CONTRACT Date: August 25, 2005
Exhibit
10.17
CONTRACT
#840/08624332/04031
Date:
August 25, 2005
For
Selling the Compounds Based on Radioactive Isotopes.
The
Company “IsoRay” Inc., USA, (<<the Buyer>>) and the Federal State
Unitary Enterprise <<Institute of Nuclear Materials>> (FSUE “INM”),
Russia, (<<the Seller>>) herein are collectively referred to as
<<the Parties>>concluded this contract.
| 1. |
SUBJECT.
|
The
Seller shall sell and the Buyer shall buy the following products labeled with
the radioactive isotopes (hereinafter “the Goods”) products as follows:
1.1 Barium
carbonate labeled with BA-131 manufactured from natural Barium.
1.2 Barium
carbonate labeled with BA-131 manufactured from 10% enriched BA-130.
1.3 Cesium-131
in a condition (chemical form) equivalent to the output manufactured product
according to and by the technology provide by the Buyer. The technical
characteristics of the goods are according to, 1.1 and 1.2 of this Contract
and
are specified in Appendix 1 which is also part of this Contract.
The
Goods
delivery will be performed on the conditions stipulated in paragraph 3 of the
Contract.
| 2. |
PURCHASE
PRICE AND CONTRACT VALUE.
|
2.1 The
unit
price for Goods will be in US dollars for the entire Contract period.
2.2 The
unit
price for Goods is according to 1.1 and 1.2 and shall be three hundred ($300.00)
dollars US for one (1) Ci of the Goods.
2.3 They
Buyer shall pay the cost of Barium Carbonate enriched by BA-130 isotope against
the Seller’s invoice separately for each shipment of the Goods and the invoiced
amount shall be a Manufacturer’s cost plus the costs incurred by purchase
handling and delivery.
2.4 The
unit
price for Goods is according to 1.3 and shall be estimated in a separate
Agreement by May 25, 2006.
2.5 As
agreed
and determined by the Parties the Contract value is three hundred thousand
dollars US
($300,000) for the first year of the Contract for the Goods delivered in the
quantity of one thousand (1,000) Curies.
2.6 The
Contract value over the seven year term is thirty million (30,000,000.00)
dollars US.
2.7 Each
year
the Parties determine the shipping amount and the cost of the Goods three months
before the expiration of the existing Contract. The Seller shall ship the Goods
in the forms and the denominations that shall be covered by the annual
Agreement.
| 3. |
DELIVERY
DATES AND ARRANGEMENTS.
|
3.1 They
Buyer shall include in the Purchase Order and confirm the following information:
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Contract
number;
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·
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Goods
purchase date,
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·
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Amount
of Goods for the date of purchase, and the quality requirements
for the
date of delivery,
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·
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The
Goods delivery date to the designated airport,
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·
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The
designated airport,
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·
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Other
additional information required by the Buyer.
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The
time
period between the purchase date and delivery date is set by the Buyer to ensure
the optimal quality of the Goods.
3.2. The
Seller shall independently nominate the Forwarder at the boundary and shall
send
an Air Way Bill (“AWB”) by Facsimile to the Buyer on the day of the Goods
departure from the Seller.
3.3. The
Seller shall deliver the shipping amount by lots on CIF terms.
3.4. The
shipping date is the date of the flight indicated in the AWB.
3.5. The
Buyer
shall place a Purchase Order and the Seller shall commit to ship each lot as
per
the Purchase Order solely submitted in written form.
3.6. The
Buyer
shall send a Purchase Order to the Seller thirty (30) days before a shipping
date and the Seller shall confirm the receipt of the Purchase Order within
three
(3) business days by facsimile.
3.7. The
Purchase Order is accepted for commitment by the Seller unless the Seller
notifies the Buyer about a justified cancellation of the Purchase Order ten
(10)
days before a shipping date.
3.8. If
the
delivery will be prevented by a contingency, the Seller shall notify the Buyer
about such non-delivery by phone or facsimile no later than five (5) days before
shipping date.
