November 19, 1968'. Mr Kenneth W.- Smith,. J. Prosident,. .11nited States.Banknote. Corp.-,,~.' 34S Hudson Street, - NEW YORKP* -N.Y.'. 10014 lot Dear _Xea, Ye have agreed-to suggested changes i . n-the your Letter,of Agreement dated November 7,. 1968, and-, s~s requested. by you,,,* r now return'two'signed,' copies.. 'kind regards,~*,.. With, L.C. Laporte', Vice-President, ..:..Research &~DovqIopmcnt;-- BATCo document for Legal Services : Health Canada 22 October 1999 "Y Rk~ 'A"o?_1 L CJ COR POR.-NTION, UNITED STATEs BAINKNOT11, 345 HUDSON STREET. NEW YORK 1001-4 - ORE0014 5-8310 KENNETH W. SMkTH 0.01,F-c- November 7 Mr. Leo C. Laporte VED Vice President NOV Imperial Tobacco Company of Canada Limited 3810 St. Antoine Street Montreal 30, Quebec, CanadaDEVELOPMUI Dear Leo: Thank you for sending us a rovised dcaft of ir tir proposed letter agrti(-ment. I have made a few changes in the letter and I ave zi,-cordingly rewritton it, hoping it will be satisfactory to you. I have signecl this letter witbout dis- cussing it with you in advance inasmuch as I must leave early tomorrow for the Far East. You will note we have changed the date for the timing of the disclosure to British American Tobacco Co., Ltd. to December 30 since- I will not be back in the States until early December. We have also made some changes in your suggestcd language and timing relating to a possible termination. Stich clause would be applicable only to the period of time between the exectuion of this agreement and the date the decision is made to go into production of the filter, after whicli it is a matter of exclusivity. Bob Wade has kindly forwarded copies of MA invoice forms to be 4-c-ecuted by us concurrently with our shipment of the material and sample xinits to 0 you. Kindly express our thanks to Bob for providing these papers. We are getting these things together and will forward them as soon as possible. Many thanks for the numerous courtesies extende(I to Dave and mt- during our visit which was not only enjoyable but of real bcnefit to us. Very best regards to you and all your colleagues-- Co~dially, PE~-DVED icD P 00 ES D0 OEVELOPPMEINVT Cr, BATCo document for Legal Services : Health Canada 22 October 1999 VX V UNNI T E D S TkT Es BA-.mix-on; CopmitATIO--m 3,4S HUDSON STRCCT. MCWYORA 10014 ORC42ON 5-6310 XCUNCT" VW. SMITH PAILS.66UT Womarri-C November 7, 1968 RECEIVED Rr. Mr. Leo C. IAporte Vice President Imperial Tobacco Company of Canada Limited 38 10 St. Anto=e Street Montreal 30, Quebec - Canada Dear Mr. Laporte: This will serve to set forth the substance of our recent conversations relating to the protein filter for which patent application has been filed by us in the United States and is in the process of being filed in Canada. For the Canadian market we are to sell our protein filter in whatever fonn. or forms it may be developed for use as a cigarette filter exclusively to you, retaining the right to sell such cigarette filter to -other purchasers for all markets other than Canada and further retaining the right to sell to other purchasers all other types of protein filters whatever their e" use may be - in all markets, including Canada (except, as aforesa~d. cigi-zette filters in Canada). In return for the foregoing commitment you are to assist us in an advisory capacity, which will also include product testing, at no cost to us, in devising a retention specification for such cigarette filter so that we may pr6duce thb beat possible protein cigarette filter. It is difficult at this time to give you a defiiaitive date for co encing nun prodtiction of the filters, although every effort is being made to do so as soon -as possible. It is also difficult for us to give you a price other than a inaximum of two cents per pack of twenty cigarettes. However. to maintain e % xclusivity we win expect in due course'a commi ' tment from you and satisfactory .,,J" to us in terths. of volume of filters to be purchased by you during six mouth periods.whin more definitive'information is available regarding filtration. CIN \~c BATCo document for Legal Services : Health Canada 22 October 1999 UjrMn S-LIrAS ILAXXXOM CORPORAT= PAOR NO. imperial Tobacco Company November 7, 1968 charicteristics, costs# timing of commercial production and whatever other factors may be involved, but, in any~ event, not later than when we shall have mutually agreed that the filter is commercially I I/ satisfactory. Until such volume commitment is mad-_~'& this agreement v may be terminated by either party on giving 30,,days' notice in writing V , to the other, such 30 days commencing fro~=Iihe date of the receipt bX the addressee of the said notice. These filters are to be purchased from our subsidiary, Chemfilters, Ltd., of Hull, Quebec, or any of its affiliated companies. . -Z.0 Should any. claim be made by any third party that the filter sold to you by us'Wringes any Canad~an patent, upon your promptly notifying us of any ~such claim, we wo. ulal indemnify you and save you harmles s from any 6st, damage, or expense in connection with any such claim. 