EXHIBIT 10.57
SECOND
AMENDED AND RESTATED
PROCESSING AGREEMENT BETWEEN
OSTEOTECH, INC.
AND
MUSCULOSKELETAL TRANSPLANT FOUNDATION
AND
BIOCON, INC.
dated as of
June 1, 2002
***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 and Exchange Commission.
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TABLE OF CONTENTS
Page
1. DEFINITIONS; COMPLIANCE WITH LAWS.........................................2
1.1 Definitions.........................................................2
1.2 Compliance with Laws................................................9
2. DELIVERY AND PROCESSING OF TISSUE.........................................9
2.1 MTF Commitment to Deliver Tissue for Processing.....................9
2.1.1 Engagement of Osteotech.....................................9
2.1.2 Forecasts...................................................9
2.1.3 Tissue Products Returned to MTF............................11
2.1.4 Inventory Requirements.....................................12
2.1.5 Tissue Delivered in Respect of Consideration for License...13
2.1.6 Processing Fees............................................15
2.1.7 Procurement Fee............................................15
2.1.8 Compliance With Applicable Standards.......................15
2.1.9 Donor Records..............................................18
2.2 Processing Responsibilities of Osteotech in Respect of MTF Tissue..19
2.2.1 General Undertaking........................................19
2.2.2 Interpretation; Change in Regulations......................19
2.2.3 Processing Considerations..................................19
2.3 Undertakings Regarding Osteotech Tissue............................20
2.3.1 General Undertaking........................................20
2.3.2 Furtherance of MTF Mission.................................21
2.3.3 MTF Responsibilities.......................................21
2.3.4 Fitness for End Use........................................21
2.3.5 Labeling...................................................21
2.3.6 Storage....................................................21
2.3.7 Record Retention and Access................................22
2.3.8 Indemnity..................................................22
3. STORAGE, SHIPPING, REGULATORY COMPLIANCE AND LABELING....................22
3.1 Possession and Storage of Tissue...................................22
3.2 Shipping...........................................................23
3.3 Certain Joint Compliance Responsibilities..........................24
3.4 Records and Reports................................................26
3.5 New Tissue Form Development........................................27
3.6 New Proprietary Products...........................................28
3.7 Other Services.....................................................28
3.8 Publication and Public Disclosure of Scientific Information........29
4. INDEMNIFICATION; SETTLEMENT..............................................30
4.1 Indemnification....................................................30
4.2 Confirmation of Previous Releases..................................32
4.3 Settlement of Current Disputes.....................................32
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5. FINANCIAL TERMS..........................................................32
5.1 Fees...............................................................32
5.2 Invoicing and Payment..............................................33
6. CONFIDENTIALITY AND CERTAIN OTHER COVENANTS..............................33
6.1 Non-Disclosure of Confidential Information.........................33
6.2 Non-Solicitation of Sales Agents...................................34
6.3 Osteotech Sales Agents.............................................35
6.4 Osteotech Marketing of Grafton(R)..................................35
6.5 Dedicated Supply...................................................35
6.6 Notices of Pricing and/or Processing Fee Increases.................35
6.7 Bone Dowel Sales...................................................36
6.8 Surviving Provisions...............................................36
7. EFFECTIVENESS AND TERM OF AGREEMENT......................................36
8. TERMINATION..............................................................36
9. INSURANCE................................................................38
10. FORCE MAJEURE............................................................38
11. BINDING AGREEMENT; ASSIGNMENT............................................38
12. NAME, EMBLEM, PACKAGING, TECHNOLOGY AND TRADEMARK........................40
13. NOTICES..................................................................41
14. ENTIRE AGREEMENT.........................................................41
15. MODIFICATION.............................................................42
16. APPLICABLE LAW...........................................................42
17. WAIVER...................................................................42
18. INDEPENDENT CONTRACTOR...................................................42
19. SEVERABILITY.............................................................42
20. SUCCESSORS...............................................................42
21. COUNTERPART SIGNATURES; DELIVERY BY FACSIMILE............................42
22. EXHIBIT 1
23. EXHIBIT 2
24. EXHIBIT 3
25. SCHEDULE 2.1.6
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SECOND AMENDED AND RESTATED PROCESSING AGREEMENT
This Second Amended and Restated Processing Agreement (this "Agreement"),
dated as of June 1, 2002, by and among Musculoskeletal Transplant Foundation,
("MTF"), a nonprofit District of Columbia corporation, Biocon, Inc., a nonprofit
District of Columbia corporation and the controlling parent corporation of MTF
("Biocon"; for purposes of this Agreement the term "MTF" shall include Biocon
and all existing and future affiliates of MTF and/or Biocon), and Osteotech,
Inc. ("Osteotech"; for purposes of this Agreement the term "Osteotech" shall
include all existing and future affiliates of Osteotech which engage in Tissue
Processing), a Delaware corporation. Capitalized terms used in this Agreement
shall have the meanings assigned to them in Section 1 hereof unless otherwise
defined elsewhere in this Agreement.
WHEREAS, Osteotech provides high-quality tissue processing services and
other related services to entities engaged in procuring and distributing human
bone and related connective soft tissue for transplantation; and
WHEREAS, MTF, directly, or by or through Biocon and/or other affiliates of
MTF, procures Tissue from various sources, and has contracted with Osteotech to
process such Tissue; and
WHEREAS, MTF wishes to obtain Tissue Processing services from Osteotech
with respect to certain Tissue procured by MTF, and Osteotech desires to perform
such Tissue Processing services for MTF with respect to such Tissue and to
return the products of such Processing to MTF for distribution, under the
following agreed terms and conditions; and
WHEREAS, Osteotech wishes to contract with MTF for MTF to procure certain
Tissue for Osteotech for use by Osteotech in a manner which is consistent with
MTF's mission as described in Section 2.3.2 hereof and in furtherance of the
interest of MTF's member organizations in finding productive uses for such
Tissue and MTF desires to perform such procurement services for such Tissue
under the following agreed terms and conditions; and
WHEREAS, Osteotech and MTF are parties to a Processing Agreement dated as
of April 1, 1997 (the "Original Processing Agreement" and, as amended and
restated pursuant to that certain Amended and Restated Processing Agreement
among MTF, Biocon and Osteotech made as of September 1, 2000, the "Prior
Processing Agreement"), and desire that this Agreement supersede and replace the
Prior Processing Agreement in its entirety except as otherwise provided herein;
and
WHEREAS, MTF and Synthes are parties to certain agreements listed on
Exhibit 1 hereto (the "MTF/Synthes Agreements") pursuant to which MTF processes
and distributes certain spine-related products developed by Synthes and/or MTF;
and
WHEREAS, Osteotech owns certain patents with respect to which MTF and
Synthes desire to obtain a non-exclusive license in exchange for certain
consideration to Osteotech as hereinafter described.
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NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS; COMPLIANCE WITH LAWS
1.1 Definitions.
"Affiliate" shall have the meaning assigned to such term in Section
11(a) hereof.
"Agreement" shall have the meaning assigned to such term in the
preamble hereof.
"Annual Processing Fee Increase" shall have the meaning assigned to
such term in Schedule 2.1.6 hereto.
"AATB" shall mean the American Association of Tissue Banks.
"Average Gross Production Yield" shall have the meaning assigned to
such term in Section 2.1.2(a) hereof.
"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 and
in any case without resorting to litigation or other legal proceedings.
"Biocon" shall have the meaning assigned to such term in the
preamble hereof.
"Bioimplants" shall mean engineered tissue graft forms processed
from cortical, cortical/cancellous, cancellous bone or variations thereof,
including without limitation ramps, dowels, wedges, blocks, and/or other forms
variations thereof.
"Confidential Information" means all general and specific knowledge,
experience 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 obligated to treat as confidential or
proprietary. 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 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.
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"Donor Commitment" shall mean Tissue from Donors in accordance with the
following table:
------------------------------- ----------------------- --------------------------------- --------------------------------
Donors per Month Donors per Month
Month Processed by Procured for
(including first and Total Donors Osteotech for MTF Osteotech by MTF
last indicated) per Month ("MTF Donors")+ ("Osteotech Donors")++
------------------------------- ----------------------- --------------------------------- --------------------------------
June 2002
through and including
December 2002 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
January 2003
through and including
December 2003 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
January 2004
through and including
December 2004 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
January 2005
through and including
December 2005 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
January 2006
through and including
December 2006 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
January 2007
through and including
December 2007 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
January 2008
through and including
December 2008 *** *** ***
------------------------------- ----------------------- --------------------------------- --------------------------------
----------
+ Except as otherwise provided in this Agreement, in each month, MTF Donors
shall meet the following requirements:
(i) The average age of such MTF Donors shall be within *** years of the
average age of donors retained by MTF and shall have a substantially equivalent
male to female ratio as donors retained by MTF.
(ii) At least *** of such MTF Donors shall be Standard Donors and
equivalent to donors retained by MTF for processing into Bioimplants for each
year of the Term of this Agreement. The intent is that such MTF Donors shall be
substantially the same as donors retained by MTF for processing into Bioimplants
which are promoted and/or distributed by Synthes. Furthermore,
----------
*** 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 and Exchange Commission.
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the intent is to meet Osteotech's specifications for Donors suitable for
Processing into Bioimplants as such specifications are provided from time to
time by Osteotech to MTF.
(iii) The remaining *** of such MTF Donors shall be composed so as to
cause all of the MTF Donors to meet the following requirements:
(A) At least *** of all MTF Donors will be Standard Donors;
(B) Not more than *** of all MTF Donors will be ages *** through ***;
(C) Not more than *** of all MTF Donors will be female ages ***
through *** ; and
(D) Not more than *** of all MTF Donors will be male ages ***
through *** .
