EXHIBIT 99.2
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
SHORT-TERM SUPPLY AGREEMENT
THIS SHORT-TERM SUPPLY AGREEMENT (the "Short-Term Supply Agreement") is
made effective as of the 23rd day of February, 2005 ("Effective Date"), by and
between Mayo Foundation for Medical Education and Research, a nonprofit
foundation having its principal place of business at Xxxxxxxxx, Xxxxxxxxx 00000
("Supplier"), and MicroIslet, Inc., a Nevada corporation, having its principal
place of business at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx
00000 ("Buyer").
RECITALS
--------
A. Buyer researches, develops, and commercializes certain technologies
in the field of xenotransplantation, specifically the use of porcine islets for
the treatment of diabetes.
B. Supplier desires to sell to Buyer, and Buyer desires to purchase
from Supplier, certain non-transgenic pigs in Supplier's barrier facility
located at 0000 00xx Xxxxxx, X.X., Xxxxxxxxx, Xxxxxxxxx (the "Facility") solely
for Buyer's use in its diabetes research, not involving humans, such use to
include provision of such pigs to third parties under contract with Buyer solely
in connection with such research (the "Permitted Use"); and
C. Supplier desires to cover the costs of operating the Facility.
NOW, THEREFORE, in consideration of the foregoing and the covenants
contained herein, the parties agree as follows:
ARTICLE 1. PURCHASE AND SUPPLY OF PIG; TERMS
1.1 PIGS Subject to Section 1.2, Supplier shall breed, grow
and provide to Buyer without further cost (beyond fees and expenses due
pursuant to Sections 1.3 and 1.4) the number of non-transgenic,
"Designated Pathogen Free" (as specified in more detail in Exhibit A)
pigs (or pancreases or islets, if mutually agreed upon) requested by
Buyer from the Facility (collectively, "Pigs", which definition shall
include any derivative or component thereof), not to exceed [***] pigs
of approximately [***] (or pancreases or islets, if mutually agreed
upon) for each month of the initial term of this Short-Term Supply
Agreement and make the Pigs available to Buyer, on the terms in this
Short-Term Supply Agreement. For all purposes under this Short-Term
Supply Agreement, the term "month" shall mean the period from the 15th
day of one calendar month through the 14th day of the following
calendar month. The first month under this agreement is the period
February 15, 2005 to March 14, 2005, the second month is the period
March 15, 2005 to April 14, 2005, and so on. If mutually agreed upon in
writing, the number of [***] Pigs per month could also consist of an
appropriate number of pigs of different weight that utilize the same
time and space requirements necessary to produce [***] pigs of [***] .
Buyer shall use the Pigs solely for the Permitted Use and will be
responsible for complying with all Laws applicable to and relating to
Buyer's Permitted Use. As used in this Short-Term Supply Agreement, the
term "Laws" means all applicable U.S. laws, regulations, rules,
ordinances and requirements, including without limitation the United
-1-
States Food, Drug, and Cosmetic Act, the Occupational Safety and Health
Act, the Fair Labor Standards Act and all regulations and orders issued
thereunder, and all applicable Federal Food and Drug Administration
("FDA") and other applicable regulatory authorities' standards. Neither
Supplier nor any party to which Supplier provides Pigs for the
Permitted Use shall use the Pigs in humans or for human research.
1.2 PRODUCTION AMOUNTS. Buyer, on the date of this Short-Term
Supply Agreement, and on the 15th day of each month thereafter, shall
provide Supplier a good-faith two month rolling forecast for the number
of requested Pigs. Given the need to ramp up for production, Suppliers'
supply obligation hereunder shall constitute only [***] Pigs during the
first month of this Short-Term Supply Agreement, [***] Pigs for the
second month, and [***] Pigs for the third month. Thereafter during the
term of this Short-Term Supply Agreement and any extension thereof,
orders may be made for a one-month supply of Pigs, on a monthly basis,
not to exceed [***] Pigs per month.
1.3 FEES AND EXPENSES. Regardless of the number of Pigs
ordered during each month of this Short-Term Supply Agreement, Buyer
shall pay Supplier a monthly fee of [***] for each month of the initial
term and [***] for each month of any renewal term of this Short-Term
Supply Agreement (the "Monthly Fee"). In addition to the monthly fee
provided for herein, Buyer shall pay Supplier's expenses of harvesting
the pancreases, if the parties agree that Supplier shall harvest and
supply pancreases, the preparation and packaging of the pancreases for
shipping, the shipping and insurance costs and all applicable taxes and
other governmental charges. Similarly, Buyer shall pay Supplier's
expenses associated with the isolation and shipping of islets if the
parties agree that Supplier shall harvest and supply islets. Supplier's
expenses shall consist of Supplier's actual costs, plus overhead
determined in accordance with Supplier's standard overhead policies.