'All info rmation 4*ow at hand and obtained in the future in conne ction with this prot~= material for use. in- a cigarette filter is , to be made available to- each of the parties as long as this working agreement is in force. As agreed in our discussIons. you may disclose all information pertaining to this protein cigarette filter to the British-American Tobacco Co., Ltd. and associated companies wi thout any obligationon their part or ours; however, we are to -advise you as to the timing of this disclosure, which will be as soon as possible and certainly no later than December 30, 1968. Of course.' it is understood that neither you nor. the British-American - Tobacco Co., Ltd. nor any such associated companies will reveal or disclose any such information to any other person. As you.1mow, we are presently investigating other types of cigarette filters. In the future, we hope to make such other cigarette filters available to yoxi upon mutually agreeable terms. We sho~ld appreciate your signing and returning the two enclosed copies of this letter, which. is being transmitted in triplicate, indicating that the foregoing represents the genexal understanding reached d1tring our recent cpn,~e reations. (P BATCo document for Legal Services : Health Canada 22 October 1999 1~ r,%rmj) STAT" DAXXXM C012POALATIOX rAot xo. 3 Imperial Tobacco Company November 7. 1968 We are 1~oking forwar . d to a long and mutually profitable relationshij with you and anticipate the pleasure of working closely with you. Cordially, Confirmed and agreed to this 18t2-, day of November 1968. IMPERIAL TOBACCO COMPAN'y OF CANA.DA LIMjTEj> By- -..Yice-President Research &..D.evelopigent 2~% BATCo document for Legal Services : Health Canada 22 October 1999 F1 LE MEMORA13DUM to OCTOBER 30. 1968 VjftT OF VESSRS. SMITH & EBERLY OF UNITED STATES BANKNOTE CORRP. hID U.S. TECHNICAL DEVELOPMENTS CO., RESPECTIVELY TO MONTREAL, OCTOBER 25/68 K.W. Smith and D. Eberly -wt with Massrs. Laporte. Runeckles, Candlish and Wade to discuss, in detail. arranements for working Jointly with ImpaHal Tobacco for the purpose of developing- their collagen protein filter material for the manu- facture of cigarette filters. They visualize that this protein filter material may be used in three different forms, that Is, granular, sheet and extruded. They are presently concerned mostly with the first two forms. Mr. Eberly's recent visit to Molins in England was not completely successful in that Molins are not presently able to manufacture filters with the protein substance. There is a good possibility, haweverp that we may be able to do so using our Strickman filter machine and it was agreed that they would ship to us the eight pounds of material which they have on hand for our experimentation. For a 10 mm chamber size, they suggest 50 mg of material. Should we be aiming for a 12 mig tar delivery, they think that a 5 = chamber with 30 mg of collagen should be adequate. They would suggest that we try a ~ mm and 4 mm. chamber since these are lengths which-we can easily achieve. The colTagen can be produced with various gradations of particle sizes and the present material is known as No. 4, Shoulld we be successful in making machine-made cigarette filters 0 we should send them cigarettes made with the filters to see if theVr-efficiencies for tar and nicotine are similar to those which -U.S. Technical Developments has been achieving in their laboratory. If they appear reasonably similar, then we plan to proceed with more detailed analyses such as gas phase work. U.S. Banknote still plans to be the 'Manufacturer of any of these types of filters made with collagen as opposed to selling us the material with which wd would manufacture our own filters. It would be advisable to clarify the patent situation regarding the Strickman filter making -machine before we disclose the details of it to U.S. Banknote. They would like to send a technician to Montreal to work with us during our attempts to manu- facture suitable filters. The purpose of the technician would be to supply information ortaining to variations in the. material which are possible.. RS14/s g -Laporte,/ cc: Mr. L..C Mr. S. M. Candlish Dr. V.C. Runeckles. 