The percentages set forth in clauses (A) through (D) above reflect the mix
of donors retained by MTF during the year preceding the Effective Date and shall
be set for the first year of the Term of this Agreement. If the mix of donors
retained by MTF during any subsequent year of the Term of this Agreement changes
from the percentages set forth in clauses (A) through (D) above, the mix of
Donors to be delivered by MTF to Osteotech for Processing during the immediately
succeeding year shall be changed to reflect the new mix of donors retained by
MTF. It is agreed that the percentages set forth in clauses (B), (C) and (D)
above are monthly averages which will be measured at the end of each calendar
quarter during the Term. In the event the monthly average of the delivered
percentages of Donors in clauses (B), (C) and (D) exceed the allowable
percentages set forth in clauses (B), (C) and (D), in any such calendar quarter
MTF shall deliver Donors in the first month of the next succeeding calendar
quarter which would cause the monthly average of the delivered percentages of
Donors during the preceding calendar quarter to comply with the maximum
allowable percentages set forth in clauses (B), (C) and (D). The maximum
allowable percentages set forth in clauses (B), (C) and (D) shall not affect the
percentage of MTF Donors which are required to be Standard Donors as set forth
in clauses (ii) and (iii)(A) above.
(iv) Osteotech shall have the right on reasonable prior notice to MTF to
have an independent third party reasonably acceptable to MTF audit MTF's
compliance with the foregoing provisions regarding the mix of MTF Donors. MTF
shall cooperate with such audit and shall provide such third party with such
information as it shall request in order to conduct such audit. Osteotech shall
be entitled to exercise such audit right no more than once per year.
++ Except as otherwise provided in this Agreement, the Osteotech Donors shall
be Non-Standard Donors. MTF shall take no action which MTF could have
reasonably foreseen would influence procurement of Osteotech Donors so as
to cause a greater percentage of such Donors to be female. If MTF begins
to retain Non-Standard Donors, MTF agrees
----------
*** 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 and Exchange Commission.
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that the ages of, and the ratio of male to female, of Osteotech Donors
shall be substantially equivalent to the ages of, and the ratio of male to
female, of Non-Standard Donors retained by MTF. Osteotech shall have the
right on reasonable prior notice to MTF to have an independent third party
reasonably acceptable to MTF audit MTF's compliance with the foregoing
provisions regarding the mix of Osteotech Donors. MTF shall cooperate with
such audit and shall provide such third party with such information as it
shall request in order to conduct such audit. Osteotech shall be entitled
to exercise such audit right no more than once per year.
** Except as otherwise provided above and in Section 2.1.5 hereof the number
of Donors to be provided per month must be delivered in each month during
the relevant year.
"Donor" shall mean a Standard Donor or Non-Standard Donor from whom
Tissue is to be (or has been) procured and delivered by MTF in accordance with
the provision of this Agreement.
"Effective Date" shall mean the date set forth in the first
paragraph of this Agreement, provided that this Agreement shall not take effect
until it has been duly executed and delivered by all parties hereto.
"Existing Proprietary Products" shall have the meaning assigned to
such term in the definition of "Proprietary Products" in Section 1.1 hereof.
"FDA" shall mean the United States Food and Drug Administration.
"License" shall mean the license granted by Osteotech to MTF and
Synthes pursuant to the License Agreement.
"License Agreement" shall mean that certain License Agreement dated
as of the same date as this Agreement, by and among Osteotech, MTF and Synthes
in the form attached hereto as Exhibit 2.
"Licensee" shall have the meaning assigned to such term in the
License Agreement.
"Licensor" shall have the meaning assigned to such term in the
License Agreement.
"MTF" shall have the meaning assigned to such term in the preamble
hereof.
"MTF Donor" shall mean a Donor delivered pursuant to the Donor
Commitment by MTF to Osteotech for Processing into products that will be
returned to MTF for distribution. The Donor Commitment with respect to MTF
Donors is set forth in the third column of the chart in the definition of "Donor
Commitment" above.
"MTF/Synthes Agreements" shall have the meaning assigned to such
term in the recitals hereof.
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"MTF Tissue" shall mean Tissue obtained from MTF Donors.
"New Proprietary Products" shall have the meaning assigned to such
term in the definition of "Proprietary Products" in Section 1.1 hereof.
"Non-Standard Donor" shall have the meaning assigned to such term in
the definition of "Standard Donor" in Section 1.1 hereof.
"Original Processing Agreement" shall have the meaning assigned to
such term in the recitals hereof.
"Osteotech" shall have the meaning assigned to such term in the
preamble hereof.
"Osteotech Donor" shall mean a Donor delivered pursuant to the Donor
Commitment by MTF to Osteotech and retained by Osteotech for processing, use
and/or distribution by or on behalf of Osteotech in accordance with the terms of
this Agreement. The Donor Commitment with respect to Osteotech Donors is set
forth in the fourth column of the chart in the definition of "Donor Commitment"
above.
"Osteotech Tissue" shall mean Tissue obtained from Osteotech Donors.
"Prior Processing Agreement" shall have the meaning assigned to such
term in the recitals hereof.
"Processing" shall mean the processing of Tissue by Osteotech in
accordance with its proprietary techniques and in accordance with the Processing
Standards.
"Processing Fee" shall have the meaning assigned to such term in
Schedule 2.1.6 hereto.
"Processing Standards" shall mean all standards, guidelines, rules,
regulations and laws applicable to the Processing, storage, packaging, 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. jurisdictions 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, as may
be amended from time to time.
"Procurement Fees" shall mean the fees to be paid by Osteotech to
MTF pursuant to Section 2.1.7 hereof with respect to Osteotech Tissue.
"Proprietary Products" shall mean Existing Proprietary Products and
New Proprietary Products. "Existing Proprietary Products" shall mean those
Proprietary Products listed in clause (b) of Schedule 2.1.6 hereto as in effect
on the Effective Date and as the same shall be amended from time-to-time
pursuant to this Agreement; Existing Proprietary Products
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shall be deemed to be Proprietary Products for all purposes of this Agreement.
"New Proprietary Products" shall mean Proprietary Products not listed in
Schedule 2.1.6 hereto and designated as New Proprietary Products pursuant to
Section 3.6 hereof.
"Recovery Standards" shall mean all standards, guidelines, rules,
regulations and laws applicable to the donation, recovery, and suitability of
Tissue. 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 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
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 pursuant to this Agreement or distributed by or on behalf
of MTF or Osteotech; (v) MTF's 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.
"Required Average Gross Production Yield" shall have the meaning
assigned to such term in Section 2.1.2(d) hereof.
"RTI" shall have the meaning assigned to such term in Section 8.5
hereof.
"Settlement Agreement" shall mean that certain Settlement Agreement
and Release by and among Osteotech, Osteotech Investment Corp., MTF and Synthes,
dated as of the same date of this Agreement, attached hereto as Exhibit 3.
"SOP" shall mean standard operating procedures of the entity to whom
such term is applied.
"Standard Donor" shall mean; (i) a human male not less than ***
years of age and not greater than *** years of age at date of death; or (ii) a
human female not less than *** years of age and not greater than *** years of
age at date of death. "Non-Standard Donor" shall mean: (i) a human male not less
than *** years of age and not greater than *** years of age at date of death; or
(ii) a human female not less than *** years of age and not greater than ***
years of age at date of death.
----------
*** 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 and Exchange Commission.
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"Suggested End User Price" shall mean, in respect of any Proprietary
Product, the price determined from time-to-time by Osteotech in its sole
discretion. The current Suggested End User Prices are set out in Schedule 2.1.6
hereto.
"Synthes" shall mean Synthes Spine Company, L.P., a Delaware limited
partnership.
"Term" shall mean the period of time during which this Agreement is
in effect pursuant to Section 7 hereof.
"Termination Fee" shall have the meaning assigned to such term in
Section 8.5 hereof.
"Tissue" shall mean human bone and related connective soft tissue.
"Tissue Products" shall mean Tissue prepared from MTF Tissue and
used as follows:
(a) By Application: The Tissue may be prepared into forms
which can bear mechanical load, such as shaped implants,
composite implants made of bone elements bonded, adhered
or otherwise formed into monolithic structures and which
may include other materials; cut or otherwise shaped
implants; or it may be formed into implants which bear
minimal load, including demineralized bone, void filling
grafts; or soft tissue grafts; or hybrids of any of the
aforementioned forms.
(b) By Field of Use: The Tissue prepared may be used in any
clinical field, including, without limitation, the
orthopaedic fields of Spine, Trauma, Joint Replacement,
Sports Medicine and Oncology; as well as Reconstructive
Surgery, Dental, Maxillofacial, Plastic Surgery and
Podiatry.
(c) By Function: Hard and soft tissue may be prepared into
graft forms which perform any function or functions,
including, without limitation, one or more of the
following functions, when used: Remodeling;
incorporation; fusion between skeletal bones, bone
portions and/or grafts; mechanical support; fixation;
fastening of skeletal elements, soft tissue, or implants
to each other; stabilization of skeletal elements or
implants; providing shape; including bone formation;
anchoring implants or grafts or anatomical structures;
filling voids; bridging gaps; forming cartilage;
adhering, binding or grouting skeletal elements, soft
tissue or grafts; resurfacing; separating bony elements;
delivering drugs, cells, bioactive molecules, DNA and/or
biomaterials.
