12.1 New Product Developments. The Parties agree to negotiate in good faith to come to agreement on terms of the Development Agreement, a joint development agreement relating to new intellectual property generated directly from the Product, the modified starch particles used in the production of the Products and the AMP™ technology. The Development Agreement will include provisions that detail how a new hemostatic powder might be developed, the rights of SMI and CryoLife to such powder, the allocation of costs and duties in such development, and the fees to CryoLife for exclusive rights to distribute such powder.
13. Representations and Warranties
13.1 Representations and Warranties
13.1.1 SMI hereby represents and warrants that:
(i) it is a duly and validly organized and existing corporation in good standing under the laws of the state of Delaware, and that it or its affiliates that may be performing its obligations under this Agreement are legally qualified to do business in each jurisdiction in which this Agreement may be performed and where its activities hereunder require such qualification,
(ii) the performance of this Agreement and the consummation of the transactions contemplated herein will not result in any breach, conflict, or violation of any terms or provisions of, or constitute a default under, its Certificate of Incorporation or By-Laws, or other organizational documents, or any material agreement or instrument to which it is a Party, by which it is bound, or to which any of its property is subject,
(iii) all requisite corporate action has been taken for the due authorization, execution, delivery, and performance of this Agreement by it, and this Agreement constitutes a legally binding obligation, enforceable against such Party, in accordance with its terms, except insofar as enforceability may be limited by bankruptcy, insolvency, reorganization, or similar laws affecting the rights of creditors generally,
(iv) it is not a Party to any litigation relating to, or that could reasonably be expected to affect, its ability to perform its obligations under this Agreement, or
(v) Schedule W-2 lists all approved clinical applications for products based on the AMP technology within the Territory.
13.1.2 CryoLife hereby represents and warrants that:
(i) it is a duly and validly organized and existing corporation in good standing under the laws of the state of Florida, and that it or its affiliates that may be performing its obligations under this Agreement are legally qualified to do business in each jurisdiction in which this Agreement may be performed and where its activities hereunder require such qualification,
(ii) the performance of this Agreement and the consummation of the transactions contemplated herein will not result in any breach or violation of any terms or provisions of, or constitute a default under, its Certificate of Incorporation or By-Laws, or other organizational documents, or any material agreement or instrument to which it is a Party, by which it is bound, or to which any of its property is subject,
(iii) all requisite corporate action has been taken for the due authorization, execution, delivery, and performance of this Agreement by it, and this Agreement constitutes a legally binding obligation, enforceable against such Party, in accordance with its terms, except insofar as enforceability may be limited by bankruptcy, insolvency, reorganization, or similar laws affecting the rights of creditors generally, and
(iv) it is not a Party to any litigation relating to, or that could reasonably be expected to affect, its ability to perform its obligations under this Agreement.
14.1 Notice. Any notice or other communication required or permitted by this Agreement must be given in writing and must be delivered by personal delivery (including personal delivery by overnight courier such as Federal Express, DHL, or similar overnight courier), first class mail (registered or certified), telecopy (with a copy sent by personal delivery or first class mail), or email (with a copy sent by personal delivery or first class mail) at the address of the Party as set forth herein or such other changed address of the Party as to which notice has been given, and will be deemed as having been given when received or delivered.
14.2 Binding; Assignment. This Agreement shall be binding on CryoLife, SMI, and their respective successors and assigns. Neither Party may assign its obligations under this Agreement or in any way transfer its rights or obligations under this Agreement, directly or indirectly, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, except that either Party may, without such consent, assign this Agreement in connection with any sale of substantially all of its assets or stock or pursuant to any merger, reclassification, or reorganization.
14.3 Entire Agreement; Modification; Waiver. This Agreement contains the entire agreement between the Parties with respect to the subject matter of the Agreement and shall supersede and terminate all prior agreements, commitments, or understandings, whether oral or written, related to the Products, except for the Confidentiality Agreement as modified by Section 7.2. No waiver or modification of any of the provisions of this Agreement shall be binding unless it is in writing and signed by the Parties. Any waiver of any condition on any one occasion shall not constitute a waiver on any subsequent occasion. A failure to exercise or a delay in exercising a right or remedy provided by this Agreement or by law shall not constitute a waiver of that right or remedy.