4__ BATCo document for Legal Services : Health Canada 22 October 1999 United States Technical Developments Company DIVISION OF UNITED STATES BANKNOTE CORPORATION _7 Aroaki and Procest Engineering for - Govermnent and Initistry 345 HUDSON STREET * NEW YORK, N.Y. 10014 TELEPHONE. (222) OR4gon 5.8320 October 1, 1968 Mr. L. C. Iapc;rte Vice President-Research and Development Imperial Tobacco Company of Canada. Limited 3810 St. Antoine Street Montreal 30, Ca da OCT I RESEARN & Aear Mr. Laporte: DEEVELOME We are listing below patent and application file numbers which are important to.the manufacture of a collagen. cigarette filter of the type discussed during our recent meeting: 1) Material Processing and Media Structuring - U. S. Banknote application filed in the UJ~ited States and Canada (file numbers will be available within about two months). 2) Solubilization of Insoluble Collagen - 3. 034, 852- U. S. Tomio Nishihara, May 15, 196Z. 3) Supporting art and techniques among others include: 3,121, 049 U.S. ..' 3, 314, 861 U. S. 4) Mter for Cigirette Japanese Application 42-70239, August 16, 1967'o 5). Absorbing and Filteri~g Method of Tar of Cigarette Smoke Japanese Application 42-52343. August 16, 1967. A formal agreement between the Japan Leather Company and United States Ov. Banknote Corporation makes it possible to produce a stabilized and specia,11y processed collagen suitable for filter media. We have received copies, of'patents 678, $06 C and 3, 079, 926 U. S. ; together with a report oix the claim strength of these issues from our patent attorneys. We appreciate your bringing the numbers to our attention4 0D BATCo document for Legal Services : Health Canada 22 October 1999 0- UNITED STATES TECHNICAL DEVELOPMENTS COMPANY PACE Me. Mr. L. C. Lapo;te October 1, 1968 Irnperial Tobacco Company of Canada t My travel plans have been changed to October 13-16. The Molins people will have a 7. 5mm cavity in operation by the 14th. We want to take adv.intage of bot~ the IS and 7. Sm= capability during this visit. I would like to try machine production on smaller quantities in order to minimize the weight and length of collagen media. We will call you up?n our return. Sincerely, DHZ.8W David R. Eberly. Jr. ,4 Vice President ,~Sinc 01VISION Of UNITW STATES SANgNOT9 CORPORATION BATCo document for Legal Services : Health Canada 22 October 1999 F1 LE ME,6*RMDUM SEPTEMBER 18. 1968 NOTES ON VISIT TO UNITED STATES TECHNICAL DEVELOPMEXTS COMPANY, DIVISION OF UNITED STATES 8A.I.K.NOTE CORPORATION.'34S HUDSW STREET. NEW YORK, ON SEPTEMBER 12. 1968 Mr. Laporte and the writer were invited to visit the U.S. Technical Developmants Company to discuss the McBee Filter and other cigarette filter developments on which they have recently been work- Ino,: Present at the discussion were the following: Mr. Kenneth W. Sififth. President, U.S. Banknote Corp. 14r. David Eberly, V.P., U.S. Technical Developments Co. Dr. Al Rubin, M.D.; Director of U.S. Banknote Corp. Mr. Marcel aeaudoin, President, Chomfilters Ltd., Hull, Que. tfx,Raymond Rocque, Secretary, Chemffilters Ltd.. Hull, Que. In addition to the above, our host at lunchtime was Mr. Estee, Chairman of United States Sanknote Corporation. Dr. Rubin is professor at Cornell Medical School in charge of the artificial kidney and transplant program and is also medical consultant to Time Miagazine. He is an expert in collagens which Is the major protein In the body and forms the. supporting structure In the lungs and other organs, Some four to five-years ago, U.S. Banknote Corporation undertook to diversify by means of--new products and ideas and set up the U.S. Technical Developments Co., as their vehicle for diversifica- tion. Mr. Eberly, who is now Vice President of Development, has work- ing with him four or five teams of people comprising some throe to eight members per team, on development and evaluation of'new ideas. One area in which they have done considerable work. is'in the surgical instrument field and I believe it was primarily for this reason that Dr.