Supply Agreement


This AGREEMENT (the "Agreement") dated as of JUNE 12, 2007 (the "Effective Date") between Diagnostic Chemicals Limited, doing business as, BioVectra, a Prince Edward Island, Canada corporation, having its principal place of business at 16 McCarville Street, Charlottetown, PE C1E 2A6, Canada (hereinafter referred to as "BioVectra") and SyntheMed, Inc., a Delaware corporation, with an address at 200 Middlesex Essex Turnpike, Suite 210, Iselin, NJ 08830 (hereinafter referred to as "SyntheMed").

WHEREAS, BIOVECTRA is a company engaged in, among other things, synthesis of polymers for use in a wide variety of applications including medical applications;

WHEREAS, SyntheMed is engaged in the development and commercialization of products designed to prevent or reduce the formation of adhesions following a broad range of surgical procedures, all of which are based on SyntheMed’s proprietary, bioresorbable polymer technology.

WHEREAS, SyntheMed’s lead product, REPEL-CV, is classified as a medical device by the US Food and Drug Administration and is currently under review by the FDA.

WHEREAS, BIOVECTRA has demonstrated its ability and capacity to produce polymer raw material in accordance with SyntheMed’s specifications for use in REPEL-CV;

WHEREAS, SyntheMed desires BIOVECTRA to manufacture, supply and sell to SyntheMed polymer raw material for further processing and incorporation into SyntheMed’s REPEL-CV finished product, for sale by SyntheMed to its customers, and BIOVECTRA desires to manufacture, supply and sell to SyntheMed such polymer raw material, all on the terms and conditions set forth herein.

 NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements provided herein, the parties hereto, intending to be legally bound hereby, agree as follows:

1.1. "Act" shall mean the Federal Food, Drug and Cosmetic Act.

1.2. "Approval(s)" shall mean receipt from the FDA or other applicable Regulatory Authority of final approval, including any applicable pricing, final labeling or reimbursement approvals, necessary to manufacture Product.

1.3. "BIOVECTRA Indemnified Party" shall have the meaning set forth in Section 14.2.

1.4. "Claim(s)" shall mean all charges, complaints, actions, suits, proceedings, hearings, investigations, claims and demands.

1.5. "Commercial Product" shall mean SyntheMed’s finished product known as REPEL-CV.

1.6. "Confidential Information" shall mean all oral or written information that is disclosed by either party (the "Disclosing Party") to the other party (the "Receiving Party"), or that the



Receiving Party becomes aware of as a result of its discussions and work with the Disclosing Party, and that is not generally known to the public, including but not limited to, information of a technical nature such as trade secrets; manufacturing processes or devices or know-how; techniques, data, formulas, inventions, discoveries or innovations (whether or not patentable), specifications and characteristics of current products or products under development; research projects, methods and results; matters of a business nature such as information about costs, margins, pricing policies, markets, sales, suppliers and customers; product, marketing or strategic plans; financial information; personnel records and other information of a similar nature, provided, however, that Confidential Information shall not include any information that (i) is or becomes public knowledge without breach of the Receiving Party's obligations hereunder; (ii) is rightfully acquired by the Receiving Party from a third party that legally acquired the information and is not under a confidentiality restriction on disclosure or use; (iii) was already known to the Receiving Party prior to receipt from the Disclosing Party as evidenced by written and dated records; (iv) is independently developed by the Receiving Party;(v) is required to be disclosed by law or court order, provided that notice of the requirement is promptly delivered to the Disclosing Party in order to provide the Disclosing Party with an opportunity to challenge or limit the disclosure obligations; or (vi) is disclosed or used following the Receiving Party's receipt of express written consent from an authorized representative of the Disclosing Party. The Receiving Party shall have the burden of proof respecting any of the aforementioned events on which the Receiving Party relies as relieving it of any confidentiality restrictions hereunder. Written disclosures for which protection is sought must be obviously marked as "Confidential" or "Proprietary" and oral disclosures for which protection is sought must at the outset be clearly identified by the Disclosing Party as Confidential Information and submitted by the Disclosing Party in summary form to the Receiving Party, marked as above within thirty (30) days after disclosure; provided, however, that protection under Article 9 shall also be given to information that is not so marked if a reasonable person trained in research, development, manufacturing and marketing within the Field would assume that it is Confidential Information. For written information that would not normally appear to constitute confidential information, for the restrictions on Confidential Information to apply, a party must mark such information "CONFIDENTIAL."

1.7 “Designated Facility” means the facility designated from time to time by SyntheMed for further processing of Product.

1.8. "Device Master File" shall mean materials that may be used to provide detailed information to the FDA or other Regulatory Body about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of the Products.

1.9. "Disclosing Party" shall have the meaning set forth in Section 1.6.

1.10. "FDA" shall have the meaning set forth in Section 3.1.

1.11. "Governmental Authority" shall mean any court, tribunal, arbitrator, agency, department, legislative body, commission or other instrumentality of (a) any government of any country, (b) any foreign, federal, state, county, city or other political subdivision thereof or (c) any supranational body exerting authority or jurisdiction over BioVectra’s manufacture of Product.

1.12. "Initial Term" shall have the meaning set forth in Section 2.1.

1.13. "Intellectual Property" shall mean all inventions, discoveries and innovations (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent rights, patent applications and invention disclosures, together with all reissues,



continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, all registered or unregistered trademarks, trade names and service marks, including all goodwill associated therewith, and copyrights, and all applications and registrations for any of the foregoing owned or controlled by or issued to SyntheMed or BIOVECTRA, and any trade secrets and know-how, in each case relating to the Products or Commercial Products.