14.4 Arbitration; Governing Law; Jurisdiction. The Parties agree that any dispute concerning, relating to, or arising out of this Agreement shall be resolved by final and binding arbitration in accordance with the procedures set forth herein. Provided, however that, notwithstanding any other provision herein, either Party, in its sole and exclusive discretion, may apply to any court with jurisdiction over the Parties for a temporary restraining order, preliminary or permanent injunction, without submission of such claim for equitable relief to arbitration.
14.4.1 In the event a dispute is not resolved informally, the Parties agree that such dispute will be resolved exclusively through arbitration to be conducted in Chicago, Illinois, U.S.A., or any other place selected by mutual agreement of the Parties. The arbitration shall be conducted through the American Arbitration Association (“AAA”), unless the Parties mutually agree to use a different arbitral body or individual arbitrator. In any case, the arbitration shall be administered in accordance with the AAA’s commercial arbitration rules (the “Rules”), except as the Rules are modified herein. The Parties consent to the jurisdiction and venue of the state and federal courts located in Chicago, Illinois, U.S.A., and further consent that any process, or notice, or applications to the court, including applications for judgment upon an award, may be served outside of the State of Illinois by overnight mail or by personal service.
14.4.2 Unless otherwise mutually agreed by the Parties, the dispute will be decided by three arbitrators with at least ten (10) years experience in distributorship arrangements. Each Party shall select one of the arbitrators. The third arbitrator shall be mutually selected by the two Party-selected arbitrators, or, absent agreement, in accordance with the then-effective Rules, with such third arbitrator having in addition to the distribution arrangement experience described above, at least ten (10) years experience with medical device distributorship arrangements.
14.4.3 The Parties shall cooperate to the fullest extent practicable in the voluntary exchange of documents and information to expedite the arbitration. The Parties agree that the discovery provisions of the Federal Rules of Civil Procedure shall apply to discovery by the Parties. Any disputes concerning discovery shall be submitted to the arbitrator for resolution.
14.4.4 The arbitrator shall have the same authority to award remedies and damages as provided to a judge and/or jury under applicable law. The arbitrator shall not have the power to alter, amend, or modify any provision of this Agreement. The arbitrator shall have the power to decide only the dispute(s) submitted to the arbitrator. The substantive law of the State of New York, without regard to its conflict of laws principles, shall apply to the interpretation, application and legality of this Agreement.
14.4.5 The arbitrator shall issue a reasoned opinion and award, in writing, within thirty (30) days of closing arguments or the receipt of post-hearing briefs, whichever is later. The opinion and award must be signed and dated and decide all disputes submitted by the Parties. The opinion and award shall set forth the legal principles supporting each part of the opinion. The decision of a majority of the arbitrators shall be binding on the Parties. Judgment on the award rendered pursuant to such arbitration may be entered in any court having jurisdiction thereof, and such judgment may be entered and enforced in any state and any country. The losing party shall pay the fees associated with the costs of the arbitrators and any costs associated with the arbitration proceedings. Each Party shall bear its own legal expenses and costs. The Parties agree that any judgment shall be considered “Confidential Information” under this Agreement and subject to the provisions of this Agreement related to Confidential Information.
14.5 Controlling Language. This Agreement has been written, and all discussions leading up to this Agreement have been conducted, in the English language which the Parties thoroughly understand. Each Party represents that it has read and fully understands this Agreement.
14.6 Independent Contractor. CryoLife shall operate as an independent contractor and nothing contained in this Agreement shall be deemed or construed to recreate an employer/employee, principal/agent, joint venture, partnership, or fiduciary relationship between the Parties.
14.7 Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, such provision will be severed from this Agreement without affecting the validity or enforceability of any of the remaining provisions.
14.8 Heading and Captions. Headings and captions used herein are for convenience only and are not to be deemed part of this Agreement.
14.9 Inapplicability of UCC. The Parties agree that neither the Uniform Commercial Code of Georgia nor any other State of the United States shall apply to this Agreement or the activities contemplated by this Agreement. The Parties intend that the provisions of this Agreement, including those relating to purchase of Products and termination, govern their activities exclusively under this Agreement where provisions of the Uniform Commercial Code might otherwise provide.
