DEVELOPMENT AND REGULATORY SERVICES AGREEMENT

Exhibit 10.2

Confidential Treatment Requested

 

EXECUTION VERSION

DEVELOPMENT AND REGULATORY SERVICES AGREEMENT

     This DEVELOPMENT AND REGULATORY SERVICES AGREEMENT (this “ Agreement ”) is dated as of May 30, 2008 (the “ Effective Date ”) between Kensey Nash Corporation, a Delaware corporation, having its principal place of business at 735 Pennsylvania Drive, Exton, PA 19341 (hereinafter referred to as “ KNC ”), and The Spectranetics Corporation, a Delaware corporation, having its principal place of business at 96 Talamine Court, Colorado Springs, CO 80907 (hereinafter referred to as “ Spectranetics ”).

     WHEREAS, KNC is a company engaged in the development, marketing and sale of medical devices for a wide variety of applications;

     WHEREAS, Spectranetics is a company engaged in the development, marketing and sale of medical devices for a wide variety of applications;

     WHEREAS, KNC has expertise in developing and manufacturing medical devices and desires to develop products for Spectranetics under the terms of this Agreement;

     WHEREAS, Spectranetics and KNC are parties to an Asset Purchase Agreement by and between KNC and Spectranetics, dated as of May 12, 2008 (the “ Purchase Agreement ”), and a Manufacturing and Licensing Agreement, dated as of even date herewith (the “ Manufacturing Agreement ”);

     WHEREAS, product development and regulatory services for the Products constitute an essential element of the basis for the purchase price set forth in the Purchase Agreement, Spectranetics would like KNC to conduct certain regulatory services related to the products acquired by Spectranetics under the Purchase Agreement as well as regarding any improved products developed pursuant to this Agreement, and KNC would like to conduct such regulatory services for Spectranetics, under the terms of this Agreement;

     WHEREAS, Spectranetics would like KNC to develop for Spectranetics improvements of the products that Spectranetics acquired from KNC under the Purchase Agreement, and KNC would like to develop such improved products for Spectranetics, under the terms of this Agreement; and      WHEREAS, as part of the development and approval process described in this Agreement, Spectranetics will need to conduct certain clinical trials, for which the parties agree to share the expenses as described 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:

 

SECTION 1. DEFINITIONS

     1.1 “ Active Customers ” shall mean the SafeCross Wire customers listed on Schedule A attached hereto.

     1.2 “ Agreement ” has the meaning set forth in the preamble hereof.

     1.3 “ Approval Authority ” shall mean any national (for example, the FDA), supranational (for example, the European Medicines Agency), regional, provincial, state or local regulatory agency, department bureau, commission, council, or other Government Body in any jurisdiction of the world involved in the granting of Approval or CE Marking for a Product.

     1.4 “ Approval ” shall mean with respect to a nation or, where applicable, a multi-national jurisdiction, any approvals, clearances, licenses, registrations, waivers or authorizations necessary for the manufacture, marketing, and sale of Products in such nation or such jurisdiction. Without limiting the foregoing, “Approval” shall include, but not be limited to, pre-market approvals, and 510(k) and special 510(k) clearances from the FDA.

     1.5 “ CE Marking ” shall mean a mandatory conformity mark on products which allows for the products to be sold in the market in the European Economic Area (EEA). The term is in the Medical Device Directive 93/42/EEC in 1993 and is obtained by the development and approval of a technical file or design dossier that is approved by an officially recognized European notified body.

     1.6 “ Claims ” shall have the meaning set forth in Section 12.1.

     1.7 “ Clinical Trial Costs ” means all costs directly associated with the clinical trials that are necessary in order to obtain Approvals from the FDA for the Indications described in Section 4, which costs shall include, but not be limited to, those costs set forth on Schedule 1(a) hereto; provided, however, that “Clinical Trial Costs” shall in no event include either party’s overhead or indirect costs associated with its performance hereunder.

     1.8 “ 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 all Information, and all correspondence with Customers and Governmental Bodies, shall be deemed the Confidential Information of Spectranetics, and

 

provided further 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 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 records; (iv) is independently developed by the Receiving Party; (v) is required to be disclosed by Law, 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 Section 8 shall also be given to information that is not so marked if a reasonable person would assume that it is Confidential Information.