Buyer shall have the right to audit such expense amounts. The Monthly
Fee will be subject to reduction in an amount negotiated in good faith
by the parties in the event that Supplier elects to sell pigs from the
Facility to a purchaser other than Buyer; provided that no such
reduction shall occur with respect to Supplier's provision or sale of
up to [***] transgenic pigs to third parties from the Facility during
any 12 month period for use outside the Field (as defined in Section
8.1). Notwithstanding the foregoing, nothing herein shall prevent
Supplier from using any quantity of transgenic pigs for its internal
research purposes outside the Field.
1.4 PAYMENT TERMS. The Monthly Fee shall be due on or before
the 15th of each month, with the first payment due on the date of last
signature on this Short-Term Supply Agreement. Supplier shall submit
invoices for the additional fees and expenses due pursuant to Section
1.3, and Buyer shall pay such invoices in full within 30 days after the
receipt of the applicable invoice.
ARTICLE 2. SPECIFICATIONS; QUALITY ASSURANCE; INSPECTIONS
2.1 SPECIFICATIONS.
-2-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
A. All Pigs supplied by Supplier shall:
(i) meet all requirements, standards and
specifications in Exhibit A as applies to Supplier (the
"Specifications");
(ii) be labeled as indicated by Supplier;
(iii) be free and clear of all liens and encumbrances
or other defects in title; and
(iv) be produced and supplied in compliance with all
Laws.
(collectively, the "QA Standards").
B. Supplier shall maintain ongoing quality assurance and testing
procedures as set forth in Exhibit A.
2.2 SHIPPING. Supplier shall: (a) ship all Pigs to Buyer
according to Buyer's shipping instructions, FOB delivered freight
collect, with title to the Pigs and risk of loss and damage passing to
Buyer upon delivery of the Pigs to the carrier specified by Buyer; and
(b) pack all Pigs suitably for shipment according to common carriers'
requirements. It shall be Buyer's duty to insure the Pigs in transit.
2.3 INSPECTION OF PIGS. Buyer shall inspect each Pig within 2
days after its receipt and immediately advise Supplier if any such Pig
does not conform to the QA Standards. If Supplier agrees that any such
Pig does not conform to the QA Standards, the Buyer shall, at
Supplier's expense and option, either destroy or have destroyed such
Pig or return it to Supplier, and Supplier shall replace it with
another Pig free of any charge or expense to Buyer, including any costs
or expenses for redelivery.
2.4 DOCUMENTATION AND INSPECTIONS. Subject to the provisions
of Article 3 of this Short-Term Supply Agreement, and further subject
to Supplier's security, health and safety and other policies and
procedures with respect to the Facility, Supplier shall make available
to Buyer, as may be reasonably requested by Buyer, the Specifications
and related documents directly related to the Pigs and Supplier's
compliance with QA Standards. Subject to the provisions of Article 3 of
this Short-Term Supply Agreement, Buyer shall have the right with
advance written notice and at times agreed to by Supplier, such
agreement not to be unreasonably withheld, during regular business
hours, to enter upon Facility and to (a) make inspections reasonably
necessary to properly ascertain compliance with the QA Standards and
this Short-Term Supply Agreement, and (b) harvest or train Supplier
personnel to harvest Pig pancreases or islets.
2.5 REQUIRED NOTIFICATION. Supplier shall immediately give
Buyer notice, by telecopy, with confirming notice by U.S. mail, if
Supplier becomes aware of any defect or condition which in any way does
not conform to the Specifications or quality of any Pigs supplied by
Supplier or which may render any such Pig ineffective, dangerous and/or
in material violation of the QA Standards.
-3-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
2.6 TRACING. Supplier shall: (a) trace and maintain records
regarding the source and, if applicable, lot number of each Pig; and
(b) maintain such records for not less than 3 years after the
termination or expiration of this Short-Term Supply Agreement.
ARTICLE 3. CONFIDENTIALITY; RIGHTS TO INVENTIONS, ETC.
