Dated ____________________________ 2000
(1) CARDIOTECH INTERNATIONAL INC
AND
(2) CARDIOTECH INTERNATIONAL LIMITED
-----------------------------------------
SUPPLY AND PURCHASE
AGREEMENT
RELATING TO CHRONOFLEX RC
-----------------------------------------
Aaron & Partners
Grosvenor Court
Foregate Street
Chester
CH1 1HG
Ref: SCH.EDW59.1
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CONTENTS
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Clause Heading Page
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1
2
3
4
5
6
7
8
9
10
11
12
Schedule
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1
2
3
4
5
<PAGE>
THIS AGREEMENT is made on 2000
BETWEEN:
(1) CARDIOTECH INTERNATIONAL INC., a United States 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
registration number 3198267, whose registered office is at 5/7 Grosvenor
Court, Foregate Street, Chester, CH1 1HG ("CTL")
WHEREAS
(A) CTI manufactures biomaterials under the Rights (as defined) and markets
them under the trademark Chronoflex .
(B) CTI and CTL have agreed to collaborate in order to undertake research in
and the development of a reproducable supply of the Chronoflex RC (as
defined)
(C) If the research and development referred to above is successful then CTI
shall supply Chronoflex RC to CTL.
NOW IT IS HEREBY AGREED as follows:-
1. Definitions and Interpretation
--------------------------------
1.1. In this Agreement the following expressions have the following
meanings unless the context otherwise requires:-
Expression Meaning
---------- -------
"Affiliate" in respect of any body corporate, a
body corporate which is its
subsidiary or holding company, or a
company which is a subsidiary of
that holding company, and each such
company;
"Appointed Expert" a person appointed pursuant to
clause 4.1(a) who shall act as expert
not arbitrator and whose decision
shall, save in the event of fraud or
manifest error, be binding;
"Chronoflex AR" a polycarbonate based polyurethane,
further particulars of which are set
out in Schedule 1 Part I;
"Chronoflex RC" a specific formulation of Chronoflex
AR which is in accordance with the
Specification;
"Commencement Date" [ ]
"Conditions" Those conditions set out in Schedule
2;
<PAGE>
"Dollars" and the sign $ the lawful currency of the United
States of America;
"Draft Product Specification" the specification particulars of which
are set out in Schedule 1 Part II;
"Escrow Agent" the person or business appointed
pursuant to clause 4.1(b);
"Finished Product Specification" a specification of Chronoflex RC
which will replace the Draft Product
Specification and apply during the
Remaining Period;
"Force Majeure" in relation to either party, any
circumstances beyond the reasonable
control of that party (including,
without limitation, any strike lock-
out or other industrial action);
"Formulation" the written formulation of
Chronoflex RC which accurately
identifies the constituent parts, the
manner or process in which they are
used, applied or which is applied to
them and the specification and
manner of use of any equipment
including, but not limited to, the
standard operating procedures and
work instructions for the production
of Chronoflex RC;
"GPC Method" as defined in Part II Schedule 1;
"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
"Laboratory" the laboratory referred to in clause
3.2;
"Licence" licence in respect of Chronoflex RC
made between the parties and the
dated the date hereof;
"MWD Test" a test of molecular weight
distribution carried out in accordance
with the GPC Method;;
"Quarter Day" the last day in a Quarter;
<PAGE>
"Quarter" each successive period of 3 months,
the first of which will commence on
the date of this Agreement;
"Remaining Period" the period of this Agreement from
the date notice is served pursuant to
Clause 3.5 until termination of this
Agreement in accordance with the
terms herein;
"Rights" the intellectual property rights
licensed to CTL by CTI pursuant to
the Licence;
"Specification" the Draft Product Specification or
the Finished Product Specification if
the Draft Product Specification has
been revised in accordance with
Clause 3.4;
"Testing Period" the period from the date of this
Agreement to the date of service of
notice by CTL to CTI pursuant to
Clause 3.3 or Clause 3.4;
"Year" each successive period of 12 months,
the first of which will commence on
the date of this Agreement.
1.2. References to Clauses and Schedules are unless otherwise stated to
clauses of and schedules to this Agreement.
1.3. The Schedules form part of this Agreement and have the same force and
effect as if expressly set out in the body of this Agreement.
1.4. Headings are for convenience only and will not affect the construction
of this Agreement.
1.5. Except where the context otherwise requires, references to:-
(a) persons include bodies corporate, unincorporated associations and
partnerships;
(b) the masculine gender include the feminine and neuter and
references to the singular include the plural and vice versa; and
(c) a document are to that document as varied, supplemented or
replaced from time to time.