3.9. Title
to
the Goods shall be transferred to the Buyer upon a Customs clearance at the
Buyer’s designated international airport.
3.10. The
Seller shall notify the Buyer about the Goods transferred to a Forwarder by
facsimile or phone within twenty four (24) hours after the receipt of an AWB
by
the Seller.
The
Seller shall send an issue date and a number of the AWB, a flight number, a
date
and time of Goods departure to the Buyer.
| 4. |
QUALITY
AND QUANTITY OF THE GOODS.
|
4.1 The
quality of the Goods delivered to the Buyer shall comply with the Specifications
as stipulated in Appendix 1 and in the Purchase Order accepted for commitment.
4.2 The
Quality Certificate (the Certificate of Compliance) shall be attached to each
item in a lot in each shipment.
4.3 The
quantity of the Goods delivered shall comply with the requirements indicated
in
the Purchase Order. The quantity of the Goods shall be measured with an error
being no more than +
5% of
the indicated quantity and should be the amount for the date of purchase.
|
5.
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SPECIFIC
CONDITIONS.
|
5.1 The
Seller shall produce Cs-131 by the Technology provided by the Buyer. The
Technology shall be transferred to the Seller under a separate Agreement.
5.2 The
Right
of Authorship of the Buyer with respect the technology transferred shall be
based on the Agreement on Intellectual Property (as specified in Appendix 2).
5.3 The
Seller shall give the Buyer the Exclusive right to sell isotopes of Ba-131
and
Cs-131 for the 10 year period staring from the date of the current Contract
up
to October 25, 2015.
The
exclusive right is granted to the Buyer upon the following conditions:
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The
Buyer transfers the above mentioned technology to the
Seller;
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·
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The
amount of the purchase order is no less than two thousand (2000)
Ci per
year starting from the year 2007;
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·
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If
the Buyer does not begin marketing Cs-131 medical product in
Russia within
four years from the date of this Contract the Seller shall have
the right
to sell CS-131 in Russia produced with the application of technology
which
is different from the Buyer’s
technology.
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6.
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PACKING
AND LABELLING.
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6.1 The
Goods
shall be packed into a Type-A Package Design (herein after referred to as a
transport container), which is responsibility of the Seller. The transport
container is a non-returnable package where a purchased quantity of the Goods
is
no
more than
0.5
▇▇▇▇▇ in one package.
6.1.1 The
transport container is a returnable package if a purchased amount is more than
0.5 Ci in one package. The Buyer shall pay the return costs for the container.
6.1.2 They
Buyer shall provide the delivery of the transport container with the Certificate
of Compliance before the shipments start for the Seller to get the Certificates
of Approval for the package design and the transportation.
6.2 The
Seller shall label the transport conformity with the ICAO and IATA regulations
and the IAEA safety standards, Safety series 6 (1990). The Seller shall be
responsible for the safety package.
6.3 The
Seller will enclose a Packing List and the Certificate of Compliance for each
lot of the goods into the transport container. An Invoice for each lot will
be
sent by facsimile only to the Buyer’s address.
6.4 The
Seller shall label each transport container in conformity with the data
indicated in the Purchase Order from the Buyer.
| 7. |
PAYMENT
TERMS.
|
7.1 The
Buyer
shall pay for the Goods in dollars US to the Seller’s bank account indicated in
paragraph 15.
7.2 The
Seller shall invoice the Buyer for each lot of the Goods delivered. The Buyer
shall pay the Invoice within thirty (30) days from the invoice date.
7.3 The
Buyer
shall make the payment against the Seller’s invoice and notify the Buyer within
twenty four (24) hours about a wire transfer date, a wire transfer number,
the
name and address of the transfer bank. The Contract number and the Invoice
number shall be indicated in the outgoing payment transfer document.
7.4 Other
payment arrangements may be possible upon agreement between the Parties.
| 8. |
DELIVERY
AND ACCEPTANCE.
|
The
Goods
are considered to be delivered by the Seller and accepted by the Buyer with
respect to quantity as per the weight and the number of cargo pieces indicated
in the shipping documents, and with respect to the quality: as per the data
in
the Certificate of Compliance.
| 9. |
INSURANCE.
|
The
Seller, while in possession of the Goods, may insure the Goods for the amount
of
the invoiced value of the Goods and against all risks.