14.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original, and all of which together shall constitute one and the same instrument.
14.11 Assignment. Neither Party may assign its rights or obligations hereunder without the prior written consent of the other, which consent may not be unreasonably withheld.
14.12 Successors and Assigns. This Agreement shall bind and inure to the benefit of the Parties and their respective successors and permitted assigns.
14.13 Further Assurances; Force Majeure. Each Party covenants and agrees that, subsequent to the execution and delivery of this Agreement and without any additional consideration, it will execute and deliver any further legal instruments and perform any acts that are or may become reasonably necessary to effectuate the purposes of this Agreement. Neither SMI nor CryoLife will have any liability for any failure or delay in performing any obligation under this Agreement (except the obligation to make payments promptly when and as due) if the failure or delay results from force majeure, understood as a cause which is beyond the control of either Party and one which could not have been avoided even with the exercise of due care. The Party claiming force majeure will give the other Party written notice of the cause within fifteen (15) days after occurrence thereof, and will exercise reasonable diligence to remove the cause and resume performance.
14.14 Specific Performance. Each Party acknowledges that it will be impossible to measure in money the damage to the other Party if a Party fails to comply with the confidentiality obligations imposed by Section 7, and that, in the event of any such failure, the other Party will not have an adequate remedy at law or in damages. Accordingly, each Party agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is an appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that the other Party has an adequate remedy at law. Each Party agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with any other Party’s seeking or obtaining such equitable relief.
[Signatures on the following page(s)]
IN WITNESS WHEREOF, the Parties have caused this Distribution Agreement to be executed by their respective duly authorized officers, and have duly delivered and executed this Agreement under seal as of the Effective Date.
| CRYOLIFE, INC. | | | STARCH MEDICAL, INC. | |
| | | | | |
| | | | | |
| /s/ D.A. Lee | | | /s/ Xin Ji | |
| Name: D. Ashley Lee | | | Name: Xin Ji | |
| Title: Executive VP, COO and CFO | | | Title: Chief Executive Officer | |
ANNEX A
Defined Terms
The following terms shall have the following meanings:
“AAA” – as defined in Section 14.4.1.
“Absorbable Modified Polymer” – as defined in the first Whereas clause.
“Adjusted Expiration Dates” – as defined in Section 3.8.3.
“Adjustment Date” – as defined in Section 3.9.2.
“Agreement” – as defined in the first paragraph.
“AMP™ technology” – as defined in the first Whereas clause.
“Affiliates” as it relates to a Party, shall mean any Person controlling, controlled by or under common control with such Party.
“Applicable Laws” means all applicable common law, statutes, ordinances, rules, regulations or orders of any Governmental Authority, including Regulatory Laws, within the Territory.
“Bona Fide Offer” – as defined in Section 1.4.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York are authorized or obligated by law or executive order to remain closed.
“CMDCAS Requirements” means Canadian Medical Devices Conformity Assessment System.
“Claim” – as defined in Section 10.1.4.
“Commencement Date” – as defined in Section 3.8.3.
“Competitive Products” – as defined in Section 2.1.
“Confidential Information” – as defined in Section 7.1.
“Confidentiality Agreement”– as defined in Section 7.2.
“CryoLife” means CryoLife, Inc., a Florida corporation, as defined in the first paragraph.
“CryoLife Indemnitees” – as defined in Section 6.2.
“Development Agreement” – as defined in the eighth Whereas clause.
“Distribute” and “Distribution” – as defined in Section 1.2.
“Effective Date” means September 29, 2010.
“Existing Distributors” – as defined in Section 2.3.1.
“Expiration Date” – as defined in Section 3.8.3.
“Failure to Supply” – as defined in Section 11.2.6.
“FDA” means the United States Food and Drug Administration or any successor agency having the administrative authority to grant Regulatory Approval in the United States.
“Field Action” means any correction or removal action due to safety, efficacy, quality or regulatory compliance concerns, including actions to recover title to or possession of, or to halt distribution of, Products that previously have been shipped to customers.
“Forecast” – as defined in Section 3.11.
