Exhibit 10.51
FINAL
PROCESSING
AGREEMENT
BETWEEN
MUSCULOSKELETAL TRANSPLANT
FOUNDATION, INC.
BIOCON, INC.
AND
OSTEOTECH, INC.
December 22, 2004
TABLE OF CONTENTS
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Page
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1.
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DELIVERY AND PROCESSING OF TISSUE
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6
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1.1
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BONE AND RELATED TISSUES SUPPLIED BY
MTF
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6
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1.2
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VOLUME AND FORECASTS
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11
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1.3
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DONOR RECORDS
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11
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1.4
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PROCESSING
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12
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2.
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TITLE, STORAGE,
SHIPPING, DISTRIBUTION, INDEMNIFICATION, REGULATORY COMPLIANCE AND
LABELING
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14
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2.1
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Title
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14
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2.2
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Storage
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14
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2.3
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Shipping
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14
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2.4
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Distribution
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15
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2.5
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Joint Regulatory Compliance, Recalls and
Labeling
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15
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2.6
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Liability
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16
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2.7
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Records and Reports
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18
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2.8
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New Product Development
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19
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2.9
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Publication and Public Disclosure
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20
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2.10
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Certain Acquired Tissue
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20
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3.
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FINANCIAL TERMS
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22
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3.1
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Fees For the Processing of Base Tissue
Products
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22
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3.2
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Suggested End User Prices
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22
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3.3
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Invoicing, Payment and Collection For Base
Tissue Products
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22
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3.4
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***
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22
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3.5
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End User Billing and Collection for Proprietary
Products
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22
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3.6
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Maximum Inventory Level
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(1
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3.7
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Confidentiality of End User
Information
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24
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4.
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CONFIDENTIALITY
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25
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5.
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TERM OF AGREEMENT
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26
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6.
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TERMINATION
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26
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6.1
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Breach or Insolvency
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26
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6.2
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Certain Third Party Agreements
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27
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6.3
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Non-Compliance With FDA Regulations
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27
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6.4
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Termination of MTF-ARC Agreement
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27
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7.
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INSURANCE
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27
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8.
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FORCE MAJEURE
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28
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9.
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BINDING AGREEMENT; ASSIGNMENT
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28
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_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
i
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10.
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NAME, EMBLEM,
PACKAGING, TECHNOLOGY AND TRADEMARK
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30
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11.
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NOTICES
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30
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12.
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ENTIRE AGREEMENT
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31
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13.
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MODIFICATION
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31
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14.
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APPLICABLE LAW
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31
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15.
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WAIVER
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31
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16.
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INDEPENDENT CONTRACTOR
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31
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17.
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SEVERABILITY
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31
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18.
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SUCCESSORS
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32
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EXHIBIT 1
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YIELD CALCULATION METHODOLOGY
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EXHIBIT 2.8
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SPECIALTY PRODUCTS
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EXHIBIT 2.10
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MTF STICKER FOR ARC LABELED TISSUE
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EXHIBIT 3.1
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PROCESSING FEES
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EXHIBIT 3.2
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SUGGESTED END USER PRICES
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EXHIBIT
3.5
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DISCOUNTING
ARRANGMENTS
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ii
PROCESSING
AGREEMENT
THIS PROCESSING
AGREEMENT dated as of
December 22, 2004, by and among Musculoskeletal Transplant
Foundation, Inc. (“ 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, storage and distribution services and other related
services to entities engaged in procuring and distributing bone and
related connective soft Tissue for transplantation; and
WHEREAS , MTF procures, processes, and distributes
Tissue from various sources, and wishes to contract with Osteotech
to process such Tissue; and
WHEREAS , MTF wishes to ensure its ability to obtain
Processing and Distribution services and, from time to time, other
services from Osteotech and Osteotech desires to perform such
services and to Process Tissue for MTF; and
WHEREAS, Osteotech is party to that certain Agreement
dated December 10, 1996, as amended with American Red Cross Tissue
Services (“ ARC ” and the “ ARC
Processing Agreement, ” respectively) pursuant to which
Osteotech provides processing and other services to ARC in
consideration for, among other things, payment of processing fees
and ARC’s commitment to deliver minimum numbers of donors for
processing by Osteotech; and
WHEREAS , MTF has entered into an Asset Acquisition
Agreement dated September 17, 2004 (the “ MTF-ARC
Agreement ”) pursuant to which MTF has agreed to acquire
from ARC certain assets related to ARC’s allograft tissue
banking operations and the closing of the MTF-ARC Agreement is
conditioned upon the satisfactory resolution of the status of the
ARC Processing Agreement either by termination or otherwise;
and
WHEREAS , subject to (a) the closing of the MTF-ARC
Agreement and (b) the termination of the ARC Processing Agreement
and resolution of all matters outstanding thereunder to the
satisfaction of ARC, Osteotech, and MTF, MTF and Osteotech wish to
enter into this Agreement; and
WHEREAS , MTF and Osteotech do not wish to modify or
amend the Amended and Restated Processing Agreement entered into as
of June 1, 2002 among MTF, Osteotech, and Biocon (the “
MTF Processing Agreement ”).