After
the
title is transferred to the Buyer the Goods may be insured by the Seller only
upon a special request of the Buyer and at the Buyer’s expense.
| 10. |
CLAIMS.
|
10.1 In
case
of noncompliance of the Goods (delivered by the Seller) with the Purchase Order
Specifications (herein after the “Quality”) and/or the radioactivity data
(herein the “Quantity”) the Buyer may present the Seller Claims with the Expert
Survey Report compiled and signed by the Buyer.
10.2 The
Buyer
may submit the Claims on quality and/or quantity of the goods within twenty
(20)
business days of the date of the delivery. The Claims shall be submitted only
in
writing.
10.3 The
Claims shall specify the following:
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the
number and the date of the Contract, Purchase order, AWB,
Packing list and
the Certificate of
Compliance.
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an
information on integrity of the transport package and overpack;
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the
place, date and time of the examination by experts, the name
of the
material and a quantity of the sampling,
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the
investigation method applied,
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the
name and address of competent independent expert(s) a description
of an
examination procedure in writing shall include the following:
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true
numerical and/or graphic data;
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·
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the
Buyer’s judgment on the Seller and the Forwarder responsibilities
for
noncompliance of the quality and/or quantity of the
Goods delivered;
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·
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the
cost calculation of a missing quantity and suggested
options of
compensations.
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10.4 The
Expert Survey Report, shall be attached to and incorporated in the
Claims text
and signed by the Buyer.
10.5 The
Claims shall be in the English and Russian languages in the original and a
copy.
10.6 The
original in English and Russian shall be mailed to the Seller by a registered
letter and the copy shall be transmitted by facsimile.
10.7 The
Seller shall confirm by facsimile the receipt of the Claims and consider it
no
later than seven (7) days after the date of receipt and shall provide the
judgment and suggest the reasonably acceptable option of compensations.
10.8 No
Claims
presented previously can be regarded by the Buyer as a reason for rejecting
and
nonpayment for any other lot(s) to be shipped under this Contract until the
Contract is completed.
10.9 Other
options of resolving the Claims may be possible upon agreement between the
Parties.
| 11. |
RESPONSIBILITIES
OF THE PARTIES
|
THE
SELLER:
11.1 The
responsibilities of the Parties shall be limited by the cost of a delivered
lot
of the Goods.
11.2 If
there
are exceptions to the quality and/or quantity of the Goods as received and
under
the condition that the Goods are usable), the Goods shall not be returned to
the
Seller.
11.3 The
Seller shall revise the invoiced amount and the Buyer shall pay only for the
usable quantity of the Goods the Seller shall send the revised Invoice to the
Buyer by facsimile.
THE
BUYER:
11.4 If
the
Buyer fails to fulfill the requirements of paragraphs 9.2 and 9.3 of the
Contract the Claims from the Buyer shall not be accepted and considered by
the
Seller and the Buyer shall pay in full for the Goods delivered.
11.5 If
the
Buyer fails to fulfill the requirements of paragraph 6.2 the Buyer shall send
by
facsimile the justification for that in writing within three (3) days in order
to resolve the appropriate issue and make a mutual decision by the Parties.
If
the Buyer omits to send the justification, then an amount of damage shall be
paid in favor of the Seller. The penalty per each day of the delay shall be
0.1%
for of the invoiced cost for the entire period from the invoice date to the
day
of payment included.
11.6 In
ninety
(90) days from the date of shipment included all amounts payable are stopped
and
cancelled and the Buyer shall pay a penalty of 10% of the invoiced amount within
five (5) business days from the date of invoicing to the date of payment
included.