3.1 CONFIDENTIAL INFORMATION.
A. "Confidential Information" shall mean all information disclosed by
or on behalf of one party or its Affiliated Entities to the other, including
without limitation information relating to the matters which are the subject of
this Short-Term Supply Agreement, the terms and the nature of this Short-Term
Supply Agreement, and all other information regarding a party's research,
technology, know-how, ideas, concepts, and the like, including information
developed in connection with this Short-Term Supply Agreement. Confidential
Information shall not include information which: (i) is at the time of
disclosure, or thereafter becomes, a part of the public domain through no
wrongful act or omission by the receiving party; (ii) is lawfully in the
possession of receiving party prior to disclosure by or on behalf of the
disclosing party as shown by written records; (iii) is lawfully disclosed to
receiving party by a third party which did not acquire the same under an
obligation of confidentiality from or through the disclosing party; or (iv) is
independently developed by receiving party without use of Supplier Confidential
Information as shown by written records. Further, if the Receiving Party is
compelled by law to disclose Confidential Information of the Disclosing Party,
it shall provide the Disclosing Party with prior notice of such compelled
disclosure (to the extent legally permitted) and reasonable assistance, at
Disclosing Party's cost, if the Disclosing Party wishes to contest the
disclosure. The foregoing restrictions shall not prohibit either party from
summarizing the terms of this Short-Term Supply Agreement, or from filing this
Short-Term Supply Agreement as an exhibit, in documents such party is required
to file with any government agency, including the Securities and Exchange
Commission; provided that such disclosure shall be only to the extent required
to comply with Laws, and further provided that the party proposing to make such
disclosure shall provide a copy of the proposed disclosure to the other party in
advance of such disclosure, and shall consider the input of such other party
concerning such disclosure, including any requests that portions of such
material be the subject of a proper request for confidential treatment.
B. A party receiving Confidential Information shall, for a period of 3
years after expiration or termination of this Short-Term Supply Agreement, as
may be extended by the Long-Term Supply Agreement, if such agreement is executed
between the parties: (y) limit dissemination of Confidential Information to only
those employees having a "need to know"; and (z) advise each such employee who
receives Supplier Confidential Information that such information is confidential
and require each such employee to comply with all obligations of confidentiality
and non-disclosure. Receiving party shall not: (i) disclose Confidential
Information to any person or entity, other than to its employees on a "need to
-4-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
know" basis only; or (ii) use such information in its own research, development,
commercialization, marketing or sale of products or services or for any other
purpose. A party shall not, by virtue of either this Short-Term Supply Agreement
or its receipt of Pigs, obtain any title to, or any interest or license in, any
of the other party's Confidential Information.
C. Nothing herein shall prevent Supplier from using information
received from Buyer internally for the purpose of supporting Supplier's other
supply or xenotransplantation activities. Buyer shall keep confidential and not
use for any purpose any information obtained that relates to the design and
operation of the Supplier's barrier facility. These obligations for non-use and
non-disclosure will survive any termination or expiration of this Short-Term
Supply Agreement and will not be subject to the 3 year limitation above.
D. Except as may expressly be set forth herein, this Short-Term Supply
Agreement does not grant any rights, by implication, estoppel or otherwise, by a
party under any patents, know-how, copyrights or proprietary information of such
party to the other. All such rights are expressly reserved. Nothing herein shall
grant a right to the a party's logos, names, trade names, service names or
trademarks.
E. Neither party will use publicly for publicity, promotion, or the
like, any employee name, logo, name, trade name, service xxxx, or trademark of
the other, without such party's prior, written, express consent.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
4.1 OF SUPPLIER RELATING TO PIGS. Supplier represents and
warrants that all Pigs that are delivered to Buyer hereunder shall
conform in all respects to and be in accordance with the QA Standards
and Supplier's quality assurance policies and procedures; and that the
current maximum Pig production capacity of the Facility is
approximately [***] Pigs per month (subject to the ramp-up
considerations as set forth in Section 1.2).
The foregoing representations and warranties shall not survive
inspection of the applicable Pigs by Buyer pursuant to Section 2.3 and
shall be for the benefit of Buyer only and not for the benefit of any
other person or entity.
SUPPLIER'S ENTIRE LIABILITY AND BUYER'S SOLE REMEDY FOR ANY
DEFECTIVE PIGS SHALL BE THE REPLACEMENT OF SUCH PIG BY SUPPLIER.
4.2 LIMITED WARRANTY. THE WARRANTY SET FORTH ABOVE IS IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED OR STATUTORY, WHICH ARE
HEREBY DISCLAIMED AND EXCLUDED BY BUYER, INCLUDING WITHOUT LIMITATION
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
USE AND ALL OBLIGATIONS OR LIABILITIES ON THE PART OF SUPPLIER FOR
-5-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE PIGS OTHER USE BY
BUYER. IN NO EVENT SHALL SUPPLIER LIABILITY UNDER ANY THEORY OR CLAIM
EXCEED THE AMOUNT OF FEES PAID BY BUYER UNDER THIS SHORT-TERM SUPPLY
AGREEMENT. Buyer will undertake all necessary and appropriate actions
permitted or required by Laws to ensure that Buyer's provision of Pigs
to any third party does not increase the scope of Supplier's
responsibility and warranty as set forth above. Supplier's limits of
responsibility as set forth above are valid and enforceable against
whomever they are applicable.
