Exhibit 2.2
Dated 2000
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(1) CARDIOTECH INTERNATIONAL INC
(2) CARDIOTECH INTERNATIONAL LIMITED
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OPTION AGREEMENT
IN RESPECT OF CARDIOPASS CORONARY ARTERY BYPASS
GRAFTS
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Aaron & Partners
Grosvenor Court
Foregate Street
Chester
CH1 1HG
Ref: SCH.EDW59.1
<PAGE>
THIS AGREEMENT is made the day of
2000
BETWEEN :
(1) CARDIOTECH INTERNATIONAL INC, a US Corporation incorporated under the laws
of the State of Massachusetts and having its principal place of business at
78E Olympia Avenue, Woburn, Massachusetts, MA01801 ("CTI"); and
(2) CARDIOTECH INTERNATIONAL LIMITED a company incorporated in England with
company number 3198267 whose registered office is at 5-7 Grosvenor Court,
Foregate Street, Chester, CH1 1HG ("CTL").
WHEREAS
(A) CTL is the exclusive licensee of the Rights (as defined) from the
registered proprietor Nervation Limited (Company No. 3961695)
("Nervation"), the parent company of CTL.
(B) CTL will contemporaneously with this Agreement enter into a product
development, licence, supply and purchase agreement with CTI ("the Product
Development Agreement") to collaborate in order to undertake research in
and the development of the Products (as defined).
(C) If CTL and CTI agree a Finished Product Specification (as defined in the
Product Development Agreement) ("the Commencement Date") then CTL will
undertake Animal Trials (as defined) on the terms of this agreement.
(D) CTL also wishes to be granted an option (and CTI is willing to grant such
option) for CTL to undertake Human Trials (as defined) and for the
subsequent exploitation of the Products upon the terms set out below. NOW
IT IS AGREED as follows:
1. INTERPRETATION
--------------
1.1. Definitions
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In this Agreement the following words and expressions shall have the
following meanings:
Expression Meaning
---------- -------
"Animal Trials" means animal pre-clinical trials
complying with FDA protocol for
the Product;
"Background" means in respect of each party the
Intellectual Property owned by or
otherwise in the possession of that
party relating to the Product at the
Commencement Date
"CABG" means the coronary artery bypass
graft more particularly described in
Part II of Schedule 1;
"Completion" means the performance by CTI and
CTL of the obligations assumed by
them respectively under Clause 4.2;
"Distribution Agreement" means the Agreement more
particularly set out in Schedule 2;
"Effective Date" means the date hereof;
"Exercise Date" means the date of service of an
Exercise Notice;
<PAGE>
"Exercise Notice" means a notice in writing exercising
the Option;
"Exercise Period" means the period described in
Clause 2.3;
"FDA" means U.S Food and Drug
Administration, Rockville,
MD20857 United States of America;
"Foreground" means all Intellectual Property
Rights resulting from the Work
"Human Trials" means human clinical trials for the
Products;
"Improvements" means all improvements,
modifications and adaptations
relating solely and exclusively to the
Products including without
limitation that related to the
specification, design, manufacture
and use of the Products
"Intellectual Property" means any patent, copyright,
registered or unregistered design,
trade mark, know-how or other
industrial or intellectual property
right whatsoever or howsoever
arising for the full term thereof and
all renewals and extensions thereof
"Investigator" means any company or organisation
appointed by CTI to carry out any
work referred to in the Programme
and to report on the results of the
Programme;
"Option" means the option exercisable or
exercised pursuant to Clause 2.1;
"Products" means CABG manufactured under
the Rights meeting the Finished
Product Specification;
"Programme" means a detailed programme for
Animal Trials;
"Rights" means the Intellectual Property more
particularly listed in Part I of
Schedule 1;
"Successful Completion" means a conclusion by the
Investigator that the results of the
work carried out pursuant to the
Programme are sufficiently
satisfactory to proceed to Human
Trials;
<PAGE>
"Work" means the work to be carried out
hereunder in relation to the
development of the Products
pursuant to the Programme
1.2. Clause headings in this Agreement are for convenience only and shall
not affect interpretation.
1.3. Where the context permits the singular shall include the plural and
vice versa and the masculine shall include the feminine and neuter
genders.
2. OPTION
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[ * ]
3. PRE-CLINICAL TRIALS
--------------------
[ * ]
4. COMPLETION OF AGREEMENT
-------------------------
4.1. Completion of the Option shall take place at the registered office of
CTL (or such other place as the parties may agree) on the day 7 days
after the Exercise Date provided that if such day is not a business
day then Completion shall take place on the first business day
thereafter.
4.2. On Completion:-
(i) each of the parties hereto shall execute the Distribution
Agreement; and
(ii) each of the parties hereto shall become bound by the terms of
such Distribution Agreement.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
5. COSTS
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5.1. Save where expressly provided in Clause 3 and Clause 3 of the Product
Development Agreement, each party shall bear its own costs and
expenses in relation to the Programme and all work carried out
pursuant to the Programme.