In this Agreement the singular includes the plural and the plural
the singular; references to statutes or regulations are to be construed as
including all statutory or regulatory
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provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" including printing, typing, lithography and
other means of reproducing words in a tangible visible form; references to
articles, section (or subdivisions of sections), exhibits, annexes or schedules
are to this Agreement unless otherwise indicated; references to agreements and
other contractual instruments shall be deemed to include all schedules and
exhibits to such agreement and all subsequent amendments and other modifications
to such agreements and contractual instruments, but only to the extent such
amendments and other modifications are not prohibited by the terms of this
Agreement, unless otherwise indicated; and references to persons or entities
include their respective permitted successors and assigns and, in the case of
any governmental entity, governmental entities succeeding to their respective
functions and capacities. The headings used in this Agreement and the table of
contents are for convenience only and shall not be deemed to constitute a part
hereof.
1.2 Compliance with Laws.
In accordance with the National Organ Transplant Act and the Uniform
Anatomical Gift Act (i) neither MTF nor Osteotech shall buy, sell, or trade
banked human tissue; and (ii) MTF and Osteotech may market recovery, testing,
processing, storage, distribution and other services in compliance with state
and federal law and in accordance with the terms of this Agreement.
2. DELIVERY AND PROCESSING OF TISSUE.
2.1 MTF Commitment to Deliver Tissue for Processing.
2.1.1 Engagement of Osteotech. MTF hereby engages Osteotech as
a provider of Processing services in respect of MTF Tissue.
2.1.2 Forecasts.
(a) Osteotech shall be responsible for planning the
Processing of all MTF Donors in order to produce
Proprietary Products. Osteotech shall make: (i)
quarterly, its good faith estimate of the demand for the
then ensuing twelve (12) month period for each of its
Proprietary Products (by product code) Processed from
MTF Donors which MTF inventories and distributes to MTF
customers; and (ii) good faith efforts to plan the
Processing of MTF Donors to meet the forecasted demand
for such Proprietary Products in order to reduce the
risk of backordering end users by maintaining the
inventory levels described in Section 2.1.4 hereof. Such
planning shall be based upon market needs for
Proprietary Products first, with base Tissue products or
non-Proprietary Products a secondary consideration.
After each MTF Donor is planned by Osteotech to meet the
forecasted demand for Proprietary Products, Osteotech
shall use its Best Efforts to follow the master plan
provided by MTF with respect to such Donor in order to
plan the remainder of such Donor for non-Proprietary
Products. Osteotech
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acknowledges that MTF has certain commitments to its
member organ procurement organizations to give priority
in certain circumstances to member demands for base
(non-Proprietary) Tissue Products currently Processed by
Osteotech and Osteotech agrees to follow MTF's
direction, as reflected in Donor master plans, to
respond to such member priority demands as long as
Processing of Proprietary Products is not disrupted.
During the first year after the Effective Date,
Osteotech shall use its Best Efforts to plan MTF Donors
such that the average gross dollar yield of Tissue
Products produced from such Donors (the "Average Gross
Production Yield") shall be at least *** per Donor based
on the Suggested End User Prices for the Proprietary
Products Processed by Osteotech from such Donors. The
calculation of such gross dollar yield of Tissue
Products produced from a Donor shall be made when all of
the usable Tissue from such Donor has been Processed.
(b) In addition, Osteotech shall deliver to MTF its good
faith estimated twelve (12) month sales projection for
each New Proprietary Product it develops and produces
which becomes subject to this Agreement pursuant to
Section 3.6 hereof, together with Osteotech's reasonable
projection of required inventory levels to be maintained
by MTF to adequately support the launch of such New
Proprietary Product. Commencing twelve (12) months after
such New Proprietary Product has been on the market, but
subject to the provisions of Section 3.6 hereto, such
New Proprietary Product shall be subject to all the
other terms of this Agreement relating to the forecasts
and inventory requirements and no longer subject to the
foregoing provisions of this clause.
(c) Should MTF be meeting the delivery requirements for
Tissue referred to in Section 2.1.5 in a timely manner,
subject to MTF's compliance with its obligations under
Section 2.1.4(a), and should MTF document to Osteotech
that a sufficient quantity of an Existing Proprietary
Product was not available to MTF creating a backorder to
MTF customers which caused cancellation by end users of
one or more purchase orders issued to MTF in respect of
such Existing Proprietary Product, then Osteotech will
reimburse MTF*** of the Suggested End User Price for the
amount of such
----------
*** 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 and Exchange Commission.
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Existing Proprietary Product in respect of which
purchase orders were so cancelled.
(d) In the event Osteotech shall fail to plan MTF Donors so
as to yield the Required Average Gross Production Yield
during the first year following the Effective Date the
number of MTF Donors to be delivered each month pursuant
to the Donor Commitment during the ensuing quarter shall
be reduced by a percentage equal to the percentage by
which the actual Average Gross Production Yield falls
below the Required Average Gross Production Yield. At
the end of such quarter the Average Gross Production
Yield for such quarter shall be calculated and, if the
Average Gross Production Yield is at least equal to the
Required Average Gross Production Yield then the monthly
Donor Commitment for the ensuing quarter shall be
restored to the levels set forth for the year in which
such quarter shall fall in the definition of "Donor
Commitment" above. If the Average Gross Production Yield
for such quarter is below the Required Average Gross
Production Yield, then the monthly Donor Commitment for
the ensuing quarter shall be reduced by a percentage
equal to the percentage by which the actual Average
Gross Production Yield falls below the Required Average
Gross Production Yield. Such calculations of Average
Gross Production Yield shall be done and such
adjustments to the monthly Donor Commitment shall be
made for each quarter (after the first year following
the Effective Date) during the Term of this Agreement.
For purposes hereof, the "Required Average Gross
Production Yield" shall be *** . No downward adjustment
of the monthly Donor Commitment shall be made if the
Average Gross Production Yield shall be below the
Required Average Gross Production Yield during a quarter
in which there shall have occurred a shortfall in the
number or types of Donors delivered by MTF to Osteotech
pursuant to the Donor Commitment.
2.1.3 Tissue Products Returned to MTF.
(a) Osteotech shall, subject to the other provisions of this
Agreement, return to MTF for distribution and invoicing
by MTF to its customers all Tissue Products, including
Proprietary Products, processed and prepared by
Osteotech from MTF Tissue.
(b) Osteotech shall use its Best Efforts to return
cancellous chips to MTF Processed by Osteotech from MTF
Tissue at a rate such that
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*** 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 and Exchange Commission.
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in each rolling three (3) month period during the Term
of this Agreement MTF shall receive, on average *** of
cancellous chips. This amount is the equivalent of ***
of the volume of cancellous chips Processed by Osteotech
from a Standard Donor during the year preceding the
Effective Date of this Agreement.
2.1.4 Inventory Requirements.
(a) Since Osteotech will plan the Processing of MTF Donors
for Proprietary Products, the inventory of Proprietary
Products Processed from such Donors to be maintained by
MTF will be reasonably determined by Osteotech based on
its good faith sales estimates for Proprietary Products.
MTF will use its Best Efforts to maintain such inventory
of Proprietary Products in cooperation with Osteotech.
Notwithstanding anything to the contrary contained
herein, (i) Osteotech shall not plan for and MTF will
not be required to maintain inventory at MTF of
Propriety Products to cover more than two (2) months of
sales of Proprietary Products forecast in good faith by
Osteotech and (ii) MTF will not be required to deliver
more MTF Donors to Osteotech than the number of MTF
Donors MTF is required to deliver pursuant to the Donor
Commitment.
(b) MTF shall report monthly to Osteotech its then current
inventory of each such Proprietary Product (by product
code). Osteotech shall maintain an inventory of such
Proprietary Products prepared from MTF Tissue sufficient
to cover sales for the next ensuing month and to turn
this inventory not less than four times in each calendar
year. In the event that such turn rate is not achieved,
Osteotech shall adjust its sales estimates to reasonably
conform to its current and reasonably expected market
conditions. MTF shall have the right on reasonable prior
notice to Osteotech to have an independent third party
reasonably acceptable to Osteotech audit Osteotech's
compliance with its obligations regarding inventory set
forth in this Section 2.1.4(b). Such right may be
exercised by MTF no more than once per calendar year
during the Term. Osteotech shall cooperate with such
audit and shall provide such third party with such
information as such third party shall reasonably request
in order to conduct such audit.
----------
*** 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 and Exchange Commission.
E-23
(c) Notwithstanding anything to the contrary contained
herein, it is the intent of the parties to act in good
faith and use their Best Efforts to not allow
back-orders or inventory shortfalls to occur and to
eliminate back-orders and inventory shortfalls when they
do occur as soon as possible.
2.1.5 Tissue Delivered in Respect of Consideration for
License.
(a) In consideration of the entering into of the License
Agreement by Osteotech and in consideration of the
License granted thereunder, MTF hereby agrees, in
addition to, and without limiting any of its other
obligations set forth in this Agreement, to deliver to
Osteotech the Tissue from Donors constituting the Donor
Commitment. For purposes of this Agreement a Donor shall
be deemed to be delivered to Osteotech by MTF when
Osteotech determines in good faith that the Donor has
been recovered in accordance with the Recovery Standards
and is able to be released for Processing. Without
limiting the foregoing, except as otherwise provided in
Section 2.1.5, any shortfall in delivery of Non-Standard
Donors shall be fully compensated by delivery (at the
time such Non-Standard Donor is due hereunder) of
Standard Donors in substitution for such undelivered
Non-Standard Donors.
(b) Notwithstanding anything to the contrary contained in
this Agreement it is expected that Tissue from the
typical Donor delivered to Osteotech by MTF shall
consist of *** and such number of *** as shall equal the
average number of *** as are recovered from donors
retained by MTF during the preceding twelve (12) month
period, and, in addition, in each month *** from not
less than *** of such Donors.
