Framework Supply Agreement, dated March 22, 2024, by and between SmartKem Limited and CPI Innovation Services Limited

Contract Categories: Business Operations - Supply Agreements
EX-10.28 4 smtk-20231231xex10d28.htm EX-10.28 Associate

Exhibit 10.28

DATED ​ ​

CPI INNOVATION SERVICES LIMITED (1)

and

SMARTKEM LIMITED (2)

​ ​

FRAMEWORK SUPPLY AGREEMENT

​ ​


Exhibit 10.28

THIS AGREEMENT is made theday of2024

BETWEEN:

(1)CPI INNOVATION SERVICES LIMITED (company number Co No: 05735040) a company incorporated in England whose registered office is at Wilton Centre, Wilton, Redcar TS10 4RF (CPIIS); and
(2)SMARTKEM LIMITED (company number 06652152) whose registered office is at Optic Technium Ffordd William Morgan, St Asaph Business Park, St Asaph, Clywd LL17 0JD (the Customer).

BACKGROUND:

(A)

The parties wish to set up a framework arrangement under which the Customer purchases Services from CPIIS on a call-off basis, with a guaranteed Minimum Spend by the Customer before the Take or Pay Date on a take or pay basis.

NOW IT IS AGREED AS FOLLOWS:

1INTERPRETATION
1.1In this Agreement the following words shall have the following meanings:

Call Off means a contract between the Customer and CPIIS formed under Clause 2 through the Customer’s signed acceptance of CPIIS’s written offer to supply a quantity of Services requested by the Customer from time to time, in form set out in Schedule 3;

Commencement Date means 1st April 2024;

Conditions of Supply means CPIIS’s standard terms and conditions of supply in the form set out in Schedule 1 and which are hereby incorporated into this Agreement and into each Call Off;

Core Hours means the working hours in CPIIS’ premises in the Neville Hamlin Building, Thomas Wright Way, Sedgefield TS21 3FG of 8:30am until 5:30pm Monday to Friday except bank holidays;

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03/22/2024 ###-###-####.1


Day to Day IP and Information Management Guidance means the guidance set out in Schedule 6;

Event of Force Majeure means in relation to any Party, any circumstances beyond the reasonable control of that Party including, but not limited to: (i) fire, flood, explosion, pandemic, epidemic, terrorism, war, riots, official national declared industrial action, government action or injunction; (ii) inability to obtain, or shortage of, fuel, power, gas, specialist replacement equipment, transportation or materials, accident to, or breakage of machinery or apparatus; (iii) strikes or labour disputes; (iv) any safety or emergency overrides; (v) lack of availability of key technical and scientific staff due to unexpected illness or their leaving the employment of CPIIS of their own volition;

Group means in relation to a Party, that company, any subsidiary or any holding company from time to time of that Party, and any subsidiary from time to time of a holding company of that Party.

Minimum Spend means the Customer’s obligation to spend under this Agreement on Services with CPIIS: during the Term, a minimum of £375,000 + VAT; before the Take or Pay Date under Clause 4.2, and as adjusted under Clause 4.3;

Price means the sum payable for the Services stated in any Call Off which shall be calculated on the basis set out in Clause 2.3;

Operations and Project Management Protocol means the protocol set out in Schedule 5;

Services means any of the types of service provided by CPIIS that are set out in Schedule 2, and which in respect of any Call Off shall be specified within that Call Off;

Take or Pay Date means 31st March 2025

Term means a period of 12 months from the Commencement Date to end on 31st March 2025;

Year means a period of 12 months running from the Commencement Date , and Month means each calendar month during the Year;

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1.2In this Agreement references to any statute or statutory provision shall, unless the context otherwise requires, be construed as a reference to that statute or statutory provision as from time to time amended, consolidated, modified, extended, reenacted or replaced.
1.3In this Agreement references to the masculine include the feminine and the neuter and to the singular include the plural and vice versa as the context admits or requires.
1.4In this Agreement references to:
1.4.1Clauses are to clauses of this Agreement; and
1.4.2Schedules are to schedules of this Agreement; and
1.4.3Parties are to the parties to this Agreement.
1.5In this Agreement headings will not affect the construction of this Agreement
2FRAMEWORK FOR SUPPLY OF SERVICES
2.1Throughout the Term, all Services supplied by CPIIS to the Customer shall be under a Call Off upon the Conditions of Supply, to the exclusion of all other terms and conditions (including any terms or conditions which the Customer purports to apply under any order or other document, or otherwise generally applied by the Customer to the purchase of Services) and in the event of any inconsistency in a Call Off between a term of this Agreement and the Conditions of Supply, such term of this Agreement shall prevail, followed by the Conditions of Supply.  For the avoidance of doubt, to the extent that any provision of the Conditions of Supply expand upon or supplement the terms of this Agreement, they shall not be held to be in conflict.
2.2No Call Off shall be valid or legally binding unless it has been countersigned by both Parties.
2.3The Price for Services ordered under any Call Off during the Term shall be calculated by reference to CPIIS’s standard SME pricing rates (Rate Card) and be subject to any discounts, rebates or other incentives available to companies entering into long term