     1.9 “ Design History File ” or “ DHF ” shall mean the manufacturer’s file that contains documents or references to documents that demonstrate that the design of the device was developed in accordance with the design plan and the requirements identified as design inputs and outputs in the manufacturer’s design control process and applicable regulations.

     1.10 “ Development and Regulatory Costs ” shall mean the cost for the design, prototyping, development, testing and evaluation of the Products as set forth in the Development Plan and all other costs directly associated with obtaining Approvals from the FDA, including without limitation the costs set forth on Schedule 1(b) hereto; provided however, that “Development and Regulatory Costs” shall in no event include Clinical Trial Costs.

     1.11 “ Development Plan ” shall mean the plan for developing and obtaining Approvals from the FDA for the Products, as set forth in Schedule B . The parties may by written agreement modify and amend Schedule B from time to time throughout the Term as required to assure successful development and commercialization of the Products.

     1.12 “ Development Program ” has the meaning set forth in Section 3.1.

     1.13 “ Development Representative ” shall have the meaning set forth in Section 3.2.

     1.14 “ Device Master Record ” or “DMR” shall mean materials that may be used to provide device specifications and manufacturing procedures regarding the Products.

     1.15 “ Effective Date ” has the meaning set forth in the preamble hereof.

 

     1.16 “ FDA ” shall mean the U.S. Food and Drug Administration, or any successor thereto, having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products, delivery systems, and medical devices in the United States.

     1.17 “ Governmental Body ” shall mean any supranational, national, regional, state or local government, court, governmental agency, authority, board, bureau, instrumentality, or regulatory body.

     1.18 “ Indemnified Party ” has the meaning set forth in Section 12.3.

     1.19 “ Indemnifying Party ” has the meaning set forth in Section 12.3.

     1.20 “ Indication ” shall mean the scope of an Approval, which may include, among other things, function, application or site for use.

     1.21 “ Information ” means all ideas, inventions, discoveries, concepts, formulas, practices, procedures, processes, methods, knowledge, know-how, trade secrets, technology, designs, drawings, computer programs, skill, experience, documents, apparatus, results, clinical and regulatory strategies, results of experimentation, including without limitation samples, test data, including pharmacological, toxicological and clinical data, analytical and quality control data, manufacturing data and descriptions, patent and legal data, market data, any Device Master Records, Design History Files, financial data or descriptions, devices, assays, chemical formulations, specifications, compositions of matter, product samples and other samples, physical, chemical and biological materials and compounds, and the like, in written, electronic or other form, whether or not patentable, and all improvements thereto, in written, electronic, or any other form, and all intellectual property rights therein other than trademark rights and patent rights, in each case developed or conceived hereunder and related to the Products.

     1.22 “ 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, and any trade secrets and know-how, in each case developed or conceived hereunder and relating to the Products.

     1.23 “ Invention ” shall have the meaning set forth in Section 7.2.

     1.24 “ KNC ” shall have the meaning set forth in the preamble hereto.

     1.25 “ KNC Indemnified Party ” shall have the meaning set forth in Section 12.2.

 

     1.26 “ Law ” means any law, statute, ordinance, directive, code, regulation, rule or order of any Governmental Body.

     1.27 “ Licensed Intellectual Property ” shall mean the Patent Rights (as defined in the Purchase Agreement) and any other Intellectual Property owned by Spectranetics, in each case solely to the extent necessary for the development of Products or the conduct of regulatory services for Spectranetics pursuant to this Agreement.

     1.28 “ Manufacturing Agreement ” has the meaning set forth in the recitals hereto.

     1.29 “ Milestone ” means each of the milestones set forth in Section 6.1.

     1.30 “ Milestone Payments ” has the meaning set forth in Section 6.1.

     1.31 “ New Product(s) ” shall mean any follow-on, modified, or improved versions of the Original Products that are developed pursuant to the Development Plan or that the parties may mutually agree in writing to be developed under this Agreement.

     1.32 “ Original Products ” shall mean the QuickCat Products, the ThromCat Products, the SafeCross Wires and the SafeCross Consoles.

     1.33 “ Product(s) ” shall mean collectively the Original Products and the New Products.

     1.34 “ Purchase Agreement ” shall have the meaning set forth in the preamble hereto.

     1.35 “ QuickCat Products ” means the QuickCat products transferred to Spectranetics pursuant to the Purchase Agreement.