4.3 OTHER REPRESENTATIONS AND WARRANTIES. Each of the parties
hereby represents and warrants to the other that: (a) it has full power
and authority required to enter into, execute and deliver this
Short-Term Supply Agreement, to carry out its obligations hereunder,
and to perform the transactions contemplated hereby; (b) this
Short-Term Supply Agreement has been duly executed and delivered by, is
the valid and binding obligation of and is enforceable against, such
party in accordance with its terms; (c) the execution and delivery of
and performance under this Short-Term Supply Agreement by such party
does not, and will not, conflict with or violate any other agreement or
obligations with third parties or any restrictions of any kind or any
Law to which it is bound or subject; and (d) it has the unrestricted
right to disclose any information it submits to the other party, free
of all claims of third parties, and that such disclosures do not breach
or conflict with any confidentiality provisions of any agreement to
which it is a party.
ARTICLE 5. LIMITATIONS OF REMEDIES
5.1 DELAY. SUPPLIER SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE
CAUSED BY DELAY IN FURNISHING PIGS, OR ANY OTHER PERFORMANCE UNDER OR
PURSUANT TO THIS SHORT-TERM SUPPLY AGREEMENT.
5.2 SOLE REMEDIES. THE SOLE AND EXCLUSIVE REMEDIES FOR BREACH
OF ANY AND ALL WARRANTIES AND THE SOLE REMEDIES FOR BUYER OF ANY KIND
WITH RESPECT TO THE PIGS COVERED BY THIS SHORT-TERM SUPPLY AGREEMENT
AND ALL OTHER PERFORMANCE BY BUYER UNDER OR PURSUANT TO THIS SHORT-TERM
SUPPLY AGREEMENT SHALL BE LIMITED TO THE REMEDIES PROVIDED IN SECTION 4
OF THIS SHORT-TERM SUPPLY AGREEMENT.
5.3 CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY'S
LIABILITY OF ANY KIND INCLUDE ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL LOSSES OR DAMAGES, EVEN IF SUPPLIER SHALL HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE. THIS
PROVISION SHALL NOT APPLY TO BUYER'S OBLIGATION TO INDEMNIFY THE
SUPPLIER HEREUNDER.
-6-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
ARTICLE 6. INDEMNIFICATION; INSURANCE
6.1 INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend
and hold harmless Supplier and its Affiliated Entities, and Supplier's
and such entities' respective officers, directors, agents, consultants,
insurers, employees, and shareholders, from and against all
liabilities, claims, suits, damages, losses, causes of action, and
expenses (including but not limited to: (y) attorneys' fees and other
costs associated with the handling or defense of any such liabilities,
claims, suits, damages, losses, and causes of action; and (z) all costs
and administrative fees associated with any recall of any items
supplied by Supplier) (each a "Liability") that are caused by or based
upon any Liability relating to any of the Pigs or any use (excluding
Supplier's use of pigs outside of this Short-Term Supply Agreement),
including any research, development or product which in any way relates
to or arises out of the Pigs provided by Supplier whether such
Liability is stated as a product liability claim, a strict liability
claim, a negligence claim, a contract, a tort claim or any other claim.
6.2 INSURANCE. Buyer shall: (a) at its sole cost and expense,
purchase and maintain in full force and effect, during the term of this
Short-Term Supply Agreement and for a period sufficient to cover its
obligations hereunder, commercial general liability insurance, in
amounts not less than $500,000 per occurrence and $1 million in the
aggregate, which name Supplier and its Affiliated Entities, and
Supplier's and such entities' respective officers, directors, agents,
consultants, insurers, employees, shareholders, as additional insureds
on such policies; and (b) upon request from Supplier from time to time,
provide Supplier with certificates of insurance from reputable insurers
approved by Supplier showing compliance with the foregoing provisions.
ARTICLE 7. TERM AND TERMINATION
7.1 TERM. Subject to Section 7.2, the initial term of this
Short-Term Supply Agreement shall be 6 months, commencing as of the
Effective Date and ending 6 months thereafter; provided, however, that
any orders for Pigs placed by Buyer and accepted by Supplier prior to
termination or expiration of this Short-Term Supply Agreement shall be
subject to the terms of this Short-Term Supply Agreement. At Buyer's
option, this Short-Term Supply Agreement may be renewed for one
additional three month term by Buyer giving written notice to Supplier
which such notice must be received by Supplier at least 30 days prior
to the expiration of the initial term. The monthly fee during such
renewal term shall be [***] per month and all other terms of this
Short-Term Supply Agreement shall be applicable during the renewed
term.