-Rubin was appointed to th eir Board and he heads their medical advisory committee. Another area In which they have been working is in the development of filters for air and water pollution control and for cigarette smoke. They acquired the rights to the McBee filter and are in the process of letting out tenders for a plant an some 20 to 25 acres of ground in Buckingham. Quebec. They have not learned yet how to manufacture the McJ3ee filter but will be manu- facturing other filters for industrial purposes. In some of their discussions they bit upon the Idea of using collagen as a cigarette filter since it is a very complex molecule. more compleX' than can "4 be made by mang and because it exists In the body. and probably acts as a filter In the lungs. They have pursued this'idea and have now. 4t .0 /V ig z C. BATCo document for Legal Services : Health Canada 22 October 1999 I 2 - filed a patent application in the U.S. and Canada on a process for preparing collagen In suitable form for cigarette filters. They qen are aware that there are other patents'copceroIng the -t11se-g-f-;Ql I_A. for.cigarette filters but their patent'is-for a process which enables is obtained- ;-~-coiEW-fdt'aT-6~ploitati-on-6f-tffe-miitYriaI fr;dfn-the hides of calves on a. cor=ercial basis. They feel that there is an adequate supply of raw material. particularly in Canada, although it could pose a problem in the United,States if the filter were highly successful. As a matter of Interest a 5% Canadian brand would re- quire approximately 300.000 lbs. cf.collagen per year. They have a. technical information exchabgd arrangement with the Nippon Leather. Company of Japan and also sonm tentative supply arrangements. Collagen is used quite extensively In-various medical techniques and Cornell Medical School Is also tied up.with the Nippon Leather Company. Dr. Rubin,, or'other people from Cornell,, visit Japan.on a regular basis of every two to four months, U.S. Technical Developments has been working on cigarette filters for the past couple of years including the collagen Idea, and have done considerable work by way of testing the efficiency of the filters. They have utilized Snell Laboratories, U.S. Testing Company Laboratol-ies, and Analytica Corporation Laboratories in Long Island, the latter chiefly for gas chromatography work. They have also employed Dr. Kirby who is' associated with Sias Laboratories and with'Brookline Hospital in Boston, to examine the pirticle size of the smoke passing through the collagen cigarette filter. Dr. Kirby has developed an early warning germ warfare,system using a Coulter counter. tied to a computer whicht is able to detect very rapidly. very large numbers of particles, and to store this information in relation to particle size, and then print out the Information In various forms as required. Dr. Kirby has utilized this technique in examining cigarette smoka,,and finds that the collagen filter has a high retention for p4rticles In the 0.2 to 0.5 micron range, which sizes are,not'n-Bir-mally rejected by the lungs. The technique which Dr. Kirl~y used was to collect the smoke in a hypodermic needle and about one minute later inject the smoke from the syringo into the Coulter counter. -We queried the time delay bebteen the actual formation of the smoke'and the tinn of measurenient as this al-I'dws coagulation of particles, particularly the smaller ones. ;he information given to us was that, while this could be true, the smoke through the collagen filter was appreciably different from that through a regulan filter and that by comparison they concluded the collagen reduces the number.of small particle sizes much more than the large particle sizes* 7he construction of the filter is that-of putting the- collagen between two acetates. The inner filter, next to the tobacco, could be - T _paper or any filterthat one wishes. he control over the' BATCo document for Legal Services : Health Canada 22 October 1999 3 smoke deiivery is affected-by varying the bulk density, the fineness and the weight of the coll4gen. They started out their experiments using 250 mg per cigarette and have now gotten down to 50 mg in a 10 mm chapber with good efficiency and relatively low pressure drop. Deliveries down to 5 mg of wet T.P.M.,- have been obtained with a* pressure drop of approximately 61. The ratio of tar and nicotine can apparently also be ;kffected by var~ing the bulk density and the fineness of pirticle size. Them seems to be some indication of selectivity for tar filtration as opposed to nicotine. 