6. BACKGROUND
----------
6.1. The Background shall remain the absolute unencumbered property of the
owner of such rights. No party will make any representation or do any
act which may be taken to indicate that it has any right title or
interest in or to the ownership or use of any of the Background of the
other party except under the terms of this Agreement, and each party
acknowledges that nothing contained in this Agreement shall give it
any right, title or interest in or to the Background of the other
party save as granted hereby.
6.2. Each party hereby grants to the other party a non-exclusive, royalty
free licence for the duration of the this Agreement to use and exploit
the grantor's Background for the purposes of performing the grantee's
Work. Each party agrees that it will not use the other party's
Background for any purpose other than the performance of its
obligations hereunder.
6.3. Each party shall inform the other of any infringement of any of the
Intellectual Property Rights in the Background as soon as reasonably
practicable upon such infringement coming to its notice. The party
that is the owner of such Intellectual Property Rights shall have the
sole conduct of any proceedings in relation to them.
<PAGE>
7. FOREGROUND
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7.1. Each party shall ensure that the Work to be carried out by that party
shall only be undertaken by persons who are either employed by them
under a contract of service or are consultants under a consultancy
contract which provides for the assignment by such consultants of all
Intellectual Property created by them during the course of their
duties owed to that party under such consultancy contract.
7.2. All Foreground arising from Work shall belong to CTL and CTI shall
assign or procure the assignment to CTL of such Foreground. CTL shall
grant CTI a royalty-free sole licence for the duration of the Work to
use such Foreground exclusively for the continuing purposes of the
Programme.
7.3. Improvements arising from Work carried out jointly shall belong solely
to CTL and CTI shall assign and procure the assignment to CTL of such
Improvements unless they shall otherwise agree.
8. CONFIDENTIALITY
---------------
8.1. Each of the parties hereto undertakes to the other to keep
confidential to themselves and their professional advisers and not to
use or communicate to any person other than his professional advisers
and any companies or institutions providing finance to it, any
confidential information concerning the business, accounts, finances,
contractual arrangements, affairs or Intellectual Property of the
other party hereto.
8.2. The confidentiality undertaking referred to above shall not apply to
confidential information if and to the extent that:-
(i) it is a matter of public knowledge;
(ii) it comes into the possession of any party other than by reason of
any breach of an obligation of confidentiality owed to the party
claiming title to such confidential information;
(iii) such disclosure is required by operation of law.
9. ASSIGNMENT
----------
Neither party shall assign or purport to assign any or all of its obligations
under this Agreement without the prior written consent of the other.
10. FURTHER ASSURANCE
------------------
10.1.Each of the parties hereto undertakes to do all acts and things within
its power to give full force and effect to this Agreement and, upon
exercise of the Option, to give full force and effect to the
Distribution Agreement.
10.2.CTI hereby undertakes to CTL not to enter into any Agreement or to do
or omit to do any act or thing prior to the expiry of the Exercise
Period which would or might reasonably be expected to prevent or
materially alter the rights to the Products proposed to be granted
pursuant to the Distribution Agreement.
11. TERMINATION
-----------
11.1.Subject to any agreement between the parties to the contrary, this
Agreement shall terminate at the end of the Exercise Period if no
Exercise Notice shall have been served beforehand.
11.2.If an Exercise Notice shall have been served before the end of the
Exercise Period, this Agreement shall terminate upon the fulfilment of
the parties obligations hereunder.
12. NATURE OF AGREEMENT
---------------------
12.1.This Agreement is personal to the parties hereto, who may not without
the prior written consent of the other, assign, mortgage, charge
(otherwise than by floating charge) or dispose of any of its rights
hereunder, or sub-contract or otherwise delegate any of its
obligations hereunder save in accordance with the terms of this
Agreement.
<PAGE>
12.2.Nothing in this Agreement shall create, or be deemed to create, a
partnership or the relationship of principal and agent or employer and
employee between the parties.
12.3.No failure to exercise nor any delay in exercising any right, power,
privilege or remedy under this Agreement shall in any way impair or
affect the exercise thereof or operate as a waiver thereof in whole or
in part.
12.4.This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, supersedes all previous
agreements and understandings between the parties with respect
thereto, and may not be modified except by an instrument in writing
signed by the duly authorised representatives of the parties.
12.5.Each party acknowledges that, in entering into this Agreement, it
does not do so on the basis of, and does not rely on, any
representation, warranty or other provision except as expressly
provided herein, and all conditions, warranties or other terms implied
by statute or common law are hereby excluded to the fullest extent
permitted by law.
12.6.If any provision of this Agreement is held by any court or other
competent authority to be void or unenforceable in whole or part, this
Agreement shall continue to be valid as to the other provisions
thereof and the remainder of the affected provision.
12.7.The parties consider that the restrictions contained in this
Agreement are separate obligations and are reasonable but if any such
restriction shall be found to be unenforceable but would be valid if
any part of it were deleted or if the period or area of application
reduced such restriction shall apply with such modification as may be
necessary to be valid and enforceable as agreed between the parties.
12.8.Each party shall bear its own costs in relation to the negotiation
and preparation of this Agreement.