1.14. "Losses" shall mean any and all damages, awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses, and expenses (including without limitation court costs, interest and reasonable fees of attorneys, accountants and other experts) incurred by or awarded to third parties and required to be paid to third parties with respect to a Claim by reason of any judgment, order, decree, stipulation or injunction, or any settlement subject to the indemnification provisions of this Agreement, together with all documented out-of-pocket costs and expenses incurred in complying with any judgments, orders, decrees, stipulations and injunctions that arise from or relate to a Claim of a third party.

1.15. "Post Term Supply" shall have the meaning set forth in Section 2.1.

1.16. "Product" shall mean the polymer raw material meeting the Product Specifications.

1.17. "Product Specifications" shall mean the specifications detailing the Product, as shown in Schedule 1.

1.18. "Product Warranties" shall have the meaning set forth in Section 11.1.

1.19. "Purchase Orders" shall have the meaning set forth in Section 5.3.

1.20. "Purchase Commitment" shall have the meaning set forth in Section 4.2(b).

1.21 “Quality Agreement” shall mean the Quality Agreement executed between the parties on December 11, 2006.

1.22. "QSR" shall mean the Quality System Regulation promulgated by the FDA under the Act or other applicable regulatory agencies of countries in which the Commercial Product will be sold as of the time of manufacture of the applicable Commercial Products; including ISO 13485, the European Union Council Medical Device Directives (the "EU Medical Device Directives"), and the Quality System Regulations as described in 21 CFR Part 820.

1.23. "Receiving Party" shall have the meaning set forth in Section 1.6.

1.24. "Regulatory Authority" shall mean an authority or authorities designated or otherwise recognized by a government for regulatory purposes in connection with protection and safety of the public health (e.g., FDA, Notified Bodies, Health Canada, EMEA) exerting authority or jurisdiction over BIOVECTRA’s manufacture of Product.

1.25. "Renewal Term" shall have the meaning set forth in Section 2.1.

1.26. "Rolling Forecast" shall have the meaning set forth in Section 4.2(b).Schedule 2.

1.27. "SyntheMed Indemnified Party" shall have the meaning set forth in Section 14.1.

1.28. "Term" shall have the meaning set forth in Section 2.1.



1.29. "Transfer Price" shall mean the price paid by SyntheMed to BIOVECTRA for the Product, as set forth in Section 5.1 hereof.

1.30. "USPTO" shall mean the United States Patent and Trademark Office.

2.1 Term. This Agreement shall commence on the Effective Date and, unless earlier terminated as provided herein, continue for five (5) years thereafter (the "Initial Term"). The Initial Term shall be automatically extended for successive one (1) year terms (the "Renewal Terms"), unless written notice of any party's intention not to extend is provided by either party at least six (6) months prior to the expiration of the Initial Term or a Renewal Term (the Initial Term and the Renewal Terms are collectively referred to as the "Term"); however, should any such notice of non-renewal be given by BIOVECTRA, BIOVECTRA shall, if so requested by SyntheMed, supply Product(s) for up to an additional twelve (12) months following the expiration of the then current Term (the "Post Term Supply") at a price to be agreed upon between the parties at that time. This extended term period may be extended if required in order to get all regulatory approvals.

3.1 SyntheMed shall have responsibility for obtaining all necessary U.S. and foreign Approvals for the Commercial Products for use, sale, marketing and distribution. BIOVECTRA will cooperate with SyntheMed to the extent BIOVECTRA's participation is reasonably necessary or appropriate in order for SyntheMed to procure such Approval, any required work which falls outside the scope of the work reasonably contemplated by the parties under this Agreement, shall be performed at a price to be negotiated between the parties.. Without limiting the generality of the foregoing, BIOVECTRA will make available to SyntheMed, without charge, information in BIOVECTRA's possession and control that is required to prepare submissions for Approval, as SyntheMed may reasonably request, and as is reasonably necessary to obtain Approvals. All information provided by BIOVECTRA hereunder shall be presented in a form which satisfies the Quality Agreement and QSR. BIOVECTRA shall consult with SyntheMed prior to engaging in any communication with the FDA or other Regulatory Authority in connection with manufacture of Product or other activities covered under this Agreement and shall provide SyntheMed a reasonable opportunity to review and comment upon any such proposed communication, whether written or oral. BIOVECTRA shall provide to SyntheMed copies of any and all correspondence or other communications, whether written, oral or otherwise, between it and the FDA or such other Regulatory Authorities relating to the manufacture of the Product. In the event FDA or other Regulatory Authority requests additional information from BIOVECTRA, BIOVECTRA shall fully and promptly cooperate and advise SyntheMed of the estimated date by which it will respond to such request.

4.1 BIOVECTRA agrees to:
a. manufacture, package, label, store and deliver the Product in accordance with the Product Specifications, Quality Agreement and QSR.
b. supply SyntheMed with all of SyntheMed’s requirements of Product consistent with the accepted Purchase Order (pursuant to Subsection 5.3);


c. deliver Product hereunder to the Designated Facility or as otherwise directed by SyntheMed on the scheduled delivery dates as set forth in the relevant Purchase Orders described in Section 5.3;
d. permit SyntheMed or its third party designee full opportunity to test the Product to ensure compliance with Product Specifications prior to delivery by BIOVECTRA, as provided in Section 6.1;
e. obtain written approval from SyntheMed prior to implementing any changes to the Product manufacturing process, raw materials, testing, systems, equipment, procedures, or software, which may impact safety, quality, or effectiveness of Product, which approval shall not be unreasonably withheld or delayed.;
f. obtain written approval from SyntheMed prior to implementing changes to Product Specifications;
g. investigate diligently, at SyntheMed’s request, complaints which relate to Product or to the manufacture of Product, and report back to SyntheMed within four (4) days of being notified by SyntheMed such complaint;
h. provide to SyntheMed any complaints BIOVECTRA receives relating to the Product or the manufacture of Product within three business days of their receipt by BIOVECTRA;
i. utilize in the manufacture of the Product only approved raw materials as agreed to by SyntheMed; and
j. follow the Quality Agreement and QSR.