7he particle size of the collagen in one of the cigarettes smoked was around 2 microns. The material is quite fibrous and. as a result, they claim that none comes through the'filter. With 50 mg of collaqen T a Kent cigarette yielded about 12 mg of wet T.P.M., and about 0.5 mg of nicotine. The pressure drop was relatively low - around 3 or 3-1/2'. 1 believe They said that collagen probably has a much higher surface to voiUme ratio than even charcoal. The preparation of the callagen for this purpose is very critical. Dr.,Rubin said that the filter material works because of three actions: 1) Hydrogen 'bonding, 2) Van der Waal Forces, 3) electrostatic charge. They anticipated that the electrosta 46 ic charge would give some difficulty in the flow of material in the hoppe~ of a filter making machine. Eberly's people are. studying f1m characteristics. They have talked with Mr. John Van Gelder of Violins who -is arranging production trials for them in England, and they anticipated that by November Molins could have some production filters for us to test. Mr. Eberly plans to go to the United Kingdom tot-tards, the end of Septemb*er for a couple of days to observe the filter making machinery and to possibly suggest modifications (Mr. Eberly was praised very highly by his co-workers for his engineering abilities). Holins are --.using what Mr. Eberly termed a recessed plug machine with a triple head producing 4 up in a rod. We suspect that this is the D.A.P.T.C. onii they are attempting to modify a charcoal feed system. They expect that by September 18th Molins should be able to make some filters. They have had analyses carried'out for benzpyrene in smoke and from the figures quoted it would appear that the benzpyrene Is removed in about the same proportion as tar. rhey haVe also had gas liquid chromatography performed primarily to ascertain if the filter gave rise to-any new materials in the cigarette smoke. The 'results were negative in- this regard. In so doingp they have obtained some qualitative analytical data on the gas phase of the smoke, And the components. of the gas phase-. ..the indications are that soma a am reduced* 4 C cc BATCo document for Legal Services : Health Canada 22 October 1999 4 The cost of hide ranges from $0.06 to !%.10 per pound and they expect that the cost of complete filters ill be in the range of $0.01 to $0.02 actual filter cost per twenty cigarettes. They wish to make tho.complete triple filter rods (4 up) thenselves and to sell us these rods. There would be no royalties and they do not ---wish to create a lot of publicity but they said they had some ideas ak to how such a filter could- be promoted. They have no intention of Mng any health claims however. Their intention is to manufacture e filters In Buckingham, Quebec, I Dr. Rubin said thiit'there was absolutely no association between this filter and Cornell Medical School or Time Magazine. They am approaching us because of their association with/ Chemfilters in Canada. They did approach one U.S. company some time ago in a rather informal way but they did.not tell them nearly as much as they told us. They would like to work with Imperial Tobacco in pursuing the development of the collagen filter since they feel they now need to work with people in the tobacco field and be guided by the requi rements of the tobacco industry. We. agreed to let them knovs within three to four weeks what our deciston would be. They would be willing to give us an exclusive licensing arrangement in Canada, assuming that the volume would be sufficient. We offered to advise them of tie types of'tests. which they should have carried out dn the filter for adequate evaluation. They are working on other filters which they are not ready to talk about as yet including the *rally" or as we know it the AcBee filter. Mr. Eberly said that the McBee filtir had soa)e interesting gas phase features. -They are studying the flow characteriSti through the filter,which' also has a lot of static but he ~~ a loss to explain why the McBee filter worked in the manner it does.. Monotype Canada Ltd**,, of Toronto* is- a wholly owned subsidiary of U. K 8anknote Corporation* RSW/sg' I .. , ~7 "-. . 4 cc:~*. LA. Laporte T co BATCo document for Legal Services : Health Canada 22 October 1999