7.2 EARLY TERMINATION.
A. Notwithstanding Section 7.1, either party shall have the right to
terminate this Short-Term Supply Agreement without liability therefor, after
written notice to the other, if the other party: (i) materially breaches any of
its obligations under this Short-Term Supply Agreement and fails to cure such
breach within 10 days after receiving written notice from the non-breaching
-7-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
party; or (ii) becomes the subject of voluntary or involuntary bankruptcy,
reorganization, receivership, or insolvency proceedings that are not dismissed
within 60 days after commencement thereof. If the parties do not agree to the
terms of a Long-Term Supply Agreement (as set forth in Section 8.2) on or before
March 16, 2005, then Buyer may terminate this Short-Term Supply Agreement
without cause at any time upon at least 30 days prior written notice to
Supplier. After such date, if the parties enter into a Long-Term Supply
Agreement, Buyer may not terminate this Agreement without cause, except as set
forth in Section 8.2 below.
B. Buyer shall thereafter have no liability to Supplier hereunder
except for any payments accrued and owing to Supplier as of such date.
C. Notwithstanding Section 7.1, Supplier shall have the right to
terminate this Short-Term Supply Agreement immediately upon written notice to
Buyer if any breach by Buyer hereunder does or may negatively impact the
Supplier's reputation or the safety of any persons.
D. FORCE MAJEURE. Neither party shall be in default in the performance
of its obligations under this Short-Term Supply Agreement if such performance is
prevented or delayed because of war or similar unrest, labor dispute or strike,
transportation difficulties, unavailability of necessary raw materials,
epidemic, fire, natural disaster, any Law of any governmental or other
authority, acts of God, or other similar cause, that is beyond the control of
and which could not have reasonably been prevented by the party whose
performance is affected; provided, however, that if such delay continues for 60
days or more, then either party may upon written notice cancel all or any
portion of unfilled Orders and terminate this Short-Term Supply Agreement.
7.3 SURVIVAL. In any event, all obligations which are by their
nature continuing, including without limitation the obligations
contained in Sections 1.4, 2.4 for a period of one year thereafter,
2.5, 2.6, Article 3, Article 4, Article 5, Article 6, Section 7.3 and
Article 9 shall survive the expiration and/or termination of this
Short-Term Supply Agreement.
ARTICLE 8.
8.1 EXCLUSIVITY. During the term of this Short-Term Supply
Agreement, Supplier shall not supply, or negotiate with any third party
for the supply of, Pigs for research related to, or use with respect
to, the treatment of diabetes (the "Field"). Supplier is free to
negotiate with or supply to parties outside of the Field.
8.2 LONG-TERM SUPPLY AGREEMENT. The parties will work in good
faith to negotiate, on or before March 16, 2005, the terms of a
long-term supply agreement containing the terms set forth in Exhibit B
hereto (the "Long-Term Supply Agreement"). Upon final agreement of such
terms, the Long-Term Supply Agreement shall be added as Exhibit C
hereto. Buyer shall thereafter have the right, but not the obligation,
at any time during the term of this Short-Term Supply Agreement to
cause Supplier to enter into the Long-Term Supply Agreement with Buyer,
-8-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
by giving written notice of Buyer's election to Supplier, which shall
be effective immediately upon Buyer's receipt. If the parties fail to
reach mutual agreement regarding such Long-Term Supply Agreement,
despite such good faith efforts, neither party shall have any liability
to the other party related to such Long-Term Supply Agreement.
ARTICLE 9. MISCELLANEOUS
9.1 INDEPENDENT CONTRACTORS. The parties are independent
contractors and nothing contained in this Short-Term Supply Agreement
shall be deemed to create the relationship of employment, partnership,
joint venture or any association or relationship between the parties
other than that of buyer and supplier. Neither party has the authority
to bind the other without express written authorization of such other
party.
9.2 ENTIRE AGREEMENT; AMENDMENTS. The terms of this Short-Term
Supply Agreement, shall constitute the entire agreement between the
parties as to the subject matter of this Short-Term Supply Agreement,
and the provisions of this Short-Term Supply Agreement shall supersede
all prior oral and written commitments, contracts, and understandings
relating to the subject matter of this Short-Term Supply Agreement. All
exhibits attached to this Short-Term Supply Agreement, and the
Specifications and other documentation referenced herein, are hereby
incorporated by reference in this Short-Term Supply Agreement and made
a part hereof. Notwithstanding anything to the contrary in this
Short-Term Supply Agreement, any information disclosed prior to the
Effective Date shall be governed by this Short-Term Supply Agreement.
This Short-Term Supply Agreement may be amended only by a writing
signed by both parties. This Short-Term Supply Agreement is intended to
be solely for the benefit of the parties and Supplier's Affiliated
Entities and no other person or entity.