NOW, THEREFORE
, in consideration of the foregoing,
and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties agree as
follows:
The following terms used in this
Agreement shall have the following definitions:
“ AATB ” shall
mean the American Association of Tissue Banks.
“ Actual Yield ”
shall mean the actual average gross dollar yield per Donor from
Proprietary Products (excluding Proprietary Products Processed from
ARC Tissue) during a particular calendar quarter, based on the
Suggested End User Prices for such Proprietary Products. The Actual
Yield shall be measured in the manner set forth in Exhibit 1
attached hereto.
“ Affiliate ”
shall have the meaning set forth in Section 9(a)
.
“ ARC Tissue ”
shall mean Tissue that has been processed or partially processed
under the ARC Processing Agreement that MTF acquires from ARC
pursuant to the MTF-ARC Agreement excluding (a) unprocessed
donors acquired by MTF from ARC and released by MTF for Processing
by Osteotech after the Effective Date (which become Donors for
purposes of this Agreement) and (b) Bulk ARC Tissue.
“ Average Donor Profile
” shall mean the following characteristics as applied to
Donors delivered by MTF to Osteotech under this
Agreement:
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(a)
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Age and Gender . The average age of such Donors shall be within
two 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.
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(b)
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Suitability for bio-implants
. At least *** of such Donors shall
be equivalent to donors retained by MTF for processing into
bio-implants for each year of the Term. The intent is that such
Donors shall be substantially the same as donors retained by MTF
for processing into bio-implants which are promoted and/or
distributed by Synthes Spine LP. Furthermore, the intent is to meet
Osteotech’s specifications for Donors suitable for Processing
into bio-implants as such specifications are provided from time to
time by Osteotech to MTF.
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(c)
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Younger Donors . No more than *** of all Donors will be ages
*** at the date of death.
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(d)
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Donor Composition . Tissue from the typical Donor delivered to
Osteotech by MTF shall consist of *** and such number of *** with
*** as shall equal the average number of *** and *** with *** and
*** as are recovered from donors retained by MTF during the
preceding 12-month
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_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
2
period, and, in addition, in each
month *** from not less than *** of such Donors.
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(e)
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Donor Consent . All Donors shall be governed by consents,
obtained prior to recovery in accordance with the Recovery
Standards, that permit the Processing of Tissue from such Donors as
contemplated under this Agreement.
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“ Base Tissue Products
” shall mean those products, other than Proprietary Products,
which are Processed under this Agreement by Osteotech from MTF
Tissue.
“ 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.
“ bio-implants ”
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.
“ Bulk ARC Tissue
” shall mean Tissue of ARC located at Osteotech that has been
partially processed under the ARC Processing Agreement and set
aside with the intent of Processing into Proprietary
Products.
“ Cancellous Chip
Deposit ” shall have the meaning set forth in Section
2.8(f) .
“ Cancellous Chip
Forecast ” shall have the meaning set forth in Section
2.8(d) .
“ Cancellous Chip
Shortfall ” shall have the meaning set forth in
Section 2.8(c) .
“ Commencement of
Production ” shall have the meaning set forth in
Section 2.8(b) .
“ Confidential
Information ” shall have the meaning set forth in
Section 4(a) .
“ Distribution ”
shall mean (a) the physical distribution to end users of
Proprietary Products by Osteotech and (b) sales and promotional
activities by Osteotech and its agents and partners directly
related to Proprietary Products and consistent with the
requirements in Section 3.6(c) .