k. if an MDR reportable event, as described in CFR Part 803, to a patient treated with the Commercial Product is found to be a direct result of a change in the processes used by BIOVECTRA for the manufacture of the Product and the change was not pre-approved by SyntheMed prior to implementation, then the indemnification provided by SyntheMed as described in Section 15.2 (ii) to BIOVECTRA shall not apply to such event

4.2 SyntheMed agrees to:

  a. ensure that BIOVECTRA is timely provided, at no charge, a production schedule in order to enable BIOVECTRA to satisfy its manufacturing and delivery obligations with respect to the Products; and

  b. provide BIOVECTRA with rolling twelve (12) month forecasts of SyntheMed's requirements of Product ("Rolling Forecast"). Such forecasts shall be prepared in good faith and provided on a quarterly basis. The first three months of any twelve month Rolling Forecast may be accompanied by firm Purchase Orders to purchase Product, which Purchase Orders shall be considered a purchase commitment ("Purchase Commitment"). SyntheMed may at any time cancel all or any portion of any Purchase Commitment, provided that SyntheMed shall, if such cancellation occurs after actual commencement of Product manufacture for the relevant Product Order, reimburse BIOVECTRA for ***, which shall be BIOVECTRA's sole remedy for SyntheMed's cancellation; provided further that (i) BIOVECTRA will attempt to minimize any losses associated with *** and (ii) BIOVECTRA will ***.



  c. investigate diligently all adverse events of which SyntheMed has knowledge or awareness, related to the Commercial Product, and promptly report such occurrences to BIOVECTRA if in the good faith reasonable determination of SyntheMed, the same could reasonably have been attributable to activities of BIOVECTRA. SyntheMed shall be responsible for the cost and execution of all medical device reporting ("MDR") in accordance with 21 CFR Part 803 and all vigilance reporting required in the markets where Commercial Products are sold; and

  d. except as otherwise set forth herein, be solely responsible for all necessary Approvals to market the Commercial Products including any re-approvals required due to, among other things, specification changes.

5.1 Initial Transfer Price. SyntheMed shall pay the Transfer Price listed in Schedule 3 for the Product.

5.2 Transfer Price Adjustment. The Transfer Price may be adjusted from time to time throughout the Term of the Agreement beginning at any time after the *** for factors such as, but not limited to, changes in raw material costs, labor costs, regulatory costs, or product liability costs. However, such adjustment shall not exceed, unless otherwise agreed, the consumer price index for Chemical Solvents area, as published by the U.S. Department of Labor, Bureau of Labor Statistics and in effect on the aforementioned date. If price adjustments are related to changes in the Product Specifications requested by SyntheMed, BIOVECTRA will propose new pricing which will be negotiated in good faith and, subject to the succeeding sentence, will be effective immediately upon shipment of Products meeting the new Product Specifications. Pricing adjustments will occur no more than *** and, unless otherwise agreed, shall become effective no earlier than three (3) months after written notice thereof is provided to SyntheMed. BIOVECTRA shall include in its notification a detailed justification for all adjustments. Such adjusted Transfer Price shall be reflected in any BIOVECTRA invoices issued for Product shipped after the effective date of adjustment.

5.3 Purchase Orders. SyntheMed shall provide BIOVECTRA with firm written purchase orders ("Purchase Orders") for Product in accordance with the lead-times set forth in Product Specifications and consistent with Purchase Commitments; provided, that SyntheMed shall have the right, forty five (45) days prior to the date of manufacture, to issue binding, written change orders to increase or decrease the quantity of such Purchase Orders. BIOVECTRA shall use its commercially reasonable efforts to comply with any reasonable revisions to Purchase Order requirements.

5.4 Acknowledgment. Within five (5) business days after receipt of a written Purchase Order from SyntheMed, BIOVECTRA shall acknowledge such receipt in writing.

5.5 Shipping. BIOVECTRA shall ship Product to the Designated Facility or other SyntheMed designated location ***, in accordance with the shipment packaging materials and shipping method specified by SyntheMed and agreed to by BIOVECTRA. *** shall pay the actual documented cost of shipping Product to the shipping destination. *** shall be responsible for all insurance, custom's charges and taxes related to shipping. Title to and risk of loss for all Product supplied to SyntheMed hereunder shall pass from BIOVECTRA to SyntheMed upon acceptance of the shipment by the carrier at Designated facility.

5.6 Invoices. BIOVECTRA shall invoice SyntheMed for the aggregate Product manufactured



per Purchase Order, and SyntheMed shall pay each invoice within ***; provided, however, that all invoices rendered pursuant to the terms of this Agreement during calendar year 2006 shall be paid by SyntheMed within ***. All payments shall be in United States currency.

5.7 Tax Witholding. If SyntheMed in good faith concludes that tax withholdings under the laws of any country are required with respect to payments to BIOVECTRA, it shall withhold the required amount and pay it to the appropriate Governmental Authority, and shall promptly provide BIOVECTRA with original receipts or other evidence reasonably required and sufficient to allow BIOVECTRA to document such tax withholdings adequately for purposes of claiming foreign tax credits and similar benefits.

6.1 No Product shall be released for shipment by BIOVECTRA unless and until SyntheMed shall have been notified by BIOVECTRA of completion of Product manufacture and has reviewed and approved the BIOVECTRA testing results. SyntheMed will be afforded full opportunity to test the Product to ensure compliance with the Product Specifications. Notwithstanding the above, such testing shall take place within thirty (30) days of completion of Product manufacture and BIOVECTRA’s Certificate of Conformance and Certification to SyntheMed. Such testing may be accomplished either by SyntheMed directly or by a third party designated by SyntheMed, which designee may be an independent testing laboratory. Each delivery of Product manufactured by BIOVECTRA shall be accompanied by BIOVECTRA's Certificate of Conformance and Certificate of Analysis, the generic form of which is attached as Schedule 4.

