EXHIBIT 10.29
PROCESSING AGREEMENT BETWEEN
OSTEOTECH, INC.
AND
MUSCULOSKELETAL TRANSPLANT FOUNDATION
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
TABLE OF CONTENTS
Page
1. DELIVERY AND PROCESSING OF TISSUE 1
1.1 MTF Commitment to Deliver Tissue for Processing 1
1.1.1 Exclusive Engagement of Xxxxxxxxx 0
1.1.2 Commitment to Deliver Tissue for Processing 2
1.1.3 Delivery of Tissue for Processing of Grafton(R)DBM Products 2
1.1.4 Costs of Procurement and Delivery 2
1.1.5 Compliance With Applicable Standards 3
1.1.6 Osteoarticular Tissue 5
1.1.7 Volume 5
1.1.8 Donor Records 6
1.2 MTF Research and Development; Retention of Development Donors 7
1.2.1 MTF Research and Development Activities 7
1.2.2 XXXXX 7
1.2.3 XXXXX 8
1.2.4 Processing Changes for Development Donors
and Equivalent Donors 9
1.2.5 XXXXX 10
1.2.6 Use of Retained Tissue 11
1.2.7 New Tissue Forms 11
1.2.8 MTF Processing Facility 12
1.3 Processing Responsibilities of Xxxxxxxxx 00
1.3.1 General Undertaking 12
1.3.2 Processes and Methods 12
1.3.3 Processing Considerations 15
2.1 STORAGE, SHIPPING, REGULATORY COMPLIANCE AND LABELING 16
2.1.1 Possession and Storage of Tissue 16
2.1.2 Shipping 17
2.1.3 Certain Joint Compliance Responsibilities 19
2.2 Liability 20
2.3 Records and Reports 23
2.4 New Tissue Form Development 25
2.5 Non-Proprietary New Products 26
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
2.6 Other Services 27
2.7 Publication and Public Disclosure 27
3.1 FINANCIAL TERMS 28
3.2 Invoicing and Payment 29
4. CONFIDENTIALITY AND CERTAIN OTHER COVENANTS 30
4.1 Non-Disclosure of Confidential Information 30
4.2 Non-Solicitation of Osteotech Employees 32
4.3 Non-Solicitation of MTF Employees 32
4.4 XXXXX 32
4.5 XXXXX 33
4.6 Non-Solicitation of Sales Agents 34
4.7 MTF Sales Agents 35
4.8 Surviving Provisions 36
5. TERM OF AGREEMENT 36
6. TERMINATION 36
7. INSURANCE 41
8. FORCE MAJEURE 42
9. ASSIGNMENT 42
10. NAME, EMBLEM, PACKAGING, TECHNOLOGY AND TRADEMARK 42
11. NOTICES 44
12. ENTIRE AGREEMENT 44
13. XXXXXXXXXXXX 00
00. APPLICABLE LAW 45
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
15. WAIVER 45
16. INDEPENDENT CONTRACTOR 45
17. SEVERABILITY 45
18. SUCCESSORS 46
AGREEMENT
This Agreement is made as of April 1, 1997 by Musculoskeletal
Transplant Foundation, ("MTF"), a non-profitDistrict of Columbia corporation,
and Osteotech, Inc. ("Osteo- tech"), a Delaware corporation as follows:
WHEREAS, Osteotech provides high-quality tissue processing
services ("Processing") and other related services to entities engaged in
procuring and distributing human bone and related connective soft tissue for
transplantation (collectively, "Tissue"); and
WHEREAS, MTF procures and distributes Tissue from various
sources, and wishes to contract with Osteotech to process such Tissue; and
WHEREAS, MTF wishes to ensure its ability to obtain processing
services and certain other services and Osteotech desires to perform such
services and to Process Tissue for MTF, provided that MTF agrees to exclusively
provide Tissue to Osteotech for Processing (except as otherwise provided
herein), regardless of where it is recovered, under the following agreed terms
and conditions;
NOW, THEREFORE, the parties agree as follows:
1. DELIVERY AND PROCESSING OF TISSUE 1.1 MTF Commitment to Deliver Tissue for
Processing 1.1.1 Exclusive Engagement of Osteotech. MTF hereby engages Osteotech
as its worldwide exclusive provider of Tissue Processing services and agrees not
to engage any other party to provide such services during the term of this
Agreement, except as otherwise provided herein.
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1.1.2 Commitment to Deliver Tissue for Processing. MTF shall deliver to
Osteotech for Processing in accordance with this Agreement all Tissue procured
by or on behalf of MTF, other than Retained Tissue (as hereinafter defined). In
the event that MTF procures donors outside the United States, Canada and Mexico
("North America"), South America and Europe and such donors cannot be shipped to
an Osteotech facility within the time specified in the Recovery Standards (as
hereinafter defined) and the Processing Standards (as hereinafter defined), MTF
may have such donors processed in a facility other than an Osteotech facility,
provided that such non-Osteotech facility is located outside North America,
South America and Europe.
1.1.3 Delivery of Tissue for Processing of Grafton(R) DBM Products. At
Osteotech's request, MTF shall use its Best Efforts to provide to Osteotech for
Processing cortical bone Tissue suitable for Processing into Grafton(R) DBM
products sufficient to meet Osteotech's good faith forecast of hospital/end user
demand for such products. For purposes of this Agreement, "Best Efforts" shall
mean, as to a party hereto, an undertaking by such party to perform or satisfy
an obligation or duty or otherwise act in a manner reasonably calculated to
obtain the intended result by action or expenditure not disproportionate or
unduly burdensome in the circumstances, which means, among other things, that
such party shall not be required to institute litigation or arbitration as part
of its Best Efforts.
1.1.4 Costs of Procurement and Delivery. As between the parties hereto, MTF
shall be responsible for the costs of procuring, screening, testing, storing,
and delivery of Tissue to Osteotech for Processing.
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1.1.5 Compliance With Applicable Standards.
(a) Compliance with Recovery Standards. With the exception
of Retained Tissue, all Tissue procured by MTF and delivered
to Osteotech for Processing shall conform to all standards,
guidelines, rules, regulations and laws applicable to the
donation, recovery, and suitability of Tissue (the "Recovery
Standards"). The Recovery Standards shall include applicable
standards and requirements relating to donor referral,
informed consent, tissue recovery, pre-processing storage,
packaging and shipping of pre-processed Tissue and all
records, activities and standards related to obtaining,
testing, documenting and evaluating serological test results;
obtaining, documenting and evaluating medical history and
lifestyle data; and related organizational, management and
quality assurance activities as may be contained in: (i)
applicable laws, regulations, and guidelines of the United
States Food and Drug Administration ("FDA"); (ii) applicable
standards and guidelines promulgated by the American
Association of Tissue Banks ("AATB"); (iii) applicable laws
and regulations of other U.S. federal, state and local
government agencies with jurisdiction over the procurement and
distribution of human musculoskeletal tissue; (iv) applicable
laws and regulations of non-U.S. jurisdictions where such
Tissue Processed by Osteotech is procured or distributed by or
on behalf of MTF; (v) MTF's standard operating procedures
("SOPs"), as may be amended from time to time by MTF; and (vi)
Osteotech's standards for recovered Tissue, to the extent
applicable to MTF supplied Tissue, as specified in Osteotech's
SOPs, as may be amended from time to time by Osteotech and as
provided to MTF in advance of their effectiveness. If
interpretation of the Recovery Standards is required or if
there is a disagreement about the interpretation of the
Recovery Standards, MTF and
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Osteotech will attempt to negotiate a resolution in good
faith. If such interpretations or disagreements are not
resolved by the parties, the parties will mutually agree to a
third party who will assist the parties in arriving at a
resolution.
(b) Compliance with Applicable Processing Standards. With
the exception of Retained Tissue, MTF shall comply with
the Processing Standards (as hereinafter defined) to the
extent applicable to MTF's activities as contemplated
hereunder.