9.3 ASSIGNMENT; SUBCONTRACTING. Neither party shall assign
this Short-Term Supply Agreement, whether voluntarily or involuntarily,
without the express written consent of the other party, except that
either party may assign some or all of its rights and obligations under
this Short-Term Supply Agreement to any of its Affiliated Entities;
without the other party's consent and Supplier may assign this
Short-Term Supply Agreement, without Buyer's prior written consent, to
a purchaser of all or substantially all of Supplier's assets related to
the Facility who assumes Supplier's obligations under this Short-Term
Supply Agreement, including the obligations set forth in Section 8.2;
provided, however, that Supplier may not assign this Short-Term Supply
Agreement to a company engaged in the development of islet-based
therapeutics for the treatment of diabetes, without Buyer's prior
written consent. Supplier may also assign this Short-Term Supply
Agreement, without Buyer's prior written consent, to a lessee of the
Facility who assumes Supplier's obligations under this Short-Term
Supply Agreement, including the obligations set forth in Section 8.2;
provided, however, that Supplier may not assign this Short-Term Supply
Agreement to a lessee engaged in the development of islet-based
therapeutics for the treatment of diabetes, without Buyer's prior
written consent. For purposes of this Short-Term Supply Agreement,
-9-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
"Affiliated Entities" shall mean, with respect to a party, an entity
that, as of the Effective Date owns or controls, is owned or controlled
by, or is under common ownership or control with, the party. This
Short-Term Supply Agreement shall be binding on the permitted
successors and assigns, and shall inure to the benefit of the permitted
successors and assigns of the parties.
9.4 GOVERNING LAW; SEVERABILITY; WAIVER; REMEDIES;
ARBITRATION. The laws of the State of Minnesota , without reference to
its principles of conflicts of laws, shall govern this Short-Term
Supply Agreement and its interpretation and construction. If any
provision of this Short-Term Supply Agreement is determined to be
unenforceable or prohibited by applicable law, such provision shall be
ineffective only to the extent of such unenforceability or prohibition
without invalidating the remainder of such provision or the remaining
provisions of this Short-Term Supply Agreement. The waiver of a breach
of any provision of this Short-Term Supply Agreement shall not be
deemed a waiver of any other breach of the same or different provision
of this Short-Term Supply Agreement. Any dispute or claim arising out
of or relating to this Short-Term Supply Agreement or the validity,
interpretation, enforceability or breach thereof, other than under
Article 3, which is not settled by agreement between the parties will
be settled by binding arbitration in Minneapolis, Minnesota in
accordance with the rules of the American Arbitration Association then
in effect, and judgment upon any award rendered in such arbitration
(including the award by the arbitrators of attorneys fees of the
prevailing party) may be entered in any court having competent
jurisdiction.
9.5 COMPLIANCE WITH LAWS. During the term of this Short-Term
Supply Agreement, each of the parties shall comply with all Laws in any
way relating to this Short-Term Supply Agreement or the performance of
such party's obligations hereunder.
-10-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
9.6 NOTICES. Notification required or permitted hereby shall
be deemed given only upon: (a) transmission by telecopier, transmission
confirmed at the fax number indicated below; (b) enclosure thereof in
an adequately post-paid envelope, sent certified mail - return receipt
requested, delivered to a U.S. Post Office; or (c) sent via a
nationally-recognized, overnight delivery service that guarantees
overnight delivery; and addressed to the party to be given notification
at the address/fax number given below or such change of address/fax
number as may be hereafter supplied in writing.
If to Supplier: If to Buyer:
Mayo Foundation for Medical Education and Research MicroIslet, Inc.
000 Xxxxx Xxxxxx XX 0000 Xxxxx Xxxxx Xxxxx, Xxx 000
Xxxxxxxxx, XX 00000 Xxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx Attn: Chief Financial Officer
(000) 000-0000 Fax: (000) 000-0000
with a copy to:
Mayo Legal Department
000 Xxxxx Xxxxxx XX
Xxxxxxxxx, XX 00000
Attn: General Counsel
Fax (000) 000-0000
IN WITNESS WHEREOF, the parties have executed this Short-Term Supply
Agreement as of the Effective Date.
Supplier: Buyer:
Mayo Foundation for Medical Education MicroIslet, Inc.
and Research
By ____ /s/ Xxxx X. Xxxxxx __________ By _____/s/ H. Hartounian___________
Print Name __Rick F. Colvin__________ Print Name ___H. Hartounian_________
Title ____Assistant Treasurer________ Title ___President__________________
EXHIBIT INDEX: A. COMPONENTS, SPECIFICATIONS AND PRICES
B. TERM OF LONG-TERM SUPPLY AGREEMENT
C. LONG-TERM SUPPLY AGREEMENT
-11-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
EXHIBIT A
---------
THE PIG SPECIFICATIONS
Confidential--Trade Secret
Under Discussion--see below for basis of discussion:
Health Monitoring and Proposed Release Criteria for Pigs from the Mayo
Developmental Project Support Facility (MDPSF).