“ Donor ” shall
mean a (i) human male not less than *** years of age and not
greater than *** years of age at date of death; or (ii) human
female not less than *** years of age and not greater than ***
years of age at date of death, in either case from whom Tissue is
to be (or has been) delivered by MTF to Osteotech for Processing
under this Agreement ( including unprocessed Donors,
wherever located, acquired from ARC by MTF and released after
the
_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
3
Effective Date by MTF to Osteotech
for Processing and excluding (x) ARC Tissue released prior
to the Effective Date by ARC to Osteotech for processing and (y)
any donors delivered by MTF to Osteotech under the MTF Processing
Agreement).
“ Effective Date
” shall mean the date of the closing under the MTF-ARC
Agreement (the “ Closing ”). MTF shall consult
with Osteotech with respect to the projected Effective Date and
shall notify Osteotech of the Effective Date in writing upon the
occurrence of the Closing.
“ End User Fee
Allocation ” shall have the meaning set forth in
Section 3.5(b) .
“ Excess Inventory
Deposit ” shall have the meaning set forth in
Section 3.6(b) .
“ FDA ” shall
mean the U.S. Food and Drug Administration.
“ Market Introduction
Date ” shall have the meaning set forth in Section
2.8(b) .
“ Minimum Donor
Requirement ” shall have the meaning set forth in
Section 1.1(a) .
“ Minimum Yield ”
shall mean an average gross dollar yield per Donor of *** from
Proprietary Products; provided , that the Minimum Yield for
the first six months of the Term shall be ***. If the Term is
renewed as provided in Section 5 , the Minimum Yield in
effect during the Renewal Term shall be increased by the same
proportion as Osteotech’s Processing Fees for Base Tissue
Products are increased for such Renewal Term as compared to the
prior calendar year.
“ MTF-ARC Agreement
” shall have the meaning assigned to such term in the
recitals hereof.
“ MTF Processing
Agreement ” shall have the meaning assigned to such term
in the recitals hereof.
“ MTF Tissue ”
shall mean Tissue from Donors delivered to Osteotech for Processing
under this Agreement.
“ NOTA ” shall
mean National Organ Transplant Act, as amended.
“ Processing ”
shall mean the Tissue processing services performed by Osteotech
pursuant to this Agreement including all operations necessary to
prepare MTF Tissue for transplantation.
“ Processing Fees
” shall have the meaning set forth in Exhibit 3.1
attached hereto.
“ Processing Standards
” shall mean all standards, guidelines, rules, regulations
and laws applicable to the Processing, storage, packaging,
labeling, shipping and Distribution of Tissue by Osteotech. The
Processing Standards shall include applicable (i) laws,
regulations, and guidelines of the FDA; (ii) standards and
guidelines promulgated by the AATB; (iii) laws and
_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
4
regulations of other U.S. federal,
state and local government agencies with jurisdiction over the
processing and distribution of human musculoskeletal tissue; (iv)
laws and regulations of non-U.S. jurisdictions where Tissue
Processed by Osteotech is procured 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 as provided to Osteotech in advance of
their effectiveness; and (vi) Osteotech’s SOPs, as may be
amended from time to time.
“ Products ”
shall mean Base Tissue Products and Proprietary Products, in each
case Processed by Osteotech from MTF Tissue.
“ Proprietary Products
” shall mean Existing Proprietary Products and New
Proprietary Products. “ Existing Proprietary Products
” shall mean those listed in Exhibit 3.2 as the same
shall be amended from time-to-time pursuant to this Agreement.
Existing Proprietary Products shall be deemed to be Proprietary
Products for all purposes of this Agreement. “ New
Proprietary Products ” shall mean Proprietary Products
not listed in Exhibit 3.2 hereto and designated as New
Proprietary Products pursuant to Section 2.8 hereof. In all
cases, Osteotech agrees not to designate Achilles’ tendon,
bone-tendon-bone, meniscus, fascia, tibialis tendon or
semitendinosis tendon, or derivatives thereof, as a New Proprietary
Product.
“ 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
applicable (i) laws, regulations, and guidelines of the FDA; (ii)
standards and guidelines promulgated by the AATB; (iii) 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) 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 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 Cancellous Chip
Yield ” shall have the meaning set forth in Section
1.1(g) .
“ SOP ” shall
mean, with respect to MTF or Osteotech, a standard operating
procedure.