“Governmental Authority” means any country in which the Products are manufactured, marketed, sold, tested, investigated or otherwise regulated, and all states or other political subdivisions thereof and supranational bodies applicable thereto, including the European Union, and all agencies, commissions, officials, courts or other instrumentalities of the foregoing.
“Indemnifying Party” – as defined in Section 6.3.
“Indemnitees” – as defined in Section 6.3.
“Insolvency Event” means that the Party (a) has commenced a voluntary proceeding under any insolvency law, (b) had an involuntary proceeding commenced against it under any insolvency law which has continued undismissed or unstayed for sixty (60) consecutive days, (c) had a receiver, trustee or similar official appointed for it or for any substantial part of its property, (d) made an assignment for the benefit of creditors or (e) had an order for relief entered with respect to it by a court of competent jurisdiction under any insolvency law. For purposes hereof, the term “insolvency law” means any applicable bankruptcy, insolvency or other similar law now or hereafter in effect.
“Initial Payment” – as defined in Section 3.1.
“Intellectual Property” means (a) discoveries, inventions, improvements, concepts and ideas, whether or not patentable, (b) works of authorship fixed in a tangible medium of expression, (c) Trademarks, (d) trade secrets and know-how and (e) all proprietary rights relating thereto, including all applications, registrations and renewals in connection therewith.
“Kitted Product” means the PerClot™ endoscopic hemostatic system when sold in a kit that includes one endoscope of at least 100 cm length for each application of powdered absorbable hemostat.
“License Agreement” – as defined in the sixth Whereas clause.
“Losses” means and includes any and all liability, damage, loss, expense, including reasonable attorney’s fees.
“MDD Requirements” means medical device directive,
“Minimum Annual Purchase Requirements” – as defined in Section 3.7.1.
“Modified Starch” – as defined in the sixth Whereas clause.
“New Application” – as defined in Section 1.3.
“New Product” – as defined in Section 1.4.
“Offer Notice” – as defined in Section 1.4.
“Open Negotiation Period” – as defined in Section 1.4.
“Other Parties” – as defined in Section 2.3.
“Party” and “Parties” – as defined in the first paragraph.
“Patents Protection Plan” means the plan for obtaining and maintaining patent protection on the SMI IP within the Territory that is set forth on Schedule 10.4.
“Permitted Clinical Applications” – as defined in the third Whereas clause.
“Person” means any individual, group or entity, including Governmental Authorities.
“Prepaid Royalty Payment” – as defined in Section 3.2.
“Product Changes” – as defined in Section 4.2.
“Product Complaint” means any expression by a Third Party of dissatisfaction relating to the identity, durability, reliability, safety, efficacy or performance of any Product, including actual or suspected product tampering, contamination, mislabeling or misformulation.
“Product Information” – as defined in Section 9.1.
“Product Specifications” means, collectively, (i) SMI’s design and functionality specifications relating to the Products and (ii) any specifications for manufacturing, testing, storing, packaging, shipping or labeling the Products set forth in any approved application for Regulatory Approval and any supplements and amendments thereto. Current Product Specifications for each product category identified in the Schedules has been delivered to CryoLife under separate cover contemporaneously with the execution of this Agreement. Product Specifications may only be amended in the manner provided in this Agreement.
“Products” – as defined in the second Whereas clause.
“Products in Inventory” shall mean and include only Products with approved shelf lives of at least three (3) years and remaining shelf lives of at least two (2) years at time of computation.
“Refund Event” – as defined in Section 3.3.
“Refund Losses” – as defined in Section 3.3.
“Refund Notice” – as defined in Section 3.3.
“Regulatory Approval” means, with respect to any country or jurisdiction, the act of the applicable Regulatory Authority that is necessary under applicable Regulatory Laws for the manufacture, marketing, distribution and sale of the Product in that country or jurisdiction, and satisfaction of all applicable regulatory and notification requirements and, to the extent applicable, the grant of pricing Approval.
“Regulatory Approval Development Plan” means the dates for obtaining Regulatory Approval for Products within the Territory as detailed in Schedule 5.1.
“Regulatory Authority” means, with respect to any country or jurisdiction, any Governmental Authority involved in granting Regulatory Approval or Pricing Approval or in administering Regulatory Laws in that country or jurisdiction, including the FDA in the United States.