12.9.Any notice required or authorised by this Agreement to be given by
either party to the other must be in writing and be delivered by hand
or sent by first class pre-paid airmail post or facsimile transmission
to the other party at the address stated at the beginning of this
Agreement or any other address notified by the recipient of the
notice. Any notice will be deemed received:-
12.9.1. if delivered by hand, when delivered;
12.9.2. if sent by post, 7 days after posting; and
12.9.3. if sent by facsimile transmission, when transmitted.
12.10. Any notice required or authorised by this Agreement to be given by
CTL to CTI shall where possible be copied to their US counsel for the
time being but non-receipt of such copied notice shall not invalidate
any notice given to CTI in accordance with Clause 12.9.
13. PROPER LAW
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This Agreement shall be governed by and construed in all respects in accordance
with the English law and the parties hereby submit to the non-exclusive
jurisdiction of the English Courts.
IN WITNESS whereof the parties hereto have executed this Agreement the day and
year first before written.
<PAGE>
SCHEDULE 1
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PART I
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RIGHTS
DEFINITION
Patent number 63-78318 (Japan)
Patent number 1813534 (Japan)
Patent number 0 286 220 B1 (EP)
Patent number 0286220 (Austria)
Patent number 0286220 (Belgium)
Patent number 168359 (Denmark)
Patent number 0286220 (France)
Patent number 3879741 - 0 (Germany)
Patent number 0286220 (Great Britain)
Patent number 3008181 (Greece)
Patent number 63267 (Ireland)
Patent number 0286220 (Italy)
Patent number 0286220 (Luxembourg)
Patent number 0286220 (Netherlands)
Patent number 88710 (Portugal)
Patent number 0286220 (Spain)
Patent number 88301722-0 (Sweden)
Patent number 0286220-7 (Switzerland)
Patent number 5132066 (USA)
Patent number 6117 535 (USA)
All other Intellectual Property relating to CABG owned or used by CTL with the
free right of disposal.
PART II
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CORONARY ARTERY BYPASS GRAFT
DEFINITION
CardioPass coronary artery bypass graft made from the 'Chronoflex' polycarbonate
polyurethane
<PAGE>
SCHEDULE 2
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DISTRIBUTION AGREEMENT
THIS AGREEMENT is made the day of 20[ ]
BETWEEN:
(1) CARDIOTECH INTERNATIONAL INC. a US Corporation incorporated under the laws
of the State of Massachusetts and having its principal place of business at
78E Olympia Avenue, Woburn, Massachusetts MA01801 ("CTI"); and
(2) CARDIOTECH INTERNATIONAL LIMITED a company incorporated in England with
Company Number 3198267whose registered office is at 5/7 Grosvenor Court,
Foregate Street, Chester, CH1 1HG ("CTL")
WHEREAS:
(A) CTL is the exclusive licensee of the Rights (as defined) from the
registered proprietor Nervation Limited (Company No. 3961695)
("Nervation"), the parent company of CTL.
(B) CTI and CTL have entered into a product development, supply and purchase
agreement ("the Product Development Agreement") previously that provides,
inter alia, for the initial research and development of the Products (as
defined) to a Finished Product Specification (as defined in the Product
Development Agreement).
(C) CTI and CTL have agreed to collaborate in the development of the Products
(as defined).
(D) The parties have agreed that if the development of the Products is
successful then CTL will act as CTI's distributor for the Products within
the Territory (as defined) upon the terms set out below.
NOW IT IS AGREED as follows:
1. INTERPRETATION
--------------
1.1. In this Agreement, unless the context otherwise requires:
<TABLE>
<CAPTION>
<S> <C>
"Acceptance Tests" means the acceptance tests for determining whether
Successful Completion has occurred to be devised
and carried out pursuant to Clause 3
"Background" means in respect of each party the Intellectual
Property owned by or otherwise in the possession of
that party relating to the Products at the date of this
Agreement
"CABG" means the coronary artery bypass graft technology
more particularly described in Part II of Schedule 1
"CE Mark" means the mark denoting Conformite Europeene
pursuant to Medical Device Directive 93/42/EEC
and "CE Marking" shall be construed accordingly;
"Confidential Information" means any confidential or proprietary information,
whether written or oral, relating to the business,
affairs, finances or Intellectual Property of either
party
"Effective Date" means the date the parties agree that Successful
Completion has been reached
<PAGE>
"FDA" means U.S. Food and Drug Administration,
Rockville, MD 20857 United States of America
"Force Majeure" means, in relation to any party, any circumstances
beyond the reasonable control of that party
(including, without limitation, any strike, lock-out
or other form of industrial action)
"Foreground" means all Intellectual Property resulting from the
Work
"Improvements" means all improvements, modifications and
adaptations relating solely and exclusively to the
Products including without limitation that related to
the specification, design, manufacture and use of the
Products
"Intellectual Property" means any patent, copyright, registered or
unregistered design, trade mark or other industrial
or intellectual property right whatsoever or
howsoever arising for the full term thereof and all
renewals and extensions thereof
"Net Sales Value" means the sums invoiced by CTI to CTL in respect
of any Products, less any value added tax (or other
taxes, duties or levies) and any amounts for
transport or insurance included in the invoice
"Products" means CABG manufactured under the Rights
according to the Finished Product Specification (as
defined in the Product Development Agreement)
"Programme" means a detailed programme for development of the
Products for the purpose of CE Marking and as
modified from time to time in accordance with the
terms of this Agreement
"Quarter" means each consecutive period of 3 calendar months
beginning on 1st January , 1st April, 1st July and 1st
October in any given Year;
"Rights" means the Intellectual Property more particularly
listed in Part I of Schedule 1;
"Successful Completion" means the completion of the Work in accordance
with the objectives stated in the Programme and
carried out in accordance with EN540 ('European
Standard: Clinical Investigation of Medical Devices
for Human Subjects')
"Technology" means all technology relating to the Products
including without limitation that related to the
specification, design, manufacture and use of the
Products
"Territory" means Italy, France, Germany, Belgium,
Netherlands, Luxembourg, Denmark, Ireland,
Norway, Turkey, Switzerland, Iceland, United
Kingdom, Greece, Spain, Portugal, Austria, Finland,
Sweden, Cyprus, Malta, Hungary, Poland, Romania,
Estonia, Lithuania, Bulgaria, Czech Republic,
Slovakia, Latvia and Slovenia
<PAGE>
"Trade Marks" means:
(a) the trade marks registered in the name of
CTI of which particulars are given in Schedule
2; and
(b) such other trade marks as are used by CTI
on or in relation to the Products as are advised
to CTL in writing at any time during this
Agreement.