“ Specialty Products
” shall have the meaning set forth in Section 2.8(j)
.
“ Standards ”
shall mean Processing Standards and/or Recovery Standards, as the
case may be.
“ Suggested End User
Price ” shall mean, with respect to any Proprietary
Product, the price to end user customers determined from time to
time by Osteotech in its sole discretion. The current Suggested End
User Prices are set out in Exhibit 3.2 .
5
“ Term ” shall
mean the “ Initial Term ” from the Effective
Date through December 31, 2006, plus any one-year “
Renewal Terms ,” pursuant to Section 5
.
“ Tissue ” shall
mean human bone and related connective soft tissue for allograft
transplantation.
“ WIP ” shall
mean work-in-process Tissue and Tissue products being processed
from ARC Tissue at Osteotech.
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1.
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DELIVERY AND PROCESSING OF TISSUE
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1.1
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Bone and Related Tissues Supplied by
MTF
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(a)
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Minimum Donor Requirement
. Subject to adjustment based on
Actual Yield pursuant to Section 1.1(f) , MTF shall exercise
its best efforts to deliver to Osteotech for Processing no less
than *** Donors per month during the Term (the “ Minimum
Donor Requirement ”). 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. Osteotech shall use its best efforts to
make such determination promptly after receipt of the Donor from
MTF. The Donors to be delivered by MTF to meet the Minimum Donor
Requirement in this Agreement shall be in addition to any donors
MTF shall be required to deliver to Osteotech pursuant to the MTF
Processing Agreement. The Donors delivered by MTF to Osteotech
under this Agreement shall be clearly identified as such by MTF and
their status as Donors shall be maintained by both parties
throughout Processing and Distribution (if applicable). Except as
otherwise specified in this Agreement, Donors shall be governed
only by the terms of this Agreement and not any other agreement,
including without limitation the MTF Processing
Agreement.
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(b)
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Average Donor Profile; Donor
Characteristics . Donors
delivered by MTF in satisfaction of the Minimum Donor Requirement
shall conform to the Average Donor Profile calculated on an average
basis over all Donors delivered in any calendar year. Osteotech
shall have the right on reasonable prior notice to MTF and at
Osteotech’s sole expense to have an independent third party
reasonably acceptable to MTF audit MTF’s compliance with the
foregoing provisions regarding MTF’s achievement of the
Average Donor Profile. 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 Osteotech
shall have the right to reject all Tissue from any particular Donor
delivered to it pursuant to this
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_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
6
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 Distribution of Tissue as contemplated
in this Agreement. In the event of any such rejection, Osteotech
shall notify MTF as promptly as practicable 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 30 days after receipt by MTF of such
written explanation, such Tissue shall not be considered in
computing any shortfall referred to below in Section 1.1(h)
; 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
Section 1.1(b) or such shortfall shall have been eliminated
as described below.
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(c)
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Donor Planning . Notwithstanding anything to the contrary
contained in this Agreement, commencing on the Effective Date and
for the remainder of the Term, Osteotech shall be responsible for
planning Donors for Processing that are delivered by MTF to
Osteotech in order to satisfy the Minimum Donor Requirement, as
needed to produce Proprietary Products. Such planning shall be
based upon Osteotech’s forecasted market needs solely with
respect to Donors delivered in accordance with the Minimum Donor
Requirement, and such plans shall be provided to MTF in good faith
and on a quarterly basis at least 30 days prior to the quarter in
which such forecast shall apply. MTF acknowledges that such
planning by Osteotech shall be conducted with a priority on meeting
the forecasted market demand of Proprietary Products first, with
Base Tissue Products a secondary consideration. After each Donor is
planned by Osteotech to meet the forecasted demand for Proprietary
Products, Osteotech shall use its best efforts to follow the Donor
master plan provided by MTF with respect to such Donor in order to
plan the remainder of such Donor for Base Tissue Products.
Osteotech acknowledges that MTF has certain commitments to its
member recovery organizations to give priority in certain
circumstances to member demands for Base Tissue Products currently
Processed by Osteotech and Osteotech agrees to use its best efforts
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.