6.2 SyntheMed or its designee shall be entitled to reject any shipment of Product or portion thereof that is not manufactured and/or delivered in accordance with the terms of this Agreement. SyntheMed shall notify BIOVECTRA of the existence and nature of any Product which does not comply with the Product Specifications and BIOVECTRA shall have a reasonable opportunity, not to exceed five (5) business days from receipt of notification, to inspect such non-compliant Product. SyntheMed shall have no obligation to pay for any Product that is subject to such a claim of non-compliance. If BIOVECTRA fails to timely inspect or if such inspection confirms such non-compliance, BIOVECTRA shall promptly replace such non-compliant Product at its own cost and expense. In the case of non-compliant Product previously shipped by BIOVECTRA, unless BIOVECTRA provides SyntheMed with detailed written instructions to return or dispose of such Product within 5 business days of a request by SyntheMed, SyntheMed may dispose of such Product as it sees fit and BIOVECTRA shall promptly reimburse SyntheMed for ***.

6.3 If, after BIOVECTRA’s inspections of such Product, the parties disagree as to the Product’s conformance to the Specifications either party may deliver the Product to an independent third-party laboratory, mutually and reasonably acceptable to both parties, for analytical testing to confirm the Product’s conformance to the Product Specifications. All costs associated with such third-party testing shall be at BIOVECTRA’s expense should the Product be determined by the independent third party laboratory to be non-compliant, and at SyntheMed’s expense should the Product be determined to be compliant. No inspection or testing of or payment for Product by SyntheMed or any third-party agent of SyntheMed shall constitute acceptance by SyntheMed thereof, nor shall any such inspection or testing be in lieu or substitution of any obligation of BIOVECTRA for testing, inspection and quality control as provided in the Specifications or under applicable local, state, or federal laws, rules, regulations, standards, codes or statutes.



6.4 In the event of an audit by a Regulatory Authority at SyntheMed which involves any Product, SyntheMed shall notify BIOVECTRA of such audit promptly after receiving notice thereof. Pursuant to such notice of audit, BIOVECTRA shall supply SyntheMed with quality control documents related to the Product portion of the Commercial Product, within one business day if reasonable, from a request by SyntheMed.

6.5 BIOVECTRA shall promptly notify SyntheMed whenever a request for a plant inspection is received from the FDA or other Regulatory Authority that relates in any way to Product,and shall promptly advise SyntheMed of any scheduled or unscheduled Product related FDA or other Regulatory Authority inspection and the progress and results thereof. A copy of Form 483 observations or other applicable reports, which apply to Product shall be supplied to SyntheMed within one business day of receipt. BIOVECTRA, at BIOVECTRA's sole expense, shall promptly take steps to remedy any valid deficiencies found by the FDA or other Regulatory Authority inspectors relating to the manufacture of Product, and to respond promptly in writing to the Form 483 observations. BIOVECTRA shall provide SyntheMed with a copy of its responses to any Form 483 observations relating to the Products in advance of their submission to FDA, and shall notify SyntheMed of the date such responses are filed with the FDA.

6.6 BIOVECTRA shall not conduct a voluntary recall of Product without prior full consultation with SyntheMed regarding the ramifications, costs and regulatory strategies associated with such a recall.

6.7 SyntheMed and BIOVECTRA shall assist and cooperate with each other in giving effect to any "Recall," as that term is defined in 21 CFR 810.2. BIOVECTRA shall be responsible for the cost of replacing any Product of any Recall caused by BIOVECTRA's shipment of Products that did not meet Product Specifications and the costs associated with return and reshipment of Product to a SyntheMed designated facility. BIOVECTRA shall have no other obligations with respect to such Recalls, except as may be provided for in Section 14.1. SyntheMed shall, however, bear all costs and expenses of any recall caused by Commercial Product design, or other acts not attributable to BIOVECTRA causing a Recall to occur, including, without limitation, costs of notifying customers and costs associated with the shipment and reshipment and replacement of such Commercial Products.

6.8 BIOVECTRA shall provide SyntheMed (or its third party designee) access to its sites and quality system records for the purpose of auditing and reviewing the sites for compliance with BIOVECTRA’s obligations under this Agreement (the "Review"). Any information obtained by SyntheMed as a result of such Review shall be subject to the provisions of Article 8 hereof. Such Review shall be made during regular business hours, upon reasonable notice and at reasonable intervals. BIOVECTRA shall respond to any findings under such Review in writing within thirty (30) days, unless otherwise agreed; additionally, SyntheMed shall have the right to re-Review any specific records to establish that any findings have been corrected.

6.9 BIOVECTRA shall cooperate with SyntheMed to provide any authorizations, documents, information, testing protocols and procedures relating to the manufacture and delivery of Product in BIOVECTRA's possession subject to Section 3, or take such other actions, which SyntheMed may reasonably request in order to obtain or maintain any registration, approval, clearance, certification or other authorization with or from any federal, state, local or foreign government agency or any self-regulatory body notwithstanding, any required work which falls outside the scope of the work reasonably contemplated by the parties under this Agreement, shall be performed at a price to be negotiated between the parties.

6.10 Each party shall keep and maintain complete and accurate records necessary for regulatory



compliance for a period of at least five (5) years after the expected life of the Product or ten (10) years from the date of creation (whichever is less), including all records that ensure the ability to perform complete lot tracing of Product.

6.11 The signed SyntheMed Quality Agreement (schedule 5) will be reviewed and updated as required per any applicable regulatory requirement changes.