2. Sale of Chronoflex RC
------------------------
[ * ]
3. Testing Period
---------------
[ * ]
4. Escrow Agent and Appointed Expert
-------------------------------------
[ * ]
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5. Payment on Account
--------------------
[ * ]
6. Exclusive Sale and Purchase
------------------------------
6.1. CTI will sell Chronoflex RC to CTL for the exclusive use of CTL in the
production of vascular access grafts and peripheral vascular grafts.
6.2. CTL will purchase its requirements for Chronoflex RC from CTI only,
provided that none of the Conditions are met.
7. Conditions of Sale and Purchase
-------------------------------
All sales and purchases of Chronoflex RC pursuant to this Agreement will be
subject to the terms of purchase of CTL set out in Schedule 3, except to
the extent that:
(a) any provision of those terms of purchase is inconsistent with any
provision of this Agreement, in which event the latter will prevail;
or
(b) CTI and CTL agree in writing to vary those terms of purchase.
8. Chronoflex RC Specification
-----------------------------
All Chronoflex RC sold by CTI to CTL pursuant to this Agreement will
conform in all respects to the Specification and CTL will be entitled to
reject any quantity of Chronoflex RC which is not in accordance with the
Specification.
9. Manufacture and Delivery of Chronoflex RC
----------------------------------------------
9.1. CTI will use all reasonable endeavours to manufacture and maintain
sufficient stocks of and manufacturing capacity for Chronoflex RC to
fulfil its obligations under this Agreement.
9.2. CTI will deliver each of CTL's orders for Chronoflex RC on the date
following 30 days after the date of receipt the written order or
confirmation of oral order (as the case may be).
*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.
9.3. The Chronoflex RC will be sold and delivered f.o.b and accordingly CTL
will arrange for suitable transport and insurance therefor and CTL
will bear the costs of such transport and insurance.
10. Price of Chronoflex RC
-------------------------
[ * ]
11. Inspection
----------
11.1.Subject always to clause 15 and to reasonable prior notice from CTL
CTI agrees that:
(a) any officer of CTL or other person duly appointed by CTL may at
any time enter at all reasonable times into and upon CTI's
premises for the purpose of ascertaining that the provisions of
this Agreement are being complied with or to ascertain compliance
with regulatory or FDA standards; and
(b) CTI will provide any information or documents CTL reasonably
requires in order to obtain regulatory approval anywhere in the
world.
<PAGE>
11.2.Such inspections shall not take place more than twice per year.
12. Non-Competition
---------------
12.1.CTI undertakes with CTL and its successors in title that it will not
and that it will procure that no Affiliate of CTI will for the
duration of this Agreement, either on its own account or in
conjunction with or on behalf of any person, firm or company, carry on
or be engaged, concerned or interested (directly or indirectly and
whether as principal, shareholder, director, employee, agent,
consultant, partner or otherwise) in the supply of Chronoflex RC to
any person, firm or company for use in vascular access grafts or
peripheral vascular grafts in the following areas:
(a) countries comprising the European Economic Area and any other
European countries;
(b) the United States of America;
(c) Japan and Asia;
(d) Australasia;
(e) South America;
(f) Africa; and
(g) Any other countries whatsoever.
*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.
12.2.The parties consider that the restrictions contained in this clause
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.
13. Force Majeure
--------------
13.1.If either party is affected by Force Majeure it will promptly notify
the other party of the nature and extent of the circumstances in
question.
13.2.Notwithstanding any other provision of this Agreement, neither party
will be deemed to be in breach of this Agreement, or otherwise be
liable to the other, for any delay in performance or the
non-performance of any of its obligations under this Agreement, to the
extent that the delay or non-performance is due to any Force Majeure
of which it has notified the other party, and the time for performance
of that obligation will be extended accordingly.
13.3.If at any time CTI claims Force Majeure in respect of its obligations
under this Agreement with regard to the supply of Chronoflex RC, CTL
will be entitled to obtain from any other person such quantity of
Chronoflex RC as CTI is unable to supply.
14. Duration and termination
--------------------------
<PAGE>
14.1.This Agreement shall commence on the Commencement Date and may not be
terminated during the period from the date hereof until the date which
is three years after the start of the Remaining Period ("the Fixed
Term Period") save in accordance with clause 3.6, clause 14.2 or
Clause 14.3. After the Fixed Term Period either party shall be
entitled to terminate this Agreement on 6 months prior written notice
or in accordance with Clause 14.2 or Clause 14.3.