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(d)
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Soft Tissue Products . Osteotech shall use its best efforts to
Process the soft Tissue Products associated with any and all Donors
delivered to Osteotech in accordance with specifications for such
soft Tissue Products that are in place as of the Effective Date
based upon the Donor master production plan submitted by MTF to
Osteotech. In the event any such
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7
specifications are changed in a
manner which would cause Osteotech to incur additional processing
expenses that are reasonably considered to be material, Osteotech
will not be required to process soft Tissue Products in accordance
with such changed specifications unless MTF shall reimburse
Osteotech for such additional processing expenses, plus a
reasonable profit. Osteotech shall use its best efforts to achieve
the same per Donor yield with respect to soft Tissue Products that
MTF achieves from donors processed by MTF. MTF shall provide
training for Osteotech personnel with respect to Processing of soft
Tissue Products and the parties shall cooperate in good faith to
compare and, where appropriate, harmonize their respective
specifications for soft Tissue Products. MTF shall report its per
Donor soft Tissue Product yield to Osteotech at least annually and
such yield reports shall be subject to review by a mutually
agreeable third party.
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(e)
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Additional Donors . Osteotech is not required to accept Donors for
Processing in excess of the Minimum Donor Requirement and the terms
for delivery, planning, and Processing of any such excess Donors
must be agreed to in advance by the parties.
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(f)
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Changes in Minimum Donor Requirement
. If the Actual Yield for any
calendar quarter during the Term of this Agreement is less than the
Minimum Yield, the Minimum Donor Requirement for each month during
the next calendar quarter shall be reduced in accordance with
Exhibit 1 subject to being increased (up to the original
Minimum Donor Requirement) in subsequent quarters in accordance
with Exhibit 1 if Actual Yield is increased. No downward
adjustment of the Minimum Donor Requirement shall be made if the
Actual Yield is below the Minimum Yield during a quarter to the
extent there shall have occurred a shortfall in the Minimum Donor
Requirement or non-compliance with the Average Donor
Profile.
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(g)
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Cancellous Chip Yield . Osteotech shall use its best efforts to return
cancellous chips to MTF Processed by Osteotech from MTF Tissue at a
rate such that in each rolling three month period during the Term
MTF shall receive, on average, *** of cancellous chips per Donor
(the “ Required Cancellous Chip Yield
”).
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(h)
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Minimum Donor Requirement Shortfall
. If for any reason MTF fails to
deliver the number of Donors required in order to satisfy the
Minimum Donor Requirement in a month and fails to make up any such
shortfall in the next succeeding month such that the number of
Donors delivered to Osteotech in such next succeeding month shall
equal such shortfall plus
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_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
8
the number of Donors required to be
delivered in order to satisfy the Minimum Donor Requirement for
such month, and such shortfall is not the result of the
circumstances set forth in Section 1.1(f) , MTF shall pay
Osteotech for each Donor constituting such shortfall an amount
equal to (a) *** of the Actual Yield during the calendar quarter
preceding the month in which such shortfall shall have occurred
plus (b) ***
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(i)
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Compliance With Processing and Recovery
Standards . The Tissue
from Donors delivered by MTF and Processed by Osteotech, and the
ARC Tissue which MTF re-releases to Osteotech for Processing, shall
conform to the Processing Standards and the Recovery Standards. MTF
and Osteotech shall provide each other a copy of its SOPs and
copies of any material amendments to its SOPs promptly after such
amendments are adopted; provided, however, that doing so will not
require such party to disclose any trade secrets, technical know
how or unpublished scientific data or technical art. If
interpretation of the Standards is required or if there is a
disagreement about the interpretation of the 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. In the event
the FDA, any other applicable regulatory agency or the AATB
implements new or additional regulations applicable to Tissue, the
parties shall implement such changes to their respective SOPs as
are necessary to comply with such regulations in respect of all
Tissue. In the event FDA has determined (after any good faith
appeal of such determination by the applicable party) that either
party has failed to implement such changes in respect of Tissue by
the effective date of such changes, the other party shall have the
remedy set forth in Section 6.3 .
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(j)
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Serology Testing . MTF shall be responsible for the performance
of all serology testing on Tissue from each Donor procured by 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 Standards or, in lieu of
such records, summary sheets acceptable to both parties. 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.
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_________________________
***Indicates the omission of confidential
material pursuant to the 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 Securities and Exchange Commission.
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(k)
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Reciprocal Audit Rights .