(c) Osteotech shall have the right to reject all Tissue from
any particular Donor delivered to it pursuant to this
Agreement if Osteotech reasonably believes that: (i)
such Tissue fails to comply with the Recovery Standards;
or (ii) such Tissue was not obtained or handled in
accordance with the Processing Standards or (iii) if the
terms of the applicable consent with respect to the
donor of such Tissue restrict the Processing and use of
Tissue as contemplated in this Agreement. In the event
of any such rejection, Osteotech shall notify MTF as
promptly as practicable
----------
*** 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 and Exchange Commission.
E-24
thereof and provide a written explanation of the
reasons. MTF shall use its Best Efforts to cure such
rejection by either: (i) correcting the cause for such
rejection so that such Tissue is no longer rejected by
Osteotech; or (ii) delivering other Tissue which is not
rejected. If such rejection is so cured within thirty
(30) days after receipt by MTF of such written
explanation, such Tissue shall not be considered in
computing any "shortfall" referred to below in this
Section 2.1.5; and, if such rejection is not so cured
within such 30-day period, such Tissue shall be
considered in computing such "shortfall" until such
rejection shall have been cured as described in this
clause 2.1.5(c) or such shortfall eliminated as
described below.
(d) In the event that MTF is unable, due to events
beyond MTF's control which could not have been avoided
by the use of due diligence, to deliver Tissue in any
month in the amounts or from the required Donor type set
forth above in Section 2.1.5 (a) hereof (the amount not
so delivered being referred to herein as the
"shortfall"), MTF shall, except to the extent it is
unable due to events beyond MTF's control which could
not have been avoided by the use of due diligence,
deliver in the next succeeding month Tissue from a
number of Donors equal to the sum of (i) the number
required by subsection (a) above to be delivered in such
succeeding month, plus (ii) the shortfall. The shortfall
in any given month shall be computed on the basis of the
sum of (i) the number of Donors required to be delivered
in such month less the number of Donors actually
delivered in such month plus (ii) the aggregate amount
of the shortfalls from all prior months which have not
been delivered. The foregoing delivery requirement shall
carry forward from month to month; however, if a carried
forward shortfall exists in two consecutive months,
notwithstanding anything to the contrary in this
Agreement, all such shortfall shall be made up by MTF in
the next succeeding month, provided that if MTF is
unable to make up such shortfall in such month due to
events beyond MTF's control which could not be avoided
by the use of due diligence, such shortfall shall be
made up by MTF in the next succeeding three months
through the delivery of Tissue from Standard Donors
only.
(e) Subject to the foregoing, in the event that in any month
MTF is unable to satisfy its requirement to deliver to
Osteotech the Osteotech Donors required for such month
from Non-Standard Donors as described in the Donor
Commitment and such event is not due to events beyond
MTF's control which could not have been avoided by the
use of due diligence, MTF shall deliver Tissue from
Standard Donors for Tissue it is so unable to deliver
from Non-Standard Donors so that, in such month, MTF
shall deliver to
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Osteotech, as Osteotech Tissue, Tissue from a total
number of Donors equal to the number required for
Osteotech Tissue for such month. The Standard Donors
delivered by MTF to Osteotech pursuant to this Section
2.1.5(e) shall have the same average age and male to
female ratio as that of the Standard Donors retained by
MTF.
2.1.6 Processing Fees. MTF shall pay, in accordance with the
provisions of Section 5 hereof, to Osteotech in respect of MTF Tissue, the
Processing Fees set forth in Schedule 2.1.6 hereto. MTF shall be responsible for
all costs and expenses of procuring, screening, testing, storing, and delivering
MTF Tissue to Osteotech for Processing.
2.1.7 Procurement Fee. Osteotech shall reimburse MTF in the
amount of *** per Donor for services performed by MTF in respect of Osteotech
Tissue which is actually delivered to Osteotech pursuant to the provisions of
this Agreement (such amount being the "Procurement Fee"); provided that, on an
annual basis, the Procurement Fee shall be increased by a percentage equal to
the increase in the then most recently published Medical Cost Component of the
Consumer Price Index over the immediately preceding twelve (12) month period;
and provided, further, that if MTF shall have demonstrated to Osteotech through
reasonable documentation that MTF's actual average system-wide amount paid to
recovery agencies, hospitals and recovery teams for recovery of Tissue in the
preceding calendar year exceeded *** per Non-Standard Donor and such average
amount for such year had increased by a percentage greater than the percentage
increase in the Medical Cost Component of the Consumer Price Index in the then
immediately preceding twelve (12) month period, then the Procurement Fee shall
be increased at such time by such documented greater percentage increase.
2.1.8 Compliance With Applicable Standards.
(a) Recovery Standards. All Tissue delivered to Osteotech
for Processing pursuant to this Agreement shall conform
to the Recovery Standards. If interpretation of the
Recovery Standards is required or if there is a
disagreement about the interpretation of the Recovery
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 upon a third party who will
assist the parties in arriving at a resolution.
----------
*** 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 and Exchange Commission.
E-26
(b) Processing Standards. MTF shall comply with the
Processing Standards to the extent applicable to MTF's
activities as contemplated hereunder.
(c) Standard Operating Procedures. Each of MTF and Osteotech
shall make available to the other a copy of its SOPs and
copies of any material amendments to its SOPs promptly
after such material 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.
(i) Upon reasonable notice and at its own expense,
each of Osteotech, on the one hand, and MTF, on
the other hand, 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,
on the one hand, and MTF, on the other hand, 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;
(x) MTF will be entitled to review Osteotech's
records only to the extent such records relate to
MTF Tissue; and (y) Osteotech will be entitled to
review MTF's records only to the extent such
records relate to Osteotech Tissue and/or MTF
Tissue.
(ii) 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 (pursuant to this Section
2.1.8(d)) of Osteotech's compliance with the
Processing Standards applied to MTF Tissue. As
part of this inspection, all such 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 such Processing Standards and to
the extent applicable to Osteotech, the Recovery
Standards, and then, in such case, such
proprietary know-how and trade secrets shall be
revealed only to a mutually agreeable third party.
Such
E-27
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 require access to
Osteotech's clean rooms, 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
clean rooms. Osteotech may, at its sole
discretion, refuse any individual access to
Osteotech's clean rooms for cause. Such denial of
access will not be a violation of this Agreement.
(iii) 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
pursuant to this Section 2.1.8(d). 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, in such case, such
proprietary know-how and trade secrets shall be
revealed 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.
(e) Meetings. Osteotech will arrange with MTF to hold
regular meetings to discuss Processing of MTF Tissue and
other related issues. At these meetings the following
information with respect to MTF Tissue will be
discussed, along with any other relevant information
related to the Processing Standards and Recovery
Standards, the approval of MTF Tissue for Processing and
the release of MTF Tissue for Processing: MTF Tissue
released month to date, Grafton(R) DBM product releases,
Bioimplant releases, releases of other Proprietary
Products rework list, unprocessed MTF Tissue list at
Osteotech, Grafton(R) DBM products, Bioimplants and
other Proprietary Products, WIP lists, and list of raw
MTF Tissue at Osteotech for Grafton(R) DBM products,
Bioimplants and other demineralized Tissue or
Proprietary Products.
(f) Serology Testing. MTF shall be responsible for the
performance of all serology testing on Tissue from each
Donor procured by
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MTF and delivered to Osteotech pursuant to this
Agreement which shall be performed by a laboratory
certified by the Centers for Medicare and Medicaid
Services under the Clinical Laboratory Improvement
Amendments of 1988. The results of such tests will be
forwarded to Osteotech promptly in accordance with the
Recovery Standards and the Processing Standards. In
addition, if MTF becomes aware of adverse test results
from tests performed by another party (e.g. eye bank,
etc.) on tissue or organs obtained from a Donor procured
by MTF and delivered to Osteotech pursuant to this
Agreement, MTF shall notify Osteotech of such test
results promptly after MTF becomes aware of such test
results.
2.1.9 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 Tissue delivered to Osteotech pursuant to
this Agreement (including records classifying each Donor
as a Standard Donor or a Non-Standard Donor); (ii)
inventory of MTF Tissue Processed pursuant to this
Agreement and received by MTF from Osteotech for
distribution to end users by MTF; and (iii) the receipt
and processing of all end user orders received from
MTF's customers who utilize the MTF Tissue processed by
Osteotech pursuant to this Agreement.
(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,
Donor classification (Standard or Non-Standard) 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 procured by
MTF and delivered to Osteotech pursuant to this
Agreement, MTF will provide Osteotech with such
information as is necessary to satisfy any such request
by any such regulatory agency.
E-29
2.2 Processing Responsibilities of Osteotech in Respect of MTF
Tissue.
2.2.1 General Undertaking.
Processing and packaging of MTF Tissue received by Osteotech from MTF for
Processing pursuant to this Agreement into then currently available finished
units of MTF Tissue shall be conducted by Osteotech in compliance with the
Processing Standards.
2.2.2 Interpretation; Change in Regulations.
(a) If interpretation of the Processing Standards is
required or if there is a disagreement about the
interpretation 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
upon a third 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
regulations applicable to Tissue, MTF shall implement
such changes to its SOPs as are necessary to comply with
such regulations in respect of all Tissue procured by
MTF and delivered to Osteotech pursuant to this
Agreement, and Osteotech shall implement such changes to
its SOPs as are necessary to comply with such
regulations in respect of MTF Tissue and Osteotech
Tissue. In the event FDA has determined (after any good
faith appeal of such determination by Osteotech) that
Osteotech has failed to implement such changes in
respect of MTF Tissue or Osteotech Tissue by the
effective date of such changes, MTF shall have the
remedy set forth in Section 8.4 and in the event FDA has
determined (after any good faith appeal of such
determination by MTF) that MTF has failed to implement
such changes in respect to MTF Tissue or Osteotech
Tissue by the effective date of such changes, Osteotech
shall have the remedy set forth in Section 8.4.