6.12 All documents specifically related to the manufacturing of Product (i.e. batch records, manufacturing procedures, FDA/ISO required documentation) will be the property of Synthemed and will be provided if and when requested.

7.1 BIOVECTRA and SyntheMed acknowledge the exclusive right, title, interest and goodwill in and to each trademark, trade name or other Intellectual Property right owned by the other party. Neither BIOVECTRA nor SyntheMed will, at any time or in any way, do or cause to be done any act, or omission, or thing to challenge, contest or in any way impair the right, title, and interest of the other party. Except as otherwise provided in this Agreement, BIOVECTRA and SyntheMed shall not in any manner represent that either has any rights in or to any trademark, trade name or other Intellectual Property right of the other party and each acknowledges that the permitted use of any trademark, trade name or other Intellectual Property right of the other shall not create any ownership right, title, or interest in or to any trademark, trade name or other Intellectual Property right of the other party.

8.1 The parties agree:

  a. To receive and hold all Confidential Information in strict confidence and to disclose such Confidential Information only to its employees and representatives who have a need to know the Confidential Information. Without affecting the generality of the foregoing, the Receiving Party will exercise no less care to safeguard the Confidential Information than it exercises in safeguarding its own Confidential Information and will be responsible for any breach of the provisions of Article 8 by its employees and representatives (including its employees who, subsequent to the first disclosure of Confidential Information, become former employees);

  b. That the Receiving Party shall not, directly or indirectly, disclose or use the Confidential Information, in whole or in part, for any purposes other than those contemplated herein. Without affecting the generality of the foregoing, the Receiving Party shall not, directly or indirectly, disclose any such Confidential Information to any third party or use the Confidential Information for the benefit of any third party;

  c. That neither party shall, without the prior written consent of the other party, disclose to any third party Confidential Information and or any of the terms, conditions or other facts with respect to the business relationship of the parties. Any approved disclosure made shall be no more extensive than is necessary to meet the minimum requirement imposed on the party making such disclosure; it being understood that BIOVECTRA and SyntheMed consent to such public disclosure regarding the business relationship of the other party as BIOVECTRA, SyntheMed or their counsel deem necessary or appropriate to comply with applicable law;

  d. That money damages may not be a sufficient remedy for a breach of this Article 8 and



that the non-breaching party may be entitled to equitable relief (including, but not limited to, a temporary restraining order or an injunction or specific performance), without posting bond or establishing monetary damages, in the event of any breach of the provisions of this Article 8;

  e. The furnishing of Confidential Information hereunder shall not constitute or be construed as a grant of any express or implied license or other right, or a covenant not to sue or forbearance from any other right of action by the Disclosing Party to the Receiving Party under any of the Disclosing Party's patents or other Intellectual Property rights;

  f. Upon the Disclosing Party's request at any time, or upon termination or expiration of this Agreement, the Receiving Party shall immediately return or destroy all written, graphic and other tangible forms of the Confidential Information (and all copies thereof) in the Receiving Party's possession or control except for one copy which may be retained by the party's legal counsel for legal archival purposes only; and

  g. The obligations of the Receiving Party regarding disclosure and use of Confidential Information shall survive the termination of this Agreement and shall continue for five (5) years after the date of termination of this Agreement.

9.1 During the Term and thereafter, except as required by applicable law, neither party shall, without securing the prior written consent of the other party, release the terms of this Agreement to any third party or publicly announce the terms of this Agreement. Notwithstanding the foregoing, during the Term and thereafter, SyntheMed may, in addition to the disclosure permitted under Section 8.1 above, disclose the existence and general nature of this Agreement in press releases, shareholder reports, quarterly and annual corporate reports, Securities and Exchange Commission filings and public or private equity offerings. In addition, both parties may provide a copy of this Agreement as part of a due diligence review in connection with a merger, an acquisition, or a public or private equity offering, so long as such review is under the auspices of an appropriate confidentiality agreement.

10.1 Subject to the provisions set forth in this Section 10.1 and Section 10.4, BIOVECTRA warrants: (i) that all Product delivered hereunder shall conform in all material respects to Product Specifications at the time of shipment; (ii) that all Product shall be manufactured substantially in accordance with (a) the Quality Agreement, (b) the pertinent rules and regulations of the QSR and ISO 13485; (iii) that no Product delivered hereunder shall at time of shipment be adulterated or misbranded within the meaning of the Act, or within the meaning of any applicable state or municipal law in which the definitions of adulteration and misbranding are substantially the same as those contained in the Act, provided such laws are constituted and effective at the time of such delivery (collectively, the "Product Warranties"). These Product Warranties shall be null and void and shall not apply to any Product which is in any way altered, modified, damaged or replaced by any person other than BIOVECTRA or its agents or which is abused or misused, whether intentionally or accidentally.

10.2 Each party represents and warrants that it is and will remain in material compliance with all applicable federal, state and local laws, regulations and orders as they may apply to this Agreement.

10.3 BIOVECTRA and SyntheMed each represent and warrant for itself that (i) it is duly



incorporated and validly existing and in good standing under the laws of the state of its incorporation, (ii) it has the full right, power, and authority to execute and perform this Agreement, (iii) this Agreement does not conflict with or otherwise result in a breach of any agreement to which such party is a party or to which it is bound, and (iv) this Agreement represents a valid, legally binding obligation of it, enforceable against it in accordance with its terms.


11.1 Neither party may assign or transfer this Agreement, in whole or in part, to a third party without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, either party may assign this Agreement to any of its affiliates, or in connection with the sale of substantially all of its assets which relate to this Agreement provided that in no event shall any such assignment release either party from its responsibilities under this Agreement unless the assignee has agreed in writing to assume all the obligations of the other hereunder 

11.2 This Agreement will bind and inure to the benefit of the respective successors and permitted assigns, whether so expressed or not.