(c) Standard Operating Procedures. MTF and Osteotech shall each
provide the other a copy of its SOPs and copies of any
amendments to its SOPs promptly after such amendments are
adopted; provided, however, that doing so will not require
such party to disclose any trade secrets, technical know how
or unpublished scientific data or technical art to the other
party.
(d) Reciprocal Audit Rights. Upon reasonable notice and at
its own expense, each of Osteotech and MTF shall have the
right to conduct an annual audit of the other party's
facilities and records related to regulatory compliance
and, in the event there are repeated significant defects
in such other party's compliance with its SOPs or any
applicable Recovery Standards or Processing Standards, as
the case may be, each of Osteotech and MTF may conduct
such additional audits of the other party's facilities
and records related to regulatory compliance as are
reasonably necessary to ensure that such defects have
been rectified. Notwithstanding the foregoing, in any
such audit MTF will be entitled to review Osteotech's
records only to the extent such records relate to donors
delivered by MTF to Osteotech for Processing and
Osteotech will be entitled to review MTF's records only
to the extent such records relate to donors delivered by
MTF to Osteotech for Processing.
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1.1.6 Osteoarticular Tissue. It is the goal of the parties for MTF to process in
its research and development facility during the term of this Agreement all of
the osteoarticular ("OA") Tissue procured by MTF. Notwithstanding the foregoing,
commencing no later than July 1, 1997 and until such time as MTF is able to
process all of the OA Tissue, MTF will process the OA Tissue recovered from
donors on Sundays through Tuesdays and Osteotech will process the OA Tissue
recovered from donors on Wednesdays through Saturdays. MTF will take no action
or fail to take any action which would influence OA Tissue donations in a manner
that would cause Osteotech to process a disproportionate share of the OA Tissue
recovered for processing.
1.1.7 Volume
(a) MTF may increase the volume of donors delivered to
Osteotech above the volume set forth in the applicable
forecast prepared and agreed to in accordance with
subsection (b), provided that it gives Osteotech ninety
(90) days prior written notice for every planned incre-
mental increase of fifty (50) donors in any month, unless
Osteotech agrees in writing to a shorter notice period
for any of these increases.
(b) Subject to subsection (a), MTF and Osteotech shall
jointly agree upon written forecasts for the Processing
of Tissue for the succeeding twelve (12) months, broken
out by month. The first such forecast shall be provided
thirty (30) days after the effective date of this
Agreement; each such forecast shall be a rolling twelve
(12) month forecast provided each January 1, April 1,
July 1, and October 1. If the parties cannot agree upon
a forecast for any month, the forecast for such month
shall be the average of the forecasts of the parties for
the immediately preceding three months.
(c) Osteotech will arrange with MTF to hold weekly production
meetings to discuss Processing and other related issues.
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(d) MTF shall be responsible for the performance of all
serology testing on each donor procured by MTF which
shall be performed by a laboratory certified by the
Department of Health and Human Services under the
Clinical Laboratory Improvement Amendments of 1988. The
results of such tests will be forwarded to Osteotech in
accordance with the Recovery Standards and the Processing
Standards. MTF shall also make arrangements to acquire
blood and tissue culture kits and Procurement Packs.
Until such time as MTF is able to perform these responsi-
bilities, Osteotech will continue supplying these
services at prices as stipulated in Exhibit 3.1. Upon
the commencement of its performance of these responsibil-
ities, MTF will acquire, at prices stipulated in Exhibit
3.1, all of Osteotech's then existing inventory of DDI
Kits and Procurement Packs; provided that MTF shall not
be required to purchase more than three (3) months' worth
of such inventory.
1.1.8 Donor Records
(a) MTF will obtain and maintain complete and accurate
records as required of MTF by the Recovery Standards
(including without limitation donor medical history,
donor life style information, serology and blood culture
testing), as well as records with respect to (i) inventory
of MTF procured Tissue shipped to Osteotech, (ii)
inventory of processed MTF Tissue received from Osteo-
tech, and (iii) the receipt and processing of all end
user orders received from MTF's customers who utilize the
Tissue. MTF shall provide to Osteotech, within fifteen
(15) days of the end of each calendar quarter, data on
the donor procurement activity of MTF occurring during
that quarter, including without limitation information
regarding Retained Tissue. Osteotech shall have the
right to audit MTF donor procurement activity data,
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including without limitation information regarding Retained
Tissue, upon reasonable prior written notice to MTF.
(b) MTF shall also obtain and forward to Osteotech, in English,
such records, within the requisite time period, as may be
reasonably necessary to satisfy all of the Processing
Standards, including, but not limited to, donor medical
history, donor life style information and all donor testing
information.
(c) In the event any regulatory agency audits or otherwise
inspects MTF's facilities or records and requires information
maintained by Osteotech relating to the Processing of MTF
Tissue by Osteotech, Osteotech will provide MTF with such
information as is necessary to satisfy any such request by any
such regulatory agency.
(d) In the event any regulatory agency audits or otherwise
inspects Osteotech's facilities or records and requires
information maintained by MTF relating to MTF's recovery,
screening and testing of Tissue Processed for MTF by
Osteotech, MTF will provide Osteotech with such information as
is necessary to satisfy any such request by any such
regulatory agency.
1.2 MTF Research and Development; Retention of Development Donors 1.2.1 MTF
Research and Development Activities. MTF intends to conduct research and
development activities with respect to the recovery, processing, and transplant
of Tissue and activities related thereto. One of the objectives of such research
and development activities is to develop new Tissue based products and
applications for Tissue.
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1.2.2 XXXXX
1.2.3 XXXXX
1.2.4 Processing Charges for Development Donors and Equivalent Donors . On an
ongoing basis, MTF shall declare donors from which it retains Tissue as
Development Donors, provisional Development Donors, or Equivalent Donors, as the
case may be. MTF shall pay Osteotech the following processing charges for
Development Donors and Equivalent Donors from which Tissue is retained by MTF:
(a) XXXXX
(b) XXXXX
(c) XXXXX
(d) XXXXX
1.2.5 XXXXX
1.2.6 Use of Retained Tissue. MTF may use Retained Tissue for
any of the following applications:
(a) research and development activities;
(b) processing and distribution of Retained Tissue from up to
XXXXX Development Donors annually, provided that MTF
shall use its Best Efforts to limit the effect of
distributing existing Tissue forms on distribution of
Tissue forms processed by Osteotech (e.g., by using its
Best Efforts to ship such Tissue first outside the United
States and then to the extent such Tissue cannot be
distributed outside the United States, to areas where
there are no existing customers for Osteotech-processed
Tissue);
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
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(c) processing and distribution of New Tissue Forms where
Osteotech has declined or failed to process such New
Tissue Forms;
(d) processing and distribution of tissue forms to fill a back
order (provided such back order is not a direct result of
MTF's failure to adequately procure or plan Donors); and
(e) processing and distribution of a form of Tissue that is
proprietary to MTF.
1.2.7 New Tissue Forms. The term "New Tissue Forms" shall mean any forms of
Tissue that are not included in MTF's catalogue as of April 1, 1997 and which
are developed by or on behalf of MTF or in which MTF has secured processing or
distribution rights. New Tissue Forms shall not include Tissue forms, the
design, development, or processing of which is proprietary to Osteotech or any
of its other Tissue Processing clients. A New Tissue Form shall be considered a
New Tissue Form until such time as Osteotech commences authorized Processing of
such Tissue form for MTF or any other client. At such time, MTF shall engage
Osteotech to Process such Tissue form provided that (a) Osteotech reasonably
demonstrates that such Tissue form as processed by it is of equal or greater
quality to the New Tissue Form processed by MTF and (b) Osteotech and MTF agree
to a processing charge for such Tissue form. If the foregoing conditions are not
met, MTF may continue to process such Tissue form as a New Tissue Form.