11.7 Other
options of resolving the outstanding issues may be possible upon agreement
between the parties.
| 12. |
FORCE
MAJEURE.
|
THE
SELLER: If
delivery in whole or in part for a period not exceeding sixty (60) days shall
be
prevented by causes beyond the control of the Seller, including, but not limited
to acts of God, labor disputes, failure of essential means of transportation
or
changes in policy with respect to either exports or imports, by the Russian
Government and/or the Government of the Buyer, this Contract shall be extended
for an additional period up to a maximum of six (6) months. If, however, such
non-delivery continues after such extended period, either the Seller or the
Buyer shall have the right to cancel this Contract to the extent of such
non-delivery by written notice, and in such case there shall be no obligation
or
liability on the part of either Party with respect to such undelivered Goods;
provided that any such notice from the Buyer shall not apply to Goods which
the
Seller has prepared or loaded for transportation to the port of shipment prior
to the receipt by the Seller of such notice.
THE
BUYER:
If the
Buyer is unable to perform the obligations under this Contract due to causes
beyond the control of the Buyer, including, but not limited to acts of God,
labor disputes, failure of essential means of transportation or changes in
policy with respect to either exports or imports, by the Government of the
Buyer
and/or the Russian Government, or winding up or insolvency of the Buyer, either
the Buyer or the Seller shall have the right to cancel this Contract by written
notice; and in such case there shall be no obligation or liability on the part
of either Party with respect to such undelivered Goods.
| 13. |
ARBITRATION.
|
13.1 All
disputes and differences which may arise out of this Contract or in connection
with it are to be settled by negotiations between the Parties within three
(3)
months from the date of infringement of the terms of the Contract by either
Party. All issued unresolved (except those being in competence of courts of
law)
by the negotiations are to be settled by the international commercial
arbitration tribunal of the chamber of commerce & industry of the Russian
Federation in Moscow, Russia.
13.2 The
awards of this Arbitration shall be considered final and binding upon both
Parties. The shares of the arbitration costs to be paid by the Parties shall
be
determined only by an Arbitration Tribunal decision.
| 14. |
OTHER
CONDITIONS.
|
14.1 The
Seller shall have the Export License granted.
Where
the
License has not been issued or received the Parties have the option of altering
the delivery schedule to allow for the issue of the License without there being
any liability attaching to the Seller and the Buyer.
14.2 Neither
Party is entitled to assign its rights and obligations under this Contract
to
the third party without the mutual agreement in writing with the other Party.
14.3 All
addendums and amendments to the Contact are valid only if they are made in
writing and sighed by the Parties.
14.4 This
Contract is originally drafted and signed in English and Russian,, respectively.
Both English and Russian versions of the Contract are of equal force.
14.5 Neither
Party has a right to change the Contract Terms and Conditions or discontinue
to
fulfill its obligations under the Contract without a written consent of the
other Party.
14.6 The
Contract shall be binding from the date of Export License issue and continue
to
October 25, 2012.
14.7 Some
other terms and conditions may be added upon agreement in writing between the
Parties.
| 15. |
LEGAL
ADDRESSES OF THE PARTIES.
|
THE
SELLER:
The
Federal State Unitary Enterprise <<Institute of Nuclear Materials >>
(FSUE <<INM>>), P.O. Box 29, Zarechhny, Sverdlovsk region, Russia
624250
Bank
Information
“Industry
& Construction Bank” Branch Uralsky, SWIFT: ICSP RU 2P; ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇.
acc.
#
40502840767002000065 for INM
Intermediary
Bank:
Wachovia Bank, NA, New York, PNBP US ▇ ▇ ▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇.▇., ▇▇▇ ▇▇▇▇▇
acc.