“Regulatory Laws” means all Applicable Laws governing (i) the import, export, testing, investigation, manufacture, marketing or sale of the Product, (ii) establishing recordkeeping or reporting obligations, (iii) any Field Action or (iv) similar regulatory matters.
“Rules” – as defined in Section 14.4.1.
“Securities Act” – as defined in Section 3.4.
“SEC Reports” – as defined in Section 3.4.
“Shares” - as defined in Section 3.1.
“SMI” means Starch Medical, Inc. a Delaware corporation, as defined in the first paragraph.
“SMI Indemnitees” – as defined in Section 6.1.
“SMI IP” – as defined in Section 10.1.1.
“Tenders” means multiple month supply contracts with hospitals, government agencies or group purchasing authorities.
“Term” – as defined in Section 11.1.
“Territory” – as defined in the third Whereas clause.
“Third Party” means any Person other than a Party or its Affiliates.
“Trademarks” means all trademarks, service marks, trade dress, logos and trade names, together with all translations, adaptations, derivations and combinations thereof (including all goodwill associated therewith), and all applications, registrations and renewals in connection therewith.
“Trademark Assignment and License Agreement” – as defined in the seventh Whereas clause.
“Trailing Average Price” - as defined in Section 3.1.
“Transfer Prices” means the prices charged to CryoLife by SMI for each of the Products, as such prices may be amended from time to time pursuant Section 3.9. Current Transfer Prices are set forth in Schedule 3.9.
“United States” means the United States of America, including its territories, commonwealths and possessions.
SCHEDULE W-1
Products
Products include all products currently identified by SMI catalog numbers: STA0001, STA0003, STA2001, STA2003, Lap3801, Lap 3803, along with rights to 5 gram products and other sizes as may be agreed to by the Parties with the same applicators and any improvements to the foregoing. Products also include the OrthoClot™ products in all configurations, with the exception of OrthoClot Endoscopic and OrthoClot Express.
SCHEDULE W-2
Permitted Clinical Applications
All permitted indications for use of the Products obtained by SMI that are for class III medical devices as of the Effective Date of this Agreement (whether such indications could be downgraded or modified in the future to be for class I or class II medical devices). Such permitted indications include use in surgical procedures or injuries as an adjunct hemostat when control of bleeding from capillary, venous, or arteriolar vessels by pressure, ligature, and other conventional means is either ineffective or impractical.
Contra-indications specified in the PerClot IFU are not Permitted Clinical Applications.
Notwithstanding the foregoing, Permitted Clinical Applications do not include topical hemostasis, first aid, woundcare, all non-absorbable hemostatic applications (defined as class I or class II medical device) and anti-adhesion applications.
SCHEDULE 2.1
Exclusions from Competitive Products and New Products
| 1. | SMI’s Perclot® endoscopic hemostatic system designed for applications in minimally invasive surgical procedures so long as SMI distributes and sells such product exclusively as a Kitted Product. |
| 2. | Products packaged and sold exclusively for topical uses so long as such products (i) do not use the PerClot name or any name or trade dress that is confusingly similar to the PerClot name or any trade dress associated with the Products, (ii) are distributed in packaging that clearly states the product is “NOT FOR INTERNAL USE,” (iii) are packaged in single use pouches, (iv) are not usable in a sterile field within a healthcare facility, and (v) are not in quantities of or about 1, 3 grams. |
| 3. | Non-powdered format absorbable hemostats, including configurations in freeze-dried foam, sponge, glue, gel, film, and microfibrillar fibers. |
| 4. | Topical hemostasis, first aid, woundcare, all non-absorbable hemostatic applications (defined as class I or class II medical device), anti-adhesion film, anti- infection composited and wound healing promotion agents. |
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”).
THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
Schedule 2.3
Existing Distributors, Agreements with Existing Distributors, Outstanding Purchase Orders
(as of August 31, 2010)
| No. | Country | Distributor Name | Distributed Product | Distribution Agreement | Signed With | Outstanding Purchase Orders |
| Products | Volumes (Units) |
| 1 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 2 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 3 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 4 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 5 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 6 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 7 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 8 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 9 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 10 | [***] | [***] | PerClot | Yes | SMI | [***] | [***] |
| 11 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 12 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 13 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 14 | [***] | [***] | PerClot | Yes | SMI | ‐ | ‐ |
| 15 | [***] | [***] | PerClot | Yes | SMI | [***] | [***] |
| |
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”).
THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
| | | | | | | Outstanding Purchase Orders |
| No. | Country | Distributor Name | Distributed Product | Distribution Agreement | Signed With | Products | Volumes (Units) |
| 16 | [***] | [***] | PerClot | No | ‐ | ‐ | - |
| 17 | [***] | [***] | PerClot | No | ‐ | [***] | [***] |
| 18 | [***] | [***] | PerClot | No | ‐ | ‐ | ‐ |
| 19 | [***] | [***] | PerClot | No | ‐ | ‐ | ‐ |
| 20 | [***] | [***] | PerClot | Expired | ‐ | ‐ | ‐ |
| 21 | [***] | [***] | PerClot | No | ‐ | ‐ | ‐ |
| 22 | [***] | [***] | PerClot | No | ‐ | ‐ | ‐ |
| |
| 1 | [***] | [***] | [***] | Yes | [***] | ‐ | ‐ |
| 2 | [***] | [***] | [***] | Yes | [***] | ‐ | ‐ |
| |
| 3 | [***] | [***] | [***] | No | ‐ | ‐ | ‐ |
| 4 | [***] | [***] | [***] | No | ‐ | ‐ | ‐ |
| 5 | [***] | [***] | [***] | No | ‐ | ‐ | ‐ |
| 6 | [***] | [***] | [***] | No | ‐ | ‐ | ‐ |
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 2.3.2
Distributors That Will Not Be Terminated for 90 Days
| Country | Distributor | Products |
| France | [***] | PerClot LAP |
| Greece | [***] | PerClot LAP |
| New Zealand | [***] | PerClot |
| UK | [***] | PerClot LAP |
SCHEDULE 3.5
Restrictive Legend on Shares
The securities described herein have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the provisions of any state securities laws, and have been acquired by the holder thereof for purposes of investment and in reliance on statutory exemptions under the Securities Act and applicable state securities laws. The securities may not be sold, pledged, transferred or assigned except pursuant to section 3.4 of that certain Distribution Agreement dated September 28, 2010, as may be amended from time to time, an effective registration statement under the Securities Act and applicable state securities laws, or in a transaction which is exempt from registration under the provisions of the Securities Act and applicable state securities laws; and in the case of an exemption, only if the issuer has received an opinion of counsel that such transaction does not require registration of the Securities, which opinion and which counsel shall be satisfactory to the issuer in its sole discretion.
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 3.6
Initial Stocking Order
The breakdown of indirect vs. direct at the bottom of this schedule.
| | Initial Order | Product Exp. Date | Pricing Direct | Pricing Indirect | Extended Cost |
1 gram Standard - STA0001 INT - Boxes | [***] | [***] | $[***] | $[***] | $[***] |
3 gram Standard - STA0003 INT - Boxes | [***] | [***] | $[***] | $[***] | $[***] |
1 gram Standard - 20cm - STA2001 INT - Boxes | [***] | [***] | $[***] | $[***] | $[***] |
3 gram Standard - 20cm - STA2003 INT - Boxes | [***] | [***] | $[***] | $[***] | $[***] |
1 gram Lap - 38cm - LAP3801 INT - Units | [***] | [***] | $[***] | $[***] | $[***] |
3 gram Lap - 38cm - LAP3803 INT - Units | [***] | [***] | $[***] | $[***] | $[***] |
1 gram OrthoClot - STA0001 INT - Units | [***] | [***] | $[***] | $[***] | $[***] |
3 gram OrthoClot - STA0003 INT - Units | [***] | [***] | $[***] | $[***] | $[***] |
| | | | | Order Total | $[***] |
| Sterile and Non-Sterile Sample Product |
| | Qty | Unit of Measure | Costs |
| Sterile Samples - STA0003-S | [***] | Boxes | $[***] |
| Sterile Samples - STA2003-S | [***] | Boxes | $[***] |
| Sterile Samples - LAP3803-S | [***] | Boxes | $[***] |
| Non-Sterile Samples - STA0003 | [***] | Units | $[***] |
| Non-Sterile Samples - STA2003 | [***] | Units | $[***] |
| Non-Sterile Samples - LAP0003 | [***] | Units | $[***] |
| | | | |
| Direct vs. Indirect Calculations* | Direct | Indirect | |
| 1g Product | [***]% | [***]% | |
| 3g Product | [***]% | [***]% | |
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 3.7
Minimum Annual Purchase Requirements*
| Commencement Date | Expiration Date | Amount |
| Effective Date | December 31, 2010 | $525,000 |
| January 1, 2011 | December 31, 2011 | $1,225,000 |
| January 1, 2012 | December 31, 2012 | $2,500,000 |
| January 1, 2013 | December 31, 2013 | $3,500,000 |
| Each Calendar Year commencing on January 1, 2014 | $1,750,000 | |
* Unit credit to be given toward the Minimum Annual Purchase Requirements for Product units shipped by SMI after closing pursuant to unfulfilled purchase orders described in Section 2.3.4(ii)(B).