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1.2.8 MTF Processing Facility. MTF will not process Tissue as permitted
hereunder in any facility other than its own research and development processing
facility and will not process Tissue in its facility except as permitted
hereunder. Such facility shall not exceed the size and operational capacity
(taking into account the amount of Processing and related equipment and the
number of rooms and personnel) considered reasonably necessary in the industry
to conduct research and development activities with respect to, and process,
XXXXX Development Donors and XXXXX Donor Equivalents as permitted hereunder.
1.3 Processing Responsibilities of Osteotech
1.3.1 General Undertaking
(a) Processing and packaging of Tissue received by Osteotech
pursuant to Section 1.1.2 into then currently available
finished units of Tissue shall be conducted by Osteotech
pursuant to the Processing Standards in accordance with
Section 1.3.2. For purposes hereof, Processing shall include
all operations necessary to prepare procured Tissue for
transplantation.
(b) Osteotech shall, upon reasonable prior written notice from
MTF, permit MTF to change the production plan for a donor
determined pursuant to Section 1.3.3(a).
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
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1.3.2 Processes and Methods
(a) Processing of Tissue will be performed by Osteotech under
applicable Processing Standards. "Processing Standards"
shall mean all standards, guidelines, rules, regulations
and laws applicable to the Processing, storage, packag-
ing, labeling, and shipping of Tissue by Osteotech. The
Processing Standards shall include (i) applicable laws,
regulations, and guidelines of the FDA; (ii) applicable
standards and guidelines promulgated by the AATB;
(iii) applicable laws and regulations of other U.S.
federal, state and local government agencies with
jurisdiction over the processing and distribution of
human musculoskeletal tissue; (iv) applicable laws and
regulations of non-U.S. jurisdiction where Tissue
processed by Osteotech is procured or distributed by or
on behalf of MTF; (v) MTF's SOPs, as may be amended from
time to time by MTF and as provided to Osteotech in
advance of their effectiveness; and (vi) Osteotech's
SOPs. If interpretation of the Processing Standards is
required or if there is a disagreement about the inter-
pretation of the Processing Standards, MTF and Osteotech
will attempt to negotiate a resolution in good faith. If
such interpretations or disagreements are not resolved by
the parties, the parties will mutually agree to a third
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party who will assist the parties in arriving at a
resolution.
(b) In the event the FDA, any other applicable regulatory
agency or the AATB, implements new or additional regula-
tions applicable to Tissue, Osteotech and MTF shall each
implement such changes to its SOPs as are necessary to
comply with such regulations. In the event Osteotech is
unable or unwilling to implement such changes, MTF shall
have the remedy set forth in Section 6.5 and in the event
MTF is unable or unwilling to implement such changes,
Osteotech shall have the remedy set forth in Section 6.5.
(c) Osteotech will grant designated MTF personnel access to
its facilities to observe all steps of Processing for the
purpose of conducting a standard MTF inspection of
Osteotech's compliance with the Processing Standards. As
part of this inspection, all Processing Standards will be
made available to the inspectors; provided, that such
access will not require Osteotech to reveal any
proprietary know-how or trade secrets unless it is
necessary to MTF's understanding of whether Osteotech is
in compliance with the Processing Standards and to the
extent applicable to Osteotech, the Recovery Standards
and then only to a mutually agreeable third party. Such
third party will have access to such proprietary know-how
and trade secrets only if it signs a confidentiality
agreement satisfactory to Osteotech. If such personnel
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require access to Osteotech's cleanrooms, the personnel must
have on file with Osteotech appropriate blood serum test
results and such other appropriate test results as Osteotech
may require prior to such personnel being granted access to
Osteotech's cleanrooms. Osteotech may, at its sole discretion,
refuse any individual access to Osteotech's cleanrooms for
cause. Such denial of access will not be a violation of this
Agreement.
(d) MTF will grant designated Osteotech personnel access to
its facilities to observe MTF's Tissue recovery
activities for the purpose of conducting a standard
Osteotech inspection of MTF's compliance with the
Recovery Standards and to the extent applicable to MTF,
the Processing Standards. As part of this inspection,
all Recovery Standards will be made available to the
inspectors; provided, that such access will not require
MTF to reveal any proprietary know-how or trade secrets
unless it is necessary to Osteotech's understanding of
whether MTF is in compliance with the Recovery Standards
and to the extent applicable to MTF, the Processing
Standards and then only to a mutually agreeable third
party. Such third party will have access to such
proprietary know-how and trade secrets only if it signs
a confidentiality agreement satisfactory to MTF.
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1.3.3 Processing Considerations:
(a) MTF will pre-plan, including a written primary and
secondary donor plan, the expected production from each
donor prior to the scheduled day of Processing. If
Tissue cannot be processed according to either the
primary or secondary donor plan, verbal approval will
first be obtained by Osteotech from MTF for changes to
the primary or secondary donor plan prior to Processing
by Osteotech which MTF will confirm by faxed written
approval. Osteotech will use its Best Efforts to
maximize the planned yield from each donor.
(b) Osteotech may present valid evidence to MTF if Osteotech
determines that FDA, AATB or other applicable government
agency mandated changes in processing techniques or the
quality and condition of MTF Tissue prevents the
achievement of the planned yield provided for in subsec-
tion (a). The parties agree to discuss the implications
of such parameters and to determine a reasonable yield
based on such new requirements.
(c) MTF and Osteotech shall each undertake reasonable efforts to
present a consistent flow of donors and Tissue to the other
with the goal of minimizing second-half-of-month bunching of
donors and Tissue. Subject to the foregoing sentence, donors
received at Osteotech for Processing will be processed within
a reasonable period of time (which shall be reviewed at the
weekly production
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meetings provided for in Section 1.1.7(c)) from the time all
required, complete and accurate donor documentation as
specified by the Processing Standards is received at
Osteotech. Subject to the foregoing, Osteotech will use
reasonable efforts to complete the Processing of MTF Tissue
and deliver such processed Tissue to MTF within a reasonable
period of time. Once Processing of the donor is complete,
subject to the provisions of Sections 2.1.1 and 2.1.2(a), all
Tissue will be shipped to MTF upon final inspection and
release thereof by Osteotech's Quality Assurance Department.
Osteotech will advise MTF no later than the following business
day if there will be a material delay in the commencement of
Processing of donors which have been released from Osteotech's
Quality Assurance Department.
(d) If the release of processed Tissue back to MTF is delayed due
to: (i) Tissue histology of unknown etiology or (ii) microbial
contamination of final product, Osteotech will immediately
notify MTF of the reason for the hold and the approximate time
period expected for the hold (in weeks).
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(e) XXXXX
2.1 STORAGE, SHIPPING, REGULATORY COMPLIANCE AND LABELING
2.1.1 Possession and Storage of Tissue
(a) Tissue delivered by MTF to Osteotech for Processing and
any finished units or other by-products derived from such
Tissue shall be held by Osteotech on behalf of MTF at all
times until delivery thereof to MTF or pursuant to MTF's
instructions, except that MTF may grant Osteotech written
permission to use excess Tissue for research purposes.
Neither MTF nor OTI shall have any ownership or other
property right in any such Tissue, finished units or
other by-products and shall not allow any third party to
obtain any such right (whether in the nature of a lien,
security interest, encumbrance, or otherwise). Neither
MTF nor Osteotech shall sell, trade, or otherwise dispose
of or imply that it is selling, trading or otherwise
disposing of, banked human tissue, provided, that this
shall not prohibit either party from promoting or
marketing its processing techniques and other services in
compliance with applicable law.
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
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(b) To the extent Osteotech stores any MTF Tissue, including but
not limited to MTF Grafton inventory, such storage shall be in
compliance with all applicable portions of the Processing
Standards. Except as provided in Section 2.1.1(c) and Section
2.1.2(e) hereof, MTF shall bear the risk of loss for all
Tissue delivered to Osteotech by MTF.