     1.36 “ Regulatory Representative ” has the meaning set forth in Section 4.2.

     1.37 “ SafeCross Consoles ” means the SafeCross console products transferred to Spectranetics pursuant to the Purchase Agreement.

     1.38 “ SafeCross Wires ” means the SafeCross wire products transferred to Spectranetics pursuant to the Purchase Agreement.

     1.39 “ Spectranetics ” shall have the meaning set forth the preamble hereto.

     1.40 “ Spectranetics Indemnified Party ” shall have the meaning set forth in Section 12.1.

     1.41 “ Term ” shall have the meaning set forth in Section 2.

     1.42 “ ThromCat Products ” means the ThromCat products transferred to Spectranetics pursuant to the Purchase Agreement.

 

     1.43 “ Transaction Documents ” means the Purchase Agreement and all other agreements delivered pursuant thereto, including, without limitation, this Agreement.

     1.44 “ Upgrade Inventory ” means the specific SafeCross Consoles listed on Schedule C hereto.

SECTION 2. TERM

     2.1 Term . This Agreement shall commence on the Effective Date and, unless earlier terminated as provided in Section 11.1 or 11.2, continue until the earlier of (i) the End Date (as such term is defined in the Manufacturing Agreement) and (ii) the achievement of, and payment in full for, each Milestone (the “ Term ”).

SECTION 3. DEVELOPMENT PROGRAM

     3.1 Development Roles . Subject to the terms of this Agreement, KNC agrees to, in consultation with Spectranetics, work in good faith to develop the Products in accordance with the Development Plan (the “ Development Program ”). KNC and Spectranetics will jointly define the Products’ specifications to meet market requirements; provided that Spectranetics shall have final approval of all design inputs, including without limitation Product needs and Specifications. The parties have agreed upon a general allocation of responsibilities for such purposes as set forth in this Section 3, and a specific allocation of responsibilities for the activities under this Agreement as set forth in the Development Plan. KNC may conduct independent development work at its own expense regarding Products other than in accordance with the Development Plan, provided that (a) KNC shall regularly update Spectranetics regarding such efforts, (b) KNC shall not incorporate any modifications or additions into the Products as a result of such efforts without the prior written consent of Spectranetics on a case-by-case basis; and (c) any modifications or Inventions resulting from such independent work shall be subject to the provisions of Section 7.2 below. Spectranetics will review and advise on product development progress, including without limitation medical input to provide assistance in the definition of the end-user product requirements and marketing specifications and phase review approval in the KNC design control process. The parties shall share equally any and all Clinical Trial Costs incurred in connection with the conduct of any pre-clinical or clinical trials performed under the Development Plan for the purpose of seeking Approvals from the FDA for Products. If Spectranetics requests a material deviation from the Development Plan for a particular Product, then KNC will provide Spectranetics an estimate of the additional development and regulatory costs that would not have otherwise been incurred by KNC in the absence of such material deviation and Spectranetics will elect either (i) to bear such additional development and regulatory costs, in which case, the parties would still share Clinical Trial Costs equally, or (ii) not to proceed with the proposed change to the Development Plan.

     3.2 Development Representation . Each party shall appoint an individual to serve as its development representative (the “ Development Representative ”) who shall be responsible for

 

working with the other party’s Development Representative in order to monitor the Development Program and the resources devoted thereto and facilitate the on-going exchange of information between the parties in connection with the Development Plan. During the course of the Development Program, the Development Representatives shall meet at times and places mutually agreed upon to discuss the progress and results of the Development Program and any modifications thereto as may be appropriate. The Spectranetics Development Representative will participate in and provide review and approval regarding Product development activities.

     3.3 Efforts . Each party will devote sufficient time, attention and qualified personnel, to meet the delivery dates for any deliverables and other matters agreed to in the Development Plan in accordance with this Agreement. The parties will provide each other with such technical support relating to the development of the Products as reasonably necessary for the parties to develop the Products. The parties acknowledge that in connection with the development of the Products, each of the parties may need access to certain Confidential Information of the other party that will be subject to the confidentiality provisions set forth in Section 8 hereof. Each party agrees to notify the other promptly of any factor, occurrence, or event coming to its attention that may affect that party’s ability to meet the requirements of the Development Plan or the Development Program generally, or that is likely to cause any material delay in the delivery of deliverables.