PURPOSE: To summarize the current program for infectious disease monitoring and
control at the Mayo Developmental Project Support Facility (MDPSF) and it's
relationship to Release Criteria of source swine for xenotransplantation
clinical studies. It is the goal of the facility health monitoring and
maintenance program to prevent and promptly identify designated pathogens that
might infect swine housed within the barrier portion of MDPSF. The ongoing
program consisting of; preventive procedures, daily health surveillance, weekly
veterinary rounds, and a monthly sentinel and serologic monitoring program,
ensures the health of the animals. Release criteria for animals for
xenotransplantation clinical studies would in part incorporate this program and
would form the basis for the release of pigs to MicroIslet. Additionally,
further quarantine and testing of source animals (donor swine), and final
product safety testing of organs, tissues, or cells would be required and would
be established by MicroIslet. The scope and degree of testing beyond the routine
herd health screening is dependent upon the ability to perform infectious
disease assays on the organ, tissue, or cell product and also the compliance
with xenotransplantation guidelines (1,2).
A. SUMMARY OF MDPSF BARRIER PROCEDURES. The most critical
aspect of maintaining animal health within the MDPSF is to maintain the
integrity of the barrier and ensure that all personnel follow all
written procedures. The physical plant design, operation, and
monitoring systems are the initial layer of biosecurity for animal
health. The building integrity and systems are computer monitored and
maintained by Mayo personnel. Entrance to animal barrier is restricted
to assigned Mayo personnel and to individuals directly involved with
the MDPSF. All personnel and visitors must adhere to the policy of
having no outside swine contact for a minimum of [***] hours.
Additional procedures are in place regarding contact with other
species. MDPSF is a shower-in/out unit, and the clothing and equipment
are dedicated to the space. All materials entering the barrier portion
must undergo specified decontamination procedures prior to entry.
Protective clothing is worn within the animal housing area. At a
minimum, [***] are required when entering the barrier portion of the
facility. All personnel undergo [***] and are restricted from any [***]
outside of the facility. If personnel are [***] they are required to
call [***] to [***] and determine if the employee is [***]. Any
employee determined by the clinic to be [***] is not allowed into the
barrier and in most cases is asked not to report to work until it can
be determined that the employee is [***] to the animals housed within
MDPSF.
CURRENT HERD HEALTH MONITORING. The health program at MDPSF is designed to
maintain the animals free of designated swine pathogens. The program involves
elements of physical plant design, written operating procedures, daily physical
monitoring of the animals, and extensive diagnostic monitoring of sentinel
-1-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
animals on a monthly basis. All illness, medical care, procedures, drugs, exams,
and treatments are recorded in the animal records. Additional diagnostic testing
is performed at the discretion of the attending veterinarian.
ROUTINE HERD MONITORING. Each animal is observed by Mayo animal care personnel
at least once daily for clinical signs of illness or changes in attitude or
behavior. Animals are checked daily for the following conditions.
[***]
Any condition is recorded in the [***]. The staff veterinarian is notified of
all health concerns. In addition, the attending staff veterinarian makes rounds
on a weekly basis to observe all animals. A call system is in place at Mayo for
primary and back-up veterinarians to be on call during the weekends and holidays
for any animal emergency.
MONTHLY SENTINEL MONITORING. Diagnostic monitoring has been performed on
sentinel animals at a minimum monthly schedule since [***]. Sentinel animals are
utilized, and undergo extensive pathology, and laboratory testing. All
laboratory analysis is performed by the [***]. The [***] veterinary diagnostic
laboratory employing board certified veterinary pathologists and experts in
veterinary infectious diseases. The [***] is accredited by the American
Association of Veterinary Diagnosticians as a full service diagnostic laboratory
for all animal species. Most assays performed for the MDPSF sentinel monitoring
are routinely done at [***]. In some cases assays are referred to the [***]. For
each case, tissues, cells, and fluids are archived at MDPSF so that diagnostic
testing may be repeated for any given sentinel.
For each sentinel animal, [***] includes examination of all [***] and [***] is
performed on [***]. [***] are also collected including; [***] is collected for
[***]. Additionally, [***] are collected. [***] are subjected to a variety of
[***] including; [***]. Routine [***] are performed on [***] specifically
targeting [***] including [***]. [***] undergo [***] screening for [***]. [***]
test is performed on [***] is performed for [***]. [***] testing is performed on
[***]. [***] is performed on [***]. A summary of [***] tested and [***] are
listed in Table 1.