"Work" means the work to be carried out hereunder in
relation to the development of the Products
"Year" means the period of 12 calendar months from the
Effective Date and each subsequent consecutive
renewal period of 12 calendar months during the
period of this Agreement.
</TABLE>
1.2. Any reference in this Agreement to "writing" or cognate expressions
includes a reference to telex, cable, facsimile transmission or
comparable means of communication.
1.3. Any reference in this Agreement to any provision of a statute shall be
construed as a reference to that provision as amended, re-enacted or
extended at the relevant time.
1.4. The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2. THE PROJECT
------------
2.1. Each party shall use their reasonable endeavours with effect from the
date of this Agreement to prepare and agree the Programme and
thereafter in accordance with the Programme:
2.1.1. carry out the Work assigned to it with all due diligence, care
and skill;
2.1.2. liaise with and provide all reasonable advice and assistance to
the other party in relation to the Programme;
2.1.3. use its reasonable endeavours to achieve Successful Completion.
2.2. Each party shall:
2.2.1. keep detailed written records of its progress with the Work
under the Programme;
2.2.2. supply to the other party on reasonable request reports
describing the progress of its Work under the Programme including
without limitation details of all Improvements which have been
made or which have come to its attention and containing
recommendation regarding the future progress of the Programme;
2.2.3. in addition to the obligations in Clause 2.2.2, keep the other
party fully informed of the progress of the Programme and of all
Improvements arising therefrom;
2.2.4. immediately notify the other party in writing if there is an
unexpected technical or scientific problem which makes it
impossible to achieve or is likely to cause a material delay to
achievement of any of the objectives of the Programme or any
particular stage of the Programme or any material increase in the
costs of the Programme or if it either becomes aware of the
action of any third party which threatens to affect adversely
Successful Completion of the Programme or the reasonable
expectations of either party hereunder.
2.3. Each party shall ensure that all the Work conducted by it shall be
carried out in accordance with generally accepted standards of good
practice at the time applicable to such work (including but without
limiting the generality of the foregoing all relevant statutory safety
standards from time to time in force) and each party will be
responsible for the implementation of and compliance with all safety
and other legislative requirements which apply to the Work assigned to
it under the Programme.
<PAGE>
2.4. Each party will procure that such facilities, materials, equipment and
technical information as are reasonably required for the proper
execution of the Programme are made available by it for the Programme.
2.5. Without prejudice to the general application of the Chronoflex RC
supply agreement previously entered into by the parties each party
shall supply to the other such materials as the other requires in
accordance with the Programme for the proper performance of the Work.
Such materials will be supplied at cost and in accordance with that
party's standard terms and conditions of sale, a copy of which shall
be available at any time on request.
2.6. CTI undertakes to generate and supply to CTL all scientific and
clinical studies and other information reasonably requested by CTL in
order that CTL may apply the CE Mark or obtain other regulatory
clearances for any products resulting from the Work in its own name.
2.7. CTL shall fund all of the reasonable external costs of the Work
pursuant to the Programme up to a maximum cost of US$3,000,000. CTL
may in its sole discretion fund costs of the Work pursuant to the
Programme in excess of this amount. If CTL advises CTI in writing that
it is not so willing to fund further costs, or subsequently advises
CTI that it no longer wishes to fund further costs, then either party
may terminate this Agreement forthwith on prior written notice to the
other party.
2.8. CTI shall supply to CTL all documentation CTL reasonably requires to
justify any claim for reimbursement or payment by CTL pursuant to
Clause 2.7. In the event that CTL and CTI cannot agree what
documentation is reasonably required to justify such claim for
reimbursement or payment the parties shall refer the matter to CTL's
auditors for the time being whose decision shall be final and binding.
2.9. The parties will use their reasonable endeavours to ensure that the
Programme is concluded within 36 months of the date of this Agreement.