14.2.CTI will be entitled forthwith to terminate this Agreement by written
notice to CTL if:
(a) CTL commits any material breach of any of the provisions of this
Agreement and, in the case of such a breach which is capable of
remedy, fails to remedy the same within 30 days after receipt of
a written notice requiring it to be remedied;
(b) CTL becomes or is deemed to be insolvent or ceases to carry on
business;
(c) CTL goes into liquidation; or
(d) CTL has a receiver, administrative receiver or administrator
appointed in respect of all or any of its assets
14.3.CTL will be entitled forthwith to terminate this Agreement by written
notice to CTI on the occurrence of any of the Conditions.
14.4.Termination of this Agreement for any reason will be without
prejudice to:-
(a) the prompt repayment by CTI to CTL of the balance (after set-off
of all orders supplied or to be supplied by CTI to CTL in
accordance with this Agreement of the sum paid by CTL pursuant to
clause 5.1;
(b) the delivery of any orders from CTL that are undelivered but in
the course of delivery at the date of termination;
(c) any rights or obligations which are accrued at the date of
termination;
(d) any rights or obligations which are expressed or by implication
intended to continue thereafter including, without limitation,
the Licence.
15. Confidentiality
---------------
15.1. Subject to clause 15.2 each party:
(a) shall treat as strictly confidential information obtained or
received by it as a result of entering into or performing its
obligations under this Agreement and relating to the negotiations
concerning, or the provisions or subject matter of, this
Agreement or the other party ('confidential information'); and
(b) shall not, except with the prior written consent of the other
party (which shall not be unreasonably withheld or delayed),
publish or otherwise disclose to any person any confidential
information
15.2. Clause 15.1 shall not apply if and to the extent that:
(a) such disclosure is required by law or by any securities exchange
or regulatory or governmental body having jurisdiction over it
and whether or not the requirement has the force of law;
(b) such disclosure is required for the purpose of routine ISO
compliance surveillance to L.R.Q.A. Ltd
<PAGE>
(c) the confidential information was lawfully in its possession prior
to its disclosure by the other party (as evidenced by written
records) and had not been obtained from that other party; or
(d) the confidential information has come into the public domain
other than through its fault or the fault of any person to whom
the confidential information has been disclosed
16. Miscellaneous
-------------
16.1.This Agreement is personal to the parties, and neither of them may,
without the written consent of the other, assign, mortgage, charge or
dispose of any of its rights hereunder, or sub-contract or otherwise
delegate any of its obligations under this Agreement.
16.2.Nothing in this Agreement will create, or be deemed to create, a
partnership between the parties.
16.3.This Agreement and the Licence contains the entire agreement between
the parties with respect to its subject matter, supersedes all
previous agreements and understandings between the parties and may not
be modified except by an instrument in writing signed by the duly
authorised representatives of the parties.
16.4.If any provision of this Agreement is held by any court or other
competent authority to be void or unenforceable in whole or part, the
other provisions of this Agreement and the remainder of the affected
provision will continue to be valid.
16.5.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.
16.6.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:-
(a) if delivered by hand, when delivered;
(b) if sent by post, 7 days after posting; and
(c) if sent by facsimile transmission, when transmitted.
16.7.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 16.6.
16.8.This Agreement will be governed by and construed in accordance with
English law and the parties submit to the non-exclusive jurisdiction
of the English courts.
IN WITNESS whereof this Agreement has been executed the day and year first
before written.
<PAGE>
SCHEDULE 1
PART I: CHRONOFLEX AR FACT SHEET
TECHNICAL FACT SHEET
CHRONOFLEX AR
BIODURABLE POLYURETHANE
ELASTOMER
DESCRIPTION
CardioTech International, Inc., manufactures and markets a solution-grade,
segmented, aromatic, polycarbonate-based polyurethane designed for use in
solvent casting and dipping applications. This elastomer may be evaluated for
use in the fabrication of blood contact surfaces, pump diaphragms, and other
medical devices.
Typical physical properties of ChronoFlex AR films are outlined below:
Durometer, (Shore) ASTM D-2240 75 A
Tensile Strength ASTM D-412 7500 psi
Elongation ASTM D-412 500 %
ChronoFlex AR is a medical-grade polyurethane, meaning that CardioTech is
committed to maintaining lot quality control, lot traceability and product
certification. The physical properties are also audited periodically in
conjunction with a ninety (90) day sample retention. ChronoFlex AR films have
been tested by an independent laboratory, and have passed or exceeded all
requirements specified in the USP Class VI biocompatibility tests.
