AMENDMENT AND SETTLEMENT AGREEMENT
Exhibit 10.1
AMENDMENT AND SETTLEMENT AGREEMENT
This Amendment and Settlement Agreement (“Settlement Agreement”), is made this 19th
day of August, 2009, by, between and among MIMEDX GROUP, INC., a Florida corporation (herein
sometimes individually called “MDXG”, and its wholly owned subsidiary MIMEDX, INC., a Florida
corporation herein sometimes individually called “MiMedx” ( both MDXG and MiMedx having their
principal offices located at 0000 Xxxxxxxx Xxxx, Xxx 000, Xxxxx, XX 00000-0000, (each of MDXG and
MiMedx being herein jointly and severally referred to as the “MiMedx Parties”), AND XXXXXX X.
XXXXXX, M.D. (sometimes herein sometimes individually called “Xx. Xxxxxx”) an individual resident
of the State of Maryland and PHANTOM HAND PROJECT, LLC (sometimes herein individually called
“Phantom”) , a limited liability company under the law of Maryland (each of Xx. Xxxxxx and
Phantom having its principal office located at Paradise Farm, 0000 Xxx Xxxxxx Xxxx, Xxxxxxxx, XX
00000, and being herein jointly and severally called the “Xxxxxx Parties’). The MiMedx Parties and
the Xxxxxx Parties are herein sometimes referred to individually as a “Party” or “party” and
jointly as the “Parties” or “parties”.
RECITALS
WHEREAS, on September 21, 2007, MiMedx and Xx. Xxxxxx entered into a Consulting Agreement (the
“Consulting Agreement”); and
WHEREAS, on May 17, 2008, MiMedx and Xx. Xxxxxx entered into a “Cost Recovery and Revenue
Sharing Agreement” (the “Cost Recovery Agreement”); and
WHEREAS, on May 17, 2008, MiMedx and Xx. Xxxxxx entered into a “Finders Fee Agreement” (the
“Finders Fee Agreement”); and
WHEREAS, the Parties desire to terminate the Cost Recovery Agreement and the Finder’s Fee
Agreement, to amend the Consulting Agreement and to enter into certain other agreements all as set
forth herein.
Settlement Agreement-Execution Copy
NOW, THEREFORE, intending to be legally bound, in consideration of the mutual promises and
agreements herein contained, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, and to
settle fully and completely all disputes, whether actual or potential, between and among them,
agree as follows.
1. Transfer of Patent Applications to Xx. Xxxxxx.
MiMedx does hereby transfer to Xx. Xxxxxx the following patent applications including the sole
right to claim priority in the United States, abroad or under treaty: United States Patent
Application No. US 61/098,478 and United States Patent Application No. US
61/101,890 (the “Patent Applications”). Immediately upon execution of this Settlement
Agreement, MiMedx will execute such documents and agreements as may be reasonably requested by Xx.
Xxxxxx to perfect the transfer of ownership of the Patent Applications on the records of the United
States Patent and Trademark Office. For certainty, MiMedx agrees that this Settlement Agreement
allows Xx. Xxxxxx to exploit the inventions in the Patent Applications and any subsequent
applications that claim priority to the Patent Applications (and any corresponding PCT
applications or patents issuing therefrom) immediately upon execution of this Settlement Agreement,
provided that the Xxxxxx Parties shall have no rights, other than the right to receive payment
under the Consulting Agreement, as amended below, to (a) the inventions associated with the
products and applications included in the Level Assets listed in Exhibit A or subsequent
applications claiming priority thereto (nor to any corresponding PCT applications or patents
issuing therefrom), (b) any other Contributed IP (as defined in the Consulting Agreement as amended
below), or (c) any other MiMedx intellectual property not related to the Patent Applications.
Without limiting the generality of the foregoing, the Xxxxxx Parties shall have no rights to claim
priority with respect to the items delineated in (a), (b), and (c) of the immediately preceding
sentence.”