#
2000193002942
THE
BUYER
Bank
Information:
Columbia
River Bank
Kennewick,
WA, USA
Account
#0171082926914
Signature
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇_____________
▇▇▇▇▇
▇. ▇▇▇▇▇▇
Date
8/25/2005
Chief
Executive Officer / Chairman /
APPENDIX
1
Contract
#840/0824332/04031
Date:
August, 25th,
2005
Technical
Specifications
|
Element
|
Maximum
concentration
(ppm)
|
Element
|
Maximum
concentration
(ppm)
|
|
Ag
|
1
|
Na
|
1
|
|
Al
|
1
|
Ni
|
5
|
|
As
|
100
|
P
|
300
|
|
Au
|
2
|
PB
|
2
|
|
B
|
2
|
Rb
|
100
|
|
Bi
|
1
|
Sb
|
20
|
|
Ca
|
1
|
Si
|
7
|
|
Cd
|
1
|
Sn
|
2
|
|
Co
|
1
|
Sr
|
10
|
|
Cr
|
3
|
Te
|
30
|
|
Cs
|
100
|
Ti
|
10
|
|
Cu
|
1
|
Tl
|
3
|
|
Fu
|
1
|
V
|
3
|
|
Mg
|
1
|
W
|
100
|
|
Mn
|
1
|
Zn
|
100
|
|
Mo
|
3
|
Zr
|
30
|
|
Note:
Cs-131/Cs-132 = 0.001
|
|||
Signature
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
The
Buyer
▇▇▇▇▇
▇. ▇▇▇▇▇▇
Chief
Executive Officer / Chairman /
Appendix
2
CONTRACT
#840/08624332/04031
August
25, 2005
Agreement
on Intellectual Property
Intellectual
Property shall mean, trade marks, service marks, trade names, domain names,
design rights, patents, copyright (including rights in computer software and
databases, and moral rights), rights in know how and other intellectual property
rights, in each case whether registered or unregistered and including
applications for the grant of any of the foregoing and all rights or forms
of
protection having equivalent or similar effect to any of the foregoing which
may
subsist in any country in the world.(See overleaf for details)
A. INTELLECTUAL
PROPERTY RIGHTS
A.1 Subject
to any pre-existing rights of the Seller (or any third party), the Results
of
the Contract shall become the absolute property of the Buyer.
A.2. If
the
Seller becomes aware of or has good reasons to believe that patentable
Intellectual Property is contained in or has arisen from the Results of the
Contract (or any part thereof), it shall notify Buyer in writing giving such
details as if may reasonably provide.
A.3 The
Buyer
shall determine whether any registered protection should be sought for any
registerable Intellectual Property arising directly or indirectly from or
contained in the Results of the Contract (or any part thereof) and shall have
the absolute right to register and apply to register such Intellectual Property
in its own sole name and at its own expense in any country of the world.
The
Seller shall use all reasonable endeavours to ensure that his employees agents,
Sub-Contractor/Sellers and representatives give all reasonable assistance to
any
party which may be requested by the Buyer to enable it to seek and obtain such
protection.
A.4 The
Seller acknowledges and agrees that all Intellectual Property arising directly
or indirectly from or contained in the Results of the Contract (or any part
thereof) belongs to the Buyer (whether created by the Seller or by any
Sub-Contractor/Seller) and accordingly:
A.4.1 The
Seller shall assign to the Buyer all its rights, title and interest in any
country of the world in and to any Intellectual Property arising directly or
indirectly from or contained in the Results of the Contract (or any part
thereof), together with any extensions, renewals, reversions and revivals of
such Intellectual Property, (together with its proprietary rights in the
physical materials in or on which such Intellectual Property and/or Results
are
contained or embodied) free from any third party lien, charge or other
encumbrance;
A.4.2 The
Seller shall use all reasonable endeavors to procure the assignment to the
Buyer
and any Intellectual Property arising directly or indirectly from or contained
in the Results of the Contract (or any part thereof) owned in any country of
the
world by any of its Sub-Contractor/Sellers or any other third party commissioned
by it to produce materials on its behalf in connection with any work (and any
such third party shall be deemed for the purposes of this clause A4 to be a
Sub-Contractor/Seller), together with any extensions, renewals, reversions
and
revivals of any such Intellectual Property, (together with all its proprietary
rights in the physical materials in or on which such Intellectual Property
and/or Results are Contained or embodied) free from any third party lien, charge
or other encumbrance; and
A.4.3 The
Seller shall waive or use all reasonable endeavors to procure the waiver of
(or
if applicable hereby waives) any and all moral rights in the Results of the
Contract (or any part thereof) to which it or any Sub-Contractor/Seller may
be
entitled under the Copyright Designs and Patents Act 1988 or any similar or
analogous law in any jurisdiction.