12.1 BIOVECTRA and SyntheMed shall each obtain and maintain at all times during the Term following the first Purchase Order hereunder, product liability insurance in the amount of at least *** per occurrence and *** and shall deliver to the other party a certificate evidencing such insurance.

13.1 In addition to any other rights of termination granted to the parties in this Agreement, each party shall have the right, but not the obligation, to terminate this Agreement upon notice to the other party under the following circumstances:

for no reason, upon six (6) months’ prior notice to the other party;

  ii. if the other party declares bankruptcy, makes an assignment for the benefit of its creditors, if any proceedings take place for arrangement for the appointment of a receiver or trustee to take possession of such party's assets, or any other proceeding under law for the entry of an order for the relief of creditors of such party shall be instituted the other party which shall not have been vacated, discharged, stayed, satisfied or bonded pending appeal within forty-five (45) days from the entry thereof or if such party shall become insolvent; or

  iii. upon a material breach of this Agreement by the other party, which breach is not remedied or cured within sixty (60) days’ notice thereof by the terminating party.

13.2 Upon termination or expiration of this Agreement for any reason, including the end of the Term as defined in Section 2, nothing herein shall be construed to release either party from any



obligation, which matured prior to the effective date of termination, or which by their terms are intended to continue.

14.1 BIOVECTRA agrees to indemnify, defend and hold SyntheMed and any of its officers, directors, affiliates, employees, sales agents, successors and permitted assigns (each, an "SyntheMed Indemnified Party") harmless from and against any and all Claims of third parties for any Losses arising out of or resulting from: (i) the failure of BIOVECTRA to ship Product that meets the Product Specifications or that is not manufactured in compliance with Quality Agreement, and QSR; (ii) any BIOVECTRA breach of a representation, warranty, covenant or obligation in this Agreement; or (iii) any negligence or willful misconduct of BIOVECTRA or its representatives, directors, officers, employees and agents, in connection with the activities contemplated under this Agreement, in each case, only to the extent such Claims listed in Section 14.1 (i - iv) are not (a) due to the negligence or willful misconduct of a SyntheMed Indemnified Party, or (b) otherwise subject to indemnification under Section 14.2.

14.2 SyntheMed agrees to indemnify, defend and hold BIOVECTRA and any of its officers, directors, affiliates, employees, sales agents, successors and permitted assigns (each, a "BIOVECTRA Indemnified Party") harmless from and against any and all Claims of third parties for any Losses arising out of or resulting from: (i) any SyntheMed breach of a representation, warranty, covenant or obligation in this Agreement; (ii) any personal injury or death resulting from use of the Commercial Product by end-users; or (iii) any negligence or willful misconduct of SyntheMed or its representatives, directors, officers, employees and agents, in connection with the activities contemplated under this Agreement.; in each case, only to the extent such Claims listed in Section 14.2 (i - iii) are not (a) due to the negligence or willful misconduct of a BIOVECTRA Indemnified Party, or (b) otherwise subject to indemnification under Section 14.1.

14.3 To receive the indemnities contained in this Section 14, the party entitled to indemnification hereunder (the "Indemnified Party") must provide the party obligated to provide indemnification hereunder (the "Indemnifying Party") with (i) reasonably prompt notice in writing of any such Claim or action, (ii) information and reasonable assistance, at the Indemnifying Party's expense, as necessary or appropriate to defend or settle such Claim or action, and (iii) full authority to defend or settle the Claim or suit. The Indemnified Party shall have the right to employ separate counsel and participate in the defense of any Claim or action, at its own expense. Except as provided in the last sentence of this Section 14.3, the Indemnified Party may not settle any Claim or action under this Section 14 on behalf of the Indemnifying Party without first obtaining the Indemnifying Party's written permission, and so long as the Indemnifying Party is diligently conducting a defense as provided herein, it shall not be liable for the attorneys' fees or expenses of the Indemnified Party. If an Indemnified Party provides notice of a Claim that is subject to indemnification in accordance herewith and is not notified within ten (10) days that the Indemnifying Party intends to defend such Claim, the Indemnified Party shall be entitled to defend, settle and/or compromise such Claim, subject to the indemnification provided for herein. Nothing in this provision, however, shall permit either party to enter into a settlement that imposes an obligation on the other party requiring them to take any affirmative action or refrain from any act, unless such other party consents to such settlement.

15.1 Independent Contractor. Neither party shall have the right, power or authority to assume or create any obligations or responsibility expressed or implied, on behalf of, or in the name of, the



other party, or to bind the other party in any manner or to any extent whatsoever, without the prior written approval and acceptance of the other party. Each of the parties hereto is an independent contractor for the purposes of this Agreement and nothing contained herein shall be deemed or construed to create the relationship of agency, partnership or joint venture or any other association except that of an independent contractor relationship.

15.2 Amendment and Waiver. This Agreement may be amended, and any provision of this Agreement may be waived, provided that any such amendment or waiver will be binding on each party only if such amendment or waiver is set forth in a writing executed by such parties. Waiver of a breach of the Agreement shall not constitute a waiver of any other subsequent breach of the Agreement. The waiver of any provision of this Agreement shall not constitute a continuing waiver of that provision or a waiver of any other provision of this Agreement.