(c) In the event that Tissue which is being processed by
Osteotech or held by Osteotech in "quarantine storage",
"pre-processing storage", or "post-processing storage"
(as such terms are defined or described in the applicable
portions of the Processing Standards) is destroyed or
rendered unusable while in the possession of Osteotech
due to the negligence of Osteotech, Osteotech shall pay
to MTF the market value of such Tissue less the cost of
Processing such Tissue.
2.1.2 Shipping
(a) Except as otherwise provided in a written document signed
by both Osteotech and MTF, Osteotech shall ship all
finished units of Tissue, other than demineralized bone
and items being reworked, derived from a donor received
for Processing from MTF back to MTF in one shipment by a
carrier designated by MTF. Osteotech shall ship finished
units of demineralized bone to MTF upon release from
Osteotech's Quality Assurance Department, except that in
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the case of finished units of MTF Grafton inventory which have
been released by Osteotech's Quality Assurance Department,
Osteotech will ship such units to MTF upon and in accordance
with MTF's order. Any item being reworked will be shipped back
to MTF as soon as it is completed and released by Osteotech's
Quality Assurance Department. MTF shall be responsible for
payment of all shipping costs.
(b) Osteotech shall ship all finished units of Tissue in shipping
containers which meet the requirements specified in the
Processing Standards. All packaging and shipping containers
must be validated and the validation studies shall be
available for review by MTF's Quality Assurance and Regulatory
Affairs Departments.
(c) Osteotech shall clearly label each shipping container as
containing transplantable tissue and with the addresses of
both the shipping and receiving facility. Such labeling shall
meet the specifications included in the Processing Standards.
(d) Each shipment from Osteotech shall include a packaging slip
listing the contents and corresponding donor lot and batch
numbers, if applicable. All tissue containers in each shipment
shall be packed with sufficient materials between containers
so that breakage will be minimized.
(e) MTF will promptly notify Osteotech of any damage to the
finished units of Tissue during shipment thereof.
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Osteotech will file a claim against the shipping carrier for
the amount of damage up to the amount insured. The amount
recovered from the shipping carrier for claims will be passed
on to MTF within ten (10) days of receipt by Osteotech.
Osteotech shall have no liability for any damage to finished
Tissue incurred during shipping, except to the extent
Osteotech fails to ensure that the shipping carrier has the
aforementioned insurance or except where such damage is caused
by the negligence or misconduct of Osteotech or its agents
(other than the carrier) or employees.
(f) Osteotech shall pay for shipping, and related costs arising
from the return of finished units of Tissue to Osteotech due
to complaints which are shown to have been caused by defects
in Osteotech's workmanship or Osteotech's failure to comply
with the Processing Standards, except for Tissue damaged
during shipment as specified in (e) above.
2.1.3 Certain Joint Compliance Responsibilities
(a) MTF shall comply with applicable laws, regulations and
guidelines as required under Section 1.1.5. Osteotech shall
comply with applicable laws, regulations and guidelines as
required under Section 1.3.2. In instances where the party's
compliance responsibilities overlap, or where otherwise
necessary and appropriate, each party
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shall use its Best Efforts to cooperate with and assist the
other party in such other party's regulatory compliance
activities. If a difference arises as to which party is
responsible for meeting a particular regulatory compliance
responsibility, MTF and Osteotech will attempt to negotiate a
resolution in good faith. If the difference is not resolved by
the parties, MTF and Osteotech will agree on a third party who
will assist the parties in arriving at a resolution.
Notwithstanding the foregoing, it is agreed that both MTF and
Osteotech shall have regulatory compliance responsibility with
respect to labeling, including without limitation, product
inserts, label content, sales sheets, advertising and product
brochure wording and marketing clearance. If a difference
arises with regard to such joint compliance responsibilities,
MTF and Osteotech will attempt to negotiate a resolution in
good faith. If the difference is not resolved, MTF and
Osteotech will agree on a third party who will assist the
parties in arriving at a resolution.
(b) Containers of finished units of Tissue processed by Osteotech
for MTF must bear a standard MTF bone product label, approved
by Osteotech and MTF, that contains the product name and
identity code, donor number and expiration date.
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(c) Osteotech shall bear the costs of producing labels in
conformance with the Processing Standards. If the labels
and/or package inserts are changed by request of XXX, XXX will
bear the costs of these changes, including label inventory
replacements. Osteotech shall not be required to maintain more
than six (6) months of label and package insert inventory by
tissue type.
(d) All labeling will be in accordance with Sections
2.1.2(b), 2.1.2(c) and the Processing Standards.
(e) Specifications for all Tissue products to be processed from
MTF donors will be developed and approved according to MTF and
Osteotech SOPs. Requests to Osteotech about its ability to
accomplish special specifications and for labeling changes,
including package inserts, will be made in writing by MTF and
will receive a written response from Osteotech within a
reasonable period of time.
2.2 Liability
(a) Osteotech agrees to defend, hold harmless, and indemnify
MTF and its member organizations against any damages,
litigation costs, losses, obligations, liabilities,
claims, actions or causes of action sustained or suffered
by MTF or any of its member organizations arising from:
(i) a breach of Osteotech's obligations hereunder; (ii)
a defect in any finished unit of Tissue processed by
Osteotech under this Agreement to the extent such defect
- 21 -
results from an error or omission by Osteotech (including any
employee or agent of Osteotech or other person to whom
Osteotech has delegated any Processing or Processing related
activities hereunder), or from a failure of workmanship, by
Osteotech; (iii) any medical claim made by any employee or
authorized agent of Osteotech regarding any MTF Tissue
processed by Osteotech (A) which is required by applicable
laws or regulations to be approved by a relevant regulatory
agency and has not been so approved and/or (B) which is not
supported by credible objective scientific evidence; or (iv) a
false and misleading representation made by any employee or
authorized agent of Osteotech regarding any MTF Tissue
processed by Osteotech.
(b) MTF agrees to defend, hold harmless, and indemnify
Osteotech against any damages, litigation costs, losses,
obligations, liabilities, claims, actions or causes of
action sustained or suffered by Osteotech arising from
(i) a breach of MTF's obligations hereunder; (ii) a
defect in any finished unit of Tissue processed by
Osteotech under this Agreement to the extent such defect
results from an error or omission by MTF (including any
employee or agent of MTF or other person to whom MTF has
delegated any Tissue recovery or distribution or Tissue
recovery or distribution related activities hereunder),
in connection with its Tissue recovery and distribution
- 22 -
activities, including without limitation any testing performed
by or at the direction of MTF; (iii) any medical claim made by
any employee or authorized agent of MTF regarding any MTF
Tissue processed by Osteotech (A) which is required by
applicable laws or regulations to be approved by a relevant
regulatory agency and has not been so approved and/or (B)
which is not supported by credible objective scientific
evidence; or (iv) a false and misleading representation made
by any employee or authorized agent of MTF regarding any MTF
Tissue processed by Osteotech.
(c) For purposes of subsection (a) above, Osteotech shall be
the "indemnifying party" and MTF shall be the "indemni-
fied party" and for the purposes of subsection (b) above,
MTF shall be the "indemnifying party" and Osteotech shall
be the "indemnified party." The obligations and liabili-
ties of the indemnifying party hereunder with respect to
claims resulting from the assertion of liability by third
parties shall be subject to the following terms and
conditions:
(i) The indemnified party shall give written notice to
the indemnifying party of any assertion of liability
by a third party which might give rise to a claim by
the indemnified party against the indemnifying party
based on the indemnity contained in Section 2.2(a)
hereof, or Section 2.2(b) hereof, as
- 23 -
the case may be, stating the nature and basis of said
assertion and the amount thereof, to the extent
known, within five (5) business days after an officer
of the indemnified party learns of the claim or
receives notice thereof. Failure to give such notice
within five (5) business days may, at the
indemnifying party's option, result in a reduction in
any subsequent indemnification payment by an amount
equivalent to the expenses and/or losses demonstrated
to have been caused by such delay in notification.