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(i)
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Annual Audit . Upon reasonable notice and at its own expense,
each of the parties 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 Standards, each party may conduct such
additional audits of such other party’s facilities and
records related to regulatory compliance as are reasonably
necessary to ensure that such defects have been rectified. Absent
material circumstances unique to this Agreement, any audits
conducted under this Agreement shall be consolidated with audits
conducted under the MTF Processing Agreement and shall not be in
addition to the audits conducted thereunder. Notwithstanding the
foregoing, in any such audit the auditing party will be entitled to
review the other party’s records only to the extent such
records relate to MTF and ARC Tissue.
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(ii)
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Access to Osteotech Facilities
. 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 1.1(k) ) of Osteotech’s
compliance with the Processing Standards applied to MTF and ARC
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 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, in its reasonable
discretion, refuse any individual access to Osteotech’s clean
rooms for cause. Such denial of access will not be a violation of
this Agreement.
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(iii)
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Access to MTF Facilities . 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
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to this Section 1.1(k) . 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.
If such personnel require access to MTF’s clean rooms, the
personnel must have on file with MTF appropriate blood serum test
results and such other appropriate test results as MTF may require
prior to such personnel being granted access to MTF’s clean
rooms. MTF may, in its reasonable discretion, refuse any individual
access to MTF’s clean rooms for cause. Such denial of access
will not be a violation of this Agreement.
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1.2
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Volume and Forecasts
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(a)
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Roles of MTF and Osteotech
. MTF shall procure, store and, in
the case of Base Tissue Products, distribute all Tissue covered by
this Agreement in a manner that assures that such Tissue will
conform to the Standards, and shall deliver such Tissue to
Osteotech as necessary to meet the Minimum Donor Requirement.
Osteotech shall Process, store and, in the case of Proprietary
Products, Distribute all Tissue covered by this Agreement in a
manner that assures that such Tissue will conform to the Standards,
and shall deliver all Base Tissue Products to MTF as required in
this Agreement.
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(b)
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Production Meetings . Osteotech will arrange with MTF to hold
regular production meetings to discuss the forecasts and other
processing issues related to the Donors delivered under this
Agreement.
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1.3
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Donor Records
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(a)
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Maintenance of Records . As they relate to MTF Tissue and ARC Tissue,
MTF will obtain and maintain (or in the case of ARC Tissue, have
access to) all: (i) necessary books, records, and other data
required under the Recovery Standards of MTF (including without
limitation donor medical history, donor life style information,
serology and blood culture testing); (ii) inventory records of MTF
Tissue and inventory records of Processed Base Tissue Products
received by MTF from Osteotech pursuant to this Agreement; and
(iii) all end user orders received from MTF’s customers who
utilize the Base Tissue Products Processed by Osteotech pursuant to
this Agreement. Osteotech will maintain all (x) necessary books,
records,
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and other data required under the
Processing Standards relating to MTF Tissue and ARC Tissue, (y)
inventory records of Proprietary Products Processed by Osteotech
pursuant to this Agreement relating to MTF Tissue and ARC Tissue
and (z) end user orders received from Osteotech’s customers
who utilize the Proprietary Products Processed and Distributed by
Osteotech pursuant to this Agreement.
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(b)
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Records Requested by Regulatory
Authorities . Each party
shall also obtain and forward to the requesting governmental
regulatory agency, in English, such records, within the requisite
time period, as may be necessary to satisfy all Standards
applicable to activities performed by such party under this
Agreement.
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(c)
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Records Delivered to Osteotech
. MTF shall 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 relating to MTF Tissue and ARC Tissue,
including, but not limited to, Donor medical history, Donor life
style information, and all Donor testing information or, in lieu of
such records, summary sheets acceptable to both parties.
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(d)
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Records Necessary to Comply with Inspection of
MTF . 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 or ARC Tissue by
Osteotech, Osteotech will provide MTF with such information in
Osteotech’s possession as is necessary to satisfy any such
request by any such regulatory agency.
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(e)
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Records Necessary to Comply with Inspection of
Osteotech . In the event
any regulatory agency audits or otherwise inspects
Osteotech’s facilities or records and requires information
maintained by MTF relating to the recovery, screening and testing
of MTF Tissue or ARC Tissue, MTF will provide Osteotech with such
information in MTF’s possession (or in the case of ARC Tissue
to which it has access) as is necessa
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