15.3 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when sent by facsimile transmission with acknowledged returned receipt, personally delivered or mailed by overnight mail, return receipt requested. Notices demands and communications shall, unless another address or individual is specified in writing, be sent to the addresses set forth as follows:

  If to SyntheMed:
SyntheMed, Inc.
200 Middlesex-Essex Turnpike
Suite 210
Iselin, NJ 08830
Fax: 732-404-1118

Attention: President

Diagnostic Chemicals Limited bda BioVectra
16 McCarville Street
Charlottetown, PEI
C1E 2A6, Canada
Fax: 902-566-2498
Attention: President & CEO
15.4 Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

15.5 Complete Agreement. This Agreement and the documents referred to herein contain the complete agreement between the parties and supersede all prior understandings, agreements and representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

15.6 Counterparts. This Agreement may be executed in one or more counterparts all of which taken together will constitute one and the same instrument.

15.7 Governing Law. The law of the State of New Jersey will govern, without regard to the



conflicts of law provisions thereof, all questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement.

15.8 Headings. Section headings used in this Agreement are for convenience only and form no part or in any way modify or define the text of meaning or any provision of this Agreement.

15.9 Force Majeure. In the event that any party is prevented from performing, or is unable to perform, any of its obligations under this Agreement due to any act of God, fire, casualty, flood, war, strike, lock out, failure of public utilities, injunction or any act, exercise, assertion or requirement of governmental authority, epidemic, destruction of production facilities, any act of declared or undeclared war or of a public enemy, or any riot or insurrection, any nuclear, biological, chemical or similar attack, any act of terrorism, or any similar occurrence cause outside the reasonable control of that party, and if such party shall have used its best efforts to avoid such occurrence and minimize its duration and has given prompt written notice to the other party, then the affected party's performance shall be excused and the time for performance shall except as otherwise provided for in this Agreement, be extended for the period of delay or inability to perform due to such occurrence.

15.10 Arbitration.

  a. The parties will attempt in good faith to resolve through negotiation any dispute, claim or controversy arising out of or relating to this Agreement. Any party may initiate negotiations by providing written notice in letter form to the other party, setting forth the subject of the dispute and the relief requested. The recipient of such notice will respond in writing within five (5) business days with a statement of its position on and recommended solution to the dispute. If the dispute is not resolved by this exchange of correspondence, then representatives of each party with full settlement authority will meet at a mutually agreeable time and place within ten (10) business days of the date of the initial notice in order to exchange relevant information and perspectives, and to attempt to resolve the dispute. If the dispute is not resolved by these negotiations, the matter will be submitted to the American Arbitration Association ("AAA") for resolution.

  b. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by arbitration in New York, New York. The arbitration shall be administered by AAA pursuant to its then-current Comprehensive Arbitration Rules. Judgment on any arbitration award may be entered in any court having jurisdiction thereof and shall be final and binding upon the parties.

  c. Notwithstanding the foregoing, nothing in this Section 15.10 shall be construed as limiting in any way the right of a party to seek injunctive relief with respect to any actual or threatened breach of this Agreement from a court of competent jurisdiction.

15.11 Remedies. Unless otherwise expressly stated, any remedy expressly provided for herein shall not be deemed to be a limitation on any remedy for any such situation or occurrence.


IN WITNESS WHEREOF, the parties have executed this Agreement through their duly authorized representatives as of the date first written above.
By:   /s/ Robert P. Hickey
By:   /s/ Ron Keefe
Name: Robert Hickey
Name: Ron Keefe
Title: President & CEO
Title: President & CEO
Date:  June 14,2007
Date:  June 12, 2007



Schedule 1  Product Specification

Schedule 2  Rolling Forecast (Material Forecast)

Schedule 3  Pricing Schedule

Schedule 4  Certification of Compliance (example)

Schedule 5  Quality Agreement


Schedule 1



Material Specification

Material: ***

BioVectra - produces the material
Chem Development Inc. (CDI) - receives material for further processing

The following is the criteria used in order to demonstrate that each lot of the Dry Raw Material Polymer Powder meets its design characteristics prior to being released for further processing. Each criterion is tested on a lot by lot basis at BioVectra. The results are reviewed and approved by Synthemed and if acceptable, the material is released to CDI for further processing. At CDI receiving inspection, the product will be tested or accepted via a vendor certification. The methods and criteria of acceptance at receiving will be documented and agreed upon in advance by SyntheMed.

3.1 ***
3.2 ***
3.3 ***
3.4 ***
3.4.1 ***
3.4.2 ***
3.4.3 ***
3.5 ***
3.6 ***
3.7 ***
3.8 ***

3.9 ***
3.9.1 ***
3.9.2 ***
3.9.3 ***
3.10  ***
3.11 ***
3.12 ***


BioVectra is responsible for the manufacturing of the material. BioVectra will be responsible for assuring the material meets all the specified criteria as defined in section 3.
CDI is responsible for the incoming receipt, inspection and release of material for further processing.

CDI is responsible for the receipt and storage of material. These activities will be performed in accordance with documented procedures which are compliant with all applicable regulatory requirements. SyntheMed will evaluate these procedures as part of its vendor qualification and monitoring procedures.


BioVectra is responsible for the inspection of the material prior to release for further distribution. These activities will be performed in accordance with documented procedures which are compliant with all applicable regulatory requirements. SyntheMed will evaluate these procedures as part of its vendor qualification and monitoring procedures.

CDI is responsible for the inspection of the incoming material. These activities will be performed in accordance with documented procedures which are compliant with all applicable regulatory requirements. SyntheMed will evaluate these procedures as part of its vendor qualification and monitoring procedures


Schedule 2



REPEL-CV Raw Material Powder Forecast



















This Quality Agreement (the "Agreement") is made as of November 10, 2006 between SyntheMed, Inc. and Biovectra with its principal office at 16 McCarville St.,Charlottetown, PE C1E 2A6, Canada. 

The purpose of this Agreement is to set forth the quality arrangements for ensuring that the manufacture, packaging, quality control and release of the Raw Material Powder (the "Agreement Product") shall take place in accordance with applicable sections of the Quality System Regulations (Good Manufacturing Practice) as detailed in Title 21, Code of Federal Regulations, Part 820, US Food and Drug Administration, or the requirements of the European Medical Device Directives and ISO 13485.