(ii) In the event any action, suit or proceeding is
brought against the indemnified party, with respect
to which the indemnifying party may have liability
under the indemnity agreement contained in subsec-
tion (a) or (b) hereof, as the case may be, the
action, suit or proceeding shall, upon the written
agreement of the indemnifying party that it is
obligated to indemnify under the indemnity agree-
ment contained in subsection (a) or (b) hereof, as
the case may be, be defended (including all pro-
ceedings on appeal or for review which counsel for
the defendant shall deem appropriate) by the indem-
nifying party. The indemnified party shall have
the right to be represented by advisory counsel and
accountants, at its own expense, and shall be kept
- 24 -
fully informed of such action, suit or proceeding at
all stages thereof, whether or not it is so
represented. The indemnifying party shall make
available to the indemnified party and its attorneys
and accountants all books and records of the
indemnifying party relating to such proceedings or
litigation. The parties will render to each other
such assistance as they may reasonably require in
order to ensure the proper and adequate defense of
any such action, suit or proceeding.
(iii) The indemnifying party shall not make any
settlement of any claims without the written
consent of the indemnified party, which
consent shall not be unreasonably withheld
or delayed.
(iv) The indemnified party shall not make any settlement
of any claims without the written consent of the
indemnifying party.
(d) The provisions of this Section 2.2 shall survive termina-
tion of this Agreement.
2.3 Records and Reports
(a) Osteotech shall maintain complete and accurate records
concerning MTF Tissue received by Osteotech, MTF Tissue
processed and in storage at Osteotech and finished units of
MTF Tissue stored and shipped by Osteotech. Such records shall
be available to MTF during normal business
- 25 -
hours upon reasonable advance notice at MTF's expense.
Osteotech shall not be required to produce any data other than
data which it is required to obtain and maintain by the
Processing Standards.
(b) In addition to the information provided in subsection (a),
Osteotech shall provide the following reports on each MTF
donor in a timely manner showing Tissue processed and shipped
by Osteotech:
Daily Reports
WIP List of Donor Releases to MTF
Weekly Reports
Pending Donor List
PCR/Re Swab List
Listing of Donors processed during prior week with
detail processing notes and Osteoarticular Logs
Donors Released Month to Date Grafton Releases
Monthly Reports
Rework List
Unprocessed Donors List at Osteotech
Grafton WIP List
Grafton Releases by Serial Number in inventory at
OTI
Alpha Tissue List
List of raw Cortical Tissue at Osteotech for Xxxx-
ton and other Demineralized Tissues
- 26 -
(c) Osteotech shall ensure that all information pertaining to MTF
will be disclosed only to those Osteotech personnel with a
need-to-know who have signed Osteotech's standard
confidentiality agreement.
(d) Osteotech shall notify MTF prior to the release of any MTF
donor identifying information, such as the donor identifying
number, where such release is legally required by a regulatory
or governmental agency or court or administrative order or
subpoena. The provisions of this Section 2.3(d) shall survive
termination of this Agreement.
(e) In connection with the marketing and distribution of
proprietary Tissue forms which are processed utilizing
Osteotech's proprietary Processing techniques ("Osteo-
tech's Proprietary Tissue Forms"), including without
limitation Grafton(R)DBM, during the course of each month
and in the case of monthly reports, no later than the
tenth (10th) business day following the end of the month,
MTF shall provide to Osteotech such reports and data as
Osteotech may reasonably request, including hospital/end
user sales of Osteotech's Proprietary Tissue Forms as
identified by the parties (such as Grafton(R)DBM) detailed
by account.
(f) Osteotech will periodically (no less than once every six (6)
months) provide MTF with a list of the agents who are
marketing Osteotech's Proprietary Tissue Forms and the
territories they are covering.
2.4 New Tissue Form Development
It is the understanding of MTF and Osteotech that each of them may
independently develop new Tissue forms and/or processes or improve upon
existing products and/or processes.
(a) Subject to subsection (c), Osteotech shall own all
rights, title and interest in and to all information,
technology, data, inventions, products, and processes,
- 27 -
conceived, made or developed solely by employees of Osteotech
as well as the intellectual property rights based thereon,
including but not limited to copyrights and patent rights
except to the extent such rights infringe upon the rights of
other parties (including MTF).
(b) Subject to subsection (c), MTF shall own all rights,
title and interest in and to all information, technology,
data, inventions, products, and processes, conceived,
made or developed solely by employees of MTF as well as
the intellectual property rights based thereon, including
but not limited to copyrights and patent rights except to
the extent such rights infringe upon the rights of other
parties (including Osteotech).
(c) Any joint development of information, technology, data,
inventions, products, and processes, shall be conducted
pursuant to a formal written development agreement signed by
Osteotech and MTF and a development budget for the project
agreed to in writing by Osteotech and MTF.
(d) The provisions of this Section 2.4 shall survive termina-
tion of this Agreement.
2.5 Non-Proprietary New Products
It is understood and agreed that Osteotech may develop new information,
technology, data, inventions, products, and processes (collectively,
"new products") jointly with its other Tissue processing clients and
that certain of such new products may not be subject to patent or
copyright protection ("non-proprietary new products"). MTF agrees that
it shall not have access to, or utilize, such non-proprietary new
products and shall not be able to cause Osteotech to utilize such
non-proprietary new products on MTF's behalf unless and until MTF shall
reimburse Osteotech and/or such other Tissue processing client(s) for
MTF's proportionate share (based upon the number of Tissue processing
clients which were involved in
- 28 -
the development of such products and/or are involved in the marketing
and distribution of such products) of the development costs (including
without limitation internal direct costs, but excluding internal
overhead costs) for such non-proprietary new product as reasonably
determined by Osteotech and such processing client or clients. The
methods and bases for determining such Tissue development costs shall
be disclosed to MTF on a confidential basis. Osteotech shall include a
provision substantially the same in substance to the foregoing
provision in its agreements with its other significant Tissue
processing clients to cover any non-proprietary new products which may
be developed jointly hereunder by Osteotech and MTF.
2.6 Other Services
Osteotech may provide such services other than the Processing services
contemplated in this Agreement as are requested by MTF in accordance
with one or more separate agreements entered into between MTF and
Osteotech. Reasonable fees for such services will be established at the
time such agreements are entered into and will be separate from the
fees listed in Exhibits 3.1 and 3.2. MTF shall be free to obtain any
such services from third parties.
2.7 Publication and Public Disclosure
(a) Either party shall have the right to publish or otherwise
publicly disclose scientific information or data
developed by such party at its own expense which utilizes
or relates to the other party's technology or other
proprietary or confidential processes or information,
provided, however, that notwithstanding any other
provision in this Agreement to the contrary, no such
publication or disclosure shall be made by the publishing
party if such publication or disclosure would result in
the disclosure of information defined as Confidential
- 29 -
Information in Section 4 or would otherwise violate or
jeopardize any proprietary rights the other party may have
with respect to such technology. Publication of jointly
developed information will be covered in a separate agreement.
(b) Within a reasonable period of time (not less than thirty
(30) days) prior to publication or other public
disclosure of the information or data described in
Section 2.7(a), the publishing party shall submit to the
other party for review a draft of the publication or, if
oral disclosure, a written copy of the remarks. The
other party shall then use Best Efforts to notify the
publishing party as soon as practicable (not to exceed
thirty (30) days from its receipt of such draft or
written copy) of (i) any reasonable changes to the
publication or disclosure it deems appropriate, which
changes the publishing party will make so long as they do
not change materially the meaning of the information or
data being disclosed or published; (ii) any error in the
information or data being disclosed, which the publishing
party shall correct upon verification of the error; or
(iii) the necessity to delay publication or disclosure to
enable the filing of any patent application or regulatory
filing if applicable, in which event the publishing party
will delay such publication or disclosure as reasonably
requested by the other party. Management of both parties
shall attempt in good faith to resolve any disputes
regarding such publications.