2. Accelerated Vesting of Options; Extension of Exercise Period.
Pursuant to Option Agreement dated June 15, 2007, MiMedx granted Xx. Xxxxxx an option to
purchase 50,000 shares of MiMedx common stock at an exercise price of $1.00 per share (the “June 15
Grant”). Pursuant to Option Agreement dated September 25, 2007, MiMedx granted Xx. Xxxxxx an
option to purchase 200,000 shares of MiMedx common stock at an exercise price of $2.40 per share
(the “September 25 Grant”). These options have been converted into the option to purchase MDXG
common stock at the aforesaid exercise prices. The June 15 Grant and the September 25 Grant are
hereby deemed to be fully vested and exercisable at any time through and including June 14, 2012,
for the June 15 Grant, and September 24, 2012, for the September 15 Grant. Each of the option
agreements is hereby deemed to be amended in accordance with the preceding sentence. Each of the
Xxxxxx Parties acknowledges and agrees that it neither holds nor is entitled to any other options
to purchase shares in any of the MiMedx Parties other than the June 15 Grant and the September 25
Grant.
3. Termination of Certain Agreements.
The Finders Fee Agreement and the Cost Recovery Agreement are hereby terminated and declared
by the parties to be of no further force and effect. Neither party to either the Finders Fee
Agreement or the Cost Recovery Agreement shall hereafter have any liability or responsibility to
the other party under either such agreement.
Settlement Agreement-Execution Copy
2
4. Allocation of Sale Proceeds from Sale of “Level Assets”.
MiMedx is exploring the disposition of the assets described on Exhibit A, attached hereto and
made a part hereof. (the “Level Assets”). For the avoidance of doubt, the Level Assets do not
include any assets of the MiMedx Parties other than as described on Exhibit A. Without
limiting the generality of the foregoing sentence, it is expressly understood that the Level
Assets exclude (i) the BioStaple Device, the Collarod Device, the CMC Device and the Tenor
Instrument Device, all of which are and will remain assets of the Mimedx Parties, and (ii) the
Patent Applications. Xx. Xxxxxx shall make commercially reasonable efforts to identify and
introduce prospective acquirers of the Level Assets to MiMedx. The terms of any disposition shall
be as determined in the sole discretion of MiMedx. In the event that the disposition of all or part
of the Level Assets is consummated, in one or more transactions, on or prior to September 20, 2010,
then the aggregate proceeds from such disposition(s) shall be allocated as follows: (i) First,
to pay the costs of the sale or other disposition transaction; (ii) Second, to pay MiMedx the
amount of $1,150,000, and (iii) thereafter, all proceeds in excess of (i) and (ii) shall be
allocated seventeen and 1/2 percent (17.5%) to the Xxxxxx Parties and eighty-two and 1/2 percent
(82.5%) to MiMedx. If the proceeds from such disposition(s) are less than $1,150,000, the Xxxxxx
Parties shall not be liable to the MiMedx Parties or otherwise for any shortfall.
5. Amendments to Consulting Agreement.
The Consulting Agreement is hereby amended as follows:
(a) Section 4 of the Consulting Agreement is hereby amended by deleting the word
“three year” from the fifth sentence of said Section 4) and adding the following to the end of said
Section 4, “Notwithstanding the foregoing, if, (i) on or prior to September 20, 2010, MiMedx enters
into and closes a transaction to dispose of all or part of the Level Assets, and (ii) the other
party to any such transaction agrees to assume this Consulting Agreement and, from and after the
date of such assumption, to make the consulting payments required by Section 2(a) hereof without
regard to the proviso at the end of the first sentence of said Section 2(a), at the election of the
assuming party, upon notice to Xx. Xxxxxx, the end of the initial term of the Consulting Agreement
will be extended for up to three (3) years after the date of such assumption. If the conditions in
the preceding sentence are not met, then this Consulting Agreement shall expire on September 21,
2010, and all obligations hereunder will cease unless expressly agreed herein to continue past the
expiration or termination hereof. If, after September 20, 2010, without the consent of the
Company, you provide consulting services to any other party, firm or company in the Field or whose
business in the Field would be directly or indirectly competitive with the business of the Company,
then the Company may terminate this Consulting Agreement upon written notice to you.”