2.10.The parties agree that, so far as reasonably practicable, the Royal
Free Hospital and University College Medical School or any other
clinic locations within the Greater University College of London
community shall be offered the opportunity to undertake all or some of
the Work provided that the terms upon which the Work is undertaken are
competitive.
2.11.CTI hereby warrants, represents and undertakes to CTL that CTI will
be solely responsible for evaluating all results arising from the work
carried out by any party pursuant to the Programme and neither CTL nor
their respective officers, employees or agents will have any liability
to CTI whether in contract, tort, negligence or otherwise for any loss
or damage arising out of or in connection with the research,
development, manufacture, supply or use of any of the Products by or
on behalf of CTI.
3. SUCCESSFUL COMPLETION
----------------------
3.1. At the date set out in the Programme, CTL shall give written notice to
CTI setting out in detail the form and subject matter of the
Acceptance Tests and the method of conducting them.
3.2. CTL shall carry out or procure the carrying out of the Acceptance
Tests at the time fixed in the Programme.
3.3. If:
3.3.1. CTL in their sole discretion consider that the Acceptance Tests
have not been passed; or
3.3.2. an ethical committee or regulatory authority deems the work
unethical to continue;
then CTL shall promptly give written notice thereof to CTI and
this agreement shall terminate upon service of such notice unless
the parties shall otherwise agree in writing.
<PAGE>
3.4. If there is a Successful Completion the provisions of this Agreement
relating to the appointment of CTL as exclusive distributor for the
resale of the Products in the Territory will apply with effect from
the date the parties agree in writing Successful Completion is reached
PROVIDED THAT CTI has not served notice on CTL in accordance with
Clause 11.1.
3.5. If there is no Successful Completion by the date 36 calendar months
from the date of this Agreement then this Agreement shall terminate
without prejudice to either parties accrued rights as at that date.
4. BACKGROUND
----------
4.1. The Background shall remain the absolute unencumbered property of the
owner of such rights at the date of this Agreement. No party will make
any representation or do any act which may be taken to indicate that
it has any right title or interest in or to the ownership or use of
any of the Background of the other party except under the terms of
this Agreement, and each party acknowledges that nothing contained in
this Agreement shall give it any right, title or interest in or to the
Background of the other party save as granted hereby.
4.2. Each party hereby grants to the other party a non-exclusive, royalty
free licence for the duration of this Agreement to use and exploit the
grantor's Background for the purposes of performing the grantee's
Work. Each party agrees that it will not use the other party's
Background for any purpose other than the performance of its
obligations hereunder.
4.3. Each party shall inform the other of any infringement of any of the
Intellectual Property in the Background as soon as reasonably
practicable upon such infringement coming to its notice. The party
that is the owner of such Intellectual Property shall have the sole
conduct of any proceedings in relation to them.
5. FOREGROUND
----------
5.1. Each party shall ensure that the Work shall only be undertaken by
persons who are either employed by them under a contract of service or
are consultants under a consultancy contract which provides for the
assignment by such consultants of all Intellectual Property created by
them during the course of their duties owned to that party under such
consultancy contract.
5.2. All Foreground arising from Work shall belong to CTL and CTI shall
procure the assignment to CTL of such Foreground. CTL shall grant CTI
a royalty-free sole licence for the duration of the Work to use such
Foreground exclusively for the continuing purposes of the Programme.
5.3. Improvements arising from work carried out jointly shall belong solely
to CTL and CTI will assign and procure the assignment to CTL of such
Improvements unless CTL shall otherwise agree in writing.
6. DISTRIBUTION
------------
6.1. During the continuance of this Agreement CTI shall not appoint any
other person firm or company in the Territory as distributor or agent
for the Products in that Territory.
6.2. CTL shall be entitled to describe itself as CTI's "Authorised
Distributor" for the Products but shall not hold itself out as the
agent for CTI or as being entitled to bind it in any way. CTI hereby
confirms that the corporate name of CTL shall not be considered to be
a breach of this Agreement for the purposes of this Clause.
6.3. This appointment shall be personal to CTL and save as expressly
provided hereby, CTL shall not assign, licence, mortgage, charge or
otherwise dispose of any of its rights or subcontract or otherwise
delegate any of its obligations hereunder without the prior written
consent of CTI.
6.4. Save as expressly provided in Clause 7.1 below, CTL shall not sell any
of the Products which it purchases from CTI through a sales agent or
through a sub-distributor without the prior written consent of CTI not
to be unreasonably withheld.
6.5. For the purposes of this Agreement, if the Effective Date does not
coincide with the commencement of a Quarter, then that first Quarter
shall be deemed to be the period from the Effective Date to the start
of the next full Quarter.
<PAGE>
6.6. CTL shall not, during the continuance of this Agreement, sell the
Products to any customer in any country which is:
6.6.1. outside the Territory; or
6.6.2. within the Territory if to the knowledge of CTL that customer
intends to resell the Products in any country which is outside
the Territory.
6.7. If in any completed Year the yearly average unit sales of the Products
completed by CTL on an arms length basis during the immediately
preceding three Years is less than twenty (20) per cent of the yearly
average unit sales of the Products completed by CTI on an arms length
basis over the same period then CTI shall be entitled, by giving not
less than three (3) months' written notice to CTL within three (3)
months after the end of that Year, to terminate this Agreement.