(c) If there has been no mutual agreement to publish or disclose
within thirty (30) days after the other party has received the
notice and draft of the publication or oral disclosure from
the publishing party, the publishing party shall again notify
the other party in writing of its intention to publish or
disclose and may proceed to
- 30 -
do so fifteen (15) days after delivery of such second notice,
subject to the provisions of Section 2.7(a).
(d) Authorship of any publication shall be determined in
accordance with normal scientific practice.
(e) The provisions of this Section 2.7 shall survive termina-
tion of this Agreement.
3. FINANCIAL TERMS
3.1 (a) MTF will pay Osteotech Processing fees as set forth in
Section 1.2.4 and Exhibits 3.1 and 3.2. Subject to the
terms set forth in Section 1.2.4 and Exhibits 3.1 and
3.2, such fees may be adjusted from time to time, but no
more frequently than annually, as set forth in Exhibits
3.1 and 3.2. Each November 1 during the term of this
Agreement, Osteotech will establish a suggested list
price to be effective the following January 1 for each of
Osteotech's Proprietary Tissue Forms (the "Suggested List
Prices"). The Suggested List Prices as of the date of
this Agreement are set forth in Exhibit 3.2 hereto.
(b) XXXXX
(c) In the event a change in federal, state or local govern-
ment rules, regulations, guidelines or laws, changes in
industry standards published by AATB or the requirements
of MTF causes Osteotech to be unable to complete the
Processing of Tissue received by Osteotech for Processing
from MTF or deliver to MTF Tissue which has been
processed by Osteotech on behalf of MTF and held in
inventory by Osteotech, MTF shall nevertheless pay a fee
to Osteotech with respect to such Tissue which is equal
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
- 31 -
to fifty percent (50%) of the fee which would otherwise be
payable to Osteotech hereunder with respect to such Tissue.
3.2 Invoicing and Payment
(a) Osteotech shall submit invoices in U.S. dollars to MTF
for all Processing services rendered in accordance with
the then existing fee schedule. The invoice date shall
be the date that Osteotech's Quality Assurance Department
releases the finished units of Tissue for shipment to MTF
or the date of shipment of Grafton or other of Osteo-
tech's Proprietary Tissue Forms maintained in inventory
by Osteotech for MTF, as the case may be.
(b) MTF will pay all invoices within forty-five (45) days of
the invoice date. In the event there is an error in an
invoice submitted to it by Osteotech, MTF shall notify
Osteotech of such error within three (3) business days of
the date such invoice is received by MTF and the invoice
date will then be the date of the corrected invoice
submitted by Osteotech. All such payments shall be in
U.S. dollars.
(c) Any balance of any invoice which is not paid within the time
specified above, at the option of Osteotech, shall accrue
interest at the rate of one percent (1%) per month.
- 32 -
4. CONFIDENTIALITY AND CERTAIN OTHER COVENANTS
4.1 Non-Disclosure of Confidential Information
(a) For purposes of this Agreement, "Confidential Informa-
tion" means all general and specific knowledge, experi-
ence and information that is confidential and of value to
MTF or to Osteotech, including without limitation,
formulations, designs, products, processes, supplies,
methods of manufacture or processing, SOPs, cost data,
master files, the nature of research and/or development
projects, as well as data relating thereto, marketing or
business plans, donor data and financial data. It shall
also mean any information disclosed to either party by
any third party which either MTF or Osteotech is obligat-
ed to treat as confidential or proprietary.
(b) Both parties agree that neither party will, at any time,
without the express agreement of the other party, or
except as expressly permitted by this Agreement, disclose
to any other person or use any Confidential Information
of the other party, except for the purposes of performing
this Agreement or any successor Agreement or as may be
required by law, governmental regulation or court order.
Information shall not be considered to be Confidential
Information of a party if it can be established that (i)
such information was in the possession of the other party
prior to disclosure to such other party by the party
claiming that it is Confidential Information and such
- 33 -
information is not otherwise subject to a confidentiality
agreement, (ii) such information is then part of the public
domain and became so without the breach of this or any other
confidentiality agreement by such other party or any of its
affiliates, or (iii) such information is developed
independently by such other party or becomes known to or
acquired by such other party by means other than as a result
of a breach of a confidentiality agreement or any fiduciary
obligation.
(c) MTF and Osteotech each agree to require employees, consultants
or others granted access to such Confidential Information to
execute appropriate Confidentiality Agreements; provided that
each organization's agreements are approved by such
organization's counsel.
(d) MTF and Osteotech recognize that violation in any
material respect of any provision of Section 4.1(b) may
cause irreparable injuries to Osteotech or MTF and agree
that MTF or Osteotech shall be entitled to preliminary
and final injunctive relief against such violation. Such
injunctive relief shall be in addition to, and in no way
in limitation of, any and all remedies or rights which
MTF or Osteotech shall have at law or in equity for the
enforcement of the provisions of this Section. In
addition, MTF and Osteotech agree that the party respon-
sible for the breach of confidentiality shall be respon-
sible for all legal fees and other costs and expenses
- 34 -
incurred in the successful enforcement of the non- breaching
party's rights and remedies under this Section 2.7.
4.2 Non-Solicitation of Osteotech Employees
During the term of this Agreement and for a two (2) year
period after termination of this Agreement (collectively, the
"Restricted Period"), MTF will not recruit or hire personnel
who are then employed by Osteotech, or who had been employed
by Osteotech at any time during the prior two (2) years, or
entice Osteotech personnel to leave Osteotech. In the event
Osteotech personnel should leave the employ of Osteotech
during the Restricted Period, MTF will not hire such personnel
for two (2) years from the date such personnel leaves the
employ of Osteotech.
4.3 Non-Solicitation of MTF Employees
During the Restricted Period, Osteotech will not recruit or hire
personnel who are then employed by MTF or who had been employed by MTF
at any time during the prior two (2) years, or entice MTF personnel to
leave MTF. In the event MTF personnel should leave the employ of MTF
during the Restricted Period, Osteotech will not hire such personnel
for two (2) years from the date such personnel leaves the employ of
MTF.
- 35 -
4.4 XXXXX
4.5 XXXXX
4.6 Non-Solicitation of Sales Agents
Neither party shall engage any (i) sales agent retained by the other
party or (ii) any employee, independent contractor or other sales
personnel affiliated with such sales agent ("affiliated personnel")
while such person is under contract directly or indirectly to the other
party and for a period of one (1) year after any such contract is
terminated. Notwithstanding the foregoing, (i) if MTF's engagement of a
sales agent who had marketed Tissue other than Grafton or another of
Osteotech's Proprietary Tissue Forms is terminated, Osteotech shall be
entitled to retain such sales agent and/or its affiliated personnel to
market Grafton or any other of its Proprietary Tissue Forms or (ii) if
Osteotech's engagement of a sales agent who had marketed Grafton or
another of Osteotech's Proprietary Tissue Forms is terminated, MTF
shall be entitled to retain such sales agent and/or its affiliated
personnel to market Tissue other than Grafton or any other of
Osteotech's Proprietary Tissue Forms, in each of the cases set forth in
(i) and (ii), without regard to the restriction set forth in the
immediately preceding sentence.