(b) Section 2 (a) of the Consulting Agreement is hereby amended by adding the
following to the end of the first sentence of said Section 2(a), “provided however, that Xx. Xxxxxx
agrees to forego and forgive one-half of all consulting payments commencing with the quarterly
installment otherwise payable for the third calendar quarter of 2009,and thereafter, until and
unless an acquirer of all or part of the Level Assets assumes this Consulting Agreement and agrees
to make the consulting payments required by this Section 2(a) from and after the date of such
assumption without regard to this proviso, in which case Xx. Xxxxxx shall look solely to the
acquirer with respect to any remaining consulting payments.”
Settlement Agreement-Execution Copy
3
(c) Section 2 (c) of the Consulting Agreement is hereby amended by deleting Section 2
(c) (i) — (v) and inserting in lieu thereof the following:
“(c) (i) Royalties. The Company shall pay you continuing royalty
fees in the aggregate as follows (the “Royalties”):
(i) Three percent (3%) of the Company’s Net Revenues
derived from the sale of Products embodying a Valid Claim
under a Company Patent in the country from which the Net
Revenues originated. For the avoidance of doubt, if any
claim of a patent application is no longer a Valid Claim,
no Royalty shall thereafter be payable with respect to a
Product embodying such claim, unless such Product embodies
another Valid Claim. No royalty shall be payable with
respect to any Product that does not embody a Valid Claim.”
(d) Sections 2 (c) (ii) — (v) are intentionally left blank.
(e) Section 2(c)(vi) of the Consulting Agreement is hereby amended by deleting the
phrase, “or other Contributed IP” from the second sentence of said Section 2(c)(vi) and by deleting
all of said Section 2(c)(vi) after the second sentence thereof.
(f) Section 2 (c)(vii) of the Consulting Agreement is hereby amended by deleting said
subsection in its entirety and inserting in lieu thereof the following:
“(vii) Term of Royalties. With respect to Royalties earned from the sale of Products
embodying or utilizing any Valid Claim under a Company Patent in the country from which the Net
Revenues originated, the Royalties shall be payable until the expiration of the Life of the Valid
Claim in such country.”
(g) Section 2 (c)(viii) of the Consulting Agreement is hereby amended by deleting the
words “during the term of this Agreement” from the first full sentence thereof.
(h) Section 2 (c)(x) of the Consulting Agreement is hereby amended by deleting the
words “during the term of this Consulting Agreement” from the third full sentence thereof.
(i) Section 16 of the Consulting Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:
“16. This Consulting Agreement may be freely transferred and assigned by the Company provided
that any transferee or assignee must agree to assume all of the Company’s liabilities and
obligations hereunder. The Consultant may not assign this Consulting Agreement or any of his
rights or responsibilities hereunder. This Consulting Agreement shall be binding upon the
permitted transferees and assigns hereof, and upon such
permitted transfer or assignment by the Company, the Company shall have no further obligation
hereunder.”
Settlement Agreement-Execution Copy
4
(j) Section 17 of the Consulting Agreement is hereby amended by adding “2(c), “
immediately following the word “paragraphs” to identify the paragraphs surviving termination.
(k) Section 6 of the Consulting Agreement is amended by adding thereto the words “in
the Field” after the word “business” the first time it appears in such Section and by adding
thereto a new sentence to read as follows:
“Notwithstanding the foregoing, after September 20, 2010, your obligations
hereunder will be non-exclusive except with respect to matters concerning
treatment of ALL fractures of the distal radius excluding those treated by
implant arthroplasty, ALL treatments for arthritis of the basilar thumb
joint (CMC), and ALL treatments of arthritis of the small joints of the hand
(PIP, MP, DIP).”
(l) The definition of “Field” in Exhibit A to the Consulting Agreement is hereby amended by
deleting the reference to “elbow” in the first sentence thereof and by adding a second sentence
thereto to read as follows:
“Notwithstanding the foregoing, the “Field” shall not include the elbow or
any subject matter arising from or claiming priority to United States Patent
Application No. US 61/098,478 or United States Patent Application No. US
61/109,890.”