2.2.3 Processing Considerations.
(a) MTF shall undertake reasonable efforts to present a
consistent flow of Donors to Osteotech with the goal of
minimizing second-half-of-month bunching of Donors, and
Osteotech shall undertake similar reasonable efforts in
respect of Processing of MTF Tissue. Subject to the
foregoing sentence, to Osteotech's right to refuse to
accept Tissue pursuant to Section 2.1.5(c) and to the
provisions of clauses (b) and (c) below, MTF Tissue
received at Osteotech for Processing pursuant to this
Agreement will be processed within a reasonable period
of time (which shall be reviewed at the meetings
provided for in Section 2.1.8(e)) from the time all
required,
E-30
complete and accurate Donor documentation as specified
by the Processing Standards is received at Osteotech.
Subject to the foregoing, Osteotech will use
commercially reasonable efforts to complete the
Processing of MTF Tissue delivered to it pursuant to
this Agreement and deliver such processed Tissue to MTF
within a reasonable period of time.. Osteotech will
advise MTF no later than the following business day if
there will be a material delay in the commencement of
Processing of MTF Tissue which has been released from
Osteotech's Quality Assurance Department. Once
Processing of the Donor is complete, subject to the
provisions of Section 3.1, all MTF Tissue will be
shipped to MTF upon final inspection and release thereof
by Osteotech's Quality Assurance Department.
(b) If the release of processed MTF Tissue back to MTF is
delayed due to (i) Tissue histology of unknown etiology;
or (ii) microbial contamination of final product,
Osteotech will notify MTF of the reason for the hold and
the approximate time period expected for the hold (in
weeks).
(c) Osteotech will maintain a quality assurance program in
respect of Processing of MTF Tissue, the goal of which
is to achieve zero defect Processing. To the extent
there are rejects of MTF Tissue, it is Osteotech's goal
that such rejects of MTF Tissue be no more than an
average of *** of MTF Tissue initially processed per
Donor of MTF Tissue (not taking into account any
reworks). All rejected MTF Tissue that can be reworked
with commercially reasonable efforts will be reworked
and returned to MTF within *** from the time of
rejection.
2.3 Undertakings Regarding Osteotech Tissue.
2.3.1 General Undertaking. As an accommodation to, and in
response to interest from, MTF's member organ procurement organizations, MTF has
determined to recover certain Non-Standard Donors that it would not otherwise
procure and make them available to Osteotech as part of the Donor Commitment.
Such Donors shall be Osteotech Donors as provided herein and shall be Processed
and distributed by Osteotech pursuant to the terms of this Agreement. In the
event MTF decides to also retain Non-Standard Donors it shall not affect MTF's
obligations to deliver Donors to Osteotech pursuant to the Donor Commitment
herein. Notwithstanding any other provision in this Agreement or in any other
agreement between
----------
*** 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 and Exchange Commission.
E-31
Osteotech and MTF, the following provisions of this Section 2.3 shall govern the
Processing, distribution, and use of by Osteotech (or any third party to whom
Osteotech distributes such tissue for redistribution) of Osteotech Tissue
delivered by or on behalf of MTF to Osteotech.
2.3.2 Furtherance of MTF Mission. Osteotech agrees that it
will Process, distribute and/or use, and use its Best Efforts to cause others to
whom it distributes for redistribution to process, distribute and/or use,
Osteotech Tissue products in a manner that is consistent with (a) MTF's mission
of providing high quality human allograft tissue for transplantation and
research (it being understood and agreed that such obligation of Osteotech shall
be deemed to have been fully satisfied for all purposes by Osteotech meeting its
obligations to provide Processing in accordance with the Processing Standards
and by preparation of products therefrom for transplant only into humans) and
(b) subject to Osteotech's rights under Section 2.1.5(c), respecting the wishes
of tissue donors and their families and the terms of the applicable consents of
the donors and/or their families or other responsible parties with respect to
such Tissue. MTF will provide Osteotech with the required information concerning
such consents at the time it delivers the applicable Osteotech Tissue to
Osteotech. Osteotech will not Process, distribute, or use, or allow others to
Process or distribute, Osteotech Tissue products in a manner or for a purpose
inconsistent with MTF's mission or such consents or applicable laws,
regulations, SOPs or Processing Standards.
2.3.3 MTF Responsibilities. Except as otherwise expressly set
forth in this Agreement, MTF shall have no responsibility with respect to the
processing, storage, distribution, use, or disposal of Osteotech Tissue after
such tissue is released to Osteotech. MTF shall have no responsibility to
conduct any additional testing with respect to Osteotech Tissue once such tissue
is delivered to Osteotech, except to the extent such testing is required by the
Recovery Standards.
2.3.4 Fitness for End Use. Osteotech will use its Best Efforts
to ensure that all Osteotech Tissue products shall be fit for the end use for
which such products are distributed (it being understood and agreed that such
obligation shall be deemed to have been fully satisfied for all purposes if such
products meet or exceed applicable Osteotech Tissue product specifications and
were prepared in accordance with the Processing Standards). In the event
Osteotech learns of any noncompliance of Osteotech Tissue products with
applicable Osteotech Tissue Product specifications, Osteotech shall forthwith
cease distribution of any such products until such noncompliance can be
investigated and resolved.
2.3.5 Labeling. MTF shall not be identified in any labeling of
or other documentation relating to Osteotech Tissue products, except to the
extent expressly required by applicable law or as expressly agreed to in writing
by MTF.
2.3.6 Storage. Osteotech shall bear all responsibility and
cost for storage of Osteotech Tissue after it has been delivered to Osteotech.
For purposes of the preceding sentence, Osteotech Tissue shall be deemed to be
delivered to Osteotech when it is physically delivered to Osteotech, not when it
is released by Osteotech's Quality Assurance Department. MTF will immediately
deliver to Osteotech all Osteotech Donors, provided that if any such Donor is
deemed by Osteotech to be unsuitable or is rejected by Osteotech pursuant to
Section 2.1.5(c), MTF will be fully responsible at its cost to promptly remove
all Tissue from such
E-32
Donor from Osteotech's facility and such Osteotech Tissue will not be deemed to
have been delivered and released under the terms and conditions of this
Agreement.
2.3.7 Record Retention and Access. Osteotech shall maintain
complete and accurate records regarding the Processing and distribution of
Osteotech Tissue products in a manner consistent with applicable law, industry
guidelines, and customary industry practices. If MTF is requested by donor
families, recovery organizations, or regulatory authorities to provide access to
any such records, MTF will request such records from Osteotech in writing with
information regarding the source and nature of the request. Osteotech will use
its Best Efforts to provide MTF with copies of or access to such records on a
timely basis, to the extent reasonably available to Osteotech; provided that in
no event shall Osteotech be required to disclose any proprietary information
pursuant to any such request.
2.3.8 Indemnity. In addition to and not in limitation of the
indemnity provisions of Section 4 hereof, 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 Osteotech's Processing, distribution, or use of Osteotech Tissue or the
Processing, distribution or use of Osteotech Tissue by any other party that has
received Osteotech Tissue from Osteotech, except to the extent that such
damages, litigation costs, losses, liabilities, claims, actions or causes of
action result from or arise out of any of the matters set forth in clauses (i)
through (iv) of Section 4.1(b) hereof. Osteotech's indemnity of MTF hereunder
shall be governed by the procedures set forth in Section 4.1 hereof.
3. STORAGE, SHIPPING, REGULATORY COMPLIANCE AND LABELING.
3.1 Possession and Storage of Tissue.
(a) MTF Tissue delivered to Osteotech for Processing
pursuant to this Agreement and any finished units or
other byproducts derived from such MTF 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 MTF Tissue for research
purposes.
(b) To the extent Osteotech stores any MTF Tissue delivered
to it pursuant to this Agreement, such storage shall be
in compliance with all applicable portions of the
Processing Standards. Except as provided in Section
3.1(c) and Section 3.2(e) hereof, MTF shall bear the
risk of loss for all MTF Tissue delivered to Osteotech
pursuant to this Agreement.
(c) In the event that MTF 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)
pursuant to this Agreement is destroyed or
E-33
rendered unusable while in the possession of Osteotech
due to the negligence of Osteotech, Osteotech shall pay
to MTF the following amounts: (i) in the case of MTF
Tissue which has already been Processed at the time of
such destruction or damage, the market value of such MTF
Tissue, less the cost of Processing such MTF Tissue; and
(ii) in the case of MTF Tissue which has not yet been
Processed at the time of such destruction or damage, the
market value of the average per Donor yield for Donors
processed in the prior calendar quarter, less the
average per Donor cost of Processing in such prior
calendar quarter.
3.2 Shipping.
(a) Except as otherwise provided in a written document
signed by both Osteotech and MTF (other than (x)
demineralized bone, (y) MTF Tissue used for Grafton(R)
DBM products, Bioimplants and other Proprietary
Products, and (z) items being reworked), Osteotech shall
ship all finished units derived from MTF Tissue from a
single Donor received for Processing pursuant to this
Agreement to MTF in one shipment by a carrier designated
by MTF. Osteotech shall ship finished units of
Grafton(R) DBM products, Bioimplants and other
Proprietary Products processed by Osteotech from MTF
Tissue pursuant to this Agreement to MTF upon release
from Osteotech's Quality Assurance Department, except
that in the case of inventory held by Osteotech for MTF
of finished units of Grafton(R) DBM products,
Bioimplants and other Proprietary Products 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 MTF Tissue to
be distributed by MTF in shipping containers which meet
the requirements specified in the Processing Standards.