-2-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
TABLE 1: CURRENT STATUS AND TESTING OF DESIGNATED SWINE PATHOGENS AT MDPSF.
------------------------------- -------------------------------------------------------- ---------------------
AGENT PRIMARY DIAGNOSTIC TESTS CURRENT STATUS
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, histopathology, bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] PCR, Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] PCR, histopathology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] IFA Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] PCR, histopathology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, virus isolation Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, virus isolation Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] IFA Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology/virus isolation Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, virus isolation, histopathology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] IHC/PCR Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, PCR, Virus isolation, IHC Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Fecal float/Blood smear Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology, virus isolation Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Serology Negative
------------------------------- -------------------------------------------------------- ---------------------
[***] Bacteriology/culture Negative
------------------------------- -------------------------------------------------------- ---------------------
Agents which have [***] on routine screening include;[***].
-3-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
RELEASE CRITERIA SUMMARY FOR SOURCE ANIMAL QUALIFICATION. In addition to the
routine monitoring described above MicroIslet would likely have to establish
additional testing protocols. It is likely that individual animals released for
clinical xenotransplantation would require the following minimum guidelines.
These guidelines will be in compliance of established guidelines for
xenotransplantation (1,2).
1) Herd screening/sentinel testing negative for designated
pathogens.
2) Compliance with MDPSF standard operating procedures.
3) Quarantine period for donor swine prior to harvest of tissues
(3 weeks recommended).
4) During the quarantine period, health monitoring of the source
animal and diagnostic assays for designated infectious agents
will be performed. The list of such agents will be dependent
upon testing performed on the donor organs, cells, or tissues.
At a minimum, animals will need to undergo veterinary
examination, a complete blood count, peripheral blood smear,
and fecal exam for parasites.
5) At the time of tissue collection all source animals must
undergo a veterinary physical exam on the day of harvest
procedure. During, or upon immediate completion of the harvest
procedure, the donor animal must undergo a gross pathology
exam prior to release of the tissues by a veterinarian. Any
gross pathologic lesions suggestive of infectious
complications would result in a "hold" upon the donor organ,
tissues, or cells.
6) Samples or biopsies of all donor organs and tissues will be
further subjected to pathology and infectious disease testing.
Samples of donor organs, blood, cells, and tissues will be
archived in compliance with the guidelines for
xenotransplantation (1,2).
ARTICLE 10. REFERENCES
1) PHS Guideline on Infectious Disease Issues in Xenotransplantation.
xxxx://xxx.xxx.xxx/xxxx/xxxxxxxxxx.xxx. January 29, 2001 (66 FR 8120).
2) PHS Guidance for Industry, Source Animal, Product, Preclinical, and Clinical
Issues Concerning the Use of Xenotransplantation Products in Humans.
XXXX://XXX.XXX.XXX/XXXX/XXXXX/XXXXXXXX.XXX. April 2003
-4-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
EXHIBIT B
---------
Terms of Long Term Supply Agreement
1. the provision of a maximum of [***] Pigs per month (or an appropriate
number of Pigs of different weight that utilize the same time and space
requirements necessary to produce [***] Pigs), based on Buyer's rolling
forecasts, for a term of 3 years beyond for a monthly free of [***] and
a reasonable inflationary increase;
2. permission to use the Pigs for xenotransplantation in humans;
3. right of Buyer to have its own quality assurance personnel inspect the
Facility;
4. the ability to extend such term for an additional 2 years and an
additional 2 years (for a total of 7 years) in the event Buyer is
conducting clinical trials;
5. the option for Buyer to purchase or lease the Facility in the event
Supplier decides to close the Facility or decides to stop producing
Pigs;
6. the following warrants to purchase Buyer's common stock upon reaching
the agreed upon milestones: warrants to purchase 75,000 shares to be
granted upon IND approval; warrants to purchase 75,000 shares to be
granted upon approval to start Phase II; warrants to purchase 75,000
shares to be granted upon approval to start Phase III; and warrants to
purchase 75,000 shares to be granted upon NDA/BLA approval;
7. mutually agreeable provisions designed to protect the continuous supply
of Pigs to Buyer under the Long-Term Supply Agreement;
8. if requested by Buyer, the parties shall negotiate in good faith
regarding the amendment of the Specifications (e.g., for any additional
testing required by any Laws); and
9. all other terms of the Short-Term Supply Agreement not in conflict with
the provisions of this Exhibit B.
-1-
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
EXHIBIT C
---------
Long Term Supply Agreement
[TO COME. SEE SECTION 8.2]
-1-