A.5 The
Buyer
shall have the right to make such use as it thinks fit of the Results of the
Contract without further payment to the Seller. The Seller shall ensure that
any
Results of the Contract prepared by him or the Buyer, not already pre-printed
to
the effect that copyright belongs to the Buyer, shall bear the wording on the
cover and first page “Copyright in this document (or drawings) belongs to Pebble
Bed Modular Reactor (Pty) Ltd”. Where the form of results prepared by the
Contractor/Seller for the Buyer does not readily allow such a method of marking
then they shall be similarly endorsed in the most suitable manner available.
B. PATENT
CLAIMS, ETC BY THIRD PARTIES
B.1 The
Seller shall indemnify and keep the Buyer fully and effectively indemnified
against any and all actions, claims, proceedings, demands, damages, costs,
charges and expenses occasioned to the Buyer as a result of any infringement
of
any Intellectual Property of any third party arising directly or indirectly
as a
result of the use by the Buyer or by any of its sub licensees, agents, Sellers,
sub Sellers or assignees of the Results of the Contract (or any part thereof)
provided by or on behalf of the Seller arising out of any work (provided that
such indemnity shall not cover any use of such Results of Contract otherwise
than for the purpose indicated by, or reasonably to be inferred from, any
specification or instruction issued by the Buyer).
B.2 If
any
claim is made or action brought against the Buyer arising our of the matters
referred to in clause B5, the Seller shall be promptly notified and shall at
his
own expense promptly conduct all negotiations for the settlement of the same
and
any litigation that may arise. The Buyer will not, unless and until the Seller
shall have failed promptly to take over the conduct of the negotiations or
litigation, make any admission which might be prejudicial to such litigation.
The conduct by the Seller of such negotiations or litigation shall be
conditional upon the Seller having first given to the Buyer such reasonable
security as shall from time to time be required by the Buyer to cover the amount
ascertained or agreed or estimated, as the case may be, of any compensation,
damages or expenses for which the Buyer may become liable. The Buyer shall,
at
the request of Seller, afford all available assistance for the purpose of
contesting any such claim or action and shall be repaid any expenses incurred
in
so doing.
B.3 The
Seller warrants and represents to the Buyer that:
B3.1
it
has the legal capacity, right, power and authority or shall use all reasonable
endeavors to procure from Sub-Contractor/Sellers the right and authority to
enter into such assignment or license of the Intellectual Property as is
provided for in the Contract;
B.3.2
it
is, or shall use all reasonable endeavors to become, the legal and beneficial
owner of the Results of the Contract (and each part thereof);
B.3.3
the
Results of the Contract do not infringe (and no part thereof infringes) any
Intellectual Property of any third party in any jurisdiction;
B.3.4
it
has not entered nor shall it enter without prior written consent of the Buyer
into any agreement or arrangement (whether or not legally enforceable) for
the
assignment or licensing or other use of the Results of the Contract (or any
part
thereof) which would in any way prevent, restrict or otherwise inhibit the
Buyer’s use and exploitation of the Results of the Contract (or any part
thereof).
B.4 The
Buyer
represents that any design or written instruction furnished or given by it
to
the Seller under this Contract shall not be such as shall cause the Seller
to
infringe any third party patent, registered design or copyright to the best
of
the Buyer’s knowledge in any jurisdiction in the performance by the Seller of
the Works.
B.5 The
Seller shall execute (or procure the execution of) such further documents and
do
(or procure the doing of) such further acts as the Buyer may reasonably request
from time to time, at the Buyer’s expense, by way of further assurance of the
rights assigned or licensed to it pursuant to the provisions of the Contract.
THE
BUYER
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇_____________
▇▇▇▇▇
▇.
▇▇▇▇▇▇
Chief
Executive Officer / Chairman /