6.8. CTI and CTL will each provide the other party with all information and
assistance reasonably necessary to determine sales figures pursuant to
Clause 6.7. In the event that CTL and CTI cannot agree what
documentation is reasonably required to determine the sales figures
the parties shall refer the matter to CTL's auditors for the time
being whose decision shall be final and binding.
7. RIGHTS AND DUTIES OF CTL
----------------------------
7.1. CTL shall be entitled without the prior written consent of CTI, to
appoint any other person, firm or company as a sub-distributor for the
purpose of the resale of the Products in the Territory in accordance
with the terms of this Agreement.
7.2. In the event of the appointment of a sub-distributor in accordance
with Clause 7.1, each of the rights, duties and obligations imposed on
CTL hereunder shall be deemed to apply mutatis mutandis to the
sub-distributor and CTL shall procure the compliance by the
sub-distributor at all times with the requirements, duties and
obligations which are imposed or are deemed to be imposed upon it.
7.3. Subject as provided in this Agreement, CTL shall be entitled to
promote and market the Products in the Territory in such manner as it
may think fit, and in particular shall be entitled to resell the
Products to its customers at such prices as it may determine.
7.4. CTL shall maintain such stocks of the Products as may be necessary to
meet its customers' requirements.
7.5. In connection with the promotion and marketing of the Products CTL
shall:-
7.5.1. make clear in all dealings with customers and prospective
customers that it is acting as distributor of the Products and
not as the agent of CTI;
7.5.2. comply with all legal requirements from time to time enforced
relating to the storage and sale of the Products.
7.6. CTL shall obtain in its own name all licences, permits and approvals
which are necessary or advisable for the sale of the Products in the
Territory by it and for the performance of its duties hereunder.
8. SUPPLY OF THE PRODUCTS
-------------------------
8.1. CTI shall use its best endeavours to supply the Products to CTL in
accordance with CTL's orders.
8.2.
8.2.1. At least 15 days before the beginning of each Quarter, CTL
shall provide CTI with a rolling forecast of sales of the
Products for the following 12 month period, by line item units,
and an estimate of CTL's forthcoming orders for Products during
the next Quarter.
<PAGE>
8.2.2. The aforementioned forecasts shall be prepared by CTL with
reasonable care and skill but are not otherwise binding upon it.
8.3. Upon receipt and confirmation of each order CTI shall as soon as is
practicable inform CTL of CTI's estimated delivery date for the
consignment and CTI shall use all reasonable endeavours to meet the
delivery date.
8.4. Risk of loss of or damage to any consignment of the Products shall
pass to CTL from the moment of delivery thereto.
9. RIGHTS AND DUTIES OF CTI
----------------------------
9.1. CTI shall from time to time provide CTL with such samples, catalogues,
brochures and up to date information concerning the Products as are
appropriate or as CTL may reasonably require in order to assist CTL
with the sale of the Products in the Territory, and CTI shall
endeavour to answer as soon as practicable any technical enquiries
concerning the Products which are made by CTL or its customers.
9.2. Where employees of either party visit the premises of the other for
the purposes of this Agreement, the first mentioned party shall:
9.2.1. procure that each such employee complies with all security,
safety and other regulations which apply to or are in force at
the other party's premises;
9.2.2. remain liable for all salaries and other employment costs of,
and all travelling, accommodation and other expenses incurred by
that party's employees; and
9.2.3. indemnify the other party against any direct damage to property
of the other party which is caused by any act or omission of any
such employee at the other party's premises.
10. INTELLECTUAL PROPERTY
----------------------
10.1.CTI hereby authorises CTL to use the Trade Marks in the Territory on
or in relation to the Products for the purposes only of exercising its
rights and performing its obligations under this Agreement and CTI
shall not so authorise any other person, firm or company.
10.2.CTL shall, at the expense of CTI, use its reasonable endeavours to
assist CTI in maintaining the validity and enforceability of the
Intellectual Property of CTI during the term of this Agreement.
10.3.CTL and CTI will as soon as possible after the date of this Agreement
enter into an appropriate licence in relation to the Trade Marks.
11. EARLY TERMINATION OF DISTRIBUTORSHIP
---------------------------------------
[ * ]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
12. PAYMENT FOR THE PRODUCTS
---------------------------
[ * ]
13. CONFIDENTIALITY
---------------
13.1.Except as provided by Clause 13.2, each party shall at all times
during the continuance of this Agreement and after its termination:
13.1.1. use its best endeavours to keep confidential all Confidential
Information and accordingly not to disclose any Confidential
Information to any other person; and
13.1.2. not use any Confidential Information for any purpose other
than the performance of its obligations under this Agreement.
<PAGE>
13.2.Any Confidential Information may be used by the receiving party for
any purpose, or disclosed by the receiving party to any other person
only if and , to the extent only that:
13.2.1. it is at the date hereof, or hereafter becomes, public
knowledge through no fault of the receiving party or by reason of
any breach of a duty of confidentiality owed by the receiving
party or any third party to the disclosing party ;
13.2.2. it can be shown by written evidence to have been known to the
receiving party prior to its being disclosed by them; or
13.2.3. such disclosure is required by operation of law.