* The Parties agree that the minimum purchase amounts will be eliminated once CryoLife is able and obtains approval from the U.S. Food and Drug Administration to manufacture Products in the U.S. for commercial distribution, all as more particularly described in the License Agreement. The minimum purchase amount for the year in which the minimum purchase amount is eliminated will be the amount set forth in the chart above for such year multiplied by a fraction. The numerator for the fraction will be the number of full calendar months completed in the year before CryoLife notices SMI that it has met the requirement for elimination and the denominator for the fraction is twelve (12).
* Subject to adjustment as provided in Sections 1.3, 3.7, 3.8, 5.1, 5.4 or 10.2.
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 3.8
| Product Name | Number of Units | Expiry Date |
| PC: STA0001/ 1 g | [***] | [***] |
| PC: STA0003/ 3 g | [***] | [***] |
| PC: STA2001/ 1 g | [***] | [***] |
| PC: STA2003/ 3 g | [***] | [***] |
| PC: LAP3801/ 1 g | [***] | [***] |
| PC: LAP3803/ 3 g | [***] | [***] |
| OC: STA0001/ 1 g | [***] | [***] |
| OC: STA0003/ 3 g | [***] | [***] |
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 3.9
Transfer Prices
FOB Shanghai or Beijing
DIRECT DISTRIBUTION*
STA 0001 US$[***] each, US$[***] box of 5 for direct distribution
STA 0003 US$[***] each; US$[***] box of 5 for direct distribution
STA 0005 US$[***] each, US$[***] box of 5 for direct distribution**
STA 2001 US$[***] each, US$[***] sold only individually for direct distribution
STA 2003 US$[***] each; US$[***] sold only individually for direct distribution
LAP 3801 US$[***] each; sold only individually for direct distribution
LAP 3803 US$[***] each; sold only individually for direct distribution
INDIRECT DISTRIBUTION***
STA 0001 US$[***] each; US$[***] box of 5 for indirect distribution
STA 0003 US$[***] each; US$[***] box of 5 for indirect distribution
STA 0005 US$[***] each, US$[***] box of 5 for indirect distribution**
STA 2001 US$[***] each; US$[***] sold only individually for direct distribution
STA 2003 US$[***] each; US$[***] sold only individually for direct distribution
LAP 3801 US$[***] each; sold only individually for indirect distribution
LAP 3803 US$[***] each; sold only individually for indirect distribution
* Direct distribution indicates CryoLife directly sells the PerClot Products to End Users (e.g. hospitals, clinics, etc.) and invoices directly to the End User.
** Standard version only, no Lap and no XL
*** Indirect distribution indicates CryoLife sells the PerClot Products to Distributors/agents and invoices to the distributors/Agents.
SMI agrees to file/submit to its notified body by September 30, 2010, appropriate information to allow it to produce [***] and that it shall begin producing such product by [***].