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
- 36 -
4.7 MTF Sales Agents
MTF acknowledges the existence and importance of the independent sales
agent network established and maintained by Osteo- tech. MTF shall be
entitled to engage independent agents to promote Osteotech's
Proprietary Tissue Forms distributed by MTF, subject to Osteotech's
right to approve such agents if they would service an area covered by
an agent retained by Osteotech and disclosed to MTF pursuant to Section
2.3(f). Osteotech shall be entitled to disapprove of any agent proposed
by MTF if such potential agent does not meet the standards established
by Osteotech to represent its proprietary technology or if Osteotech's
agent shall object thereto, provided that Osteotech shall make a good
faith determination of whether the agent proposed by MTF would meet
such standards. In the event any Osteotech sales agent who covers an
area serviced by an MTF agent is terminated and Osteotech desires to
replace such sales agent, Osteotech shall use its Best Efforts
consistent with its past practices to replace such agent with an agent
who does not object to MTF's agent. If Osteotech cannot retain such an
agent, it shall so notify MTF and MTF shall terminate its agent in a
manner consistent with the termination provisions of its agreements
with its agents (such agreements to provide for termination by MTF on
no more than thirty (30) days prior notice) and if it so desires,
replace such agent with an agent which is not objectionable to
Osteotech's new agent or its agent.
- 37 -
4.8 Surviving Provisions
The provision of Section 4.1, 4.2, 4.3, and 4.6 shall survive the
termination of this Agreement in accordance with their terms.
5. TERM OF AGREEMENT
This Agreement shall become effective on April 1, 1997 and shall
terminate March 31, 2002; unless terminated earlier in accordance with the
provisions hereof. This Agreement shall automatically renew for an additional
five year period, unless MTF or Osteotech shall, at least six (6) months prior
to the termination date of this Agreement, communicate in writing to the other
party, as the case may be, its intention not to renew the Agreement.
6. TERMINATION
6.1 Either party may terminate this Agreement at any time upon:
(a) The material breach by the other party of any of its
obligations under this Agreement if such breach shall not be
cured within ninety (90) days after written notice thereof is
given by the non-breaching party to the breaching party; or
(b) An adjudication of the other party as bankrupt or insolvent;
or the admission in writing by such other party of its
inability to pay its debts as they mature; or an assignment by
such other party for the benefit of
- 38 -
its creditors; or such other party applying for or consenting
to the appointment of a receiver, trustee or similar officer
for its assets; or the appointment of a receiver, trustee or
similar officer for such other party's assets without the
application or consent of such other party, if such
appointment shall continue undischarged for a period of ninety
(90) days; or such other party instituting (by petition,
application, answer, consent or otherwise) any bankruptcy,
insolvency arrangement or similar proceeding relating to it
under the laws of any jurisdiction; or the institution of any
bankruptcy, insolvency arrangement or similar proceeding
relating to such other party, if such proceeding shall remain
undismissed for a period of ninety (90) days; or the issuance
or levy of any judgment, writ, warrant of attachment or
execution or similar process against a substantial part of the
property or assets of such other party, if such judgment,
writ, warrant of attachment or execution or similar process
shall not be released, vacated or fully bonded within ninety
(90) days after its issue or levy.
6.2 MTF may terminate this Agreement at any time upon ninety (90) days
prior written notice to Osteotech if MTF makes a determination to end
its program of procuring and distributing Tissue; provided that if MTF
resumes such program at any time
- 39 -
during the term of this Agreement it shall provide prompt written
notice of such resumption to Osteotech and this Agreement shall become
effective again in accordance with its terms as soon as is practicable,
but in no event later than ninety (90) days after such notice is
received by Osteotech.
6.3 (a) If, as determined by a panel of experts under Section
6.3(b) a commercially feasible processing technology not
available as of the date of this Agreement ("New
Technology") developed by a third party results in a form
of tissue that (A) represents a significant scientific
advance in transplantation (including a significantly
greater acceptability by patients or physicians) when
compared to forms of tissue processed using Osteotech's
processing technology or (B) is comparable to forms of
tissue processed by Osteotech and represents at least a
ten (10%) percent reduction in costs (a "significant
reduction in costs"); and
(ii) Osteotech refuses, or is unable, to achieve compara-
ble scientific or economic results within six (6) months
of such determination, then MTF may terminate this
Agreement.
(b) (i) A determination under Section 6.3(a) shall be initiated by
MTF if the threshold is met through notice to Osteotech, in
writing, which notice shall describe the New Technology and
describe in reasonable detail the
- 40 -
scientific advance or economic benefit resulting from the New
Technology. The threshold will be met if MTF can reasonably
demonstrate that it has lost or is reasonably likely to lose
two (2%) percent of its projected gross revenues (based on
MTF's gross revenues for the preceding twelve (12) months,
adjusted for new product lines and projected growth, but
including revenues from Grafton and any other of Osteotech's
Proprietary Tissue Forms only if and to the extent New
Technology competes with Grafton or such other of Osteotech's
Proprietary Tissue Forms, as the case may be. (ii) Within
thirty (30) days after Osteotech's receipt of such notice, MTF
and Osteotech shall each appoint to a panel one expert
qualified to make a determination under Section 6.3(a) with
respect to the matter described in the notice under clause
(i). The expert appointed by a party shall be acceptable to
the other party. The two experts shall, as soon as
practicable, appoint a third expert to the panel. (iii) MTF,
Osteotech, and the party that has developed the New Technology
may submit relevant written information to the panel. (iv)
Within ninety (90) days of final composition of the panel or
such other period as the panel shall determine by unanimous
vote is necessary to make its determination, the panel shall,
by a vote of at least two of its
- 41 -
members, determine whether the New Technology represents a
scientific advance or a significant reduction in costs
described in Section 6.3(a), provided that if the panel
determines that the New Technology is not as safe as
Osteotech's technology the New Technology shall not be deemed
to represent a scientific advance or a significant reduction
in costs.
(c) The parties shall agree to the budget for the panel and MTF
shall advance all budgeted expenses incurred by the panel. If
the panel determines that the New Technology represents a
scientific advance or a significant reduction in costs,
Osteotech shall reimburse MTF for such expenses.
6.4 In the event MTF enters into an agreement or arrangement with
a third party whereby finished units of Tissue processed by
Osteotech for MTF are used as part of such third party's
technology or product, MTF shall promptly inform Osteotech of
its intent to enter into such agreement or arrangement and
Osteotech shall have the right to (i) terminate this Agreement
at any time upon ninety (90) days prior written notice to MTF
without any further obligation to MTF, other than (A) Osteo-
tech's obligations hereunder with respect to MTF Tissue which
Osteotech has begun to Process and MTF Tissue which Osteotech
has finished Processing but not yet delivered to MTF, which
obligations shall continue until all such Tissue is delivered
- 42 -
to MTF and (B) those obligations which otherwise survive termination of
this Agreement in accordance with their terms, or (ii) renegotiate the
terms of this Agreement.
6.5 MTF may terminate this Agreement at any time upon thirty (30)
days prior written notice to Osteotech if Osteotech is
unwilling or unable to comply with the provisions of Section
1.3.2(b) to the extent such provisions are applicable to
Osteotech. Osteotech may terminate this Agreement at any time
upon thirty (30) days prior written notice to MTF if MTF is
unwilling or unable to comply with the provisions of Section
1.3.2(b) to the extent such provisions are applicable to MTF.
6.6 In the event MTF (i) develops a non-proprietary Tissue form,
modification of an existing form, or a change in presentation
of a Tissue form, (ii) requests that Osteotech process such
Tissue form and (iii) agrees to reimburse Osteotech for the
additional expenses for additional equipment, personnel or
facility which would be reasonably incurred by Osteotech in
order to process such Tissue form and Osteotech fails to
notify MTF of its decision to process such Tissue form within
three (3) months after its receipt of such request and
agreement in writing from MTF, provided that such Tissue form
does not violate any patent or other proprietary right, or any
law or regulation or the Processing Standards, MTF may
terminate this Agreement only as it would apply to such new
- 43 -
non-proprietary Tissue form. Such three (3) month period shall be
extended to six (6) months if Osteotech presents reasonable evidence of
its need for such extension in order to make its determination
hereunder.