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supply contracts, the current version of the Rate Card applicable on the Commencement Date being set out in Schedule 4.
3CPIIS’S OBLIGATIONS
3.1Throughout the Term, CPIIS shall:
3.1.1use its reasonable commercial endeavours to supply to the Customer such of the Customer’s requirements for the Services as the Customer may request under any Call Off, but may decline a Call Off where the Services requested, in CPIIS’s reasonable and expert opinion, and acting in good faith are;
(i)not physically possible on the basis requested by the Customer, whether using the equipment available to CPIIS, or at all; or
(ii)outside of the skill sets offered by CPIIS’s staff; and
3.1.2use its reasonable commercial endeavours to accommodate the requested timings of Services to be delivered under any Call Off, but the Customer acknowledges that as the operator of a part publicly funded open access research facility, CPIIS cannot give undue priority to the Customer nor exclude other third parties from access to those facilities by permitting the Customer exclusive use of any resource as part of the Services; and
3.1.3supply all Services under each Call Off subject to the Conditions of Supply
4OBLIGATIONS OF THE CUSTOMER
4.1Subject to Clause 4.3, in consideration of reservation of staff and facilities required to deliver the Services and of the pricing model agreed under this Agreement, the parties have agreed that the Customer shall by the end of the Year make the relevant Minimum Spend in respect of Services before the Take or Pay Date.

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4.2Subject to Clause 4.3, the Customer agrees that it shall during the Year make payments for Services to CPIIS under Call Offs of a total of at least the Minimum Spend before the Take or Pay Date.
4.3The Customer shall be permitted on the Take or Pay Date to reduce the Minimum Spend by the total of the amount that the Customer has actually spent in that Year under Clause 7.3 with third party suppliers on alternative services to any Services ordered from CPIIS under any Call Off prior to an Event of Force Majeure that have been affected by such Event of Force Majeure.  Such adjustment shall be assessed and capped to the value of such Services had they been provided and carried out by CPIIS according to the rates under this Framework Agreement.
4.4Where the Customer is unable to access the facility, the Minimum Spend will be reduced on a pro rata basis in line with the formula set out in Schedule 5
4.5CPIIS agrees to provide the Customer with regular information in accordance with the Project Management Protocol, and the Customer agrees to proactively phase and manage the placing of its Call Offs throughout the Year so as to ensure the smooth and regular placing of Call Offs and delivery of Services in order to achieve the Minimum Spend.
4.6The Customer agrees that if during the Year the Customer has not made payments for Services to CPIIS under Call Offs of a total of at least the Minimum Spend before the Take or Pay Date, that without prejudice to any other rights or remedies that CPIIS may have under this Agreement, under any other agreement, or otherwise, that CPIIS shall by way of liquidated damages for any breach of Clause 4.2 be entitled to a payment of the shortfall between Services actually paid for by the Customer and the Minimum Spend (“Liquidated Damages”).
4.7The Parties hereby agree that the Liquidated Damages are a genuine and reasonable pre-estimate of the loss that CPIIS would suffer in the event of a breach of Clause 4.2 by the Customer.

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4.8CPIIS shall be entitled to invoice the Liquidated Damages to the Customer at any time after the Take or Pay Date, and the Customer shall pay such invoice within 30 days of issue.
5ASSIGNMENT

Neither Party shall be entitled to assign, novate, sub-contract or otherwise transfer this Agreement or any part of it without the prior written consent of the other Party.

6TERM, TERMINATION AND POST TERMINATION
6.1This Agreement shall come into force on the Commencement Date and, subject to Clauses 6.3 and 6.4, shall continue in force for the Term.
6.2Not Used .
6.3Either Party may, by notice in writing to the other Party, instantly terminate this Agreement if:
6.3.1the other Party makes an arrangement or composition with its creditors, or otherwise takes the benefit of any act for the time being in force for the relief of insolvent debtors, or convenes a meeting of creditors (whether formal or informal), or enters into liquidation (whether voluntary or compulsory) except a solvent voluntary liquidation for the purpose only of reconstruction or amalgamation, or has a receiver and/or manager, administrator or administrative receiver appointed of its undertaking or any part thereof, or a resolution is passed or a petition presented to any court for the winding up of the other Party, or any proceedings are commenced relating to the insolvency or possible insolvency of the other Party; or
6.3.2the other Party suffers or allows any execution, whether legal or equitable, to be levied on its property or obtained against it; or
6.3.3the other Party is unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986; or