14. WARRANTIES AND LIABILITIES
----------------------------
14.1. Subject as herein provided CTI warrants to CTL that:
14.1.1. all Products supplied hereunder will be of satisfactory
quality and shall be fit for any purpose held out by CTI and will
comply in all material respects with any specification agreed for
them and will be comply with all statutory requirements and
regulations relating to the sale of the Products;
14.1.2. the Trade Marks are registered in the name of CTI and that it
has disclosed to CTL all trade marks and trade names used by CTI
in relation to the Products at the date of this Agreement; and
14.1.3. it is not aware of any rights of any third party in the
Territory which would or might render the sale of the Products,
or the use of any of the Trade Marks on or in relation to the
Products, unlawful.
14.2.CTI shall indemnify CTL in full against all liability, loss, damages,
costs and expenses (including legal expenses) awarded against or
incurred or paid by CTL as a result of or in connection with any
breach of warranty given by CTI pursuant to Clause 14.1.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
14.3.CTI shall maintain in force an insurance policy with a firm or company
of reasonable repute affected for the benefit of CTL to cover all or
any potential liability pursuant to Clause 14.2 and shall procure that
the interest of CTL shall be noted on such policy or policies in
respect thereof.
15. FORCE MAJEURE
--------------
15.1.If any party is affected by Force Majeure it shall forthwith notify
the other party of the nature and extent thereof.
15.2.No party shall be deemed to be in breach of this Agreement, or
otherwise be liable to the other, by reason of any delay in
performance, or non-performance, of any of its obligations hereunder
to the extent that such delay or non-performance is due to any Force
Majeure of which it has notified the other parties; and the time for
performance of that obligation shall be extended accordingly.
15.3.If the Force Majeure in question prevails for a continuous period in
excess of six months, the parties shall enter into bona fide
discussions with a view to alleviating its effects, or to agreeing
upon such alternative arrangements as may be fair and reasonable.
16. DURATION AND TERMINATION
--------------------------
16.1.This Agreement shall come into force on the date of this Agreement
and, subject to earlier termination pursuant to the provisions of
Clause 3.3, Clause 11.1 or this Clause, shall continue in force for an
initial period of 10 years ("the Initial Term").
<PAGE>
16.2.In the event that CTL wishes to renew this Agreement it shall not less
than 90 days prior to the expiry of the Initial Term or any subsequent
renewal term serve written notice on CTI of its intention so to do.
16.3.Upon receipt of the aforementioned notice and subject to the
provisions set out below, this Agreement shall be renewed for a
further period of 5 years and the provisions of this Agreement shall
apply mutatis mutandis in respect of such renewed term.
16.4.Any party shall be entitled forthwith to terminate this Agreement by
written notice to the others if one of the parties commits any
persistent or repudiatory breach of any of the provisions of this
Agreement and, in the case of a breach capable of remedy, fails to
remedy the same within 30 days after receipt of a written notice
giving full particulars of the breach and requiring it to be remedied
16.5.Any party shall be entitled to terminated this Agreement by written
notice to the other if:
16.5.1. an encumbrancer takes possession or a receiver is appointed
over any of the property or assets of any other party;
16.5.2. any other party makes any voluntary arrangement with its
creditors or becomes subject to an administration order;
16.5.3. any other party goes into liquidation (except for the purposes
of amalgamation or reconstruction and in such manner that the
company resulting therefrom effectively agrees to be bound by or
assume the obligations imposed on any other party under this
Agreement);
16.5.4. anything analogous to any of the foregoing under the law of
any jurisdiction occurs in relation to any other party; or
16.5.5. any other party ceases, or threatens to cease, to carry on
business.
16.6.For the purposes of Clause 16.4, a breach shall be considered capable
of remedy if the party in breach can comply with the provision in
question in all respects other than as to the time of performance
(provided that time of performance is not of the essence).
16.7.Any waiver by any party of a breach of any provision of this
Agreement shall not be considered as a waiver of any subsequent breach
of the same or any other provision thereof.
16.8.The rights to terminate this Agreement given by this Clause shall be
without prejudice to any other right or remedy of either party in
respect of the breach concerned (if any) or any other breach.
17. CONSEQUENCES OF TERMINATION
-----------------------------
17.1. Upon the termination of this Agreement for any reason:
17.1.1. CTI shall be obliged to repurchase from CTL all or part of any
stocks of the Products then held by CTL at their Net Sales Value
or the value at which they stand in the books of CTL, whichever
is lower; provided that:
17.1.1.1. CTI shall be responsible for arranging and for the cost
of, transport and insurance; and
17.1.1.2. CTL may sell stocks for which it has accepted orders
from customers prior to the date of termination, or in
respect of which CTI does not, by written notice given to
CTL within 7 days after the date of termination exercise its
right of repurchase, and for those purposes and to that
extent the provisions of this Agreement shall continue in
full force and effect;
17.1.2. CTL shall at the expense of CTI within 30 days send to CTI or
otherwise dispose of in accordance with the directions of CTI all
samples of the Products and any advertising, promotional or sales
material relating to the Products then in the possession of CTL;
<PAGE>
17.1.3. if applicable, CTL shall immediately terminate the appointment
of any sub-distributors;
17.1.4. the provisions of Clauses 4, 5, 13 and 17 shall continue in
force in accordance with their respective terms;
17.1.5. subject as otherwise provided herein and to any rights or
obligations which have accrued prior to termination, neither
party shall have any further obligation to the other under this
Agreement.