6.7 In the event Osteotech develops or acquires a substitute for
Tissue based products or Tissue based technology ("Tissue
Substitute") which materially competes in the United States
with the Tissue distributed by XXX, XXX shall have the right
to terminate this Agreement at any time upon ninety (90) days
written notice to Osteotech without further obligation to
Osteotech (other than those obligations which otherwise
survive termination of this Agreement in accordance with their
terms) if Osteotech fails to cease such competitive activity
within sixty (60) days of written notice from MTF requesting
the cessation of such competitive activity. Any such product
or technology shall not be deemed to be competitive with MTF's
Tissue distribution activities until such time as such product
or technology receives the necessary regulatory approvals and
is marketed commercially in the United States. In any event
the restrictions on Osteotech's activities set forth in this
Section 6.7 shall not apply to any Tissue Substitute acquired
or developed by Osteotech which Osteotech offers to MTF on
terms which are consistent with the terms of this Agreement.
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6.9 MTF shall have the right to terminate this Agreement in accordance with
Section 4.4 and Section 4.5, as provided therein.
7. INSURANCE
(a) Osteotech shall secure and maintain in force reasonable and
adequate insurance coverage for Osteotech's Tissue Processing
activities, provided such coverage is available at reasonable
prices and terms. Osteotech shall deliver to MTF certificates
of insurance within fifteen (15) days after execution of this
Agreement.
(b) MTF shall secure and maintain in force reasonable and adequate
insurance coverage of MTF bone and tissue recovery and
distribution activities, provided such coverage is available
at reasonable prices and terms. MTF shall deliver to Osteotech
certificates of insurance within fifteen (15) days after
execution of this Agreement.
(c) Osteotech shall require each subcontractor or assignee (if any
are permitted by MTF) to procure and maintain insurance of the
types and amounts required of Osteotech. In addition, once
approved by MTF, the subcontractor or assignees shall sign the
indemnity agreement as it appears in Section 2.2(a) in favor
of MTF. If there is any assignment to a majority-owned
subsidiary of Osteo-
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tech as provided in Section 9 of this Agreement, that
subsidiary shall meet each requirement of this Section 7.
8. FORCE MAJEURE
Neither party shall be responsible to the other for nonperformance or
delayed performance of the terms and conditions hereof due to acts of God, acts
of government, wars, riots, accidents and transportation, fuel or material
shortages, or other causes (except strikes), in the nature of force majeure
which is beyond its control. To the extent Osteotech is unable to perform
Processing of MTF's Tissue due to such events, Osteotech shall arrange to have
MTF's Tissue processed under Osteotech's oversight within thirty (30) days of
the occurrence of such event. Notwithstanding the above, in the event of total
or partial destruction of any processing facility of Osteotech utilized in the
Processing of MTF Tissue, Osteotech shall agree to rebuild such plant or part
thereof within a reasonable period of time and agrees to arrange for the
Processing, under Osteotech oversight and in compliance with the Agreement, of
MTF Tissue during such period.
9. ASSIGNMENT
Except as otherwise expressly herein provided, this Agreement may not
be assigned in whole or in part without the prior written consent of the other
party, provided that either party may assign its rights under the Agreement to
any majority-owned subsidiary of such party without the consent of the other
party, provided that
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such subsidiary agrees in writing to be bound by the terms and conditions of
this Agreement. In any event Osteotech and MTF and their respective subsidiaries
shall be subject to and bound by the terms and conditions of this Agreement to
the extent any of them are engaged in the recovery and distribution or
Processing of Tissue, as the case may be.
10. NAME, EMBLEM, PACKAGING, TECHNOLOGY AND TRADEMARK
(a) Except to the extent Osteotech indicates in any litera-
ture, including without limitation promotional materials, that
MTF is one of Osteotech's Tissue Processing clients, without
the prior written consent of MTF, Osteotech shall have no
right to use the trademark or emblem of MTF in connection with
its Processing activities or to use the name of MTF for
commercial purposes; provided, however, Osteotech may disclose
MTF's name as may be required by law, government regulation or
court order.
(b) Except to the extent MTF indicates in literature,
including without limitation promotional materials, that
Osteotech processes Tissue distributed by XXX, XXX shall
not have the right to use any trademark or emblem of
Osteotech, including the name Osteotech, without the
prior written consent of Osteotech; provided, however,
MTF may disclose Osteotech's name as may be required by
law, government regulation or court order.
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(c) (i) Nothing in this Agreement shall be interpreted to convey
to MTF any trademark, patent or proprietary technology owned
by Osteotech; (ii) Nothing in this Agreement shall be
interpreted to convey to Osteotech any trademark, patent, or
proprietary technology owned by MTF.
(d) MTF recognizes that Osteotech currently performs, and
intends in the future to perform, Processing services for
others in addition to MTF, and therefore, agrees that
unless specifically developed or customized for MTF or as
otherwise provided herein, all packaging and technology
used by Osteotech to perform Processing services for MTF
may also be used by Osteotech to perform such services
for others.
(e) MTF recognizes that Osteotech processes proprietary forms of
tissue and agrees that if it were to distribute these tissues
it will do so only under the trademark, packaging, labels and
emblems developed and provided by Osteotech.
11. NOTICES
All notices and other communications provided for hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested,
telecopied, with a copy sent promptly thereafter by U.S. mail, or delivered by
hand or overnight delivery, as follows.
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If to MTF: Chief Executive Officer
Musculoskeletal Transplant Foundation
000 Xxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone No. (000) 000-0000
Telecopy No. (000) 000-0000
If to Osteotech: Chief Executive Officer
Osteotech, Inc.
00 Xxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone No. (000) 000-0000
Telecopy No. (000) 000-0000
or such other person or address as either party may designate by written notice
to the other party complying as to delivery with the terms of this Section 11.
All such notices and other communications shall be effective (i) if mailed by
certified or registered mail, when received as indicated by the return receipt,
(ii) if telecopied, when transmitted, as indicated by the facsimile transmission
report, provided same is on a business day in the U.S. (excludes weekends and
federal holidays) and, if not, on the next business day, or (iii) if delivered,
upon delivery, provided same is on a business day and, if not, on the next
business day.
12. ENTIRE AGREEMENT
This Agreement sets forth the entire Agreement between the parties. Any
prior agreements, promises, negotiations, or representations, either oral or
written, relating to the subject matter of this Agreement not expressly set
forth in this Agreement are of no force or effect.
13. MODIFICATION
This Agreement, or any part of section of it, may not be amended or
modified except by the written consent of both parties of the Agreement.
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14. APPLICABLE LAW
This Agreement shall be construed in accordance with the laws of the
State of New Jersey, without giving effect to any conflict of laws principles.
15. WAIVER
Waiver or breach of any provision of this Agreement shall not be deemed
a waiver of any other breach of the same or a different provision of this
Agreement.
16. INDEPENDENT CONTRACTOR
Osteotech is providing its services hereunder as an independent
contractor. Nothing herein shall create any affiliation, partnership or joint
venture between the parties hereto, or any employer/employee relationship.
17. SEVERABILITY
The provisions of this Agreement shall be severable, and if a court of
competent jurisdiction holds any provisions of this Agreement to be in violation
of any applicable law, the remaining provisions shall nevertheless remain in
full force and effect.
18. SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized officers as of the date first written
above.
MUSCULOSKELETAL TRANSPLANT FOUNDATION
BY:/S/XXXXX XXXXXXXX
--------------------
Xxxxx Xxxxxxxx, President and
Chief Executive Officer
OSTEOTECH, INC.
BY:/s/XXXXXXX X. XXXXX
----------------------
Xxxxxxx X. Xxxxx, President
and Chief Executive Officer
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MTF Exhibit 3.1
Schedule of Processing Fees
XXXXX
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
MTF Exhibit 3.2
Schedule of Processing Fees
XXXXX
XXXXX Indicates the omission of confidential material pursuant to a
request for confidential treatment made in accordance with
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The confidential material is being filed separately
with the Secretary to the Securities Exchange Commission.