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6.3.4the other Party ceases to trade; or
6.3.5the other Party suffers or is subject to a similar situation or analogous action in any jurisdiction.
6.4Either Party shall have the right to terminate this Agreement forthwith by written notice to the other Party in the event that the other Party is in material breach of its obligations under this Agreement and:
6.4.1where such breach is capable of remedy, the Party receiving the notice fails to rectify such breach within thirty (30) days of receipt of a written notice from the terminating Party specifying the nature of the breach and requiring it to be rectified; or
6.4.2where such breach is not capable of remedy, by serving written notice with immediate effect.
6.5The termination of this Agreement shall not of itself act to terminate any individual contracts that may be in place between the Parties under any Call Off, each such Call Off being separately subject to the Conditions of Supply and the termination of each such contract under a Call Off being determined separately by the Parties under the Conditions of Supply.
6.6The provisions of clauses 4, 5, 6, 7, 8 and 10 shall survive termination.
7FORCE MAJEURE
7.1Provided always that the Party in question uses all reasonable endeavours to prevent and mitigate an Event of Force Majeure, subject always to Clause 7.3, any Party affected by an Event of Force Majeure shall be excused performance of its obligations under or pursuant to the Agreement (save for those obligations in Clauses 4 and 5) if and to the extent that performance of such obligations is delayed, hindered or prevented by such Event of Force Majeure.
7.2Without prejudice to Clause 7.1, if a Party is prevented in whole or in part from performing its obligations by reason of an Event of Force Majeure or is aware of the

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likelihood of being so prevented, it shall notify the other Party in writing promptly of the cause and extent of such non performance or likely non performance, the date or likely date of commencement thereof and the means proposed to be adopted to remedy or abate the Event of Force Majeure; and the Parties shall without prejudice to the other provisions of this Clause 7.2 consult with a view to taking such steps as may be appropriate to mitigate the effects of such Event of Force Majeure.
7.3In the event that an Event of Force Majeure should last for more than 90 days without the Party affected by such Event of Force Majeure being able to mitigate, remedy or abate the Event of Force Majeure in accordance with the steps agreed by the parties under Clause 7.3, then the Customer shall be entitled to purchase from third party suppliers alternative services to any Services ordered from CPIIS under any Call Off prior to the Event of Force Majeure that have been affected by such Event of Force Majeure, and shall be permitted on the Take or Pay Date to make an adjustment to the Minimum Spend at set out under Clause 4.3 2.  Provided such adjustment shall be assessed and capped to the value of such Services had they been provided and carried out by CPIIS according to the rates under this Framework Agreement.
8GENERAL
8.1Each right or remedy of a Party under this Agreement is without prejudice to any other right or remedy of that Party whether under this Agreement or not.
8.2If any wording in any provision of this Agreement is found by any court, tribunal or administrative body of competent jurisdiction to be wholly or partly illegal, invalid, void, voidable, unenforceable or unreasonable, such wording shall to the extent of such illegality, invalidity, voidness, voidability, unenforceability or unreasonableness be deemed severable, and the remaining provisions of this Agreement and the remainder of such provision shall continue in full force and effect.
8.3Failure or delay by either Party in enforcing or partially enforcing any provision of this Agreement will not be construed as a waiver of any of its rights under this Agreement.

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8.4Any waiver by a Party of any breach of, or any default under, any provision of this Agreement by the other Party will not be deemed a waiver of any subsequent breach or default and will in no way affect the other terms of this Agreement.
8.5A person who is not a party to this Agreement has no right under the Contracts (Right of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
8.6The formation, existence, construction, performance, validity and all aspects of this Agreement shall be governed by English law and the parties submit to the exclusive jurisdiction of the English courts.
9OPERATIONS AND PROJECT MANAGEMENT PROTOCOL
9.1Both Parties agree to follow the Operations and Project Management Protocol including Service Level Agreement throughout the Term.
9.2CPIIS shall procure that whilst providing the Services to the Customer under this Agreement, that its employees also follow the Day to Day IP and Information Management Guidance.
10NON-SOLICITATION
10.1Neither Party shall, directly or indirectly solicit or entice away from the employment of the other Party any person employed or engaged by the other Party during the Term and for a period of six (6) months after the expiry of the Term or the termination of this Agreement.
10.2For the avoidance of doubt, the provisions of clause 10.1 above shall extend to the employees of each Party’s Group.

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IN WITNESS whereof this Agreement has been executed by authorised signatories on the date stated above

Signed by /s/ Scott Percy

for and on behalf of CPI Innovation Services Limited

Scott Percy

Name: ………………………………………………………………………

Director of Photonics & Electronics

Job Title: ……………………………………………………………………

Signed by /s/ Ian Jenks

for and on behalf of SmartKem Limited

Ian Jenks

Name: ………………………………………………………………………

CEO

Job Title: ……………………………………………………………………

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SCHEDULE 1 - CONDITIONS OF SUPPLY

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SCHEDULE 2 - LIST OF SERVICES

 

 

 

 

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SCHEDULE 3 - CALL OFF FORM

 

 

 

 

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SCHEDULE 4 - RATE CARD

 

 

 

 

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Schedule 5: Operations and Project Management Incorporating Service Level Agreement

 

 

 

 

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SCHEDULE 6 - DAY TO DAY IP AND INFORMATION MANAGEMENT GUIDANCE

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