's right thereafter to enforce
and compel strict compliance with every term and condition hereof.
Section 21. Governing Law. The Buyer and Seller agree that this
Agreement shall be deemed to have been made and executed in the State of New
York and that any dispute arising under this Agreement shall be resolved in
accordance with the laws of the State of New York excluding any choice of law
principles thereof. The parties disclaim the applicability of the United Nations
Convention for the International Sale of Goods.
Section 22. Notice. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged, (ii)
one business day after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three business days after having
been deposited in any post office or mail depository regularly maintained by the
U.S. Postal Service and sent by registered or certified mail, postage prepaid,
addressed as follows:
If to Buyer: With a copy to:
CTI Molecular Imaging, Inc. Alston & Bird LLP
810 Innovation Drive One Atlantic Center, 1201 W. Peachtree St.
Knoxville, TN 37932 Atlanta, GA 30309
Telephone: (865) 218-2000 Telephone: (404) 881-7000
Facsimile: (865) 218-3254 Facsimile: (404) 881-7777
Attn: General Counsel Attn: Nils Okeson, Esq.
If to Seller: With a copy to:
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* *
or addressed as such party may from time to time designate by written notice to
the other parties.
Section 23. Option to License. Seller, to the extent that it is legally
able to do so, hereby grants to Buyer an option to negotiate a reasonable
royalty-bearing, non-exclusive license under Seller's intellectual property
rights in its lutetium oxide processing technology to make and use lutetium
oxide concentrate, provided that such option shall be exercisable by Buyer only
in the event that Seller, due to the occurrence of one of the events listed in
Section 12(a) above, becomes unable to supply lutetium oxide to Buyer.
Section 24. Miscellaneous. (a) Buyer hereby represents and warrants
that it is entering into this Agreement solely for the purchase of Product for
use in its manufacturing operations and, where appropriate, for the sale of
crystals or boules produced by Buyer from the Product, and Buyer understands and
agrees that it will not resell any Product to any third party other than to its
own corporate affiliates for use by them in further manufacturing.
(b) Each shipment shall constitute a separate and independent
transaction and either party may recover for each such shipment without
reference to any other. If either party is in default with respect to any terms
or conditions of this Agreement, then, in addition to any other legal remedy
available to the other party, such party may, at its option, defer further
shipments or payment hereunder until such default be remedied, or, such party
may decline further performance of this Agreement.
(c) In case of a dispute concerning the weight of Product
delivered in bulk carload or tank car shipments, shipper's weight, certified to
by sworn Weigh-master, shall govern absent reasonable error.
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
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<PAGE>
CTI MOLECULAR IMAGING, INC. *
By: By: /s/ *
------------------------ -------------------------------
Ron Nutt, Ph.D. *
President and CEO President and General Manager
*
By: /s/ *
-------------------------------
*
President
* Omitted information is the subject of a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and
has been filed separately with the Securities and Exchange Commission.
11