1.  Audits 

Biovectra shall give all reasonable access to its facilities to satisfy all applicable regulatory audit requirements. Any such audits will determine if Biovectra has adequate premises, equipment, systems and a staff with sufficient knowledge and training to carry out satisfactorily the manufacture, assembly, packaging and testing of the Agreement Product destined to be further processed by SyntheMed, Inc. or its designee.
2.  Material Specifications

Biovectra shall manufacture the Agreement Product according to the methods agreed to by SyntheMed. The information/specifications to be provided to Biovectra may include but may not be limited to:
The manufacturing formula
The manufacturing method
The environmental conditions required
The master batch manufacturing record
The finished product specification
All analytical methods


3.  Change control 

Biovectra shall not, except with the prior written consent of SyntheMed (which consent shall not be unreasonably withheld or delayed), change or cause to be changed any materials, equipment, or method of production or testing related to the Agreement Product provided however, that any such change for which SyntheMed has given its prior written consent shall also comply in all respects with all applicable legal requirements, and provided further, that in the event any change is required by any legal requirement and SyntheMed does not consent to such change within a reasonable period of time, Biovectra shall be excused from all performance hereunder.

4.  Documentation
Biovectra will create the documentation to produce the Agreement Product to satisfy the appropriate regulatory requirements. These documents will be reviewed and approved by SyntheMed. They will be subject to Change Control as specified in section 3 above. Biovectra will provide control of all documentation as required under all applicable regulations and as part of the Biovectra quality system.

5.  Raw Material Purchasing/Testing 
Biovectra shall be responsible for the assessment of all ingredients to be used in the manufacture of the Agreement Product in order to ensure compliance with the agreed upon specifications. Biovectra will also be responsible for the qualification of all vendors that supply the ingredients for the Agreement Product.

6.  In-Process Controls 
Biovectra shall be responsible for any agreed upon quality control testing required during the manufacture of the Agreement Product. Biovectra shall advise SyntheMed of any significant changes prior to their implementation in the in-process controls (ref section 3 above).

7.  Finished Product Testing 
Biovectra shall be responsible for testing each batch of the Agreement Product (including any testing requiring to be performed by a third party laboratory) to ensure its compliance with the finished product specifications agreed to by SyntheMed. Biovectra shall provide and/or make available a record of the test results for every batch manufactured and details of all out of specification investigations. SyntheMed will review the documentation and approve the release of each batch of material unless otherwise notified (see section 10).

8.  Stability 
Biovectra shall assist as needed in ensuring the generation of the stability data for the Agreement Product.
9.  Storage. Delivery and Transportation 
Biovectra shall be responsible for the quality of the Agreement Product on its premises and be responsible for any subsequent deterioration of the Agreement Product due to its storage or handling. Biovectra shall utilize agreed upon means for transportation for delivery of the Agreement Product to SyntheMed or its designee.
10.  Release Procedure 
Biovectra shall test (or have tested at a third party laboratory as agreed by SyntheMed) the Agreement Product to the full finished product specification in accordance with the requirements specified. SyntheMed shall be responsible for the final release of the Agreement Product according to agreed upon procedures. Biovectra shall provide:
A Certificate of Analysis listing all test results for each batch of Agreement Product
Certification that all manufacturing was completed in accordance with agreed upon procedures
Any other details or documents which may be agreed from time to time between the Quality Departments of Biovectra and SyntheMed.
Information and copies of investigation reports relating to a) critical batch deviations that would have an impact on the critical quality attributes or were associated with critical process parameters, b) out of specification results or c) non-compliances with regulatory requirements. These shall be communicated as soon as practicable to the Director, Quality Systems at SyntheMed.

11. Retention Samples 
Biovectra shall keep adequate retention samples of the Agreement Product and raw materials as agreed to with SyntheMed.


12. Rejection and Reprocessing
Prior to shipment of each batch supplied and where applicable, Biovectra shall submit to Synthemed all available information regarding major deviations, out of specification results and investigations, or non-compliance with GMP.
If a batch of the Agreement Product is rejected by Biovectra for any reason, Biovectra must advise SyntheMed of the occurrence thereof and any other relevant details.
Rework or reprocessing of the Agreement Product is not permitted without the consent of SyntheMed. (The term 'rework/reprocessing' excludes any re-inspection activities that are specified in Company's approved procedures).
13. Recalls and Complaints 
Biovectra shall conduct any reasonable investigations requested by SyntheMed pursuant to complaints received on the batches of the Agreement Product. A report of such investigation shall be provided in timely fashion to the Quality Department of SyntheMed. In the event of a recall of the Agreement Product, Biovectra’s responsibility is limited to supplying appropriate information relevant to any alleged product defect prompting such recall action.

14. Batch records 
Biovectra shall keep original copies of all records of manufacture for at least five (5) years from the date of manufacture, and shall notify SyntheMed before disposing of such records.
Biovectra shall also keep records relating to the receipt, testing and use of raw materials and packaging components for at least five (5) years from the date of approval for use in manufacturing.

15.  Sub-contracting 
Biovectra may sub-contract the manufacture, packaging or testing of the Agreement Product to another site, provided that (a) SyntheMed has been notified of the site and (b) SyntheMed has approved such site.
16.  Regulatory Requirements 
Biovectra shall provide manufacturing information as reasonably requested by SyntheMed in support of the preparation of any Regulatory submissions and/or requirements for the Agreement Product.


Date: 12-01-2006
Date: 12-11-2006
Name:   /s/ John Hoffer
Name:  /s/ Ron Keefe
Title:  Dir Quality Systems & RA
Title:  President & CEO