All such 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 such 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 such shipment from Osteotech shall include a
packaging slip listing the contents and corresponding
Donor lot and batch
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numbers, if applicable. All tissue containers in each
such 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 such
finished units of MTF Tissue which it reasonably
believes occurred during shipment thereof. Osteotech
will file a claim against the shipping carrier for the
amount of damage up to the amount insured. Osteotech
will insure finished units of MTF Tissue with the
shipping carrier in an amount not less than the portion
of the Suggested End User Price which would have been
received by MTF had such finished units of Proprietary
Products been received by MTF without damage and not
less than the end user price for all other MTF Tissue
which would have been actually received by MTF had such
finished units been received by MTF without damage. The
relevant portion of the amount recovered from the
shipping carrier for any such claims will be passed on
to MTF within ten (10) days of receipt by Osteotech.
Osteotech shall have no liability for any damage to such
finished units of MTF Tissue incurred during shipping,
except to the extent Osteotech fails to require 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 any such finished units of
MTF 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 MTF Tissue damaged
during shipment, as specified in (e) above.
3.3 Certain Joint Compliance Responsibilities.
(a) MTF shall comply with applicable laws, regulations and
guidelines as required under Section 2.1.8. Osteotech
shall comply with applicable laws, regulations and
guidelines as required under Section 2.2.1. In instances
where the party's compliance responsibilities overlap,
or where otherwise necessary and appropriate, each party
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 upon a third party who will assist
the parties in arriving at a resolution. Notwithstanding
the
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foregoing, it is agreed that both MTF and Osteotech
shall have regulatory compliance responsibility with
respect to labeling MTF Tissue and to the extent
expressly required by applicable law, Osteotech Tissue,
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 upon a third party who will
assist the parties in arriving at a resolution.
(b) Containers of finished units of MTF 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.
(c) Osteotech shall, in respect of MTF Tissue, 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.
(d) All labeling of MTF Tissue will be in accordance with
Sections 3.2(c), 3.2(d) and the Processing Standards.
(e) Specifications for all products which are not
Proprietary Products but are to be processed from MTF
Tissue 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.
(f) In the event of any recall (either voluntary or mandated
by FDA) of Tissue Products Processed from MTF Tissue,
MTF shall be responsible for carrying out such recall,
provided that Osteotech shall reimburse MTF for the
costs of such recall if such recall is made necessary by
Osteotech's failure to comply with the Processing
Standards with respect to such Tissue or Osteotech's
negligence in Processing such Tissue.
(g) In the event of any recall (either voluntary or mandated
by FDA) of Tissue Products Processed from Osteotech
Tissue, Osteotech shall be responsible for carrying out
such recall, provided that MTF shall reimburse Osteotech
for the costs of such recall if such recall is made
necessary by MTF's failure to comply with the
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Recovery Standards with respect to such Tissue or MTF's
negligence in recovering such Tissue.
3.4 Records and Reports.
(a) Osteotech shall maintain complete and accurate records
concerning MTF Tissue received by Osteotech pursuant to
this Agreement, MTF Tissue Processed pursuant to this
Agreement and in storage at Osteotech, and finished
units of MTF Tissue stored and shipped by Osteotech
pursuant to this Agreement. Such records shall be
available, at MTF's expense, to MTF during normal
business hours upon reasonable advance notice. 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
MTF Tissue in a timely manner showing MTF Tissue
processed and shipped by Osteotech:
Daily Reports
List of Donors of MTF Tissue Released to MTF.
Weekly Reports
Pending list of Donors of MTF Tissue.
Listing of Donors of MTF Tissue processed during prior
week with detailed processing notes.
Monthly Reports
Proprietary Product Releases by serial number in
inventory at Osteotech.
(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
identifying information, such as the Donor identifying
number, related to any MTF Tissue delivered to Osteotech
pursuant to this Agreement where such release is legally
required by a regulatory or governmental agency or court
or administrative order or subpoena. The provisions of
this Section 3.4 (d) shall survive termination of this
Agreement.
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(e) In connection with the marketing and distribution of
Grafton(R) DBM products, Bioimplants and other
Proprietary Products processed by Osteotech from MTF
Tissue, 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 such products 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 Grafton(R) DBM products, Bioimplants and
other Proprietary Products processed by Osteotech that
bear MTF's label which, in each case, were prepared from
MTF Tissue, and the territories they are covering;
provided such information shall be treated as
Osteotech's Confidential Information pursuant to Section
6.1 hereof.
3.5 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) and the provisions of the
License Agreement, Osteotech 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 Osteotech as
well as the intellectual property rights based thereon,
including but not limited to copyrights and patent
rights.
(b) Subject to subsection (c) and the provisions of the
License Agreement, 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.
(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 3.5 shall survive
termination of this Agreement.
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3.6 New Proprietary Products.
It is understood and agreed that Osteotech may develop New
Proprietary Products on its own or jointly with its other Tissue processing
clients. Subject to the other provisions of this Section 3.6, MTF agrees that:
(i) Osteotech may, by written notice to MTF identifying the New Proprietary
Product and its Suggested End User Price, elect (in its sole discretion) to have
any such New Proprietary Product be treated under this Agreement as an Existing
Proprietary Product for all purposes (in which event, clause (b) of Schedule
2.1.6 hereto shall be deemed amended to include such additional Existing
Proprietary Product effective as of the date of such notice) and to Process MTF
Tissue into such New Proprietary Product under this Agreement; and (ii) unless
and/or until Osteotech shall have made such election and delivered such written
notice, MTF shall not have access to, or the right to utilize, any such New
Proprietary Product and shall not be able to cause Osteotech to Process or
produce any such New Proprietary Product for MTF or on MTF's behalf unless and
until MTF and Osteotech shall have executed a written agreement or a written
amendment to this Agreement which provides for such access or utilization by or
on behalf of MTF. Notwithstanding the foregoing, Osteotech shall not have the
unilateral right to have a New Proprietary Product treated as an Existing
Proprietary Product and to Process MTF Tissue into such New Proprietary Product
under this Agreement if Osteotech's Processing of such New Proprietary Product
would, based on Osteotech's good faith forecast of projected unit sales of such
New Proprietary Product and Donor planning for the twelve (12) month period
after its market introduction, cause the aggregate weighted average Suggested
End User Price for Proprietary Products derived from MTF Donors to be less than
*** of the aggregate weighted average Suggested End User Price for Proprietary
Products derived from MTF Donors (based on actual unit sales) Processed by
Osteotech during the calendar year preceding the proposed introduction date for
such New Proprietary Product, unless otherwise agreed to by the parties. MTF
shall have the right on written thirty (30) days' notice to Osteotech to cause
such New Proprietary Product not to be deemed to be an Existing Proprietary
Product if actual unit sales of such New Proprietary Product for the twelve (12)
month period after its market introduction caused the aggregate weighted average
Suggested End User Price for Proprietary Products derived from MTF Donors during
such twelve (12) month period (based on actual unit sales) to be less than ***
of the aggregate weighted average Suggested End User Price for Tissue Products
derived from MTF Donors (based on actual unit sales) Processed by Osteotech
during the calendar year preceding the market introduction of such New
Proprietary Products.
3.7 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
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*** 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 and Exchange Commission.
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services will be established at the time such agreements are entered into and
will be separate from the fees listed in Schedule 2.1.6. MTF shall be free to
obtain any such services from third parties.
3.8 Publication and Public Disclosure of Scientific Information.
(a) Either party shall have the right to publish or otherwise
publicly disclose at its own expense scientific information or
data developed by such party 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 Information in Section 6.1 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 3.8(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 do so fifteen (15) days after
delivery of such second notice, subject to the provisions of
Section 3.8(a).
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(d) Authorship of any publication shall be determined in
accordance with normal scientific practice.
(e) The provisions of this Section 3.8 shall survive termination
of this Agreement.
4. INDEMNIFICATION; SETTLEMENT
4.1 Indemnification.
(a) Indemnification by Osteotech. 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 or
default by Osteotech of any of its representations,
warranties or covenants contained in this Agreement;
(ii) a defect in any finished unit of MTF Tissue
Processed by Osteotech under this Agreement to the
extent such defect 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 activities or any 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 pursuant to this
Agreement (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 pursuant to this
Agreement.
(b) Indemnification by MTF. 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 or
default by MTF of any of its representations, warranties
or covenants contained in this Agreement; (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 activities
or any Tissue recovery or distribution related
activities hereunder), in connection with its Tissue
recovery or distribution 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 Tissue procured by
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MTF and processed by Osteotech pursuant to this
Agreement (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
Tissue procured by MTF and processed by Osteotech
pursuant to this Agreement.
(c) Indemnification Procedures. For purposes of subsection
(a) above, Osteotech shall be the "indemnifying party"
and MTF shall be the "indemnified 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 liabilities 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 4.1(a) hereof, or Section
4.1(b) hereof, as 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 Section 4.1(a) or Section 4.1(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 agreement contained in subsection (a) or
(b) hereof, as the case may be, be defended
(including all proceedings on appeal or for review
which counsel for the defendant shall deem
appropriate) by the indemnifying party. The
indemnified party shall have the right to be
represented by advisory counsel and accountants,
at its own expense, and
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shall be kept 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 4.1 shall survive
termination of this Agreement.
4.2 Confirmation of Previous Releases.
Without limiting any other provision of this Agreement, each of the
parties to this Agreement hereby confirms, ratifies and agrees to be bound by
the provisions of Section 2.4(d) and 2.4(e) of the Prior Processing Agreement,
and, as they relate to such Sections 2.4(d) and 2.4(e), Sections 2.4(f), 2.4(g)
and 2.4(h) of the Prior Processing Agreement, in each case, as if such
provisions had been expressly incorporated in this Agreement with such changes
as are necessary to make those provisions have the identical substantive effect
they would have had under such Prior Processing Agreement if this Agreement had
not been entered into.
4.3 Settlement of Current Disputes.
Osteotech, MTF and Synthes have settled certain current disputes between
them pursuant to the Settlement Agreement.