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 3.15
Products Samples
Non-Sterile Samples
| · | All samples should be of 3g volume (to allow for multiple demos per unit) |
| · | Initial Request (in units, not boxes) - To be sent with first order |
| · | Quarterly Sample Provisions (starting the first calendar quarter after product launch) |
| · | Ordering = CryoLife to list non-sterile samples needs with each order |
Sterile Samples
| · | For first three contract years: |
| o | Contract Year 1 - [***] units of STA0003 and [***] units of STA2003 and [***] units of LAP3803 |
| o | Contract Year 2 and 3 - [***] units of STA0003 and [***] units of STA2003 and [***] units of LAP3803 |
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN
REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS
BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 5.1
List of Countries Where Approved:
Australia, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Hungary, Iceland, Republic of Ireland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, Sweden, United Kingdom
Regulatory Approval Schedule & Forecast With Amount of Minimums Reduced
| Jurisdiction | Approval or Forecast Date | Amount* |
| [***] | January 1, 2013 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | July 1, 2014 | $[***] |
| [***] | July 1, 2011 | $[***] |
| [***] | July 1, 2011 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2011 | $[***] |
| [***] | January 1, 2013 | $[***] |
| [***] | January 1, 2013 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | July 1, 2014 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
| [***] | January 1, 2012 | $[***] |
* The Parties acknowledge that the amount set forth above is not an actual calculation by either party of the amount of sales available in each such country and is not based on any such calculation, but just an agreed upon amount negotiated between the parties.
SCHEDULE 8.2
Marketing Support
The following apply to all Products and will be provided by SMI without charge to CryoLife.
| · | Supply 5000 printed brochures in English and associated marketing materials as needed to support the sales efforts in all countries where Regulatory Approval has been obtained. |
| · | Supply CryoLife all images, videos, and electronic files of all marketing and training materials. |
| · | Provide CryoLife with all information related to the preclinical and clinical performance of the Products (abstracts, poster, published papers, white papers, videos). |
| · | Provide CryoLife with a written update of all ongoing and planned preclinical/clinical studies on the Products. |
| · | Make changes to marketing materials as necessary to meet the requests and requirements of any Regulatory Authority. |
| · | Prior to making any changes/revisions to any marketing materials, allow CryoLife a chance to review and make recommendations. |
| · | Provide prompt review (within 5 Business Days) of all marketing materials created by CryoLife. |
| · | Provide currently available graphic design updates for trade show displays in sizes and formats requested by CryoLife. |
| · | Supply all images and provide support for CryoLife use of image in all media (web, print, and other media). |
| · | Provide CryoLife with final file of all trade show graphics and artwork. (CryoLife will pay bills for trade show and advertising space.) |
SCHEDULE 9.1
Languages
Czech
Danish
Dutch
English
French
German
Greek
Hungarian
Italian
Norwegian
Polish
Portuguese
Russian
Slovak
Spanish
Swedish
Turkish
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION.
Schedule 10.1
Intellectual Property
| No. | Title | Filing Date | Application No. | Internation Filing Date | Priority Date | International Application No. | Applicants | Inventor | Current Status | National Phase |
| | | | | | | | | | | |
| 1(1) | [***] | [***] | [***] | / | / | / | [***] | [***] | [***] | |
| 1(2) | [***] | [***] | [***] | [***] | [***] | [***] | Submitted to [***], [***] and [***] via [***]** |
| | | | | | | | | | | |
**Application No. for [***]: [***], [***]: [***] and [***]: [***]
[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION.
Schedule 10.4
Patent Protect Plan
| No. | Title | Filing Date | Application No. | Internation Filing Date | Priority Date | International Application No. | Applicants | Inventor |
| 1 | [***] | [***] | [***]** | [***] | [***] | [***] | [***] | [***] |
** Application No. for [***]: [***], [***]: [***] and [***]: [***]
National Phase and Protect Plan:
As part of its efforts, SMI shall prepare quarterly written reports describing the current status of the patent and patent application listed herein and written notifications describing any amendments made to the claims during the prosecution of any application of patent and any receipt of notice from the [***] of its intent to grant a patent on the [***] patent listed above, no later than 30 days before the deadline for CryoLife to select and SMI to effect the national stage entry (i.e. validation) in the designated [***] states of CryoLife's choosing, which states shall include all those nations in which CryoLife [***] its [***] ([***]) and any new countries added in which a [***] can be [***] since that time. SMI will continue to pursue the patent in [***], [***] and [***].