     3.4 Personnel and Resource Commitment . During the course of the Development Program, each party will commit an appropriate amount of personnel and other resources as reasonably necessary to meet the requirements of the Development Plan.

     3.5 Standards . All device design activities will comply with applicable Laws, including without limitation FDA (Title 21, chapter 1, subchapter H, part 820, subpart C) and ISO 13485:2003:E design control and quality regulations. The parties agree and acknowledge that the foregoing applies to all jurisdictions where KNC is selling the Products as of the Effective Date, and the parties agree to consult in advance regarding the application of Laws to any new jurisdiction where Spectranetics may in the future elect to sell the Products to ensure that the parties comply with all applicable Laws for such jurisdiction. Spectranetics shall reserve the right to audit the DMR and DHF at reasonable times and upon reasonable notice to KNC to monitor and ensure compliance.

     3.6 Sharing of Data . All data generated from the Development Program, including, but not limited to design control elements, laboratory, animal and clinical data, and also including but not limited to all regulatory submissions and correspondence to all Governmental Bodies relating to the Development Program, shall be owned by Spectranetics, copies of which KNC shall have a right to retain subject to the confidentiality obligations set forth in Section 8. To the extent that this data is generated by KNC, KNC shall promptly make such data available and share it with Spectranetics. To the extent that this data is generated by Spectranetics, Spectranetics shall promptly make such data available and share it with KNC solely for the purpose of KNC’s performance of activities under this Agreement.

 

     3.7 Additional Products . From time to time, the parties may agree to jointly develop additional Product configurations. In such event, the parties shall update the Development Plan or execute an addendum to this Agreement, such update or addendum shall describe the additional Product configurations and the modifications to the Development Program required to support the development of such additional Product configurations, and funding for such additional Product development shall be shared equally.

     3.8 Development Audits .

          (a) Spectranetics will have the right to conduct, either directly or through a designee, inspections, audits, and investigations of KNC’s facilities, equipment, record-keeping procedures, and records related to the development of Products, including without limitation sites where KNC conducts clinical trials or analytical work, as Spectranetics reasonably deems necessary, on reasonable advance written notice, to monitor KNC’s progress and compliance with Law and the terms of this Agreement, or to address regulatory concerns relating to KNC’s development efforts hereunder.

          (b) Spectranetics also will have the right upon reasonable prior notice to KNC to have a representative present in KNC’s facilities related to the development of Products to observe and monitor the conduct of the development of Products to confirm compliance with Law and this Agreement. If Spectranetics identifies an issue in its inspection, audit, or investigation, KNC will address such issue promptly by proposing a solution in writing to Spectranetics. KNC will not implement the solution until Spectranetics consents to the solution, such consent not to be unreasonably conditioned, delayed or withheld. Upon receipt of Spectranetics’ consent, KNC shall implement the agreed upon solution.

          (c) Spectranetics will have the right to inspect and audit all clinical data in KNC’s control upon reasonable advance notice to KNC, during normal business hours. Additionally, KNC will provide to Spectranetics copies of all summary data generated by or on behalf of KNC in the course of performing development activities.

SECTION 4. REGULATORY SERVICES

     4.1 Regulatory Roles . Subject to the terms of this Agreement, KNC shall, in consultation with Spectranetics, work in good faith to obtain the Approvals from the FDA in accordance with this Section 4 and the Development Plan. Spectranetics will advise and provide feedback to KNC on KNC’s regulatory strategy. KNC and Spectranetics will jointly define the Indications and regulatory strategy for Approvals from the FDA; provided that Spectranetics shall have the final authority in its reasonable judgment with respect to any disputes between the parties with respect to the foregoing. For all Approvals from Approval Authorities outside of the United States, KNC will not be responsible for filings or communications, but KNC does agree to provide Spectranetics any applicable test data that KNC possesses regarding the applicable Product for Spectranetics’ filing requirements. If Spectranetics requests that additional testing be

 

conducted in order to satisfy the requirements of any such Approval Authority, KNC agrees to cooperate with Spectranetics and Spectranetics will bear the reasonable expense of any such additional testing.

     4.2 Regulatory Representation . Each party shall appoint an individual to serve as its regulatory representative (the “ Regulatory Representative ”) who shall be respon