(m) The definition of “Valid Claim” in Exhibit A to the Consulting Agreement is hereby amended
to read in its entirety as follows:
“‘Valid Claim’ means a claim of a pending or issued and unexpired Patent,
that has not been abandoned, revoked or held invalid or
unenforceable by a decision of a court or other governmental agency of
competent jurisdiction from which no appeal can be or is taken within the
time allowed for such appeal, and that has not been disclaimed, denied, or
admitted to be invalid or unenforceable through reissue, disclaimer, or
otherwise by the Consultant.”
(n) The definition of “Contribution Period” in Exhibit A to the Consulting Agreement is hereby
amended to read in its entirety as follows:
“Contribution Period” means the period that shall commence on the date of
this Consulting Agreement and shall expire on the third anniversary hereof,
even if this Consulting Agreement has been terminated by the Company due to
the Consultant’s breach hereof, provided that the Contribution Period shall
continue for the full initial term and any renewal
term of this Consulting Agreement with respect to matters concerning
treatment of ALL fractures of the distal radius excluding those treated by
implant arthroplasty, ALL treatments for arthritis of the basilar thumb
joint (CMC), and ALL treatments of arthritis of the small joints of the hand
(PIP, MP, DIP).”
Settlement Agreement-Execution Copy
5
(o) Numbered paragraphs 2, 4, 6, 8, 9, 12, 13, 14, 15 and 16 of Schedule 1 to the Consulting
Agreement are intentionally left blank.
6. Effect of Deletions from Schedule 1 to the Consulting
Agreement.
The intellectual property that was described in numbered paragraphs 2, 4 6, 8, 9, and 14 of
the Consulting Agreement prior to amendment by Section 5(o) above is hereby conveyed to the Xxxxxx
Parties. The intellectual property that was described in numbered paragraphs 12, 13, 15 and 16 of
Schedule 1 to the Consulting Agreement and all subsequently developed Contributed IP relating to
MiMedx’s collagen products belong to the MiMedx Parties and no royalties shall be payable in
respect of such intellectual property under the Consulting Agreement.
7. Surrender of MDXG Shares.
Xx. Xxxxxx hereby surrenders and contemporaneously herewith delivers to MDXG 50,000 shares of
common stock of MDXG. Such shares will be held by MDXG as treasury shares for future reissuance or
returned to authorized but unissued status or otherwise disposed of as MDXG may determine in its
sole discretion.
8. Physicians Advisory Board.
It is understood that the “Level” Physician Advisory Board (“PAB”) may be discontinued by
MiMedx as a separate body, and one or more Level PAB members may be asked to serve on the MiMedx
PAB.
9. Mutual Release and Non-disparagement.
(a) Release of the MiMedx Parties. As a material inducement for the MiMedx Parties to
enter into this Settlement Agreement, the Xxxxxx Parties hereby jointly and severally, knowingly
and voluntarily, on behalf of themselves, their predecessors, successors and assigns, fully and
forever release and discharge the MiMedx Parties, and each of them, including, but not limited to,
each of their past, present and future principals, owners, managers, shareholders, officers,
directors, employees, parents, subsidiaries, affiliates, divisions, predecessors, successors,
assigns, trustees, agents, attorneys and representatives, from any and all charges, claims,
demands, losses, rights, promises, agreements, contracts, covenants, actions, suits, causes of
action, obligations, debts, costs, expenses, damages, judgments, orders or
liabilities of any kind or nature (including attorneys’ fees and legal expenses), in law,
equity or otherwise, whether known or unknown, suspected or unsuspected, which the Xxxxxx Parties
now or may at any time hereafter own or hold or have, or claim to have or hold, arising out of or
related to any fact, circumstance or condition existing or occurring prior to the date hereof. The
Xxxxxx Parties hereby assume the risk of mistake of fact or law in entering this Settlement
Agreement. This Section 9(a) of the Settlement Agreement is intended to be a general release by
the Xxxxxx Parties of any and all claims whatsoever against the MiMedx Parties arising prior to the
date hereof and shall be so construed.