5. FINANCIAL TERMS.
5.1 Fees.
(a) MTF will pay to Osteotech the Processing Fees.
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(b) ***
(c) Osteotech will pay to MTF the Procurement Fees.
(d) ***
5.2 Invoicing and Payment.
(a) Osteotech shall submit invoices in U.S. dollars to MTF
for all Processing Fees due in respect of MTF Tissue
delivered to Osteotech hereunder. The invoice date shall
be the date that Osteotech's Quality Assurance
Department releases the finished units of MTF Tissue for
shipment to MTF or the date of shipment of Grafton(R)
DBM products, Bioimplants or other Proprietary Products
Processed from MTF Tissue, as the case may be.
(b) MTF shall submit invoices in U.S. dollars to Osteotech
for all Procurement Fees due in respect of Osteotech
Tissue delivered hereunder when such Osteotech Tissue is
delivered to Osteotech.
(c) Each party will pay each invoice received by it within
forty-five (45) days of the invoice date. In the event
there is an error in an invoice submitted to it, the
receiving party shall notify the other party of such
error within three (3) business days of the date such
invoice is received and the invoice date will then be
the date of the corrected invoice submitted by such
other party. All such payments shall be in U.S. dollars.
(d) Any balance of any invoice which is not paid within the
time specified above, at the option of the party to whom
payment is due, shall accrue interest at the rate of one
percent (1%) per month.
6. CONFIDENTIALITY AND CERTAIN OTHER COVENANTS.
6.1 Non-Disclosure of Confidential Information.
(a) 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
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*** 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 and Exchange Commission.
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performing this Agreement or any successor Agreement or
as may be required by law, governmental regulation or
court order.
(b) Each Party agrees to require its employees, consultants
or others granted access to Confidential Information to
execute appropriate confidentiality agreements; provided
that each organization's agreements are approved by such
organization's counsel.
(c) MTF and Osteotech recognize that violation in any
material respect of any provision of Section 6.1(a) 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 6.1. In
addition, MTF and Osteotech agree that the party
responsible for the breach of confidentiality shall be
responsible for all legal fees and other costs and
expenses incurred in the successful enforcement of the
non-breaching party's rights and remedies under this
Section 6.1.
6.2 Non-Solicitation of Sales Agents.
(a) MTF shall not engage any (i) sales agent retained by Osteotech
or (ii) any employee, independent contractor or other sales
personnel affiliated with such sales agent ("affiliated
personnel"), while any such sales agent or affiliated
personnel is under contract directly or indirectly to
Osteotech and for a period of one (1) year after any such
contract is terminated, to promote or represent any form of
Tissue developed, processed or distributed by or on behalf of
MTF or any of MTF's licensees, licensors, distributors,
partners or agents which competes with any of Osteotech's
Proprietary Products, including without limitation
Grafton(R) DBM products or Bioimplants.
(b) Osteotech shall not engage any (i) sales agent retained by MTF
or (ii) any employee, independent contractor or other sales
personnel affiliated with such sales agent ("affiliated
personnel"), while any such sales agent or affiliated
personnel is under contract directly or indirectly to MTF and
for a period of one (1) year after any such contract is
terminated, to promote or represent any form of Tissue
developed, processed or distributed by or on behalf of
Osteotech or any of Osteotech's licensees, licensors,
distributors, partners or agents which competes with any of
MTF's proprietary Tissue products.
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6.3 Osteotech Sales Agents.
MTF acknowledges the existence and importance of the
independent sales agent network established and maintained by Osteotech. MTF
shall not be entitled to engage independent agents or any other person or entity
to promote Osteotech's Grafton(R) DBM products or other Proprietary Products
distributed by MTF unless Osteotech shall have first consented in writing to MTF
engaging such agent, person or entity. Osteotech shall have full discretion to
determine whether to withhold or grant such consent.
6.4 Osteotech Marketing of Grafton(R).
Osteotech represents that it currently intends to continue to
market Grafton(R) DBM in the United States through its direct and independent
sales agent network regardless of whether it enters, in the future, into
agreements with parties other than MTF.
6.5 Dedicated Supply.
MTF shall use its Best Efforts to ensure that: (a) when a
customer requests a Proprietary Product processed by Osteotech for MTF pursuant
to this Agreement, such request will not be diverted to or fulfilled by,
directly or indirectly, any product processed by MTF or any entity (other than
Osteotech) with which MTF has any contractual or other business arrangement; and
(b) that Proprietary Products processed by Osteotech which are the subject of
any such request will in fact be shipped to such customers.
In furtherance of the foregoing undertaking, if Osteotech shall determine
that, notwithstanding the foregoing, any such Proprietary Product processed by
Osteotech shall not have been delivered to such customer, upon presentation of
evidence reasonably documenting such fact (provided that no hearsay evidence
will be used to make such determination), MTF shall pay Osteotech an amount
equal to *** of the Suggested End User Price for each and every Proprietary
Product processed by Osteotech which would have been distributed to such
customer.
6.6 Notices of Pricing and/or Processing Fee Increases.
Osteotech shall deliver to MTF written notice no less than ninety (90)
days prior to the effectiveness of any change in Suggested End User Price or in
the Annual Processing Fee Increase (referred to in Schedule 2.1.6 hereto). Each
such notice shall state the new Suggested End User Price or Annual Processing
Fee Increases as relevant and the effective date thereof. All such changes and
information related thereto shall be treated as Confidential Information until
publicly disclosed by Osteotech.
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*** 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 and Exchange Commission.
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6.7 Bone Dowel Sales.
Osteotech agrees to plan its products from MTF Tissue so that the growth
rate of end user unit sales of its bio-d(R) Threaded Cortical Bone Dowel product
does not exceed the following amounts: in 2002, *** times the number of such
sales in 2001; in January 2003, *** times the number of such sales in January
2002.
6.8 Surviving Provisions.
The provision of Sections 6.1 and 6.2 shall survive the
termination of this Agreement in accordance with their terms.
7. EFFECTIVENESS AND TERM OF AGREEMENT.
This Agreement shall, when it has been executed by all the
Parties hereto, become effective as of the Effective Date and shall terminate on
December 31, 2008, unless terminated earlier in accordance with the provisions
hereof.
8. TERMINATION.
8.1 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
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
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*** 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 and Exchange Commission.
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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.
8.2 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 during the original 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.
8.3 In the event MTF enters into an agreement or arrangement with a
third party whereby finished units of MTF 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 terminate this Agreement solely as it relates
to MTF Tissue at any time upon ninety (90) days' prior written notice to MTF
without any further obligation to MTF, other than (A) Osteotech'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 MTF Tissue is delivered to MTF
and (B) those obligations which otherwise survive termination of this Agreement
in accordance with their terms.
8.4 MTF may terminate this Agreement at any time upon thirty (30)
days' prior written notice to Osteotech if FDA has made the determination (after
any good faith appeal of such determination by Osteotech) described in Section
2.2.2(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 FDA has made the determination (after any good faith appeal of
such determination by MTF) described in Section 2.2.2(b) to the extent such
provisions are applicable to MTF.
8.5 In the event that Regeneration Technologies Inc. ("RTI") shall
have acquired beneficial ownership of more than 50% of the voting shares of
Osteotech or shall have caused the election of persons nominated by it to
membership on the board of directors of Osteotech so that such persons
constitute a majority of the membership of such board, then MTF shall have the
right, exercisable solely by delivery of written notice to Osteotech within
thirty (30) days of the occurrence of such event, to terminate this Agreement
upon payment to Osteotech of the Termination Fee (as defined below); provided
that such right may only be exercised if the License is simultaneously
terminated pursuant to the provisions of Section 6.5 thereof. The Termination
Fee shall be the net present value to Osteotech, determined at the time of
exercise of the rights referred to in this Section 8.5, of the remaining
obligations of MTF under this Agreement for the remainder of its term. Osteotech
and MTF will negotiate in good faith to agree on the Termination Fee. If such
agreement is not reached within thirty (30) days after the occurrence of the
change in control event involving RTI, the Termination Fee shall be
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determined by an appraiser jointly selected by Osteotech and MTF, which
appraiser shall submit to the parties a report within thirty (30) days of its
appointment setting forth such determination. If the parties are unable to agree
on an appraiser within forty-five (45) days after failing to reach agreement on
the Termination Fee, within seven (7) days thereafter, each party shall submit
the names of two nationally recognized firms that are engaged in the business of
valuing non-publicly traded securities, and each party shall be entitled to
strike one name from the other party's list of firms, and the appraiser shall be
selected by lot from the remaining two firms. The expenses of such appraiser
shall be borne equally by Licensor and Licensee. The determination of any such
appraiser as to the Termination Fee shall be final and binding upon all parties.
9. 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 has
previously delivered to MTF certificates of insurance.
(b) MTF shall secure and maintain in force reasonable and
adequate insurance coverage of its Tissue recovery and
distribution activities pursuant to this Agreement,
provided such coverage is available at reasonable prices
and terms. MTF has previously delivered to Osteotech
certificates of insurance.
(c) Osteotech shall require each subcontractor or assignee
who Processes MTF Tissue on behalf of Osteotech (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 4.1(a) in favor of MTF. If there is
any assignment to a majority owned subsidiary of
Osteotech as provided in Section 11 of this Agreement,
that subsidiary shall meet each requirement of this
Section 9.
10. 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 Tissue due to such events, Osteotech shall arrange to have
such MTF Tissue processed under Osteotech's oversight within thirty (30) days of
the occurrence of such event.