18. NATURE OF AGREEMENT
---------------------
18.1.This Agreement is personal to the parties hereto, who may not save in
accordance with Clause 7.1 without the prior written consent of the
other, assign, mortgage, charge (otherwise than by floating charge) or
dispose of any of its rights hereunder, or sub-contract or otherwise
delegate any of its obligations hereunder save in accordance with the
terms of this Agreement.
18.2.Nothing in this Agreement shall create, or be deemed to create, a
partnership or the relationship of principal and agent or employer and
employee between the parties.
18.3.No failure to exercise nor any delay in exercising any right, power,
privilege or remedy under this Agreement shall in any way impair or
affect the exercise thereof or operate as a waiver thereof in whole or
in part.
18.4.This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, supersedes all previous
agreements and understandings between the parties with respect
thereto, and may not be modified except by an instrument in writing
signed by the duly authorised representatives of the parties.
18.5.Each party acknowledges that, in entering into this Agreement, it
does not do so on the basis of, and does not rely on, any
representation, warranty or other provision except as expressly
provided herein, and all conditions, warranties or other terms implied
by statute common law or otherwise are hereby excluded to the fullest
extent permitted by law.
18.6.If any provision of this Agreement is held by any court or other
competent authority to be void or unenforceable in whole or part, this
Agreement shall continue to be valid as to the other provisions
thereof and the remainder of the affected provision.
18.7.Each party shall bear its own costs in relation to the negotiation
and preparation of this Agreement.
18.8.The parties consider that the restrictions contained in this
Agreement are separate obligations and are reasonable but if any such
restriction shall be found to be unenforceable but would be valid if
any part of it were deleted or if the period or area of application
reduced such restriction shall apply with such modification as may be
necessary to be valid and enforceable as agreed between the parties.
19. PROPER LAW
-----------
This Agreement shall be governed by and construed in all respects in
accordance with the English law and the parties hereby submit to the
non-exclusive jurisdiction of the English Courts.
20. NOTICES AND SERVICE
---------------------
20.1.Any notice required to be served hereunder shall be sent by pre-paid
post or facsimile transmission to the other party at the last known
address of the recipient.
20.2.Any notice or other information given by post pursuant to Clause 20.1
shall be deemed to have been given on the seventh working day after
the envelope containing the same was so posted; and proof that the
envelope containing any such notice or information was properly
addressed, pre-paid, registered and posted, shall be sufficient
evidence that such notice or information has been duly given.
<PAGE>
20.3.Any notice or other information sent by facsimile transmission shall
be deemed to have been duly sent on the first working date after
transmission, provided that the transmitting fax machine generates
upon completion of the transmission a transmission report stating that
the notice has been duly transmitted without error to the addressee's
fax number.
20.4.Any notice required or authorised by this Agreement to be given by
CTL to CTI shall be copied to their US counsel for the time being but
non-receipt of such copied notice shall not invalidate any notice
given to CTI in accordance with this Clause.
IN WITNESS whereof the parties hereto have hereunto set their hands the day and
year first before written.
<PAGE>
SCHEDULE 1
----------
PART I
------
RIGHTS
DEFINITION
Patent number 63-78318 (Japan)
Patent number 1813534 (Japan)
Patent number 0 286 220 B1 (EP)
Patent number 0286220 (Austria)
Patent number 0286220 (Belgium)
Patent number 168359 (Denmark)
Patent number 0286220 (France)
Patent number 3879741 - 0 (Germany)
Patent number 0286220 (Great Britain)
Patent number 3008181 (Greece)
Patent number 63267 (Ireland)
Patent number 0286220 (Italy)
Patent number 0286220 (Luxembourg)
Patent number 0286220 (Netherlands)
Patent number 88710 (Portugal)
Patent number 0286220 (Spain)
Patent number 88301722-0 (Sweden)
Patent number 0286220-7 (Switzerland)
Patent number 5132066 (USA)
Patent number 6117 535 (USA)
All other Intellectual Property relating to CABG owned or used by CTL with a
free right of disposal.
PART II
-------
CABG
DEFINITION
CardioPass coronary artery bypass graft made from 'Chronoflex' polycarbonate
polyurethane.
<PAGE>
SCHEDULE 2
----------
TRADE MARKS
DEFINITION
CardioPass
ChronoFlex
<PAGE>
EXECUTED by a duly authorised )
representative for and on behalf of )
CARDIOTECH INTERNATIONAL INC. )
in the presence of: )
EXECUTED by a duly authorised )
representative for and on behalf of )
CARDIOTECH INTERNATIONAL LIMITED )
in the presence of: )
<PAGE>
SIGNED by a duly authorised )
representative of CARDIOTECH )
INTERNATIONAL INC. )
)
SIGNED by a duly authorised )
representative of CARDIOTECH INTERNATIONAL)
LIMITED )
<PAGE>