Settlement Agreement-Execution Copy
6
(b) Release of the Xxxxxx Parties. As a material inducement for the Xxxxxx Parties to
enter into this Settlement Agreement, the MiMedx Parties hereby jointly and severally, knowingly
and voluntarily, on behalf of themselves, their predecessors, successors and assigns, fully and
forever release and discharge the Xxxxxx Parties, and each of them, including, but not limited to,
each of their past, present and future principals, owners, managers, shareholders, officers,
directors, employees, parents, subsidiaries, affiliates, divisions, predecessors, successors,
assigns, trustees, agents, attorneys and representatives, from any and all charges, claims,
demands, losses, rights, promises, agreements, contracts, covenants, actions, suits, causes of
action, obligations, debts, costs, expenses, damages, judgments, orders or liabilities of any kind
or nature (including attorneys’ fees and legal expenses), in law, equity or otherwise, whether
known or unknown, suspected or unsuspected, which the MiMedx Parties now or may at any time
hereafter own or hold or have, or claim to have or hold, arising out of or related to any fact,
circumstance or condition existing or occurring prior to the date hereof. The MiMedx Parties
hereby assume the risk of mistake of fact or law in entering this Settlement Agreement.
Notwithstanding anything to the contrary above stated in this Section 9(b), this Section 9(b) shall
not release, limit or impair in any way Xx. Xxxxxx’x indemnity obligations under Section 8(c) of
the Consulting Agreement (other than with respect to the Patent Applications (as defined in Section
1 above)) whether now existing or hereafter arising. Except as set forth in the preceding
sentence, this Section 9(b) of this Settlement Agreement is intended to be a general release by the
MiMedx Parties of any and all claims whatsoever against the Xxxxxx Parties arising prior to the
date hereof and shall be so construed.
(c) Non-Disparagement. The Xxxxxx Parties and the MiMedx Parties shall not in
undertake any disparaging or harassing conduct, or make any disparaging or harassing statements in
writing or verbally to any third party, regarding any of the other parties hereto and/or the
directors, officers, managers, supervisors, employees, agents or products and services of any of
the other parties hereto.
(d) No Other Payments Due. Xx. Xxxxxx acknowledges that he has received payment for
all consulting payments and incurred business-related expenses, for all time periods prior to the
date of this Settlement Agreement, with no other payments being due except in accordance with this
Settlement Agreement.
(e) Delivery of All Company Property. Xx. Xxxxxx agrees that upon termination or
assignment of the Consulting Agreement, upon the request of any of the MiMedx Parties, he will
immediately deliver to MiMedx all property of any of the MiMedx Parties under
his possession or control (including but not limited to all documents, electronic files and
records, other records, accounting, scientific, medical or other business records, medical device
drawings in whatever media, computer disks, equipment, keys, access cards, or other tangible and/or
intangible things that may or may not relate to or otherwise comprise confidential and/or
proprietary Information or trade secrets under applicable law) that Xx. Xxxxxx created, used,
possessed or maintained during his consultancy with MiMedx.
Settlement Agreement-Execution Copy
7
10. Miscellaneous.
(a) Negotiated Agreement. The terms of this Settlement Agreement were determined
through substantive negotiations between the Xxxxxx Parties and the MiMedx Parties, and, as such,
this Settlement Agreement shall not be construed against any party on the grounds that such party
drafted this Settlement Agreement. This Settlement Agreement shall be interpreted in accordance
with the plain meaning of its terms, as though drafted equally by the parties, and not strictly for
or against either of the parties hereto.
(b) Binding Effect. This Settlement Agreement shall be binding upon the parties
hereto and upon their heirs, administrators, representatives, executors, successors, and assigns,
and shall inure to the benefit of said parties and each of them, and to their heirs,
administrators, representatives, executors, successors, and assigns.