FABRICATION
ChronoFlex AR is ideal in applications requiring exceptional flexure endurance,
such as artificial heart diaphragms or vascular grafts.
ChronoFlex AR is processed by traditional solvent casting techniques. Removal of
Dimethyl Acetamide (DMAc) solvent leaves a polymeric film that is best attained
in a forced hot air oven. We recommend temperatures between 60oC and 80oC.
Depending upon the size of the component being manufactured, the duration of
heating time may vary between 2 and 24 hours. It is essential that dry air be
used during DMAc evaporation, because this solvent is highly hygroscopic and
water absorption into the solvent will cause the film to become cloudy, with
reduced physical properties.
<PAGE>
Both viscosity and percent solids may be reduced by addition of DMAc.
Analytical-grade DMAc is recommended for these purposes, since this grade of
solvent has minimal moisture content
COMPOSITION
Synthesis of ChronoFlex AR is carried out by the addition of MDI
(diphenylmethane 4,4' diisocyanate) to polycarbonate diol, followed by addition
of a mixture of chain extenders and a molecular weight regulator, with the
reaction carried out in DMAc solvent. ChronoFlex AR is thus supplied as a 22%
solids solution, ready for solution casting.
YELLOWING
Most medical-grade polyurethanes are clear to slightly yellow in their original
state. However, aromatic-based polyurethanes turn dark yellow to amber as a
result of processing, sterilisation or exposure to UV light. While this
discoloration (which is caused by the formation of chromophoric groups in the
MDI portion of the molecular chain) does not affect the physical properties of
the product, it may nevertheless influence the aesthetics of the device.
BIODURABILITY
Biodurability means freedom from Biologically-induced Environmental Stress
Cracking during the intended period of implantation (1). In general, it refers
to the unwanted action of macrophagic enzymes onto polyether-based
polyurethanes, which results in surface fissures. ESC may lead to catastrophic
device failure. ESC susceptibility is tested by the "Stokes" test.
ChronoFlex AR elastomers are polycarbonate based, and are thus believed to be
resistant to ESC. However, we strongly recommend customers to test the
suitability of this product in their specific application
FDA STATUS
The use of ChronoFlex AR in medical devices is not covered by any specific FDA
regulation. It is the responsibility of the user to establish safety with the
FDA through submission of an individual application. CardioTech has submitted an
MAF to the FDA and will approve FDA access as required in processing a
customer's application. The MAF contains proprietary information on the base
polymers, the manufacturing process, product release specifications, and other
relevant data to assist FDA personnel in the approval process.
TECHNICAL SERVICE
CardioTech technical personnel are ready to assist you with processing, product
availability, or pricing. Please call Robert Carson at our UK office or Hans
Vingerhoed in Belgium for further details or enquiries about customised
viscosities
<PAGE>
References:
1. Szycher, M. "Biostability of Polyurethane Elastomers A Critical Review" J
Biomat Appl., 3(2):299-402, (1988).
2. Stokes, K.B., et al. "New Test Methods for the Evaluation of Stress
Cracking and Metal Catalyzed Oxidation in Implanted Polymers," in
PU in Biomedical Engineering, H.Planck et al, eds,. Amsterdam:
Elsevier, 109-127 (1987)
--------------------------------------------------------------------------------
This information has been gathered from standard reference sources and is
believed to be accurate and reliable. CardioTech makes no other warranty,
express or implied, that the results obtained from the use of this product or
information contained herein shall be merchantable or fit for any particular
purpose, or that the use of this product will not infringe any patent. It is
offered solely for your consideration, investigation, and verification.
PART II: CHRONOFLEX RC SPECIFICATION DRAFT
[ * ]
*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.
<PAGE>
SCHEDULE 2
CONDITIONS
[ * ]
*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.
<PAGE>
SCHEDULE 3
TERMS OF PURCHASE
[ * ]
*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.
<PAGE>
SCHEDULE 4
PRICES
[ * ]
*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.
<PAGE>
EXECUTED AND DELIVERED by )
CARDIOTECH )
INTERNATIONAL INC as )
its Deed acting by:- )
Director
Director/Secretary
SIGNED by )
)
for and on behalf of )
CARDIOTECH )
INTERNATIONAL )
LIMITED in the presence )
of:- )
<PAGE>