11. BINDING AGREEMENT; ASSIGNMENT.
(a) Each of Biocon and MTF represents, warrants and
covenants (i) that this Agreement does not violate any
law, rule or regulation
E-49
applicable to it, nor does it conflict with or cause a
breach of or default under any other agreement to which
either of them or any other organization, entity or
person which they control, are controlled by, or are
under common control with, either through ownership,
common management, contract or otherwise (any such
organization, entity or person being an "Affiliate" for
purposes of this Agreement) is a party or is bound; and
(ii) that neither of them or any of their Affiliates
will enter into any agreement which would conflict with
or interfere with MTF's ability to comply with its
obligations under this Agreement; and (iii) that this
Agreement has been duly authorized by all necessary
actions and constitutes its legal, valid and binding
obligation enforceable against it in accordance with its
terms. Each of Biocon and MTF agrees that all of MTF's
obligations under this Agreement are and will be binding
upon Biocon and MTF and all existing and future
Affiliates of either of them and that each party whose
signature to this Agreement is required to make such
obligation binding on all such Affiliates has in fact
executed this Agreement Each of Biocon and MTF, on the
one hand, and Osteotech, on the other hand, represents,
warrants and covenants that it is not a party to any
agreement, or subject to any obligation or other duty,
that would materially conflict with or interfere with
MTF's or Osteotech's respective ability to comply with
its obligations under this Agreement.
(b) Osteotech represents, warrants and covenants (i) that
this Agreement does not violate any law, rule or
regulation applicable to it, nor does it conflict with
or cause a breach of or default under any other
agreement to which it or any of its affiliates is a
party or is bound; and (ii) that neither it or any of
its affiliates will enter into any agreement which would
conflict with or interfere with Osteotech's ability to
comply with its obligations under this Agreement; and
(iii) that this Agreement has been duly authorized by
all necessary actions and constitute its legal, valid
and binding obligation enforceable against it in
accordance with its terms. Osteotech agrees that all of
Osteotech's obligations under this Agreement are and
will be binding upon all existing and future Affiliates
of Osteotech and that each party whose signature to this
Agreement is required to make such obligation binding on
all such Affiliates has in fact executed this Agreement.
(c) 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
this Agreement to any majority-owned subsidiary of such
party without the consent of the other party, provided
that such subsidiary agrees in writing to be bound by
the terms and
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conditions of this Agreement. In the event of any such
assignment, the party making such assignment shall not
be relieved of its obligations under this Agreement
unless otherwise agreed to in a writing executed by the
other party.
12. NAME, EMBLEM, PACKAGING, TECHNOLOGY AND TRADEMARK.
(a) Except to the extent Osteotech indicates in any
literature, including without limitation promotional
materials, that MTF is one of Osteotech's Tissue
Processing clients, and except as required under this
Agreement, 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 without the prior written consent of
MTF; 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 MTF Tissue distributed by MTF, and
except as required under this Agreement, MTF 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.
(c) (i) Nothing in this Agreement shall be interpreted to
convey to MTF any trademark, patent or proprietary
technology owned by Osteotech; and
(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
Products and agrees that if it were to distribute these
products it will do so only under the trademark,
packaging, labels and emblems developed and provided by
Osteotech.
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13. 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.
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
If to Biocon: Chief Executive Officer
Biocon, Inc.
000 Xxx Xxxxxx
Xxxxxx, 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 13.
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.
14. 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. Without limiting the
foregoing, except as expressly provided in Section 4 hereof, it is agreed that
the Prior Processing Agreement is superseded in its entirety by this Agreement
and is of no force and effect as of the Effective Date.
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15. MODIFICATION.
This Agreement, or any part or section of it, may not be amended or
modified except by the written consent of both parties to such Agreement.
16. 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.
17. 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.
18. INDEPENDENT CONTRACTOR.
Each of Osteotech and MTF 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.
19. 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.
20. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective parents, subsidiaries, affiliates, successors and
assigns.
21. COUNTERPART SIGNATURES; DELIVERY BY FACSIMILE.
This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, and all of
such counterparts together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Second Amended and
Restated Processing 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
BIOCON, INC.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------
Xxxxx Xxxxxxxx, President
OSTEOTECH, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx, President
and Chief Executive Officer
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Exhibit 1 to Processing Agreement
MTF/Synthes Agreements
***
----------
*** 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 and Exchange Commission.
E-55
Exhibit 2 to Processing Agreement
FORM OF LICENSE AGREEMENT
MTF/Synthes Agreements
[See Exhibit 10.58 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002]
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Exhibit 3 to Processing Agreement
FORM OF SETTLEMENT AGREEMENT
[See Exhibit 10.56 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002]
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SCHEDULE 2.1.6 TO PROCESSING AGREEMENT
PROCESSING FEES
MTF shall pay to Osteotech the Processing Fees described in the following
subsections of this Schedule 2.1.6.
(a) Processing Fees in respect of Base Allograft Tissue.
BASE ALLOGRAFT PROCESSING FEE ***
1. MTF shall pay to Osteotech the amount of *** (as it shall be modified
pursuant to the following clause 2, the "Processing Fee") for Processing the MTF
Tissue of each Donor from which MTF Tissue is delivered pursuant to this
Agreement on or prior to December 31, 2003;
2. After December 31, 2003, the Processing Fee for Processing of MTF
Tissue delivered in a calendar year, will be the Processing Fee for the
immediately preceding calendar year multiplied by an amount equal to the sum of
(x) 1.0 plus (y) the Annual Processing Fee Increase in respect of such year (For
the purpose of this Schedule 2.1.6, "Annual Processing Fee Increase" shall mean,
in respect of Processing Fees for any calendar year, a percentage determined by
Osteotech in its sole discretion, provided that such percentage shall not exceed
the increase in the Medical Cost Component of the Consumer Price Index for the
calendar year immediately preceding the calendar year to which such Annual
Processing Fee Increase will be applied.)
(b) Processing Fees in respect of Proprietary Products.
In addition to the Processing Fees referred to in the foregoing clause
(a), MTF shall pay to Osteotech the following fees (each a "Processing Fee") for
Processing MTF Tissue into the listed Proprietary Products.
PROPRIETARY PRODUCT PROCESSING FEES
---------------------------------------------------------------------------------------------------------------
Suggested Processing
End User Price Fee
----------------- --------------
GRAFTON(R)
DEMINERALIZED BONE
MATRIX (DBM)
GEL .5cc *** *
1cc *** *
5cc *** *
10cc *** *
----------
*** 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 and Exchange Commission.
E-58
PROPRIETARY PRODUCT PROCESSING FEES
---------------------------------------------------------------------------------------------------------------
Suggested Processing
End User Price Fee
----------------- --------------
25cc *** *
FLEX 1.5 x 1.5 cm *** *
5 x 2.5 cm *** *
10 x 2.5 cm *** *
5 x 5 cm *** *
PUTTY .5 cc *** *
1cc *** *
2.5cc *** *
5cc *** *
10cc *** *
1/4 cc syringe (1 ea.) *** *
1/4 cc syringe (10 ea.) *** *
1/2 cc syringe (1 ea.) *** *
1/2 cc syringe (10 ea.) *** *
CRUNCH 5cc *** *
15cc *** *
MATRIX 2.5cm x 5cm *** *
2.5cm x 10cm *** *
8mm x 10 mm plug (1 ea.) *** *
8mm x 10 mm plug (5 ea.) *** *
10mm x 10 mm plug (2 ea.) *** *
12mm x 10 mm plug (2 ea.) *** *
14mm x 10 mm plug (2 ea.) *** *
16mm x 10 mm plug (2 ea.) *** *
18mm x 10 mm plug (2 ea.) *** *
20mm x 10 mm plug (2 ea.) *** *
25mm x 10 mm plug (2 ea.) *** *
----------
* The Processing Fee in respect of the listed Existing Propriety Product shall
be *** of the Suggested End User Price unless modified by the mutual written
agreement of the parties.
*** 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 and Exchange Commission.
E-59
PROPRIETARY PRODUCT PROCESSING FEES
---------------------------------------------------------------------------------------------------------------
Suggested Processing
End User Price Fee
----------------- --------------
GRAFTON PLUS (TM) DEMINERALIZED BONE 1cc *** *
MATRIX (DBM) PASTE
5cc *** *
10cc *** *
BIOIMPLANTS
bio-d(R) Threaded Cortical Bone Dowel *** *
Graftech(TM) Posterior Ramp *** *
Graftech(TM) Anterior Ramp *** *
***
Graftech(TM) Cervical Spacer 5mm to 9mm *** *
10mm to 13mm ***
Graftech(TM) Cervical Dowel *** *
Graftech(TM) Cortical Spacer *** *
------------------------------------ -- -------------------------------- -- ----------------- -- --------------
----------
1. Osteotech shall deliver to MTF written notice no less than 90 days prior to
the effectiveness of any change in Suggested End User Price or in the Annual
Processing Fee Increase. Each such notice shall state the new Suggested End User
Price or Annual Processing Fee Increases as relevant and the effective date
thereof.
2. The fees referred to in this clause (b) are inclusive of all marketing and
sales programs to be provided by Osteotech and all technical support, clinical
studies, medical education and other services required to market and sell
products.
3. Without limiting the foregoing, Processing Fees and all other matters in
respect of any New Proprietary Product shall, except to the extent such New
Proprietary Product is designated to be an Existing Proprietary Product pursuant
to the provisions of Section 3.6 of the Processing Agreement to which this
Schedule is attached, be negotiated among the parties at the time of
introduction thereof, and no party shall have, under the Processing Agreement,
any obligation to any other party in respect of any New Proprietary Product
unless and until Processing Fees and all such other matters shall have been
documented by a written agreement among the parties.
--------
* The Processing Fee in respect of the listed Existing Propriety Product shall
be *** of the Suggested End User Price unless modified by the mutual written
agreement of the parties.
*** 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 and Exchange Commission.
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