(c) Severability. Should any Settlement Agreement provision (or subpart thereof) be
declared or be determined by any court of competent jurisdiction to be wholly or partially illegal,
invalid, or unenforceable, such provision (or subpart thereof) shall be severed from the remaining
provisions (or subparts thereof), with any illegal or unenforceable provision (or subpart thereof)
not affecting the remainder of this Settlement Agreement, which shall continue at all times to be
valid and enforceable.
(d) Entire Agreement. This Settlement Agreement sets forth the entire agreement
between the parties hereto pertaining to the subject matter hereof and fully supersedes any and all
prior agreements or understandings, written or oral, between the parties hereto, other than the
Consulting Agreement which shall remain in full force and effect as modified hereby. None of the
MiMedx Parties has made any promises, representations, or agreements of any kind to any of the
Xxxxxx Parties in consideration for entering into this Settlement Agreement beyond those expressly
set forth herein. Each of the Xxxxxx Parties represents and warrants that no other contractual
obligation of any type or description is owed to any of them by any of the MiMedx Parties.
(e) Modification; Non-Waiver. The terms of this Settlement Agreement may not be
amended, modified, canceled, terminated, or waived, except by a written instrument executed by the
Xxxxxx Parties and the MiMedx Parties, or in the case of waiver, the party to be charged with such
waiver. The failure of any party to insist upon or enforce strict performance of any provision of
this Settlement Agreement or to exercise any rights or remedies will not be construed as a waiver
by such party to assert or rely upon any such provision, right or remedy in that or any other
instance.
Settlement Agreement-Execution Copy
8
(f) Governing Law. This Settlement Agreement is made and entered into in the State of
Georgia, and shall be interpreted, enforced, and governed under the laws of Georgia.
(g) Headings; Preamble. Those section headings in this Settlement Agreement are used
herein for the convenience of reference only and shall not affect the meaning of any provision of
this Settlement Agreement. All of the warranties and representations in the preamble of this
Settlement Agreement are hereby incorporated into and made a material part of this Settlement
Agreement.
(h) No Bar. Each of the Xxxxxx Parties acknowledges and agrees that the existence of
any claim or cause of action against any of the MiMedx Parties shall not constitute a defense to
the enforcement by MiMedx of each of the Xxxxxx Parties’ covenants, obligations, or undertakings in
this Settlement Agreement.
EACH OF XXXXXX X. XXXXXX, M.D. AND PHANTOM HAND PROJECT, LLC, STATE THAT HE AND IT HAVE HAD
THE OPPORTUNITY TO BE ADVISED BY COUNSEL IN THE CONSIDERATION AND EXECUTION OF THIS SETTLEMENT
AGREEMENT; AND THAT EACH FULLY UNDERSTANDS ITS MEANING, CONTENT, AND BINDING EFFECT. EACH FURTHER
STATES THAT HE AND IT ARE VOLUNTARILY AND OF FREE WILL SIGNING THIS SETTLEMENT AGREEMENT IN FULL
AND FINAL RELEASE OF ALL CLAIMS.
IN WITNESS WHEREOF, the parties have hereunto affixed their hands and seals, effective as of the
date first above written.
| /s/ Xxxxxx X. Xxxxxx, M.D. | ||||||
| Witness: | Xxxxxx X. Xxxxxx, M.D. | |||||
| Phantom Hand Project, LLC | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx, M.D. | |||||
Witness:
|
Xxxxxx X. Xxxxxx, M.D., Sole Manager | |||||
SIGNATURES CONTINUE ON THE FOLLOWING PAGE
Settlement Agreement-Execution Copy
9
| MIMEDX GROUP, INC. | ||||||
ATTEST:
|
By: | /s/ Xxxxxx X. Xxxxx | ||||
| Xxxxxx H. “Xxxx” Petit, CEO | ||||||
, Secretary |
||||||
| MIMEDX, INC. | ||||||
ATTEST:
|
By: | /s/ Xxxxxx X. Xxxxx | ||||
| Xxxxxx H. “Xxxx” Petit, CEO | ||||||
, Secretary |
||||||
Settlement Agreement-Execution Copy
10
